Conquerthe greatest

money migrationin history

Keith Fitz-Gerald, Chief Investment Strategist MoneyMorning.com

All investments have inherent risks.

Past performance does not guarantee future results.

All investments are undertaken at your own risk.

Recommendations are subject to change at any time.

No representation is being made that any account will, or is likely to achieve profits or losses similar to those discussed in this presentation.

The risk of loss in online trading of stocks, options, futures, forex, foreign equities, and bonds can be substantial. Options are not suitable for all investors. For more information read the "Characteristics and Risks of Standardized Options". For a copy, call +1 203 618-5800 or click here. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.

Should you listen to anything

I have to say?

Copyright 2011 – All Rights Reserved

Keith Fitz-Gerald• Chief Investment Strategist, Money Map Press

- 640,000 daily subscribers in 30 countries• Former Trade Advisor in global markets• Regular - Fox, Marketwatch, Forbes, others• Founding Fellow of Kenos Circle• Author Fiscal Hangover: how to profit in the new

global economy

I’ve been trading & travelling for 20+ years

And I have never seen

as much opportunityas I see now

Image: Adapted from Inc.com

There is a $300 trillion recovery building that almost nobody sees coming…

What to do with your money is perhaps the most challenging question of all

How much?Where?When?What about cash?Stocks, bonds, gold?Income?International holdings?

Image: Matt Collins, Scientific American

I recognize that many of you want to go straight to the secret sauce…

Sweet Love Sauce: Amazon.com

That’s great…but without context the results are meaningless

http://4.bp.blogspot.com/_hBiBaUg_1rA/SJTQE0ymK7I/AAAAAAAABxI/OIKhMiaaQ2E/s400/confusing_signs2.jpg

So let’s step back a minute and examine the broader scheme of things…

…then we’ll know what to do

Money is like water…

if it is flowing out of one part of the world, that means it’s flowing into another

Most people understand this instinctively on some level but I find that

few have thought about what it really means for your money

http://trustedbi.com/images/puzzled-man.jpg

Let’s take a look

http://www.ony.unu.edu/images/world_with_money.jpg

North Americancountries account for 47.88% ($11.3 trillion) of global economic leaders

Adapted from CNN.com interactive graphic

Asian countriesaccount for 25.00% ($5.9 trillion) of global economic leaders

Adapted from CNN.com interactive graphic

European countriesaccount for 24.57% ($5.8 trillion) of global economic leaders

Adapted from CNN.com interactive graphic

North Americancountries account for 39.51% ($16.2 trillion) of global economic leaders (…a 17.48% decline from 2000)

Adapted from CNN.com interactive graphic

Asian countriesaccount for 30.73% ($12.6 trillion) of global economic leaders (…a 5.73% increase from 2000)

Adapted from CNN.com interactive graphic

European countriesaccount for 24.87% ($10.2 trillion) of global economic leaders (…a 0.30% increase from 2000)

Adapted from CNN.com interactive graphic

Asian countriesaccount for 39.6% ($21.4 trillion) of global economic leaders (…a 28.86% increase from 2010)

Adapted from CNN.com interactive graphic

North Americancountries account for 33.33% ($18 trillion) of global economic leaders (…a 15.71% decrease from 2010)

Adapted from CNN.com interactive graphic

European countriesaccount for 21.85% ($11.8 trillion) of global economic leaders (…a 12.14% decrease from 2010)

Adapted from CNN.com interactive graphic

When viewed through growththe shift is even more apparent

Adapted from CNN.com interactive graphic

Adapted from CNN.com interactive graphic

Adapted from CNN.com interactive graphic

2000

2005

2010

2015

GDP Growth – 2000~2015

It’s worth noting… despite$14.85 trillion in guarantees and stimulus the U.S. doesn’t even make the list

Here’s another way to look at it…

Asia’s share is growing**

Oil exporters

US, OCADC countries, & rest of the world is shrinking

It’s also worth noting… That our own zero-interest-rate-policy, TARP and QE2 makes this worse

**Asia has attracted $2.3 billion a day since April 2009 - DBS Group Holdings

China

United States

India

Japan

Brazil

Russia

U.K.

Germany

France

ItalyAdapted from original by Joe Swainson/VisualizingEconomics.com

It doesn’t matter if you prefer pie charts…

Or simple line charts…

As recently as 2005, only 27 Fortune 500 Companies were based in BRIC countries. That number today – a mere five years later – is 67.

The conclusion is the same…

Money is leaving the developed

economies & nanny states…

…and flowing into the

emerging markets

Despite overwhelming evidence, people dismiss what’s happening…

http://www.aspencountry.com/assets/product_images/product_lib/29000-29999/29586.jpg

That’s a costly mistake

Because the risks have never been higher when it comes to our money

Many people are understandably frightened by the changes taking place…

http://jan.freedomblogging.com/files/2009/11/frightened-guy-560.jpg

Yet history shows that

The trick is knowing what to look for

Half the World’s GDP

In 2009, 55% of the world’s GDP is concentrated in just 3: EU, USA, PRC

http://imgs.sfgate.com/c/pictures/2007/08/31/bu_bric.jpg

And Half the World IsCatching Up

http://imgs.sfgate.com/c/pictures/2007/08/31/bu_bric.jpg

The biggest

spending gap in

recorded history

Source: McKinnsey & Co. IMF

Top 5 Exchanges (Capital Raised) 2008

Source: Ernst & Young

Top 5 Exchanges (Capital Raised) 2009

Source: Ernst & Young

Top 5 Exchanges (Capital Raised) 2010

Source: Ernst & Young

Looking at it another way

Source: Ernst & Young

Top 10 Global IPOs (YTD as of March 18, 2011)

Source: ipo-book.com

Renren, Inc. IPO$854.9 millionMay 4, 2011

U.S. listed Chinese IPOs

• May 4, 2011 Renren, Inc. (NYSE: RENN) , a China-based a social networking provider raised $854.9 million in its IPO making it the largest Chinese IPO since 2009

• 2010: a record 22 Chinese companies listed on NYSE

• Since the beginning of 2010, Chinese high technology companies have raised $1.7 billion in the US IPO market for 30% of all activity.

