The most amazing week of our lifetime …

November 1st, 2010

Martin D. Weiss, Ph.D.

If there ever was a single week promising to deliver the most amazing financial changes of our lifetime, this has got to be it — with TWO D-Days hitting in the next 48 hours.

D-Day #1 comes tomorrow, with the midterm elections!

Yes, on the campaign trail, the raging debate is shrouded in political bravado and dripping with personal innuendo.

But as you know, it’s really about everything we’ve been saying since you first joined us — the 100-year financial storm, the government’s unprecedented response, the stimulus, bailouts, debt, deficits, and more!

Indeed, tomorrow brings THE pivotal event of our times — the tipping point that could switch the nation from stimulus to gridlock … from lavish consumer spending to zealous consumer saving … and, ultimately, from shady prosperity to shaky austerity.

D-Day #2 comes Wednesday — this time at the Fed.

play video

That’s when Ben Bernanke and his Federal Open Market Committee will make a landmark announcement about their NEXT round of mass money printing.

Yes, this has been billed as merely “a lot more of the same.” But it’s really a whole NEW chapter in the life of Bernanke’s money printing presses …

play video

Because now, instead of printing money strictly as a one-time emergency measure to squelch a debt crisis, Bernanke’s proposal is to print money as a regular tool to deliberately and unabashedly CREATE INFLATION.

Each of these events is revolutionary — in their origins and their consequences.

Both will strike in the next 48 hours.

Both raise major urgent new questions for investors.

And both mandate your close attention.

For my views on how they fit in with the big picture on what’s happened — and what’s most likely to happen — see my quick 3-minute video I recorded for Money and Markets TV

Plus, for the investment strategy we’re using right now to convert these amazing events into equally amazing profit opportunities, see our last and most important pre-election presentation …

Good luck and God bless!

Martin

Related posts:

  1. New buys this week! Your deadline: THIS TUESDAY!
  2. Four Shocking Bombshells Bernanke Did NOT Tell Congress About Last Week
  3. The income investments Dad and I are going to talk about next week …

Read more here:
The most amazing week of our lifetime …

Commodities, ETF, Mutual Fund, Uncategorized

The most amazing week of our lifetime …

November 1st, 2010

Martin D. Weiss, Ph.D.

If there ever was a single week promising to deliver the most amazing financial changes of our lifetime, this has got to be it — with TWO D-Days hitting in the next 48 hours.

D-Day #1 comes tomorrow, with the midterm elections!

Yes, on the campaign trail, the raging debate is shrouded in political bravado and dripping with personal innuendo.

But as you know, it’s really about everything we’ve been saying since you first joined us — the 100-year financial storm, the government’s unprecedented response, the stimulus, bailouts, debt, deficits, and more!

Indeed, tomorrow brings THE pivotal event of our times — the tipping point that could switch the nation from stimulus to gridlock … from lavish consumer spending to zealous consumer saving … and, ultimately, from shady prosperity to shaky austerity.

D-Day #2 comes Wednesday — this time at the Fed.

play video

That’s when Ben Bernanke and his Federal Open Market Committee will make a landmark announcement about their NEXT round of mass money printing.

Yes, this has been billed as merely “a lot more of the same.” But it’s really a whole NEW chapter in the life of Bernanke’s money printing presses …

play video

Because now, instead of printing money strictly as a one-time emergency measure to squelch a debt crisis, Bernanke’s proposal is to print money as a regular tool to deliberately and unabashedly CREATE INFLATION.

Each of these events is revolutionary — in their origins and their consequences.

Both will strike in the next 48 hours.

Both raise major urgent new questions for investors.

And both mandate your close attention.

For my views on how they fit in with the big picture on what’s happened — and what’s most likely to happen — see my quick 3-minute video I recorded for Money and Markets TV

Plus, for the investment strategy we’re using right now to convert these amazing events into equally amazing profit opportunities, see our last and most important pre-election presentation …

Good luck and God bless!

Martin

Related posts:

  1. New buys this week! Your deadline: THIS TUESDAY!
  2. Four Shocking Bombshells Bernanke Did NOT Tell Congress About Last Week
  3. The income investments Dad and I are going to talk about next week …

Read more here:
The most amazing week of our lifetime …

Commodities, ETF, Mutual Fund, Uncategorized

Major Moves Oct: Assets Grow, Focus On Active Bond ETFs

November 1st, 2010

The S&P500 was up 3.69% in the month of October, continuing the strong returns from the stellar month in September when the S&P was up nearly 9%. The NASDAQ surpassed the S&P numbers to deliver 5.86% returns for October. The market continued to rally as the US Fed essentially confirmed for the markets on several occasions that QE2 is going to happen, it’s more a matter of when and how much.

In Active ETF land, October was a month of more new product filings from current issuers looking to expand their line-up of actively-managed ETFs and also of continuing debate on the merits and deficiencies of the Active ETF structure. AdvisorShares also launched its Cambria Global Tactical ETF (GTAA: 25.0099 0.00%) in the closing week of October to significant investor interest as it scooped up more than $17 million in assets after just 4 days on the market. AdvisorShares also filed for two new funds with Strategic Income Management (SiM) – the company which absorbed Emerald Rock Advisors, with whom AdvisorShares was collaborating with previously to launch two separate actively-managed ETFs. The filing for those two products was subsequently withdrawn, presumably in response to Emerald Rock being absorbed by SiM. WisdomTree also filed plans for 3 more actively-managed bond ETFs, clearly encouraged by the success of its first fixed-income fund, the Emerging Market Local Debt Fund (ELD: 53.07 0.00%).

Gary Gastineau, Principal at ETF Consultants, also gave us a detailed run-through of what NAV-based trading is all about and how it can help overcome the deficiencies of the existing Active ETF structure and make it more effective. More discussions resulted from an article published by McKinsey’s Financial Services Practice that opined on what it will take for actively-managed ETFs to become disruptive.

Fund Flows:

(Click table to enlarge)

Assets within the Active ETF space in the US grew by another $125 million, finishing at $2.34 billion at the end of October. Starting with AdvisorShares, its Mars Hill Global Relative Value Fund (GRV: 24.62 0.00%) has largely stagnated since the surge in assets it saw immediately after its launch when it gathered close to $40 million in assets within 3 weeks. In October, GRV shrank by $0.72 million. AdvisorShares other two existing products, the Dent Tactical ETF (DENT: 20.37 0.00%) and the WCM/BNY Mellon Focused Growth ADR ETF (AADR: 28.8593 0.00%) have both had a hard time gathering funds over the last few months as well. However, AdvisorShares scored big with its latest fund launch – the Cambria Global Tactical ETF (GTAA: 25.0099 0.00%), run by Mebane Faber who is the author of the popular book, “The Ivy Portfolio”.  GTAA was able to attract more than $17 million in assets within 4 days of launch, but we’ll have to wait and see whether this surge in assets will continue or whether GTAA will also plateau like other AdvisorShares funds.

