Travis Boyd, President Trump, Brazil discussed on Bloomberg Surveillance


Not above literally just started talking travis boyd hopkins about how kids come on the president you mentioned ovechkin but make america great again american ice hockey fan wrong okay let's talk brazil gabriela should we talk brazil okay gabbana census joining us from j p morgan asset management global market strategist very confused wondering what on earth is going on in this studio gabby let's just talk about brazil brasilia intervening in the market without much success at the moment i'm ems under some significant stress say relative to how it has been in the last year why don't they hiking interest rates so let's think about why brazil's under pressure right now i would say two things the first is the broad us dollar strength really since mid april in brazil seen as a bit vulnerable to given it's very large fiscal deficit so that's one thing central bank hiking actually exacerbates that problem the second reason brazil's under pressure right now is because the investment thesis is falling apart for this year growth has been slashed growth expectations and there's more of a probability of shall we say non business friendly candidate win in october central bank hiking actually doesn't fix either of those problems either so they are pushing back against this narrative that raising rates is gonna fix any of the problems perhaps even exacerbate them and let's remember that inflation in brazil's actually very very low at the moment so just to discussing the more broadly there are calls for help from emerging markets from the central bank governor of indonesia the central bank governor of the rbi in india urge patel essentially asking the fed to do something but the do something is interesting to me because it's not slow down rate hikes it's slowed down the pace of balance sheet reduction why his balance sheet reduction so important to am right now in a way that maybe some people didn't anticipate i'm not sure that that would agree that it is necessarily because for emerging markets in the past higher rates in the united states in and of themselves have not been a problem because rates are rising balance sheet is coming down because the economy's doing well that's a good thing for emerging markets so honestly the trouble we're here we're having right now is not interest rate in.

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