After brief interruption, stocks have continued their winning streak. The ongoing market event, earnings season, has started with a bang, with companies on many points of the spectrum beating estimates. Alcoa, JP Morgan Chase and Intel all surprised the Street.

But the strong move in the U.S. stocks pales in comparison with the shares of emerging markets, especially the BRACC countries. Year-to-date, BRACC countries have outperformed the U.S. strongly, and we expect this trend to continue.

The main reason behind the strong showing of emerging and BRACC markets is the fact that their economies are not only recovering, but getting stronger. Australian unemployment rate, for example, unexpectedly fell last week to 5.7 percent (from 5.8 percent), as the number of people who are employed rose by more than 40,000 – the biggest gain in nearly two years. The rate of increase in Australia reflects its improving economy – as does the Australian dollar, which is now at its highest levels in a year. Expectations are for another interest increase, which will be another positive for the currency.Read more...