Many of the world's developed markets have struggled to return to solid levels of growth and have been weighed down by large budget deficits and high levels of unemployment. Because of this, many stock markets remain well below their 2008 lows, even when factoring in the large run-up in share prices over the past two months. Yet a few countries have managed to return to their pre-crash levels relatively quickly, including the dynamic Israeli economy, which has seen its fortunes boosted in recent months thanks to the discovery of a large gas field off of its coast in the Mediterranean. In fact, the Israeli Finance Minister recently said that the find could be worth "hundreds of billions of dollars," and some are projecting that the fields could help to double the surplus in the nation's current accounts balance.

Besides this massive find in gas reserves, the Israeli economy has been humming along thanks to solid growth in the technology industry and improving fortunes for the country's largest company, TEVA Pharmaceuticals (Nasdaq: TEVA). TEVA is one of the world's leaders in generic drug manufacturing and has managed to amass a market capitalization of over $46 billion, which makes it one of the 20 largest drug companies in the world, and by far the largest publicly traded company in Israel. Thanks to this size, investors who are bullish on Israel cannot overlook TEVA and its weight in the Israeli stock market, which is why today's earnings report from the generic drug giant is so crucial [also read Five Surprising Facts About The ETF Industry].

TEVA is expected to post robust earnings for its most recent quarter with profits of $1.27 a share on revenues of $4.4 billion. Both of these numbers, if confirmed in today's report, represent massive increases in year-over-year terms for the company; a 29.9% EPS growth and revenue growth of 23.1%.  Of particular interest to investors should be a preliminary report on ratiopharm, Germany's second largest generics producer which TEVA acquired earlier this year in order to beef up its business in Europe and become a larger player in the area. "Increasing Teva's market share in Europe -- a geography with tremendous potential for generics penetration -- is an important pillar of our long-term growth strategy. With the acquisition of ratiopharm, we will become the leader in key European markets and we are well-positioned to become the leader in many other European markets in the near future," said Teva's president and CEO Shlomo Yanai, suggesting that the nearly $5 billion dollar purchase by the Israeli giant is an important acquisition by the firm, and that Europe will play a crucial role in their long-term growth strategy. Any information regarding this is likely to weigh heavily on the stock [see Three Country ETFs Ripe With Risk].

Because of this earnings report, we have decided to make the iShares MSCI Israel Capped Investable Market Index Fund (NYSE: EIS), which allocates just over one-fifth of its assets to TEVA, today's ETF to watch. The fund tracks the MSCI Israel Capped Investable Market Index, which measures the performance of the Israeli equity market and currently holds 81 securities in addition to its large holding in Teva. In terms of market capitalization breakdown, most of the fund goes toward mid-cap securities (42.7%), while all of the giant-cap allocation goes toward Teva. This suggests that Teva's movements will have a large impact on the Israeli market, and if the company should disappoint investors with its earnings report and forecasts for the rest of the year, we look for EIS to be in for a rough trading day [see Five Ultra-Concentrated ETFs].

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