Waterford, Ireland

Our faith is weakening. That is, our faith that the government will be able to cause inflation, sooner or later. Let’s review our own narrative: deflation now, inflation later.

It’s very simple. Maybe too simple. After a half a century of credit expansion, we now have a credit contraction. In this sense, everything is happening as it should.

There was a crash and credit crunch at the end of last year. Then, the feds panicked. They fought back with monetary and fiscal stimulus. Rates were cut to nearly zero. The Fed flooded the system with cash and easy credit – buying up Wall Street’s bad investments…propping up bad banks…and guaranteeing trillions worth of bad debt. And the federal government passed a stimulus program that authorized more than $700 billion in spending.

Beginning on March 9th, we also got a big bounce in the world’s stock markets – just as we

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ProFunds Group, the world’s largest manager of short and leveraged funds, announced today that it is launching four new ProShares ETFs, the first designed to seek twice the daily returns of indexes covering developed foreign markets, emerging markets, China and Japan. The new ETFs will be listed on NYSE Arca today.

“With some international markets posting strong year-to-date returns, investors are expressing interest in tools that allow them to gain magnified exposure to these markets,” said Michael L. Sapir, ProFunds Group Chairman and CEO. “These new ETFs complement our existing ETFs that are designed to provide short (or inverse) exposure to the same international indexes. Over the coming weeks, we plan to further expand our international offerings with ETFs covering more regions and specific countries.”

ProShares

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“We view this theme, the build-out of the developing world as it closes the infrastructure gap with the developed world, as one of the – if not the – most important themes in global investments, for the coming decade.” This is a quote from the featured story on Morgan Stanley’s main website -a report entitled: “Emerging [...]

It has been some time since the last post, but I wanted to mention that the last post was published on SeekingAlpha (Here) For this post, I wanted to highlight IBM’s biennial global CEO study. Last month IBM took out a few full page ads in the June 23rd issue of Fortune advertising their study which can be found here: Study Link (you have to register first and then are allowed to download it) The study personally interviewed 1,130 CEO’s worldwide (the breakdown is: 121 from Japan, 248 Asia, 364 EU, 39 non-EU, 290 North America, and 68 South America). The CEO’s headed a wide variety of companies- 19% of them had over 50,000 employees, and 22% had less than 1,000 – and it is unclear how they selected their sample. They reviewed topics like changing business trends, developing markets in non-developed countries, and future strategic plans. To be ...

The leading story this morning on CNNMoney was Fortune’s Global 500 – Its annual compilation of the top 500 companies in the world. As always, the report categorizes companies with a high amount of granularity: the report lets visitors analyze companies by location, fastest growing, most profitable, by industry, CEO’s, largest employees, etc. This is Emerginvest’s in-depth analysis of Fortune’s Top Global 500 report, which includes substantial shifts away from US-based firms, in a traditionally US-dominated top 500 list. This is evidenced not only by the shift in the number of companies away from the US to emerging markets, but also according to the top companies by % increase in profitability, where no US-based company appears in the top 39 spots (AMR squeaks in at #40). Here are our thoughts:

(The link) http://money.cnn.com/magazines/fortune/global500/2008/full_list/

Not all that surprisingly, Wal-Mart clinchéd the top spot

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Things are progressing here at Emerginvest quite well, but this week has been mostly development on behind-the-scenes code, so there isn’t too much too report. Aside from that, we know that you, our users, enjoy our site for one reason: a shared passion for global financial trends and emerging markets. In light of that, I wanted to start writing a series posts that would be more pertinent for you. Topics I have in mind are: highlighting global information portals, commenting on insightful articles, and our perspective on major financial topics like portfolio diversification. For the first of these articles, I wanted to expound upon the last post and aggregate a list of high-quality emerging market and global economic blogs. Most of these authors are financial advisers and economists and I have yet to find a place which combines this wealth of information. This is by no means an exhaustive list, so ...

Jacada (JCDA) signs another material deal — this time it’s a follow-on deal with Nationwide Insurance.  According to the release, “This most recent contract extends the use of the Jacada solution to the Property and Casualty Direct Sales and Service group, to further automate and simplify access to customer, policy and billing information.”

Defense contractor Elbit Systems (ESLT) signed a $20 million deal to supply its Hermes unmanned air vehicles (UAV) to an unnamed European country.  The agreement is for air vehicles and ground systems to be delivered in 2009, according to Reuters.

Motorola, a strategic partner of NICE Systems (NICE), announced the receipt of an order on behalf of Denmark’s Interior Ministry.  The order is for an integration of NICE Inform, the firm’s multi-media

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I find myself in the Swiss Alps this weekend, spending a few days with my family in the picturesque village of Veysonnaz. While tranquillity reigns and the family delights in having my attention for a change, the bad news for readers is that “Words from the Wise” is taking a break this Sunday.

As a substitute for the weekly review, I have obtained the necessary permission to republish a fascinating discussion of Kate Welling (Weeden & co) with Albert Edwards and James Montier of Société Générale. They are, in a word, skeptics, and at this juncture most deeply skeptical of any and all notions that “the worst is over”. The article will be up on

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Happy July 4th!

A reader asked for my two cents on foreign country selection.

This may be difficult to articulate into something that usable because there is an element of gut feel at times and also a lot of my groundwork was laid quite a few years ago and so now it is more about following developments.

The way I view things the best type of country is one that offers the best chance for diversification and that means countries that are at different points in their economic cycles and by extension different stock market cycles.

This doesn’t always hold up (Oz down a lot this year, Norway down slightly, Canada (EWC) up a hair and Brazil (EWZ) up a little) but over time it works often.

Another category of country would be developed countries that right or wrong I think have a chance to outperform the US over the course of the stock market …

Globes out today with an article about Project Better Place CEO, Shai Agassi’s recent address to the House of Representative’s Select Committee on Energy Independence and Global Warming.  Agassi, an Israeli uber-entreprenuer who had sold his software firm to German software giant SAP, had pretty compelling statitics backing his new venture — a venture focused on developing the infrastructure for mass-market electric cars.

Couple of points from Agassi’s presentation

for the cost of 2 months of oil ($100B), the U.S. could put in place electric car infrastructure to end oil dependence
for the price of 1 year worth of oil ($500B), the U.S. could “creat[e] fully renewable electrical generation sufficient to power all of the nation’s vehicles”
Operating costs for electric cars is about $0.06/mile while traditional combustion engines cost $0.16/mile

You can see the entire webcast that took place last week here.  It’s an

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