Global Stock Investor Hotline 63

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Global stock markets rebounded somewhat this past week, with the MSCI global emerging markets index rising just about 0.5%. World stock markets mostly are gaining in early trading today, after Chinese manufacturing growth picked up and Australia’s economy expanded at its fastest pace in three years. But markets are likely to remain volatile ahead of U.S. jobs figures due Friday.

The good news in your Global Stock Investor portfolio continues. The Japanese yen hit another new record high against the U.S. dollar — a bullish sign for your position in CurrencyShares Japanese Yen Trust (FXY). The iShares MSCI Malaysia Index (EWM), the Market Vectors Brazil Small-Cap ETF (BRF) and the Claymore/BNY Mellon Frontier Markets (FRN) also closed at yearly highs. Freeport-McMoRan Copper & Gold, Inc. (FCX), your most volatile holding, jumped a whopping 8%. Your position in the Market Vectors Indonesia ETF (IDX), however, pulled back. Not to worry, this dip merely offers a terrific time to add to your position.

Despite the strong performance of many of your positions, bearish sentiment is at or near record levels. Ironically, this is often marked by a sharp bounce in the markets. Holding some of the top-performing markets in the world, you are well-positioned to profit from any bounce. At the same time, we have just entered September — usually a tough time for the markets. So I am keeping some of your more volatile holdings — Vale S.A. (VALE), iShares MSCI Taiwan Index (EWT), iShares MSCI Turkey Invest Mkt Index (TUR) and WisdomTree Dreyfus Chinese Yuan Fund (CYB) — on a temporary HOLD.

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Portfolio Update

Market Vectors Brazil Small-Cap ETF (BRF) closed at a record $51.51 this week, ending the week 2.47% higher. Brazil is almost getting too popular for its own good, with more than nine ETFs you can purchase. But driven by Brazil’s strong domestic consumption, BRF is still my top pick and remains a BUY.

The WisdomTree Dreyfus Chinese Yuan Fund (CYB) ended the week slightly lower. Although the Chinese currency is up against the U.S. dollar since the Chinese government announced its new exchange-rate program on June 19, the yuan has fallen by 1.82% against the euro, by 3.94% compared with the British pound and by a whopping 8% versus the Swiss franc. CYB is a HOLD.

iShares MSCI Malaysia Index (EWM) hit yet another record of $12.92 this week, ending the week about 1% higher. As Asia’s second-best performer last month, the market continues to be supported by government reforms and a stronger ringgit, the local Malaysian currency. EWM is a BUY.

iShares MSCI Taiwan Index (EWT) fell slightly this week. Linked more closely to the Nasdaq than any other Asian market, Taiwan is dragging. EWT is a temporary HOLD.

iShares MSCI South Korea Index (EWY) ended the week up, after pulling back from the $48.00 level. The South Korean stock market is trading firmly this morning, with oil and shipping stocks among the notable gainers. EWY remains a BUY.

Freeport-McMoRan Copper & Gold, Inc. (FCX) jumped an eye-popping 8% this week. This is a seriously volatile stock and is not worth playing with in the month of September. I am keeping FCX on a short-term HOLD.

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Claymore/BNY Mellon Frontier Markets (FRN) was back up to record highs this week, with both the Chilean and Colombian markets back on track. Poland, an FRN component market, also reported some of the strongest growth in Europe last quarter. FRN remains a BUY.

CurrencyShares Japanese Yen Trust (FXY) hit a record high of $117.83, reaching yet another peak not seen in decades. The Japanese authorities’ efforts to stem the yen’s steady rise have had little effect. FXY is a defensive HOLD.

Global X FTSE Nordic 30 ETF (GXF) bounced back over the $16.00 level this past week, rising 2.16%. Sweden’s leading think tank, The National Institute of Economic Research (NIER), raised its growth outlook to 4.3% this year and 3.4% in 2011, up from 3.7% and 3.0%, respectively, in June. GXF remains a HOLD through September.

Market Vectors Indonesia ETF (IDX) fell back sharply this week from last week’s record levels. With Trade Minister Mari Pangestu announcing that Indonesia’s economy may grow 6% this year and probably will accelerate in 2011, the recent pullback is a good time to add to your position. Indonesia remains a BUY.

Market Vectors Russia ETF (RSX) climbed back over the $30 level last week. As a proxy for global risk, the world’s cheapest major stock market remains a BUY.

iShares MSCI Turkey Invest Mkt Index (TUR) rose 1.6% this past week. Turkey’s economy has bounced back more quickly than other markets and most forecasts for 2010 growth are pegged at more than 6%. It is a temporary HOLD.

Vale S.A. (VALE) bounced back slightly this week. But with the company, the world’s biggest iron ore producer, slashing its price for iron ore by about 10%, thanks to a drop in spot prices in China, Vale is a HOLD.

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P.S. If you want to keep up with my latest insights on developments in fast-paced global markets, you can now follow me on Twitter on @NickVardy or on my new blog, NickVardy.com.

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Global stock markets pulled back sharply early last week, before Chairman Ben Bernanke confirmed the Fed's willingness to do whatever it takes to keep the economy on track. The Fed chairman's comments caused bonds to collapse and stock markets to rally sharply on the final trading day of the week. For the week, the Nasdaq fell 1.2%, the S&P 500 dropped 0.7% and the Dow retreated 0.6%. The MSCI Emerging Markets Index ended the week 1.3% lower.

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