Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Investors Find Solace in Emerging Market Stocks Amid U.S. Economic Turmoil

Stock-Markets / Emerging Markets Nov 04, 2010 - 07:14 AM GMT

By: Money_Morning


Jon D. Markman writes: Maybe you've noticed that many of the stocks rising through the ranks of the broader market lately have a foreign accent.

The Claymore/AlphaShares China Small Cap exchange-traded fund (ETF) (NYSE: HAO), MV MarketVectors Indonesia Index ETF (IDX), and the PowerShares Emerging Markets Sovereign Debt ETF (NYSE: PCY) are just a few of the ETFs I've recommended in the past that are leading the market higher.

Similarly, Swiss instrument maker Mettler-Toledo International Inc. (NYSE: MTD) and Chilean fertilizer maker Sociedad Quimica y Minera (NYSE: SQM) have helped carry our Strategic Advantage "StrataGem" portfolio higher.

The main reason for this is that the Group of 20 (G-20) meeting in South Korea ended last week with finance chiefs of the 20 largest countries agreeing not to engage in a currency war. That was pretty much a green light for traders to push down the value of the U.S. dollar, which has the effect of lifting the value of commodities and markets denominated in other currencies.

The only major new economic release in the past week came off the real estate wire, where we learned of a surprise 10% month-over-month increase in U.S. home sales, which rose to 4.53 million in September from 4.12 million in August. This seems like good news, but it is largely meaningless. Sorry to spoil the good vibes, but the real story was described well by analysts at Capital Economics.

CapEcon noted that the sharp increase in home sales was due to fading downward distortion in the aftermath of expiration of the homebuyer tax credit in the spring. As a result it is unlikely to signal the start of a real recovery, which now may be further delayed by the foreclosure crisis.

The big improvement in sales last month was only possible, in short, because sales had fallen so far in the summer after the tax credit ran out. Current sales levels are still 22% below April's peak of 5.79 million homes. The freezing of some foreclosure activity may depress sales in October too, as 35%, or 1.6 million, of September's sales were foreclosed properties.

Even if sales on just 15% of foreclosed homes fall through, that may mean 240,000 fewer foreclosed homes are sold in October. That's why this impressive number is probably not going to be repeated.

More generally, the sour economy and decline in the desire to own a house will all weigh on existing home sales for at least three years, CapEcon analysts estimate. There was a surplus of roughly 1.5 million homes up for sale in September relative to demand.

Prices will remain under downward pressure until demand moves back in line with supply. That's going to take years, rather than months.

This environment is going to be very tough on U.S. regional banks and money center banks alike, which still have a lot of toxic home loans on their books. Those loans will have to be written off against future earnings. To cope, banks are simply writing fewer mortgages, despite crazy-low rates.

The bottom line is that transactions and revenues at banks, home builders, materials suppliers, home furnishing stores and the like are probably going to remain under pressure for some time, keeping their shares in check. The builders' stocks will rise before business actually improves, but looking back at past cycles it looks like this could take another six to 18 months at the very least.

To get a quick understanding of the difference now between U.S. banks and foreign banks, here's an example: ICICI Bank Ltd. (NYSE ADR: IBN) is one of the largest financial institutions in India. Shares are up 735% since mid-2003 as it has grown serving the needs of this emerging market. In that time, shares of Wells Fargo & Co. (NYSE: WFC) are up just 26% and shares of Bank of America Corp. (NYSE: BAC) are down 62%.

This is no time to be contrarian and imagine the relationship is going to suddenly reverse. This differential is more likely to expand, not contract, as India and other Southern Asian countries – unburdened by heavy debts – grow much faster than the over-leveraged United States. Stick with emerging market ETFs for a large part of your risk capital.

[Editor's Note: Money Morning Contributing Writer Jon D. Markman has a unique view of both the world economy and the global financial markets. With uncertainty the watchword and volatility the norm in today's markets, low-risk/high-profit investments will be tougher than ever to find.

It will take a seasoned guide to uncover those opportunities.

Markman is that guide.

In the face of what's been the toughest market for investors since the Great Depression, it's time to sweep away the uncertainty and eradicate the worry. That's why investors subscribe to Markman's Strategic Advantage newsletter every week: He can see opportunity when other investors are blinded by worry.

Subscribe to Strategic Advantage and hire Markman to be your guide. For more information, please click here.]

Source :

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email:

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in