Below is a list of 2013 and quarter-to-date stock market returns for 77 countries around the world. Of the 77 countries shown, 60 are in the green for the year, while 17 are in the red. As shown, Japan is now up the most of any country with a YTD gain of 45.22%. Japan is already up 21.76% in the second quarter as well. This gain of 21.76% for Japan doesn't even rank it first for the second quarter, however. Greece is actually doing the best of any country in the second quarter with a gain of 28.13%. Dubai ranks second for the quarter with a gain of 25%.

On the downside, Peru has been the worst country so far this year with a decline of 15.73%. The Ukraine ranks second to last with a decline of 10.44%, followed by Colombia at -9.8%. Two BRICs round out the

The Bank of England's Monetary Policy Committee concludes its two-day meeting tomorrow. The recent data have been stronger than expected and this has boosted economists' conviction that the MPC refrain from cutting rates or resuming its gilt purchases.

After a poor Q4 12, the U.K. economy has shown greater resilience this year. The economy expanded 0.3% in Q1, which while nothing to write home about, is better than the contraction some feared or even the 0.1% expansion the consensus forecast. The favorable news carried into the start of Q2, with April's manufacturing PMI reaching a 3-month high and the service sector PMI rising to its best level since last August.

With these kind of numbers, while price pressures remain sticky, BOE Governor King is unlikely to have won over converts his minority faction (which includes Miles and Fisher as well). In fact, there is some risk that that faction experiences

The most likely outcome is that the UK will avoid a triple-dip recession on Thursday. Given the media hype surrounding the release, any figure above zero will trigger a potential Sterling surge on short covering. The underlying economic backdrop will, however, remain precarious regardless of the GDP data. To help stabilize growth and debt dynamics, the UK currency will have to decline sharply over the medium term. In this environment, any Sterling rallies on the data should be seen as a clear selling opportunity, especially on any approach to 1.54 against the dollar.

The UK and global media have prepared lurid headlines that the UK economy is in a triple-dip recession which will be unleashed instantly if the National Statistics office reports a first-quarter GDP figure below zero. There is little doubt the Sterling will be in for an initial caning if a GDP contraction is confirmed with positioning into

As the European Union lurches from one crisis to the next, making the continent as a whole appear to be the proverbial sick man of the global economy, it is worth looking for past national overhauls that might serve as a template for future EU success. Great Britain is an excellent overhaul template, and it owes much of its prosperity over the last two decades to Margaret Thatcher, who passed away earlier this week.

Margaret Thatcher is widely regarded as the British counterpart to America's Ronald Reagan, and thanks to the policies she championed, the U.K. is a far more vibrant and successful country today, even with the ongoing recession in the EU, than it was at the best of times in the 1970s. However, Thatcher's policies were controversial because while they increased average incomes and national prosperity in the medium term, they also increased inequality undoubtedly leading to

For investors in the index funds focusing on the UK such as iShares UK fund (EWU), there is no more pressing question than why the British economy continues to underperform the US. This same issue is hurting investors in many popular ADRs and UK-focused stocks like Vodafone (VOD), British American Tobacco (BTI), WPP (WPPGY), BP (BP), BHP (BHP), Astrazeneca (AZN), Pearson (PSO), HSBC (HBC), News Corp (NWSA), Unilever (UL) and ARM Holdings (ARMH). Collectively, stocks like these with heavy exposure to the United Kingdom have underperformed peer US firms by 9% over the last 2 years.

Even for those stocks with a large portion of sales coming from international sources, the economy in the UK continues to damper enthusiasm among many investors. Given the similarity between the US and the UK in terms of the structure of the economy and the past performance of both nations, the obvious question is,

The holiday-shortened week for the Western indexes on my watchlist saw the S&P 500 hit a new all-time high against a backdrop of eurozone anxieties. Another big story was Japan's Nikkei 255, which closed the quarter with a gain of 19.27%, almost double the 10.03% gain of the closest contender, the S&P 500. The third big story of the week was the Shanghai Composite's loss of nearly 4% (3.94% to be precise). On the whole, the watchlist finished in the red for the third consecutive week. But the -0.44% average of the eight was not as grim as last week's -1.29%.