In what has come to be expected now, iShares’ Diversifed Alternatives Trust (ALT: 50.95 0.00%) continued to gather assets slowly and steadily, increasing by another $10 million this month and crossing the $100 million mark. PIMCO’s Enhanced Maturity Fund (MINT: 101.02 0.00%) also continued to have a volatile asset base due to the nature of the fund, being a money-market alternative. MINT gathered $92 million in assets this month to finish at around $440 million in assets.

WisdomTree continues to find traction for ELD as the fund attracted another $100 million of investor money this month. WisdomTree’s other new launch, the Dreyfus Commodity Currency Fund (CCX: 25.44 0.00%), is off to a slower start with assets standing at $20 million a month after launch. The gains though were offset by losses in its older currency funds such the Brazilian Real Fund (BZF: 28.78 0.00%) which lost $64 million and the Emerging Currency Fund (CEW: 23.10 0.00%) which lost more than $100 million.

(Click table to enlarge)

In Canada, the actively-managed ETF landscape continues to be dominated by Horizons AlphaPro, which really saw its first strong success with the launch of the AlphaPro Corporate Bond Fund (HAB) that gained another $33 million in assets this month to reach a $273 million market cap. The fund’s success highlights the relevance and demand for actively-managed bond offerings given that they have also been quite successful in the US.

New Entrants, Filings and Closures:

1. WisdomTree plans actively-managed Brazil bond fund – direct link

2. AdvisorShares files for two actively-managed ETFs with Strategic Income Management – direct link

3. WisdomTree files for 3 more actively-managed bond ETFs – direct link

ETF

Major Moves Oct: Assets Grow, Focus On Active Bond ETFs

November 1st, 2010

The S&P500 was up 3.69% in the month of October, continuing the strong returns from the stellar month in September when the S&P was up nearly 9%. The NASDAQ surpassed the S&P numbers to deliver 5.86% returns for October. The market continued to rally as the US Fed essentially confirmed for the markets on several occasions that QE2 is going to happen, it’s more a matter of when and how much.

In Active ETF land, October was a month of more new product filings from current issuers looking to expand their line-up of actively-managed ETFs and also of continuing debate on the merits and deficiencies of the Active ETF structure. AdvisorShares also launched its Cambria Global Tactical ETF (GTAA: 25.0099 0.00%) in the closing week of October to significant investor interest as it scooped up more than $17 million in assets after just 4 days on the market. AdvisorShares also filed for two new funds with Strategic Income Management (SiM) – the company which absorbed Emerald Rock Advisors, with whom AdvisorShares was collaborating with previously to launch two separate actively-managed ETFs. The filing for those two products was subsequently withdrawn, presumably in response to Emerald Rock being absorbed by SiM. WisdomTree also filed plans for 3 more actively-managed bond ETFs, clearly encouraged by the success of its first fixed-income fund, the Emerging Market Local Debt Fund (ELD: 53.07 0.00%).

Gary Gastineau, Principal at ETF Consultants, also gave us a detailed run-through of what NAV-based trading is all about and how it can help overcome the deficiencies of the existing Active ETF structure and make it more effective. More discussions resulted from an article published by McKinsey’s Financial Services Practice that opined on what it will take for actively-managed ETFs to become disruptive.

Fund Flows:

(Click table to enlarge)

Assets within the Active ETF space in the US grew by another $125 million, finishing at $2.34 billion at the end of October. Starting with AdvisorShares, its Mars Hill Global Relative Value Fund (GRV: 24.62 0.00%) has largely stagnated since the surge in assets it saw immediately after its launch when it gathered close to $40 million in assets within 3 weeks. In October, GRV shrank by $0.72 million. AdvisorShares other two existing products, the Dent Tactical ETF (DENT: 20.37 0.00%) and the WCM/BNY Mellon Focused Growth ADR ETF (AADR: 28.8593 0.00%) have both had a hard time gathering funds over the last few months as well. However, AdvisorShares scored big with its latest fund launch – the Cambria Global Tactical ETF (GTAA: 25.0099 0.00%), run by Mebane Faber who is the author of the popular book, “The Ivy Portfolio”.  GTAA was able to attract more than $17 million in assets within 4 days of launch, but we’ll have to wait and see whether this surge in assets will continue or whether GTAA will also plateau like other AdvisorShares funds.

In what has come to be expected now, iShares’ Diversifed Alternatives Trust (ALT: 50.95 0.00%) continued to gather assets slowly and steadily, increasing by another $10 million this month and crossing the $100 million mark. PIMCO’s Enhanced Maturity Fund (MINT: 101.02 0.00%) also continued to have a volatile asset base due to the nature of the fund, being a money-market alternative. MINT gathered $92 million in assets this month to finish at around $440 million in assets.

WisdomTree continues to find traction for ELD as the fund attracted another $100 million of investor money this month. WisdomTree’s other new launch, the Dreyfus Commodity Currency Fund (CCX: 25.44 0.00%), is off to a slower start with assets standing at $20 million a month after launch. The gains though were offset by losses in its older currency funds such the Brazilian Real Fund (BZF: 28.78 0.00%) which lost $64 million and the Emerging Currency Fund (CEW: 23.10 0.00%) which lost more than $100 million.

(Click table to enlarge)

In Canada, the actively-managed ETF landscape continues to be dominated by Horizons AlphaPro, which really saw its first strong success with the launch of the AlphaPro Corporate Bond Fund (HAB) that gained another $33 million in assets this month to reach a $273 million market cap. The fund’s success highlights the relevance and demand for actively-managed bond offerings given that they have also been quite successful in the US.

New Entrants, Filings and Closures:

1. WisdomTree plans actively-managed Brazil bond fund – direct link

2. AdvisorShares files for two actively-managed ETFs with Strategic Income Management – direct link

3. WisdomTree files for 3 more actively-managed bond ETFs – direct link

ETF

Gold, Oil, SPX Trading Around the Election

November 1st, 2010

This week we have a major wild card (Election) happening on Tuesday. Most of you know I don’t get involved with political discussion for several reasons… one of them being that I am Canadian “an outsider” looking in.

That being said, it looks and feels as though the market has been propped up and oil has been held down from an invisible force. Lots of theories going around saying higher stock and lower/stable oil prices will give voters the warm fuzzies to keep the current leaders elected… I prefer trading the charts and not getting caught in the Wall St. hype.

Let’s take a quick look at some charts

SPY – SP500 ETF Trading Vehicle

The broad market has been finding buyers as the beginning of each month and it looks as though it’s ready for another bounce. I do want to note that Tuesday or Wednesday we could see a very sharp move in the market as investors around the world digest the outcome. It is very important to keep positions small and or use protective stops incase of a flash crash or flash rally for those of you trying to pick a top.

