Soaring inflation in the 13-nation euro-zone is creating painful new difficulties for the European Central Bank (ECB) as it fights to calm tensions in Europe's financial markets. Energy and food prices pushed November's inflation rate in Germany to its highest level since at least 1995. This poses a serious challenge to the ECB, which pledged to keep inflation "below but close" to 2%. ECB President Jean-Claude Trichet said earlier this month that the inflation "hump" was proving larger and longer-lasting than expected. However, the ECB's room for maneuvering on interest rates has been constrained by threats of growth from the strong euro and the global credit crisis.

The ECB's governing council will likely keep the ECB's main interest rate on hold at 4% when it meets this upcoming Thursday in Frankfurt. However, that does not mean the bank is inactive. On Thursday, the ECB announced that it will take the exceptional step of extending a regular money market operation in order to cover the Christmas holiday and year-end operations, when financial institutions will be under huge pressure to put their 2007 books in order. That ECB announcement followed a recent surge in one-month and three-month interest rates. In its statement, the ECB said that the amounts of additional emergency funds it injected into money markets would be aimed at keeping market interest rates in line with its main policy rate. One operation scheduled for December 19 would now mature January 4, 2008, while a separate operation scheduled for December 28 would allow "further liquidity demands to be satisfied." These are the latest in a series of moves to ensure that money markets will function normally and keep market rates low.

For further evidence of a looming slowdown in Europe, November's "economic sentiment" index, published by the European Commission, fell to its lowest level since March 2006. Although economic activity has generally remained robust in the 13-country euro region, Europe has fought against a currency headwind. The credit squeeze has also driven up financing costs for business and consumers, as well as creating additional uncertainty. Furthermore, the stronger euro has hit exporters, while higher inflation has reduced consumer spending power. (The strong euro is also sending well-off European shoppers on trans-Atlantic buying sprees in American stores.)

This same sense of creeping pessimism is also growing in Britain. On Thursday, the governor of The Bank of England, Mervyn King, told a parliamentary committee that there has been a softening of the global economy since last summer, with business confidence declining as the credit turmoil continues. King added that while the British economy is expected to slow, inflation remains a concern due to rising energy prices and the potential for higher pay awards as salaries for the new year are reviewed. Interestingly, King also said that retailers have told him over the last three weeks that there has been a significant softening in retail spending. The fact that many Britons are flocking to New York and other U.S. cities to do their holiday shopping (taking advantage of the weak U.S. dollar as well as savings on sales or VAT taxes) was not mentioned.

Germany is in a special kind of funk this week after a Bundesbank survey announced last week that German retail sales fell a stunning 4.4% in October compared to the same month a year ago and by 2.7% compared to just a month ago in September. These are the worst retail sales figures since January, when retail sales naturally declined due to a 3% Value Added Tax (VAT) increase. German consumers are worried about higher food and energy costs, which have driven German inflation to near a 14-year high. There is also a lot of concern that overall retail sales could fall by 2% in 2007 and that Christmas sales would be very disappointing. Once again, there was no mention of high-end German shoppers flocking to the U.S. for cheap holiday shopping, taking advantage of the weak U.S. dollar (strong euro) and no crippling 17% to 19% VAT taxes. *

* Typical European Value-Added Tax (VAT) rates are 16% in Spain, 17.5% in the U.K., 19% in Germany and the Netherlands, 19.6% in France, 20% in Italy or Austria, 21% in Belgium, Portugal or Ireland, 22% in Finland, and 25% in Denmark and Sweden. Despite a $1,000 airline ticket and $1,000 more in hotels, meals and other incidentals, European shoppers can save money on U.S. purchases of $10,000 or more.

More good economic news.

Productivity in the nonfarm business sector increased at a 6.3% annual rate in the quarter, the government said in its second estimate of productivity. A month ago, the government said productivity rose 4.9% annualized.

Unit labor costs, a key gauge of inflationary pressures from wages, were revised much lower, showing a 2% annual decline in the third quarter compared with a 0.2% drop estimated a month ago.

Unit labor costs in the second quarter were also revised much lower, from a 2.2% gain to a 1.1% decline, reflecting more up-to-date compensation information.

This is important because higher productivity gives the Federal Reserve more room to cut interest rates. MarketWatch writes, "High productivity growth means the economy can grow rapidly without inflation, raising living standards and theoretically allowing workers to get big raises without hurting the boss's profits." I'm sure today's report will have a major impact at the Fed's meeting next week.