The Shanghai remains the only index on the watch list in bear territory -- the traditional designation for a 20% decline from an interim high. See the table inset (lower right) in the chart below. The index is down a dismal 35.58% from its interim high of August

We're now almost finished with the 1st quarter of 2013. It's been a good year for the US markets … and the strong start to the year by the major broad stock market indices points to a strong year on the whole, based on previous analysis we've done of 30 and 50 years of data.

But there's been some interesting divergence in performance going on between some of the "established" economies and the more emerging ones. Specifically, the popular "BRIC" countries - Brazil, Russia, India, China - have underperformed in 2013 thus far.

We're using the major US based ETFs to track the performance of these various countries and sectors:

For the USA - S&P 500 Index ETF (SPY)
Japan - iShares Japan ETF (EWJ)
Brazil - iShares Brazil ETF (EWZ)
Russia - Market Vectors Russia ETF (RSX)
India - WisdomTree India ETF (EPI)
China - iShares China ETF

Below is an updated look at where the S&P 500 and its ten sectors currently stand within their normal trading ranges. In the table below, the red shading represents overbought territory, while the green shading represents oversold territory. The black vertical "N" line represents each sector's 50-day moving average.

As shown, the S&P 500 and six of ten sectors remain in overbought territory, with Consumer Staples the most overbought. Nine of ten sectors are above their 50-day moving averages. The Materials sector has moved solidly below its 50-day with today's declines.

Interestingly, while

There are two important events tomorrow in the U.K. in addition to the monthly jobs report. The first is the minutes from the recent BOE meeting.

We already know the MPC did not resume their gilt purchases. However, the vote will be important for investors. Governor King, along with Miles and Fisher had favored resuming gilt purchases in January, but were outvoted. We expect that they did not change their minds, so once again the governor was outvoted.

Moreover, we suspect the governor votes last and knows full well that he was outvoted prior to casting his lot. Apparently this is to provide a signaling device. While stylistically this seems to be more collegial and democratic, the BOE has come under criticism recently for preventing MPC members from making comments that deviate from the BOE's "collective forecast".

In any event, if King, Miles and Fisher succeeded in convincing a colleague

Never mind Sachs vs Krugman: by far the most interesting and important fiscal-policy debate right now is Cameron vs Wolf.

David Cameron, of course, is the prime minister of the UK, and last week he gave a rambling 4,000-word speech on the national economy which is almost impossible to read. For some reason the speech appears online in what you might call teleprompter format, with a single sentence sometimes spanning three separate paragraphs. It’s a clear indication that Cameron is more interested in rhetoric than he is in substance.

Meanwhile, Martin Wolf, who for many years has been the most respected and important economic commentator in Europe, has in recent weeks become much more accessible. Check out his column on bankers’ bonuses, for instance: it’s a smart and rollicking read, arguing persuasively that the UK government is being idiotic in its opposition to European bonus caps.

Wolf’s

© Elliott R. Morss

March 2013

Introduction

Every so often, people who buy stocks, hopefully via mutual funds and/or exchange traded funds (ETFs) should stand back from their home stock markets and look at how the rest of the world is doing. In the following, I look at what has happened to markets since U.S. banks collapsed in 2008 and the extent of the recovery since then. I conclude with thoughts on how well the underlying economies of the countries covered will do in future years.

Equities: Collapse and Recovery

1. Collapse

Table 1 goes back to the stock market peaks that occurred in either 2007 or early 2008. The "Peak/Trough Loss" is the percentage hit (peak to trough) the various markets took in the global collapse. And they are large: in an earlier piece, I concluded that globally, stock market losses were $36 trillion. Put that together with the

There are many reasons to invest in foreign stocks. In addition to emerging and frontier markets, U.S. investors should have exposure to other developed markets. This is because companies in other developed countries operate differently with respect to management and other factors and their sales territory is not only limited to their home markets but may also include other markets. For example, many European multinationals such as Nestle (NSRGY.PK), BP Plc (BP), BASF AG (BASFY.PK), Unilever (UL, UN), Honda Motor Co (HMC), etc. have presence in many foreign countries in addition to their home markets. By investing in companies located in other developed countries U.S. investors can gain from their performance which can vary from the performance of their U.S. peers.

