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5 Key Forces Driving Global Markets

Sharon A. Daniels | Tuesday, March 1, 2011 at 3:00 pm

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Is the post-Great Recession bull market on shaky ground? There are several opposing forces we see that are likely to impact it. Witness the striking divergences across global markets, asset classes and even among individual sectors Spreading civil unrest in the Middle East thats sending oil prices higher Inflation anxiety in emerging markets thanks to soaring food prices The ongoing sovereign debt crisis and slow growth in Europe Growing political dissent at the federal AND state level here in the USA
Sharon A. Daniels Executive Vice President Banyan Partners, LLC

All these forces are making it even more difficult for investors to navigate the financial markets. Editors Note: Click here now to register for our FREE webinar: Where to Invest Now: 5 Key Forces Driving Global Markets.

We believe that much of the easy money has already been made in this bull run that began exactly two years ago this month. Since then, the S&P 500 Index has doubled in value. Additional gains could be more difficult to come by requiring investors to roll up their sleeves and dig deeper to uncover the best profit opportunities without taking on excessive risk. 1 Were convinced that in todays unsettled market climate, you must be more selective and opportunistic than ever about how and where you invest. We believe todays conditions also require a disciplined focus on the fundamental forces shaping the global economy both positively and negatively and opening new opportunities and risks for investors. One key question: What are the forces driving global markets today and how can we identify the best investment opportunities as a result? Tomorrow Wednesday, March 2, at noon our investment team will deliver our answer to this critical question in an online exclusive briefing: Where to Invest Now: 5 Key Forces Driving Global Markets. And I want to extend this special invitation for you to attend free of charge. Simply go here to register now.

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invitation for you to attend free of charge. Simply go here to register now.
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In this fast-paced 30-minute strategy briefing, youll learn about the five key forces we see impacting global investments and more importantly, well give you the specific investment moves were making in an effort to profit from these trends. Heres just a small sample of what well cover in detail on Wednesday Key Force #1: Profit Opportunities from Feeding the World: Global food prices are surging higher a force that has played no small part in fueling civil unrest in developing nations from Tunisia to Egypt. Certainly, supply constraints due to bad weather are partly to blame for the record-breaking run-up in grain prices. But fundamental forces are also at work driving agricultural prices higher and this pattern could continue for many years to come. The fact is, grain production worldwide has failed to meet growing consumption demand in seven of the last 11 years in spite of steady increases in crop yields over the period. 2 Much of the recent rise in agricultural commodity prices can be traced to growing wealth in emerging markets a long-term trend that we believe will not only continue, but even accelerate. Plus, the worlds growing appetite for energy is also pushing grain prices higher. More crops are being diverted from the dinner table into alternative fuels instead. While were all feeling the pinch from rising food costs, we also see a great opportunity for investing in the farm belt by taking a closer look at the booming agribusiness sector. In Wednesdays exclusive strategy webinar, well name names specific investment picks that were convinced have the most upside potential when it comes to capitalizing on this long-term trend. Editors Note: Click here now to register for our FREE webinar: Where to Invest Now: 5 Key Forces Driving Global Markets. Key Force #2: Protect Yourself from Rising Interest Rates: The number one worry for many clients I speak with these days is the prospect of a sudden surge in interest rates leading to significant losses in their fixed-income portfolios. Many investors who depend on bonds to provide a steady yield have suffered through a period of ultra-low interest rates for too long, steadily eroding their income in the process. Now to add insult to injury, rising rates threaten to erode their principal too.

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Our.c mission: To help you avoid hidden landmines in financial markets and find the pockets of strength to potentially groww . d o c a c k .c u -tr your wealth in the months ahead. Well also give you an inside look at our opportunistic investment process to show you exactly how we have prepared our investment strategy in advance for these market-moving forces.

