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See http://antispam.yahoo.com/domainkeys DomainKey-Signature: a=rsa-sha1; q=dns; c=nofws; s=lima; d=yahoogroups.com; b=QoSQmgPmTpy10eAsuA8OpFpKvhqWCsIY55mtpN22TOiYHT+M5GXoyDGniLAqPrZiH9+c5Jis3YWMLK817ks1azApCuI41l91z2VAqblbFb25I8EBvC4UxOGah9HddD+q; Received: from [68.142.237.88] by n14.bullet.mail.re1.yahoo.com with NNFMP; 08 Dec 2008 06:25:48 -0000 Received: from [69.147.65.149] by t4.bullet.re3.yahoo.com with NNFMP; 08 Dec 2008 06:25:35 -0000 Received: from [66.218.66.61] by t9.bullet.mail.sp1.yahoo.com with NNFMP; 08 Dec 2008 06:25:35 -0000 X-Yahoo-Newman-Id: 13855412-m1618 Received: (qmail 34324 invoked from network); 8 Dec 2008 06:25:29 -0000 Received: from unknown (66.218.67.94) by m35.grp.scd.yahoo.com with QMQP; 8 Dec 2008 06:25:29 -0000 Received: from unknown (HELO n25c.bullet.scd.yahoo.com) (66.218.67.216) by mta15.grp.scd.yahoo.com with SMTP; 8 Dec 2008 06:25:29 -0000 Received: from [209.73.164.83] by n25.bullet.scd.yahoo.com with NNFMP; 08 Dec 2008 06:25:29 -0000 Received: from [69.147.65.171] by t7.bullet.scd.yahoo.com with NNFMP; 08 Dec 2008 06:25:29 -0000 Received: from [66.218.66.82] by t13.bullet.mail.sp1.yahoo.com with NNFMP; 08 Dec 2008 06:25:29 -0000 X-Sender: gmorlan@tampabay.rr.com X-Apparently-To: Divergence@yahoogroups.com X-Received: (qmail 27990 invoked from network); 6 Dec 2008 14:33:17 -0000 X-Received: from unknown (66.218.67.97) by m50.grp.scd.yahoo.com with QMQP; 6 Dec 2008 14:33:17 -0000 X-Received: from unknown (HELO hrndva-omtalb.mail.rr.com) (71.74.56.124) by mta18.grp.scd.yahoo.com with SMTP; 6 Dec 2008 14:33:17 -0000 X-Received: from nunswen0cecy73 ([72.184.17.31]) by hrndva-omta03.mail.rr.com with ESMTP id <20081206143314.QNIG8173.hrndva-omta03.mail.rr.com@nunswen0cecy73>; Sat, 6 Dec 2008 14:33:14 +0000 To: Message-ID: <007401c957af$94af4ea0$be0debe0$@rr.com> X-Mailer: Microsoft Office Outlook 12.0 Thread-Index: AclXoUJFt+a1YGV0RSO4dI6tbMaqAwADkCBw Content-Language: en-us X-Originating-IP: 71.74.56.124 X-eGroups-Msg-Info: 1:12:0:0:0 From: Loren Morlan X-Yahoo-Profile: lorenmorlan X-eGroups-Approved-By: rosstodd via web; 08 Dec 2008 06:25:23 -0000 Sender: Divergence@yahoogroups.com MIME-Version: 1.0 Mailing-List: list Divergence@yahoogroups.com; contact Divergence-owner@yahoogroups.com Delivered-To: mailing list Divergence@yahoogroups.com List-Id: Precedence: bulk List-Unsubscribe: Date: Sat, 6 Dec 2008 09:33:17 -0500 Subject: [Divergence] FW: The gates to dollar heaven are guarded by skeptics Reply-To: Divergence@yahoogroups.com X-Yahoo-Newman-Property: groups-email-ff-m Content-Type: multipart/alternative; boundary="----=_NextPart_000_0075_01C95785.ABD946A0" X-Antivirus: AVG for E-mail 8.0.176 [270.9.15/1834] ------=_NextPart_000_0075_01C95785.ABD946A0 Content-Type: text/plain; charset="us-ascii" Content-Transfer-Encoding: 7bit From: Money and Markets [mailto:eletter@moneyandmarkets.com] Sent: Saturday, December 06, 2008 7:33 AM To: gmorlan@tampabay.rr.com Subject: The gates to dollar heaven are guarded by skeptics MONEYANDMARKETS> Saturday, December 6, 2008 YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET [ <] Money and Markets 2008 Archive View This Issue On Our Website [>] The gates to dollar heaven are guarded by skeptics by Jack Crooks Dear Subscriber, Jack Crooks I was doing some research earlier in the week, and I came across a blog I'd never heard of written by a guy I'd never heard of on a topic that we've all most certainly heard of ... the U.S. dollar. It was the same old story that's been beaten into the ground: The U.S. dollar is doomed ... the U.S. economy can't sustain its current account deficit ... a U.S. economy on the brink of recession is terrible for the buck ... blah, blah, blah. Over the last several months, I've explained why the U.S. dollar is NOT DOOMED despite what have been, and will continue to be, some rotten tasting fundamentals in the United States. You can read about my views in my past Money and Markets columns. However, here's a different, more academic approach that builds an even stronger case for the U.S. dollar. The first thing you need to know is this ... Markets Often Become Feedback Loops Markets are driven by human nature and are not rational. If they were, there would be no uncertainty, no guesswork, and no market. Because markets are driven by human perceptions and feelings, markets are completely irrational at times - sometimes longer than you may think. As John Maynard Keynes quipped, "Markets can stay irrational longer than you can stay solvent." Internal Sponsorship Foreign Interest Rates Falling Like Dominos! Set to Drive U.S. Dollar Sky-High We are now witnessing some of the deepest and sharpest interest rate cuts in history - in the Eurozone ... the UK ... Australia ... New Zealand ... and Sweden. Here's how you can USE this massive new global mega-trend to go for profits of up to $1,818 PER hour beginning EARLY NEXT WEEK! Click here for more information ... Most people think trends are driven by events, the changing fundamentals. But they're not. It's the perception of these events by market participants that counts. And depending on the time frame and market environment, investors will perceive things any number of ways. This quote sums it up ... "But what actually registers in the stock market's fluctuations, are not the events themselves, but the human reactions to these events. In short, how millions of individual men and women feel these happenings may affect their future." - Bernard Baruch With that in mind, here's an important point that most investors have never considered: While the fundamentals appear to drive prices, often times it's the prices that drive the fundamentals. Think feedback loop here. Let me walk you through the process ... Step #1. The price of an asset falls. The