Naturally, the easiest explanation currently is “tapering”, which is something I’ve been trying to fight for the last several weeks among the investors that I speak to. Alas, the power of the front page of FT or WSJ saying “EM is doomed as Fed tightens (sic!) the policy” is difficult to overcome. What is particularly worrying is that this sort of über-lazy argumentation is very often used by fairly young traders. The reason why it worries me is that those guys will at some stage be responsible for the way the market behaves and that spells all sorts of issues, especially when it comes to concentration of views and positions.
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