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Global Markets

With "Risk Off" Trades Waning, U.S. Stocks Could Be Ready to Reverse Course

There are new signs that institutional traders are preparing for a change in direction of the U.S. dollar and European euro that may have big implications for U.S. stocks.

For months, the winning trade was to short stocks, the euro, and commodities, while buying gold, bonds and the dollar. Commentators labeled this the "risk off" trade since gold and bonds were seen as safe-haven assets. But when crowd mentality is at work, and sentiment – not fundamentals – is driving the bids, there really isn't such a thing as a "safe" trade. It's all speculation.

Take yesterday (Tuesday), for example: After surging 131 points, or 1.4%, out of the gate, the Dow Jones Industrial Average relinquished most of its advance to close just 16 points higher at 9,702.98. Meanwhile the Standard & Poor's 500 Index, which had climbed 1.5% to 1,038 in early trading, ended the day just 0.18% higher.

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Six Ways to Invest in Korea – Asia's Can't-Miss Market

With the U.S recovery looking a bit iffy after last week's unemployment report, Japan and Britain battling huge budget problems and Europe in trouble because of the Greek debt crisis, investors have quite naturally shifted their focus to Asia.

But even there the pickings seem a bit slim. Asian stalwarts China and India show signs of overheating (India more so than China). Taiwan and Singapore – both excellent markets – seem pretty fully valued right now.

That leaves us with one Asian market whose economy is enjoying well-balanced growth, whose government is a model of competence and efficiency and whose stock market is surprisingly reasonably valued.

I'm talking about South Korea.

To discover the five essential Korea profit plays, please read on…

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Australia Reduces Mining "Super Tax," Reviving Profitability of Resource Sector

Australian mining companies declared a huge win today (Friday) when the government announced the proposed mining "super tax" would be reduced, prompting some companies to reactivate shelved projects and reopen merger and acquisition talks.

Australia's Prime Minister Julia Gillard agreed on a compromise plan that would reduce the planned tax to 30% of profits from iron ore and coal, and 40% tax on oil and natural gas, down from the originally proposed 40% tax on all resources. The new plan, called the mineral resource rent tax, would also raise the tax's trigger level to profits that exceed a 12% rate of return instead of 6%.

"The reduction in the headline rate is an amazing concession," John Robinson, chairman of Global Mining Investments Ltd., told Bloomberg. "It's certainly better than I had expected."

Mining companies would be allowed to claim depreciation on their assets based on market value instead of book value.

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Canada: The World's Economic Compass

If you're looking for a reliable investment, look no further than Canada.

It's strange, but with so much talk about troubles in the United States, Europe, China and the Middle East these days, one of the best-performing economies in the world is often overlooked.

Of course, that's finally started to change since the financial crisis has exposed our northern neighbor as a model economy – something the Group of 20 (G20) summit highlighted last weekend.

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Money Morning Mid-Year Forecast: India is on the Path to Double-Digit Growth

If it's able to control inflation and cut its debt, India could well become the world's most appealing investment opportunity.

Europe is choking on debt and scrambling to salvage its beleaguered currency. The United States is saddled by high unemployment and struggling to preserve its wobbly recovery. Even China – which has had to reign in its stimulus to cool its red-hot property market and curb inflation – may have peaked.

Yet India's gross domestic product (GDP) is shooting sharply higher, and many economists think economic growth in the subcontinent is about surge into the double-digits for the first time ever.

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It's Time to Invest in Chile and Colombia – Latin America's Reigning 'Good Guys'

For decades, investors with an interest in Latin America were essentially limited to two choices: Invest in countries that were moderately badly run; or invest in countries that were truly dreadfully run.

Most recently, it's been the "dreadfully run" group that seems to be attracting new members: Bolivia, Ecuador and Nicaragua have subscribed to the economic and political doctrines of Hugo Chavez's Venezuela.

However, two elections this year have created a new category of Latin American country – the "truly well run" class – and installed the first two members: Chile and Colombia. As investors, we should rejoice, make them part of our portfolio, and keep an eagle eye out for other countries that may join this promising new category – the "good guys."

For an overview of the two Latin America stocks to buy now, please read on...

G20 Summit Bogged Down by a Shaky Global Recovery

The Group of 20 (G20) countries concluded their weekend summit with an outline for reducing budget deficits and a delay in global banking reform, but failed to create a unified policy as nations find themselves in different phases of economic recovery.

Leaders pushed decisions on global banking regulations to the agenda of the November session in Seoul, South Korea. The meeting's concluding statement expressed unity in countries' desires to reduce debt, but did little to alter austerity plans and stimulus measures countries have already created.

"With the common efforts of G20 members and the international community, the world economy is gradually recovering, but the foundations of the recovery are still not solid, the process is not balanced and there are still many uncertainties," said Chinese President Hu Jintao. "All this shows that the deeper impacts of the financial crisis have still not been surmounted, and systemic and structural risks to the world economy remain very grave."

The G20 communique underscored the countries' focus on achieving "growth friendly" fiscal policies while acknowledging that leaders must reduce the budget deficits, although policies and budget cuts should be tailored to suit each individual nation.

"The path of adjustment must be carefully calibrated to sustain the recovery in private demand," the G20 nations wrote. "There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth."

Analysts said the divergent views on how to sustain economic recovery marked the lack of effectiveness of the G20 forum.

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How to Profit From Europe's Stealthy Resurgence

European countries – both inside and outside the Eurozone – are slashing their budget deficits.

Greece, Portugal and Spain – three of the so-called "PIGS" – have to do so, of course. But Germanygenerally reckoned to be in excellent shape – is also cutting its deficit, as is France, which hasn't run a budget surplus in 40 years. Britain, too, with no need to protect the euro (it's not a Eurozone member) just introduced a budget that cut the deficit by $140 billion over four years.

U.S. President Barack Obama and other Keynesians warn that Europe may push its own economy – or even the global economy – back into recession.

But here's the surprising reality: Europe may gain from its fiscal pain – and its deficit-trimming actions offer the best hope for a lengthy recovery.

To see which European countries are expected to rebound - and which ones to invest in - please read on...

Why Investors Must Keep an Eye on Spain

Greece is not the big story of Europe anymore – just a smoke screen.

The big story is Spain and the United Kingdom, and the news is getting worse.

In the past week, Spanish officials acknowledged to reporters that the country's banks and companies were having difficulty obtaining credit. The credible website EuroIntelligence reported that Spain is now effectively cut off from international capital markets, which is a major new development.

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George Soros: "We Have Just Entered Act II" of the Global Financial Crisis

George Soros gained global recognition when he co-founded the Quantum Fund with Jim Rogers in 1970. That fund generated an average annual return of more than 30% while he was at the helm.

Soros hasn't quit making timely market calls since: From his $10 billion bet against the British pound sterling in 1992 to his April 2008 prediction that we had not "seen the full effect" of the recession and that the situation was "more serious than the authorities admit or recognize."

In February, Soros called the euro's viability into question, and the currency has plunged some 10% since that time.

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