As one would expect during a bull market, small caps have been a leading performer since the low of March 9 last year, with the Russell 2000 Index gaining 96.7% compared with the S&P 500 Index rising 70.9%.

Considering the last few days, however, it would seem if small caps have been tiring, resulting in the Russell 2000 Index being the only major US stock market index registering a loss for the past week as shown below.

Source: StockCharts.com

A few days’ underperformance is hardly grounds for drawing meaningful conclusions, but it is worth watching this space for a pointer regarding the overall market.

I will leave you with a chart of the ProShares UltraShort Russell 2000 ETF (TWM), a fund that seeks daily investment results corresponding to twice (200%) the inverse

Stephen Roach, chairman of Morgan Stanley Asia, talks with Bloomberg’s Susan Li and Paul Gordon from Beijing about the US calls for a stronger yuan. China is conducting stress tests to gauge the effect of yuan appreciation on companies, a sign the government may be preparing for policy change even as it rebuffs foreign criticism of its 20-month dollar peg.

Criticizing Paul Krugman’s comments that the US should consider a 25% surcharge on Chinese goods, Roach said: “They don’t want to look in the mirror. America doesn’t have a China problem. It really has a savings problem. America has the biggest shortfall of national savings of any leading country in modern history. And when you don’t have savings you have to run current account deficits to import surplus savings from abroad and run massive trade deficits to attract the capital. Last year America ran trade deficits with over 90

This post is a guest contribution by Asha Bangalore* of The Northern Trust  Company.

Foreign central banks’ holdings of US Treasury securities and agency debt at the Federal Reserve continue to advance. During the week ended March 17, foreign central banks held $3.00 trillion at the Federal Reserve. Of this, roughly 75% of it is held in the form of Treasury securities and the remaining 25% is Fannie Mae and Freddie Mac securities. Although the pace of acquisition has slowed compared with the peak period of crisis, holdings of US Treasury securities has grown at close to 25% on a year-to-year basis (see chart 1) in the past few weeks.

At the same time, holdings of Fannie Mae and Freddie Mac securities have declined from a year ago (see chart 2).

The video clips below provide a handy summary of the reports expected on the economic, financial and corporate front around the globe during the week ahead.

US: Health care, housing data Markets will be watching to see if health insurers will be able to sustain their rally after this weekend’s climactic vote to overhaul the nation’s health-care system. Data on existing- and new-home sales will also be examined.

Europe: UK Budget, Carin in focus European leaders meet in Brussels, Chancellor unveils UK budget. Cairn Energy, Air Berlin report earnings.

Asia: Japan CPI World bankers will be on inflation watch when Japan reports its consumer price index for February. Policy minutes from the Bank of Japan will

Don Coxe has updated his popular webcast on Friday, March 19 - good news for his followers. You can access the recording here or from the sidebar of the Investment Postcards site (the column on the right-hand side) by clicking on Don’s photograph. Please note that access to Don’s recording works best with Firefox or the latest version of Internet Explorer.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

Source: Mike Thompson, Comics.com, March 19, 2010.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

Government bonds have been trading sideways since the middle of last year as market participants wax and wane about the prospects of the nascent economy recovery. Also, it has not quite been the one-way traffic for yields many pundits have been forecasting as seen from the US Treasury being able to sell paper across the yield curve at lower-than-expected yields.

Not subscribing to a meaningful economic recovery under his “new normal” scenario, Bill Gross, the manager of the world’s largest bond fund, last month increased the exposure of the Pimco Total Return Fund to US government debt to 35% from 31% – the first increase since October 2009. Interestingly, $409 billion from a total inflow of $507 billion into US mutual funds over the past year ended up in bond funds.

The chart below, courtesy of the latest Commitment of Traders report (via David Rosenberg, chief economist and strategist

The markets have created their own gold standard because of uncertainties regarding other asset classes, Marc Faber, author of The Gloom, Boom and Doom Report, told CNBC on Thursday.

“I think we already now have a gold standard … created by the market place. We have the exchange traded funds that have proliferated and we have more and more physical buying of gold,” he said.

Source: CNBC, March 18, 2010.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

FavStocks.com - Marc Faber: We have a new gold standard Copyright © 2010 FavStocks.com - Written by Prieur du Plessis Please visit FavStocks.com for more info on your Favorite Stocks. Also stop by the free Stock Market Forum and

The markets have created their own gold standard because of uncertainties regarding other asset classes, Marc Faber, author of The Gloom, Boom and Doom Report, told CNBC on Thursday.

“I think we already now have a gold standard … created by the market place. We have the exchange traded funds that have proliferated and we have more and more physical buying of gold,” he said.

Source: CNBC, March 18, 2010.

Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates, yesterday made the following observation: “To be sure, the Case-Shiller index has yet to roll over. But it has slowed, and being a three-month average, it may take time to show deflation again. The LoanPerformance home price index is down for four months running. Freddie Mac’s conventional home price index fell 0.7% in Q4. RadarLogic’s 25-city house price index is down for two months in a row and in four of the past five.”

A useful source for some guidance on the prospects of real estate is Robert Cambell’s Campbell Real Estate Timing Letter (via Dow Theory Letters) from which I have excerpted the paragraphs below.

“Now is not the time to jump into the real estate market because some analysts are telling you we’ve hit