New Article Addresses Japanese Yen Will Rise from Increased Volatility and Risk

Jack Crooks takes a closer look at historical information on currency markets and typical reactions those markets had in regards to recessions. In this issue of Money and Markets, Mr. Crooks identifies riskiness of the financial market place and the indirect affect that has on currency.

Jupiter, Fla., (PRWEB) January 20, 2008 -- Jack Crooks takes a closer look at historical information on currency markets and typical reactions those markets had in regards to recessions. Mr. Crooks identifies riskiness of the financial market place and the indirect affect that has on currency.

Recession reared its ugly head in 1987 and the pain lasted until 1990. Things calmed down until 1998, when the Asian Financial Crisis set in. The result: A spike in volatility among the world's major currencies (as measured by the JPMorgan G7 volatility index). Even though volatility quickly came down from that peak, it remained relatively high as the years following the crisis wore on. Finally, around the beginning of the new century, things calmed down. Until the technology bubble burst sending the economy into another recession. Resulting in foreign exchange volatility surging yet again.

It wasn't until after investors accepted the failure of many dotcoms that volatility finally began to wane. As the recession faded, so did unpredictability in the currency markets.
Volatility in the currency markets can follow a fairly predictable pattern. When crisis strikes or recession sets in, the currency markets turn erratic.

One year ago, the JPMorgan G7 volatility index was at a record low. Sure, the housing bubble had already begun deflating, but the subprime meltdown had yet to wreak havoc on the financial markets and recession was a very distant threat. Conditions were calm and predictable, borrowing rates were low and global markets were rising as far as the eye could see. It was an ideal environment for the carry trade, borrowing on the cheap and investing in high yield plays. Traders didn't have to do very much to make serious profits. They just borrowed cheap money from places like Japan where interest rates were low and exchange rates were fairly stable. Then, they plowed it into pretty much anything else that struck their fancy.

Recently, things have gotten risky again. In December, volatility spiked to levels not seen in more than nine years. And at the same time, the Japanese yen has experienced a substantial rally versus most other major currencies. Traders can no longer sit back and rake in returns from yield differentials or the difference in various interest rates. Prices are moving all over the place. The carry trade is no longer a one-way trip down easy street. In order to be successful, traders may need to switch their bets.

So investors are doing the same thing they did during all the recessions of the past: Traders are turning to the Japanese yen to save their investments. Investors and institutions inside and outside of Japan are pulling away from risk and repaying their yen loans. Plus, a growing number of traders are also buying up the yen for pure speculative purposes because they know that the yen will rally against the U.S. dollar and higher yielding currencies.

"Historically, this directional shift is the way market bottoms are often made. And while there are no sure bets, there is a good chance the Japanese yen has plenty of upside ahead of it," Mr. Crooks states.

To read this issue online, please visit:
http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1376

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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