Plenty of news flow to digest this morning in the emerging markets before the opening bell. We said to play the turn in Turkey via TUR. Now it looks like weaker FX is working to boost exports/ depress imports. *** We have put on our tactical trading call on BZ as of last week saying the market was overdone to the downside and that the banks had been overly beaten up on credit fears. Core view at EM.com is that these are some of the best banks in the EM world if not the world. They have had to deal with credit issues in past. UBS apparently agrees and has a strong note out this morning highlighting valuation more than compensating for the risk. We agree. UBS also discounts the argument that the Brazilian banks will face a new cycle of substantial and consistent asset quality deterioration. This is completely unrelated with what is happening in the real economy, and particularly in the labor market. Unemployment in BZ and trained labor scarcity means anyone who has bank credit is able to pay their bills. Buy ITB, BBD, BSBR in this order. This is the same trade as last week. *** Auto sales may be slowing, but manufacturers are still having the biggest year since 2008. U.S. auto names will print poorly tomorrow. And are gas prices really getting better? Not sure about that. I had my first $100 tank of gas yesterday on a fill-up somewhere in Long Island on way home from the beach. *** The copper buy the dip mentality is not going away if there is truly a 2.1 million ton deficit in production by 2015 and no real new projects coming online. Meanwhile, Chilean copper producer Codelco reported record numbers. *** MOS, POT look attractive, Citi says. This seems like the same note they had out last week but we will take it. The stocks are in +1.75%. *** Canada in no hurry to sell Chrysler shares. Are they better portfolio managers than their U.S. counterparts? It looks like it. Canada is not ready to sell out to Fiat for a song where the U.S. government is selling out. We see U.S. TARP history with AIG and even GM: Washington is not good at getting fair value after nursing these assets back to health. *** Solar names should get a boost today on Germany's policy change on ending its nuclear program by 2022. Watch TSL, STP, FSLR. *** EWZ vs EEM. This is a basic one, but you can see the current setup and why BZ should outperform over the next few weeks or months! *** Walmart gets into South Africa. This deal is old news but it did not look good for WMT recently that they would get the labor unions on board. Positive for WMT. They now have their footprint and door into Africa.
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