Although markets have been a bit skittish so far this year and despite concerns about growing debt and slower growth, there are plenty of great value opportunities out there for alert investors.

Still, it makes sense to play some defense by hedging your stock picks with what I call “shock absorbers.” Cash, gold, silver, and high-quality bonds come to mind, but there are also some better options out there — namely stable markets and their currencies.

But first, let’s take a look at three qualities that make a country a good hedge and safe haven:

1. Strong, stable currency with ample liquidity

The country’s currency should demonstrate deep liquidity so that investors can move in and out of it without sharp movements in price. It needs to be widely recognized as a reserve currency.

2. Financial and political stability

The fiscal discipline and political stability of the country needs to be unquestioned. Countries with large fiscal deficits are unable to be dependable safe havens since the path of least resistance is to devalue the currency to make debt loads more manageable.

3. Market-based, rules-driven, open economy

Investors and trading partners thrive best in a market-oriented economy where the rules are clear and transparent. Faith in the fairness of the judicial system and institutions is vitally important.

Switzerland and the Swiss franc fit the bill nicely.

For starters, relatively small Switzerland is home to four of the five largest firms in Europe in terms of market value: UBS (NYSE: UBS), Nestlé (OTC: NSRGY), Novartis (NYSE: NVS) and Roche. These companies are increasingly tapping into emerging market growth.

Switzerland also has a number of other factors on its side:

• It has the highest per-capita income in the world.

• While it’s only 137 miles by 216 miles in size with a population of 7.2 million, Switzerland packs a punch and is a financial and multinational powerhouse.

• The Swiss franc is backed by ample gold reserves, fiscal discipline, a trade surplus, and very little foreign debt.

• Outward looking, Switzerland has 40% of its gross domestic product attributed to exports.

• Switzerland represents the third-largest financial center in the world after New York and London. It is also home to world-class pharmaceutical, engineering, and food companies.

• Switzerland enjoys a stable government, vibrant democracy, and a reputation as an asset haven in times of stress. The Swiss have had a functioning democracy for 500 years and actually have a fairly weak central government, with a legislature that meets for only two weeks, four times a year. (Good idea for U.S. Congress?) Voters actually defeated a referendum that would have implemented a shorter workweek and longer vacations.

• All men between the ages of 20 and 42 are required to engage in military training each summer, resulting in an army of 625,000. Swiss Guards have protected the Vatican since 1506.

Switzerland is on Sale

That all sounds pretty good, especially since the Swiss stock market is trading at a discount to the S&P 500. Now, how should Switzerland become part of your portfolio?

Large, global blue chip companies are almost always favorable due to attractive price-to-book valuations, entrenched brand names, dominant market shares, proven management teams, solid free cash flows, and double-digit growth potential.

What better way to play this trend than with Swiss quality, value, and global growth?

The iShares Switzerland Index (NYSE: EWL) is a smart way to gain exposure to a basket of Switzerland’s leading multinationals and has an expense ratio of only 0.59%. In addition, while a rising Swiss franc puts pricing pressure on Swiss exporters, a strong Swiss franc supercharges returns for investors in EWL.

My go-to stock pick in Switzerland is Nestlé (OTC: NSRGY). This consumer giant has a share-buyback program, a focus on growth in emerging consumer markets, and a rising dividend.

ABB (NYSE: ABB) is a terrific infrastructure play and has been on a tear, winning power and automation-technology contracts all over the world.

You may also wish to pair EWL with iShares Singapore (NYSE: EWS). Singapore is the “Switzerland of Asia,” with $40,000 of foreign exchange reserves for every citizen.

And if you only want exposure to the Swiss franc, take a look at the CurrencyShares Swiss Franc Trust (NYSE: FXF).

You can’t go wrong buying Swiss quality — and it’s even better if the country is on sale.

Until next time,

Carl Delfeld for Wealth Daily

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It wasn’t that long ago that the Canadian dollar was being left for dead. After trading above par in late 2012 and early 2013, the currency had fallen to just US88.94¢ by March 20, 2014.

