The withdrawal of Larry Summers from consideration to be Federal Reserve chairman is bullish for emerging markets, says Michael Gayed, chief investment strategist at money manager Pension Partners.

That's because Summers would have pursued a more hawkish policy than Fed Vice Chairwoman Janet Yellen, who's now likely to get the job, Gayed told Newsmax TV in an exclusive interview.

With Summers out of the picture, financial markets will no longer expect a quick end to the Fed's quantitative easing sometime next year, Gayed says.

Watch our exclusive video. Story continues below.



Editor’s Note: Seniors Scoop Up Unclaimed $20,500 Checks? (See If You Qualify)

"It happens slower. If it happens slower, if there's more money printing than the market had actually thought there would be under a Summers-led Fed," he said.

"That means the dollar likely has to fall, more dollars being printed. Anything foreign denominated that's unhedged to currency does well and emerging markets, which since the taper talk began in May fell aggressively, probably will benefit."

And why is that?

"As long as the Fed is printing, there is more likelihood of money going overseas to Brazil, Russia, India and China, given that the Fed is literally the central bank of the world," Gayed said.

After hitting a low on June 24 amid concern about Fed tapering, emerging market and U.S. stocks drifted higher in tandem until the beginning of September. Since then emerging markets have outperformed the U.S.

"But that move looks to be very early," Gayed said. Over the past year, the Standard & Poor's 500 Index has gained 16.8 percent, while the SPDR S&P Emerging Markets ETF has slipped 0.98 percent.

"So we talk about this massive bull market, but it has not been a bull market at all for the suppliers of the U.S. economy, which is Brazil, Russia, India and China," Gayed said.

"China looks like it's improving. China improving causes an increase in commodities demand. That means exporters like Brazil to China probably also benefit."

Emerging markets represent such an underinvested area now, that you only need a marginal shift in funds away from the U.S. to spark a major rally, Gayed says.

"A lot of people have big doubts on emerging markets, acting like a crisis already has occurred, like we we're in a 1998 financial contagion scenario," he said "But there has been no crisis."

Commodities prices will head higher along with emerging markets, Gayed says. "The two are somewhat the same trade. So you tend to see commodities outperform at the same time emerging market stocks outperform."

Editor’s Note: Seniors Scoop Up Unclaimed $20,500 Checks? (See If You Qualify)