Have had a great run for a decade, can they possibly go higher?
Sure, so long as the dollar carry trade keeps ‘em afloat!
Borrowing cheap in the US to buy economic growth, debt, and anything else that’s tasty is what the big banking and hedge fund boys are doing.
Returns are astounding.
Sure, there’s the odd problem in places like Dubai, but that’s not gonna stop these engines of growth!
“Investors are starting to look at this asset class and realize that it is a pretty safe place,” said Kevin Daly, who manages $1.7 billion in emerging market debt at Aberdeen Asset Management.
Of course, this quote reflecting supreme confidence that it’s different this time means that these markets are likely heading for a fall.
The problem may come when another sovereign defaults, or interest rates begin to rise in the US and Europe, or somebody blows up the Saudi/Iraqi/Iranian oil fields.
Then the hot money flees to safe havens.
Emerging markets crash worldwide, while no growth developed countries start cringing again.
Oh well, this is what current US international economic policy is all about. We’ve had a couple of bubbles, now we need to find another one.
And the banks are certain that Uncle Sam will bail ‘em all out when they get too greedy.
Gorilla says: “It’s what happens when dishonesty is the only transparency!”
