Let’s assume that Europe has staved off collapse, that the evolving plan will calm fear for a while, that Europe will stop driving the market, at least for a bit. Let’s also assume the U.S. will do the right thing and finish its debt reduction job in the right way. Big assumptions, but, let’s make them anyway. Where does that leave us as traders and investors
Certainly, Europe and the U.S. offer good value plays, but what about a growth story What about the emerging markets
Stocks in developing countries are rebounding from the longest losing streak in more than a decade as countries from Turkey to Brazil cut borrowing costs. While bears say the stocks will decline as inflation and Europe’s debt crisis crimp growth, bulls say smaller government debt levels give policy makers more ammunition to keep their economies expanding. The MSCI Emerging Markets Index has risen more than 20 percent since its Oct. 4 low, meeting the common definition of a bull market.
Well, I guess we can’t completely escape the effect of the European problems, but we can reasonably postulate that Europe will be less of a “drag” than if it were to implode. In any case, the above clearly points to a “tale of two cities,” one in which the bears reign and the other the bulls. So, how does one decide which way to go One way is to follow the money …
Options traders are making more bets than any time since 2009 that emerging market equities will climb after valuations fell to the lowest levels in three years.
This is a strong indication money is flowing into the belief that emerging markets will return to strong growth. Hey, it’s all a bet anyway, so why not go with the odds, the odds created when money flows in one direction or another …
The ratio of calls to buy the iShares MSCI Emerging Markets exchange-traded fund has jumped to a 22-month high of 0.80-to-1, up from 0.65 a month ago and the 0.59 average since 2006 … Calls that pay if the fund climbs 4.2 percent to $42 by December are the fastest-growing bet and now account for the largest share of the ETF’s 5.46 million options.
Looks like we have direction, and it looks like we have conviction, both of which confirm where the money is flowing. Just saying …
Ya know, I just can’t resist applauding the government when they go after excessive greed. It often makes my day …
U.S. authorities have widened their investigation to 17 Swiss banks under scrutiny for possibly helping wealthy Americans dodge taxes …
Trade in the day – Invest in your life …