Gold Price – Futures Contract

The price of gold looks to be setting up for another wave down in my opinion. More often than not we see a sharp pullback, sideways chop then a pop above recent highs. It’s that pop above recent highs which tends to suck in long positions only to roll over and make new lows quickly after. As noted in previous reports, gold has support around $1300 area and that’s what I am looking for. Again this week’s election will trump recent price action so we really just need to sit tight until the smoke settles.

Crude Oil Futures:

Crude oil has been trading sideways for a solid month while the US dollar has been dropping at tremendous rate. Many oil traders believe the price is being manipulated to stay down until the election is finished because of the strong negative affect rising oil prices have on the economy/end user/voters.

Weekend Trading Conclusion:

In short, this is a going to be a wild week in the market. Keeping position sizes small and using protective stops is crucial during times like these. We have taken profits on both of our positions from last week and have moved our stops to breakeven for the balance just incase of a crash.

Overall, I am neutral on the market for a couple days until we see what type of blip we get on the charts.

If you would like to receive my Daily Trading Commentary, Charts and Trades be sure to join my newsletter: www.TheGoldAndOilGuy.com

Chris Vermeulen

Get More Free Trade Ideas Free Here: www.GoldAndOilGuy.com

Read more here:
Gold, Oil, SPX Trading Around the Election




Chris Vermeulen is a full time daytrader and swing trader specializing in trading (NYSE:GLD), (NYSE:GDX), XGD.TO, (NYSE:SLV) and (NYSE:USO). I provide my trading charts, market insight and trading signals to members of my newsletter service. If you have any questions feel free to send me an email: Chris@TheGoldAndOilGuy.com This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Commodities, ETF

Gold, Oil, SPX Trading Around the Election

November 1st, 2010

This week we have a major wild card (Election) happening on Tuesday. Most of you know I don’t get involved with political discussion for several reasons… one of them being that I am Canadian “an outsider” looking in.

That being said, it looks and feels as though the market has been propped up and oil has been held down from an invisible force. Lots of theories going around saying higher stock and lower/stable oil prices will give voters the warm fuzzies to keep the current leaders elected… I prefer trading the charts and not getting caught in the Wall St. hype.

Let’s take a quick look at some charts

SPY – SP500 ETF Trading Vehicle

The broad market has been finding buyers as the beginning of each month and it looks as though it’s ready for another bounce. I do want to note that Tuesday or Wednesday we could see a very sharp move in the market as investors around the world digest the outcome. It is very important to keep positions small and or use protective stops incase of a flash crash or flash rally for those of you trying to pick a top.

Gold Price – Futures Contract

The price of gold looks to be setting up for another wave down in my opinion. More often than not we see a sharp pullback, sideways chop then a pop above recent highs. It’s that pop above recent highs which tends to suck in long positions only to roll over and make new lows quickly after. As noted in previous reports, gold has support around $1300 area and that’s what I am looking for. Again this week’s election will trump recent price action so we really just need to sit tight until the smoke settles.

Crude Oil Futures:

Crude oil has been trading sideways for a solid month while the US dollar has been dropping at tremendous rate. Many oil traders believe the price is being manipulated to stay down until the election is finished because of the strong negative affect rising oil prices have on the economy/end user/voters.

Weekend Trading Conclusion:

In short, this is a going to be a wild week in the market. Keeping position sizes small and using protective stops is crucial during times like these. We have taken profits on both of our positions from last week and have moved our stops to breakeven for the balance just incase of a crash.

Overall, I am neutral on the market for a couple days until we see what type of blip we get on the charts.

If you would like to receive my Daily Trading Commentary, Charts and Trades be sure to join my newsletter: www.TheGoldAndOilGuy.com

Chris Vermeulen

Get More Free Trade Ideas Free Here: www.GoldAndOilGuy.com

Read more here:
Gold, Oil, SPX Trading Around the Election




Chris Vermeulen is a full time daytrader and swing trader specializing in trading (NYSE:GLD), (NYSE:GDX), XGD.TO, (NYSE:SLV) and (NYSE:USO). I provide my trading charts, market insight and trading signals to members of my newsletter service. If you have any questions feel free to send me an email: Chris@TheGoldAndOilGuy.com This article is intended solely for information purposes. The opinions are those of the author only. Please conduct further research and consult your financial advisor before making any investment/trading decision. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Commodities, ETF

What REALLY Happens When You Ignore Wall Street

November 1st, 2010

What REALLY Happens When You Ignore Wall Street

Investors hear a lot of talk about index funds and diversifying risk. And on its face, diversification seems like a reasonable strategy for long-term investing.

I disagree.

As a matter of fact, I've found that the opposite is true. Sometimes it's best to ignore Wall Street.

If you have a clear strategy and can focus on specific types of stocks, you can beat the “slow and steady wins the race” strategy without resorting to trading or aggressive bets.

The other problem with traditional buy-and-hold strategies in this type of market is they just doesn't work. Stocks have run and fallen so many times that if they were a little boy he'd be wrapped head to toe in bandages.

The S&P 500, the poster child of a diversified portfolio of quality stocks, has a three-year average annualized return of -6.2%. That's not exactly going to get your retirement nest egg comfortably fluffy.

You can either continue to extend the long-term diversification mantra “it will be fine over time,” or you can focus like a laser beam on quality opportunities and stick with them until they run their course.

Here's the approach I take in Stock of the Month:

  • Compare each holding to the performance of the S&P 500. When I select an investment, one of my primary goals is to outperform the market. A security could be up or down since I purchased it. But I want to specifically know whether my assumptions about its potential to outperform the market were sound.
  • Review and assess any negative material changes for each of my holdings. Before I buy a security, I nearly research it to death. I assess its opportunity to outperform based on its fundamentals, competition, financials and economic trends. But conditions change. In a downturn, I take a harsher view of anything new that is liable to negatively impact performance.
  • Search for the new silver linings. No matter how dark a market storm cloud, there are always opportunities. Revisit your watch list. Sometimes I can find an underpriced chestnut. Sometimes I can find an investment that outperforms in stormy weather.

Because I follow this approach, on average, my open positions are outperforming the S&P 500 by more than 10 percentage points.

Two other trends are working in my focused favor:

1. Companies are now sitting on high levels of cash. During the recession, companies battened down the hatches, cut costs and paid down debt. As a result, company balance sheets are healthy. The non-financial companies in the S&P 500 are sitting on $837 billion in cash — which is much higher than normal and 26% more than they had last year. And that's just a subset of the S&P 500. Overall, $3 trillion of cash is sitting on company balance sheets.

