Asia

Merrill came out with a report this week that reiterated their view that the rest of the world is "decoupling" from the US -- meaning the US is no longer the growth engine of the world economy. Merrill believes that US economic growth will be less than consensus but that the rest of the world including Asia will be faster than consensus. They also argue that valuations in Asia do not reflect this -- investors in Asia appear to assume growth will slow as growth in the US slows.

Since my portfolio is 24% Asia, I view this report favorably. My Asian manager -- Matthews Asian funds is specifically targeting companies that benefit from the growth in the domestic economy and from intra-Asia trade rather than the traditional exporters to the US. They have a great long term track record built mostly by not going down when the markets falter. They get close enough on the upside and make up for it by huge outperformance when the markets are falling.