InvestMacro Forex News

By MoneyMorning.com.au

You could call it the tale of two stock markets.

On one, margin debt has hit a nominal all-time high.

On the other, investors have taken it down to a ten year low.

The two exchanges are the New York Stock Exchange and the ASX.

But which is which and what does it mean for your investments? 

Which Market Would You Prefer?

You’ve probably already guessed. It’s Australia where it’s hitting a low. Take this from the Australian this week:

‘ALTHOUGH share values have risen to levels not seen since before Lehman Brothers went broke five years ago, retail share investors are more risk averse than ever, with the volume of margin lending falling to a 10-year low.

‘Reserve Bank figures show the number of client accounts with margin loans has fallen by a third to 170,000 since the beginning of 2010, while the $12 billion in loans outstanding is down 44 per cent since then and is 70 per cent below its pre-crisis peak.‘

Now compared that to what Dan Denning, editor of The Denning Report, revealed this week about how things are playing out over in the US:

‘At the beginning of October margin debt on the New York Stock Exchange (NYSE) was nearing an all-time high at $378 billion. Adjusted for inflation, it’s still just below the 2007 highs, but well above the 2000 highs. If you ever needed proof that today’s highs on the S&P 500 are heavily leveraged, the chart below provides it.‘

Click to enlarge

Dan’s take is that investors in US stocks are taking massive risk based on the expectation stocks will continue to rise thanks to the US central bank, the Fed. His conclusion? A highly leveraged, dangerous stock market.

In this case, Dan is talking about the US. Now, a major correction in US stocks usually knocks the stuffing out of the Australian index as well, which must be on Dan’s mind because he’s
predicting a recession here too.

But we can’t help but think the Australian stock market is a less risky proposition if you compare the two based on this trend.

That’s not to say it’s easy to find value. But it does give you a better idea of your risk profile. And IF the current margin debt trend reverses in Australia, that could put some wind at the back of the Australian market in 2014. Emphasis on the ‘could’, of course.

Over at Australian Small-Cap Investigator, Kris Sayce must like the idea of buying up stocks when investors are wary and risk averse, because the buy list is growing by the month.

So far, the only ones not in the black are some of the resource stocks. Everything else is humming along quite well, especially the dividend payers, which Kris reasoned would catch the eye of the market.

Could sentiment be changing in the natural resource space?

One Space to Just Watch for Now

Sentiment is a subjective thing. But there were some interesting moves from some of the big players this week. That’s one way to get a drift of how they see things.

BHP chipped in with a healthy September quarter upgrade. The big burly Aussie miner and fellow iron ore giant Rio Tinto are tabling expanding their iron ore operations in the Pilbara, with a possible US$10 billion in new investment.

Then came news that global energy giant Chevron could splash $500 million on oil and gas exploration, according to The Australian, in the Bight Basin, off South Australia’s coast. 

‘Federal Industry Minister Ian Macfarlane said yesterday that exploration permits had been awarded to Chevron to explore in two frontier offshore blocks spanning more than 32,000sqkm — almost doubling the US group’s total offshore acreage holdings in Australia. The Bight Basin, part of the Great Australian Bight, is believed to be highly prospective and is similar in size to the Gulf of Mexico.‘

Source: The Australian
Click to enlarge

Over at ASI, Kris doesn’t look at companies as big as Chevron and Rio Tinto. In the resource space, he’s after the developers and explorers. They have not fared well in the last two years, across all commodities, perhaps with the exception of some of the oil plays. But we don’t think you’ll see a turnaround in the junior space until the big boys lead the way in a sustained way.

That’s why Kris is focusing on small cap businesses with revenue and profits. These are companies that offer the prospect of organic growth, but with income for investors as well.

With investors focusing on income and cash flow, junior resource stocks don’t really fit the bill in the current climate. That’ll change somewhere down the line. It always does.

Hopefully we’ll be able to report back shortly on how resource veteran Rick Rule sees the market when he does a free speech to a select bunch of PPP subscribers next week. Stay tuned.

