There’s a sense that something big is brewing in markets. One shouldn’t be surprised, we’ve been talking about such issues for sometime, but there have been many false alarms in recent years. However markets are begun to shows signs of instability in recent weeks. The dollar’s rise has begun to turn the screw on the emerging markets, and in Europe, Italy’s new government and its extravagant fiscal plans are beginning to unsettle bond markets. Throw in this political story with more broad geopolitical risk, and there’s a lot investors need to be watching. The dollar is at the centre of this, according to Raoul Pal from Global Macro Investor (see below). Indeed he calls it the powder keg, because its continued appreciation runs in the face of the the deflationary-style trades that dominate markets, and where positioning is currently at its extremities. Something will have to give. We also feature a range of pieces looking at the sustainability of high oil prices, the resurgence of political risk and how investors should be navigating their EM exposures.