MARKET COMMENT
December 21, 2006
The only sector to perform well today was bonds. And, that’s not such a good thing since
yields are already low. Should they drop
much lower, then you might expect the economic soft-landing [The Goldilocks
scenario if you will] to become a less gentle affair. If you own stocks, you won’t like that.
But today there is some good news to outline and that comes
from more dividends hitting 2006 strong performing ETFs. Let’s review just a few.
ETFDividend
EWA [Australia
ETF] $1.0977
EWM [Malaysia
ETF] $0.1954
EEM [Emerging Markets ETF] $1.5725
EWW [Mexico
ETF} $0.45
EWZ [Brazil
ETF] $0.86
EPP [Asia/Pacific ex-Japan ETF] $5.1973
DVY [DJ Dividend ETF] $0.527
As we’ve noted recently expect more good treats like these
over the next week of trading. The
better the year performance the more substantial will be the dividend
amount. While EWM’s
dividend appears low, based on the market price it exceeded 2% while that for EPP
was around 4%. Every little bit helps
right?
One of the issues most investors don’t pay attention to is
the persistent “carry trade” in Japan. Monetary authorities in Japan JUST left
their interest rates unchanged at .25%.
Smart institutions [or just those with a pulse] can borrow at rates near
these and invest in Aussie bonds at 6% or US Treasuries at 4.5% and lock-in the
differential. As long as Japanese
authorities are willing to keep rates this low, this trend and trade will
continue. The yen will continue to fall
against the euro and Aussie dollar where yield differentials are prominent.
With economic data coming in weak, the transportation sector
also took it on the chin. Transports
aren’t just about airlines, but how robust goods are moving about the
country. If the economy weakens, not
much gets shipped.
We’ll keep this commentary brief today. Expect more dividends next week and some
intermittent posting from yours truly next week. There will be no weekend commentary unless
there’s trouble of some kind.
I leave you with a message of peace contained in this wonderfully done but brief video. Make sure you watch it please.
Have a wonderful and peaceful holiday!
Disclaimer: Among
other issues, the ETF Digest maintains positions in: IEF, TLT, EWA, EWM, EWW, EWZ, EPP and DVY.