Surprisingly strong sales and prices of existing U.S. homes; improving economic data from the eurozone; signs of robust growth from China and other parts of Asia; and a return of real (if anemic) growth to the economies of Germany and France all confirm that global economic recovery is on the horizon.
Summer doldrums notwithstanding, your Global Stock Investor portfolio had a strong week, with most positions outperforming the increasingly robust U.S. market. Commodities play Freeport-McMoRan Copper & Gold Inc. (FCX) jumped 10% as the price of copper continues to soar and institutional investors re-focus on this large commodity play. ICICI Bank Ltd. (IBN) also leapt around 8% as the Indian market recovers. Both Market Vectors Indonesia ETF (IDX) and the iShares MSCI South Korea Index Fund (EWY) rebounded sharply this past week as the belief in economic recovery in Asia gains conviction.
The poor performance of the UltraShort 20+ Year Treasury ProShares (TBT) remains a conundrum in light of soaring estimates of government deficits. This position remains a HOLD.
Overall, I see no end to the firming risk appetite across global financial markets in the near future. I also expect both increased volumes and volatility in the next week or so as more and more traders return to their desks and reduce their allocations to cash.
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) ended the week flat as the Chinese Central bank kept a tight range on the Chinese currency even after Premier Wen Jiabao said China would maintain a loose monetary policy to keep the country’s economic recovery from stalling. Recent government efforts to use the yuan more widely for trade settlement are also helping to underpin the yuan. CYB remains a defensive BUY.
iShares MSCI Taiwan Index Fund (EWT) rose 2% this week. Filings by the Harvard endowment to the Securities and Exchange Commission revealed that it added substantially to its stake in EWT in Q2. EWT remains a long-term BUY.
iShares MSCI South Korea Index Fund (EWY) jumped a solid 6% this week, as South Korean consumer sentiment improved for a fifth straight month in August to its highest level in seven years. This raised expectations of an early recovery in Asia’s fourth-largest economy. EWY remains a BUY.
Freeport-McMoRan Copper & Gold Inc. (FCX) soared 15% to hit $67.46, before pulling back. Goldman Sachs added the stock to the firm’s "Americas Conviction Buy List," predicting FCX will surge on an expected rise in demand for copper, which will drive up prices. We agree. Your bet on “Dr. Copper” remains a BUY.
ICICI Bank Ltd. (IBN) jumped over 8% this week. The ICICI Bank CEO noted that the crack in the secrecy shield of Swiss banks will help banks across the world. With technical indicators for the stock bullish, IBN remains a BUY.
Market Vectors Indonesia ETF (IDX) ended the week over 6% higher as the ETF approached highs for the year. Indonesia’s flagship airline carrier PT Garuda Indonesia announced plans this week to raise up to $400 million in an initial public offering in June of next year to fund its expansion. The “new BRIC” remains a BUY.
Market Vectors Gold Miners ETF (GDX) rose almost 6% this week but it still is locked in a narrow trading range. GDX remains a long-term BUY.
Chemical & Mining Co. of Chile Inc. (SQM) rose almost 4% this week. With an explosion of lithium battery-powered vehicles coming to market in the next three years and virtually every automaker building battery production facilities right now, SQM has a bright future. It remains a BUY.
UltraShort 20+ Year Treasury ProShares (TBT) continues to break down technically, even as estimates of the U.S. government deficit continue to soar to over $9 trillion over the next decade. Your bet against U.S. Treasuries is a HOLD.
P.S. The constantly changing market environment continues to present investors with some of the most challenging times in recent history. Mark your calendar for Thursday, September 10, 2009, at 2 p.m. EDT for my first-ever LIVE teleconference when I will discuss “How to Profit in Global Markets During the 4th Quarter.” This is your chance to hear my predictions and learn how to profit in the next three months. This special, FREE event is for subscribers only. I hope you will join your fellow subscribers and me on this call. Expect to receive a phone call from me at roughly 2 p.m. on Thursday, Sept. 10, and I encourage you to pick up the phone and join the call. Please click here to verify or update your phone number to ensure that I can reach you.
