February 17, 2004

High Yield AND Capital Gains: Chart of the Day

The Reserve Bank of Australia calls its benchmark interest rate of 5.25% "accomodative." Oh my goodness. But they also suggest room to raise rates if the Australian economy overheats. The range suggested by a bank official is between 5.25 and 6.25. Quick, get some Aussie bonds! While the U.S. Fed is slouching towards monetary purgatory, central banks in Australia and England are offering global investors yields that make it easy to get out of the dollar. And if your cost basis is dollars, the Everbank World Currency CDs I mentioned in the Housing Report are a great way to get yield and benefit from any continued gains in the currency of your choice. I recommended the Aussie currency CD because of the hawkishness of Australia's central bank. (If you want to know more about this, send me an e-mail at strategicinvestment@agora-inc.com with "Everbank" in the subject line.) The chart below shows the gain in the Australian dollar over the last year, via the Philly listed Australian Dollar Index (XAD). It also shows the performance of the Australian iShare (EWA). Speaking of which, the composition of the iShare is significantly financial (30% banks). But it's also 20% basic materials...which by the way is a PERFECT way to play commodity prices and the Asian stories...capital intensive basic materials industry on a continent within shipping distance of Asia's resource ravenous economies. A LOT MORE on this in the March issue and later this week. Australian Stocks and Currency Powering Up


Post a Comment

<< Home