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Please note: The Frank Talk articles listed below contain historical material. The data provided was current at the time of publication. For current information regarding any of the funds mentioned in these presentations, please visit the appropriate fund performance page.

U.S. ISM Manufacturing Index Heats up While China PMI Cools
September 10, 2014

Jobs, jobs: The U.S. ISM manufacturing Index for August is at a three-year high - U.S. Global InvestorsYou can always count on the United States of America to help boost global manufacturing growth. In its monthly Purchasing Managers Index (PMI) report, JP Morgan announced that the global PMI showed a slight uptick from 52.5 in July to 52.6 in August. The U.S. is again one of the top drivers alongside the Czech Republic, Taiwan, the United Kingdom, Ireland and Canada.

The U.S. ISM Manufacturing Index—our version of the PMI—rose more than 3 percent to close at a stellar 59.0, a three-year high. Meanwhile, China’s PMI inched down 0.6 points in August, from 51.7 to 51.1, ending a five-month winning streak beginning in February.

The monthly index tracks five major indicators in the manufacturing sector, including inventory levels, new orders, production, employment and supplier deliveries. The greater the number above 50.0, the greater the manufacturing expansion over the previous month. Anything below 50.0 would indicate a contraction. Economists rely on these numbers to adjust their GDP estimates.

That the U.S. nearly reached 60.0 supports the belief that we’re in for a robust second half. As I told Palisade Radio’s Collin Kettel recently, the U.S. “hit the ball right out of the park. You can’t even find the ball. It’s gone right past the parking lot. And that makes the dollar very strong.” 

U.S. ISM Manufacturing Index at a Three-Year-High - U.S. Global Investors
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This news is tempered somewhat by the most recent nonfarm payroll employment data released by the U.S. Bureau of Labor Statistics. Total employment in the U.S. rose by a weaker-than-expected 142,000 in August, compared with an average monthly increase of 212,000 over the last 12 months.

On the bright side, the National Federation of Independent Business’s Optimism Index, which measures job openings, job creation, capital spending and inventory investment, gained 0.4 points in August to end at 96.1, the second-best reading since October 2007. The largest gains in employment occurred in professional and business services and health care.

Emerging Markets
Commercial and business services also topped the growth ranking in August among global emerging markets, while health care services came in at number six. Business-facing and financial sectors posted their fastest expansion rate since January 2012, closing in on 60.0.  

Detailed Breakdown of Global Sector PMI - U.S. Global Investors
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Again, China cooled in August, interrupting its positive five-month run. But at 51.1, manufacturing activity is still expanding, just at a slower pace.

Despite a Slight Pullback in August, China's PMI Maintains Growth - U.S. Global Investors
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This slowdown is partially attributable to fewer orders from and weaker outputs to Europe, which trades more with China than the U.S. does. Europe’s flagging economy, as a result, has been a setback for China.

European imports to China, in fact, declined in August to a 14-month low compared to August 2013. Of the five indicators that compose China’s overall PMI, the New Orders Index dropped the most, from 53.6 to 52.5, a loss of 2 percent.

Another factor that led to China’s downgraded PMI is the country’s reduction in manufacturing jobs as part of cost-cutting measures. Its Employed Persons Index saw a minor dip from 48.3 to 48.2.

Many economists, as well as portfolio manager of our China Region Fund (USCOX) Xian Liang, are now waiting to see if China will announce further stimulus measures to prevent the world’s second-largest economy from slipping even further. Although Premier Li Keqiang has repeatedly dismissed the possibility of another full-blown bailout, typical monetary policy solutions might include cutting interest rates and reducing the amount of reserves banks must hold as deposits.

Will the People's BAnk of China enact further forms of monetary easing? U.S. Global Investors

To learn more about what’s driving the global economy, be sure to sign up for our upcoming webcast, “One World Market, Many Central Banks: How Will Your Investments Be Impacted?” The free webcast is scheduled to be held on Thursday, October 2, at 4:30 ET. We hope you’ll join us! 

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio.

The J.P. Morgan Global Purchasing Manager’s Index is an indicator of the economic health of the global manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The ISM manufacturing composite index is a diffusion index calculated from five of the eight sub-components of a monthly survey of purchasing managers at roughly 300 manufacturing firms from 21 industries in all 50 states.