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But there are steps you can take now to earn a decent yield without taking excessive interest rate risk. To protect yourself, consider shortening the maturity of your fixed income holdings to about five years or less. You can still maintain a decent cash flow yield by striking the right balance between risk and return potential and we can show you how. Second, consider using fixed income surrogates in your portfolio. These specialty bond-like investments pay a generous yield and are backed by cash flow from tangible income-producing assets. Energy partnerships are just one example, but there are other risks involved in these securities so you must be careful to do your homework carefully. Well share a couple of names we especially like right now. Third, you may be able to hedge your interest rate risk and perhaps even profit from rising interest rates with certain exchange traded funds (ETFs) that are designed to go up in value as rates go up and bond prices go down. On Wednesday, well reveal these names plus a few more specific securities were counting on to help protect clients in a rising interest rate climate. Editors Note: Click here now to register for our FREE webinar: Where to Invest Now: 5 Key Forces Driving Global Markets. Key Force #3: Emerging Markets: Too Much of a Good Thing? Robust growth in emerging markets has been a big plus for the entire global economy in recent years. In fact, most of the incremental growth the world has experienced since the Great Recession has come from faster-growing developing nations. By next year, the major G-7 industrialized countries (US, Japan, Germany, Canada, Italy, UK and France) may produce LESS than HALF of total global GDP compared with about 70 percent as recently as the mid-1980s. China alone could account for 10 percent of worldwide growth by 2012!3

But this great growth story doesnt come without a price. Strong growth, ultra-low interest rates and strong capital flows into emerging markets are creating an unwanted and potentially destabilizing side effect soaring inflation! GDP is expanding 9.6 percent year-over-year in China more than 10.6 percent in India and at a rate of nearly 7 percent in Brazil. 4 At the same time, however, consumer price inflation in China has accelerated to 5.1 percent year-over-year in Brazil its 6.4 percent and consumer prices are soaring 8.3 percent in India!5 In response, central banks across the emerging world have started to hike interest rates and use other tools to tighten

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In response, central banks across the emerging world have started to hike interest rates and use other tools to tighten monetary policy including outright currency and price controls in an attempt to fight inflation.
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So, one of the biggest balancing acts in 2011 will be striking a delicate equilibrium between growth and inflation in the developing world. Its no easy trick to fine tune monetary policy as past failures in US Federal Reserve policy can clearly attest.

In emerging markets where financial systems are still in the developing stages the task of managing an economy is even more difficult. For this reason, while we see great long-term opportunity in these fast-growing markets, we also expect volatility ahead. We think the best way to play the emerging market theme right now is by taking a closer look at blue-chip companies closer to home whose fortunes are aligned with stronger global growth. Just two days from now, well share details about six companies that are prospering from the global economy and were convinced have great upside potential right now. Best of all, these particular stocks dont involve a high-risk bet on obscure foreign stock exchanges. Editors Note: Click here now to register for our FREE webinar: Where to Invest Now: 5 Key Forces Driving Global Markets. Divergences among markets, sectors and asset classes are likely to intensify as the global bull market matures, perhaps leading to a more difficult and at times confusing investment climate ahead. Thats why I invite you to join us TOMORROW Wednesday, March 2 at NOON Eastern Time for this exclusive online investment briefing:

In this Web event, we lay out for you the major investment forces we see impacting global markets and we explore, in detail, the perils and profit opportunities we see ahead. And well go one step further not only covering the big picture trends but also reveal detailed, specific investment ideas were convinced can help you capitalize on these trends. Heres a sneak preview Earn potential profits from rising interest rates! An investment thats as easy to buy as any stock but could soar in value when longer-term bond prices fall This could be the ultimate energy play for 2011! With energy prices soaring, this stock could be in the catbird seat with profits skyrocketing 60 percent last year A born again blue-chip poised to soar! This modern American icon is hitting its stride with renewed upside momentum in the internet age Feeding the world! This spinoff is feasting on surging agricultural commodity prices with top line sales growing 58 percent last quarter alone And much more! There is absolutely no cost or obligation to attend this exclusive strategy session, but space is limited. All I ask is that you register in advance. Editors Note: Click here now to register for our FREE webinar: Where to Invest Now: 5 Key Forces Driving Global Markets. What you learn in this webinar could help protect and grow your wealth when you need it most. Just go here now to let me know youll be joining us, and my team will immediately send you a reservation confirmation AND instructions for attending the event this Wednesday. Best wishes,

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. Sharon A. Daniels Executive Vice President

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Banyan Partners, LLC

1 Bloomberg market data, 2/25/11 2 US Global Investors: Weekly Investor Alert, 2/11/11 3 Bloomberg Businessweek: Emerging Markets: Bubble of Growth Leader?, 10/28/10 4 Dec ision Economics: Global Economic Developments, 2/4/11 5 Ibid.

The investments to be discussed in this presentation may not be suitable for all investors. Investors must make their own decisions based on their specific investment objectives and financial circumstances. This briefing will be solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.

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