reason may be triggered by the market realizing that key economic fundamentals are deteriorating, e.g. a decline in GDP or a larger-than-expected unemployment report. Step #2. As prices fall, collateral values fall. Banks and others who lent based upon the value of collateral then must call in loans or require more collateral. This reduces available credit. Step #3. This decline of credit adds to the deteriorating fundamentals. Step #4. Declining fundamentals lead to more price declines. What we're left with is a self-reinforcing process where lower prices lead to falling collateral values, further weakening the fundamentals. This feedback loop has played out right in front of our eyes in the current crisis ... The swift decline in prices, in the credit market primarily, has drained global liquidity. Internal Sponsorship Coming on December 8 ... MAM-TV > Bright and early next Monday, you'll be able to watch your favorite editors present market commentary on MAM-TV. > That's not all . as a Money and Markets subscriber, you'll have access to information and insight from each of the editors that will help you to keep your money safe while getting richer. > We're working day and night to put the finishing touches on MAM-TV. So stay tuned! The credit market problems forced institutions to sell other "good" assets in order to generate cash. These other "good" assets were stocks. This in turn has triggered more selling, and so on and so forth. And this is why, when it comes to the currency market ... The Gates to Dollar Heaven Are Guarded by Dollar Skeptics Maybe you've heard of Ralph Nelson Elliott and his Elliott Wave Theory. Basically, this theory is a way of examining how markets move up and down in basic wave-like motions. According to Elliott, there are five major waves of any up or down move. On a basic chart, it looks like this ... Five-Wave Uptrend Let me show you how this theory relates to the U.S. dollar right now. Right now, the first wave of that five-wave uptrend pattern is where I think we are with the U.S. dollar ... Wave #1 of an uptrend follows the end of a five-wave downtrend. Naturally, there are plenty of skeptics of such a reversal move. These skeptics are still stuck on the same old story, refusing to accept the potential for a major trend change. The evidence is there - the U.S. dollar can rally. It's done so over the last several months. Take a look ... The skeptics hold on to the same old argument about why the U.S. dollar is destined to become a banana republic currency, but you may want to reconsider the premises. U.S. Dollar Index Weekly The argument of the skeptics goes something like this: The rally in the "doomed dollar" is only because of the fear in the market. Once this fear period passes, the dollar will tumble once again. Here is my counter to that argument: The U.S. economy is still the most efficient and flexible economy in the world. Just look at how often the U.S. government has been turning on a dime to find a solution to its economic problems. Skeptics say this is a sure sign of weakness in U.S. financial leadership. But overall I see this as a sign of the STRENGTH of the U.S. system. And a huge reason why the U.S. will eventually emerge from this morass faster and stronger than the other leading developed nations the dollar competes against. And guess what happens if this proves true? It will lead to a strong self-feeding flow of international capital into ... you guessed it ... the U.S. dollar. Why? First, the Fed will be expected to be the first to hike rates since the U.S. economy will recover first. That will be a big catalyst for money to flow into the buck. And ... As foreign investors head to the U.S., they'll need stacks of dollars to buy U.S. assets-another big kicker for the lowly buck. As foreign investors head to the U.S., they'll need stacks of dollars to buy U.S. assets - another big kicker for the lowly buck. Second, long-term capital will be excited to see a major economy poised for real growth potential - that will lead to a lot of foreign direct investment into the U.S. And that effectively means buying the dollar to buy U.S. assets - another big kicker for the lowly buck. Look, the beginning of any new trend is loaded with skeptics. But keep in mind, at a certain point prices begin to influence the fundamentals. As momentum builds based from a self-reinforcing feedback loop between prices and fundamentals, greater momentum will build behind the U.S. dollar. That will eventually lead to capitulation - the point when more and more skeptics become believers. And that inflection point marks the beginning of a multi-year dollar bull market. The most powerful leg up is when the market catches on to the underlying fundamentals that were not quite visible to those stuck on their dollar bear story. And I think that next leg is dead ahead. Best wishes, Jack _____ About Money and Markets For more information and archived issues, visit http://www.moneyandmarkets.com Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Michelle Johncke, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood. Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph: This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com . >From time to time, Money and Markets may have information from select third-party advertisers known as "external sponsorships." We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions. View our Privacy Policy. Would you like to unsubscribe from our mailing list? To make sure you don't miss our urgent updates, add Weiss Research to your address book. Just follow these simple steps. C 2008 by Weiss Research, Inc. All rights reserved. 15430 Endeavour Drive, Jupiter, FL 33478 ------=_NextPart_000_0075_01C95785.ABD946A0 Content-Type: text/html; charset=US-ASCII Content-Transfer-Encoding: 7bit

