Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	Returns of the MSCI ACWI for the past five trading days, priced in USD and local currencies

Macro Notes
Last week saw continued timidity in the market, as modestly improved U.S. jobs numbers offset the news of European bank downgrades. A wavering market persisted for the week, with the major indexes often whipping between positive and negative territory throughout the trading day. In short, worries over Europe haven’t subsided, and markets remain shaky.

While the MSCI All Country World Index rose a modest 1.46 percent in local terms, currency gains helped to boost returns for U.S. investors. U.S investors benefited across the board, as gains in currencies such as the Brazilian real and the euro helped to alleviate the negative returns that local investors experienced.

Despite the positive returns related to euro strengthening, it’s become increasingly clear that those markets will likely take a sizable hit if fears of a eurozone collapse materialize.

Until an answer to Europe’s problems is clear, anemic returns across the board and spastic reactions to bad news seem to be the new normal.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The Swedish krona’s jump toward the end of the week may look small, but it was enough to create a fairly sizable gap, at 1.6 percent, between the local and USD-denominated MSCI Sweden indexes.

Macro Notes
Most of the news coming out of Europe last week was bad, but the markets didn’t seem to get the memo.

According to the Wall Street Journal, U.K. bank chief Mervyn King called the current crisis “the most serious financial crisis at least since the 1930s, if not ever.” Former ECB president Jean-Claude Trichet echoed King’s sentiment, noting that “the economic outlook remains subject to particularly high uncertainty and intensified downside risks.”

In addition, Fitch cut Spain’s and Italy’s ratings on Friday. Still, Spain and Italy returned 3.5 percent and 4.9 percent, respectively, over the week, and most of the other eurozone countries were in similarly good shape. That said, Greece actually had a spectacularly bad week, losing 9.04 percent in the EUR- denominated index and 8.53 percent in the USD-denominated index.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	A strong Aussie dollar augmented a strong rally in Australian equities, capping the market’s best week in three years.

Macro Notes
Last week, the Asia Pacific region produced a mixed bag of results, as seven of the region’s 13 markets finished higher for the week. A furious end-of-week rally produced two-day returns, on Thursday and Friday, that were the strongest in over two years. Among the winners were export firms, smartphone makers and mining companies.

Australia and New Zealand were the regional standouts, finishing the week up 5.33 percent and 2.58 percent, in U.S. dollar terms, respectively. In other words, Australia’s rugby team was not the only flag bearer trouncing the competition last week.

Australia’s superiority over its so-called “kissing cousin,” New Zealand, was on display not just in its market’s superior performance last week, but also in light of S&P and Fitch’s decisions to strip the Kiwis of their “AAA” rating. The decision sent credit spreads between the two countries to the highest level since 2009.

As if Australia’s week could not get any better, the IMF called the country’s economic performance in recent years “enviable.” Unfortunately for investors, the IMF went on to call for increases in mining taxes in order to insulate the country’s economy from sustained European weakness and Chinese softening.

Meanwhile, Indonesia’s market continued its swoon. As the country’s equity markets fell 4.92 percent for the week in U.S. dollar terms, bond yields fell from three-month highs, dropping 54 basis points.

Despite Indonesia bonds posting the best performance of the region so far in 2011, overseas funds cut holdings of the country’s sovereign issues by an unprecedented 29 trillion rupiah ($3.2 billion) last month. It remains to be seen if this represents a blip on the radar, or a more substantial reaction to the country’s proposed market interventions.

Finally, India’s markets shaved losses in the second half of the week after strong export figures buoyed investor confidence.

Regardless of how good the country’s exports are now, India’s economy will continue to be subject to the ups and downs of the European debt crisis, and the performance of Indian equities will follow suit. As with all of its Asian counterparts, India’s consumer class will only emerge if the country is able to tame the inflationary beast that has its grip on food prices.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the iShares MSCI Brazil Index Fund (NYSEArca: EWZ), the BRL-USD cross and the MSCI Brazil Local Index over past five trading days.

Macro Notes
The global markets went through another week filled with uncertainty, as the sovereign debt crisis continued in Europe. But last week was quite positive for Latin American equities. Peru made the strongest comeback, with a 3.9 percent rally by the end of the week. Currency impact in Peru was so miniscule that returns were virtually identical for local and U.S. investors.

Peruvian banking officials are still preparing for the worst in terms of the global economic outlook. Last week, the Peruvian central bank kept borrowing costs unchanged for the fifth month in a row and the sovereign debt crisis outweighed any concerns on inflation. It cited slower growth as one of the major factors driving its decision.

Peru is also undertaking fiscal measures to support its economy, as it taps into its surplus to engage in “preventative” stimulus measures amounting to $470 million.

Meanwhile, currency impact hit the hardest in Brazil last week, as the real posted the biggest weekly gain since 2008. The real rallied over 6 percent last week, despite a central bank survey saying Brazil will miss its inflation target this year—the first time since 2003. U.S. investors in Brazil were up 2.81 percent this week, while local investors experienced negative returns of 2.31 percent.

This directly affected those in the iShares MSCI Brazil Fund (NYSEArca: EWZ) who experienced returns of nearly 4 percent—a huge difference from that of local Brazilian markets.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	Returns of the South African rand vs. USD; returns of the iShares MSCI South Africa Index ETF (NYSEArca: EZA)

Macro Notes
Emerging market currencies generally rebounded last week, at least temporarily reversing last month’s slide.

The South African rand put last quarter’s dismal showing in the rearview mirror, rekindling hopes among traders for a possible rate cut from the central bank. Meanwhile, South Africa’s Reserve Bank said the value of its foreign reserves dropped more than 3 percent in August as gold and the euro sagged.

Price return for U.S. investors in the iShares MSCI South Africa Index Fund (NYSEArca: EZA) was 4.8 percent for the week. Comparable returns were basically flat last week for the Market Vectors Egypt Index ETF (NYSEArca: EGPT) and the iShares MSCI Israel Capped Investable Market Index Fund (NYSEArca: EIS).

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	Returns of the MSCI Canada and MSCI United States Index, past five trading days, priced in USD

Macro Notes
Rhetoric from world economic leaders regarding the outlook for the U.S. and global economy continues to be negative. Ben Bernanke pledged to continue providing support to an economy that’s “close to faltering.” The United Kingdom’s bank chief, Mervyn King, was quoted in the Wall Street Journal saying: “This is the most serious financial crisis at least since the 1930s, if not ever.”

North America continues to feel the weight of Europe’s problems hanging over its shoulder. The U.K. embarked on another round of quantitative easing to support its flailing economy. Earlier in the week, news of the European Commission’s plans to recapitalize failing banks in the region aided the rally in North American markets. As with most things in Europe lately, nothing is certain or final.

Locally, not all was doom and gloom. The increase in jobless claims came in below expectation at 401,000 for the week. The U.S. economy added 103,000 jobs in the last month, beating expectations. Retail sales showed improvement on the back of back-to-school promotions. President Obama vowed to push through his jobs proposal, taking a piecemeal approach if necessary. U.S. stocks closed last week up 2.2 percent, as the market will take any positive news at this point.

After two weeks of suffering losses at the hands of currency exposure, U.S. investors ended the week up 0.87 percent, benefiting from weakness in the U.S. dollar. In local terms, Canadian equities closed the week down 0.19 percent, despite a reported increase of 61,000 jobs, and a decrease in unemployment to 7.1 percent.