What's Driving the Emerging Markets Rally?

The video discusses the unexpected positive reaction of emerging markets to a surge in US CPI, which typically would have led to volatility and declines. Two main explanations are provided: the rise in commodity prices, such as oil and copper, and the perception of 'good inflation' linked to stronger US economic growth. Additionally, the video explores the impact of Trump's policies on emerging market credit, noting that fears of protectionism have not materialized, and credit spreads have reached multi-year lows. The tension between different narratives about Trump's policies and their effects on emerging markets is also highlighted.

What is one reason given for the positive reaction of emerging markets to rising U.S. inflation?

• Weaker U.S. dollar

• Increased commodity prices

• Lower U.S. economic growth

• Decreased oil prices

How does stronger U.S. economic growth theoretically affect emerging markets?

• It causes them to collapse

• It negatively impacts them

• It has no effect

• It should benefit them

What was the expected impact of a Trump win on emerging markets?

• Positive growth

• Immediate recovery

• Negative impact due to protectionist policies

• No change

What has been the trend in credit spreads on emerging market corporate debt?

• They have widened significantly

• They have remained stable

• They have disappeared

• They have narrowed to multiyear lows

What is one explanation for the narrowing of credit spreads in emerging markets?

• Investors foresee a decline in commodity prices

• Investors expect a decrease in U.S. economic growth

• Investors doubt the implementation of protectionist policies

• Investors believe in the success of protectionist policies