 

 

From: Money and Markets [mailto:eletter@moneyandmarkets.com]
Sent: Saturday, December 06, 2008 7:33 AM
To: gmorlan@tampabay.rr.com
Subject: The gates to dollar heaven are guarded by skeptics

 

MONEYANDMARKETS»


Saturday, December 6, 2008

YOUR BEST SOURCE FOR THE UNBIASED MARKET COMMENTARY YOU WON'T GET FROM WALL STREET

 

[«] Money and Markets 2008 Archive

View This Issue On Our Website [»]

The gates to dollar heaven are guarded by skeptics
by Jack Crooks

Dear Subscriber,

Jack Crooks

I was doing some research earlier in the week, and I came across a blog I'd never heard of written by a guy I'd never heard of on a topic that we've all most certainly heard of ... the U.S. dollar.

It was the same old story that's been beaten into the ground:

The U.S. dollar is doomed ... the U.S. economy can't sustain its current account deficit ... a U.S. economy on the brink of recession is terrible for the buck ... blah, blah, blah.

Over the last several months, I've explained why the U.S. dollar is NOT DOOMED despite what have been, and will continue to be, some rotten tasting fundamentals in the United States.

You can read about my views in my past Money and Markets columns.

However, here's a different, more academic approach that builds an even stronger case for the U.S. dollar.

The first thing you need to know is this ...

Markets Often Become Feedback Loops

Markets are driven by human nature and are not rational. If they were, there would be no uncertainty, no guesswork, and no market.

Because markets are driven by human perceptions and feelings, markets are completely irrational at times — sometimes longer than you may think. As John Maynard Keynes quipped, "Markets can stay irrational longer than you can stay solvent."

Internal Sponsorship

Foreign Interest Rates
Falling Like Dominos!
Set to Drive U.S. Dollar Sky-High

We are now witnessing some of the deepest and sharpest interest rate cuts in history — in the Eurozone ... the UK ... Australia ... New Zealand ... and Sweden.

Here's how you can USE this massive new global mega-trend to go for profits of up to $1,818 PER hour beginning EARLY NEXT WEEK!

Click here for more information ...

 

Most people think trends are driven by events, the changing fundamentals. But they're not. It's the perception of these events by market participants that counts.

And depending on the time frame and market environment, investors will perceive things any number of ways. This quote sums it up ...

"But what actually registers in the stock market's fluctuations, are not the events themselves, but the human reactions to these events. In short, how millions of individual men and women feel these happenings may affect their future." — Bernard Baruch

With that in mind, here's an important point that most investors have never considered:

While the fundamentals appear to drive prices, often times it's the prices that drive the fundamentals.

Think feedback loop here.
Let me walk you through the process ...

Step #1. The price of an asset falls. The reason may be triggered by the market realizing that key economic fundamentals are deteriorating, e.g. a decline in GDP or a larger-than-expected unemployment report.

