Global markets continued their bullish trends this past week. While U.S. stock markets are on the verge of breaking out on the upside, most global markets have already done so. Emerging market stocks are now the single, best-performing asset class in the world. Their 35.47% rise since Jan. 1 makes the S&P rise of 1.76% through the end of May seem positively anemic.
That should come as no surprise. As the United States struggles to emerge from its recession, many emerging markets are already ahead of the game. The International Monetary Fund projects that while the world’s developed economies will contract this year, emerging economies as a group will expand by as much as 2.5%.
You had three big movers in your Global Stock Investor portfolio this week.
Freeport-McMoRan Copper & Gold Inc. (FCX) soared 14.3%, as analysts upped their target price for copper to as high as $3 per pound. Tighten your stop to $44.50.
India’s ICICI Bank Ltd. (IBN) jumped 8.7% as positive sentiment surrounding the recent Indian elections continued to power that country’s stock market ahead. Tighten your stop to $22.50.
Chile’s Chemical & Mining Co. of Chile Inc. (SQM) leapt a solid 5.9%, as buying interest in the stock increased substantially. Tighten your stop to $29.50.
Thanks to a combination of a return of appetite for risk and concerns about the U.S. fiscal position, the U.S. dollar continued on its now relentless downward path. I had moved UltraShort Euro ProShares (EUO) to a HOLD a few weeks ago. But because currency trends tend to be long and strong, I am going to throw the towel in on this one even before we hit our stops. SELL EUO.
All of your other positions remain BUYs.
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) dropped slightly to $26.54 as U.S. Treasury Secretary Tim Geithner eased his tone with the Chinese on his visit to Beijing this past week. With the yuan 40% undervalued on a purchasing power parity basis, CYB remains a defensive BUY.
The iShares MSCI Taiwan Index (EWT) rose slightly this week, as the American Chamber of Commerce in Taipei on Tuesday voiced its support of the Taiwanese government’s bid to forge a comprehensive trade deal with China. EWT remains a BUY.
Freeport-McMoRan Copper & Gold Inc. (FCX) soared to the $58.12 level on Monday, before correcting slightly yesterday. With some analysts now upping their estimates of the copper price to $3 per pound, FCX is a BUY.
ICICI Bank Ltd. (IBN) jumped 8.7% this week as the Indian bull is back. With the current government’s "massive mandate," pro-business reforms will be on a (relative) fast track. IBN is a BUY. Tighten your stop to $22.50.
Chemical & Mining Co. of Chile Inc. (SQM) jumped 5.9% as agricultural stocks perform strongly across-the-board. There is a huge amount of call option activity going on in SQM, indicating that some investors are betting on a huge upward move in the stock. SQM remains a BUY. Tighten your stop to $29.50.
The UltraShort Lehman 20+ Treasury ProShares ETF (TBT) ended the week at $55, as the U.S. Treasury market calmed down after last week’s sharp move in interest rates. But arguing against a rise in interest rates is like arguing against gravity. Mother Nature will prevail as rates will rise and Treasuries will continue to fall. TBT remains a BUY.
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