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Why We Invest Heavily in Poland
July 9, 2014

There’s a reason why Poland retains the number two slot in our Emerging Europe Fund (EUROX), following Turkey. Ever since the fall of communism in 1989, the country has risen steadily, from a fledgling republic beset by near-bankruptcy, a deteriorating infrastructure and an East-West identity crisis, to emerge as one of the European Union’s (EU) most prosperous nations, alongside the U.K., France, Germany and Spain.

The latest issue of The Economist, in fact, asserts that Poland has had its best 25 years in half a millennium, citing its relatively quick market-oriented recovery, decrease in public spending and insistence on keeping its native currency, the flexible złoty, in favor of adopting the euro.

For these reasons and more, Poland was the only country in the EU—of which it’s been a member since 2004—to dodge the recession that struck Europe in the late 2000s. More recently, the international sanctions against Russia following its invasion of the Crimean Peninsula have also benefited Poland, as many investors have found it to be a safer, less volatile place for their money.

In a recent interview with VoiceAmerica, U.S. Global Investor’s Director of Research John Derrick said:

[Poland is] used as a safe haven in the region: stable economy, stable political environment. It’s benefited from the European recovery and doesn’t have that much trade with Russia.

Many economists now believe that Poland will eventually join ranks with the top 20 economies in the world, perhaps by as early as 2030. It currently sits at number 22, 23 or 24, depending on the source.

As you can see in the chart below, Poland has consistently outpaced its EU peers in the eurozone for the last 10 years, never once dipping below zero percent growth.

Poland Leads Economic Growth in Europe
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An eye for business.
Poland has grown in economic strength largely because it offers the EU low-wage yet high-quality labor. Many German companies can get a better production deal from their eastern neighbor than they can from China.

Although Poland doesn’t have any internationally recognizable brands, there are a few held in EUROX worth mentioning.

One of the most successful and lucrative companies is Powszechna Kasa Oszczędności Bank Polski, which translates roughly to “Polish General Savings Bank.” With a net income of over $1 billion, PKO Bank Polski, as it’s popularly known, is the largest and most highly rated bank not just in Poland but also Central and Eastern Europe. Founded in 1919, the bank is headquartered in Warsaw.

Another Warsaw company in the financial industry is Powszechny Zakład Ubezpieczeń, or PZU Group. With a net income just below $1 billion, it’s one of the top insurance groups in Central and Eastern Europe.

ENERGA Group, which rounds out the top three Polish stocks in EUROX, held its initial public offering (IPO) in December of last year. With over 118,000 miles of power lines, ENERGA is one of Poland’s leading energy providers, servicing close to 3 million customers. A significant percentage of the power it generates comes from renewable energy sources such as wind, biomass and run-of-the-river hydroelectricity. ENERGA reported a high return on equity (ROE) in the first quarter of this year, soaring to 10.6 percent, up from 4.4 percent in the same quarter last year.

Always seeking growth and opportunity.
If any country knows how to overcome crushing war and hardship, it’s Poland. Having been invaded and antagonized countless times over the centuries by nations such as Russia, Sweden, Austria, Hungary, Turkey and, most notably, Germany, it’s had little chance to find its place in the world.

But after 25 years of peace and stability, Poland is finally on a path to great success, ascending more rapidly than any other country in Central or Eastern Europe, with no signs of slowing.

Find out what other holdings we have in our Emerging Europe Fund (EUROX).

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Emerging Europe Fund (EUROX) as a percentage of net assets as of 6/30/2014: Powszechna Kasa Oszczednosci Bank Polski SA (4.55%), Powszechny Zaklad Ubezpieczen SA (2.86%), Energa SA (2.73%).

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

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Turkey Is the Big Winner Following the Crisis in Ukraine
June 19, 2014

Turkey Is the Big Winner Following the Crisis in Ukraine

Russia’s annexation of the Crimean Peninsula and the possibility of further action taken in Ukraine and other former Soviet Bloc nations have led many investors to wonder, understandably so, what impact the crisis has had on investment opportunities in Eastern Europe. To unravel these concerns and more, U.S. Global’s Director of Research John Derrick caught up with Gavin Graham of VoiceAmerica’s “Emerging and Frontier Markets Investing” program.

