Bill Hall: Emerging economies including China (NYSEARCA:FXI) and India (NYSEARCA:EPI), which are growing several times faster than the U.S., have nevertheless disappointed investors this year. The S&P 500 Index (NYSEARCA:SPY) of the U.S. has rallied 22 percent, compared with the benchmark MXEF, MSCI Emerging Markets Index’s 1.46 percent loss.
U.S. stock markets clearly aren’t forward-looking. They’re blind. They’re no longer following fundamentals. They’re bedazzled by only one thing: How much money the Federal Reserve and other central banks will print. Nothing else matters.
The Fed has managed to monopolize everyone’s attention over the past five years. As long as the central bank continues to expand its balance sheet by more than $85 billion a month and maintain short-term interest rates near zero, the U.S. markets might simply refuse to see reality. It’s the mother of all allusions.
For example, a week ago, the Federal Open Market Committee voted nine to one to continue its aggressive asset-purchase policies, setting off a buying frenzy that sent the S&P 500 and the Dow indexes to all-time highs.
Moreover, most of the committee members said raising the federal funds rate is about two years away. But it doesn’t matter what the Fed says it might do in 2015 or 2016; that’s because anything the Fed says beyond the horizon of a few weeks is useless.
Does that mean it’s time for investors seeking long-term value to look outside the U.S.?
With the U.S. economy expected to grow 2 percent a year and the U.K. at 1.5 percent, compared with China expanding at 7.5 percent and India at 5 percent, it may be time to look elsewhere.(...)Click here to continue reading the original ETFDailyNews.com article: Why Investors Should Consider Emerging MarketsYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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