After a remarkably strong, two-week rally which saw some global stock markets rise 12 out of the last 13 trading days, markets are shifting into consolidation mode. Some pullback is to be expected as markets digest some of the gains of the recent run-up. This may continue for the next week or two. But general market sentiment remains robust — overall a more positive outlook than I would have expected from the normally sleepy summer months.
Your Global Stock Investor portfolio had two standout performers this week, as both the Market Vectors Indonesia ETF (IDX) and the iShares MSCI Taiwan Index Fund (EWT) closed yesterday at highs for the year. India’s ICICI Bank Ltd. (IBN) also hit a high for 2009 this past week before pulling back slightly. Your commodities play, Freeport-McMoRan Copper & Gold Inc. (FCX), also soared back up to near highs for the year.
Your bet against U.S. Treasuries through the UltraShort 20+ Year Treasury ProShares (TBT) also resumed its upward trend this week, after a period of sharp correction. With the U.S. government already raising $1.046 trillion from debt sales this year, and the budget deficit projected to reach $1.85 trillion in 2009 — equivalent to 13 % of GDP — your bet against U.S. Treasuries remains a safe one. “Good news” about the economy is “bad news” for this position as investors abandon “safe” U.S. Treasuries in favor of “riskier” global assets.
The Wisdom Tree Dreyfus Chinese Yuan Fund (CYB) was flat again as Chinese and Obama Administration officials huddled to discuss economic relations between the two countries. As the world’s most undervalued major currency, CYB remains a defensive BUY.
iShares MSCI Taiwan Index Fund (EWT) jumped another 2.6% this week, closing at a record high of $11.43. EWT remains a long-term BUY.
Freeport-McMoRan Copper & Gold Inc. (FCX) rose slightly this week after penetrating the $60 level for the first time since early June. This indirect bet on “Dr. Copper” remains a BUY.
ICICI Bank Ltd. (IBN) hit a high of $33.32, its highest level in 2009, before pulling back slightly. The volatile bet on India’s future is a long-term BUY.
Market Vectors Indonesia ETF (IDX) jumped another 5.2% this week to a record high of $50.87 as Indonesia creeps back on to investors’ radar screens. The “new BRIC” remains a BUY.
Market Vectors Gold Miners ETF (GDX) fell slightly this past week, after breaching the $40 level for the first time since early June. This leveraged play on the price of gold remains a long-term BUY.
Chemical & Mining Co. of Chile Inc. (SQM) was flat this week. With some technical analysts placing a target price of $53.00 on the stock, SQM remains a BUY.
UltraShort 20+ Year Treasury ProShares (TBT) jumped back over the $54 mark last week, before it settled back around the $53 level. TBT remains a BUY.