Week Ahead

Economic releases in the US will be heavy on real estate stuff. It will be ugly. Europe will have its bank stress tests released. They will lie about the results in order to disguise how ugly it is. Eastern Europe looks like next week’s Vesuvius.

Earnings season will get serious. Earnings should be generally good – and with easy comparisons to last year – but based on the earnings reactions last week, it will not likely generate much upside.

Currencies — Have been driving portfolio flows around the world and will likely continue to do so as long as interest rates are so low everywhere. US $ is oversold and should bounce for safe-haven reasons – but housing data could become a problem. Euro is overbought and untouchable this week as a place for a cash equivalent. Yen is strong — but is getting close to the point where BoJ often intervenes. Swiss franc is overbought but looks neutral (bullish if euro has problems). Pound looks neutral. A$ looks very vulnerable. C$ looks neutral/bullish. Gold looks vulnerable (but neutral if dollar/euro have problems). Emerging market currencies (esp Brazil and India) look strong but this is one scary world when those places are even considered as a place to put cash.

International — Singapore (EWS), Indonesia (IDX), and small-cap Brazil (BRF) are the only foreign ETF’s that look like a buy right now — though all are vulnerable to a pullback in equities generally and/or any pullback in risk. Closed-end fund SGF (conc on Singapore) is selling at a reasonable discount. There are quite a few foreign ETF’s that are “almost buys” — but it’s too late in this rally to buy “almost buys” unless the markets digest the recent rally for a week or three. Too much possibility of whipsaws.

Commodities — Sugar (SGG) is the only buy. Ags (esp grains and coffee) are overbought but still buys on a pullback. Natural gas looks like it has little downside from here. Other than that — avoid or short.

Short ETF’s — I avoid most of these now since all I get is burned on them and they are all inherently worth nothing anyway. But a number of them are set up for a move up if one is so inclined — esp small caps, energy, financials.


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