This week saw an interesting series of events on world markets. Firstly, the Chinese bubble released some pressure midweek, with a token 7 percent pull back following a tripling of stamp duty for the country's 'investors'.

While a pull back in the super heated Shanghai market is not particularly surprising, the events that followed are quite interesting indeed. Unlike last February's correction, world markets simply shrugged off the dip. This fact supports our view that the impact of the bubble's eventual bursting should be contained within China.

Not only did the markets express indifference to the incident, America's leading indices touched new highs! In fact, the S&P 500 closed yesterday at a record 1530.62. And we continue to have confidence in the Dow breaching 14,000 to close in on 15,000 this year, as the bull market steps up a gear.

Returning to China, after last week's article on the country's stock market, this week we discuss the US/China relationship from a historical and economic perspective. The rise of China is beginning to ruffle some Congressional feathers, but calls for a big revaluation of the yuan could have nasty effects for the global economy...

At the company level, one stock with much to gain from China's continued growth is BHP Billiton. Indeed, the stock has been a long standing favourite of ours partly for this reason. And despite the stock's strong potential, the wider market continues to underestimate the mining heavyweight's prospects. Although, possibly not for much longer...

Members may recall that we identified an interesting exchange traded fund (ETF) back in March. The Fund offers exposure to four soft commodities; corn, wheat, soybeans and sugar. At the time, while we liked the fundamentals, short term weakness in the share price prompted us to wait for a more favourable buying opportunity. Well, that opportunity has arrived for the Powershares DB Agriculture Fund.

We're always pleased to see one of our holdings exceed expectations. And that's exactly what Royal Dutch Shell managed to do with their latest results. Although we don't see an end to the difficult Nigerian conditions any time soon, the company's global operations should buffer the impact and we see a bright future for the oil giant.

Another stock emerging into the light is Vodafone. Last summer, calls for the head of CEO Arun Sarin reached a crescendo. However, a year on and investor sentiment is the most positive it has been since the bursting of the telecoms bubble in 2000. Driving the about face is increasing confidence in Mr Sarin and his plans for growth, particularly in emerging markets.

In other news, we were also encouraged to see George Soros has been building a position in Microsoft, which is part of the Fat Prophets Portfolio. We have considered this stock to be under valued for some time now and are pleased to see this view in some way vindicated by Mr Soros' involvement.

 Best Regards,

Fat Prophets
Investment Heavyweights