Featured Trades: (SOUTH KOREA), (EWZ)
3) The Economic Miracle That is South Korea is Firing on All 16 Cylinders, taking the KOSPI up 6% YTD. Q1 GDP grew at an annualized rate of 7.8%, driven by a huge rebound in electronics exports and a big contribution from stimulus driven civil engineering. Credit Suisse says the full year GDP figure could come in as high as 6.2%. That is an enormous improvement from the negative 4% rate seen only 18 months ago. The Korean Won has appreciated by 20% against the dollar in the past year. It is just a matter of time before the Bank of Korea raises rates from the current record low of 2%, improving its yield spread over the dollar and thus leading to further gains. Regular readers of this letter know well that I have been a big fan of the Hermit Kingdom (click here for the call). Don’t pay any mind to North Korea’s recent sinking of a South Korean warship. This noise has been going on for 60 years. Better use the next substantial dip in the global capital markets to accumulate more of this semi emerging market’s ETF (EWZ).