Interesting Items From Barron's

A little confirmation bias for a couple of long running themes I've been writing about;

First up is a quote from a bond fund manager who is "also allocating some money to bonds from Canada, Australia and Norway, which have triple-A ratings and strong, commodity-backed economies."

We have had across the board exposure to short term sovereign debt issues from Australia and Norway for several years and exposure here and there to Canada. Debt from these countries has become increasingly popular in the last year or two (a mixed blessing) for what I think are obvious reasons -which is that although not trouble-free economies they are on much firmer footing.

There have been plenty of instances where the inferior US dollar has gone up against these currencies and this is always a threat but over the last ten years the Australian dollar is up 100% against the USD, the USD is down 34% against the NOK and the loonie is up 60% against the dollar. All of that but plenty of counter trend moves along the way. Obviously I feel the dollar will continue to encounter long term weakness even if the results over the next ten years are less dramatic than the last ten years.

The other item came from the Asia Trader column. "'The fact that Asian markets have performed worse than U.S. and Europe when the real problem is there, not here, seems a little unfair,' says Markus Rosgen, Asia strategist for Citigroup in Hong Kong" and "...agree with Garner that 'the sell-down in Asia is clearly overdone.' The shares, after all, fell harder than those in Europe or the U.S., which is where all the trouble started."

We'll not worry about the notion of fairness. I've asserted many times that decoupling was never about markets that somehow go up when most other markets go down but at best, more like going down and then recovering on different time tables than the US. The different time table idea worked very well in 2008 (think beyond Europe and Japan) but appear to not be working as well now.

I made a comment the other day about Singaporean banks being on firmer ground than the US banks but that Singapore always seems to get hit harder during these types of downturns. The quotes are signs of frustration over this type of trading but it is not a new phenomenon. In the last decade Singapore was up 9% plus dividends versus a loss of 24% (excluding dividends) for the S&P 500. Obviously 9% for a decade is not good but better than a loss of 24%.

A point I have made in looking at other countries in the decade-long context is that many of these places carried on without us and will continue to do so. Client holding Nike (NKE) just had its earnings report and revenue from emerging markets was up 24%. Our economy stinks and people in other markets are buying a lot more Nike shoes and apparel--as an anecdote.

This will mean little for traders but I think is very encouraging for investors. It takes work to isolate markets likely to benefit in this manner and again they will not go up when other markets are panicking lower--at least this should not be the expectation but I believe the decade long success from other markets can be repeated even if the US does poorly again.