But cash on the balance sheet doesn't help a company grow. Companies could hire more employees to expand their businesses, but so far that has not been a course they have been willing to take. They could buy existing businesses with strong growth potential. And that appears to be the case.

Small companies are still having problems borrowing money to expand their businesses. Lenders, however, are very comfortable loaning money to big companies with strong balance sheets. Therefore, marriages between big and small companies seem like matches made in financial heaven.

2. Merger activity is heating up. August is usually a slow month for deals. But the pace of mergers and acquisitions this month is set to be the highest of the year.

Global takeovers exceed $1.3 trillion so far this year, up almost +25% from the same time last year. That's great news for funds that profit from Wall Street's deal making. What's even better is that these funds tend to be steady growers. While they may lag a little in raging bull markets, they consistently outperform in inconsistent or bear markets.

Action to Take –> One of my recent portfolio additions is a fund that takes advantage of this M&A trend. It's typical of searching out timely opportunities and holding them just long enough to get every last ounce of profit from them and then move on. But because I'm buying trends and not earnings or story stocks, these are investments, not trades.

I take what market will give me, and right now, playing the “hold-and-hope” game just isn't working. But I've found a strategy that is.

Uncategorized

What REALLY Happens When You Ignore Wall Street

November 1st, 2010

What REALLY Happens When You Ignore Wall Street

Investors hear a lot of talk about index funds and diversifying risk. And on its face, diversification seems like a reasonable strategy for long-term investing.

I disagree.

As a matter of fact, I've found that the opposite is true. Sometimes it's best to ignore Wall Street.

If you have a clear strategy and can focus on specific types of stocks, you can beat the “slow and steady wins the race” strategy without resorting to trading or aggressive bets.

The other problem with traditional buy-and-hold strategies in this type of market is they just doesn't work. Stocks have run and fallen so many times that if they were a little boy he'd be wrapped head to toe in bandages.

The S&P 500, the poster child of a diversified portfolio of quality stocks, has a three-year average annualized return of -6.2%. That's not exactly going to get your retirement nest egg comfortably fluffy.

You can either continue to extend the long-term diversification mantra “it will be fine over time,” or you can focus like a laser beam on quality opportunities and stick with them until they run their course.

Here's the approach I take in Stock of the Month:

  • Compare each holding to the performance of the S&P 500. When I select an investment, one of my primary goals is to outperform the market. A security could be up or down since I purchased it. But I want to specifically know whether my assumptions about its potential to outperform the market were sound.
  • Review and assess any negative material changes for each of my holdings. Before I buy a security, I nearly research it to death. I assess its opportunity to outperform based on its fundamentals, competition, financials and economic trends. But conditions change. In a downturn, I take a harsher view of anything new that is liable to negatively impact performance.
  • Search for the new silver linings. No matter how dark a market storm cloud, there are always opportunities. Revisit your watch list. Sometimes I can find an underpriced chestnut. Sometimes I can find an investment that outperforms in stormy weather.

Because I follow this approach, on average, my open positions are outperforming the S&P 500 by more than 10 percentage points.

Two other trends are working in my focused favor:

1. Companies are now sitting on high levels of cash. During the recession, companies battened down the hatches, cut costs and paid down debt. As a result, company balance sheets are healthy. The non-financial companies in the S&P 500 are sitting on $837 billion in cash — which is much higher than normal and 26% more than they had last year. And that's just a subset of the S&P 500. Overall, $3 trillion of cash is sitting on company balance sheets.

But cash on the balance sheet doesn't help a company grow. Companies could hire more employees to expand their businesses, but so far that has not been a course they have been willing to take. They could buy existing businesses with strong growth potential. And that appears to be the case.

Small companies are still having problems borrowing money to expand their businesses. Lenders, however, are very comfortable loaning money to big companies with strong balance sheets. Therefore, marriages between big and small companies seem like matches made in financial heaven.

2. Merger activity is heating up. August is usually a slow month for deals. But the pace of mergers and acquisitions this month is set to be the highest of the year.

Global takeovers exceed $1.3 trillion so far this year, up almost +25% from the same time last year. That's great news for funds that profit from Wall Street's deal making. What's even better is that these funds tend to be steady growers. While they may lag a little in raging bull markets, they consistently outperform in inconsistent or bear markets.

Action to Take –> One of my recent portfolio additions is a fund that takes advantage of this M&A trend. It's typical of searching out timely opportunities and holding them just long enough to get every last ounce of profit from them and then move on. But because I'm buying trends and not earnings or story stocks, these are investments, not trades.

I take what market will give me, and right now, playing the “hold-and-hope” game just isn't working. But I've found a strategy that is.

Uncategorized

Chart of the Week: Money Market Mutual Funds

October 31st, 2010

When the first version of this week’s chart of the week first appeared on the blog in Chart of the Week: Change of Trend in Cash Holdings? in January 2009, it generated a surprising amount of controversy. A follow-up post in March 2009, Cash on the Sidelines Headed Back to Stocks? also seemed to polarize some of the readership here.

In retrospect, this data from the Investment Company Institute (ICI) as well as similar data from AMG Data Services did an excellent job of keeping track of the flow of funds in and out of cash and therefore have been excellent proxies for a large part of the net change in demand for equities.

In the chart below, note that money market mutual fund assets began declining sharply in the second week in March 2009 (after topping in January 2009,) just as stocks were bottoming and starting to catch a bid. In the twenty months since the bottom in stocks, net changes to money market mutual funds have been a solid coincident and sometimes leading indicator of demand for stocks.

I am resurrecting this chart again for several reasons, not the least of which is that the decline in money market mutual funds has lessened considerably since the end of April, when stocks hit their 2010 highs. Additionally, last week’s increase of $25 billion in money market mutual funds was the largest since July 2009 and the second largest since January 2009. While this may not mean anything, I like to be provocative with these kinds of charts. Readers should at least be open to the possibility that most of the cash on the sidelines that will ultimately be committed to stocks in a bull market has already been committed. Perhaps it will take a significant downturn in bond prices for the next large pool of money to be moved into equities.

Either way, I still think this chart of money market mutual funds bears further watching.

Related posts:

[source: Investment Company Institute]
Disclosure(s): none



Read more here:
Chart of the Week: Money Market Mutual Funds

Mutual Fund, Uncategorized

Chart of the Week: Money Market Mutual Funds

October 31st, 2010

When the first version of this week’s chart of the week first appeared on the blog in Chart of the Week: Change of Trend in Cash Holdings? in January 2009, it generated a surprising amount of controversy. A follow-up post in March 2009, Cash on the Sidelines Headed Back to Stocks? also seemed to polarize some of the readership here.