Another that should be noted is each developed country has its own unique advantages and disadvantages. Though most European countries struggled in recent years, Germany performed very well

Top Stories
Abe expected to nominate Kuroda as Bank of Japan Governor. Japanese PM Shinzo Abe is reportedly set to nominate Asian Development Bank President Haruhiko Kuroda as next BOJ Governor. It's a dovish choice as Kuroda has been vocal about his lack of concern over a weaker yen and the need to institute a 2% inflation target. Abe is also expected to nominate two other easy-money advocates as deputy governors, according to a source. The dollar is 0.5% higher vs. the yen (FXY) and the Nikkei gained 2.4% overnight.

U.K. stocks rise and the pound weakens following downgrade. The FTSE 100 (EWU) gained 0.8% in midday trade and sterling (FXB) slid to its lowest level against the dollar in two years following Friday's downgrade of the country by Moody's. Calling the timing of the downgrade a surprise, one analyst nevertheless reminded the market had been

Moody's took away the UK's triple A rating late Friday. A ratings downgrade has long been rumored, and although the timing is always surprising, the move itself has long been anticipated. Sterling slumped on the news in thin dealings, losing a cent in about 30 minutes.

When it comes to corporate ratings, we can appreciate that rating agencies may have access to private information. They may also be of value in some developing countries, where information is more difficult to secure. However, when it comes to large developed countries, the rating agencies have access only to public information and it is the same information that investors use to make their decisions.

That there is extremely little value-added or new information contained in a rating agency is evident in the lack of market response to downgrades of Japan, the US, Austria, and France, for example. There is little reason to expect

Diversification is an important factor to consider when investing in foreign stocks . An investor can diversify based on a specific theme or types of markets such as emerging, frontier, developed, etc. It is better to diversify between different markets and then different countries within those markets. It is not a wise idea to invest all the assets allocated for foreign stocks in one type of market or a theme. Diversification between countries not only reduces many risks but also offers potential to enhance returns as one country’s economy may grow faster than the other.In addition, a few countries may not perform well as projected.

During the global financial crisis of 2008-09, international diversification seemed to be pointless as all markets plunged in lock step.It did not matter if an investor diversified across emerging and developed markets.The benefits of diversification across different markets or even asset classes seemed to be

Considering the depth of economic contraction just reported in Europe, and given the GDP contraction just reported in the U.S., are stock investors laughing at hellfire as they bid shares higher? How safe are the latest stock gains considering the most recent economic data?

Stocks are on a tear, with securities that track the broader indexes all up substantially since the start of the year. The market has moved impressively higher when tracking the indexes from off the lows of mid-November, and if we look as far back as the start of June 2012, the gains are even more impressive. There's a trending bull market no doubt, but the economy seems to be deteriorating outside of the recovery in real estate. So has the market ignored an important detour sign as it continues to run higher?

A year ago, at the beginning of 2012, very few investors expected that European stocks would end up performing as well as they did in the calendar year. By the time we bade farewell to 2012 and welcomed 2013, the FTSE Developed Europe Index had posted a total return of 30% for the year, compared with the S&P 500's 16% gain. And it did so in spite of the fact that the latest economic outlook for Europe's economy isn't so rosy. Here's a country-level look at some of the earnings and revenue forecast leaders and laggards for 2013 and 2014.

IMF 2013 Forecasts Lowered

True, the International Monetary Fund also warned about the weakness in Japan, which it expects will see growth contract further next year, but its comments on the "unexpectedly stubborn eurozone recession" and its decision to trim its 2013 global growth forecast to 3.5% from the 3.6%