Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the MSCI All Country Europe Index, past 5 trading days, priced in USD

Macro Notes
The euro ended another week down on Friday, touching a seven-week low after disappointing bond auctions in Germany and Italy. Meanwhile, the Brazilian real fell more than 5 percent for the week, leading other emerging market Latin American currencies, which were broadly down.

In fact, the week saw the dollar strengthen against currencies in every major region, amid fears of a global economic slowdown. Economic ties to a faltering Europe have thus hurt even the currencies of developing-market countries.

Moody’s cut Hungary’s sovereign debt rating to junk status, which helped push the Hungarian forint to recent lows. Belgium and Portugal also suffered downgrades from rating agencies over the week.

If anything, fears over Europe seem to be mounting, particularly given the climbing yields on Italian bonds and a new hesitancy to loan to Germany, which had been considered safe from the economic woes of its European neighbors.

U.S. investors have felt the spreading eurozone worries, via another week of a strengthening dollar, which is looking increasingly attractive in all the fear.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	On Friday, Moody’s downgraded Hungary’s sovereign debt to junk, a move that sent both the Hungarian forint and neighboring currencies tumbling. The forint took the brunt of it, falling nearly 2% on the day.

Macro Notes
Last week was again firmly in the red for Europe, driven by worsening debt concerns and magnified by a weakening euro.

Investors in a dollar-denominated MSCI ACWI Europe Index lost 6.35 percent on the week—nearly 2 percent worse than the 4.47 percent that local investors lost. There were no bright spots anywhere—losses for dollar-denominated investors ranged from a high of 9.6 percent in Italy to a low of 4.7 percent in Denmark.

Last week started badly, with Moody’s warning that it might downgrade France’s outlook, though hedging that its rating wasn’t yet under threat.

On Tuesday, Spain’s three-month Treasury auction resulted in 5.11 percent yields—the highest since the euro’s introduction. On Wednesday, Germany’s bond auction failed to attract the expected buyers, drawing worry about the region’s strongest country. On Friday, Italian 10-year bond yields rose to 7.3 percent, solidifying fears that Italy may be the next eurozone country to require a bailout.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The likely passage of a new mining tax sent U.S. investors in Australia fleeing.

Macro Notes
With another week of pronounced weakness, the Asia Pacific region edged closer to matching the eurozone as the globe’s worst-performing stock composite. The region’s 18 percent year-to-date drop, as measured by the MSCI Asia Pacific ex Japan Index, is now close to matching the 19 percent decline in the Stoxx Europe 600 Index.

The region was hit with a triple whammy of negative news, as a combination of a disappointing report on Chinese manufacturing, a downward revision to third-quarter U.S. growth, and the approval of an Australian mining tax sent Asian markets into a tailspin.

Australia’s market was predictably the week’s worst, as the approval from the lower house of Congress on a comprehensive new mining tax threatened to cleave profits from the resource-rich country’s corporations and sent the MSCI Australia Index down nearly 5 percent.

Despite reassurances from the country’s finance minister that foreign direct investment in the country would continue undeterred, the currency markets disagreed nearly as much as the equity markets, sending the Aussie dollar down nearly 3 percent.

The Taiwanese market was another standout for all the wrong reasons, as the Taiwanese market sunk in tandem with the country’s currency after Taiwan’s statistics bureau cut 2011 and 2012 growth estimates. The worst week in two months was enough to send the market down over 7 percent in dollar terms.

China, the region’s economic leader, set the tone for the week with its worst reading on manufacturing in over two years.

Were it not for the country’s currency controls, results would have been even worse for dollar-based investors. Still, the fallout from this week’s news isn’t likely to be felt immediately, as China announced the opening of an investigation into U.S. renewable energy subsidies and their potential impact on Chinese competitiveness.

Also, the Indian rupee, the Korean won and New Zealand dollar were all notably lower on the week, as concerns over European contagion and local economic weakness led investors to sell these Asian currency/U.S. dollar pairs last week.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the MSCI Brazil Index, past 5 trading days, priced in USD and BRL

Macro Notes
Last week brought terrible returns for U.S. investors in Latin America, as currency movements impacted local returns negatively.

Chile took the hardest hit, as depreciation in the peso brought returns of 9.89 percent to U.S. investors. Even the giant of Latin America, Brazil, saw its U.S. investors take a hit from the depreciating real, with a weekly return of 8.12 percent.

Traders in Latin America continue to speculate that future rate cuts in Brazil are impending. This comes after a statement from President Dilma Rousseff that “the country has room to use monetary policy to shore up economic growth.”

Meanwhile, Chilean Central Bank President Jose De Gregorio announced that Chile may need to revise its 2012 growth estimate as the sovereign debt crisis in Europe continues. If a European nation were to exit the euro, the ripple effects would be huge—not only for the likes of Chile, but countries in the developed world as well.

In Mexico, expectations of an interest rate reduction are being thrown aside as the peso hovers at a two-year low. As it stands right now, U.S investors in Mexico have lost 16.9 percent versus local returns of 4.47 percent—the difference due to the steep decline in the peso.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the Market Vectors Egypt Index ETF (TR, USD) and EGP/USD cross rate, past week

Macro Notes
Egypt pushed Europe’s debt crisis off the front page last week with a new drama of its own.

The stability of Egypt’s government was called into question as protesters in Cairo’s Tahrir Square called for an end to military rule. Thirty-eight have died so far in this latest wave of unrest. Egyptian parliamentary elections are scheduled for today.

Meanwhile, Standard & Poor’s cut Egypt’s sovereign debt rating from “BB-” to “B+.” That’s the fourth rate cut this year. One-year Egyptian debt was sold last week at yields approaching 15 percent. While equities aren’t directly tied to government debt, the S&P’s stamp of disapproval and double-digit yields will do little to reassure nervous U.S. investors.

The Market Vectors Egypt Index ETF (NYSEArca: EGPT), the sole ETF vehicle for single-country coverage, hit the year-to-date low last Tuesday. On Thursday, Orascom Telecom rose more than 6 percent on news it would split into two companies. Orascom Telecom is the third-largest holding in EGPT.

Not surprisingly, the Egyptian pound fell against the dollar for the week, though it remained above lows for the year.

Elsewhere, the South African rand fell for the week, dragged down by the euro debt crisis.

Gainers

Losers

Data Provided by MSCI Inc.

Editor's Choice Graph	Graph Description
	The returns of the MSCI United States and MSCI Canada indexes, past week, priced in USD

Macro Notes
Last week served up a double dose of pessimism from Europe as well as the United States. U.S. markets fell 4.9 percent on the week, while Canadian equities in U.S. dollar terms slipped 5.8 percent.

The European debt crisis took a turn for the worse, as an auction of German 10-year bunds failed to draw enough interest. Additionally, the latest auction of Italian and Spanish debt saw significant increases in borrowing costs.

The reverberations were felt throughout the markets, with investors rushing to the “safety” of the U.S. dollar. The greenback appreciated against most currencies, including the Canadian dollar. U.S. investors in Canadian equities lost over 2 percent due to the weakening loonie.

The supercommittee in Washington, D.C. meanwhile failed to reach an agreement on reducing the U.S. budget deficit, causing markets to tank.

The partisan standoff raises concerns about the U.S.’ ability to reduce its own debt burden. For now, the rating agencies have all taken a wait-and-see approach related to the U.S. deficit. However, further downgrades may be on the horizon should Congress try to undo the triggered reduction in spending.

The supercommittee’s failure will result in automatic cuts totaling $1.2 trillion in defense and discretionary spending that are to go into effect starting 2013.