During the last few months, I’ve grown increasingly bullish on the euro zone, and subscribers to my PowerOptions Trader service are reaping the benefits big time.
As far back as late 2014, it was becoming obvious the European Central Bank (ECB) had to do something to jumpstart the euro-zone economy. Mario Draghi and his central banker cohorts didn’t disappoint. First, they telegraphed the move, and then they followed up with more details in January.
Since then, we’ve started to get improving PMI and other data out of the region, which lifted the shares of iShares Europe (IEV) from a low of $40.61 in early January to the recent six-month high of $46.61.
That’s an impressive move, but it pales in comparison to the iShares Europe June $44 call option that I recommended to my PowerOptions Trader subscribers. Even after yesterday’s market sell-off, subscribers that heeded my call to act were still up triple-digit percentages in that recommendation.
If we use the relationship between the Fed’s quantitative easing (QE) initiatives and the move in the S&P 500 during the last six years as a guide, there is plenty of reason to be bullish on the more than 27 countries that have embarked on stimulative monetary policies so far this year.
Twenty-seven is quite a lot, but like many things, you want quality over quantity. Here are some of the ones that my subscribers are investing in and some that are on my radar.
Earlier this week, Markit Economics issued its final April PMI report, and it was better than expected. But peering into the details, the same concerns that were raised in the flash report remain.
More specifically, growth was recorded in most nations, except France and Greece (shocker), with Germany’s rate of growth cooling month over month. Both Greece and France were clearly in contraction territory, with PMI readings of 48.0 and 46.5, respectively. The region should continue to benefit from the ECB’s efforts, which will also do wonders for euro-zone stocks in general.
The good news is Markit also delivers several more in-depth euro-zone country reports alongside the aggregate euro-zone report. I’ve been bullish on the Italian economy, and the April report from Markit was rather bullish for iShares MSCI Italy Index ETF (EWI).
Growth in Italy’s manufacturing sector gained further momentum in April, with faster increases in output and new orders recorded. With the level of new orders received by Italian manufacturers increasing for the third month in a row and at a faster rate than in March, the Italian economy should continue to improve in the coming weeks and months. On top of that, we can also layer in the positive bump to be had from the Expo Milano 2015, which just started a few days ago and lasts through the end of October.
Digging further into Markit’s findings, other countries that have been in expansion mode are Ireland, Spain and the Netherlands. Shares of iShares MSCI Ireland Capped ETF (EIRL) are up 14% year to date, while the Netherlands-focused iShares MSCI Netherlands Investable ETF (EWN) is up 9%.
By comparison, iShares MSCI Spain Capped ETF (EWP) shares are up a paltry 4% since the beginning of 2015. Looking at those two endpoints, however, misses the wider volatility this ETF has experienced during the first three months of 2015. With the shares well off their 52-week high of $44.46, they warrant investor attention, particularly as the ECB stimulus trickles through.
Outside the euro zone, there is one other region investors should look to as they look to grow their exposure outside the United States.
India’s new order activity continued to climb in April, marking the 18th consecutive month of improvement. One of the key standouts was that demand from external markets remained strong, as the level of new export orders increased at a solid pace.
There are several ETFs that grant exposure to this market, including WisdomTree India Earnings Fund (EPI) and iShares S&P India Nifty 50 Index Fund (INDY); the latter tracks the top 50 companies by market capitalization that trade in the Indian market.
Publisher’s Note: Only hours remain to take advantage of Chris’ Power Wealth Alliance service, which guarantees a full 48 double- and triple-digit percentage gains inside the next 12 months. Click here to get started right away, or contact Power Wealth Alliance Trading Director Charles Campbell for more information at 866-482-7689.
In case you missed it, I encourage you to read my e-letter column from last week about two market “revelations” that could impact your portfolio. I also invite you to comment in the space provided below my commentary.