The purpose of this presentation is to discuss the Fed’s transition from a very expansive monetary policy to some normalcy and its implications for Emerging Markets (EM). On December 18, 2013 the Fed decided to taper its quantitative easing policy by $10 billion per month, to $75 billion. Chairman Ben Bernanke stated that the Fed’s “Quantitative Easing” (QE) program will wind down steadily through 2014 and conclude by year-end, assuming the economy remains healthy. On January 29, 2014 the Fed announced that it would taper quantitative easing by another $10 billion per month to $65 billion. However, there is still uncertainty about Fed’s program given that the tapering will be data-dependant and both the Fed chairmanship and the several board positions will have changed in early in 2014. As a result, both the timing and extent of the QE withdrawal remains uncertain. This re-trenching by the Fed seems to have more serious implications in a number of “Emerging Markets” (EM). According to Institute of International Finance, EM capital inflows have fallen sharply under more difficult external conditions, and are estimated to decline by $153 billion to $1,062 billion in 2013 overall. It is important to note that not all EM’s are the same. In addition, rising global interest rates in anticipation of Fed tapering have compounded domestic weaknesses in EMs. The so-called “fragile five” EM’s (Brazil, India, Indonesia, South Africa, and Turkey) have already started experiencing an economic slow down, capital flight, CDS’s rising, and depreciation of their currencies. Also, we found that among the “fragile five,” the ones with (1) high current account (CA) deficits, (2) low international reserves, and (3) lacking structural reforms seem to experience the highest depreciation in their currencies. Moreover, the correlation among the “fragile five’s” currencies is strikingly positive and strong. As liquidity will dry up and global capital will slowly but surely move back to the “developed markets” (DM), it is likely that “fragile five” EM’s will suffer the most and experience economic as well as political turmoil.