But just two months later, the loonie has rallied more than 3.5% and David Rosenberg knows why.

The chief economist at strategist at Gluskin Sheff + Associates Inc. listed the reasons in his daily Breakfast with Dave report…continue reading HERE

…continue reading HERE

Quotable
“Give me a one-handed economist.”
 
― Harry Truman
 
Commentary & Analysis
The Fed Hydra Kabuki Dance from Hell
 
What a performance from Fed Chairman Janet Yellen at her press conference yesterday to explain the Federal Open Market Committee rate decision. 
 
Why does every answer from a Fed Chairman begin with “so?”  Bernanke had that weird habit too.  I guess it is a Fed thing.  “Johnny, did you steal money from mommy’s purse?”  And little Johnny says, “So…I needed to buy some candy…” and before Johnny can finish the excuse a regular father would already have stopped him in mid-sentence and said in no uncertain terms: “Answer the damn question: yes or no?”  But of course the Fed can never answer the damn question.  And so it goes…

• So… those inflation numbers.  The latest headline CPI looked high to me, but don’t make too much out of the fact all the things real people are forced to buy, like food, medicine, education, and energy are rising while real wages are taking a dirt nap.  Inflation is well under control.  Prices are actually tucked tightly within our mandate and in fact we are hoping we see more inflation.

• So…the Fed funds rate is just about perfect where it is now, unless of course we need to change it for some reason.
• So…those long-term forecasts of growth are precise, but there is quite a margin of error and we have two new committee members who haven’t been properly indoctrinated; all will be good next time around.  So I wouldn’t put too much emphasis on that forecast even though we use them to determine the Fed Funds rate.  And so when we do raise the Fed Funds rate, whenever that may be, for some unknown reason, don’t worry because the long end of the curve won’t rise anyway. 
• So… there is a growing number of structurally unemployed out there, but I am sure zero-bound interest rates will do the trick and the economic recovery will pull them back into the job market.  But of course we have to remember the economy’s inability to grow at normal capacity will mean many of those structurally unemployed may not find jobs which will likely hurt the productivity of the US economy.  
• So…I am concerned about the spread between junk and high quality paper, but I see no cause for concern about too much leverage being taken, or investors stretching for yield, or bubbles anywhere.
• So…employment has improved dramatically and we are succeeding on our mandate there, but of course you realize the labor market is still quite weak and zero interest rates will be needed for longer than many expect. 

I could go on, but thinking about Fed Chairman Yellen’s blather gives me a headache, so I will stop there and let you add some of your favorites.  But I do have a few questions and comments:

• Has the women ever traded anything in her life? 
• Has she ever held a real job outside of academia? 
• Is she the epitome of “no skin in the game” or what?
• Does she actually think she instills the least bit of confidence in anyone listening to her blather? 
• Did she ever read Luwign von Mises’ accumulation of articles titled the Manipulation of Money and Credit? 
• Does she understand the Fed is why investors are stretching for yield and taking on too much risk? 
• Does she realize a country with the advantage and burden of reserve currency status is supposed to be responsible with money and credit? 
• And is she really our “best and brightest,” or yet another concoction from the well-connected tribal northeastern liberal institutions and the proper gender to boot? 
• Could that performance provide any better example of why we need to shut-down the Fed Open Market Committee? 
• Is it any wonder why China is about to zoom past the US as the world’s eminent economic power?

So…the Fed funds rate is just about perfect where it is now, unless of course we need to change it for some reason.