Imagine that instead of hovering around 13,600, the Dow Jones Industrial Average is closing in on 70,000. Impressive, no? But that's where the Dow would be if it had merely kept pace with my legendary Emerging Growth Buy List. Instead, the Dow is over 55,000 points behind us!

I'm proud to have achieved such a great long-term track record. Over the last 23 years, the stocks on my Emerging Growth Buy List have gained over 5,500%. By the way, those aren't my numbers--that's from The Hulbert Financial Digest, which is an independent tracker of financial newsletters.

I have to thank my team of analysts who work day and night looking for the best profit opportunities on Wall Street. My goal is to double your money every four years, and we've been able to do that--a little faster actually--for nearly a quarter of a century.

This week, however, I want to tell you why I think 2008 could be our best year ever. I should add that our best year so far was in 1991 when our Buy List soared 83.9%. In fact, I see a lot of the same things coming together that helped us out 17 years ago.

Before I get into the nitty-gritty, I want to let you know that you can sign up now for a three-month trial subscription to Emerging Growth for just $295. That includes three months of the newsletter, access to my legendary Buy List including my risk profiles and buying instructions. You'll also get access to my weekly hotlines and special flash alerts. This is a great opportunity for all investors, and I encourage you to act now. In fact, if you're not satisfied within the first 90 days (three months) of service, then we'll give you your money back! That's how much I stand behind Emerging Growth.

The reason you need to move quickly is that the Federal Reserve meets again on Tuesday in Washington. The stock market could stage one of its strongest rallies of the year. Wall Street thinks it's a foregone conclusion that Bernanke & Co. will cut interest rates. I agree, but here's where Wall Street and I part ways: I think the Fed will cut rates by 0.50% instead of the 0.25% that Wall Street expects.

A 0.5% cut could launch a "buying panic" just as it did in September. That's when the Dow surged 336 points in one day. So if you wait, you risk missing out on the best returns. Many of my Buy List stocks are the ones that will benefit the most from lower rates. That's exactly the strategy I took in 1991. That year, the Fed cut rates 10 times, and that helped propel our 83.9% gains. I don't think most investors realize the profit opportunity here--or worse, they're holding the wrong kinds of stocks. Bill Gross, the bond guru, just said that the Fed could bring interest rates all the way down to 3% next year. I think he may be right.

Let me give you a preview of how our Emerging Growth stocks could react. Today, one of my favorite tech stocks, Methode Electronics (MEI), exploded 27% higher. That's more than most stocks make in one year. Heck, even two years. But this is exactly the kind of return that Emerging Growth subscribers have come to expect.

The catalyst for Methode's explosive rally today was an earnings report that simply floored Wall Street. Profits soared 80%. The company beat expectations by 29%. And if that weren't enough, they raised guidance as well. Institutional investors have been tripping over each other all day to buy more shares. Fortunately, my subscribers and I enjoying watching the chaos from a safe distance. I first recommended Methode to Emerging Growth investors three months ago when no one was interested. I continue to like MEI, and I rate it a strong buy for moderately aggressive investors up to $14 a share.

Methode is hardly our only stock ready to surge. In fact, I see dozens of great buys. In my December issue of Emerging Growth, I detail my Top 10 stocks to buy right now. If you've been reading "What's Working on Wall Street Now" for a while, you may recall that I'm a big fan of Guess (GES), the teen jean machine. GES is one of my highest-rated consumer stocks. I highlighted the stock back in August, and I said it was my next candidate to stun Wall Street with a strong earnings report.

How did I know this? Easy, I have a teenage daughter. I've learned to never underestimate the power of young female shoppers. I also have a team of analysts who run the numbers on every stock, and we saw a compelling buy.

Over the summer, the consensus of Wall Street analysts was expecting Guess to report earnings of 33 cents a share for Q2. Please, what were they thinking? My team and I knew that Guess would earn 35 cents at the least. Sure enough, just after Labor Day Guess reported second-quarter earnings of 40 cents a share.

Guess was due to report third-quarter earnings this week, and I saw the same thing happening. I'm not sure why these analysts continually underestimate Guess. Maybe they're simply afraid to stand out from the pack. Sure enough, GES beat earnings again. For the third quarter, Guess earned 62 cents a share, five cents more than Wall Street was expecting.