Below you can read some of the interview highlights, in which John speculates on who were the winners and losers in the aftermath of the Russia-Ukraine conflict. He also touches briefly on the violence that has recently erupted in Iraqi Kurdistan and what effect it might have on neighboring Turkey.

Which European countries have the greatest potential and have benefited the most from what’s been happening?

I think Poland’s been a beneficiary. It’s used as a safe haven in the region: stable economy, stable political environment. It’s benefited from the European recovery and doesn’t have that much trade with Russia.

I think Turkey has benefited, more from a money flow standpoint. If you were worried about what was going on in Russia and some of the longer-term implications, I think money flowed into places like Turkey. Money also flowed into places like Greece because a lot of the international investors tend to be regional investors, and within that region, there are shift allocations into places like Turkey, which has been a very strong performer this year. Part of that money is coming out of Russia.

That’s a very fair point because, as you say, if you’re running a dedicated Eastern European fund, Russia’s been overwhelmingly the largest weight within it, though a fair number of people were underweight even before Crimea because of concerns about governance and the like. Nonetheless, where are you going to go? Turkey is obviously a major market. Some of the reasons you like it include the demographics as well as the government’s pro-business attitude.

Exactly. If you just take a step back and look at the long-term secular growth, the demographics are very positive. There’s an entrepreneurial culture in Turkey: good government policies generally speaking toward business development, toward foreign investors. Basically business can get done, businesses can be created, and all those kinds of things that most Americans can relate to.

It’s still an emerging market country, and they’ll do things that you’ll look at and scratch your head, like banning Twitter or Facebook. But the political situation has definitely calmed down, and so I think the long-term secular story for Turkey is probably the best long-term secular story in the region. That’s what you want to hitch your wagon to over the long run.

Now I know that maybe one or two eyebrows will have been raised by you mentioning that Greece has been seen as a safe haven, but you are very right and very early in picking Greece as a market that had some very positive changes taking place. Do you want to just briefly recap where we are now?

Six years into a recession, Greece is finally starting to see the light at the end of the tunnel. They’ve made some significant structural changes. Essentially the banking system has been consolidated down. There are now four major players there. All in the last month, they actually have recapitalized, raised money. That put some pressure on the Greek market and banks over the last month or so, and it puts them on a much firmer footing. The banking system can function more properly, and you can actually start seeing real growth.

The European Central Bank (ECB) has been very supportive. The ECB announced a TARP-like program where you can get long-term funding—essentially a four-year repo currently at 25 basis points. That’s going to be positive for peripheral banks in general whether it’s Greece or Spain or Italy.

They’ve also talked about doing a securitization program where you get some kind of quantitative easing. All those kinds of incremental things are very positive for Greece. After six years of recession, they’re finally starting to come out of it. It’s just like a natural cycle. It doesn’t stay bad forever. That’s going to continue for the next 12 to 18 months.

Which is about as long as one can look ahead, especially with exciting things like the Ukrainian crisis happening. Briefly, in terms of those countries, which don’t look as attractive? Presumably the Baltic republics, which are seen as being more vulnerable, given what happened with Crimea and Ukraine?

Definitely. There’s concern there that Russian expansionism is going to continue. Will NATO really defend those countries if Russia tries to re-exert its influence in those regions? I think those have been areas that have been hurt by the crisis because they’re viewed as the next dominoes, if you will. Obviously those are not big markets and have limited investment opportunities, but definitely I think they’ve been negatively impacted. People aren’t really sure what the Russians’ ultimate goals are here, what they’re really trying to accomplish: are they done, or are they trying to recreate the Soviet Union?

Just to finish up, in terms of talking about military action, you were mentioning earlier about what’s been happening in Iraq where an al-Qaeda-linked group has taken over the second major city, Mosul, in Iraq and led to hundreds of its inhabitants fleeing. Maybe that’s going to have some effect on next-door neighbor Turkey?

The Turkish market is down about 3 percent today, and currency’s down 1 percent or so. Obviously it sounds like the situation in Iraq is deteriorating pretty rapidly. That’s a pretty significant development. It just raises a lot of questions about what’s happening there and what’s going to be the impact for Turkey. There’s a fair amount of trade that goes across there—oil pipelines that they’ve finally got up and running, particularly in the north in the Kurdistan region, sending oil to Turkey. There’s still some controversy about who’s going to buy it because they don’t have an agreement with the central government.

