Voices and Visions:Russia and the Sochi Olympics;Fed Tapering

Russia's Deputy Economy Minister Sergei Belyakov has been commenting on the effect of the Sochi Winter Olympics on his nation.Speaking on Bloomeberg TV,he said the main question is,what does it mean for us?We had to create new conditions for life in the whole country.We have a lot of new facilities.It was very important for us.We're speaking about new living standards.The Olympics and the World Championships-all these events are not Putin's project;they are a project to create new ideas,new technology.
Visit Russia and see what's the reality here,the difference between perception and reality,Mr.Belyakov urged.Can Russia afford the 15 billion dollar fund for Ukraine?Please don't be worried.Everything's OK.Our economic situation is not very good.That's why the business environment here is the highest priority of the Russian government.It's not as bad as people think;but we want to make it much better than it is now.We have not only goals;but we have achievements.*
Mr.Belyakov declined to comment on how the Federal Reserve's decision to begin tapering its asset purchases in support of the US economy would effect the emerging markets.Simon Goodfellow,CEO of Harlyn Research,said there will be a spike in volatility.At some stage,that has to go up,and when it does,markets will sell off.Somewhere along the line,investors will have to react.Bond market investors will cause a spike in equity volatility.There was an initial positive response to the Fed holding off on hiking interest rates.Just understand that that will reverse sharply sometime in 2014,Mr.Goodfellow cautioned.*
Tapering doesn't mean tightening,outgoing Fed Chairman Ben Bernanke said in his last press briefing.The Fed will keep tightening until unemployment drops below 6.5%.
The process will be deliberate and data-dependent.Asset purchases will not be on a pre-set course,Mr.Bernanke explained.*
Janet Yellen will succeed Mr.Bernanke in January.

Private Bank Views-plus Middle East Moment

This is a quiet period,according to Mark Matthews,Head of Research for Asia at Bank Julius Baer;September will be D-Day.The MSCI World Index is up 10% this year;the US is up 14%,overshadowed by all this volatility.The markets will go down if Federal Reserve Chairman Ben Bernanke doesn't express some kind of positive policy action.It's unclear how the Fed makes decisions.
The US is not doing very badly.China's probably the big problem in the world right now.It's slowing down in a way the leaders are comfortable with.
I like the quality US blue chips;quality high yield bonds;Southeast Asian equities such as those from Thailand and the Philippines.
The Julius Baer Group says it is the leading Swiss private banking group,serving sophisticated private clients,family offices and external asset managers from all over the globe.With its headquarters in Zurich,it has more than 40 offices in over 20 countries.The group was founded in 1890.
Middle East Moment:Any Middle East military action will push oil prices significantly higher,says Helma Croft,a geopolitical strategist at Barclays Capital.Drought and its higher food prices will hurt Middle East fiscal positions.None of these governments can afford to put off subsidies to their people.
Barclays(BCS)

Managing Director:Where You Want To Be

There's a transition in the mix of growth coming out of China,according to Lisa Shalett,Managing Director at Bank of America-Merrill Lynch.We think it's going from infrastructure/construction/building to a consumption/services mix.
Our thesis has been to go with the best of breed in Europe.That means Siemens,Daimler Benz,Astra Zeneca.Investor fatigue and the overhang of issues are really in the U.S. market.
Mario Draghi,President of the European Central Bank,can learn a lot from Federal Reserve Chairman Ben Bernanke.The risk in Europe now is a deflationary bust.You want to be in high quality,dividend-growing equities and investment grade corporates.You want to be in companies,not countries.Be in the emerging markets and high yield debt,Ms.Shalett counseled.
Lisa Shalett is Chief Investment Officer of Merrill Lynch Global Wealth Management and Head of Investment Management and Guidance.With over 17 years' experience in the investment industry,she has a BS in applied mathematics and economics from Brown University and an MBA from Harvard Business School.
Bank of America-Merrill Lynch(BAC),Siemens AG(SI),Daimler AG(DDAIF),Astra Zeneca(AZN)

BNP Paribas Forecasts 2010

Brian Fabri,Chief Economist at global bank BNP Paribas,says the U.S. economy still needs help,and that is why Federal Reserve Chairman Ben Bernanke will keep interest rates low.By Q3 2010,there could be nasty surprises in the economy.Banks still are gonna be writing off more bad debt.Commercial real estate will cause more losses for banks.State and local governments will be insolvent,probably needing more federal aid.I think we go from 3% growth to 1.5% about the middle of next year.There are significant head winds,a number of little factors.In 2010,liquidity stops growing.It could create another flight to safe dollar/Treasury move.We will return to reality from the golden handshake.We will back away from risk-taking about the middle of next year,Brian Fabri predicted.
The economic research department of BNP Paribas is a worldwide function grouping together economists based in Paris,New York,London and Tokyo.BNP Paribas has 202,300 employees in 83 countries.Its three core businesses are Retail Banking,Corporate Investment Banking and Investment Solutions.It was named 2008 Global Banker of the Year by The Banker magazine.