Global Investment Strategy for First Quarter 2009 2 comments

by: Enzio von Pfeil February 02, 2009 | about: FXY / SPY / UUP

Enzio von Pfeil

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Excerpts from Dr. Enzio von Pfeil's January 29, 2009 appearance on CNBC Asia:

THE GLOBAL ECONOMIC TIME™ AS THE STRATEGY BACKDROP

It remains characterized by an excess demand for money (banks don't want to lend) and by an excess supply of goods.
Crucially, this type of "excess demand for money" is dangerous, as bank lending is driven by profits, not by (central bank) policy.
So the question then becomes: "when will banks start wanting to lend again?" Answer: the day that they cannot afford NOT to lend anymore.
Meanwhile, the "excess supply of goods" is most glaring in rising unemployment and thus in rising social unrest.
For the next couple of quarters, the world will be stuck in "L": the best image of stock markets is to picture a fish flopping around on a hot cement sidewalk.
Obama will disappoint, sadly. I am glad that he won, but it is one thing to give great speeches, and another thing to create Congressional approval for effective policy!
- First, his stimulus package cannot work as banks simply won't want to lend; at best, he is stopping the rot.
- Secondly, he is going to anger China with all of his "undervalued RMB" rhetoric, so watch a trade war result. This will lead the Chinese to buy less US government bonds, so up go long bond yields, and
- Thirdly, I fear that he will be worn out by fights within the strong personalities in his Cabinet, not to mention with the Republicans in Congress.

WHAT THE KEY INVESTMENT OBJECTIVE MUST BE DURING 1H09

Exactly what you call this portion of your show, "protect your wealth."
UNLESS you are a trader who is very well plugged-in, this is the time of FEAR, not of greed!
This fear is exactly why the investment advice that we have provided has given our subscribers gains of nearly 29% since the 10/07 crash.

WHERE INVESTORS SHOULD PARK THEIR Money

a) Currency

For now, the dollar is the safe haven currency.
I disbelieve recent strength in "commodity currencies" like the Australian and New Zealand dollar: with an excess supply of goods, there is NO reason to expect demand for commodities to rise strongly!
Equally, the yen will remain strong until risk appetite has returned and investors re-visit multi-currency carry trades,

b) Commodities

Avoid them for the same reason that I am cautioning you against buying "commodity currencies."
The only commodity worth considering is gold as a "safe haven."

c) Stock markets

if you agree with my assessment of the global Economic Time, and thus agree with my key investment objective of wealth protection, then do NOT play around in stock markets.
I know that many people perceive there to be "great value" out there. So do I, but I also would add that this is "value at risk": there is plenty of bad news not yet factored into markets.
- For instance, the low PE ratio is going to rocket once the "E" sails south yet again, so that destroys the argument that there is great value out there.

d) Bank deposits

This is the BIG difference to previous crises: this time it is "different" in that people don't really trust the banks with whom they have put their money
Indeed, recent news on the shenanigans of office decorations and yet another corporate jet at major banks supports this suspicion.
Thus, if your bank is not government-guaranteed, find one that is. Equally, even if it is government-guaranteed, read the fine print and see if your money really is safe!

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