Your Global Stock Investor portfolio had a strong week, with two of your positions, PowerShares DB Commodity Double Short ETN (DEE) and the UltraShort Lehman 20+ Treasury ProShares (TBT), hitting record highs of $86.82 and $48.12, respectively. Both DEE and TBT are now firmly above their respective 50-day moving averages, confirming their uptrend.
Meanwhile, the bears for the U.S. bond market are out in force. Harvard economist Ken Rogoff argued this week in The Wall Street Journal that “a near doubling of the U.S. national debt suggests that the endgame to this crisis eventually is going to bring much higher interest rates [as investors demand higher yields in return for buying U.S. government debt] and a collapse in today’s bond-market bubble.” That development would send TBT soaring.
Your defensive-position holdings in two Asian currencies have become steadier and steadier. The CurrencyShares Japanese Yen Trust (FXY) stayed steady — trading between the $110 and $112 mark over the entire week. Although its upward momentum has flagged, the yen continues to stay above its 50-day moving average.
The Chinese yuan, through the WisdomTree Dreyfus Chinese Yuan Fund (CYB), has stuck between $25.00 and $25.20 for several weeks now.
Your stock holdings — Millicom International (MICC) and Nextel Holdings (NIHD) — have fallen in price since they were recommended, despite yesterday’s moderate rally in the stock markets. You can expect both of these positions to soar on any improvement in market sentiment.
Finally, there’s an old sketch from Monty Python on investment bankers which confirms the Biblical wisdom that there is “little new under the (financial) sun.”
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) is as steady as it has ever been, with the Chinese authorities managing the currency exchange rate more tightly than ever. I am keeping CYB at a HOLD.
PowerShares DB Commodity Double Short ETN (DEE) closed at a record high of $86.82 yesterday as the oil price tumbled back near $40, its lowest price since Jan. 20. With the global economy slowing and this position’s role as a hedge on global stock markets, it remains a BUY.
The CurrencyShares Japanese Yen Trust (FXY) stayed steady this week, and is now locked in a very narrow trading range. FXY is a BUY.
Millicom International (MICC) rose all the way to $42.55 last Wednesday, before falling back. Because I am wary of taking any additional positions in equities, I am keeping it at a HOLD.
Nextel Holdings (NIHD) fell back this week on negative market sentiment. I am keeping NIHD at a HOLD.
UltraShort Lehman 20+ Treasury ProShares (TBT) hit a record high this week. This leveraged position, which bets on the collapse of the last remaining bubble in financial markets, may turn out to be the equivalent of betting against subprime loans in 2007. It could end up being the trade of the year. TBT a BUY.