The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (ETF Expert) -- In the first two months of the year, SPDR Dow Jones Industrials (DIA) garnered 6.5% and the underlying benchmark made a successful run at 13000. It was a phenomenally fast start that persuaded many investors with cash on the sidelines to reconsider.
Perhaps surprisingly, foreign stock ETFs dramatically outperformed domestic counterparts in January and February. For example, Vanguard Emerging Markets (VWO) raked in 16.8%, Market Vectors Brazil Small Cap (BRF) rocketed 27.9% and Wisdom Tree India Earnings (EPI) catapulted 31%. In essence, the "risk trade" was striking Madonna's vogue pose.
However, things changed in the month of March and the mainstream media seemed to miss it. Even as the S&P 500 topped 1400 - and even as the Nasdaq surpassed 3000 -- significant risk assets were starting to slide.Specifically, energy and materials stocks dipped; small-cap U.S. stocks waned. And most notably of all, emerging market equities everywhere responded poorly to weak demand from China. Personally, I don't view potential contraction in China's manufacturing sector or uncertainty over a so-called property bubble as alarming. On the contrary. I believe Chinese authorities will exert their fiscal firepower in the form of a direct stimulus package and People's Bank leaders will lower interest rates and cash reserve requirements as needed. Ultimately, that will benefit investors in certain aspects of the emerging market space. However, I am troubled by economic contraction in Europe as well as the burdensome rise in Spanish bond yields. With eurozone PMI declining to 48.7 in March, and European banks demonstrating fear in lending to one another yet again, the media might want to lay off the U.S. economic recovery angle a tad. In truth, trillions in deficit spending combined with electronic money printing and unbelievably low interest rates have made U.S. stocks attractive. That said, a "straight line through the roof" is not a probable investing outcome with 3-month LIBOR rates hampering any chance at a European renaissance. (Note: The rapid decline in 3-month LIBOR that began in 2012 helped fuel risk assets through February, but the rate is stuck at 0.47 since March began.)
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
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.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
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.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV