They can't run out of U.S. exposure. They have Treasuries, cash, the whole yield curve, corporate bonds that they can invest in. They can even invest in paintings.
Facing the fog of uncertainty, the Fed should see the benefits of pausing on September 20.
This could be the beginning of an interesting game between the ECB and the financial markets, ... If they believe the ECB has miscalculated they will take on the euro like never before.
With the strong labor report, strong retail sales, and the strong inflation report, market expectations of a sustainable U.S. recovery have increased.
Indonesia is the first to crack, due mainly to its fragile institutional framework and a general lack of credibility. But we should start to consider the scenario where what is happening in Indonesia may not be an isolated event in Asia.
There was a view among the Europeans and the Japanese at the G-7 meeting last month that persistent pressure may not be the best approach. That wasn't shared by the U.S.
The bottom line is headwinds are mounting against the Asian economies.