Markets rallied sharply yesterday after Fed Chairman Ben Bernanke told Congress that the recession might end this year and that the Fed had no plans to nationalize banks. That lifted the Dow Jones industrial average and Standard & Poor’s 500 index off of their lowest levels since 1997.
Financial stocks rallied sharply in anticipation that Obama’s speech would provide specifics about his plans to stabilize the financial system. Alas, specifics are never the strength of the new president. His “audacity of hope” style is being greeted with skepticism by Wall Street.
Although global stock markets are technically oversold, I am skeptical that yesterday’s sharp gains are the beginning of a sustained rally. As far as your Global Stock Investor portfolio is concerned, it is better to stick with the alternative asset classes in the portfolio.
The one exception is last month’s Global Stock Investor pick, Chemical & Mining Co. of Chile Inc. (SQM). This stock soared yesterday after announcing that the company had almost tripled its earnings in 2008.
Your position in the PowerShares DB Commodity Double Short ETN (DEE) hit another record high of $99.52 on Feb. 18, before correcting. Like the energizer bunny, this one keeps on going and going. But until DEE consolidates its gains, however, I am keeping it at a HOLD.
The CurrencyShares Japanese Yen Trust (FXY) weakened significantly during the past week as Japan’s economic weakness threatens the yen’s status as a safe haven currency. As a result, you were stopped out of the yen for a gain of 9.5%.
The Chinese yuan, through the WisdomTree Dreyfus Chinese Yuan Fund (CYB), is nudging steadily upward. Hillary Clinton’s visit to China seemed to undo some of the antagonistic rhetoric of Secretary of the Treasury Tim Geithner. It remains a HOLD.
The UltraShort Lehman 20+ Treasury ProShares (TBT) ended the week flat. With the U.S. government’s record funding needs, TBT remains a BUY.
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) stayed steady as The People’s Bank of China set today’s central parity rate for the dollar-yuan pair at 6.8361. I am keeping CYB at a HOLD.
PowerShares DB Commodity Double Short ETN (DEE) hit another record high this past week. After its strong recent gains, I am keeping this at a HOLD.
Millicom International (MICC) continues its volatile ways. Because of the unease in equity markets, I am keeping it at a HOLD.
Nextel Holdings (NIHD) has announced that Nextel Argentina, Nextel Brazil, Nextel Mexico and Nextel Peru will offer the BlackBerry Curve 8350i smartphone. I am keeping NIHD at a HOLD.
Chemical & Mining Co. of Chile Inc. (SQM) reported earnings this week for 2008. Net income was $501.4 million ($1.91 per ADR), an increase of 179% over the 2007 figure of $180.0 million ($0.68 per ADR). Operating income reached $632.2 million, 144% higher than the $259.5 million recorded the previous year. Revenues for 2008 totaled US$1,774.1 million, representing growth of 49.4% over the $1,187.5 million reported in 2007. SQM remains a BUY.
UltraShort Lehman 20+ Treasury ProShares (TBT) had a flat week. With the U.S. government expected to borrow over $2.5 trillion in 2009, look for interest rates to rise. TBT remains a BUY.
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