The Yen to Soar, the Dollar Falls Lower

Jack Crooks examines the Japanese Yen and the U.S. dollar. In this issue of Money and Markets, Mr. Crooks looks further at the connections between the U.S. stock market and rising foreign currencies.

Jupiter, Fla., (PRWEB) November 30, 2007 - Jack Crooks examines the Japanese Yen and the U.S. dollar. Mr. Crooks looks further at the connections between the U.S. stock market and rising foreign currencies.

In recent years, international investors borrowed an estimated $1 trillion worth of Japanese yen, converted the yen into other currencies, and used that money to buy riskier investments, including U.S. stocks. But now, with turbulence on the horizon, they're starting to reverse that transaction, selling the riskier investments and buying back the yen. This is resulting in the yen rising and, when U.S. stocks are shaky, the yen rises even more.

The stock market is not just volatile; it's getting riskier day by day.

Despite a rocky road, some investors have convinced themselves that this year has been a good one for equities. They've been willing to overlook a whole litany of problems, and the Federal Reserve has been more than willing to help them out by lowering the fed funds and discount rates.

Moreover, the S&P closed on November 30 at just 4.6% higher than where it opened up the year. That's far less than its average annual return. And prior to that, the major averages hadn't been able to string together three consecutive days of gains since September. In fact, November revealed an extreme lack of conviction among stock market bulls.

Meanwhile, the risks keep getting harder and harder to ignore:

•    Financial firms all over the U.S. and Europe struggling to cope with the credit crunch, taking write-offs in the tens of billions of dollars;

•    Subprime mortgage losses and write-downs expected to grow far larger, with cuts and bruises likely to morph into gaping wounds for major lending institutions;

•    The very real possibility that some banks may not be able to survive the blood loss; and

•    The inability of banks to expand lending thanks to net losses, ratings downgrades, and dwindling assets

Further losses are set to shake up the markets a heck of a lot more, and every time they do, it could drive more money back into the Japanese yen.

"Never forget: An estimated one trillion dollars worth of Japanese yen has been borrowed and plowed into higher-yielding, higher-risk bets. When the money reverses, and those yen loans get covered, the currency must ricochet back to higher levels," Mr. Crooks states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1231

About JACK CROOKS & MONEY AND MARKETS     

John (Jack) Crooks is the founder and president of Black Swan Capital, an independent advisory firm specializing in foreign exchange and currency markets investing for retail and institutional clients. A seasoned financial advisory with nearly 20 years of investment experience, Mr. Crooks uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. He is the editor of Weiss Research's latest investment offerings, World Currency Alert and World Currency Options, which were launched in August 2007.

Mr. Crooks also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, he was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, Mr. Crooks served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for an international investment boutique, where he was responsible for providing daily advice and global strategy analysis.

Prior to entering the investment arena, Mr. Crooks held various corporate finance positions. He has written extensively on the subject of global currencies and international economics and has been published in Asian Times, Futures Magazine, Barron's, Bloomberg, Dow Jones Newswire, and across many financial websites. He has also appeared on Bloomberg TV and CNBC.

Mr. Crooks holds a bachelor's degree in finance from Florida State University and a master's in business administration from the University of North Texas.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

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