The global economic and political picture is pretty complex right now.
Decades of corruption and malinvestment have caused a dozen or so countries to elect populist leaders or enact capital controls.
A strong U.S. dollar is also causing their local currencies and domestic bond markets to feel significant pain.
Emerging Markets were one of the big beneficiaries of Central Banks’ free money policy and often times those funds were not put to good use. Now, the rise in King Dollar is making debt service on their dollar denominated debt very difficult and I expect that trend to continue. It very well could be the trigger to next global recession.
Here’s a list of countries w/ populist leaders or economic troubles:
- South Africa
- North Korea
I’m probably missing a few. Interesting times ahead.