It’s yet another manic week in global markets. The Federal Reserve engineered a bailout of Bear Stearns, Wall Street’s fifth-biggest bank, by rival J.P Morgan Chase & Co., even as the Fed slashed its key interest rate by three-quarters of a percentage point to 2.25%. Yesterday, the Dow Jones industrial average soared 420 points, or 3.51%, to 12,392.66 — its biggest one-day point gain in more than five years. Asian stock markets rose overnight. European markets today look less impressed.
As I’ve been noting in the last few weeks, short and sharp relief rallies are typical of bear markets. Contrast the mood of the markets on Monday and Tuesday. One day, Wall Street investment banks are going belly up. The next day, U.S. markets boast record gains. The roller coaster continues.
Most of your Global Stock Investor holdings remained steady this week. The top performer was the CurrencyShares Japanese Yen Trust (FXY) which soared all the way above $103 in intraday trading. How best to play all this? Add to your positions on any dips — particularly to the PowerShares DB Agriculture (DBA) and Barrick Gold (ABX). Though not immune to the market moodswings, these defensive positions will continue to do well during unsteady markets. All other picks — except for Veolia Environnement (VE) — remain BUYs.
PORTFOLIO UPDATE
Barrick Gold (ABX) dropped yesterday after the Federal Reserve’s interest rate cuts. Gold is correcting after its recent run-up above $1,000, making it a perfect time to add to your positions here. The outlook for gold is bullish and the world’s largest gold miner remains a BUY.
Coca-Cola Hellenic Bottling (CCH) was surprisingly steady this week, global gyrations notwithstanding. This stock remains a BUY.
PowerShares DB Agriculture (DBA) corrected this week. That offers you a chance to load up on DBA. The agricultural boom remains a top theme in your Global Stock Investor portfolio, and DBA remains a top BUY.
iShares MSCI Brazil Index ETF (EWZ) soared in yesterday’s relief rally. Two of the ETFs biggest components, state-run energy giant Petrobras and heavyweight miner Vale, rose 1.52% and rose 2.58%, respectively. When global markets turn, this position will soar. Brazil is a BUY.
CurrencyShares Japanese Yen Trust (FXY) hit yet another record of close to $103 against the dollar highs before selling off on yesterday’s sharp rally. Now up 16.32%, this steady defensive play remains your top hedge on the markets. The yen remains a BUY.
Millicom International (MICC) gained $6.61, or 6.9%, to $102.24 and was one of the Nasdaq’s biggest gainers yesterday. This highly volatile stock is a BUY.
ArcelorMittal (MT), the world’s biggest steel producer, announced a $100-per-ton price increase on its carbon and high-strength, low-alloy plate steel products for all North American orders, effective May 4. With the stock back up near $80, it remains a BUY.
Potash (POT) jumped 3.67% yesterday and now is back up above $160. RBC Capital markets maintained an “outperform” rating and $195 price target on Potash shares. That represents upside of more than 20%. The stock remains a BUY.
Elements Rogers International Commodity ETN (RJI) was broadly flat this week, confirming that this month’s pick is much more diversified than DBA, which is focused exclusively on agriculture. This latest addition to your portfolio should be a steady performer. RJI is a BUY.
Veolia Environnement (VE) announced that its U.K. subsidiary has won a 25-year waste contract worth a cumulative 667 million euros from West Berkshire council in southern England. The stock has stayed flat after last week’s sell off. The stock is a HOLD.
P.S. Join my Eagle Publishing investment colleague Mark Skousen and me for FREEDOM FEST 2008, "The Trade Show for Liberty," on July 10-12, 2008, Bally’s/Paris Resort. FreedomFest will feature more than 88 speakers, 100 exhibitors, and 1,000 attendees. Guests will include John Mackey, CEO of Whole Foods Market, Congressman Ron Paul, a 2008 Republican candidate for president, Steve Moore, of The Wall Street Journal editorial board, David Boaz, vice president of Cato Institute, Robert Poole, Jr., of Reason Foundation, Jeremy Siegel, "The Wizard of Wharton," and Rick Rule, one of the country’s top money managers. Also hear Frank Holmes, Doug Casey, Larry Abraham, Ron Holland, Frank Trotter, Bert Dohmen, Keith Fitz-Gerald, Peter Zipper, John Mauldin, and many more.
