•  Despite the Fed continuing to taper the pace of asset purchases, it appears that Emerging Markets (EMs) have rebounded from their initial sell off.
•  Has the crisis “vanished” as Bloomberg recently claimed or is this a lull in a secular downtrend?
•  There are a number of indicators we can look at, but none are more telling than the direction of currencies and interest rates – higher rates will hurt growth prospects.
•  Regardless of the “crisis talk”, EMs will continue to lead global growth, albeit at a slower pace than many would like.
•  Does this, coupled with slow and presumably steady growth in the West augur for higher interest rates going forward? This is anathema to Central Bankers.

Are We Out of the Woods Yet?

In May of 2013 when then-Chairman Ben Bernanke announced his intention to eventually start tapering asset purchases in the United States, Emerging Market equities and currencies were the first, unwitting victims. 

The thinking goes as follows: