User 305589

Ed Yardeni Likes Emerging Markets, High Yield Bonds; Believes Europe's in for Trouble

I am not ignoring it at all - maybe I am underestimating it, yes that could be. I am not claiming to own the crystal ball. I do think, however, that the odds are heavily stacked against emerging markets domestic demand to lead the world economy into recovery mode. It's simply too small yet, to accomplish that job.
What is really striking is the magnitude and speed of the sentiment shift that has taken place. After almost Armageddon dears we are now back to speculations who will lead the next recovery.
I am more concerned with when this next recovery will start, how sustainable it will be once govt. stimulus runs out and how far to the upside it can carry and what it could do to unemployment and household incomes. If the latter two don't improve substantially, any expectation of a sustained recovery is premature. Unless, opf course, you regard a real gdp growth of 0-0.5% a 'recovery'


On May 08 09:27 AM Henry Buttal wrote:

> User 305589 - I think you are ignoring the potential for domestic
> consumption growth in the BRIC (and other) countries. Also, trade
> between the countries hasn't ceased, it has just dropped. The currently
> level of trade, while reduced almost to 10 year lows, will still
> offer enough to fund emerging markets, even if just at a slower pace.

Ed Yardeni Likes Emerging Markets, High Yield Bonds; Believes Europe's in for Trouble

Let me get this right: He (rightfully, imho) says that America will see a slow and subdued recovery, as will Europe and Japan. So Chindia and Brasil will lead the way. Cool idea, but how could they? most of the much-hailed inner-Asia Trade so far has essentially been compoased of stuff that porceeded through various stages in various Asian countries to finally end up to be exported from China to japan, the USA and Europe. This, major, partwill obviously not rebound as long as these three economic areas do not recover substantially. So it's then all depending on some selected exports and Asian/Brazil domestic demand. Unfortunately, the emerging affluent middle class in Chindia and Brazil made their moneys to a large extent with exports to the developed nations and their income depends on it. And a rising oil price will again start to hurt the domestic economies of Chindia significantly.
So I really wonder where all that growth and recovery should actually come from? I hope Ed Yardeni doesn't think the 2 trn $ FX reserves of china will do the trick.
Imho his view, which I regard as the mainstream consensus view right now, will be in for a very rude awakening half a year or a year from now at the latest.