Nevertheless, there’s oil and gas and all those kinds of things that are good for Turkey in the long run. I look at today’s developments as probably likely a buying opportunity in Turkey.

Indeed, having reduced our exposure in Russia following the events in Ukraine, our Emerging Europe Fund (EUROX) now invests the largest percentage of its assets in Turkey (24.29 percent), followed by Poland (14.75 percent) and Greece (11.80 percent).

You can listen to John’s entire interview below, starting 18 minutes into the program.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries. The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

BRIC refers to the emerging market countries Brazil, Russia, India and China.

 

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From Constantinople to Istanbul, Turkey Has Never Been Better
June 2, 2014

Istiklal Caddessi, the main shopping street in Instanbul, TurkeyEvery time he travels to Turkey, portfolio manager of our Emerging Europe Fund (EUROX), Tim Steinle, says the country continues to develop. Although technically classified as an emerging market, one wouldn’t think to label the country as such upon arrival. The population is young and growing, there are improvements to infrastructure everywhere you look, beautiful green parks are more prevalent, and the professional staffs that run many of the shops and businesses are both well organized and thriving.

Tim told me the entire taxi system has improved upon each visit that he makes. There are newer, cleaner cars, and more professional drivers who run meters without being asked to do so. The same higher quality of service holds true when it comes to hotels, restaurants and employees of bus systems and airlines. Tim says these kinds of improvements are merely a side show in comparison to even larger companies that are run by world-class management teams.

A sweet spot in Turkey.
As Tim saw first hand, wanting the richer things in life can start with something simple, like chocolate. During his time in Turkey, he visited the Ulker Chocolate factory, a highlight for him and the group of individual investors he was traveling with.

Ulker Chocolate FacotryThe Ulker family owns the global Godiva brand through its Yildiz holding (a major Turkish manufacturer of food products), while the remainder is held by the publicly listed Ulker company.

Ulker, the market leader among Turkish chocolate companies, processes its cocoa beans in-house, unlike many of its competitors. Ulker has started a pilot farming project in Ghana. Although there were no photographs allowed inside the Ulker plant, Tim was very impressed with what he saw and shared this observation, “The plant was spic-and-span, and the cocoa bean processing hardware was just as complex as I have seen at a petroleum refinery.” Ulker is one example of the dynamic nature of many companies in Turkey; nothing is static for them, and innovation is constant.

Car purchases continue to drive growth.
Fiat is another company that is capitalizing on the consumer-oriented growth in Europe. Fiat-branded cars are manufactured around the world, but the company also has joint ventures in several countries including Turkey. Fiat S.p.A. is a majority shareholder in Chrysler and parent company to the Fiat Group.

Tim visited Tofas headquarters during his trip, and as you can see in the photo below, he and the rest of the group were able to check out the Fiat Doblo, a vehicle that looks very similar to a van but also has characteristics of most sports utility vehicles.

The Flat DobloIn 2010, Tofas, Fiat’s JV partner, began building the newest version of the Doblo in Turkey. There are several versions of the vehicle, including the Doblo EV, which is the all-electric version. The Doblo is also coming to the U.S. as Dodge Ram, and will be branded as a light commercial vehicle.

Tim pointed out to me the growing number of European-made vehicles that we see today, including the Ford Transit which is similar in style to the Doblo. The Transit was the first product of Ford of Europe, a subsidiary of Ford Motor Co., and won the 2010 Truck of the Year award. Volkswagen is yet another car company with European roots. “Just look under the hood,” says Tim, “these cars’ engines are made in Hungary.”

Money in the bank.
We know an increasing majority of the Turkish population has more money in their pockets, but how are Turkish banks doing? It seems the financial sector and individual banks are keeping up with the demand for innovation. One of the companies Tim met with while in Turkey was Garanti Bank, the second-largest private bank in the country.

Garanti Bank's ATM MachinesTim was impressed with the bank’s presentation and the incredible functionality of Garanti’s ATM machines. In the U.S. it is common to use an ATM to withdraw money, check your account balance, and in some instances deposit money. The Garanti ATM allows users to make over 100 different types of transactions!

