Global debt has grown by over 12% (or $27 trillion) since 2016, reaching $244 trillion (318% of GDP) in Q3 2018.

Turkey and Argentina saw sharp depreciations in 2018, that erased substantial real exchange rate overvaluations. We assess the BoP impact in 2019 using our Nowcast.

Portfolio inflows to EMs were $3.1 bn in December. Equity and debt flows softened to $2.9 bn and $0.2 bn, respectively. Net capital flows remained in negative territory in November.

Dichotomy between still-strong growth and market warning signals leaves investors scrambling; Upward pressure on overnight rates could trigger liquidity shortages, higher volatility in money markets; Lowest tier of investment grade now accounts for 42% of the U.S. corporate debt universe, up from 30% in 2008; Central bank reserve managers shift away from USD in 2018

We see global growth worries as overblown. US data are catching down with elsewhere, but that was inevitable and to be expected, a normal sign of global business cycle swings. We lower our growth forecasts modestly, but continue to see a solid overall picture.

With softening profit margins and high debt levels, some parts of the U.S. corporate sector are looking more vulnerable

Indian shadow banks came under pressure in 2018. We assess how much of a macro risk they pose.

Expansionary fiscal policy will continue to drive non-oil growth, as fragile investment sentiment and regional tensions continue to hinder growth of the private non-oil sector. We expect overall growth to moderate to 2.0% in 2019, dragged down by compliance with the recent OPEC+ deal.

Our January 2019 US Financial Regulatory Update covers new reports released by the Federal Reserve on Financial Stability, and Supervision and Regulation; proposed adoption of SA-CCR for large banks; proposed regulations on GILTI Inclusion and BEAT Tax; the November 2018 U.S. General Election and other federal personnel updates, among other topics.

EM Growth Tracker at 3.4% 3m/3m sa ar in December. Decline driven by hard data and business sentiment. Trade volumes and industrial production weakening. All regional trackers slowing towards the end of 2018.

Jittery equity analysts cut forecasts for next year’s corporate earnings; Tighter financial conditions may prompt more central bank caution; Safe-haven flows intensify in early 2019 amid concerns about the credit cycle; Heightened volatility — notably in equity markets – dampens risk appetite 

Slump in cyclical sectors highlights concerns about global growth, impact of quantitative tightening; Market selloff has prompted a sharp correction in equity valuations—but they still don’t look cheap; Signs of rotation to emerging markets; This will be the last Weekly Insight of 2018—see you in the New Year!

In this forerunner to deeper IIF analysis that will follow in 2019, we look at some potential scenarios where innovative disruption could have an asymmetric effect on banks’ balance sheets.

Lesson #1: Don’t engineer an outsize credit boom into a global tightening cycle. Lesson #2: Current account-based estimates of FX fair value are really important. Lesson #3: After a decade of G-3 monetary easing, EM has a positioning overhang. Lesson #4: Imposing a tariff on China is a negative shock that weakens the RMB. Lesson #5: Don’t get hung up on stories the Fed is shifting hawkish. It isn’t.

In our last edition of Sticky Notes in 2018, we look at President Xi's reform anniversary speech, Venezuela's future, NAFTA termination, oil markets, and a potential U.S. government shutdown.