From Russia, With Fear

by Sara Nunnally Published on Monday, 02 April 2012, Inside Investing Daily

The BRICs are starting to show their power. As tensions with Iran rise, their economic fate is at risk.

When Russia’s worried, we all should be worried…   And when that worry concerns Iran and its nuclear program, it’s even scarier. Let me throw out a few words and phrases that Russian Deputy Foreign Minister Sergei Ryabkov said in an interview on Friday:

• Alarming
• Expanding
• Violation
• A new global economic crisis
• Strikes against Iran by… Israel
• An explosion of energy prices
• Escalation
• Worse than last year

Emerging Markets Hot Again

Check out this article from MarketWatch.com: Global equity ETFs are vacuuming up cash

Looks like money’s getting offshore and headed to emerging markets… again. Diversified Emerging Market ETFs have seen inflows of $6.8 billion so far this year. Boy, I love it when we’re right.

Iran Feeling the Pressure

Economic sanctions are starting to have an effect on Iran. Reuters reports that the country has defaulted on its payments for rice to India.

Iranian buyers have defaulted on payments for about 200,000 tonnes of rice from their top supplier India, exporters and rice millers said on Tuesday, a sign of the mounting pressure on Tehran from a new wave of Western sanctions.

Now Iran can’t buy Indian rice on credit.

Really, We Want to Tell You, But…

At long last, investigators have tracked the billions of dollars in MF Global customer money. They found it –

Oh, wait. They’re not saying where they found it, because their afraid it’ll disappear again, and they won’t be able to retrieve it or potentially prosecute anyone for wrongdoing.

Either this is a big ruse to make people feel better that their money’s been found, or investigators are just dumb. If I was holding $20 million in dirty money from MF Global, do you think I’d wait around after you said you were able to trace it? Heck no!

The chances of those customers getting that money back are falling quickly…

U.S. a Hot Destination for EM Tourists

Would you believe me if I told you that Chinese and Brazilian tourists could inject $850 billion into our economy by 2020?

That’s what the National Retail Federation is saying. This kind of dough will only come if more Visas were issued to Chinese and Brazilian tourists.

Obama signed an executive order on Jan. 19, calling on the Dept. of Homeland Security and the Dept. of State to come up with a plan in the next two months that will boost Visa processing by 40% in the next year.

From Bloomberg:

The resulting increase in U.S. tourism could create 1.3 million jobs and add $850 billion to the economy by 2020, the National Retail Federation said in a Jan. 19 report, citing the U.S. Travel Association.

With slumping U.S. consumer spending and a weak dollar, tourists can make a big impact… even in luxury items. Saks and Bloomingdale’s are looking for big boosts in sales to tourists.

“We’re expecting an enormous uptick in growth,” Bloomingdale’s Chief Executive Officer Michael Gould told Bloomberg. “We have the kind of brands that are highly respected by these visitors, and the faster they can get here the better.”

I Like My Lattes in Bangalore…

Did anyone catch this?

“Starbucks to Open First Indian Store This Autumn“

It’s taken Starbucks ten years to decide to open a store in India, but now it says it could have 50 by the end of the year, and the company says 3,000 stores in India is not an unreasonable long-term estimate!

Here’s the dynamic, though. Cafe Coffee Day holds the market in India with 1,200 stores and really cheap coffee… about $1 for a cappuccino. Starbucks will have to capture a market that likes premium coffees, which might actually be there for the taking.

Now, This Is Interesting…

MarketWatch.com’s Polya Lesova reporting from Davos, Switzerland:

The $10 billion Russia Direct Investment Fund plans to announce three deals in the next month, the chief executive of the Russian government’s private-equity vehicle told MarketWatch in an interview on the sidelines of the World Economic Forum’s annual meeting.

The deals will be the first for the fund, which was created in June 2011 and will be capitalized with $10 billion from the Russian government over the next five years. It’s mandated to co-invest with international investors in an effort to attract investment to Russia.

The main industries that this fund will be focused on are financial services, logistics, healthcare, electrical utilities and agriculture. We think something’s missing from this list… and that’s a shame.

The fund is expected to be involved in 15 deals over the next three years, and we hope more than one of those deals finds its way into the energy and infrastructure arena – not just electrical utilities. There are some major deficiencies in this sector that could really hamper growth.

Here’s an article I published right around the holidays on the subject.

“New” World Currency

Back in vogue: gold.

We’ve known it was coming. We’ve seen the writing on the wall for a long time. We’ve told you to buy gold for years in Inside Investing Daily.

Gold is the only real currency left. The euro is on its way to oblivion… the greenback has lost 98% of its value since 1913, and the yen’s value can hardly be slashed anymore.

And world governments are taking note, buying up five times more gold in 2011 than in 2010.

And now gold prices have climbed 15% in just a few weeks.

Check it out.

On the Chopping Block

Ratings agency Fitch just cut the credit rating of five euro-area countries:

Fitch Ratings cut the credit ratings of Italy, Spain and three other euro-area countries, saying they lack financing flexibility in the face of the regional debt crisis.

Italy, the euro area’s third-largest economy, was cut two levels to A- from A+. The rating on Spain was also lowered two notches, to A from AA-. Ratings on Belgium, Slovenia and Cyprus were also reduced, while Ireland’s rating was maintained.

Fitch says, “These sovereigns do not, in Fitch’s view, accrue the full benefits of the euro’s reserve-currency status.”

One begins to wonder how long the euro will retain its reserve-currency status…

N-11 Market Seeks US Partnership

That book I told you about yesterday, The Growth Map: Economic Opportunity in the BRICs and Beyond, by Jim O’Neill, talks about 11 up-and-coming countries that are going to be the real engines of growth for the global economy.

They are dubbed the “Next 11″ or N-11, and one of them is the Philippines.

And then we hear this from the BBC: