Global Markets Choppy, as Volatility Rises

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

It’s been a choppy five days in global markets over the past week. Stocks suffered steep losses yesterday as oil prices surged, renewing worries that higher fuel prices could hobble the global economic recovery. Oil prices jumped 13% last week with a rise in turmoil across North Africa and the Middle East. Americans are now paying roughly $75 million more per day to fill their gas tanks than a week ago.

After a period of extremely low levels, volatility is back, particularly in sectors like technology. Your position in JinkoSolar Holding Co., Ltd. (JKS) rallied as much as 16% in a single day, before actually ending the day lower.

Despite this, most of your positions in your Global Stock Investor portfolio ended the week higher. A couple of investment themes in your Global Stock Investor portfolio continue to perform particularly well, including oil through the Market Vectors Russia ETF (RSX), agriculture through Agrium Inc. (AGU) and Japanese small caps through WisdomTree Japan SmallCap Dividend (DFJ). You should feel comfortable adding to all of these positions. Technology — Universal Display Corp. (PANL) — also continues to outperform, as long as you are willing to endure the volatility.

Overall, our decision to exit almost all of our emerging market positions over the past two months continues to be a good one, as these formerly red-hot markets have fallen out of favor.

Meanwhile, Las Vegas Sands (LVS) announced that it is being investigated by U.S. authorities over its compliance with provisions of the Foreign Corrupt Practices Act related to its operations in Macau, as a result of a lawsuit filed by a disgruntled former employee in Nevada. Not surprisingly, this hit the stock hard.

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Although I know nothing about the details of the case, as a former attorney that helped set up businesses in emerging markets early in my career, I can tell you this is a good example of the legal millstones American companies have around their corporate necks when doing business abroad. No Chinese company that ever cut a deal with the government of Nigeria or Sudan — places that are virtually “no-go zones for U.S. companies — will ever be sued by its own government for the way they do business abroad. No matter where you come down on this issue, it’s a high price to pay for a naïve America.

The question is whether that price is worth paying…

Portfolio Update

Agrium Inc. (AGU) jumped 4.07% this past week. With agricultural stocks recovering almost all of their falls from the previous week, and with the stock still trading above its 50-day moving average, AGU remains a BUY.

The WisdomTree Dreyfus Chinese Yuan Fund (CYB) rose .20% this past week. The yuan has been essentially flat as a pancake in all of 2011. Now trading back above its 50-day moving average, CYB is a BUY.

WisdomTree Japan SmallCap Dividend (DFJ) was up 2.06% this past week. Watch this trade become “conventional wisdom” over the coming months. Bumbling Japan actually outperformed dynamic China in 2010. DFJ remains a BUY.

Freeport-McMoRan Copper & Gold, Inc. (FCX) rose 2.46% this past week. We’ve given this stock plenty of room to pull back, as it is one of the most volatile out there. But if it hits its stop of $47.50, you should be out. Trading below its 50-day moving average, this volatile stock is a HOLD.

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Global X FTSE Nordic 30 ETF (GXF) ended the week 2.71% higher. Trading back above its 50-day moving average, this bet on the most dynamic part of Europe is a BUY.

JinkoSolar Holding Co., Ltd. (JKS) dropped 2.04% this past week. JKS jumped as high as 16.1% in early trading on Monday before swooning 2.3% below Friday’s closing price, all on very heavy trading volume. Italy announced that it might cap solar installations at 8 gigawatts total, and JinkoSolar has a large exposure to the Italian market. Still above its 50-day moving average, JKS remains a volatile BUY.

Las Vegas Sands Corp. (LVS) dropped back 4.84% this past week, thanks largely to its announcement that it is being investigated by the Securities and Exchange Commission. Trading back under its 50-day moving average, and near its stop price, Asia’s Las Vegas is now a HOLD.

Market Vectors Russia ETF (RSX) jumped 4.8% this past week, as soaring oil prices support the market. Trading above its 50-day moving average for the first time since September, RSX remains a BUY.

Universal Display Corp. (PANL) ended the week 1.86% higher after a very volatile week. With earnings announcements coming up on March 14, this is a terrific time to add to your position in this stock. But strap yourself in for a wild ride. PANL remains a solid BUY.

Vale S.A. (VALE) rose just under 1% this past week. Despite the company’s bullish outlook on China, with the stock trading below its 50-day moving average, Vale is a HOLD.

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