Currency Devaluation in Emerging Markets

The interesting news these days is all about currency devaluation in the emerging markets. Due to the tapering of the Federal Reserve, we now have an unintended consequence. All of the cheap money supplied by the Federal Reserve, that went to the emerging markets, is now coming home. Some of the emerging market countries are already feeling this pressure of currency outflows. As a result they are raising interest rates at a very fast pace which collapses their economies. Although emerging market equities have better valuations than developed market equities, we still see a monthly outflow of $12 billion out of emerging market funds. All of this money is now flowing back into U.S. bonds and more recently into precious metals.

To read my analysis, go here.

For more info you can watch this interview with Gerald Celente.