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The New Saviors of America

By Dr. Steve Sjuggerud
Friday, December 14, 2007

Crashing U.S. home prices... a falling dollar... Who's going to save us?

Brits! Brits? Yes, Brits... like Susan Wakefield and Pamela Westhead...

They live in Lytham St. Annes in England, but they're in Orlando, shopping for the holidays. "It's at least half the price of what we pay at home," they told the Orlando Sentinel last week. They're going home with four suitcases full of purchases. It's not just Susan and Pamela, of course...

"It's all U.K., all the time," Jackie Young told the newspaper. Jackie is a director at Prime-Outlets International – a big mall near the Orlando airport and attractions. "The influx we've seen in the last three to four months has been phenomenal," she says.

The mall estimates 80% of its customers now are foreigners. The malls literally have busloads of foreigners dropped off every day, just to take advantage of the weak U.S. dollar.

I can attest to it... Last week I was in Orlando, as my dad is currently in the hospital there. I took my mom out to do some Christmas shopping and get her mind off of my dad for a little while. Bad idea...

The parking lots were full. And the shopping aisles were worse than the parking lots. If a shopper didn't have an English accent, he had a Latin one.

The paper ran a photo of Antonio Greige, in town from Venezuela, with six shopping bags in his hands. "The prices are good," he says.

I'm sure they are – even the normally junky Brazilian currency has roughly doubled in value versus the dollar in the last five years.

Brits and Latin Americans aren't just buying "stuff" in Florida. They're buying property, too...

"My things are so cheap here in the States!" a middle-aged Scottish woman told analyst Steve Leuthold. "We're going shopping... and we're looking for a nice, warm winter vacation home," her husband added. "The prices are less than half of those in Spain. And we have a nonstop service from Edinburgh. Our friends just bought a wonderful condo there."

My friend, this is how it works...

What we're seeing is quite normal. It's people acting rationally.

For $400,000, Brits can get an average home back in England. But thanks to the crash in the dollar and falling home prices, $400,000 goes a very long way for Brits in Florida these days. And the condo they really want seems like it's practically free right now – probably less than 100,000 British pounds.

Every time a Brit buys a property in America, or a fancy purse at a mall, the dollar rises a hair and the British pound falls a hair. The amount of change is obviously infinitesimally small. But when you have busloads and busloads of tourists selling their currencies to buy dollars so they can spend them in the U.S. economy, it all adds up.

Okay, maybe the Brits (and Latin Americans, and Europeans) won't save the U.S. economy by buying handbags and condos.

But they will make a difference. (Heck, they probably will save Florida.)

When planeloads of people come to Florida to shop, we should be darn close to a bottom in the U.S. dollar. And as Orlando can tell you, we're definitely seeing that now...

Good investing,


Market Notes


The world's greatest economist is changing his mind on the world...

Due to copper's heavy use in home wiring, plumbing, automobiles, appliances, and electronics, the metal's price action may be the world's best gauge of overall economic health. This insight gives copper its PhD in economics and the nickname "Dr. Copper."

As our chart today shows, the good doctor is getting gloomier about the world's finances. After bumping up against the $3.80 per pound level several times this year, copper has declined nearly 20% since October.

It's still a little early to call the U.S. a "recession economy," but if copper sinks below its 2007 low of $2.40 a pound, it would give plenty of support to the argument that the U.S. isn't growing. A rough patch would lead to lower interest rates to stoke the economy... which would result in "nirvana" for virtual banks. If you're not in these stocks, you're missing out on what will likely be the most profitable trade of 2008.

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