Emerging Markets (EEM, quote) trading lower today on a series of macro issues and market specific dynamics. Much of the weakness has been follow through from a weaker Asia session and developed markets which frankly look to be in no man’s land technically.
On down market days one of favorite things to do is set my technical scans looking for names that are performing well among the sea of red.
As the rally across Latin America continues into the summer, investors need to be wary of the catalysts to the rally versus the reality of the expected change.
As we move into the final stretch of the first week of June, market participants find U.S. economic reports at best mixed. ADP Jobs numbers fell short of expectations (179k vs, 210k) and analysts are now wondering when we are going to see stronger recovery numbers.
After a gap higher in Dunkin Brands (DNKN, quote) stock from last summer through to mid-March, we made the call that the valuation didn’t justify owning when the industry leader Starbucks (SBUX, quote) had more stable growth and a much more attractive valuation.
In late April, we initiated a trade idea recommending investors to sell frontier markets and buy emerging markets. The trade was carried out by buying equal Dollar amounts of the iShares MSCI Emerging Markets Index (EEM, quote) and selling iShares MSCI Frontier 100 Index Fund (FM, quote) ETF.
Gazprom has already rallied 35% off the lows (in Emerging Markets you make the most money when things go from “terrible to bad”) and can’t seem to find any love off the China gas deal.
Not only have the last few FOMC Mins kicked yields higher, but the yield crunch was more about positioning than fundamentals.