Monthly Archives: September 2013

The press as a lagging indicator, continued

Folha de Sao Paulo has made this easy for us. Here are a couple of Economist covers, four years apart:

2013.09.26 Brazil Economist cover

Honestly, when it’s not so tiresome, it’s actually amusing how blind people can be. I honestly have too many previous ramblings on this topic to list them all but if you’re interested, you can find them somewhere among these.

Also, there’s this:

Fed tapering, Emerging Markets, Banxico

Thanks to Brent Donnelly from Nomura for this chart showing USDMXN vs 10-year US Treasuries since “tapering” became a new market watchword:

2013.09.20.USDMXN 10 year UST

So what? Here’s so what: For anyone who ever thought Videgaray, Carstens or whoever else had any sway, when push comes to shove, dollar-peso moves almost in lockstep with Fed expectations. Put another way, whenever Bernanke & Co. decide easy money is over and raise interest rates, expect the peso to go back above 13.0+ and stay there (possibly even 14). And if Carstens or whoever replaces him is smart, they’ll keep their hands off. Draw your own conclusions about what that means for Mexican inflation, TIIE, etc.