In retrospect, this data from the Investment Company Institute (ICI) as well as similar data from AMG Data Services did an excellent job of keeping track of the flow of funds in and out of cash and therefore have been excellent proxies for a large part of the net change in demand for equities.

In the chart below, note that money market mutual fund assets began declining sharply in the second week in March 2009 (after topping in January 2009,) just as stocks were bottoming and starting to catch a bid. In the twenty months since the bottom in stocks, net changes to money market mutual funds have been a solid coincident and sometimes leading indicator of demand for stocks.

I am resurrecting this chart again for several reasons, not the least of which is that the decline in money market mutual funds has lessened considerably since the end of April, when stocks hit their 2010 highs. Additionally, last week’s increase of $25 billion in money market mutual funds was the largest since July 2009 and the second largest since January 2009. While this may not mean anything, I like to be provocative with these kinds of charts. Readers should at least be open to the possibility that most of the cash on the sidelines that will ultimately be committed to stocks in a bull market has already been committed. Perhaps it will take a significant downturn in bond prices for the next large pool of money to be moved into equities.

Either way, I still think this chart of money market mutual funds bears further watching.

Related posts:

[source: Investment Company Institute]
Disclosure(s): none



Read more here:
Chart of the Week: Money Market Mutual Funds

Mutual Fund, Uncategorized

Three ETFs Supported By US Economic Growth

October 31st, 2010

The US economy grew by 2 percent in the third quarter of this year and business activity accelerated in October, signs that corporate and consumer spending are holding up providing positive price support for the iShares Dow Jones US Industrials (IYJ), the Vanguard Materials ETF (VAW) and the PowerShares DB Base Metals (DBB).

According to the latest data from the Institute for Supply Management-Chicago Inc., economic expansion is at the forefront illustrated by its business barometer reading of a 60.6.  Furthermore, data suggests that output climbed at the fastest pace in the third quarter as companies are upgrading equipment and boosting output to meet enhanced increased foreign and domestic demand. 

The momentum behind this uptrend in manufacturing and industrials has been driven by improved capital investment, increases in output of business equipment and increases in consumer and investor confidence. As nations continue to recover, it appears that manufacturing and industrials likely will remain at the forefront of economic growth.

As previously mentioned, three ETFs that are directly correlated with the economic expansion include:

  • iShares Dow Jones US Industrials (IYW), which boasts industrial conglomerate General Electric (GE) as its top holding and closed at $47.11 on Friday.
  • Vanguard Materials ETF (VAW), which holds copper giant Freeport McMoRan-Copper & Gold (FCX) and industrials giant Dow Chemical (DOW) as top holdings.  VAW closed at $75.65 on Friday.
    • PowerShares DB Base Metals (DBB), which enables one to gain exposure to copper, aluminum and zinc; all metals that are expected to continue to witness insatiable demand around the world.  DBB closed at $22.75 on Friday.

When investing in these ETFs, it is equally important to consider the inherent risks that are involved.  To help mitigate the effects of these risks, the use of an exit strategy which identifies specific price points at which downward price pressure is likely to prevail is important.

Such a strategy can be found at www.SmartStops.net and updated data indicates that the price points for the aforementioned ETFs are as follows: IYW at $59.08; VAW at $71.90; DBB at $21.94.  These price points are reflective of market volatility and change on a daily basis. 

Disclosure: No Positions

Read more here:
Three ETFs Supported By US Economic Growth




HERE IS YOUR FOOTER

ETF, Uncategorized

Guess What’s Coming to Dinner: Inflation! (Part One of Two)

October 31st, 2010

The US Bureau of Labor Statistics (BLS) recently reported that consumer price inflation (CPI) declined in September to a 59-year low of just 1.1% y/y. Excluding more volatile food and energy prices, the so-called core CPI rose only 0.8% y/y. This is not good news for the US Federal Reserve, which considers this a dangerously low rate of CPI. While the Fed lacks a formal CPI target–unlike many other central banks–it nevertheless seeks to keep inflation sufficiently above zero so that, should the economy weaken further, low inflation is unlikely to turn into outright deflation, something the Fed considers it necessary to avoid at all costs.

With a range of economic indicators now suggesting that the rate of US economic growth has moderated of late, the Fed is preparing to add additional monetary stimulus to the economy, most probably in the form of expanded US Treasury purchases. This, the Fed appears to believe, will lower borrowing costs and perhaps further weaken the dollar somewhat. That in turn should stimulate economic activity such that the risks of consumer price deflation diminish.

Now the Fed is not necessarily highly confident at this point that this is going to work. Indeed, there is an unusually large amount of dissent at the Fed at present. A number of senior Fed officials–most notably Thomas Hoenig, President of the Kansas City Fed–are skeptical that additional monetary stimulus will have the desired effect on the economy and, in fact, might be counterproductive.

Why might additional stimulus be ineffective? After all, the Fed has a long track record of injecting monetary stimulus into the economy from time to time, supporting growth and preventing deflation. Indeed, as observed above, there has been no consumer price deflation in the US for two full generations, and no severe, prolonged deflation since 1934.

Well there are signs that Fed stimulus to date is not having much effect. Notwithstanding near zero policy rates and a doubling of the monetary base, the economy is clearly struggling and CPI has continued to trend lower amidst spare capacity in many business sectors. With broad un- and underemployment currently at 17%, most US workers are not in a position to demand higher wages as firms seek ways to maintain profit margins amidst weak final demand. (Real final sales, which subtracts changes in inventories from GDP and thus is a more stable measure of economic activity, has grown at a mere 1% over the past two quarters.) The employment cost index (ECI), which measures the rate of growth of total compensation–wages and benefits–has risen a mere 1.8% over the past year, far below the 3-4% average of the past decade and barely above the 1.1% rate of CPI y/y. Until un- and under-employment declines substantially, additional money flooding into the financial system is unlikely to have much if any impact on wages and, hence, is unlikely to contribute, at least not directly, to a rise in CPI.

But what about growth? Won’t additional money creation stimulate business investment, eventually supporting the job market, wages and consumption, thereby pushing up CPI? Well that is certainly what the Fed would like to see, but with both business and consumer confidence extremely weak, it is far from clear that any additional money created will do anything other than push up banks’ so-called “excess reserves”, that is, money which the Fed has made available to the banks but which they have chosen not to lend out in some form.

Many refer to this sort of situation as a Keynesian “liquidity trap”. You can lead the horse to water (liquidity) but you can’t make it drink (borrow/invest/spend). Keynes’ solution to this problem was for fiscal policy to go where monetary cannot, which is to force additional spending, either indirectly, via a debt-financed tax cut or, directly, through increased government spending. The former can be considered “supply-side” and the latter “demand-side” forms of stimulus but from a broad macroeconomic perspective they amount to much the same thing: Both are, in effect, attempts to spend one’s way out of an economic downturn brought about by excessive debt and financial leverage. The effects of such policies might look nice on the aggregate income statement for a time–in that economic activity remains artificially elevated–but the aggregate balance sheet is going to deteriorate as a result. And as any good financial analyst knows: The income statement is the past. The balance sheet is the future.

