New York Federal Reserve Building. Photo: Reuters/Keith Bedford

Hedge funds lost tens of billions of dollars on bullish oil trade prior to last week’s blood-letting, and they probably lost a few more tens of billions of dollars on short bond bets. We are back to Goldilocks: reasonably strong economic growth, limited inflation, cautious Federal Reserve. The real winners today are the emerging markets. Asia Unhedged has maintained that EM is less sensitive than it has been in the past to US interest rates, but the relief rally on the moderate Fed in EM is remarkable. The MSCI EM global ETF (EEM) is up 2.19% vs. a half-percent gain in the S&P.  Turkey (TUR) is up nearly 3%, while Thailand and the Philippines are up around 1.5%. Asia Unhedged continues to love Asian EMs.  It’s interesting that Brazil and Mexico are up only slightly — they are the really levered, commodity-sensitive plays. This isn’t about an excessively easy Fed: it’s the Fed allowing growth to proceed where growth is happening.