Nouriel Roubini is on a roll, as for news appearances that is. Matching our earlier post from Marc Faber today, his company is now saying to buy emerging markets.
Note that we track all global country ETFs here. The following chart shows the country ETF daily performance:
(please click to enlarge)
Brazil, Indonesia, and Russia lead the charge with staggering results.
The announcement was actually made by Roubini Global Economics, which went on a hiring spree as everyone idolizes Roubini and he is now a well sought after speaker. Business is very good for Roubini. Keep that in mind.
They say that emerging markets will extend their biggest rally in a decade as investors continue the mother of all carry trades and borrow dollars to buy stocks, bonds and currencies in the world’s fastest growing economies. They recommend investors should take “overweight” positions in developing-nation assets, the surge in asset prices “has many legs to go".
Unwinding The Carry Trades
In a carry trade, investors borrow in countries with low interest rates to invest in higher-yielding assets.
“There’s going to come a problem when the Fed has to normalize monetary policy,” said Das. “All those carry trades are going to be unwound.” Still, he said, “it’s going to take a long time to get there.”