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🎙 "Don't call it a comeback. I've been here for years." - See who said it and why it matters at the bottom.
A growing chorus of U.S.-based fund managers is betting that emerging market stocks and bonds are poised to outperform U.S. assets this year.
What's happening: Following 2019's blowout returns for U.S. stocks and strong performance for high yield, government and even municipal bonds, investors expect U.S. assets to fall to earth in 2020 and are positioning in EM.
What they're saying: "Emerging markets present top 2020 opportunities," UBS Global Wealth Management's CIO Mark Haefele wrote in a recent note to clients.
Further, top analysts at Deutsche Bank and Schroders have said they expect EM currencies to outperform in 2020, and Morgan Stanley and Citigroup are betting on emerging fixed-income assets.
Why it matters: Bullish fund managers are putting their money where their mouths are, laying down bets that EM equities, debt and currencies are primed to deliver solid returns for their clients, which include pension funds, retirement accounts and endowments, among others.
Yes, but: While emerging nations like India, South Africa, Brazil and Mexico have typically had stronger economic growth than developed countries like the U.S., Japan and Germany, that may not be the case in 2020.
Threat level: Major asset managers largely ignored EM for years and they now may be facing “secular stagnation,” and a breakdown of growth, Robin Brooks, managing director and chief economist at the Institute of International Finance, warns.
BlackRock will begin to pull out of some investments that “present a high sustainability-related risk,” but not all fossil fuel companies. (NY Times)
China’s exports rose in December for the first time in five months and by more than expected, despite a decline in shipments to the U.S., signaling a modest recovery in demand. (Reuters)
Visa said it would buy Plaid, a fintech startup that gives apps like Paypal's Venmo access to bank accounts, for $5.3 billion. (WSJ)
Gertjan Vlieghe became the third member of the Bank of England's policy-setting committee to suggest he'd be willing to cut rates at this month's policy meeting, following similar comments from governor Mark Carney. (BBC)
Britain's economy shrank by 0.3% in November and manufacturing output fell by 1.7%. (Guardian)
China will no longer be labeled a currency manipulator, the Treasury Department announced, just two days before President Trump and Vice Premier Liu He are set to sign "phase one" of a long-awaited trade deal.
What happened: China was added to the list just five months ago after its government allowed the yuan to slip below a 7-to-1 dollar ratio for the first time in more than a decade.
Between the lines: The yuan lost value largely because of the Trump administration's trade war and threats of further escalation as China abandoned its efforts to hold that level.
Reality check: The change in designation also makes little sense given where China's yuan was trading before the label was applied and when it was removed.
After it laid off 2,800 employees last week, citing “ongoing uncertainty” related to Boeing’s 737 Max jet, Moody's downgraded the secured debt of airplane parts supplier Spirit AeroSystems and handed it a Ba2-PD Probability of Default rating.
What it means: Wichita, Kansas-based Spirit gets about half of its annual revenue from supplying parts for the Max, which has been grounded for months following two fatal crashes and remains in a production halt indefinitely.
Why it matters: This is the latest piece of fallout from Boeing's two crashes, showing how the production freeze could have ramifications throughout the manufacturing industry and the U.S. economy.
The big picture: Boeing's decision to suspend 737 MAX production could hit dozens of companies, Moody's warned in a separate note on Friday, identifying 24 firms with exposure to Boeing and its supply chain and placing four on review for downgrades.
Don't forget: Indonesia’s Lion Air considered putting its pilots through simulator training in 2017 before flying the 737 Max but abandoned the idea after Boeing convinced them it was unnecessary, Bloomberg reported Monday.
Tesla has been among the most derided companies in the world, but CEO Elon Musk has been getting revenge against hated short sellers since the electric car company's June swoon.
By the numbers: Short sellers who have bet against Tesla's stock price surrendered a total of $2.89 billion in net-of-financing mark-to-market losses in 2019, and have almost matched that total in less than two weeks of trading in 2020, according to data from S3 Partners.
Where it stands: Short sellers have largely tapped out as the company's stock has rocketed higher, but some are holding tight.
What happened: Wall Street has gotten very bullish on Tesla in recent months, pushing the stock's price from $400 to over $500 in less than a month and valuing the company at close to $95 billion.
Between the lines: Musk has 1 billion reasons to keep his foot on the gas pedal.
His mama said knock you out! The legendary James Todd Smith, who created the moniker Ladies Love Cool James (shortened to LL Cool J), was born on Jan. 14, 1968.