Callum Newman
Editor, Money Weekend

From the Port Phillip Publishing Library

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Special Report: UNAVOIDABLE: Australia’s First Recession in 22 Years  

By MoneyMorning.com.au

Technology:
Your Next Broadband Provider Could Be NASA

NASA has just tested a new communications system. The simple description for it is space-broadband. It’s not your average broadband. This communication from space is at speeds that smash broadband speeds here on Earth.

The Lunar Atmosphere Dust Environment Explorer (LADEE) is currently in orbit around the moon. It’s collecting space dust and sending test results back to Earth. But instead of using traditional radio signals to send the data, LADEE has gone high-tech.

The new system is the Lunar Laser Communication Demonstration (LLCD). And LLCD is as every bit as cool as it sounds too.

What LLCD does is send data back to earth from lunar orbit. Now sending data from space isn’t anything new. The Voyager spacecraft sends data back to earth…and it’s gone inter-stellar.

LLCD is cutting edge not because of what it does, but how it does it. It uses an infrared laser that pulses hundreds of million times a second. And this laser is faster than the fibre optics we get in our homes.

LLCD blows home broadband away. NASA got download speeds of 622 Mbps.

Of course sending a laser from the moon’s orbit to Earth isn’t that easy. NASA says it’s hard to point the laser in the right direction. So hard in fact it’s like, ‘the equivalent of a golfer hitting a ‘hole-in-one’ from a distance of almost five miles.‘

I’m not sure how they calculated that. But it’s NASA…so I’m sure someone figured it out.

With this kind of technology on the LADEE mission, the future is bright for space communication. It means going forward there will be some brilliant live-feeds from space missions. NASA also said, ‘The goal of LLCD is to validate and build confidence in this technology so that future missions will consider using it,‘

This also has huge potential for use in commercial space exploration and travel. Imagine being on board Bigelow’s Space Hotel streaming Netflix? Perhaps you want to share your space experience back home to your family in real-time? With LLCD technology it’s going to be possible.

This technology reaffirms our belief that space will grow into a huge market opportunity over the decades to come. And that along with that will be opportunities to invest in some pioneering companies. If only NASA was listed…

Health:
Bionic is the New Human

It seems like every couple of years prosthetics get twice as advanced. Almost as though Moore’s Law is applicable to these technological marvels as well.

Not long ago prosthetic limbs were simply plastic molds. Now you can get an automated arm that’s controlled with nothing but the power of thought.

Some prosthetic feet even have built in actuators that simulate the movement and gait of a normal foot. It’s almost better than having a real foot. Except when the battery runs out.

In fact, prosthetics are getting so advanced they’re becoming better than the bits and pieces we’re born with.

It might sound a bit macabre but it does potentially lead to a world where people choose to have prosthetics instead of perfectly functioning ‘organic’ body parts.

Think about it. Imagine replacing a normal muscle with an artificial muscle’which could carry a weight 80 times its own while extending to five times its original length.‘That’s what scientists in Singapore have been able to do. Well they didn’t replace a human muscle, but they’ve built artificial ones.

No more hamstring tears, no more back problems. You’d be faster, stronger, able to work and live longer…it opens a world of potential. But it also opens a world of ethical questions too. And don’t even get me started on when this kind of technology infiltrates professional sports.

‘Performance enhancing’ aside, a new type of prosthetic just got a green light.

It’s a bioprosthetic heart. And the French health authority, ASNM, just gave the go ahead for human trials. Four patients in three hospitals will receive the artificial heart to replace their failing ones.

CARMAT SA [EPA: ALCAR] is the company that makes the artificial heart. Their CEO Mario Contivi said,

‘I would like to thank the ANSM, with which we have had very rewarding interactions, the clinicians involved in preparing the study and our shareholders, whose patience and support have been rewarded. We are touched and eager to be able to propose replacing a patient’s sick heart with a CARMAT heart.‘

If all goes well it’s a big step forward for saving the lives of people with end-stage heart failure. And a little step closer to world when living well past 150 is a real possibility.