A deteriorating balance sheet, or expectations thereof, normally would lead financial markets to demand a higher risk premium to hold a company’s stock, which implies a lower price-to-earnings (P/E) ratio. This can come about, however, either through a decline in the price of the stock, an increase in the earnings yield, or some combination thereof. In the event of sovereign balance sheet deterioration, however, as described above, there is no “stock” per se, but there is a yield on a government bond. If global investors observe a deteriorating sovereign “balance sheet”, they will demand a higher yield premium to hold that bond relative to some other asset. As the yield rises, the price of the bond declines, in effect devaluing the debt and reducing the “P/E ratio”. But then what happens when the central bank resists a rise (or facilitates a decline) in bond yields by lowering policy rates or buys up bonds directly in permanent open market operations (POMOs), as the Fed is now doing?

In this case, the required adjustment cannot fully take place via a higher bond yield, so instead, the price of the bond must decline in real rather than nominal terms. For this to happen, the currency must decline. It is no coincidence that, as the Fed has made it increasingly clear to financial markets that it is prepared, in principle, to expand the POMO program indefinitely until inflation (or expectations thereof) rises by a desired amount, the dollar has declined sharply versus nearly all other currencies.

Regards,

John Butler,
for The Daily Reckoning

[Editor's Note: The above essay is excerpted from The Amphora Report, which is dedicated to providing the defensive investor with practical ideas for protecting wealth and maintaining liquidity in a world in which currencies are no longer reliable stores of value.]

Guess What’s Coming to Dinner: Inflation! (Part One of Two) originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Guess What’s Coming to Dinner: Inflation! (Part One of Two)




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Guess What’s Coming to Dinner: Inflation! (Part One of Two)

October 31st, 2010

The US Bureau of Labor Statistics (BLS) recently reported that consumer price inflation (CPI) declined in September to a 59-year low of just 1.1% y/y. Excluding more volatile food and energy prices, the so-called core CPI rose only 0.8% y/y. This is not good news for the US Federal Reserve, which considers this a dangerously low rate of CPI. While the Fed lacks a formal CPI target–unlike many other central banks–it nevertheless seeks to keep inflation sufficiently above zero so that, should the economy weaken further, low inflation is unlikely to turn into outright deflation, something the Fed considers it necessary to avoid at all costs.

With a range of economic indicators now suggesting that the rate of US economic growth has moderated of late, the Fed is preparing to add additional monetary stimulus to the economy, most probably in the form of expanded US Treasury purchases. This, the Fed appears to believe, will lower borrowing costs and perhaps further weaken the dollar somewhat. That in turn should stimulate economic activity such that the risks of consumer price deflation diminish.

Now the Fed is not necessarily highly confident at this point that this is going to work. Indeed, there is an unusually large amount of dissent at the Fed at present. A number of senior Fed officials–most notably Thomas Hoenig, President of the Kansas City Fed–are skeptical that additional monetary stimulus will have the desired effect on the economy and, in fact, might be counterproductive.

Why might additional stimulus be ineffective? After all, the Fed has a long track record of injecting monetary stimulus into the economy from time to time, supporting growth and preventing deflation. Indeed, as observed above, there has been no consumer price deflation in the US for two full generations, and no severe, prolonged deflation since 1934.

Well there are signs that Fed stimulus to date is not having much effect. Notwithstanding near zero policy rates and a doubling of the monetary base, the economy is clearly struggling and CPI has continued to trend lower amidst spare capacity in many business sectors. With broad un- and underemployment currently at 17%, most US workers are not in a position to demand higher wages as firms seek ways to maintain profit margins amidst weak final demand. (Real final sales, which subtracts changes in inventories from GDP and thus is a more stable measure of economic activity, has grown at a mere 1% over the past two quarters.) The employment cost index (ECI), which measures the rate of growth of total compensation–wages and benefits–has risen a mere 1.8% over the past year, far below the 3-4% average of the past decade and barely above the 1.1% rate of CPI y/y. Until un- and under-employment declines substantially, additional money flooding into the financial system is unlikely to have much if any impact on wages and, hence, is unlikely to contribute, at least not directly, to a rise in CPI.

But what about growth? Won’t additional money creation stimulate business investment, eventually supporting the job market, wages and consumption, thereby pushing up CPI? Well that is certainly what the Fed would like to see, but with both business and consumer confidence extremely weak, it is far from clear that any additional money created will do anything other than push up banks’ so-called “excess reserves”, that is, money which the Fed has made available to the banks but which they have chosen not to lend out in some form.

Many refer to this sort of situation as a Keynesian “liquidity trap”. You can lead the horse to water (liquidity) but you can’t make it drink (borrow/invest/spend). Keynes’ solution to this problem was for fiscal policy to go where monetary cannot, which is to force additional spending, either indirectly, via a debt-financed tax cut or, directly, through increased government spending. The former can be considered “supply-side” and the latter “demand-side” forms of stimulus but from a broad macroeconomic perspective they amount to much the same thing: Both are, in effect, attempts to spend one’s way out of an economic downturn brought about by excessive debt and financial leverage. The effects of such policies might look nice on the aggregate income statement for a time–in that economic activity remains artificially elevated–but the aggregate balance sheet is going to deteriorate as a result. And as any good financial analyst knows: The income statement is the past. The balance sheet is the future.

A deteriorating balance sheet, or expectations thereof, normally would lead financial markets to demand a higher risk premium to hold a company’s stock, which implies a lower price-to-earnings (P/E) ratio. This can come about, however, either through a decline in the price of the stock, an increase in the earnings yield, or some combination thereof. In the event of sovereign balance sheet deterioration, however, as described above, there is no “stock” per se, but there is a yield on a government bond. If global investors observe a deteriorating sovereign “balance sheet”, they will demand a higher yield premium to hold that bond relative to some other asset. As the yield rises, the price of the bond declines, in effect devaluing the debt and reducing the “P/E ratio”. But then what happens when the central bank resists a rise (or facilitates a decline) in bond yields by lowering policy rates or buys up bonds directly in permanent open market operations (POMOs), as the Fed is now doing?

In this case, the required adjustment cannot fully take place via a higher bond yield, so instead, the price of the bond must decline in real rather than nominal terms. For this to happen, the currency must decline. It is no coincidence that, as the Fed has made it increasingly clear to financial markets that it is prepared, in principle, to expand the POMO program indefinitely until inflation (or expectations thereof) rises by a desired amount, the dollar has declined sharply versus nearly all other currencies.

