Let's talk a little more about divergence - as in wacky divergences.
Last time, we looked at divergence through the lens of interest rates and how rates - principally measured by the yield on the U.S. Treasury 10-year note - were going lower when they were expected to move higher as the Federal Reserve tapers its monthly bond purchases.
But there's another divergence at work, and it strikes me as dangerous.
We're talking about the rising prices of emerging markets stocks and bonds...
Let's talk a little more about divergence - as in wacky divergences.
Last time, we looked at divergence through the lens of interest rates and how rates - principally measured by the yield on the U.S. Treasury 10-year note - were going lower when they were expected to move higher as the Federal Reserve tapers its monthly bond purchases.
But there's another divergence at work, and it strikes me as dangerous.
We're talking about the rising prices of emerging markets stocks and bonds...
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Hardly anyone would argue that China isn't an economic miracle.
Over the last 20 years, its 1.3 billion people have propelled the Chinese economy into the world's No. 2 spot.
But two decades of blistering 10% annual growth have moderated to 7%.
However, a potential sea change is underway in its southern neighbor, India.
With a new, impressive prime minister, and a burgeoning consumer population, they're setting up as the next economic miracle... Full Story
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Emerging markets have experienced record outflows so far this year, as global capital sailed back to safer markets.
Just in the first five weeks of 2014, $18.6 billion fled emerging markets - a staggering number when compared to the $15.2 billion in emerging market outflows for the entirety of 2013.
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More than $7 billion was withdrawn from exchange-traded funds (ETFs) investing in emerging markets in January 2014, and this emerging markets chart shows which countries have been hit the hardest.
The S&P 500 has dipped 4.3% since the start of 2014, but that pales in comparison to the losses experienced by emerging markets ETFs.
ETFs serve as a good measuring stick for emerging market performance because they hold many of the top stocks, securities, or bonds from that country.
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Investors have been running from emerging markets in 2014, but two emerging market ETFs have pulled in double-digit gains this year.
More than $7 billion has been withdrawn from emerging market exchange-traded funds in 2014. As a result, funds like the iShares MSCI Brazil Capped Index Fund (NYSE: EWZ) and Global X FTSE Argentina 20 ETF (NYSE: ARGT) have dropped 10.3% and 9.4%, respectively.
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Market watchers have been pointing to selloffs in emerging markets like Turkey, Argentina, and Thailand as a reason to be cautious about investing in stocks today.
But falling share prices aren't a problem if you know where to look...
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In 2001, the BRICs - Brazil, Russia, India, and China - would be the engines of economic growth. These four countries demonstrated enough political stability, population growth, and openness of trade to warrant being acclaimed as the economic superstars of the next decade.
They were named the best investments to make to play global growth. And they delivered.
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Overall, this sector has healthy global sales of $959 billion and is expected to grow those sales at a rate of 4.5% a year. But in emerging markets, sales in this sector will grow at three times that rate. And on top of that, another development will make these markets even more lucrative.
We've identified the handful of companies best-positioned to take advantage of this...
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Tobacco. Fast Food. Alcohol. Gambling. These are some of humanity's favorite vices, which also happens to make them excellent investments. After all, doing things that are bad for you not only never goes out style, it's one of the world's most dependable growth markets.
But there's a secret sauce that can make some 'sin stocks' even sexier...
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Investors love emerging markets because they know that's where most of the world's growth is. But not all emerging markets are created equal. Fortunately, the best places to put your money all have something in common.
You just have to look for one key trait...
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So many times people miss out on the early, most lucrative stages of a blockbuster investing trend like tech or emerging markets simply because they don't realize how big it will turn out to be. That's why we want our readers to know about frontier markets now...
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Cisco stock (Nasdaq: CSCO) plunged 7.17% today, and Wal-Mart (NYSE: WMT) stock 2.6%, after disappointing earnings reports drove investors to sell.
Cisco announced plans to cut 4,000 more jobs (5% of its global workforce); the sales forecast for the quarter came in surprisingly low.
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Egypt’s uprising shows that emerging market middle classes desire more economic freedom. Where will protests next emerge? Higher food prices are one clue. Read more...
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President Obama is wrapping up a wide-ranging trip to Africa this week, one in which he talked about everything from human rights, the triumphs of Nelson Mandela, a return to growth in Zimbabwe and the prospects of an African renaissance.
But it was his comments about access to electricity that should have drawn the most attention. The President is setting the stage for a huge leap in Africa's standard of living - and most people probably didn't notice.
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Contrary to what you may think, the U.S. is not the best performing market in the world. Frank Holmes discusses why a great place to search for yield now is overseas… Read more...
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