Enzio's Clock

Summary

Topics Covered

With the North Koreans now threatening yet another missile test, tensions have to rise. We link this to Obama's disputes with Iran and Israel. So we are dealing with a tricky triangle, to force an alliteration on you. Tensions have to keep mounting, meaning that markets will get nervous and head south. 

Here are some ways to make money off these tensions:

1. Sell the yen.  With rising markets since March, the yen has fallen. This makes sense: people are putting on carry trades using the yen as their zero-finance vehicle. If tensions were to keep mounting, so my guess is that markets will drop. That reduces risk, so people put on more market shorts, using the yen to finance these, and that depresses the yen even more.
2. Buy Swiss Francs. Here is a safe haven play in the currency arena. You all know about it. Since we recommended buying this ETF on 27th October 2008, it has risen by 7.2%
3. Buy gold. You know that when tensions rise, gold is a favoured haven. The same goes for this time. Since we recommended the ETF, PHAU:LN, on 15th November 2007, it has risen by 17.3%. 
4. Buy aerospace and defense stocks. One relevant  ETF is ITA:US. It has outperformed the S&P500 since the more recent bull run of 3rd March 2009 and - sadly - should continue outperforming.