The Daily Reckoning
Weekend Edition
March 12-13, 2005
Baltimore, Maryland
By Addison Wiggin and Tom Dyson MARKET REVIEW: JAPAN'S GREATEST TRADE At some point yesterday afternoon, Addison Wiggin
approached our desk with a twinkle in his eye. "The Japanese are about to start dumping their dollars," he
said. We didn't even bother asking for details; the dollar/yen
chart we quickly pulled up said it all. The rate had moved
from 104.67 to 103.70 in a matter of minutes... The spike was caused by Prime Minister Junichiro Koizumi,
we found out later, as he answered questions before a
parliamentary committee. "I think it's necessary to have diversity," was all he
said, answering a question on Japan's reserve. But when you
have the international currency markets hanging on your
every word – currency markets that are extremely sensitive
to the idea of central bank diversification – these were
big words. Immediately following Koizumi's comment, top officials at
the Ministry of Finance denied there were plans to dump the
dollar...but Addison didn't believe a word of it. He thinks
they've let the cat out of the bag. So does Dennis Gartman. He writes, "We suspect that Mr.
Koizumi gave voice to the one truly great concern that the
monetary authorities in Japan have quietly been discussing
amongst themselves over the course of the past several
months: 'How do we get ourselves out of the positions we
(and the Chinese) have gotten ourselves into regarding
these bulging foreign currency reserve positions so heavily
skewed to the dollar?'" "As we have long said, it takes buying and a lot of it to
put a market up; it takes a mere lack of buying to send at
market down. We fear the lack of buying...and that is a
fear far large enough!" Dennis Gartman fearful? What if he had a $700 billion long
position in U.S. Treasury bonds to worry about? Japan does. And on Thursday they had to swallow news of a
$113.9 billion budget deficit in February, the biggest
monthly gap ever seen. On Friday, fingernails would have been gnawed again.
January's trade deficit came in at $58.3 billion, the
second largest one-month shortfall in history. This news didn't escape the bond market. The 10-year note
jumped 24 basis points last week, representing the largest
one-week down-move in government bond prices since the week
ending April 26, 2004. [Ed. Note: Closing prices for all
the major markets can be found below, with their moves for
the week.] How much longer can the Japanese maintain their composure? We don't dare to blink... Regards, Tom Dyson
The Daily Reckoning P.S. Friday, March 4 was a pivotal day for Dow Theorists.
Then, on Monday, March 7, the Dow crossed 11,000 for the
first time in three-and-a-half years. Chris Mayer explains the significance: "Really, you
couldn't ask for a better alignment. On Friday, both the
Dow Jones Industrial Average and the Dow Jones
Transportation Average topped their Dec. 28 highs. Volume,
too, was a smidgeon higher on the breakout." "As if to provide further confirmation, the Dow Jones
Utility Average also made a new high. As Richard Russell,
long-time editor of Dow Theory Letters, writes, 'It is an
extremely rare occurrence to see all three Dow Jones
averages - Industrials, Transports and Utilities - breakout
out to new highs simultaneously.'" "To go even further, they are all above their 50-day moving
averages, as are the Nasdaq and the Russell 2000." "Therefore, we have, for the time being, a bullish signal,
and we intend to favor bullish plays in our trading as long
as this is the case." [Ed. Note: More on Dow Theory, from Addison, below – see
Flotsam and Jetsam – or to see how Chris Mayer translates
these signals into trade recommendations, check out this
feature... http://www.agora-inc.com/reports/CPT/WCPTF308 --- Daily Reckoning Book Of The Week --- The Mystery of Capital by Hernando de Soto "The most important book on global economics ever written."
–- Addison Wiggin Why do some countries succeed at capitalism while others
fail? This persuasive book revolutionizes our understanding
of capital and points the way to a major transformation in
the world economy. http://www.invest-store.com/cgi-bin/dailyreckoning-bin/moreinfo.cgi?item=686151 --- Advertisement ---- ------------------------ THIS WEEK in THE DAILY RECKONING: This week we introduced a
second commodity expert into the fold. His name is Justice
Litle, and he will work right alongside Kevin Kerr. (Kevin
will make the trades and read the markets, while Justice
will handle the investments and the fundamental research)
We ran two essays by Justice this week – on Tuesday and
Wednesday... REAGAN'S REAL REVOLUTION 03/11/05
By Bill Bonner "On the outside, the U.S economy looks just
fine and dandy, thanks to the 'world improvers'...but if
you dig a little deeper and open your eyes a little wider,
you'll see something quite different."
http://www.dailyreckoning.com/Issues/2005/DR031105.html THE RIDDLE OF THE NILE 03/10/2005
By Chris Mayer
"What does an English hydrologist, a Harvard economics
professor, and the Nile have to do with predicting the ups
and downs of the stock market? A lot more than one would
think..."
http://www.dailyreckoning.com/Issues/2005/DR031005.html THE DRAGON IS RAVENOUS 03/09/2005
By Justice Litle
"While food is necessary for survival, energy is necessary
for growth...and no country is growing at a faster clip
than China. Their demand for energy increases everyday, and
we explore their strategies to ensure energy security."
http://www.dailyreckoning.com/Issues/2005/DR030905.html CHINA'S HUNGER FOR KNOWLEDGE 03/08/2005
By Justice Litle "By examining the key elements of China's strategy, we will
be enabled to understand and anticipate its movements.
