Summary

Manoj described how the dollar turns from a global automatic stabiliser in times of stress into a global accelerator when the crisis is past. He reiterated his long-standing view of China - short the consumer and long manufacturing. Cyclically, the only thing that matters is the social compact and so far we have seen only 50% of the stimulus. Expectations for growth are 8%+ in a quarter or two. Manoj has been long China equities since mid-March (as well as Korean equities and FX). Generally, he is bullish the triple unwind framework seen in EM: US rates/FX diverge (both rise only in a tantrum), China growing/easing and EM excesses are minimal. He advocated an EM barbell strategy - strongest and weakest economies in WIT club, a cross-asset barbell - WIT vs laggards and sustainable FX for WIT - high-beta laggards. Manoj predicted rate cuts will lead to stronger FX according to their (g-r) framework. Top trades highlighted included long Mexican rates (Banxico to cut 250 more this year), long RUBTHB (oil collapse priced in, fiscal space to be used for referendum, cuts will help), Indian and Polish equities. ZAR and BRL to be the new 'escape valves' after a high-beta bounce.

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