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.

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.

Also from Reuters:

On Sunday, U.S. President Barack Obama authorized new measures which extend sanctions to all Iranian financial institutions and require financial institutions doing business in the United States to block and freeze transactions having a suspected link to Iran.

Previous sanctions had only required American banks to reject those transactions.

Asian importers of Iranian crude, fuel oil and iron ore will find the sanctions complicate payment, which already often goes through intermediaries in the Middle East.

Iran will be forced to rely more on settlement in illiquid currencies, which raises its cost of trade and adds to pressure on its currency.

Indeed, Iran’s economy is getting weaker by the day… And this is good news to oil sharks like China.

China is relishing a weaker Iran. You see, 20% of Iran’s total oil exports go to China. But recently with all the sanctions, China has slashed it Iranian oil shipments by half… and it’s picking up the slack from other places, like Iran’s nemesis Saudi Arabia, or its erstwhile ally Russia.

But China doesn’t really care where it buys its oil. It just cares about how much it has to pay to get it. And right now, China is using these economic sanctions to great effect. The pressure Tehran is feeling gives China a whole lot of leverage. It’ll still buy Iranian oil… but at a much cheaper price than it had been paying.

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…

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.”

“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.

The article says, “Café Coffee Day has a ubiquitous presence in Indian cities and is especially popular with the country’s youth, many of whom appear to prefer its large selection of cold, sweet milkshakes, teas and other beverages, rather than traditional coffee.”

These beverages are what Starbucks charges the most for.

(Incidentally, we’re not sure where the first Starbucks will open, perhaps Mumbai… But Bangalore, the Silicon Valley of India, could be a hotbed for any source of caffeine.)

If Starbucks can establish a good foothold in India, it might even open more doors for international companies to come set up shop.

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.

There’s Something Ugly in Russia

Environmentalists estimate at least 1 percent of Russia’s annual oil production, or 5 million tons, is spilled every year. That is equivalent to one Deepwater Horizon-scale leak about every two months. Crumbling infrastructure and a harsh climate combine to spell disaster in the world’s largest oil producer, responsible for 13 percent of global output.

– Nataliya Vasilyeva, AP Business Writer, Dec. 18, 2011

Don’t mistake me… Today’s commentary isn’t about the environment, or the severe damage Russia is doing to its own Motherland.

It’s about competence. It’s about common sense.

It’s about effectiveness.

Indeed, Russia is wasting a huge opportunity right now. According to some of the more conservative estimates, 5 million tons of oil leak into Russian soil and rivers every year. That’s about 36.5 million barrels of oil wasted each and every year.

At a price of $95 a barrel, Russia’s throwing away nearly $3.5 billion a year.

And the problem is only going to get worse.

The majority of these leaks are from dilapidated infrastructure stuck in the harsh climate of the frozen tundra. But nobody is paying attention. The Natural Resources Ministry and the Energy Ministry say they have no data on leaks.

And the oil companies themselves are covering up the problem.

The Associated Press reports that Lukoil, Russia’s second largest oil company, was responsible for a huge oil leak in the republic of Komi back in 1994, when 100,000 tons of oil gushed from an oil pipeline. Not only has the area not been cleaned up, but Lukoil says it had only 2.7 tons of oil leak out in the region last year… a figure the locals vehemently protest as wrong.

And this same thing is happening across Russia.

So here’s the issue.

Russia’ oil infrastructure is outdated and in disrepair. And the problem isn’t just with old infrastructure. In fact, a newly commissioned pipeline shipping oil from Eastern Siberia to China had a 400-ton, 3,000-barrel leak just two months after it began operating.

Russian technology seems to be shoddy. But that’s not stopping Russia from rushing into the Arctic, looking to claim drilling rights. Or from making billion-dollar deals with Iran to develop the Zagheh oilfield in Bushehr province.

It’s all about the initial grab… get the easy stuff and worry about the rest later. Or don’t worry, it’ll take care of itself.

