Dynamic Growth ETF Portfolio
NEW BUYS:
None
NEW SELLS:
VOX: Vanguard Telecom-.297
SWITCHES:
None
Here are our Top 10 ETF's for the week of September 24th:
1) FXI- iShares FTSE/Xinhua China 25- .616
2) PGJ: PS Golden Dragon China Fund- .599
3) ITA- iShares DJ Aerospace & Defense-.571
4) IAH- Internet Architecture HOLDRs Trust-.555
5) PPA- PS Aerospace & Defense- .526
6) IXP: Telecommunications Sector Index Fund- .501
7) EWS: iShares MSCI Singapore (Free) Index Fund-.494
8) IHI- DJ Medical Devices- .469
9) OIH: Oil Services HOLDRS- .468
10) DND: Wisdom Tree Pacific Ex-Japan Total Dividend- .443
Honorable Mentions:
EWM: MSCI Malaysia (Free) Index- .393
The Week in Review:
On Tuesday, the FOMC cut the Fed Funds rate a half point (.50) to 4.75%. While the stock market cheered the news, the U.S. Dollar collapsed, and prices for commodities, precious metals and energy spiked.
The U.S. Dollar is now almost at par with the Canadian Dollar. The last time this happened was in 1975, which was 31 years ago . Five years ago, nobody would have thought this was possible.
While many Americans spend their waking hours oblivious to what is going on around them, the financial strength and sovereignty of the United States is crumbling.
Weeks before the Fed cut the discount rate, we told you that foreign currency ETF's around the globe we climbing in our weekly ranking system. The rally of these foreign currencies was a precursor to the Dollars eventual decline.
I have provided some of the rankings below;
FXE- Euro Currency Trust- .557
FXB- CurrencyShares British Pound Sterling Trust- .404
FXF- CurrencyShares Swiss Franc Trust- .300
FXC- CurrencyShares Canadian Dollar Trust- .470
FXA- CurrencyShares Australian Dollar Trust- .437
Why the Dollar Collapsed- Inflation!!!
After Tuesday's FOMC meeting, their statement read;
Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
The smart money knew that the Fed's statement on inflation was a lie. The Fed was clearly lowering rates to bailout hedge funds, private equity, and numerous lenders.
We know that the Fed's comments on inflation were a lie because;
1) Gold closed at $732.10, up from $711.00 last week and $703.00 two weeks ago.
2) NYMEX crude oil spiked to $81.62 /bbl up from $78.09/bbl last week, and $75.62/bbl two weeks ago.
3) Commodities surged this week as the CRB Index closed at 444.00, up from 428.54 last week, and 418.53 two weeks ago.
Even if the Fed Funds rate fell to 4%, this would not be enough to bailout homebuyers who go suckered into interest only, no money down, or adjustable rate mortgages.
Foreclosures will continue for the next few years while the bankers partake in the "Great American Land Grab of the 21st Century".
And you thought Mr. Potter from "It's a Wonderful Life" was a fictional character!
What Does All This Mean???
Well, I hate to be the one to tell you this, but you are going to be paying more for Food, Energy, Building Materials, Services, Plumbers, Electricians, Contractors, Vehicles, Travel, Leisure, Going out to eat, and anything else you can think of.
Since we can only get our news from TV networks that are biased toward one political agenda or the other (Conservatives-Fox/ Liberals-CNN, etc) we trend to Parrott or mimic what we are told.
For example;
This morning on Fox, I was listening to a discussion about Mattel's apology to the Chinese over the manufacturing of some of their toys tainted with lead.
To show you how misleading some of the news comments are, one person in the discussion said, “Consumers would pay more for products if they were made here in the U.S. rather than overseas in countries like China".
What a crock of crap!
Last night I was at our local mall. I saw the price tag of a polo shirt made in Sri Lanka. It was listed at $75.00. The total manufacturing costs of that shirt can't be more than $10 bucks, maybe $15 of you add in shipping.
Whether Ralph Lauren Polo or any other retailer manufactures a shirt for $10 bucks overseas or $15 bucks here in the U.S., charging $75 bucks is still a hefty profit.
The bottom-line is this. Manufacturers know that the public will pay only so much for an item. It doesn't matter what the product is, if the price gets too high, the consumer will say no.
To maximize profits, increase the stock price, and to get rich through their stock and option grants, companies will replace the American worker to make an extra $5 dollar profit.
So, people like Mr. Ralph Lifshitz (Ralph Lauren's real name), and Mr. Jay Schottenstein (American Eagle) know from personal experience that outsourcing works for them, and they are very wealthy because of it.
Rates Will Go Up After Hedge Funds, Private Equity, and Lenders are Rescued
U.S. Dollar is in a depression. Once the Fed bails out their buddies, rates will be raised back to the 5.25% level as a move to rescue the dollar and fight inflation.
In the meantime, we could see the Fed Funds drop another .75 basis points (.75%), or whatever it will take to bailout the bankers. Once this problem clears up, interest rates are definitely headed higher, and the dollar will recover.
Enjoy The Rally!
Now that the Fed has made its move, I believe the markets will rally into year-end.
In October, I wouldn't be surprised to see the major market averages give back half of their recent gains. This pullback will set the stage for a more meaningful rally through December.
We raised our allocation to the stock market by another 5% when the Dow dropped below the 13,000- 12,800 mark, and the SPX fell below 1400.
At Dow 12,000 we will raise our allocation to the stock market by another 5%.
Our asset allocation is as follows;
70% Equities: (Normally 95%) Aggressive
60% Equities: (Normally 80%) Moderately Aggressive
50% Equities: (Normally 60%) Moderate
30% Equities: (Normally 40%) Moderately Conservative
15% Equities: (Normally 20%) Conservative