Guess has been a huge winner for us. I first recommended shares of GES to my subscribers in March 2006, and the stock is up over 140% for us. Again, that's the power of Emerging Growth investing. I currently rate Guess a strong buy up to $50 a share for conservative investors.

Stocks, Futures and Options Magazine rated The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing as one of its Top 10 Investing and Trading Books of 2007.

6. The Little Book That Makes You Rich: A Proven Market-Beating Formula for Growth Investing, By Louis Navellier (Wiley, 2007)

This latest best-selling volume in the "Little Book" series illustrates how to succeed in the stock market by using growth investment strategies. The book provides tools for selecting stocks with phenomenal performance, combining eight fundamental indicators, such as sales growth and cash flow, with quantitative ratings that weigh risk versus reward. Navellier, whose recommendations over 20 years have beaten the market by a 4-to-1 margin, shares his methodologies for outperforming the market with limited risk.

Yikes.

Columbia Management has closed a giant enhanced money fund for institutional investors after major clients pulled out amid losses on complex asset-backed securities, the firm says.

Columbia, a unit of Bank of America Corp., says it is shutting its $12 billion Strategic Cash portfolio -- which just months ago been a $40 billion fund.

The fund was an enhanced money fund, a short-term investment pool that offered higher yields than a traditional money-market fund. Unlike traditional money-market funds, the Strategic Cash fund didn't offer investors a guarantee that it would maintain a $1-per-share net asset value, although the fund was managed toward that goal.

The fund's current net asset value is $0.994, firm officials said.

Large investors in the Strategic Cash portfolio will be redeemed "in kind" -- meaning they will be handed their share of the underlying securities. Smaller investors can be redeemed in cash.

The Strategic Cash portfolio was open to investors with a minimum of $25 million or more.

This is huge news and it's an example of the escalating SIV crisis. This is the buzz in institutional circles ever since State Street lost approximately 17% in an enhanced money market fund.

Now the big question is, will BofA step to the plate and guarantee its SIVs like SEI and Legg Mason? Citigroup originated half of the SIVs which is why they may not survive or at least be broken into little pieces.

Last Thursday, President Bush and Treasury Secretary Hank Paulson unveiled their much-rumored plan to "freeze" interest rates on certain subprime mortgages for up to five years. Treasury Secretary Paulson said that the plan involves no government money, and that he expects companies that service loans to abide by guidelines for refinancing and modifying subprime mortgages for able borrowers. Speaking at the White House, President Bush said that the plan was not a bailout. Under the plan, negotiated by the Treasury and White House, along with representatives from the private sector, borrowers will be able to refinance an existing loan into a new private mortgage or be shifted into a loan from the Federal Housing Administration.

In 2008 and 2009, about 1.8 million subprime mortgages are due to be reset at higher interest rates, according to Treasury Secretary Paulson. Many foreclosures are expected to follow in the wake of these subprime resets. Treasury Secretary Paulson emphasized that his proposed plan is estimated to help as many as 1.2 million homeowners avoid foreclosure. Although, the White House plan was severely criticized (for "not going far enough") by House Financial Services Committee Chairman Barney Frank and Chairman of the Joint Economic Committee Senator Chuck Schumer, there was also criticism that the federal government should not be interfering with valid mortgage contracts. However, since the plan required no federal money and was negotiated with major banks and mortgage lenders, it is misleading to label the plan a bailout.

The other big news from Washington last week was Treasury Secretary Paulson's proposed "super fund" for Structured Investment Vehicles (SIVs), the financial vehicles that have been causing so much havoc in institutional money markets. Bank of America, Citigroup and J.P. Morgan have been working since September to find a way to provide liquidity for off-balance-sheet entities, especially SIVs. The big banks that proposed this super fund at the Treasury Secretary's urging are now scaling back the size of the fund, which was at one time envisioned to be $100 billion in size. People familiar with these banks' plans say they are proceeding with the fund despite the smaller size. These banks, which have also been seeking informal participation from other financial institutions, expect to start a formal syndication process shortly.

One reason that the proposed superfund is shrinking is that other solutions to the SIV problem have emerged. For example, Britain's HSBC Holdings became the first bank to bail out its own funds. The bank said it planned to transfer two SIVs and take $45 billion in mortgage-backed securities and other fund assets onto its own balance sheet. In the U.S., money managers like SEI and Legg Mason have offered to buy SIVs for their money market funds, if necessary. The State of Florida has enlisted money manager BlackRock to help with its SIV holdings. Specifically, the Florida money market pool for municipalities will be split in two. Fund "A" will contain roughly 86% of the assets, which BlackRock said are higher-quality money-market investments, while Fund "B" will hold about $2 billion of riskier assets, including some lower-quality SIVs.

