Monday, May 2, 2011

The Wrong Answer

I'm going to keep it simple this week. Everyone is trying to guess the market's next move. Everyone is trying to guess the next catalyst of a market move. Everyone has a wrong answer. The right answer is the Japanese yen.

World domination is the goal of the central bank and world domination can't work unless there is only one currency. Conversion to a single currency is made much simpler when all currencies exhibit valuations of parity.Most of the major economies of the world are already there but one - Japan. Before they were HAARPed with the earthquake/ tsunami of March, the yen traded at about 85 to 1 versus the US dollar. The immediate currency reaction was a severe strengthening of the yen. The BOJ intervened to weaken the yen and jolt the stock market. They yen sank. Japan was re-HAARPed and the yen resumed its strengthening trend.

I have included below a chart that shows how the world has wrong answers to market direction. The chart shows the 2-beta yen ETFs that Proshares offers - the YCL is long the yen and the YCS is short the yen. The green line is the YCL and the red line is the YCS. Obviously, over the two year time frame of this chart, the long yen has gained and the short yen has lost. What is most interesting is the volume. Traditional wisdom and strategy has bet on the weakening yen theme as witnessed by volume in the millions per day for the YCS while the long yen YCL barely garners a few thousand shares per day. It seems that no one understands that the central banks are working to facilitate a one world currency invocation and they need to vastly strengthen the yen. Understandable, Japan has debt issues and economic growth issues that render its central bank incapable of raising rates to strengthen the currency. The dirty work now falls to outside forces. Nothing is off the table to the illuminati that control the central banks. Look at the chart below and determine for yourself whether you think the yen will continue to strengthen or will soon weaken. Remember, if we conclude the yen will soon weaken, that means the US dollar will strengthen. I think we all know that since Bernanke seized power in 2007, the US dollar is doomed for obsolescence.

Chart 1 - 2 years YCL in green, YCS in red
Chart courtesy

The current trend will likely stay intact until the yen closes in on the US dollar parity line. That means more inflation, higher equity prices, higher metals prices, and more Federal Reserve control. The US dollar must be weakened by any means necessary. So sayeth the Fed!

Disclaimer: The views discussed in this article are solely the opinion of the writer and have been presented for educational purposes. They are not meant to serve as individual investment advice and should not be taken as such. This is not a solicitation to buy or sell anything. Readers should consult their registered financial representative to determine the suitability of any investment strategies undertaken or implemented. BMF Investments, Inc. assumes no liability nor credit for any actions taken based on this article. Advisory services offered through BMF Investments, Inc.

No comments:

Post a Comment