Emerging Markets are Wobbling

As the U.S. raises interest rates and strengthens the dollar, emerging markets will be tested. This also comes at a time where there're rising oil prices as well as the start of trade wars. Considering Brazil’s stock market has recently fallen 5%, Tech took the biggest hit, because investors own stock in Tech, and trade the rest. Therefore, when the rest of the industries fall, investors will be forced to raise cash, Tech could be hit hard. For right now we're worried about the “1998 risk”, when emerging market problems continue to grow and force investors in the US to take defensive action. Higher interest rates make emerging market less attractive and lead investors to cash in their overseas holdings. Foreign investors have pulled out an around $12 billion in emerging markets in may. Other factors that could hurt emerging markets include the French President threatening to make the G-7 the G-6, Mexico could place $3 billion in tariffs on US Goods after Trump imposed tariffs on aluminum and steel, as well as the uncertainty of the Euro Zone. As the FED continues to tighten monetary policy, it's bad for emerging markets. Overall, emerging markets are not something you should touch right now, but you should really pay attention to their movements, as it helps us understand why the U.S. economy is doing so well.