http://www.morganstanley.com/views/gef/index.html "While still in its infancy, this new liquidity cycle will likely help support asset markets, end the recession later this year and prevent lasting deflation. As always, it is difficult to predict which asset classes will benefit most from the build-up of excess liquidity. However, our strategists favour credit and EM equities in 2009."
They may be right. The trillion euro bailouts are flying fast and furious, and interest rates are going from zip to ZIRP ("zero interest rate policy"). And of course it's a no-brainer to invest in the Chinese, Vietnamese, Russian or Venezuelan developmental states. What Fels doesn't say, of course, is that the next liquidity cycle will be driven primarily by the governments of the new metropoles and rising semi-peripheries, not the US consumer.
-- DRR