Russ Kinnel: We heard from Michael Hasenstab on the opening keynote. He is the manager of Templeton Global Bond, a fund that's had a couple of hard years because it leans toward emerging markets, and emerging-markets bonds have been hit fairly hard, and it was interesting.
He had three key points to share with us. The first was that the dollar was going to rally because the Fed was going to have to tighten. He thinks growth and core inflation are on the way up and the Fed's going to have to tighten. And of course, that is also a view that's bearish for Treasuries. But what he likes is emerging-markets bonds, not a big surprise. He has always been biased that way, but he made a pretty strong case.
He pointed out that if you look at it from a currency perspective, many emerging-markets currencies are at their weakest points in a very long time. Yet many of those emerging-markets governments and economies are much stronger than they have been at other points of weakness and basically he pointed out that, for instance, many of them have much more of their debt sold internally, so they are less dependent on external buyers.
But the key to his thesis is really that China is going to have a soft landing rather than a hard landing. And if China has a soft landing, that's good for other Asian economies as well as China but also a lot of the other emerging market economies which sell a lot of commodities to China and are one way or the other linked to China. And what he really liked were countries like Mexico, Indonesia, Malaysia--argue that they are at really historic buying points.
Now, again, this is his own viewpoint. So, we have to take it a little with a grain of salt, but I think he made a strong case and a good reminder that sometimes the best bargains are the areas that have been hit hardest. So, I think it was really an interesting take and makes me want to go shop for emerging-markets bonds. Not that I would buy a lot of those right now, but there is not a lot out there that actually has a decent yield. and this is one where you could look.