Also Breaking-well WOWS members shouldn't be surprised.

Despite the allure and mainstreams fascination and love affair with the idea of emerging market long positions, WOWS has been on the bearish side of Emerging markets. I have argued that they will aggressively fight back against the hot money flows that raise inflation in their economies, which now creates the following calculus (hot money flows to emerging markets=inflation=protests and food riots=regime change).

I have said in the last week or so that China will raise rates in February and they did. While China is not what I would consider an emerging market per se, it is reflective of the actions that will be taken in emerging markets.

Besides raising rates three times in little over a month, China has now hiked their banks reserve ratio requirements meaning the are draining liquidity out of the system and fighting the Fed fire with fire.

This could emerge to be a thematic conflict through 2011 and America will soon feel the pain from Fed actions in another form.

Don't forget our China 25 bear trade, FXP it's been performing well.