Economic Crises Could Drive Stock Sectors

Martin D. Weiss, Ph. D. takes a closer look at how economic crises are affecting the stock sectors. Dr. Weiss explains how each of these crises is bound to drive most U.S. stock sectors.

Dr. Weiss has recently warned investors about a severe U.S. recession, surging inflation, and close encounters with a Wall Street meltdown. New news on each of these crises has burst onto the scene, creating the conditions for a bond market disaster and driving the U.S. stock market into a tailspin.

Deepening the U.S. recession, vehicle sales are expected to plunge to 15-year lows. Dealer lots are overflowing with trucks and SUVs. But they can't get enough fuel efficient cars, limiting sales in the most popular models. Another warning sign: S&P has just put GM, Ford and Chrysler on credit watch negative. Weiss would not be surprised if one of them is soon forced to file for bankruptcy.

Bankruptcy has already struck over 20 airlines worldwide, with many more on the way. The top 10 U.S. airlines are expected to post pre-tax losses of nearly $18 billion this year and next.

U.S. inflation is surging. In May, producer prices jumped 7.2% compared to a year earlier; import prices catapulted 17.8%, the biggest rise ever recorded; and core producer prices (excluding food and energy) rose at the fastest pace since 1991.

The bond insurance disaster Weiss has been writing about for many months has finally struck: Moody's has downgraded MBIA's ratings by five notches and Ambac's by three. In turn, this is threatening the finances of hundreds of thousands of states and local governments that are covered by these two industry giants. The entire bond insurance system has always been questionable. Now it's falling apart, resulting in another wave of bank losses and write downs that could exceed the losses from the housing and mortgage crisis.

All of this is bound to drive most U.S. stock sectors, especially financial stocks, even lower. Already, the benchmark banking sector index (BKX) is about to bust below the low set in 2003, during the depths of the last bear market.

In the past, if an investor wanted protection against falling stock prices, he would have to sell short or use futures markets. And in either case, he could then be exposed to unlimited risk. Now investors can take advantage of a simpler, risk-controlled defensive strategy. Inverse ETFs are special ETFs designed to go up when a particular stock index or sector goes down. The investor can buy these inverse ETFs just like any other ETF; they can be bought through the same broker, with the same low commissions and the same flexibility to get in and out as the investor wishes.

"And even better news is that a whole new series of inverse ETFs are now available that can be used for protection against declines in specific industry sectors: real estate, financials, consumer goods, semiconductors, technology and even emerging markets," Weiss states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspxThe-Triple-Crisis-Strikes-Harder-1903

About MARTIN D. WEISS & MONEY AND MARKETS

Martin D. Weiss, Ph.D., founder and president of Weiss Research, Inc. and a leading advocate for investor safety, is a nationally recognized expert on domestic and international financial markets. With more than 35 years of experience, including many years in Latin America and Asia, Dr. Weiss has helped empower millions of investors to make better financial decisions through his monthly Safe Money Report and daily Money and Markets.

Dr. Weiss' keen understanding of foreign markets and the global economy has earned him a reputation for thoughtful, in-depth analysis that investors can rely upon to make informed financial decisions. Regularly called upon by the media for his independent investing guidance, he has been featured in publications nationwide, including The Wall Street Journal, The New York Times, Chicago Tribune, Investor's Business Daily, and Forbes and has also appeared on CNN and CNBC.

Throughout his career, Dr. Weiss has been an advocate for consumers and investors in the insurance, banking and brokerage industries, dedicating his time and resources providing analysis and data for Congressional testimony, constructive proposals for reforms in the securities industry and legislation for full financial disclosure as well sound accounting and fiscal policy. In November 2004, he launched the Sound Dollar Committee, a nonprofit organization dedicated to building a network of investors seeking to protect the nation's future by demanding honesty in government accounting, a balanced budget and sound economic policy.

Dr. Weiss is author of The New York Times best-seller, The Ultimate Safe Money Guide, which gave baby boomers a road map to grow their wealth safely. It was listed on the New York Times Business, Wall Street Journal, and BusinessWeek best-seller lists, as well as the Barron's Roundup for 2002.

Dr. Weiss holds a bachelor's degree from New York University, a Ph.D. from Columbia University and is fluent in eight European and Asian languages.

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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