timthumb (2)U.S. – Rating agency Standard and Poor’s has raised its credit outlook for the U.S. economy from negative to stable. This is long overdue says Richard Cayne of Meyer International in Bangkok Thailand as the US economy has been recovering well over the past few years and will continue to do so.

In August 2011, S&P downgraded the U.S. rating one notch from AAA to AA+, but now believes further downgrades are less likely as the economy continues to recover.

The news saw the U.S. dollar strengthen 1.3% against the Japanese yen, and 0.2% against the euro, but S&P is still concerned about the high levels of U.S. debt.

The U.S. Treasury Department, which had said that S&P’s calculations in making its initial downgrade were flawed, welcomed the latest action. Richard Cayne Meyer noted the comment “We’re pleased that they are recognising the progress in the U.S. economy and fiscal results,” said Mary Miller, the Treasury’s under secretary for domestic finance.

Japan – Japan has revised its first-quarter economic growth up to 1%, as part of government data released this week by the Cabinet Office.

Revisions to official data show the Japanese economy grew at an annualised rate of 4.1% throughout the first quarter, up from an original estimate of 3.5%.

Japan’s original estimate of 3.5% already marked the fastest growth rate recorded by any G7 economy for the period.

Strong household spending and an uptick in private residential investment are said to have been the biggest contributors to the expansion in the Japanese economy throughout the first quarter of 2013. This says Richard Cayne in Bangkok should provide more comfort for investors looking to get into Japanese equities.

The quarter-on-quarter growth rate was also the highest since the 1.2% witnessed during the first three months of 2012.

China – The World Bank has cut its growth forecast for China amid warnings of slower but more stable global growth over the coming months.

The bank now expects China to grow 7.7% in 2013, down from its earlier projection of 8.4%, it also cut the forecast for global economic growth to 2.2% from 2.4%.

The bank said growth in China, the world’s second-largest economy, had slowed as policymakers look to rebalance its growth model. While numbers are down China’s inward consumption rates should help support valuations of Chinese companies says Richard Cayne Meyer.

Emerging Markets – Emerging markets have lagged over the opening half of 2013, leading some investors to re-assess their exposure to these regions.

While the MSCI World is up 18.3% since the start of the year, the MSCI Emerging Markets Index gained just 2.2%. Despite this, BlackRock chief investment strategist Russ Koesterich says investors should consider emerging market options such minimum volatility funds, single-country or regional portfolios and venturing into frontier markets.

Koesterich says: “In light of the recent poor performance, many investors are asking me whether they should be abandoning emerging markets in favor of bets closer to home. My answer: clearly is ‘no’”. Richard Cayne agrees emerging markets offer much value but suggests buying on dips.

Frontier Markets – The world’s least-developed markets are proving the most resilient to the three-week selloff that has erased $1.9tn of global equity value.

While the MSCI All-Country World Index of shares in advanced and emerging nations has lost 4.2% since May 22 amid speculation the Federal Reserve will pare monetary stimulus, the MSCI Frontier Markets Index returned 0.5%. Thirteen of the 15 top-performing stock gauges are in frontier countries, where the mean market value of $49bn compares with almost $19.5tn in the U.S. Again buying on dips makes a lot of sense as long term value is there says Richard Cayne at Meyer International Ltd Thailand

Commodities – Hedge fund managers increased bets on a gold rally to the highest level in seven weeks this week, prior to a report showing that U.S. unemployment had dropped spurred the biggest reversal in prices since April.

U.S. payrolls rose 175,000 in May, signalling that companies are optimistic about the outlook for demand, the government said.

“We saw some short-term bullish sentiment build up, then the jobs data dashed all hopes of gold rising,” said Walter Hellwig, who helps manage $17bn of assets at BB&T Wealth Management in Birmingham, Alabama. “Any good news for the economy is not so good for gold. The debate about when the Fed will taper or end stimulus continues to pressure.” Richard Cayne suggests that in today’s market revising ones commodity holdings downwards and equity holdings upwards would make a lot of sense.

NO COMMENTS