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D Fry Market Outlook 22 12 2006

The only sector to perform well today was bonds. And, that's not such a good thing since yields are already low. Should they drop much lower you might expect the economic soft-landing [The Goldilocks scenario if you will] to become a less gentle affair. If you own stocks, you won't like that.

D Fry Market Outlook 22 12 2006

D Fry Market Outlook 22 12 2006

But today there is some good news to outline and that comes from more dividends hitting 2006 strong performing ETFs. Let's review just a few.

iShares MSCI Australia Index (EWA) -- $1.0977

iShares MSCI Malaysia Index (EWM) -- $0.1954

iShares MSCI Emerging Markets ETF (EEM) -- 1.5725

iShares MSCI Mexico Index ETF (EWW) -- $0.45

iShares MSCI Brazil Index ETF (EWZ) -- $0.86

iShares MSCI Pacific ex-Japan (EPP) -- $5.1973

iShares Dow Jones Select Dividend ETF (DVY) -- $0.527

As we've noted recently expect more good treats like these over the next week of trading. The better the year performance the more substantial will be the dividend amount. While EWM's dividend appears low, based on the market price it exceeded 2% while that for EPP was around 4%. Every little bit helps right?

One of the issues most investors don't pay attention to is the persistent "carry trade" in Japan. Monetary authorities in Japan JUST left their interest rates unchanged at .25%. Smart institutions [or just those with a pulse] can borrow at rates near these and invest in Aussie bonds at 6% or U.S. Treasuries at 4.5% and lock-in the differential. As long as Japanese authorities are willing to keep rates this low, this trend and trade will continue. The yen will continue to fall against the euro and Aussie dollar where yield differentials are prominent.

With economic data coming in weak, the transportation sector also took it on the chin. Transports aren't just about airlines, but how robust goods are moving about the country. If the economy weakens, not much gets shipped.

D Fry Market Outlook 22 12 2006

We'll keep commentary brief today. Expect more dividends next week and some intermittent posting from yours truly.

I leave you with a message of peace contained in this wonderfully done but brief video. Make sure you watch it please.

Have a wonderful and peaceful holiday!

Disclaimer: Among other issues, ETF Digest maintains positions in: iShares Lehman 7-10 Yr Treasury Bond ETF (IEF), iShares Lehman 20+ Year Treasury Bond ETF (TLT), iShares MSCI Australia Index (EWA), iShares MSCI Malaysia Index (EWM), iShares MSCI Mexico Index ETF (EWW), iShares MSCI Brazil Index ETF (EWZ), iShares MSCI Pacific ex-Japan (EPP) and iShares Dow Jones Select Dividend ETF (DVY).

Source: David Fry's Daily Market Outlook