JPMorgan's Cavenagh: 'Underweight' Philippine Peso

The video discusses the potential risks associated with the upcoming Federal Reserve cycle, emphasizing the challenges in the currency markets, particularly in emerging markets. It highlights the lack of positive spillovers from China and the need for caution even when the Fed is cutting rates. The speaker suggests a selective underweight strategy in emerging market currencies, focusing on specific regions like EM Asia and the Philippine peso due to anticipated economic challenges.

What is the main concern regarding the upcoming Federal Reserve cycle?

• It will lead to a strong market rally.

• It poses risks to the markets.

• It will have no impact on the markets.

• It will only affect the technology sector.

Why is it challenging to be short on the dollar and long on emerging market currencies?

• Because of an uncertain global growth environment.

• Due to strong economic performance in emerging markets.

• Due to positive spillovers from China.

• Because of a stable global growth environment.

What is the stance on emerging market currencies in the current environment?

• Overweight selectively.

• Overweight across all emerging markets.

• Neutral on all currencies.

• Underweight selectively.

Which currency is mentioned as being underweight in EM Asia?

• Philippine Peso

• South African Rand

• Indian Rupee

• Brazilian Real

What economic factor is expected to re-widen in the second half of the year for the Philippines?

• Trade surplus

• Twin deficits

• Foreign reserves

• Inflation rate