• So…those long-term forecasts of growth are precise, but there is quite a margin of error and we have two new committee members who haven’t been properly indoctrinated; all will be good next time around.  So I wouldn’t put too much emphasis on that forecast even though we use them to determine the Fed Funds rate.  And so when we do raise the Fed Funds rate, whenever that may be, for some unknown reason, don’t worry because the long end of the curve won’t rise anyway. 
• So… there is a growing number of structurally unemployed out there, but I am sure zero-bound interest rates will do the trick and the economic recovery will pull them back into the job market.  But of course we have to remember the economy’s inability to grow at normal capacity will mean many of those structurally unemployed may not find jobs which will likely hurt the productivity of the US economy.  
• So…I am concerned about the spread between junk and high quality paper, but I see no cause for concern about too much leverage being taken, or investors stretching for yield, or bubbles anywhere.
• So…employment has improved dramatically and we are succeeding on our mandate there, but of course you realize the labor market is still quite weak and zero interest rates will be needed for longer than many expect. 

I could go on, but thinking about Fed Chairman Yellen’s blather gives me a headache, so I will stop there and let you add some of your favorites.  But I do have a few questions and comments:

• Has the women ever traded anything in her life? 
• Has she ever held a real job outside of academia? 
• Is she the epitome of “no skin in the game” or what?
• Does she actually think she instills the least bit of confidence in anyone listening to her blather? 
• Did she ever read Luwign von Mises’ accumulation of articles titled the Manipulation of Money and Credit? 
• Does she understand the Fed is why investors are stretching for yield and taking on too much risk? 
• Does she realize a country with the advantage and burden of reserve currency status is supposed to be responsible with money and credit? 
• And is she really our “best and brightest,” or yet another concoction from the well-connected tribal northeastern liberal institutions and the proper gender to boot? 
• Could that performance provide any better example of why we need to shut-down the Fed Open Market Committee? 
• Is it any wonder why China is about to zoom past the US as the world’s eminent economic power?

Do you remember some of your Greek mythology?  Do you remember Hydra, the multi-headed serpent?  Every time one of its heads was cut off Hydra quickly grew two more, making it that much more dangerous.  I couldn’t stop thinking about that as I watched Mrs. Yellen at her press conference yesterday.

So…A crash is on the way.  The only question is when. 

So…Hercules was able to finally kill Hydra by cauterizing the wound each time he cut off a head, keeping two more from growing back.  He knew if he could do that, and finally cut off the last remaining head, it would be the end of the evil serpent Hydra.  So…is there anyone out there who wants to revive Ron Paul’s call to dismantle the Fed? 

It will take a Herculean effort to kill off the Fed.  Our top schools seem to breed the “best and brightest” Keynesian Ph.D. clowns faster than Hydra’s heads appeared.  But ending the Fed is a worthy goal.  And I am sure those of us who are not members of the oligarchical intelligentsia, especially those in the structurally under- and un-employed class, would be mighty grateful. 

Jack Crooks

President, Black Swan Capital

www.blackswantrading.com

info@blackswantrading.com

Twitter: @bswancap

P.S. If you would like to sample our forex service, I will set you up for a two week trial and you can see more of what we do and determine if Black Swan Forex could be a resource to help you make real money in the currency market.

Please click here to request a free trial.  We simply need your name and email address.

P.S.S. The US dollar reserve status and case for a US dollar bull market power point presentation andIntroduction to Currency Trading webinar has been posted to our home page at the top:www.blackswantrading.com

Putin advisor Sergey Glazyev, the same person who in early March was the first to suggest Russia dump US bonds and abandon the dollar in retaliation to US sanctions, a strategy which worked because even as the Kremlin has retained control over Crimea, western sanctions have magically halted (and not only that, but as the Russian central bank just reported, the country’s 2014 current account surplus may be as high as $35 billion, up from $33 billion in 2013, and a far cry from some fabricated “$200+ billion” in Russian capital outflows which Mario Draghi was warning about recently)….

….continue reading HERE

Investors/Traders Need to Closely Monitor the Forex Market (click on the link for the ins-and-outs of the FOREX market – the world’s largest traded market – Money Talks Editor

“Wyckoff’s Market Rating” System Explained

Understanding the charts:

Sharpening Your Trading Skills: The MACD Indicator

Sharpening Your Trading Skills: Moving Averages

Sharpening Your Trading Skills: The Relative Strength Index (RSI)

For the Euro, CDN Dollar etc, more Charts as below can be viewed HERE