Today, Justice Litle looks at the transfer of knowledge and
technology from multinational corporations..."
http://www.dailyreckoning.com/Issues/2005/DR030805.html WE'RE ON A ROAD TO NOWHERE 03/07/2005
By The Mogambo Guru "Not that the Mogambo Guru is a glass-half-full kind of
guy, but lately he's been more downtrodden than usual. He's
realized inflation is eventually going to destroy us all,
but he's not going to take it sitting down."
http://www.dailyreckoning.com/Issues/2005/DR030705.html --- Advertisement ----
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------------------------ HEADLINE, NEWS And INSIGHT: Articles of additional interest
we might have ran in the DR, but didn't! CALIFORNIA DREAMIN'
By Bill Bonner "Brand-name cities are becoming home to the rich and the
hip, as well as to fashionable industries, such as media,
banking and finance. And people can hardly wait to get away
from the suburbs to take advantage of city life." http://www.dailyreckoning.com/Featured/CaliforniaDreamin.html MORE OIL FOR THE LAMPS OF CHINA
By Byron King "The continents hold most of what geologists refer to as
the Earth's sedimentary basins, and that is where the
petroleum is. Well, sometimes that is where the petroleum
is; you have to drill and find it. The Chinese know this." http://www.dailyreckoning.com/Featured/MoreOilforChina.html ------------------------
FLOTSAM AND JETSAM: How can an investor avoid market
crashes, yet always be long at market bottoms? Addison
Wiggin explains... In 1929, a little known market timing system predicted
stocks were overvalued due for a major crash - just days
before the Dow Jones shocked Wall Street by tumbling 23% in
2 days. Anyone who listened saved a fortune - literally. That same system later told investors to get back in the
market in 1932 - just before it rose 365%. It also called
the 502.4% rise between 1949 and 1966, the 23% crash in
1987, the bull market of the 1990s and the crash in 2000. In fact... This market timing system has predicted EVERY major move on
Wall Street for the last 100 years. And following its
advice has proven far more lucrative than simple buy-and-
hold investing. Years ago, two analysts named Robert Edwards and John Magee
put this system to the test. They wrote about it in a book
called Technical Analysis of Stock Trends. The study tracked this system's performance using over 59
years of live stock market data. They compared the results
to how much you would have made with buy-and-hold investing
over the same period. Buy-and-hold investors would have turned a single $1,000
investment into $17,570. This system turned every $1,000
into $112,360. Or about 112 times your money. That's nearly
seven times more than buy-and-hold investors made. But that's not even the best part... While the S&P 500 has averaged about 11.3% over the last 34
years, this market-timing strategy helped investors move in
and out of stocks skillfully enough to pile up average
annual gains of 22.6%...for 50 years. Those are Buffett-sized returns. And that's why I am so
excited... Recently, our very own value expert, Chris Mayer, took this
proven market timing system and made it even more powerful.
He figured out a way to use the same proven indicators -
that predicted every major market move since the early
1900s - to predict individual stock moves. Chris actually looks for what are called "Crisis Points."
These are the very points when a stock is set to catapult -
up or down. That means in any given day, Chris is following about 8,000
potential moneymaking opportunities. And better still, he
leverages those moves by up to four or five times by
recommending appropriate puts and calls. And it works... Chris has already racked up gains of 121%, 42% and 40% to a
small group of investors. And now he's asked that I invite
you to join in the profit making. But you have to hurry... In 14 days the price to join Chris will rise considerably.
And I do have to warn you. There is a very limited number
of people who can join Chris and his Crisis Point Trader
System. So please hurry and reserve your spot today. Best regards, Addison Wiggin
The Daily Reckoning P.S. You wouldn't believe what this powerful system is
saying about today's market. Find out now... http://www.agora-inc.com/reports/CPT/WCPTF308 -------------------- And The Markets...
| Friday | Thursday | This week | Year-to-Date | DOW | 10,776 | 10,852 | -165 | -0.1% | S&P | 1,200 | 1,209 | -22 | -1.0% | NASDAQ | 2,042 | 2,060 | -29 | -6.2% | 10-year Treasury | 4.55% | 4.47% | 0.24 | 0.33 | 30-year Treasury | 4.82% | 4.76% | 0.17 | 0.00 | Russell 2000 | 627 | 627 | -18 | -3.8% | Gold | $444.95 | $442.30 | $11.50 | 1.7% | Silver | $7.53 | $7.49 | $0.18 | 10.5% | CRB | 318.62 | 315.15 | 9.56 | 12.2% | WTI NYMEX CRUDE | $54.43 | $53.54 | $0.65 | 25.3% | Yen (YEN/USD) | JPY 104.05 | JPY 104.07 | 0.69 | -1.4% | Dollar (USD/EUR) | $1.3450 | $1.3428 | -317 | 0.8% | Dollar (USD/GBP) | $1.9238 | $1.9227 | -108 | -0.3% |
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