Brazil EMs and US Stocks

I have written and spoken about this before but it needs mention again. Reason is that the dollar is starting a decline that might also push up the BRL, or Brazilian Real. This along with rising commodity prices is akin to what happened in 2008. Countries like Brazil and Russia that export commodities saw their stock markets make new highs even as the S&P was falling. Reason? Commodity prices were rising till June 2008 especially Oil. Not India markets, but Indian metals stocks did manage a double top into May 2008 as a sector play.


Similarly during 2011-2016 when the dollar rallied crashing commodities these markets were killed.


So now as the US equities show signs of rolling over along with the dollar we maybe in for another period where EMs that are commodity producers will go up a lot and outperform US markets. India is not one of them but we do have metals and commodity producers. What about trump tariffs? then only raise the imported cost of Steel and Aluminium for the US that is all. A falling dollar is the Macro trend driving commodity prices higher. So far on this chart all are rising together but the S&P came close to breaking the pink line and maybe it will break next time round. But watch the others as they might just save the day.


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