Step #2. As prices fall, collateral values fall. Banks and others who lent based upon the value of collateral then must call in loans or require more collateral. This reduces available credit.

Step #3. This decline of credit adds to the deteriorating fundamentals.

Step #4. Declining fundamentals lead to more price declines.

What we're left with is a self-reinforcing process where lower prices lead to falling collateral values, further weakening the fundamentals.

This feedback loop has played out right in front of our eyes in the current crisis ...

The swift decline in prices, in the credit market primarily, has drained global liquidity.

Internal Sponsorship

Coming on December 8 ...
MAM-TV

» Bright and early next Monday, you'll be able to watch your favorite editors present market commentary on MAM-TV.

» That's not all … as a Money and Markets subscriber, you'll have access to information and insight from each of the editors that will help you to keep your money safe while getting richer.

» We're working day and night to put the finishing touches on MAM-TV. So stay tuned!

 

The credit market problems forced institutions to sell other "good" assets in order to generate cash.

These other "good" assets were stocks.

This in turn has triggered more selling, and so on and so forth.

And this is why, when it comes to the currency market ...

The Gates to Dollar Heaven
Are Guarded by Dollar Skeptics

Maybe you've heard of Ralph Nelson Elliott and his Elliott Wave Theory. Basically, this theory is a way of examining how markets move up and down in basic wave-like motions.

According to Elliott, there are five major waves of any up or down move. On a basic chart, it looks like this ...

Five-Wave Uptrend

Let me show you how this theory relates to the U.S. dollar right now.

Right now, the first wave of that five-wave uptrend pattern is where I think we are with the U.S. dollar ...

Wave #1 of an uptrend follows the end of a five-wave downtrend. Naturally, there are plenty of skeptics of such a reversal move.

These skeptics are still stuck on the same old story, refusing to accept the potential for a major trend change.

The evidence is there — the U.S. dollar can rally. It's done so over the last several months. Take a look ...

The skeptics hold on to the same old argument about why the U.S. dollar is destined to become a banana republic currency, but you may want to reconsider the premises.

U.S. Dollar Index Weekly

The argument of the skeptics goes something like this: The rally in the "doomed dollar" is only because of the fear in the market. Once this fear period passes, the dollar will tumble once again.

Here is my counter to that argument:

The U.S. economy is still the most efficient and flexible economy in the world. Just look at how often the U.S. government has been turning on a dime to find a solution to its economic problems.

Skeptics say this is a sure sign of weakness in U.S. financial leadership. But overall I see this as a sign of the STRENGTH of the U.S. system. And a huge reason why the U.S. will eventually emerge from this morass faster and stronger than the other leading developed nations the dollar competes against.

And guess what happens if this proves true?

It will lead to a strong self-feeding flow of international capital into ... you guessed it ... the U.S. dollar. Why?

First, the Fed will be expected to be the first to hike rates since the U.S. economy will recover first. That will be a big catalyst for money to flow into the buck. And ...

As foreign investors head to the U.S., they'll need stacks of dollars to buy U.S. assets—another big kicker for the lowly buck.

As foreign investors head to the U.S., they'll need stacks of dollars to buy U.S. assets — another big kicker for the lowly buck.

Second, long-term capital will be excited to see a major economy poised for real growth potential — that will lead to a lot of foreign direct investment into the U.S. And that effectively means buying the dollar to buy U.S. assets — another big kicker for the lowly buck.

Look, the beginning of any new trend is loaded with skeptics. But keep in mind, at a certain point prices begin to influence the fundamentals.

As momentum builds based from a self-reinforcing feedback loop between prices and fundamentals, greater momentum will build behind the U.S. dollar.

That will eventually lead to capitulation — the point when more and more skeptics become believers.

And that inflection point marks the beginning of a multi-year dollar bull market.

The most powerful leg up is when the market catches on to the underlying fundamentals that were not quite visible to those stuck on their dollar bear story. And I think that next leg is dead ahead.

Best wishes,

Jack

 

 

About Money and Markets

For more information and archived issues, visit http://www.moneyandmarkets.com

Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Michelle Johncke, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.

Attention editors and publishers! Money and Markets issues can be republished. Republished issues MUST include attribution of the author(s) and the following short paragraph:

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

From time to time, Money and Markets may have information from select third-party advertisers known as "external sponsorships." We cannot guarantee the accuracy of these ads. In addition, these ads do not necessarily express the viewpoints of Money and Markets or its editors. For more information, see our terms and conditions.

View our Privacy Policy.

Would you like to unsubscribe from our mailing list?

To make sure you don't miss our urgent updates, add Weiss Research to your address book. Just follow these simple steps.

© 2008 by Weiss Research, Inc. All rights reserved.

15430 Endeavour Drive, Jupiter, FL 33478

 

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