The S&P 500 is down 18.62% since the start of the year — and now is trading lower than when Alan Greenspan gave his famous "irrational exuberance" speech in December of 1996.
That all said, your Global Bull Market Alert portfolio continues to perform well in the face of extremely challenging market conditions. Last week, six of your nine positions chalked up gains.
Last week’s bet alongside George Soros favorite, Brazilian oil giant Petrobras (PBR), bucked the downtrend in global stock markets, ending the week up 6.8%.
Your bet against U.S. Treasuries through the Rydex Inverse Government Long Bond Strategy Inverse (RYJUX) gained a solid 3.8%. With the Obama administration’s breathtaking budget making the cost of the Iraq War look like a rounding error, it’s hard to be bullish on U.S. Treasuries.
Your bets against Britain also gained in the past week, with your short position in the CurrencyShares British Pound Sterling Trust (FXB) rising 2% and your short position in the iShares MSCI United Kingdom Index (EWU) climbing 5%. These are the two biggest, long-term gainers in your portfolio.
Expect the Market Vectors Double Short Euro ETN (DRR), which gained almost 2% last week, to make a big move this coming week. As I discussed in last week’s Global Guru, Europe’s “subprime nations” will put substantial pressure on the euro. Yesterday, the Hungarian prime minister dramatically warned of a “new economic Iron Curtain” descending on Europe if Western Europe doesn’t bail out the East with a package equivalent to one-third of the region’s GDP. This transparent example of geo-political blackmail was rightfully rejected by Germany’s Angela Merkel. Any euro weakness is bullish for your position in DRR.
Your bet on falling commodity prices through the PowerShares DB Commodity Double Short ETN (DEE) took a breather last week, ending the week slightly down after rallying to a record high on Feb. 23.
Both Millicom International Cellular S.A. (MICC) and iShares MSCI Emerging Markets Index (EEM) sold off in sympathy with global stock markets and we stopped out of these positions earlier today.
Finally, look for a dividend payment just under 72 cents per share on March 6 from your holding in iShares iBoxx $ High Yield Corporate Bond (HYG).
Portfolio Update
The PowerShares DB Commodity Double Short ETN (DEE) hit a record high last Monday before correcting. You’ve already sold off half of this position for a 22% gain. Timing the exit of this position at the absolute top is always going to be a challenge. Hold on to your position for now, and keep your stop at $82.00.
Market Vectors Double Short Euro ETN (DRR) gained almost 2% last week. You can expect more gains today as the U.S. dollar is rallying against the euro in early trading. With Europe in crisis over its subprime nations to the East, the downward pressure on the European currency is substantial.
Your short position in the CurrencyShares British Pound Sterling Trust (FXB) gained another 2% this week. The $1.40 level is critical for this position. If it slices through that level, look out below.
Your short position in the iShares MSCI United Kingdom Index (EWU) gained a solid 5% last week on the global sell-off. Whatever the U.S. economy does, the Brits do it just a little bit worse.
The iShares iBoxx $ High Yield Corporate Bond (HYG) sold off last week. A dividend payment of around 72 cents on March 6 will help cushion the recent losses.
Petrobras (PBR) got off to a strong start, clocking a 6.8% gain. This combined bet on Brazil and the oil price has lots of legs. Stick with it.
The Rydex Inverse Government Long Bond Strategy Inverse (RYJUX) rallied 3.8% last week. Continue to bet against U.S. Treasuries.
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