• 2011 YTD: eight Chinese companies have listed in the United States raising $1.5 billion …more than triple the activity over the same time period in 2010.

• Since 2006, Asian issuers, particularly China and Hong Kong, raised the most IPO capital on record, making up almost 65% of global proceeds (US$183.9 billion, 789 deals).

Source: Ernst & Young, Thomson Reuters & NYSE.com

SALES $8,869 BILLION 7%

PROFITS $576 BILLION 105%

ASSETS $36,501 BILLION 23%

MARKET VALUE $10,215 BILLION 16%

BIGGEST COMPANY

PETROCHINA

Asia by the numbers

Source: Forbes – The Global 2000 (2011)

Asia Is The Billionaire Factory

Total number of billionairesin Asia in 2011

332Total number of billionairesin Asia in 2001

79Source: Forbes – The Global 2000 (2011)

Many people think that somehow things will go back to the way they were…

…they will…but it’s not what they expect

Source: Visualizing Economics; Angus Maddison, University of Groningen

Copyright 2009 – All Rights Reserved

Most to gain

Most to lose

While we’re on the subject of China, this next chart takes many people by surprise…

China has had the world’s largest economy for 18 of the last 20 centuries

China

United States

Western Europe

• Japan’s Lost Decade begins• U.S. real estate bubble• Dot.bomb

The point: China’s just coming back up to speed…

China’s growth is not an aberrationnot going awaynot stopping

Whether or not we like it is immaterial…

…get over it or get left behind

China will affect every asset class and every investment choice on the planet for the next 100 years…

…it is the single largest opportunity we will see in our lifetimes

And the best part…

You don’t have to invest there to profit…

…But you do have to know how this money shift

will play out in world markets

Let’s break it down to brass tacks

http://4customers.files.wordpress.com/2008/11/brass-tacks.jpg

Emerging markets had less debt going into this crisis and will have less debt coming out

Less inflationary pressure and greater strength

Debt

Sell

Buy

Geopolitical influence

• Recent events show the US is outmatched, isolated and increasingly irrelevant. Expect Europe to show renewed strength not as the EU but as individual nations doing business with China and with Asia. • US fails to recognize that even though we are uncomfortable

with China’s rise, increasing number of nations are okay with it

Sell

Buy Most investors have only 6% overseasData suggests 40% may be more appropriate

U.S. only choices – they underperform

Currencies• $202 trillion in unfunded

liabilities signal weaker U.S. Dollar

• Short term tactical rise in USD is temporary “risk off trade”

• End of the Euro?

• Expect Chinese Yuan in trading pairs within a decade

http://1.bp.blogspot.com/_1V7wnZxPqok/RqWqS9Y-fdI/AAAAAAAAF04/6jgdlxW1jOc/s400/usd+cartoon.bmp

Sell

Buy Asian currencies, Swiss Franc

Euro, U.S. Dollar

Purchasing power shifting from West to East

Will haunt badly scared US consumer for generation or moreEmerging markets consumers will take up the mantel

Sell

Buy

Manufacturing in most countries is expanding but PIGSs risk contraction, Japan risks failure

“Glocal” branding means bigger cash flow

40% of S&P 500 already drive earnings from overseasWeaker dollar helps ‘em earn more moneyBuy

Oil

• Emerging market demand will push price higher

• Falling western demand a fallacy• Alternative energy remains wishful

thinking• $100 a barrel or more Buy

Resources & Commodities

• Gold $2500 an oz or more• Chinese view these as alternative

currencies because they preserve value

• Bid up so have to step carefully

http://www.heatingoil.com/wp-content/uploads/2009/11/rising-oil-price.jpg

Buy

This all boils down to one key thought…

Declining

Growing

Follow the money…

Share of worldwide capital

RecappingAsia will become largest driving force in world trade• Led by China, it will become single biggest market and influence in global

trading for the next 100 years• 40% of the S&P 500 earnings already come from outside the U.S.

Western Economies are falling by the wayside• Aging population• Very high Debt to GDP ratios severely hamper GDP growth• Private growth reduced by higher taxation and larger public sector spending

Even though people are paralyzed by high unemployment, low inflation, and a housing market that may not come back for a decade, your money doesn’t have to be.

Some choices to get started…

The risk of loss in online trading of stocks, options, futures, forex, foreign equities, and bonds can be substantial. Options are not suitable for all investors. For more information read the "Characteristics and Risks of Standardized Options". For a copy, call +1 203 618-5800 or click here. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.

Chinese RMB

• World’s new reserve currency?

• Global swaps are enabling this even as western banks don’t yet see it coming and major currency pairs have not priced it in…yet

• 2-10 year horizon • EverBank Deposits• WisdomTree Dreyfus

Chinese Yuan (CYB)• MarketVectors RMB/USD

(CNY)

US Dollar

• Risk off make this a nimble trader’s play

• EU debt crisis• Commodities play implied• 3-6 month horizon

• PowerShares DB USD

Index Bullish (UUP)

Japanese Yen

• Makes Greece look good• Experienced mis-managers• The trade of the century• 2-10 year horizon • More this afternoon

Thank you!

Friday1100 Conquer the Greatest Money Migration1615 Making the Currency Trade of the Decade Count

Saturday1630 The best places to hide from the falling dollar

www.moneymorning.com