The Canadian economy showed signs of improvement in January, while the economies of Germany, Italy and Spain showed signs of weakening economies, according to the latest edition of Nielsen’s Economic Current, which consolidates key consumer data from the company’s global research resources. The U.S. economy continued to be weak, but showed no signs of worsening.
Nielsen’s scorecard ranks national economic performance on a scale of one to five, with one representing very strong growth (over 5%). According to this scorecard, India and China were the only countries that scored a one in January 2009, while Canada and Russia scored twos (growth between 1% and 4%). The United States scored a four, which was worse than any other country except Spain.
Other key findings from the survey include:
- U.S. consumers reversed a six month trend of declining number of shopping trips and spending per trip.
- Consumers in the U.S. and Canada spent more per trip across fast moving consumer goods sold in food, drug, and mass merchandisers
- Western Europe also saw an increase in the number of shopping trips
- Store brands and value channels remain strong
This is the same reason I picked Australia (not measured by Nielson) as the safest market for 2009 – Canada and Australia both have small populations and lots of natural resources to export. Less people means a more manageable social net in rough times and less need tof the countries to go into debt. That makes both Aussie and Canadian dollars good currencies as relatively safe havens but they've already had a huge run since I picked them last month (15%), which was doubly impressive as it came against a strong dollar rally.
Watch for the Aussie dollar to take out it's Jan high of 72.67 – that will indicate a run to 80. Resistance should be around 73.5 and, if they consolidate around there, they're probably going to pop higher. Does that make Australia's stock exchange a good buy? You may think not as usually a strong local currency is bad for exports but, since they mainly export commodities and import goods, the Aussie stock market tends to mirror their currency.
EWA is well off the lows but has good premiums for a buy/write but a scale-in as we're expecting a global pullback at some point. The ETF trades at $14.56 and the May $14 puts and calls can be sold for $1.90 for a net entry of $12.66/13.33 – up 15% if called away at $14 and 8% off if put to you – that's about as good as it gets with most ETFs…
