4 Buys as We Repatriate Assets

12/16/2011 10:45 am EST

Focus: GLOBAL

Nicholas Vardy

Editor, Bull Market Alert, The Alpha Investor Letter, and The Global Guru

The global picture remains fuzzy, so it's time to reel in the growth stocks and start to consolidate strong domestic positions says Nicholas Vardy of Bull Market Alert.

What was all the hoopla in Europe about last week? The 17 Eurozone governments and potentially nine others in the 27-nation EU agreed in principle to a greater centralization of their budgets and the passage of the equivalent of “balanced budget amendments.” Those amendments include automatic corrections, if the so-called “structural deficit” exceeds a certain level.

These measures sound impressive on paper. And frankly, I'd be shocked if the US Congress would agree to any measure that would tie its own fiscal hands nearly as much.
 
The summit also laid bare the deep divisions in Europe—particularly, the gap between the views of UK Prime Minister David Cameron and Europe's “first couple,” Germany's Angela Merkel and France's Nicolas Sarkozy. Cameron rejected Friday's agreement outright, as he failed to secure an exemption for the United Kingdom's financial industry.
 
Aside from nationalistic prancing, the elephant in the room is the practical issue of implementing and enforcing any agreement made in Brussels. As it stands today, 26 out of 27 prime ministers will have to fight domestic political battles to get Friday's agreements confirmed. Good luck with that.
 
With Europe in crisis, and the Chinese and Asian economies slowing, you're already seeing—through our picks in the ProShares Ultra S&P500 (SSO), MasterCard (MA), and Ford (F)—how we are slowly but surely shifting the emphasis in the Bull Market Alert portfolio back toward the United States.

The US markets today remain the best among a weak bunch in the world, with only the US and Indonesian stock markets in the black as we head into the final weeks of 2012. You can expect to see more US-oriented picks in the weeks ahead.

In that vein, here are a few updates on some of our favorites:

Companhia de Bebidas Das Americas (ABV) jumped another 4.14%. AmBev hiked prices in late 2010, causing it to lose some Brazilian market share, but increasing its profit margin. That strategy paid off as Morningstar analysts note that ABV has now recaptured most of that lost market share. ABV is a buy.

Bank of Ireland (IRE) continued its rise and added 2.07%. The European Central Bank (ECB) recently lowered interest rates by 0.25% (25 basis points).

Notably, Bank of Ireland passed only 0.1% to 0.15% of this rate cut on to its lending customers. Such a move allows the balance of the rate cut benefit to go directly to IRE’s bottom line, aiding its recovery. IRE is currently a hold, but continues to inch closer towards its 50-day moving average.
 
National Bank of Greece SA (NBG) fell 5.51% over the past five trading days. The European Banking Authority announced Thursday that a planned 30-billion euro aid package would be enough to meet capital adequacy ratios.

This aid package will ensure that major Greek banks maintain their ability to withstand a wider sovereign default. NBG remains a hold.

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