Vietnam ETF (VNM) and What the U.S. Widening Trade Deficit Means

The U.S. trade deficit widened to a 6-month high and by the most in 8 years.

That means that we imported way more goods while our exports declined.

Now, we don’t like to use one economic stat as the end all be all, but this does indeed strengthen our stagflation outlook.

The Dollar’s recent strength is a factor as well.

Looking ahead, the west coast port labor potential strike, could hurt both imports and exports in the coming months.

vietnam growing imports chart

Meanwhile, the chart above (from Bloomberg) shows us another interesting trend.

One that we have dubbed as the “sleeper trade” for 2023 and beyond.

Since we in the U.S. have rising imports, these charts illustrate where we (and other countries) are going for cheap labor and goods.

And it is not just to China.

Note the declining dependence on China and the rising dependence on Vietnam for imports.

vnm vietnam etf trading bullish investing chart

This is a weekly chart using the ETF VNM for Vietnam.

About the ETF:

VNM extends beyond firms domiciled in Vietnam to include non-local companies generating at least 50% of revenues in Vietnam. In doing so, VNM adds exposure to different sectors via companies in other regions.

It’s a broad take on the Vietnamese market for those seeking a pure-play fund.

Finance is the top sector in the ETF basket at 51.95% followed by Consumer Non-Durables at 16.62%.

The blue line is the 23-week moving average. Should that clear and confirm by the end of this week, that is a phase change to Recuperation

The last time VNM traded at these levels was the week of January 23rd when the high was 13.17. 

Should the price hold the phase change and take out the 2023 highs, we will consider that a more bullish sign.

Our Real Motion Indictor tells us that momentum has also cleared its 50-week moving average. Price and momentum are moving in tandem.

Nothing pleases us more than when fundamentals and technicals line up.

ETF Summary

S&P 500 (SPY) August 2022 high 431.73-and of course 420 now key

Russell 2000 (IWM) 180-now must hold while still miles from its 23-month MA 193

Dow (DIA) 23-month MA 337 pivotal and closed right there

Nasdaq (QQQ) Big correction as Canada hikes rates-also somewhat saturated index. 350 pivotal with the close below

Regional banks (KRE) 45.50 significant resistance

Semiconductors (SMH) 142.50 the 10-DMA if breaks still looking at 138-140

Transportation (IYT) 233.50 is significant resistance

Biotechnology (IBB) 121-135 range 

Retail (XRT) 60 now support and 63 resistance

Twitter: @marketminute

The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.

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