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Never a boring day - that's been the de facto mantra of the administration of President Donald Trump. But over the weekend, he may have taken things a bit too far. In a series of tweets, Donald Trump accused his predecessor, former President Barack Obama, of wiretapping his phones . A day later, the White House called for a congressional investigation as to whether Obama meddled in last year's general election.
Amid the turmoil, news agencies continue to probe into the Donald Trump administration's alleged ties with Russian government officials.
Already, substantive consequences have been rendered, most notably the resignation of Lt. Gen. Michael Flynn as national security advisor. Questions have also surfaced about Attorney General Jeff Sessions. To everyone else, this has the makings of a new low in American partisanship. But for Mexican stocks, this is the reprieve that they've been waiting for.
It's easy to see why this would be the case. When the markets opened this week, trading was a bit of a mess. All three major indices flashed red. Even sentiment for our northern neighbors in Canada was muted, with the exchange-traded fund iShares MSCI Canada Index (ETF) (NYSEARCA: EWC ) being flat for the last few days.
Not so for Mexican stocks. The iShares MSCI Mexico Capped (ETF) (NYSEARCA: EWW ) moved up 0.8% for the day. But more importantly than that, the EWW has been one of the best-performing international ETFs this year, up nearly 9%. With the last two trading sessions, the benchmark for Mexican stocks moved past its 200-day moving average. Could this be signaling a new wave of much-need bullish momentum?
The signs say yes. Although unpredictability is virtually guaranteed with the Donald Trump administration, Mexican stocks have a "told you so" card to play. The chaos in American politics is a gift from the heavens, if only for propaganda purposes. But more cynically, our southern neighbors must sense four short years.
With that in mind, here are three Mexican stocks that are suddenly great again.
Mexican Stocks to Buy: Wal-mart de Mexico S A B de C V (ADR) (WMMVY)
Click to Enlarge If you want a case study in the unexpected, compare Wal-mart de Mexico S A B de C V (ADR) (OTCMKTS: WMMVY ) to Wal-Mart Stores Inc (NYSE: WMT ).
Donald Trump ran on the ticket of restoring America's place in the world. When he won against all odds, most companies took comfort in the fact that "The Donald" understood business. Here was a guy that could jumpstart a shaky economic recovery.
Since the beginning of the new year, however, the results have been mixed. Powerhouse WMT is up only 1%. In contrast, WMMVY, is veritably soaring, up nearly 12%. A tremendous amount of bullish volume entered the markets in late February, suggesting this is no fluke. Additionally, the broader sentiment towards Mexican stocks should boost WMMVY. Its well above its 50-day moving average, and it is within striking distance of the 200-day moving average.
The last time WMMVY breached this longer-term average was in August of last year. This appears to be a transition from trough to peak. Unfortunately, big brother WMT is on the opposite end of the cycle. It recently fell below its 200 DMA, which raises concerns. For all the talk about rejuvenating American competitiveness, domestic consumption seems awfully deflated.
Until the Donald Trump administration figures something out, Mexican stocks are positioned to get the last laugh.
Mexican Stocks to Buy: Santander Mexico Fincl Gp SAB deCV (ADR) (BSMX)
Click to Enlarge When real estate mogul and former reality TV star Donald Trump shocked the world on November 8, 2016, one of the biggest beneficiaries was American financial institutions.
Since the election, the Financial Select Sector SPDR Fund (NYSEARCA: XLF ) has gained an astonishing 24.5%. But that's not really a surprise, considering that Trump ran on the promise of lower regulations. That unleashes weapons that were forcibly sheathed in the prior administration.
Among Mexican stocks, and especially their financial sector, Donald Trump had the completely opposite effect. This is no better illustrated than the sudden demise of Santander Mexico Fincl Gp SAB deCV (ADR) (NYSE: BSMX ). On the day of the election, BSMX stock closed at $8.69, having regained sharp losses from the start of November. When the following session started, BSMX gapped down to $7.73. The next day, shares closed down at $6.87.
At its lowest point from the election, BSMX stock was down nearly 27%. The combative rhetoric dismayed Mexico, and Mexican stocks took a hammering. But since the first of December, a remarkable shift occurred in BSMX. Shares charted a bullish trend channel featuring higher highs and higher lows. BSMX is now up 20.6% as a result.
Thanks to the latest drama surrounding Donald Trump, BSMX is now back in the driver's seat.
Mexican Stocks to Buy: America Movil SAB de CV (ADR) (AMOV)
Click to Enlarge If there's any other industry that annoys Americans like politics, it's probably the telecommunications sector. With competitors accusing one another of hidden fees and lack of coverage, it seems awfully analogous to " fake news ."
Who really knows which data plan is the best until you try it? Either way, the telecom industry was enthused with Donald Trump's victory, considering the sharp rise of the iShares Dow Jones US Telecom (ETF) (NYSEARCA: IYZ ).
That was in 2016. In 2017, it has been a different story altogether. The IYZ is down more than 6%, and it looks like things will only get worse. However, the greener grass is found among Mexican stocks. After taking a tremendous lashing since the election, America Movil SAB de CV (ADR) (NYSE: AMOV ) is back in form. The Mexican telecom giant is actually one of the few stocks that has regained what Donald Trump "took" from them.
The contrast between AMOV and many of its American counterparts couldn't be sharper. Year-to-date, AMOV is up 8.5%, and has skyrocketed to 24% since hitting a dramatic low on Nov. 10. Furthermore, shares are convincingly above its 50 and 200 DMAs, while bullish volume confirms its upward trek.
Of the Mexican stocks on tap, AMOV has the potential to make the most of the Donald Trump fiasco.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
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