Lost in all of the global action around Israel and Gaza, Russia and Ukraine and the slow-burning Iraqi civil war, investors have already forgotten about Banco Espirito Santo. This Portuguese bank spooked global markets a week ago on concerns that it may be heading for default. Indeed, the bank did in fact declare bankruptcy this past weekend. For investors taking note of a seemingly endless bull market, that may have been a warning shot. After all, U.S. stocks stumbled on several occasions in the early years after the Great Recession of 2008, every time Europe began to wobble. Judging by… Read More

Lost in all of the global action around Israel and Gaza, Russia and Ukraine and the slow-burning Iraqi civil war, investors have already forgotten about Banco Espirito Santo. This Portuguese bank spooked global markets a week ago on concerns that it may be heading for default. Indeed, the bank did in fact declare bankruptcy this past weekend. For investors taking note of a seemingly endless bull market, that may have been a warning shot. After all, U.S. stocks stumbled on several occasions in the early years after the Great Recession of 2008, every time Europe began to wobble. Judging by recent economic data, Europe may again start to dominate the headlines, and U.S. investors need to start paying close attention again. For that matter, if your portfolio has direct exposure to Europe, it may be time to trim your positions. European stocks have been marching ever higher, but it is increasingly apparent that it was too soon for celebration. #-ad_banner-#​Debt And Growth: An Unmatched Pair The entire basis for the rally in European stocks has been predicated on an expectation that a resumption of economic growth would help to bring massive debt burdens into check. Read More

It’s no secret that Latin America is one of the most attractive regions in the world for investors. While investors have previously invested in the region’s abundant natural resources, a rising middle class is creating opportunities for companies that rely on domestic demand.#-ad_banner-#​ Thus, investors should be looking to telecoms, retailers and airlines.  Telecoms will be big winners in a rising middle-class economy because mobile phones are becoming a necessity. Of course, the middle class will want to shop, so certain retailers will be especially appealing. Finally, the bustling middle class will want to enjoy their newfound wealth… Read More

It’s no secret that Latin America is one of the most attractive regions in the world for investors. While investors have previously invested in the region’s abundant natural resources, a rising middle class is creating opportunities for companies that rely on domestic demand.#-ad_banner-#​ Thus, investors should be looking to telecoms, retailers and airlines.  Telecoms will be big winners in a rising middle-class economy because mobile phones are becoming a necessity. Of course, the middle class will want to shop, so certain retailers will be especially appealing. Finally, the bustling middle class will want to enjoy their newfound wealth by traveling.  Let’s take a closer look at three of the best companies for capitalizing on these trends. America Movil (NYSE: AMX )   Market cap: $82.3 billion Recent price: $22.97 52-week range: $19.01-$23.85 Payout ratio: 34% Dividend yield: 1.7% America Movil is the dominant telecom company in Mexico. (Although Mexico is technically in North America, most analysts and economists consider Mexico a big part of the Latin American economy.) America Movil is controlled by Carlos Slim, the world’s richest man behind Bill Gates, with a net worth of around $72 billion. Slim is doubling… Read More

One mantra has overridden everything else for the past five years. It has proved even the most astute bears wrong and made money for anyone with a dime in the markets.  #-ad_banner-#Don’t fight the Fed! Stocks have jumped every year since 2009 — and every year pundits say we are due for a major correction. Subpar job growth and annual GDP growth under 2% cannot possibly support asset prices, they say, and a slowing China can’t pick up the slack. And every year they are wrong. Why? Because for the past five years, we have had the most… Read More

One mantra has overridden everything else for the past five years. It has proved even the most astute bears wrong and made money for anyone with a dime in the markets.  #-ad_banner-#Don’t fight the Fed! Stocks have jumped every year since 2009 — and every year pundits say we are due for a major correction. Subpar job growth and annual GDP growth under 2% cannot possibly support asset prices, they say, and a slowing China can’t pick up the slack. And every year they are wrong. Why? Because for the past five years, we have had the most influential central bank in the world saying they’ve got a monetary defibrillator… and they’re going to keep shocking the economy until it jumps back to life. The economic resuscitation has been in the form of more than $3 trillion pumped into the system. While the general economy may still seem to be on life support, asset prices have more than doubled since the Federal Reserve began its assorted quantitative easing (QE) programs.  What’s Next? As Fed winds down its historic monetary support, I can’t help but wonder: What’s next for stocks? Fortunately for investors, it looks like… Read More

Shares of Brazilian companies listed on U.S. exchanges have made a remarkable comeback since March. The reasons given in the financial press would be comical if they were not so ridiculous.  #-ad_banner-#For instance, one pundit says the World Cup, though well over budget and a spectacular failure for the home team, will mean faster economic growth in the second half of the year. That’s just a sample from a list that goes on and on… but nobody’s acknowledging the economic reality that is poised to bring stocks down again.  Stocks Bounce — But Not For Long In… Read More

