The big news in global financial markets this week was rating agency S&P’s downgrade of the outlook for U.S. government debt to a “negative.” That hit global assets hard on Monday as stocks plummeted across all markets.
S&P’s downgrade eventually should benefit your short position in U.S. Treasuries through the UltraShort Lehman 20+ Year Treasury (TBT) — though, astonishingly enough, this position actually fell on Monday. I also discussed this position in yesterday’s Global Guru.
By yesterday, most of your positions had bounced back strongly. With Asia’s markets up strongly in this morning’s trading, I am particularly bullish on your now-contrarian bet on Japan through the WisdomTree Japan SmallCap Dividend Fund (DFJ) and iShares MSCI South Korea Index (EWY), with the latter fund’s high weighting in Samsung. If you can endure the volatility, you also should add to your position in Universal Display (PANL), as well.
A few themes stand out as I survey asset classes in your portfolio.
First, it appears that emerging markets may have broken out to the upside. Asian markets, in particular, are trading at or near record highs. Other Asia-related bets like Las Vegas Sands (LVS) also are recovering.
Second, the U.S. dollar continues its relentless decline. This should boost your returns in your global investments; your bet against U.S. Treasuries through the UltraShort Lehman 20+ Year Treasury (TBT); and your bet on gold through Market Vectors Gold Miners ETF (GDX).
Overall, you are well-positioned in almost all of the major investment themes of the year, as well as in top-performing global markets like Russia (RSX) and Indonesia (IDX).
Agrium Inc. (AGU), your bet on agricultural fertilizers, rose 1.94% this past week. I’m bullish on this bet on rising food prices. But with the stock trading under its 50-day moving average, it is a HOLD.
The WisdomTree Dreyfus Chinese Yuan Fund (CYB) rose .47% in the past week. Trading above its 50-moving average, and breaking out of a trading range, CYB is a BUY.
WisdomTree Japan SmallCap Dividend Fund (DFJ) rose 2.92% last week. Once Japan’s inevitable recovery starts to take hold, DFJ should rebound. DFJ remains a BUY.
iShares MSCI Singapore Index (EWS) rose 1.59% this past week. An ETF on this highly developed Asian market, EWS is a BUY.
iShares MSCI Malaysia Index (EWM) traded slightly higher this week. EWM remains a BUY.
iShares MSCI South Korea Index (EWY) rose 3.26% this past week and is trading just under record highs. Apple suing major ETF component Samsung is a testament to the strength of “Asia’s Apple.” EWY remains a BUY.
iShares MSCI Taiwan Index (EWT) fell slightly this past week. Trading above its 50-day moving average, this tech heavy bet on the “other China” remains a BUY.
Freeport-McMoRan Copper & Gold Inc. (FCX) dropped 3.24% over the past week. Trading below its 50-day moving average, FCX is now a HOLD.
Market Vectors Gold Miners ETF (GDX) traded flat its first week in the portfolio. With gold trading up near $1,500 per ounce, this leveraged bet on the gold price remains a BUY.
Global X FTSE Nordic 30 ETF (GXF) ended the week 1.01% lower, pulling back from record highs the previous week. GXF remains a BUY.
Market Vectors Indonesia ETF (IDX) rose another 2.18% this past week. Now trading back up near the record highs it hit in November, IDX is a BUY.
JinkoSolar Holding Co., Ltd. (JKS) dropped 2.03% in the past week. JinkoSolar has scheduled its earnings Conference Call (Q1 2011) to start Monday, May 2, 2011, at 8:00 a.m. EDT. Trading close to its 50-day moving average but still slightly below it, JKS remains a HOLD.
Las Vegas Sands Corp. (LVS) rose a solid 4% this past week, as your bet on “Asia’s Las Vegas” bounces back. Casino gambling revenue in Macau climbed 43% to $7.3 billion in the three months ended March as gamblers from mainland China placed more bets. LVS is a BUY.
Market Vectors Russia ETF (RSX) dropped 1.42% this past week, as oil prices corrected. Now trading below its 50-day moving average, RSX is now a HOLD.
Universal Display Corp. (PANL) endured a week of wild swings, ending the week 1.87% lower. The company announced a new office in Tokyo, Japan, near the headquarters of some of today’s largest display panel builders, including Sony and Toshiba. Trading well above its 50-day moving average, PANL is a solid BUY.
UltraShort Lehman 20+ Year Treasury (TBT) dropped 5.04% this past week — absolutely astonishing for a week where the outlook on U.S. government debt was downgraded to negative for the first time in history. The fundamental case against U.S. Treasuries remains intact. But with TBT now trading below its 50-day moving average, it remains a HOLD.
iShares MSCI Turkey Invest Mkt Index (TUR) traded flat this week — an impressive relative performance for an often topsy-turvy market. The “unheralded” BRIC remains a BUY.
Vale S.A. (VALE) rose 0.18% during the past week. With VALE trading again below its 50-day moving average, it is back to a HOLD.
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