Spruce Update: Emerging Markets Contagion

Given the headlines about trade wars and fears of emerging market contagion, we thought it would be a good time to revisit our thoughts on the market and portfolio positioning.  
We are significantly under-weight emerging market (EM) risk assets and are not yet tempted to “buy the dip”. In our opinion several EM countries have fundamental problems including Argentina, Brazil, China, Iran, South Africa, Turkey and Venezuela including some/all of slowing growth/recession, currency weakness, rising foreign denominated debt, declining currency reserves, deficit spending, inflation, and widening credit spreads.