Energy:
Waves Could Power Your Vacuum

The James Dyson Award is one of the design world’s most prestigious awards. Of course the award is in recognition of one of modern day’s greatest industrial designers. So you expect there to be some kudos in being a finalist and eventual winner.

We’re yet to find out who the winner is for 2013. The major announcement is on the 7th of December. But in the lead up to the big announcement one of the 20 finalists caught our attention. It’s particularly relevant when it comes to the topic of energy.

It’s ironic the potential winner of the Dyson Award could power the very invention that made Dyson a household name.

The project I’m talking about generates power from waves. Why we haven’t been able to harness the power of the surf until now is beyond my technical expertise. But from what I gather it’s something to do with the specific direction of the waves.

However this project seems to do away with that problem. The Renewable Wave Power (RWP) is specifically for the Orkneys, Scotland. And if it works it might just find its way to the best surf breaks around the world.

The RWP description says, ‘The design has the unique ability to absorb forces from the peaks and troughs of the North Atlantic waves in any given direction.‘

RWP will undergo more trials and development. And even if it doesn’t win the Award, I’m certain it’s technology that’s sure to take off.

Just like solar, wind, thermal and atomic power, RWP is another potential contributor of energy in a future world less reliant on fossil fuels.

Sam Volkering
Technology Analyst, Revolutionary Tech Investor

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Article by Investazor.com

During the summer, the Bank of England promised to keep the benchmark rate at 0.5% at least until the unemployment rate falls to 7% and the economy starts transferring signals of a strong pace of recovery. Recently, positive signs became more and more visible, as the unemployment rate decreased to 7.7%, raising the hopes to see the labour market remarkable improved by 2015. Still, other parameters need to be considered, as the inflation which remains at 2.7% and threatens to be nearing to 3%. In this case, a further increase in the interest rate needs to be considered. In the meantime, the stimulus program is maintained as it needs to stay in place until the economy prove to be as strong as needed in order to have this aid removed.

The governor Mark Carney has no intention of removing the actual program, on the contrary, he is seriously considering new ways of better stimulating the economy, as it takes all necessary safety measures since the high level o instability in the world’s economy and especially in the European economy.

The main indicator of economic growth last released was the quarterly GDP, which was up 0.8%, beating the expectations of 0.7%, fact that gave momentum to the economy of the United Kingdom. The services sector, which accounts for most of the activity in the British economy, increased with 0.7%.  Even if the evolution of the economic growth is still under the rhythm imposed in 2008, given the whole European picture, United Kingdom is finding itself among the countries with the brightest results. It also tends to give momentum to the Euro zone, showing improvements, even if there are countries that need more time in order to find their stability.

The post United Kingdom Gives Momentum to the Euro Zone appeared first on investazor.com.

By www.CentralBankNews.info     Colombia’s central bank held its benchmark interest rate steady at 3.25 percent, as expected, and said economic growth this year would be similar to last year but downside risks were “not negligible and may have increased recently.”
    The Central Bank of Colombia, which has held rates steady since April after cutting by a combined 100 basis points in the first three months of the year, said “growth of the United States may have suffered as a result of a partial closure of the federal government and increased uncertainty,” while some emerging economies were expanding at a slower pace and China’s growth was higher than expected by financial markets.
    The U.S. Federal Reserve’s decision to delay tapering its asset purchases had partly reversed the rise in interest rates from May and there was a decrease in the risk indicators for Latin American countries and a slight appreciation of their currencies.
    In September the central bank also forecast growth this year similar to 2012’s 4.2 percent, and earlier this month the bank’s governor predicted growth of 4 percent or slightly more. The central bank said it was projecting 2013 growth of between 3.5 and 4.5 percent.
    “In Colombia, the available data for the third quarter suggest that economic activity expanded at a faster pace than in the first half of the year, driven by investment,” the bank said, echoing last month’s statement.
    Colombia’s Gross Domestic Product expanded by an annual 4.2 percent in the second quarter, up from 2.8 percent in the first quarter.
    Colombia’s inflation rate was steady at 2.27 percent in September and August and the bank said expectations were anchored to its long-term goal of 3.0 percent inflation.

    www.CentralBankNews.info

By Mitchell Clark, B.Comm. For Profit Confidential

Well, it turns out that third-quarter earnings were pretty good for E. I. Du Pont de Nemours and Company (DD). The company surprised with solid volume growth and its cash balance soared.

DuPont recently broke out of a two-year-long stock market consolidation. Still yielding around three percent, this position is not expensively priced, and its latest numbers were very good, considering the size and maturity of this business.

The company’s third-quarter consolidated sales grew five percent to $7.7 billion. The strongest division was, once again, in agriculture, with a 15% gain in sales to $1.6 billion on stronger volumes and higher pricing in Latin America.

Every single operating division posted improved operating earnings comparatively, except for the company’s performance chemicals business. Sales in Europe, the Middle East, and Africa (EMEA) grew a surprising 10% during the quarter, while sales in North America and the Asia Pacific grew three percent; Latin American sales grew four percent.

Of note was the company’s strong improvement in shareholders’ equity, and as is typical with so many large corporations, DuPont’s cash and cash equivalents balance soared to $7.0 billion, from $4.3 billion at the end of 2012.

The company’s third-quarter dividend was $0.45 a share, compared to $0.43 in the same quarter last year. Another dividend increase is likely within the next two quarters; the company can certainly afford it.

As I stated before, the most important division for DuPont is its agriculture business. Third-quarter expenditures on research and development were $540 million, compared to $521 million in the same quarter last year. Virtually all of the increased spending was dedicated to the company’s agriculture business.

Wall Street wants DuPont to spin off its agriculture division into a whole new company. This certainly would make for a very attractive asset, but it’s the one bright spot in DuPont’s mature roster of businesses. It’s hard to imagine the company would sell its best asset.

On the stock market, DuPont has seemingly broken out of its major consolidation, and while growth expectations are still very modest for this conglomerate, the prospect of increasing quarterly dividends is improving. The company’s stock chart is featured below:

Chart courtesy of www.StockCharts.com

More and more of DuPont’s business is being considered non-domestic. According to the company, the percentage of total consolidated sales in developing markets increased to 40% from 38% in the comparable quarter. For DuPont, developing markets include China, India, Latin America, Eastern and Central Europe, the Middle East, Africa, and Southeast Asia. While many of these regions are the source of decent growth for DuPont, local prices and currency translation is a hurdle.

All in all, it was a very solid quarter for DuPont. Just like so many other large companies have been reporting, DuPont’s operating earnings beat consensus but revenues came in slightly short.

Street estimates for DuPont for this year and next have been going up across the board. Company management cited that its agriculture segment is experiencing a strong start to the fourth quarter. Management was deliberately conservative with its year-end forecast and this is typical of companies wanting to beat consensus. DuPont is a solid dividend payer and may be an attractive investment opportunity on dips for income-seeking investors.

by Sasha Cekerevac, BA

Well, the latest numbers related to job creation were recently released and to no one’s surprise, they were worse than expected.

For the month of September, job creation totaled 148,000, down from expectations of 180,000. (Source: Bureau of Labor Statistics, October 22, 2013.) While most people are simply writing off the latest data by saying that the U.S. government shutdown was the primary reason for the lack of job creation, I think there’s much more going on behind the scenes than simply a couple of weeks of not going to work.

This lack of job creation extends beyond simply the past few weeks; the trend over the past couple of years has remained far below potential. Even with the Federal Reserve throwing literally trillions of dollars into the U.S. economy for the past few years, there are no signs of life.

However, looking at the total level of job creation is not enough. Two other key figures you should pay attention to in addition to the total level of job creation are wages and hours worked. The Federal Reserve takes these additional metrics into account when trying to develop a picture of the economy.

The average hourly earnings increased by 0.1% in September, slightly below expectations of 0.2% from the previous month. The average hourly workweek did not change at 34.5 hours.

I don’t know about you, but seeing a mere 0.1% increase in my pay would not cause me to run out and spend more money or feel more secure about my financial future.

Before job creation takes place, you will usually notice hours increasing as employers use existing workers for longer hours through overtime, rather than hiring new employees right off the bat. Therefore, the fact that average hours worked per week is not rising indicates that businesses are not seeing an increase in demand for their products.

If this is the net result stemming from the most aggressive monetary policy ever put in place by the Federal Reserve, I can only think of one word to describe the situation: pathetic.

Even though the lack of job creation shows that our economy remains weak, stocks are moving upward. This tells me that people aren’t buying stocks based on true fundamentals, but because of the promise of continued Federal Reserve-induced stimulus.

The problem now for the Federal Reserve is that they are running out of arrows in their quiver. I think that the Federal Reserve’s monetary policy is losing its effectiveness—meaning, the central bank is pushing on a string. At some point, this will begin to impact stocks.

However, once the Federal Reserve begins to reduce its aggressive monetary policy stance, I think the economy and job creation will get hit significantly.

Look at it this way: if job creation was only at 148,000 new positions last month with the most aggressive monetary policy stance by the Federal Reserve in history, does that give you any confidence that the U.S. economy can stand on its own two legs?

Not to me, it doesn’t, as it appears that the fundamental nature of the economy is broken and needs significant structural reforms. But try telling that to the stock market.

            Chart courtesy of www.StockCharts.com

You would think that with a weak economy, muted job creation, and no real income growth, the stock market would have trouble moving higher—wrong. The S&P 500 is at its all-time highs.

While the market was oversold in 2009, I would say most of this year’s move has been fueled by the Federal Reserve’s monetary stimulus.

Considering where the job creation is today, I would certainly look at raising cash, because at some point, the fundamental picture of the economy will begin to impact the stock market and bring prices back down to reality.

This article How to Invest in This Fundamentally Broken Economy was originally published at Investment Contrarians

By Chris Vermeulen – GoldAndOilGuy.com

Traders and investors all around the world is having trouble climbing over the wall of worry/fear with the US stock market, and rightly so. There is a lot of things taking place and unfolding that carry a high level of uncertainty. Let’s face it, who wants to invest money into the market when it’s hard to come by (high unemployment, banks are still extremely tight with their money, companies are nowhere near wanting to hiring new staff).

The hard pill to swallow is the fact that the stock market loves to rise when uncertainty is high. It’s almost doing it just to drive investor’s nuts who sold out near market bottom or recent correction. You must overcome the urge to short the market when the economy looks so bearish in the years ahead, and continue to trade with the trend.

Short Term Investing – Weekly Volatility Index Chart

Below you can see the fear index. The chart is self-explanatory showing where it should move next. But if you are not familiar with the VIX then here is definition by investopedia:

“The first VIX, introduced by the CBOE in 1993, was a weighted measure of the implied volatility of eight S&P 100 at-the-money put and call options. Ten years later, it expanded to use options based on a broader index, the S&P 500, which allows for a more accurate view of investors’ expectations on future market volatility. VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets.”

Weekly Investing Chart of the SP500 Index

After reviewing the VIX chart above which points to stocks nearing a level of selling pressure, then review the chart below we come to a conclusion that a minor pullback of 2-5% is likely to take place in the next week ortwo.

The divergence in the Relative Strength Index is a bearish sign for the broad market. While I feel a pullback is do and needed for the market to regroup, it is important to review the seasonality chart and know that we are entering one the strongest times of the year for stocks.

SP500 Seasonality Chart

Again, using the data from the previous two charts along with this graph clearly shows that a pullback in the stocks is likely going to be bought back up by the brave investors willing to override their fear and go with the trend. For more interesting charts check out my stock chartlists: https://stockcharts.com/public/1992897

The Wall Of Worry Conclusion:

In short, expect the stock market to correct in the next week or two. But once we get a correction of two percent or more, be prepared for buyers to step back in and buy things up into year end.

This WALL OF WORRY is about to GET HIGHER!

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by George Leong, B.Comm.

A soft jobs reading came out last Tuesday, and the stock market…soared? That’s right. Initially, I was a bit taken aback by the surge, but then again, the buying was driven by the optimism surrounding soft economic growth—because that means the Federal Reserve can justify its continuance of cheap money and the stock market stays at its highs. (You’d be a fool to think the buying was driven by sound economic and corporate growth—even if that is the first lesson in Economics 101.)

My sense is the Federal Reserve will most likely refrain from any tapering of its bond buying until early 2014, when the new Fed chairman, Janet Yellen, takes over. She’s also accommodative towards the printing of cheap money.

And that’s exactly what the stock market wants. Without all of this so-called monetary “cocaine,” I doubt the stock market would have moved this high.

But investors need to be wary. The stock market is warped now in its thinking and the continued dependence on cheap money is ridiculous. The stock market needs a stronger economic recovery, more job creation, and much better revenue growth from companies, which remains problematic.

However, in spite of the absence of these fundamental factors, the stock market will likely continue to edge higher, partly due to the continued lack of alternative investments. With the 10-year bond yield down at 2.49%, the bond market is a cesspool for your capital. Heck, you can make that in a day on the stock market at the rate it’s moving! Investors realize this and will likely continue driving cheap money into stocks and pushing equities higher.

Again, this is great for investors, but you have to think about how it will negatively impact the financial soundness of America going forward, especially as interest rates begin to ratchet higher. The amount of debt being carried by the government and Fed is massive. We could be headed towards a financial tsunami down the road that will really hinder America’s ability to grow and retain its spot as the top economic powerhouse in the world, especially with China sitting squarely in America’s rear-view mirror.

So enjoy the ride and make your money now. It’s not going to last forever, as we are into the fifth year of the current bull market that is showing some signs of fading on the horizon.

Be on the lookout for this and make sure you have an exit strategy in place.

This article Five-Year Bull Market Run Showing Signs of Fading? Was originally published at Investment Contrarians

By George Leong, B.Comm. For Profit Confidential

It’s time to look at the charts again. The S&P 500 scored yet another record high of 1,759.33 on Tuesday and is now up over one percent from its mid-September high.

I must admit: the S&P 500 looks pretty good on the chart, driven by bullish sentiment and a desire to reach higher. The breakout appears to be holding, so 1,800 looks reachable by the year’s end. Of course, a lot will depend on whether shoppers spend in the upcoming holiday season and if the Federal Reserve starts tapering its bond buying.

For now, as shown by the long-term yearly chart of the S&P 500 below, you’ll notice the two plateaus highlighted by the horizontal blue line, which stretch from 1965 to 1980, when stocks did nothing, and from 2000 to the present. As shown on the chart, the S&P 500 staged an impressive breakout that resulted in a two-decade-long rally extending from 1980 to 2000, based on my technical analysis.

Back in 1985, the S&P 500 was trading at a mere 200 points. We are up nearly eight-fold since.

Now, is the S&P 500 headed for another extended breakout like the one it experienced more than 30 years ago? It could definitely happen, that is, if all the stars are aligned.

Chart courtesy of www.StockCharts.com

Perhaps we are in a state of utopia for the stock market—with steady growth, low interest rates, benign inflation, and cheap accommodative monetary policy.

But be careful before treading on. The problem I see is that we will likely need to see a bigger stock market correction than the recent five-percent correction by the S&P 500.

Take a look at the past two years on the chart below. There was a correction of about 10% in the S&P 500 in the second quarter of 2012, followed by another 7.5% adjustment in the fourth quarter (as indicated by the shaded ovals). Then there was the 6.5% correction a few months back.

With the S&P 500 now at another record high, another correction could be brewing on the horizon, as indicated by the final shaded oval in the chart below.

Chart courtesy of www.StockCharts.com

Of course, we may not see a correction until the stock market reaches higher. Once that point is achieved, say the S&P 500 at 1,800, then we could see a fallout, as the market realizes the economic and corporate growth are not that good and they don’t support the market gains.

The months of November and December will be interesting and stocks could go either way. Just make sure you take some profits off the table and cut some losses prior to year-end.

by John Paul Whitefoot, BA

Despite Congress miraculously pulling the U.S. back from the brink of destruction by temporarily raising the debt ceiling and ending the U.S. government shutdown, Americans continue to be a pessimistic bunch. But can you blame us?

According to Gallup’s U.S. Economic Confidence Index, consumer sentiment remains in negative territory. After falling to -39 during the recent standoff in Washington, U.S. economic confidence has improved to -36. To use the term “improved” is being generous; in late May, the index was at -3. (Source: “U.S. Economic Confidence Index [Weekly],” Gallup web site, October 14, 2013.)

While the brinksmanship in Washington is (temporarily) over, our pessimism isn’t. According to another poll, 71% said economic conditions right now are poor, while just 29% said economic conditions are good—the lowest level of the year. Now granted, it takes time for economic confidence to return; following the debt negotiations in 2011, it took economic confidence five months to recover. (Source: Steinhauser, P., “CNN Poll: After shutdown, America is less optimistic about economy,” CNN web site, October 22, 2013.)

Unfortunately, it could be worse this time, thanks in large part to high unemployment and stagnant income and wages. And there’s also the fact that Washington only agreed to fund the government through to January 15, 2014 and extend the debt ceiling through February 7, 2014. Americans can’t get too optimistic about the economy knowing the government is just taking time to reload.

Fortunately, there are economic lands where optimism is blooming in light of real economic change. Economic optimism in the eurozone improved for the fifth straight month and hit a two-year high in September. The European Commission said morale in the 17-nation euro zone bloc climbed faster than expected, to 96.9 from 95.3 in August; this represents the best reading for the eurozone since August 2011. (Source: Santa, M., “Faith in euro zone economy hits two-year high in September,” Reuters web site, September 27, 2013.)

The positive trend in the eurozone was bolstered in part by the bloc’s five biggest economies, with Spain and Italy increasing by 2.5 points and France inching up 1.6 points. Sentiment in Germany, the eurozone’s largest economy, remained unchanged.

But that doesn’t mean Germany doesn’t have a lot of reasons to be optimistic. The eurozone country said its robust economy would stimulate record employment in 2013 and 2014 and boost consumer confidence, spending, and industrial investment. The eurozone’s largest economy’s gross domestic product (GDP) is expected to grow 0.5% in 2013 and 1.7% in 2014; as a result, the eurozone country’s unemployment rate is expected to fall from the current 6.9% level to 6.8%. (Source: “Germany bullish on economy, jobs for 2014: ministry,” The Business Times web site, October 23, 2014.)

Meanwhile, Spain’s central bank said its two-year recession had come to an end in the third quarter, when Spain reported 0.1% quarter-over-quarter growth. While not exactly a robust number, it does show that the eurozone in general is getting stronger.

Investors looking to both fortify and diversify their holdings might want to consider exchange-traded funds (ETFs) with exposure to the eurozone. The Vanguard FTSE Europe (NYSEArca/VGK) ETF is up 17% since the beginning of July and four percent since the beginning of October.

Those investors looking for a more local flavor can consider any number of country-specific eurozone ETFs. The iShares MSCI Germany (NYSEArca/EWG) ETF is up 18% since the beginning of the third quarter and has gained 5.5% since the start of October. Meanwhile, the iShares MSCI Spain Capped (NYSEArca/EWP) ETF is up 34% since the beginning of July and more than eight percent this month.

Thanks to a weak U.S. economy, it looks as if the Federal Reserve is going to continue its $85.0-billion-per-month quantitative easing policy, at least until the U.S. economy shows signs of sustained growth—but that’s still a ways away. What the current ongoing liquidity means is that cheap money can flow into stronger economies, including the eurozone.

This article Three Bullish ETFs for an Increasingly Optimistic Eurozone was originally published at Daily Gains Letter