People are nervous about emerging markets. You know that. I know that. Everyone knows that. And everyone plus you and me also knows why people are thusly nervous.

It’s because after years of benefiting from flows facilitated by unprecedented accommodation by DM central banks, the tide is starting to turn and even if lackluster data in Europe and a generalized deceleration across developed economies means the U.S. ends up being the proverbial “last man standing“, the Fed is likely to stay the course on hikes thanks ironically to the fact that the very same late-cycle fiscal stimulus that makes it possible for the U.S. expansion (already the second longest in recorded history) to continue, also raises the risk of inflation pressures building.

And so, Jerome Powell will stick to his guns (until he doesn’t) and that means more hikes and higher short rates and higher real rates and rising 10Y yields and a stronger dollar and perhaps a shortage of dollar liquidity (i.e., a prolonging of the funding squeeze that unfolded in Q1), and on and on.

None of that bodes well for EM and the recent run on the Argentine peso and Turkish lira perhaps provide something in the way of a preview of what happens when inherently precarious idiosyncratic stories in the developing world collide with Fed normalization. There’s also trouble in Indonesia and Hong Kong, with the latter seemingly vulnerable to capital flight and the possibility that higher rates could end up bursting bubbles that inflated on the back of abundant liquidity.

“It has been striking to see market participants suddenly becoming aware of the often indirect mechanisms which meant that in prior years an abundance of $ liquidity drove up asset prices, and of the potential for these processes now to run in reverse,” Citi wrote in a recent note.

But the primary question (which is: will the ongoing dollar rally and an aggressive Fed continue to destabilize EM by undercutting the dynamics that fueled the carry trade?), another question is this: who’s been selling recently?