A spate of deal-making helped lift stocks last week as the
S&P 500 added 0.1 percent. That does not sound like much, but
it was enough for the seventh consecutive up wee for the
benchmark U.S. index.
Sturdy economic reports, decent earnings and now mergers and
acquisitions activity have been the recent catalysts giving the
bulls reasons to cheer.
Still, there are some causes for concern. Earnings season is
drawing to a close. The sequestration debate looms and
deal-making alone cannot prop up the entire market.
Not to mention, emerging markets equities, broadly speaking,
have not been stellar performers to start the year. Add those
factors to the fact that the U.S. dollar is showing signs of life
and a case can be made that risk appetite is fading.
It is should be noted that the latter stages of February are
usually not kind to stocks. With that in mind, keep an eye on the
in this holiday-shortened week.
Direxion Daily Gold Miners 3X Bear Shares (NYSE:
) A familiar friend makes another appearance on this list. Not to
toot our own horns too much, but
DUST was touted in these parts as back as
. Since mid-November, the fund has surged 50.5 percent.
A run like that may make it seem as though DUST is poised to
take a break. Actually, the opposite might be true. Gold itself
looks quite vulnerable
and that is bad news for the miners that struggled when gold was
rising. Also consider the PowerShares DB Gold Double Short ETN
WisdomTree Japan Hedged Equity Fund (NYSE:
) One of 2013's most successful ETFs, both in terms of
asset-gathering and pure performance, makes another appearance on
this list. And with good reason. The dollar surged against the
yen during Monday's Asian session after the G-20 declined to
censure Japan for allowing the yen to fall so far so fast against
the greenback and the euro.
That could leave the door open for the Bank of Japan to engage
in stimulus and/or asset-buying later this year. Speaking of BoJ,
Prime Minister Shinzo Abe will
reportedly name the new leader of the central
bank as soon as this week
and it very well could be former Deputy Governor Toshiro
That sets up nicely for DXJ, USD/JPY and Japanese equities
because Muto will tow the Abe line, which is to engineer
inflation while deploying bold tools and unlimited easing to jolt
the world's third-largest economy.
Those looking for another way to play this trade may want to
consider put options on or outright shorting of the iShares MSCI
South Korea Index Fund (NYSE:
) as South Korean exporters are seen as vulnerable due to the
PowerShares Dynamic Food & Beverage Portfolio (NYSE:
) Thanks to Warren Buffett's thirst for mega-acquisitions,
oft-overlooked PBJ is flying high these days. Buffett's Berkshire
Hathaway and a Brazilian partner announced they will acquire
PBJ's largest holding, H.J. Heinz (NYSE:
), last week for $28 billion.
Buffett may not be done and the food industry is fertile
ground for the man that loves easy-to-understand, highly
profitable businesses with recognizable brands.
At least another 10 percent of PBJ's weight, that being
General Mills (NYSE:
) and Hershey (NYSE:
), have been mentioned as
as possible Berkshire targets
. J.M. Smucker (NYSE:
) and, to a lesser extent, Kellogg (NYSE:
) could also be Berkshire targets. Both are PBJ holdings.
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