Global markets have gotten choppier over the past week or so, as they stand on the cusp of a correction or a sharper move upwards. Overall, global stock markets are feeling healthier than even a month ago. If history is any guide, the market may head upwards for another few weeks, before it’s time to "sell in May, go away."
As you know, your Global Stock Investor portfolio is positioned so that it moves independently of the overall stock market. You have holdings linked to currencies (CYB, EUO), commodities (FCX), fixed income (TBT) and one holding in a global stock (SQM).
Your most recent position, Freeport-McMoRan Copper & Gold Inc. (FCX), reports first-quarter results today. Analysts polled by Thomson Reuters have been projecting a first-quarter profit of 14 cents a share and sales of $2.7 billion — though the analyst community is sharply split on whether to expect a bullish or bearish surprise. Parse the numbers how you wish, but this stock will trade in line with “Dr. Copper.” If the global economy is strengthening and the price of copper continues to rise, so will Freeport.
Chemical & Mining Co. of Chile Inc. (SQM) hit highs not seen since last September, back when the S&P was trading at around the 1275 level. That shows you how much markets like Chile have recovered — and how much better some global markets have rebounded in comparison with their U.S. counterpart.
On the currency front, the euro has resumed its downward trend against the U.S. dollar. Having just crossed a 50-day moving average, your position in UltraShort Euro ProShares (EUO) is now in a steady uptrend.
Your position in the Chinese yuan through the WisdomTree Dreyfus Chinese Yuan Fund (CYB) fell slightly this week. But it is a steady gainer that is unlikely to disappoint in the long run.
Your position in the UltraShort Lehman 20+ Treasury ProShares (TBT) is treading water. That means that the Treasury bubble has stopped inflating. But when bubbles pop, they pop quickly. Any big gains in this position will come quickly on the back of a sudden shift in sentiment.
Portfolio Update
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) fell slightly this week. The People’s Bank of China has set today’s central parity rate for the dollar-yuan pair at 6.8342. A steady “cash-plus” style investment, CYB remains a BUY.
The UltraShort Euro ProShares (EUO) plummeted to a fresh five-week low against the dollar as the market is increasingly dissatisfied with the European Central Bank’s interest rate policies. With the euro down to $1.29 in this morning’s trading, EUO is a BUY.
Freeport-McMoRan Copper & Gold Inc. (FCX) announces earnings today. Look for the stock to move sharply on the news either way. If the stock sells off sharply for whatever reason, it is a good opportunity to BUY.
The Chemical & Mining Co. of Chile Inc. (SQM) shot up to $32.87 last week before correcting. With SQM’s home stock market of Chile being one of the top performers among all emerging markets this year, expect this stock to be one of the better performers in 2009. SQM remains a BUY.
The UltraShort Lehman 20+ Treasury ProShares ETF (TBT) has been trading in a narrow trading range of late. This shows that bubbles can stay inflated longer than many of us can ever think. Nevertheless, with the pressure on U.S. Treasuries all on the downside, TBT remains a BUY.
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