Available to both Garanti customers and those who do not bank with the company are unique packages of cardless services in a network of over 200 ATMs from all over the country, according to Garanti’s website. A few examples include mobile phone recharges, exchange transactions with different currencies, invoice payments and deposits, all without needing to have your bank card with you.

Yet again we see world-class innovation from a Turkish company. The financial sector in Turkey, as well as in Greece as I've written about recently, has taken off in the last year. After concerned investors sold their emerging markets holdings last year, the central bank in Europe took action by raising rates this February. It was at this time that we saw a tremendous rally in Turkish banks and the lira began to stabilize. Strength returned to financials.

Turkish Banks Rally After Central Bank Stabilizes the Lira
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Investing in the best.
At U.S. Global Investors we are always looking for companies that are growing. As an emerging market, Turkey is dependent on foreign inflows, but the positive growth throughout the country is incremental and simultaneously wide-spread in many companies both big and small. Within our EUROX fund, it is companies like the ones Tim visited that we like to invest in; those that are in growing sectors of the market and display robust fundamentals.

To see the industries and names we feel are promising within emerging Europe, check out the composition of our Emerging Europe Fund.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Distributed by U.S. Global Brokerage, Inc.

Foreign and emerging market investing involves special risks such as currency fluctuation and less public disclosure, as well as economic and political risk. By investing in a specific geographic region, a regional fund’s returns and share price may be more volatile than those of a less concentrated portfolio. The Emerging Europe Fund invests more than 25% of its investments in companies principally engaged in the oil & gas or banking industries.  The risk of concentrating investments in this group of industries will make the fund more susceptible to risk in these industries than funds which do not concentrate their investments in an industry and may make the fund’s performance more volatile.

F Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. Holdings in the Emerging Europe Fund as a percentage of net assets as of 03/31/14: Chrysler Group LLC 0.00%, Fiat S.p.A. 0.00%, Ford Otomotiv Sanayi AS 0.96%, Turkiye Garanti Bankasi AS 2.58%, Tofas Turk Otomobil Fabrikasi AS 3.00%, Ulker Group 0.00%, Volkswagen 0.00%, Yildiz Holding 0.00%.

F All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The Borsa Istanbul-Banks Index (XBANK Index) is a capitalization-weighted, free-float adjusted Industry Group Index composed of National Market listed companies in the banking industry. All members of the index are also constituents of the XUMAL Sector Index.

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The Good, the Bad and the Opportunity
May 12, 2014

With so many headlines, it can be tough to sort through the market news.The press is demanding the attention of investors more than ever. Whether it was the recent jobs report or last week’s testimony from Janet Yellen, sorting through the market noise is no easy task. Since the world is so interconnected from Facebook to WhatsApp, a spark of news can ignite unfounded fear in an instant. What’s truly significant when it comes to your investments?

Twice a day, in the morning and at lunch, our investment team sits down together to discuss what’s important and what’s immaterial. Last week, in my opinion, the good outweighed the bad. Much of the economic news was a direct result of government policies, both fiscal and monetary. Here are my findings, which I hope will help you filter through the noise.

Government Policies are a Precursor for ChangeWhat are the challenges?
1. As you probably know by now, the Global Purchasing Managers’ Index (PMI) is one of the key metrics we pay attention to as a gauge of the global economy’s strength. In April, the Global PMI fell from 52.1 to 52.0, and though the drop was small, investors who previously were encouraged by a synchronized growth cycle, lost some confidence. Japan’s services and manufacturing PMI readings dropped precipitously. The services PMI plunged to 46.4 in April and the manufacturing PMI fell to 49.4. Both numbers were above the 50 mark in the previous month.

A Setback From Japan's Prime Minister's AbenomicsThe reason for Japan’s slump lies in the consumption tax rate hike, from 5 percent to 8 percent, imposed on the country on April 1. The tax increase was aimed at decreasing the country’s huge public debt, nearly 245 percent of GDP. Just when Japan was finding its economic foothold for recovery, the restrictive fiscal policy caused economic activity to stumble.

Why it matters: The reason for the fall in Global PMI is directly related to Japan’s fall in PMI. Japan has become a drag on global growth. It’s important to recognize the root cause – increased taxes just as monetary stimulus measures were seeing results. This is not good for economic growth and should serve as a cautionary tale for other countries.

