From BT’s bond guru Vimal Gor via the AFR comes some very familiar thinking:
Mr Gor said the world was at “the beginning, rather than the beginning of the end, of a sell-off in emerging markets and credit” and declared he would maintain short exposures, despite the recent rebound in commodity prices.
The root cause of emerging market pain was a resurgent US dollar, Mr Gor said, which had left foreign borrowers scrambling to hedge their rising debt loads.
…”While weakness in commodity markets has been apparent for a while, it has yet to claim many victims at the company level. This is now happening, and credit markets are most certainly taking notice,” he said.
…”The problem is inherently no different, as the banking crisis was caused by sharp falls in the value of the collateral they were most exposed to – residential housing – while in this case it’s just sharp falls in copper, iron ore or oil.”
Give that man a cigar. There is one difference, though, this time the GFC is based in Australia.
Cue the RBA’s statement on monetary policy:
