Jeff Saut Weekly

Investment Strategy by Jeffrey Saut

As for the “here and now,” our hedged “long” positions in the major
market exchange-traded funds (ETFs) are now showing decent gains and we
are raising stop-loss points appropriately. Meanwhile, our unhedged
long positions in the iShares MSCI Japan (EWJ/$9.63) and the iShares
MSCI China (FXI/$31.11) have not only broken out above their respective
December closing “highs,” but their November closing “highs” as well,
and hereto we are raising stop-loss points. As for the closed-end
municipal bond funds recommended three weeks ago, both BlackRock
MuniHoldings Insured (MUE/$9.60) and Nuveen Insured Dividend Advantage
(NVG/$11.60) have experienced rallies that have reduced their discounts
to net asset value by nearly 50%. While we continue to like the
strategy of buying distressed debt, we would now be more price
sensitive given the fact that the Treasury Bond complex broke down last
week, implying higher interest rates. Interestingly, while we don’t own
it, the Market Vectors Agribusiness ETF (MOO/$29.46) has closed above
its November/December closing “high,” which should help our
recommendation on 8%-yielding Archer-Daniels convertible preferred “A”
shares (ADM+A/$38.27). We continue to like the agriculture theme and in
addition to Archer-Daniels offer for your consideration Bunge’s
7%-yielding convertible preferred (BGEPF/$68.00); both issues are
followed by our correspondent research affiliate.