Mr Market sees the world one way. The International Monetary Fund (let's call it Mr Policy Wonk) sees it another. It would be nice if Mr Market turned out to be right.
The IMF financial stability report's estimate this week that global credit losses could reach $4.1bn understandably grabbed the headlines. But a bigger departure from market wisdom came in the report's assessment of emerging markets.
For Mr Policy Wonk, emerging market risks have risen the most since the last stability report came out during the worst of the crisis in October. Cross-border bank lending is contracting, as is finance from capital markets. Emerging markets suffer most from “home bias” as banks in receipt of government funds turn their attention to home. The base of investors buying emerging market stocks has contracted.