The big news in the Global Stock Investor portfolio this week was related to the single stock on our “watch list,” ICICI Bank Ltd. (IBN). The Indian banking giant soared on optimism from the re-election of Manmohan Singh as prime minister. The entire Indian market jumped 17% on Monday as the election outcome was viewed as a positive for India’s long-term economic growth prospects. With global markets back to embracing risk appetite, and wanting to increase your overall exposure to the stock market, I am moving IBN back to a BUY. Set a $17.50 stop price for IBN.
As a rule, increasing risk appetite is bad for that ultimate of safe havens, the U.S. dollar. Indeed, the U.S. dollar has resumed its downward path as investors embrace riskier assets. Although the European economy is much weaker than the economies in the United States or Asia, I don’t want to fight this increasingly powerful trend in global currencies. I have moved the UltraShort Euro ProShares (EUO) to a HOLD.
Your position in the UltraShort Lehman 20+ Treasury ProShares (TBT) jumped above the $51 level. As money moves into riskier assets, look for this position to continue to strengthen. The real story here is the Treasury bubble. As Warren Buffett noted: “When the financial history of this decade is written, it will surely speak of the Internet bubble of the late 1990s and the housing bubble of the early 2000s… But the U.S. Treasury bond bubble of late 2008 may be regarded as almost equally extraordinary.”
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) snuck back above the $25.50 level as China’s stocks rose to their highest level in nine months. CYB remains a defensive BUY.
The iShares MSCI Taiwan Index (EWT) got off to a strong start in its first week in your portfolio, closing yesterday at a high not seen since the end of September. With Asian markets leading the charge in the recovery in global stock markets, EWT is a BUY.
The UltraShort Euro ProShares (EUO) fell this week, as risk appetite returned to global markets. With the dollar weakening across the board, EUO is now a HOLD.
Freeport-McMoRan Copper & Gold Inc. (FCX) is approaching the $51 level in today’s trading as copper resumed its rally on the back of expectations of a global economic recovery led by China. FCX is a BUY.
With Chemical & Mining Co. of Chile Inc. (SQM) trading above the $37 dollar level as agricultural stocks come back into vogue, SQM remains a BUY.
The UltraShort Lehman 20+ Treasury ProShares ETF (TBT) shot back above the $51 level this past week. With U.S. Treasuries — “the mother of all bubbles” — primed to pop, TBT remains a BUY.
