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Emerging Money: Global Inflation Epidemic

Monday, 23 Jun 2008 | 6:47 PM ET

If you’re looking to play emerging markets you already have an appetite for risk. But where are the safe havens as inflation threatens the twin engines of emerging markets growth, India and China.

India

If you think things are pricey here, better not take a trip to Mumbai. India's inflation rate has reached a 13-year peak. In fact, inflation has sent India's stock market tumbling in recent days as investors anticipate tighter monetary policy to bring prices under control.

India has now joined Indonesia, Vietnam,Sri Lanka and Pakistan as an emerging nation struggling with double digit inflation.

China

Meanwhile, China said its decision to increase retail gasoline and diesel prices by up to 18 percent will not undermine its fight against inflation.

The Trade

"Central Banks around the world, especially in emerging markets, are going to have to raise rates," says Fast Money’s favorite emerging markets trader Tim Seymour. "They have no choice. In the second half of the year I expect to see interest rates rise and that will crimp growth."

But there's always a trade. According to Seymour, there are a few.

Look at the iShares MSCI Mexico Index or iShares MSCI Brazil Index , he says, because central banks in Mexico and Brazil have been raising rates. I think think they're better positioned along this curve. Or you can play the Wisdomtree Trust as a stronger currency play.

Be careful of that EWW, counters Pete Najarian. Only three stocks make up 50% of the ETF. Know what you're buying.

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Emerging Money: Global Inflation
Discussing the global inflation epidemic, with Tim Seymour, Seygem Asset Mgmt. and the Fast Money crew.

Looking for more trades. Check out all the companies in the Emerging Money Top 20, an index made up of 20 firms poised to profit from explosive global growth.


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Trader disclosure: On June 23, 2008, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (HAS), (WMT), (MSFT), (INTC); Najarian Owns (AAPL), (TSO), (XLF), (CHK); Najarian Owns (LLL) Calls, (SLB) Calls, (SD) Calls; Najarian Owns (MER) Puts; Adami Owns (NUE), (BTU), (C), (AGU), (GS), (INTC), (MSFT); Finerman Owns (GS); Finerman's Firm Owns (CYBX), (MO), (MSFT), (NYX), (PM), (SBUX), (TSO), (VLO); Finerman's Firm Owns SPX Index Puts; Finerman's Firm And Finerman Own (C) And (C) Leaps; Finerman's Firm Is Short (BIG), (IYR), (IJR), (MDY), (IWM), (SPY)

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CYB
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MSCI MEXICO
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EBIX
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