Regards,

John Butler,
for The Daily Reckoning

[Editor's Note: The above essay is excerpted from The Amphora Report, which is dedicated to providing the defensive investor with practical ideas for protecting wealth and maintaining liquidity in a world in which currencies are no longer reliable stores of value.]

Guess What’s Coming to Dinner: Inflation! (Part One of Two) originally appeared in the Daily Reckoning. The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.”

Read more here:
Guess What’s Coming to Dinner: Inflation! (Part One of Two)




The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Commodities, Uncategorized

Fed President: Bernanke Making “A PACT WITH THE DEVIL”

October 31st, 2010


play video

When Fed President Hoenig declared last week that Bernanke is making “a pact with the devil,” he wasn’t kidding.

Nor was he talking about a little side deal that would someday be forgiven in money heaven.

Rather, he was referring to an unprecedented decision by Bernanke and Company — coming THIS week — that could change the course of history: A new round of Fed money printing with immediate impacts on markets and unforeseeable consequences for the dollar.

Meanwhile, just 48 hours from now, we will also be smack in the middle of another major event — the most important midterm election of our lifetime.

Each of these events represents potentially
revolutionary changes for our country,
our economy and YOUR money.

Each is going happen THIS week!

And each opens the door to unique, unprecedented profit opportunities, which I describe in my last and most important pre-election presentation, now available online.

Look. Five weeks ago, when we first presented the findings of our internal Weiss poll, we already had a pretty good feel for these revolutionary changes on the way.

Then, three weeks ago, when we shared with you the results of our national Weiss-Zogby poll, we had an even clearer vision.

And now, as the hours tick by, and the events are nearly upon us, it’s time to bring you up to date …

Revolutionary Change #1
Shift to Fiscal Conservatism

We’ve known that, regardless of which party gained control of the House or the Senate, there would be a major shift toward fiscal conservatism in Congress, making it almost impossible for Washington to pass major new spending or stimulus legislation.

Our polls showed us that, in a hypothetical three-way race, a maverick, anti-spending outsider would beat both a Republican and Democratic opponents hands down.

Moreover, voters were opposed to bank bailouts by an overwhelming margin of 12 to one.

And now, within about 48 hours, those voters are going to make themselves heard!

Likely impact: As we have stressed repeatedly, this shift to conservatism is fundamentally NEGATIVE for the U.S. economy and the U.S. stock market. Both have relied heavily on government stimulus for support.

But it could be also be temporarily negative for gold, foreign currencies, commodities and other alternative investments that have been so popular lately.

Revolutionary Change #2
MORE Mass Money Printing

This revolution started months ago. And now it’s about to resume!

Indeed, we have strongly suspected all along that the Federal Open Market Committee (FOMC) was getting ready to announce a second major new round of mass money printing, or “quantitative easing” (QE2).

The problem:

Yes, the Fed CAN print the money and inject it into the system. But it CANNOT control where that money goes. So if lenders and investors have concerns about the U.S. or see more promising opportunities elsewhere, most of that money is diverted to other, alternative markets.

This is why it’s a pact with the devil. And this is why it’s bound to backfire.

Likely impact: QE2 is fundamentally neutral — or, at best, only mildly and temporarily positive — for the U.S. economy. But it is strongly POSITIVE for a wide range of alternative investments, including precious metals, key foreign currencies and certain commodities.

Key Short-Term Factors That Are Now
More Evident Than Just Days Ago

As we stand at the precipice of the week in which these revolutionary changes are going to strike, several short-term factors have also come into clearer focus:

First, regarding the election, the market is now more vividly aware of the likely shift toward fiscal conservatism that we first alerted you to weeks ago. More national polls have been released. These polls have added more weight and confidence to the results of our own polls. And based on all the new poll data, analysts from all three sides — Democrat, Republican and Tea Party — are now in agreement that …

(a) The House will almost definitely be controlled by Republicans.

(b) The Republican side of the aisle will almost definitely include a strong and vocal Tea Party caucus. And …

(c) Even if Democrats retain a slim majority in the Senate, they will most probably heed the will of the majority of their constituents and oppose major spending or stimulus legislation.

In short, the market now knows what we knew weeks ago!

Second, regarding the Fed decision, the market has also zeroed in more closely on the range of likely possibilities, as follows:

(a) Based on the Fed’s own pronouncements, it’s now widely expected that the FOMC WILL announce QE2 on November 3rd. If there is no QE2 announcement, a lot of people are going to be VERY surprised.

(b) The likely QUANTITY is still being hotly debated, but my surveys and research tell me the market is expecting somewhere between $50 and $100 billion in Fed bond purchases per month.

Likely impact: The low end of the range could be a disappointment; the high end will be greeted as a pleasant surprise.

(c) More important than the quantity, however, could be the specificity of the announcement. In other words, will the FOMC specify ahead of time the total amount of QE2? Or will it be vague and keep the market guessing as to how long the money printing will continue?

Likely impact: A vague announcement will be a disappointment. A more specific pre-announcement will be greeted positively.

That’s the market’s perception of the near-term outlook. Now let me give you mine:

It’s the bulls who have been in the catbird seat in recent weeks. It’s the bulls who’ve been riding this wave and leveraging the expectations for QE2.

So right now, the burden is on THEM to get confirmation regarding their expectations for QE2. To stay on track, the bulls now NEED the Fed to pre-announce a very substantial QE2. If they get what they need, gold, currencies and commodities should be off to the races again. But if the number is on the low end, or if the Fed’s announcement is vague, we could see intermediate corrections in many of these markets.

Bottom line: The long-term fundamental outlook is very clear to us. The short-term outlook is potentially tricky and volatile, and, accordingly, I want to ensure that you have the facts you need to protect yourself and profit.

My new presentation on this opportunity is Two New Megatrends, Two Mega Windfalls and it’s online right now.

In it, I show you the investment strategies I’m using in Dr. Weiss’ $1,000,000 “Rapid Growth” account to grab huge profit potential beginning NEXT WEEK.

I show you how the approach I’m using could have handed you a 2,478% return — enough to turn $10,000 into $257,800 … or $100,000 into more than $2.5 million.

And I show you how you can track every move I make — in ADVANCE!

So now, with just 48 hours to go before election day, I recommend that you take two, critical steps immediately:

Step #1: Click this link now to view our new pre-election presentation … how we’re going to harness the money-making power of these two watershed events … and how you can, too.

Step #2: After watching the presentation, see for yourself the benefits of tracking Martin’s $1,000,000 portfolio and save $1,313.

Two warnings:
This is my LAST pre-election presentation. It goes offline when the polls close on the West Coast.

This is also your LAST chance to save $1,313. After election night, our introductory offer ends.