Shares of Brazilian companies listed on U.S. exchanges have made a remarkable comeback since March. The reasons given in the financial press would be comical if they were not so ridiculous.  #-ad_banner-#For instance, one pundit says the World Cup, though well over budget and a spectacular failure for the home team, will mean faster economic growth in the second half of the year. That’s just a sample from a list that goes on and on… but nobody’s acknowledging the economic reality that is poised to bring stocks down again.  Stocks Bounce — But Not For Long In November, I examined the country’s deep fiscal problems and predicted lower economic growth on higher rates. Since then, analysts have downgraded estimated 2014 economic growth to just 1.2%, down from expectations well above 2% last year. In March, the country’s debt was downgraded to BBB- (one level above junk) by Standard & Poor’s, and the government will likely miss budget targets this year. Shortly after my article came out, Brazilian stocks plummeted, with the iShares MSCI Brazil Fund (NYSE: EWZ) falling 18% in just three months. Shares of Petrobras (NYSE: PBR), forecast to be the hardest-hit for its role as… Read More

Today, the global pharmaceutical industry is worth roughly $1 trillion. And when you look at the major players in this space — Merck (NYSE: MRK), Bayer (OTC: BAYRY), Johnson & Johnson (NYSE: JNJ), and so on — it’s hard to imagine the industry growing at any sort of rate for investors to get excited about. #-ad_banner-#But a wave of change is quietly sweeping this industry. And investors who are aware of these developments have an opportunity to position themselves to profit — ahead of the crowd. It’s no secret… Read More

Today, the global pharmaceutical industry is worth roughly $1 trillion. And when you look at the major players in this space — Merck (NYSE: MRK), Bayer (OTC: BAYRY), Johnson & Johnson (NYSE: JNJ), and so on — it’s hard to imagine the industry growing at any sort of rate for investors to get excited about. #-ad_banner-#But a wave of change is quietly sweeping this industry. And investors who are aware of these developments have an opportunity to position themselves to profit — ahead of the crowd. It’s no secret that many of the companies I just mentioned are facing some challenges. Before I tell you more about the opportunity, it’s important to understand what those challenges are.  Big Pharma seemed unstoppable until a few years ago — when three trends began pushing the industry in a new direction. The “patent cliff”: Between 2012 and 2018, patent expirations are set to erase a whopping $148 billion in sales. When those patents expire, generic makers move in, undercut the brand name and eat up the profits.  Production of new drugs is costly: PricewaterhouseCoopers estimates that for every 30 drugs in… Read More

While many investors were headed to the beach or the mountains for the Independence Day weekend, they might have missed a doozy of a jobs report. Nearly 300,000 jobs were created in June, the national unemployment rate fell to just 6.1%, and the report showed such well-rounded strength that economists are increasingly convinced that the good times will last all year. By my math, a quickly firming labor market should lead to higher interest rates. I was surprised when interest rates failed to budge after Federal Reserve Chairman Janet Yellen’s comments during the release of the minutes from the June… Read More

While many investors were headed to the beach or the mountains for the Independence Day weekend, they might have missed a doozy of a jobs report. Nearly 300,000 jobs were created in June, the national unemployment rate fell to just 6.1%, and the report showed such well-rounded strength that economists are increasingly convinced that the good times will last all year. By my math, a quickly firming labor market should lead to higher interest rates. I was surprised when interest rates failed to budge after Federal Reserve Chairman Janet Yellen’s comments during the release of the minutes from the June meeting of the Fed’s Open Market Committee. Yet last week’s employment report may be the catalyst to get rates moving higher. #-ad_banner-#A rise in rates cuts both ways for U.S. stocks. They signal stronger economic activity, but also start to squeeze out comparable income-producing equity investments. For investors involved with some other major markets, rising rates are simply bad news. A mountain of fresh debt is the culprit, as these economies fell into a classic mistake. In a recent report, the Bank of International Settlements (BIS) explains: “Financial booms in which surging asset prices… Read More

Over the past five years, dozens of country- and region-specific foreign market exchange-traded funds (ETFs) have emerged on the scene. #-ad_banner-#Want to invest in the Philippines? There’s a fund for that (iShares MSCI Philippines (Nasdaq: EPHE). Prefer Scandinavian ETFs? The Global X FTSE Nordic Region ETF (NYSE: GXF) is the fund for you. It’s a wonderful development, and more investors should be embracing these funds as they enhance their level of global exposure. But the trouble with the ETF approach is self-evident. These funds buy a basket of leading companies and then (mostly) hold on to them. Their portfolios are… Read More

Over the past five years, dozens of country- and region-specific foreign market exchange-traded funds (ETFs) have emerged on the scene. #-ad_banner-#Want to invest in the Philippines? There’s a fund for that (iShares MSCI Philippines (Nasdaq: EPHE). Prefer Scandinavian ETFs? The Global X FTSE Nordic Region ETF (NYSE: GXF) is the fund for you. It’s a wonderful development, and more investors should be embracing these funds as they enhance their level of global exposure. But the trouble with the ETF approach is self-evident. These funds buy a basket of leading companies and then (mostly) hold on to them. Their portfolios are stocked with great companies — and not-so-great ones. The mutual fund approach can be a bit savvier, allowing for tactical asset shifts into the best companies. But these funds are typically pricier, and in any event, they tend to spread their assets around among so many companies that it’s hard to profit from the success of any particular investment. Case in point: the Baron Emerging Markets Fund (Nasdaq: BEXFX), which I profiled back in April. Morningstar gives it five stars, and its first glance, it’s impressive to note that its top three holdings (South Africa’s Steinhoff International and Brazil’s Smiles… Read More

