This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Don Dion's Weekly ETF Blog Wrap

Stocks in this article: GDXJ IAU CEW

NEW YORK ( TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next. Among his blogs this week were the following, in which he wrote about caution signals for emerging market currencies, John Paulson's plans to set up a gold fund and what it means for gold investors, and the short-term weakness in the financials.

Caution Signals for Emerging-Market Currencies

Posted 11/20/2009 2:36 p.m. EST

The discussion and implementation of capital controls is a barometer for the currency market, and investors in emerging-market currency ETFs should take heed.

In the past month, Taiwan moved to block hot money from sitting in time deposits, and Brazil initiated a tax on foreign equity investors.

Hong Kong reports that in the six weeks between Oct. 1 and Nov. 13, close to $75 billion flowed into the country. To put that in perspective, Hong Kong's GDP was $215 billion last year. Stock market capitalization exceeds $2 trillion, but 50% of the market is made up of Chinese firms. Hong Kong's government is concerned about the huge inflows, and it is not alone.

Bloomberg also reports that, "Officials from India, South Korea and Indonesia are among those expressing concern over overseas capital stoking stock and real estate prices."

These nations remember the 1997 Asian crisis well and do not want to suffer a repeat. The main focus of their concern is the ultra-low interest rate on the U.S. dollar that is fueling the carry trade. Emerging markets are seeing increases in asset prices along with their currencies, and it may eventually cause global imbalances that will be corrected via another currency crisis.

While emerging-market equities still have room to advance, the easy currency gains are gone. It's impossible to know when the current currency trends will end, but the growing concern from South America to Asia is a sign that we are entering the middle phase of the current rally. Note that the policies are unlikely to change the market; rather, by the time the slow-moving governments finally act, the market has already shifted.

Investors in emerging-market currency ETFs, such as WisdomTree Dreyfus Emerging Currencies (CEW) do not need to sell now, but I would not add new positions.

> > Bull or Bear? Vote in Our Poll

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs