Gainers

Losers

Data Provided by MSCI Inc.

Macro Notes
Foreign currencies weakened against the dollar in nearly every major region this week. The euro clawed back some losses Friday on news Greece would see more bailout funds. The the eurozone currency still ended the week down 0.20 percent. Also, for those of you who’ve been stockpiling French francs for the past 10 years waiting for the euro to dissolve, the old currency officially became worthless this week.

A rally in the Indian rupee, whose strength certainly wasn’t hurt by inflows of foreign capital this week, and a 0.31 percent rise for the Australian dollar were offset in the region by the Japanese yen’s 2 percent drop. Was the yen’s move a reaction to Tuesday’s Bank of Japan announcement of further easing? It’s tough to say, but for U.S. investors, the currency’s drop took some of the joy out of the Japanese stock market’s 5 percent rally this week.

Gainers

Losers

Data Provided by MSCI Inc.

Macro Notes
Europe’s regional index finished the week relatively flat, with Hungary’s, Spain’s, and Poland’s losses offsetting the rest of the continent’s gains. Surprisingly enough, the market seemed to take in stride news of the ECB exchanging €50 billion of old Greek bonds for new ones to avoid taking losses.

It’s hard not to wonder what the implications of that move are for private European banks and other sovereign debt-holders.

Currency impacts, for the most part, were fairly minimal last week – local euro-denominated index returns ended the week close to their USD-hedged counterparts. Moreover, the exceptions, the Czech Republic, Hungary, Poland and Norway aren’t exactly at the center of investors’ attentions right now.

Instead, everyone’s favorite troubled step-child, Greece, managed to impress global investors despite worries amongst eurozone finance ministers that Greece can’t be trusted with its entire bailout package all at once. Although a writer at Fidelity Interactive Content Services suggests convinced that now may be the right time to pile money back into Europe, I’d like to see Greece actually meet some of its goals.

Gainers

Losers

Data Provided by MSCI Inc.

Macro Notes
What a difference a calendar year makes.

The Indian market, last year’s slaughterhouse for U.S investors, just reeled off its seventh-straight week of gains. The Indian market is the region’s second-best performer in the past three months, narrowly trailing the return of the Thai market.

Perhaps more astonishing has been the performance of the rupee -- last year’s dog, which has been the third-best performing currency in the region the past three months.

India is following Asia’s economic leader, China, which enjoyed another strong week. Chinese growth in past 90 days has propelled every market in the region post solid gains so far this year.

Australia and New Zealand finished the week in the red along with Malaysia, even though the Aussie and Kiwi dollars both moved up against the dollar last week. Both currencies have been the best performing currencies in the past three months.

While strong currencies buoyed U.S. investor returns in these countries, the Thai and Hong Kong markets have managed to post returns of 15 percent over the past 90 days without any help from a rising currency.

On the other hand, a weakening yen has eroded otherwise lofty returns for U.S. investors in Japan as last week’s 2 percent decline in the currency overshadowed a near-5 percent return in the Japanese stock market.

Gainers

Losers

Data Provided by MSCI Inc.

Macro Notes
Equities in Latin America made definitive movements into the green as positive news from Europe signaled that Greece would receive another bailout package. Currency impact in Latin America was mild across the board with the exception of the Chilean peso. The peso brought a currency impact difference of -1.49 percent to U.S. investors in Chile as it retreated against the U.S. dollar over the course of the week. Still, Chile’s central bank reports that it’s seeing improved optimism in the financial markets and that demand has grown a bit faster than expected.

Though Mexican equities showed a lackluster performance, investors have much to rejoice about as Mexico and the U.S. agreed to work together when drilling for oil and gas below the maritime border in the Gulf of Mexico. Secretary of State Clinton notes that “the reservoirs could hold considerable reserves that would benefit the United States and Mexico alike”.

The coming week could hold greater volatility for Latin America as Greece and the Iranian nuclear ordeal play an even bigger role in investor’s decisions.

Gainers

Losers

Data Provided by MSCI Inc.

Macro Notes
Undoubtedly, the Middle East and Africa are feeling the consequences of the European sovereign debt crisis.

Europe’s problems are especially tough on Morocco’s economy. According to Reuters, European demand generates almost 60 percent of Moroccan export revenues as well as over 80 percent of the African country’s tourism. In addition, Morocco’s 2.5 million migrant workers are struggling to find blue-collar jobs across the strait of Gibraltar in Europe’s slowing economy.

Meanwhile, ongoing turmoil in South Africa’s mining industry contributed to a -1.10 percent loss in local currency: bringing losses of -1.49 percent to U.S. investors and -0.40 percent to local market players. To make matters worse, proposed UN sanctions on Iran will hurt South Africa even more as it gets nearly a quarter of its oil supply from Iran.

Compared to its neighbors, Egypt did relatively well last week, despite overall weakening in the Egyptian pound. U.S. investors gained 5.17 percent compared with locals who gained 5.23 percent.

Egyptian stocks rallied as France Telecom agreed to pay Naguib Sawiris $2 billion for a 20 percent direct stake in Egyptian Co. For Mobile Services (Mobinil). The Egyptian telecom company’s share price jumped 10 percent and Orascom Telecom Media & Technology, an associated company, followed suit, gaining 9.9 percent.

The purchase marked another move by the French telecommunications company to continue expanding its business into emerging markets.

Gainers

Losers

Data Provided by MSCI Inc.

Macro Notes
U.S. equities benefited from another week of good economic data. A quick perusing of the results on the economic calendar for the week ending Feb. 17 shows improvements in unemployment and manufacturing. Friday’s CPI results showed costs rising slightly, reducing deflationary concerns and dampening the case for QE3. The results are likely to keep Fed policy in a holding pattern, until more definitive data come out.

Depending on who you listen to earnings season has brought either promising or alarming signals.

It’s hardly surprising that earnings were bound to cool off, given the string of above-average earnings seasons recently. Still, with many signs pointing toward a steadily improving economy, the recent rally isn’t likely to halt.

The one caveat appears to be Europe, as a lot of uncertainty surrounding Greece and its neighbors remain. The fact that the U.S. economy has continued to improve while Europe sorts out its mess suggests that a successful resolution would only lead to more improvement for U.S. markets.

Signs of a U.S. recovery and increasing oil prices have fueled the rise of the Canadian dollar. While concerns about Europe seem to be keeping a lid on the loonie’s rise, the Canadian currency has nonetheless steadily appreciated in the past few months. As the Greek bailout deal appears to be set, I anticipate we’re going to see Canadian equities benefit from further appreciation in the loonie.