In the generation after World War II, air travel changed the face of business and leisure.  #-ad_banner-#Vast distances could suddenly be traversed and companies like Boeing (NYSE: BA), Douglas Aircraft and Fokker sold all the planes they could build. The Brazilian government wanted in on the action, and in 1969, launched Embraer (NYSE: ERJ). Few expected a country like Brazil, which had not yet developed a mature manufacturing base at that point, to have any chance of building a global jet maker that could compete with established Northern Hemisphere rivals. It was a bumpy flight for this aviation upstart, which… Read More

In the generation after World War II, air travel changed the face of business and leisure.  #-ad_banner-#Vast distances could suddenly be traversed and companies like Boeing (NYSE: BA), Douglas Aircraft and Fokker sold all the planes they could build. The Brazilian government wanted in on the action, and in 1969, launched Embraer (NYSE: ERJ). Few expected a country like Brazil, which had not yet developed a mature manufacturing base at that point, to have any chance of building a global jet maker that could compete with established Northern Hemisphere rivals. It was a bumpy flight for this aviation upstart, which was almost shut down in the early 1990s before the government decided to privatize it. Soon thereafter, Embraer listed its shares in Brazil, and its American depositary receipts (ADRs) began trading in the U.S. in the summer of 2000 at around $13 a share, moving into the low $20s a year later. Yet the events of 9/11 would doom air travel for the foreseeable future, and this stock plunged to around $8 in October 2001. Of course, as we now know, air travel didn’t cease to exist. And as the airline industry recovered, so did Embraer, which began rolling out… Read More

The New Zealand kiwi is nearing an all-time high against the dollar. #-ad_banner-#​That’s great news for any U.S. exporters looking to sell goods into that country, as U.S. made products become relatively less expensive. On the flip side, the surging kiwi makes New Zealand a costlier destination for U.S. travelers.  Yet for investors, this currency move represents a completely different set of issues. And currency moves may be the single most important factor when you are trading in and out of foreign investments. Apologies to advanced investors, but a few basic explanations are in order. When… Read More

The New Zealand kiwi is nearing an all-time high against the dollar. #-ad_banner-#​That’s great news for any U.S. exporters looking to sell goods into that country, as U.S. made products become relatively less expensive. On the flip side, the surging kiwi makes New Zealand a costlier destination for U.S. travelers.  Yet for investors, this currency move represents a completely different set of issues. And currency moves may be the single most important factor when you are trading in and out of foreign investments. Apologies to advanced investors, but a few basic explanations are in order. When you buy shares of a foreign stock (likely through an American depositary receipt), mutual fund or exchange-traded fund (ETF), your dollars must be converted into the local currency. And if that currency rises in value, as the New Zealand kiwi just has, then your investment rises in value by an identical amount, as you own kiwi-denominated assets, not dollar-denominated assets. (This notion mostly applies to stocks as most foreign bonds are mostly denominated in dollars or euros.) We saw the impact of a surging currency in recent quarters, as the Indian rupee staged a remarkable rebound against the U.S. dollar last… Read More

1982 was a great year to become a U.S. bond investor. At the time, energy prices were high and the economy was in shambles. To make matters worse, the U.S. adopted a tight monetary policy due to high inflation in the 1970s. #-ad_banner-#The outlook for bonds was bleak. Yields were at all-time highs and prices were at historic lows. At one point the 10-year treasury yielded north of 14%. While no one realized it at the time, this was the starting point for the biggest bull market in bonds the world has ever known… Thanks to easing monetary policy, over… Read More

1982 was a great year to become a U.S. bond investor. At the time, energy prices were high and the economy was in shambles. To make matters worse, the U.S. adopted a tight monetary policy due to high inflation in the 1970s. #-ad_banner-#The outlook for bonds was bleak. Yields were at all-time highs and prices were at historic lows. At one point the 10-year treasury yielded north of 14%. While no one realized it at the time, this was the starting point for the biggest bull market in bonds the world has ever known… Thanks to easing monetary policy, over the next 30 years U.S. treasuries would go on to return 246% in capital gains. Add in the 14% yield that investors would have received over that time, and the total return for government bonds from 1982 to 2012 was 667%. That translates to an annual return of 22%… and that’s from boring, safe bonds, mind you. To give you an idea of how incredible that is, hedge funds generally target a return of 11-12% a year. Unfortunately, as we told in you a previous StreetAuthority Daily issue, the opportunity in U.S. debt has long since evaporated. The… Read More