The US appears to be continuing the Bernanke paradigm of targeting the unemployment rate of 6.5% and keeping track of an inflation rate target of 2%  and the Fed will respond to general conditions as the Federal Reserve sees  it. As the IMF has noted the developed countries have recovered well in 2013, thus the targets from the Fed are approaching the points where a larger scale stopping of easing will occur.

Despite a stellar year for equities in the world’s largest economy, the Dow Jones Index gained 26.5% for 2013, emerging markets have suffered from weak demand, currency issues and unrest in places, such as, Thailand, Ukraine and Caracas. The Treasury appears ready to, proverbially, strike when the iron is hot or push for growth while the momentum is favoring the US expansion. Consequently, currency issues are a serious problem for emerging countries because of the dislocation of capital created by the past fives years of stimulus and although China had better than anticipated results since January, the GDP and growth rates were off their highs and showing signs of a moderating of China’s torrid pace of high growth for the past decade and a half.

Combining these issues, the two economic major powers are having impacts on developing countries. Therefore, we expect broad stroke demands from emerging markets on the US and China.

– By Julien David

Caracas, China, Dow Jones Index, Federal Reserve, GDP, IMF, Thailand, Ukraine