Is Japan's Composite Purchasing Managers' Index Dragging Down Global Growth?
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2. Another challenging area of the market is China. China’s manufacturing PMI came in lower at 48.1 in April, contracting for the fourth month in a row, and the country also saw a decline of 0.3 percent in its consumer price index (CPI). Employment in the Asian nation is also at a seven-month low, adding growth concerns for the country.

Why it matters: This negative data means there is potential for fiscal policy easing, allowing the Chinese government to boost the economy in the coming months.

Focus on the strong points.
1. The rate of change of global industrial production (IP) was slowing until the close of 2013. Now, however, the global growth outlook is improving. You can see that an inflection point was hit in mid-2013, reaccelerating IP and coinciding with the global GDP outlook for 2014.

Global Industrial Production is Rising
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Europe is also doing well. The eurozone composite PMI, a good indication of growth, rose to 54.0 in April. In addition, Spain and the U.K. saw increases in GDP in the first quarter and Spanish banks are seeing a decline in bad debts.

Eurozone Composite PMI Sees a Boost
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Why it matters: When global IP moves up, this is a sign that momentum in the global economy has changed – for the better. This is good for commodities such as oil, gas and copper, but also for cyclical areas like energy and industrials. There is no doubt that people in every country want upward mobility for their families, and as the demand for better education, cars, etc. continues, commodities and cyclicals should benefit.

As wages begin to rise, workers have more money to spend, boosting the economy.2. In a recent report, ISI also highlights that minimum wages are going up in the U.S., citing examples of multi-year wage increases for those who had not received pay increases for the last several years. Various groups who received no increase before will now see a 4 percent rise per year, a leading indicator of wage growth trends. Consumer net worth is also expected to rise by $7.1 trillion in the second quarter, taking it to $82.5 trillion.

Why it matters: Real incomes are expected to rise as wage increases outpace inflation. With the uptick in consumer net worth and steady job growth, consumers will feel more comfortable spending.

3. Bank loans have seen an increase of 10.4 percent annualized over the last 14 weeks. As you can see in the chart below, the number of loans continues to increase. According to the Wall Street Journal, one area where bank lending has accelerated is to commercial businesses.

U.S. Bank Loans Continue to Increase in 2014
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Why it matters: This positive trend is a potential inflection point for the economy because it indicates economic acceleration. Not only are banks making it easier to borrow by relaxing lending standards, companies are confident enough about the economy to want more money to grow and invest. The WSJ goes on to say that earnings in April from the six largest banks in the U.S. pointed to an increase in commercial loans of 8.3 percent in the first quarter from last year.

Economic data around the globe continues to remain supportive. Even among challenges, there are opportunities to be found. For example, on Thursday we heard that the European Central Bank is likely to ease interest rates in June. This could be another catalyst for Europe, which is already showing improving economic activity.

Keep Calm and Invest OnSimilarly, China’s inflation is at an 18-month low as of yesterday, which could increase the odds of a policy response, a positive stimulus for the economy. Japan is dealing with the same thing; the country committed to Abenomics and will likely respond with additional policy support to get back on the recovery track. Don’t let negative news overshadow good news and keep in mind that bad news tells you where the opportunities are.

Fund portfolios are actively managed, and holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more of U.S. Global Investors Funds as of 03/31/2014: Facebook.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the links above, you may be directed to third-party websites. U.S. Global Investors does not endorse all information supplied by these websites and is not responsible for their content.

The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The Purchasing Manager’s Index is an indicator of the economic health of the manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment. The J.P. Morgan Global Purchasing Manager’s Index is an indicator of the economic health of the global manufacturing sector. The PMI index is based on five major indicators: new orders, inventory levels, production, supplier deliveries and the employment environment.

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Net Asset Value
as of 11/22/2017

Global Resources Fund PSPFX $5.97 0.03 Gold and Precious Metals Fund USERX $7.36 No Change World Precious Minerals Fund UNWPX $5.76 0.03 China Region Fund USCOX $12.18 0.03 Emerging Europe Fund EUROX $7.09 0.04 All American Equity Fund GBTFX $24.06 -0.05 Holmes Macro Trends Fund MEGAX $21.36 -0.06 Near-Term Tax Free Fund NEARX $2.21 -0.01 U.S. Government Securities Ultra-Short Bond Fund UGSDX $2.00 No Change