GLOBAL STOCK INVESTOR HOTLINE UPDATE 91

Nicholas Vardy

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

Your Global Stock Investor portfolio had a strong week, with all your positions including the Direxion Funds Dollar Bull 2.5x Fund (DXDBX) and the Market Vectors Double Short Euro ETN (DRR) showing strong gains, and the CurrencyShares Japanese Yen Trust (FXY) hitting a record high.

The notable exception was the WisdomTree Dreyfus Chinese Yuan Fund (CYB). On Monday, the yuan fell by an unusually large 0.7% against the dollar. The yuan’s decline in recent days comes amid growing signs of weakness in China’s economy. Although the yuan’s exchange rate is actively managed, the Chinese central bank helped to trigger the drop by posting reference rates Friday and Monday that traders regarded as signs the bank favored a weaker yuan. Chinese exporters welcome a weaker yuan because it would make their goods less expensive in the United States. A large devaluation is unlikely, because it would cause friction with the incoming Obama administration, which has signaled it wants a stronger Chinese currency to make China a bigger consumer of U.S. exports. Nevertheless, with the increased uncertainty surrounding the yuan, I am moving WisdomTree Dreyfus Chinese Yuan Fund (CYB) to a HOLD.

In other news, the European Central Bank (ECB) is expected to cut interest rates by 50 to 75 basis points tomorrow after reports confirmed that inflation is not much of a problem in the Eurozone. This puts further pressure on the euro and is bullish for your position in the Market Vectors Double Short Euro ETN (DRR).

With the U.K. economy sliding deeper into recession, the Bank of England is increasingly likely to slash its key interest rate for the third time in as many months and may prompt the government to launch a second fiscal stimulus package next year. A weaker British pound sterling is good news for your position in the Direxion Funds, Dollar Bull 2.5x Fund (DXDBX).

Exclusive  A SHINY PROFIT IN GOLD

With the exception of the WisdomTree Dreyfus Chinese Yuan Fund (CYB), all of your other picks remain BUYs at current levels.

Portfolio Update

The WisdomTree Dreyfus Chinese Yuan Fund (CYB) had its worst week in recent memory, with the yuan falling on the back of expectations that the Chinese government may devalue the currency to stimulate exports, which account for 40% of China’s (slowing) economy. Although the political cost of such a devaluation would be high, and therefore unlikely, CYB is less of a sure bet than it was before. Therefore, I am moving CYB to a HOLD.

The Direxion Funds Dollar Bull 2.5x Fund (DXDBX) ended the week higher after the previous week’s sharp sell-off. With DXDBX still below its previous highs, and European currencies under additional pressure thanks to interest rate cuts this week, this is an excellent time to BUY DXDBX.

The Market Vectors Double Short Euro ETN (DRR) also recovered sharply this past week, hitting the $58.00 level on Monday, before correcting yesterday. With the European Central Bank expected to cut interest rates tomorrow by as much as 75 basis points, the euro has no where to go but down. DRR is a BUY.

The CurrencyShares Japanese Yen Trust (FXY) closed at a record high of $106.97 on Monday, before correcting ever so slightly. The yen will continue to gain steadily as the carry trade unwinds. FXY is a BUY.

The Rydex Managed Futures Strategy Fund (RYMFX) rose slightly this week, benefiting from favorable trends in both the currency and oil markets. Based on its recent performance under volatile conditions, this fund benefits from strong risk management, and remains a defensive BUY.

Exclusive  Currency Bets Paying Off; Global Stocks Remain Range Bound

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE


img
previous article

Global stock markets continue to be held hostage to extreme volatility.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

LEARN MORE HERE

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

LEARN MORE HERE

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike Turner’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. Since 2010, Hilary's financial publications have provided stock analysis and investment advice to her subscribers:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE