Slides from the DoubleLine Emerging Markets Fixed Income Fund webcast titled, “Let’s Get Fiscal”
DoubleLine Emerging Markets Fixed Income Fund
Emerging Markets Risks We Saw in May 2016
- Global Growth Slowdown
- China
- Political Risk
- Brazil, Venezuela, Turkey
- Potential for Rising U.S. Treasury Yields
- Potential for Continued Commodity Price Declines
China Growth Has Stabilized
Chinese Reserves Have Stabilized
[drizzle]Political Risks We Saw in May 2016
- Brazil
- Political uncertainty was reduced after President Dilma Rousseff was formally impeached
- The new Temer administration has shown a commitment to a fiscal reform
- Venezuela
- Uncertainty over a political transition of power and the government’s ability to continue servicing its debt remains
- Contagion risk from a Venezuela default remains small
- Turkey
- The failed coup attempt allowed President Erdogan to consolidate power and crackdown on the government’s political opponents
- Moody’s downgraded Turkey’s Baa3 rating to Ba1, citing erosion of institutional strength and sizeable external funding requirements
- Contagion risk from Turkey capital outflows remains modest
10 year UST Yields Range-Bound
Commodity Appear to Have Stabilized
EM Index Returns Year To Date to September 30, 2016
Monetary to Fiscal Policy
Central Bank Policy
Central Banks Have Expanded Their Balance Sheets
Despite Central Bank Monetary Easing, Growth has Fallen Short of Expectations
Rise in Populism: Higher Fiscal Spending and the Rejection of Globalization
Fiscal Room?
Fiscal (Political) Feasibility
Fading Fiscal Drags Should Help Support Growth
The Type and Composition of Fiscal Policy Matters
“Investment has the highest multiplier, followed by government wages and purchases”
“Corporate and personal income taxes have the most negative effects on GDP”
Large Public Debt Stocks Will Likely Increase with Fiscal Stimulus
Emerging Markets Adjusting to Policy Shifts
Structural Reformers
Stability at risk
- South Africa
- Turkey
- Venezuela
- Ecuador
Adjusting to Macro Stability
- Argentina
- Brazil
- Colombia
- Russia
Structural Reformers
- Indonesia
- India
- Mexico
- Peru
See the full slides below.
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