Overall, U.S. stock markets were flat again this week, with the S&P 500 eking out a 0.50% gain. Global markets matched that performance with the MSCI Emerging Markets Index rising 0.60%.
Your Alpha Investor Letter portfolio had a solid week, with most of your positions rising. Las Vegas Sands (LVS) remains the star performer, gaining 2.57%. Overall, I am encouraged by the strong performance of your latest batch of U.S. blue chip stocks like Visa Inc. (V) and Yum! Brands, Inc. (YUM), both of which are strongly outperforming the S&P 500 index.
I also want to point out the strong performance of some of your global holdings. Your positions in MSCI South Korea Index (EWY), the iShares Singapore ETF (EWS), the iShares MSCI Hong Kong Index (EWH) and Market Vectors Russia ETF (RSX) also are outperforming the MSCI Emerging Markets Index by a wide margin.
Although the pace of the market’s rise has abated somewhat in the last few weeks, I find that slowdown encouraging for two reasons. First, it allows the market to consolidate its gains, after its relentless rise upward. Second, the market now is starting to reward stock picking — that is, some stocks are actually outperforming others. That’s in sharp contrast to the ”baby out with the bathwater” behavior of markets of the past few years, when all stocks pulled back equally, no matter what their fundamentals.
On a personal note, I recently hosted a reception for Republican National Committee Chairman Reince Priebus here in London. He is one of triumverate of Wisconsin Republicans alongside Congressman Paul Ryan and Governor Scott Walker who have burst onto the U.S. national political scene in the last two years. Priebus’ visit was the first time that the Republican Party has reached out to American expatriates. As he himself put it, London is a long way from Kenosha, Wis. It also marks the first time I feel strongly enough about a U.S. presidential election that I am getting involved in political fundraising. As a member of the RNC’s Advisory Board for 2012, I’ll be attending the nominating convention in Tampa at the end of August. I hope to see some of you there.
But whichever lever you pull in the political voting booth, I believe that this election is less about the candidates than about the fundamental direction that the United States will take in the coming decades. And it is, indeed, as commentator Thomas Sowell put it in the title of one of my favorite books of all time: “A Conflict of Visions.”
Portfolio Update
WisdomTree Japan SmallCap Dividend Fund (DFJ) gained 1.61% over the past week. Japan weathered a magnitude 6.3 trembler last Tuesday, but that was not enough to shake investors. DFJ rebounded off of the 50-day moving average and kept rising all week. DFJ is now testing the $45 February 52-week high for the third time. DFJ is a BUY.
Las Vegas Sands Corp. (LVS) rose 2.57%. LVS closed yesterday after making a second test of its recent $60.00 52-week high. LVS is up 38.2% over the past year and consensus estimates forecast earnings-per-share growth at 27.2% for 2012. In fact, every property LVS owns recently has reported increased earnings. LVS is a BUY.
MSCI South Korea Index (EWY) remained flat for the week. EWY bounced off of the 50-day moving average (MA) and tested the considerable $60 resistance level it has been poking at for the past month. In related news, Starbucks reported it may double its South Korean store count to over 700 by 2016. When a disposable income expense such as Starbucks plans to throw well-researched money into a market, it normally means brighter days are ahead for the region. EWY is a BUY.
MSCI Malaysia Index (EWM) moved up 0.98% last week, with EWM holding fast to its rising 50-day moving average. Malaysia has had great success in the economic development of its West Coast and enjoyed a doubling of residential property values in less than three years. Malaysia’s $700 million infrastructure expenditure along its East Coast brings high hopes for prosperity there, as well. This investment has already spurred $3 billion in foreign investment pledges over the past three months. EWM is a BUY.
Market Vectors Russia ETF (RSX) came in flat last week. The “golden cross” formation occurred Tuesday on the RSX chart and several short-term indicators are reflecting “buy” indications currently. From a technical standpoint, the RSX chart is ripe for gains. RSX closed dead on its 50-day moving average Tuesday and is a BUY.
iShares JPMorgan USD Emerging Markets Bond (EMB) lost a mere 0.31%. Emerging market companies issued $100 billion worth of dollar-denominated bonds by April 27 last year. By way of comparison, emerging market companies reached the $100 billion level by March 22, making 2012 a record year. EMB is a BUY.
Market Vectors Indonesia Index ETF (IDX) gained 1.38%. IDX continued to trade sideways under the 200-day moving average last week, toying with the 50-day moving average. Prospects remain positive for the Indonesian economy as it boasts a 40% gain over the past two years — beating the S&P 500 by 16% and China by a whopping 54%. IDX is a HOLD.
Listed Private Equity ETF (PSP) was flat for the week. PSP is now up more than 10% since I recommended it for your portfolio — not to mention the hefty 7.2% yield as high income bonus. PSP is a BUY.
iShares Singapore ETF (EWS) rose 1.66%. Singapore opened two large casinos in 2010 that managed to rake in a staggering $6 billion in gaming revenue just one year later. That revenue total is more than what the Las Vegas strip produced all last year. Singapore gaming regulators issued two “junket” licenses last week to bring more high rollers to these casinos to further turbo-charge gaming revenue. EWS is a BUY.
Berkshire Hathaway (BRK-B) gained 0.38%. BRK-B continued to climb above the $80 price level on the recent strength in financials and Bank of America (BAC). Buffett also purchased some additional shares in Visa (V) recently. BRK-B is a BUY.
iShares MSCI Hong Kong Index (EWH) rose 0.67% last week. EWH rebounded from a recent pullback caused by a weak Chinese Purchasing Managers Index report. This sell-off has likely run its course and I see the recent bounce off of the 50-day moving average as an encouraging sign. EWH is a BUY.
Freeport McMoRan Copper & Gold Inc. (FCX) dipped 1.02% over the past five trading days. FCX is an opportunity waiting to blossom. Strong consolidation has taken place for several weeks now, on good volume, with gold and copper selling off sharply in recent months. Global stockpiles of copper are now at the lowest level in three years, and Standpoint Research upgraded FCX to a “Buy” on Tuesday. FCX is a HOLD, but not for long.
Visa Inc. (V) moved up 2.82%. Warren Buffett holds Visa in his Berkshire Hathaway portfolios and recently purchased more, while citing the shift from cash to more efficient payment methods. If Warren’s buying, it’s usually a good idea to pick up a little for yourself, as well. V is a BUY.
Ford Motor Co. (F) gave back 1.75%. Ford has more than 1,000 engineers creating the technology for hybrid and electric vehicles that will propel the company into the next generation of alternate-fuel vehicles, and profitability. Ford recently unveiled plans to convert a 285,000-square-foot engineering center in Michigan to a next-generation electric vehicle development plant. F is a HOLD.
Yum! Brands, Inc. (YUM) gained 0.58% over the past five trading days. YUM!’s chart is the poster child for the proverbial “picture perfect” stock chart. Atlantic Equities just initiated coverage on YUM! with an “Overweight” rating and an $81 price target — 11% above the current price. YUM! also declared a $0.28 dividend last Friday, payable on May 4. YUM! is a BUY.
Statoil ASA (STO) dipped 0.69% last week. Statoil announced that it would be the “working operator” of the gigantic Johan Sverdrup oil find in the North Sea, located off the coast of Norway. This oil field is one of the largest oil discoveries ever found in the Norwegian region. STO is a BUY.
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