IB Net Payout Yields Model

Emerging Markets Ready to Rumble Back?

After a year of crumbling stock markets some live now exists in the Emerging Markets. The main culprit has been high inflation, but for numerous reasons that is in the process of ending.

Are argument all along has been an issue in how inflation reporting focuses on the year over year numbers as opposed to inflation over time. For example, commodity prices hit the inflation numbers hard towards the end of 2010, but only when you compare them to 2009 numbers. But going back a few years to 2007 and all of a sudden the 'inflation' doesn't exist anymore.

Naturally China has been facing wage pressure along with most other emerging markets, but a lot of this was due to the relentless focus on the spiraling commodity prices. Not that pries for copper and oil have stabilized and even dropped from early 2011 highs, the numbers will start showing year over year drops even if Brent remains elevated around $110.

All of this brings us back to focusing on emerging market stocks. Such stocks have been a constant theme in our models. Now though with inflation under control and numerous BRIC countries lowering rates, it is time to bring a focus back to the sector.

Not really sure which country to focus on so far, but Tim Seymour of Emerging Money is a expert on the BRICs and he appears to favor Brazil. See the CNBC appearance below.
















We'll highlight some of our favorite stocks next week. The sector hasn't been this cheap in a while.



Disclosure: No positions mentioned. Please review the disclaimer page for more details.


Comments

Popular posts from this blog

Aurora Cannabis: Deal Or No Deal

C3.ai: Out Of Steam (Rating Downgrade)

Archer Aviation: Promising Developments