Regards,

Monty Agarwal

Related posts:

  1. Flash update: Market turn in the making!
  2. Bernanke Hallucinating
  3. Bernanke Running Amuck

Read more here:
Fed President: Bernanke Making “A PACT WITH THE DEVIL”

Commodities, ETF, Mutual Fund, Uncategorized

Fed President: Bernanke Making “A PACT WITH THE DEVIL”

October 31st, 2010


play video

When Fed President Hoenig declared last week that Bernanke is making “a pact with the devil,” he wasn’t kidding.

Nor was he talking about a little side deal that would someday be forgiven in money heaven.

Rather, he was referring to an unprecedented decision by Bernanke and Company — coming THIS week — that could change the course of history: A new round of Fed money printing with immediate impacts on markets and unforeseeable consequences for the dollar.

Meanwhile, just 48 hours from now, we will also be smack in the middle of another major event — the most important midterm election of our lifetime.

Each of these events represents potentially
revolutionary changes for our country,
our economy and YOUR money.

Each is going happen THIS week!

And each opens the door to unique, unprecedented profit opportunities, which I describe in my last and most important pre-election presentation, now available online.

Look. Five weeks ago, when we first presented the findings of our internal Weiss poll, we already had a pretty good feel for these revolutionary changes on the way.

Then, three weeks ago, when we shared with you the results of our national Weiss-Zogby poll, we had an even clearer vision.

And now, as the hours tick by, and the events are nearly upon us, it’s time to bring you up to date …

Revolutionary Change #1
Shift to Fiscal Conservatism

We’ve known that, regardless of which party gained control of the House or the Senate, there would be a major shift toward fiscal conservatism in Congress, making it almost impossible for Washington to pass major new spending or stimulus legislation.

Our polls showed us that, in a hypothetical three-way race, a maverick, anti-spending outsider would beat both a Republican and Democratic opponents hands down.

Moreover, voters were opposed to bank bailouts by an overwhelming margin of 12 to one.

And now, within about 48 hours, those voters are going to make themselves heard!

Likely impact: As we have stressed repeatedly, this shift to conservatism is fundamentally NEGATIVE for the U.S. economy and the U.S. stock market. Both have relied heavily on government stimulus for support.

But it could be also be temporarily negative for gold, foreign currencies, commodities and other alternative investments that have been so popular lately.

Revolutionary Change #2
MORE Mass Money Printing

This revolution started months ago. And now it’s about to resume!

Indeed, we have strongly suspected all along that the Federal Open Market Committee (FOMC) was getting ready to announce a second major new round of mass money printing, or “quantitative easing” (QE2).

The problem:

Yes, the Fed CAN print the money and inject it into the system. But it CANNOT control where that money goes. So if lenders and investors have concerns about the U.S. or see more promising opportunities elsewhere, most of that money is diverted to other, alternative markets.

This is why it’s a pact with the devil. And this is why it’s bound to backfire.

Likely impact: QE2 is fundamentally neutral — or, at best, only mildly and temporarily positive — for the U.S. economy. But it is strongly POSITIVE for a wide range of alternative investments, including precious metals, key foreign currencies and certain commodities.

Key Short-Term Factors That Are Now
More Evident Than Just Days Ago

As we stand at the precipice of the week in which these revolutionary changes are going to strike, several short-term factors have also come into clearer focus:

First, regarding the election, the market is now more vividly aware of the likely shift toward fiscal conservatism that we first alerted you to weeks ago. More national polls have been released. These polls have added more weight and confidence to the results of our own polls. And based on all the new poll data, analysts from all three sides — Democrat, Republican and Tea Party — are now in agreement that …

(a) The House will almost definitely be controlled by Republicans.

(b) The Republican side of the aisle will almost definitely include a strong and vocal Tea Party caucus. And …

(c) Even if Democrats retain a slim majority in the Senate, they will most probably heed the will of the majority of their constituents and oppose major spending or stimulus legislation.

In short, the market now knows what we knew weeks ago!

Second, regarding the Fed decision, the market has also zeroed in more closely on the range of likely possibilities, as follows:

(a) Based on the Fed’s own pronouncements, it’s now widely expected that the FOMC WILL announce QE2 on November 3rd. If there is no QE2 announcement, a lot of people are going to be VERY surprised.

(b) The likely QUANTITY is still being hotly debated, but my surveys and research tell me the market is expecting somewhere between $50 and $100 billion in Fed bond purchases per month.

Likely impact: The low end of the range could be a disappointment; the high end will be greeted as a pleasant surprise.

(c) More important than the quantity, however, could be the specificity of the announcement. In other words, will the FOMC specify ahead of time the total amount of QE2? Or will it be vague and keep the market guessing as to how long the money printing will continue?

Likely impact: A vague announcement will be a disappointment. A more specific pre-announcement will be greeted positively.

That’s the market’s perception of the near-term outlook. Now let me give you mine:

It’s the bulls who have been in the catbird seat in recent weeks. It’s the bulls who’ve been riding this wave and leveraging the expectations for QE2.

So right now, the burden is on THEM to get confirmation regarding their expectations for QE2. To stay on track, the bulls now NEED the Fed to pre-announce a very substantial QE2. If they get what they need, gold, currencies and commodities should be off to the races again. But if the number is on the low end, or if the Fed’s announcement is vague, we could see intermediate corrections in many of these markets.

Bottom line: The long-term fundamental outlook is very clear to us. The short-term outlook is potentially tricky and volatile, and, accordingly, I want to ensure that you have the facts you need to protect yourself and profit.

My new presentation on this opportunity is Two New Megatrends, Two Mega Windfalls and it’s online right now.

In it, I show you the investment strategies I’m using in Dr. Weiss’ $1,000,000 “Rapid Growth” account to grab huge profit potential beginning NEXT WEEK.

I show you how the approach I’m using could have handed you a 2,478% return — enough to turn $10,000 into $257,800 … or $100,000 into more than $2.5 million.

And I show you how you can track every move I make — in ADVANCE!

So now, with just 48 hours to go before election day, I recommend that you take two, critical steps immediately:

Step #1: Click this link now to view our new pre-election presentation … how we’re going to harness the money-making power of these two watershed events … and how you can, too.

Step #2: After watching the presentation, see for yourself the benefits of tracking Martin’s $1,000,000 portfolio and save $1,313.

Two warnings:
This is my LAST pre-election presentation. It goes offline when the polls close on the West Coast.

This is also your LAST chance to save $1,313. After election night, our introductory offer ends.

Regards,

Monty Agarwal

Related posts:

  1. Flash update: Market turn in the making!
  2. Bernanke Hallucinating
  3. Bernanke Running Amuck

Read more here:
Fed President: Bernanke Making “A PACT WITH THE DEVIL”

Commodities, ETF, Mutual Fund, Uncategorized

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