This is Russia’s M.O. Has been since oil first started hitting the main stage.

From Barbarians of Oil:

Internally, [between 1920 and 1970] Russia was finding and producing more oil, but its insulation from oil majors made its technology second-rate. 67 In other words, Russia’s plentiful supply of new oil that was easy to extract offset the decline of its poorly managed fields. The government did not invest in the industry as smartly as it should have.

By this time last year, estimates came out that Russia had used up 50% of its known oil reserves, and would have to attract some serious investments to the industry.

Putin (who’s still prime minister, though is running for president again) said on Dec. 19, 2010, that the country would need to invest $280 billion into the oil industry over the next 10 years. At $28 billion a year, that $3.5 billion in oil leaks doesn’t look so small, does it?

If it can’t get investments going in its oil industry, Russian oil output could fall 20% by 2020.

And according to Kremlin documents, about 80% of the oil refining industry’s infrastructure is worn out.

Some analysts think that Russia can’t make all these upgrades alone… and that it will have to seek help — and technology — from the West.

Certainly, if it’s going to take on the Arctic, drilling in the harshest conditions on Earth, then it’s going to need some serious expertise. But Russia’s always been reluctant to let the West in. And that’s putting it mildly.

In fact, the Kremlin changed some of its oil policy rules a couple years back. The only kind of oil company that can work on “Russian” reserves on the continental shelf is a state-owned company that has at least five years of offshore development experience.

Russia estimates that some 70 billion tons of oil and gas are in Arctic reserves, and it says it’ll cost $224 billion over the next 18 years to get to production.

If it can get to it. Gazprom, one of only two Russian oil companies “qualified” and allowed to explore on the continental shelf, hopes to get 200 billion cubic meters of natural gas and 10 million tons of oil from those reserves…

But there’s no technology available to ship that fuel from the sea to the terminals on the coast. Tankers wipe out profits and pipelines are at risk of being hit by icebergs.

It’s the classic case of putting the cart before the horse.

And it’s why I want to keep an eye on Russia here in Macro Trader. There are some strong headwinds to the country’s economy, not least of which is its overreliance on the energy industry.

With infrastructure and production failing, we might get an interesting opportunity to short Russia.

Stay tuned…

This article was first published on December 28, 2011, in Macro Trader, a bold trading service that’s part of the Insiders Strategy Group’s portfolio of publications.

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.

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…

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

And then we hear this from the BBC:

The Philippines has confirmed that it is discussing ways to “maximise” defence ties with the US amid territorial disputes in the region.

In a statement, the foreign affairs secretary cited the need for more joint military exercises to protect national interests.

The statement was in response to a Washington Post story alleging a possible return of US bases.

Analysts say the move is an attempt to contain the influence of China.

This could not only offer the Philippines some regional protection (whether it’s warranted or not is up for debate), but an economic trigger. U.S. bases bring a lot of money to a city or region, and the Philippines could use it.

The country is growing too quickly, but it’ll need revenues to keep up with other kinds of growth – like population and resource demand.

Keep the Philippines on your watch list…

This guy’s most known for coining the term BRIC for the grouping of Brazil, Russia, India and China. It’s been an investor’s boon for the past ten years, and everyone thought he was crazy at first. This new book highlights eleven new countries that are about to hit center stage.

The Growth Map has already got me hooked… From Page 5:

Some observers say the effect of the BRICs on the world economy has been exaggerated because their growth was primarily driven by exports to the developed markets, as well as the rise in commodity prices. Exports certainly played a major role for China, but since the 2008 credit crisis and the consequent fall in demand in the United States and elsewhere, that is no longer the case. For India, domestic demand has been the driver throughout the last decade and increasingly it is the domestic consumer as well as an increase in infrastructure spending that is fueling growth in the BRIC economies. The credit-fueled growth in the U.S. demand certainly played its part in their ascent, but even since 2008, and despite the ongoing U.S. struggles, the BRIC economies have continued to power ahead.