Our Taipan Emerging Market Index is up today by 14.7%. Although this is a decline from last week’s stellar gain of 44.2%, we still managed to beat the S&P 500 and Dow Jones Industrial Average.

As of this writing, the Dow was down 32.5% and the S&P 500 dipped 5.8% since Monday. Despite the grim inflation numbers for many emerging markets, our index still managed to outperform the two major U.S. exchanges.

 
Key
ALL ORDINARIES IDX (ASX: ^AORD) Australia
BSE SENSEX (Bombay: ^BSESN) India
IBOVESPA SAO PAULO (^BVSP) Brazil
EGYPT CMA GENL INDX (Cairo: ^CCSI) Egypt
HANG SENG INDEX (HKSE: ^HSI) Hong Kong
COMPOSITE INDEX (Jakarta: ^JKSE) Jakarta
COMPOSITE INDEX (Kuala Lumpur: ^KLSE) Kuala Lumpar
KOSPI Composite Index (KSE: ^KS11) South Korea
MERVAL BUENOS AIRES (Buenos Aires: ^MERV) Argentina
IPC (Mexico: ^MXX) Mexico
NZX 50 INDEX GROSS (NZSE: ^NZ50) New Zealand
IGBM (Madrid: ^SMSI) Spain
TEL-AV TASE-100 IND (^TA100) Israel
TSEC weighted index (Taiwan: ^TWII) Taiwan
SSE Composite Index (Shanghai: 000001.SS) Shanghai
iShares MSCI South Africa Index (EZA) South Africa
RTSI INDEX (RUS: RTS.RS) Russia
ISHARES MSCI THAILAN (NYSEArca: THD) Thailand
iShares MSCI Turkey Invest Mkt Index (TUR) Turkey

Asia continues to dominate our index. Last week Hong Kong’s Hang Seng Index (HKSE: ^HSI) came out the big winner. This week, it’s Australia’s ALL ORDINARIES IDX (ASX: ^AORD).

^AORD enjoyed growth across all major sectors — reflecting the general health of the Australian economy and the government’s successful efforts to control inflation.

Today, Federal Treasurer Wayne Swan said that Australia’s economy has been remarkably resilient in the face of financial turmoil, and is well placed to remain in good shape.

Robust growth in emerging economies had boosted Australia’s terms of trade, countering the impact of slower global growth, tighter credit conditions and higher domestic interest rates, he said.

But he also warned inflation would remain a challenge for the economy.

Bloomberg reported last week that Australia’s economy grew twice as fast as economists forecast in Q1. Gross domestic product rose 0.6% from Q4, when it increased a revised 0.7%, according to the Bureau of Statistics in Sydney. Exports of iron ore and wheat, in addition to construction, saw the highest growth.

Overall, it looks like Asia is still the place to put your money, despite inflationary pressures.

Have a great weekend.

–Irwin Greenstein

More than a million foreign nationals have crept into the costal regions of Mexico already… but that number is growing.

They are seeking cheap, easy access to the 2,000-mile border with the United States, and the Mexican government is helping them, even creating laws to aid them. Why? Because these people pump $5.3 billion into the country’s economy every year.

Mexico’s being paid off, and certain U.S. agencies are joining in. They want to make it even easier for foreign nationals to creep into our southern neighbor’s towns and cities.

In one popular nest, the wave of zealots has reached 60 people a day. That’s about 15% a year as the size of this camp has grown to over 200,000. The state government in the area is allowing this group to run rampant; the incoming cash is too hard to resist.

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Roller-coaster ride is a good way to describe the Shangahi SSE Composite Index.

If you were in it a year ago and rode it up for an exhilarating six months you would’ve gained 61.5%. That’s darn good when you compare it with the Dow Jones Industrial Average, NASDAQ and the S&P 500 which were pretty much flat.

(000001.SS = SSE Composite Index; ^IXIC = NASDAQ; ^DJI = Dow Jones Industrial Average; ^GSPC = S&P 500)

As you can see, the next six months would have wreaked havoc on your stomach. The plunge in the SSE Composite Index reached 39.9%. After the nausea faded you could still say, “Well, OK, but I’m still up more than 40%” and that’s a great way of looking at it. But what if you jumped in during November and rode it down?

What has fueled this roller-coaster ride in the SSE Composite Index? It’s called the “inflation contagion.”

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The news is great in emerging markets…India’s growing middle class can now afford servants.

The boost in Brazil’s currency makes the country’s treasury bonds more attractive than ever.

And Russia, China, India, Malaysia, South Korea and Brazil still look like great bargains compared to the U.S.

Is this all easy money ripe for the pickin’?

Not exactly…with oil jumping $11 last Friday, inflation running rampant on forecasts of $5 gas and Wall Street’s banks sinking deeper into the abyss investors are grinding their teeth figuring what to do next.

The mental horsepower needed to extract profits from these storm-tossed markets has never been greater. That’s why I was truly dismayed to read a front-page story in our hometown Baltimore Sun about American teenagers who will be our future business leaders.

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