Pay back the Money?

OK is it just me or do we think something is weird.  Banks - flat on their back last September - get relief from a capital injection and accounting treatment relief - very few heads rolled.  

Oops, the TARP funds had strings!?  Shiela Bair is exactly right in her criticism of Citigroup - or what may soon reduce itself to John Reed's Citibank (full disclosure - I worked for Citibank from 1994-2000) - look - the blame is three-fold - 1) Credit Risk - didn't you know what was in the portfolio? 2) Management - didn't you know what it meant when the Credit Risk team told you that there was significant risks in the securitization portfolio? 3) Regulators - for years the CFTC was trying to regulate CDS' and other derivatives.

74% of global economists predict that the US recession will end in 3^rd quarter 2009.  What does that mean for Emerging Markets?  DEMAND!  Yes, lets remember Mr. Adam Smith’s views on supply and demand and the 'invisible hand'.  When the economy is perking up, demand increases, needing more raw material supply and, of course, oil. 

 

Yes – but – it’s all very frail.  The FED was surprised when rates (not prices) for Freddi and FannieMae bonds rose thwarting the combined FED/Treasury effort to reduce mortgage rates.  Well, if the divergent data indicate anything, it is that everyone is desperately looking for signals to kick-in to signal a resurgent economy or is it a flat liner.

 

I don’t know if you’ve checked, but your checking/savings accounts are probably yielding 1.5-2% interest per annum - if you're lucky.  Same for the PE/hedge/CLO funds.  Are they happy people – no.  We don’t need managers in Greenwich and Wilton to tell us how to make 1% return on savings.

 

Et voila, right on cue, Emerging Markets come to mind.  (cue the music)

 

PE funds are laser targeting Emerging Markets as potentials for investment returns.

Emerging Markets are the future.