Emerging Market Equities Outlook

A number of factors should be considered when evaluating the wisdom of equity investing in the emerging markets today.Andrew Swan,head of Asian Equities and portfolio manager with BlackRock,the world's largest money manager,lists the following:
1.Valuations are very,very defensive;
2.Most investors are out of the asset now;
3.The Fed is changing directions,getting more dovish.*
Improving momentum in the EM has just been for the past two months,said Mr.Swan.What you've seen is currencies appreciate and capital starting to come back to these markets.I do see growth weakening for the moment outside of Asia.*
Exports have been a very big headwind.If we do get a weaker dollar and higher materials pricing,global trade could start to pick up later this year,and that would benefit the EM,Mr.Swan pointed out.*
iShares Emerging Markets ETF (EEM),iShares Asia/Pacific Dividend ETF (DVYA)

Global Debt and the Risk to Capitalism

The Federal Reserve Open Market Committee issued its interest rate decision Wednesday afternoon,deciding to leave rates unchanged for now,and anticipating only two rate hikes this year,rather than four.They are not actively considering negative interest rates,unlike the European Central Bank,which has just implemented them.*
Markets and central banks globally are beginning to realise that there are negatives to negative interest rates,responded Bill Gross of Janus Capital Management,portfolio manager of the Janus Global Unconstrained Bond Fund and co-founder of PIMCO.It's a more dovish Fed.The Fed is still way above the market.Treasuries are fully priced at these levels.The Fed is connected to the stock market,but I don't think they're responsive to rates being at zero.It's a negative for the finance industry,for pensioners and for savers.They can't earn as much as they should.*
I think,to a certain extent,capitalism is at risk.It doesn't break down,but at the margin,it's hindered and it's hampered.The long term effect basically hampers investment by institutions like insurance companies.*
I think the Fed has an historical sense that Fed Funds should be at 3 or 4%.The real problem is,the tremendous amount of debt in the global markets.When debt gets up to a substantial level,things can de-lever.It's debt that has come to the forefront the past several years in the global economy,and that's what we need to worry about.*
An economy can't grow very fast if wages can't grow more than .6%.I think TIPS are a decent value,to the extent the Fed will reach their 2% inflation target.*
iShares TIPS Bond ETF (TIP),Janus Global Unconstrained Bond Fund;A (JUCAX)

Authorities Confront Crisis

Financial authorities in several countries have been taking steps to ease the financial crisis.On Monday,the Federal Resrve and European Central Bank,as well as eight other central banks,more than doubled reciprocal swap lines,which provide access to U.S. dollars,to 620 billion dollars from 290 billion dollars.The Reserve Bank of Australia pumped 1.95 billion dollars into the market.The events of Black September,a month of financial meltdowns, shook institutions' confidence in dealing with each other and,so far, credit remains tight in spite of their best efforts.Banks continue to hoard cash in the money markets.Many believe that the central banks will have to coordinate an interest rate cut to break the credit logjam.Jean-Claude Trichet,President of the ECB,and Australian Prime Minister Kevin Rudd have called on the U.S. Congress to pass the rescue plan for the common good.The U.S. Senate is to vote on the measure tonight.