This action by key money managers, selected banks, Treasury Secretary Paulson and the White House is a key step in helping to resolve the ongoing credit crisis. The truth of the matter is that these steps are really just Band-Aids, designed to postpone the crisis until the Fed slashes key interest rates and overall liquidity improves. Tomorrow's interest rate cut by the Fed will be the third in a series of key interest rate cuts that should continue well into 2008. The Fed is the lender of last resort and must continue to lower the Fed Funds rate (currently at 4.5%), since it is well above market rates, such as the 3-month Treasury Bill, which is now yielding only 3.04%. Since the Fed cannot fight market rates for too long, I expect that the Fed will cut the Federal Funds rate at least another full 1% in all, with a hefty 0.5% cut occurring at tomorrow's FOMC meeting.

You might think that with the Fed aggressively cutting key interest rates that the U.S. dollar might weaken further against other currencies. However, with other central banks now cutting their key interest rates, the Fed and other central banks are now moving in tandem. Additionally, since crude oil prices are falling, despite OPEC's decision last week to keep production levels unchanged, there is rising optimism that inflation may decline. As a result, the dollar may be more stable. The dollar was fairly flat last week, so our currency tailwind appears to be stalling.

Shares of Washington Mutual (WM), the largest thrift in the country, are getting hammered today. The company just announced that it's cutting 3,150 jobs plus it's lowering its dividend from 56 cents a share to 15 cents a share. Ouch!

Fortunately for followers of my Portfolio Grader Pro, WM was already rated "F - Strong Sell." The company is really bad shape and I wouldn't be surprised to see someone buy it out.

This is more evidence of the seismic shift out of value stocks, which includes many financials, and into growth stocks. This is an odd market because the stocks that people think are safe, may not be. Be sure to see how your stocks rate in Portfolio Grader Pro. I strongly urge you to sell any stock ranked D or F.

In response to many e-mails I got, no, FLIR Systems (FLIR) is not down 50% today. The stock simply split its shares 2-for-1. The price falls in half and investors now have twice as many shares. My $76 buy-below price in Emerging Growth also splits to $38. The stock is an excellent buy.

Here's the Fed's official policy statement:

The Federal Open Market Committee decided today to lower its target for the federal funds rate 25 basis points to 4-1/4 percent.

Incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction and some softening in business and consumer spending. Moreover, strains in financial markets have increased in recent weeks. Today's action, combined with the policy actions taken earlier, should help promote moderate growth over time.

Readings on core inflation have improved modestly this year, but elevated energy and commodity prices, among other factors, may put upward pressure on inflation. In this context, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.

Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; and Kevin M. Warsh. Voting against was Eric S. Rosengren, who preferred to lower the target for the federal funds rate by 50 basis points at this meeting.

In a related action, the Board of Governors unanimously approved a 25-basis-point decrease in the discount rate to 4-3/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis.

"Baffling" says it all. At least there was one dissenting vote.

The Federal Reserve cut short-term interest rates by 0.25% today. This marks the third time in a row that the Fed cut interest rates. Short-term rates are now at 4.25%. The Fed also lowered the discount rate it charges banks for direct loans by 25 basis points to 4.75%.

While analysts were expecting a 25 basis-point cut, investors were hoping for more. The Dow sold off 294.26 points to close at 13,432.77. The NASDAQ ended 66.60 lower at 2352.35.

In their statement, Fed officials hinted that more cuts are possible if the housing and credit crisis (which stems from mortgage lending) doesn't improve.

That's very encouraging news. You'll remember November was a particularly rocky month for the market because the Fed had said they didn't expect any more rate cuts this year. But continued fallout in the financial sector and growing fears of a recession have given the central bank a change of heart.

While I was hoping myself to see a 0.50% cut today, I'll definitely take the 0.25% we got. And I'm confident we'll see several more rate cuts are coming in 2008.

Why am I so sure? Not too long ago, the Fed significantly reduced its growth forecast for 2008, lowered its inflation forecast and raised its unemployment forecast. Specifically, the Fed now expects 2008 GDP growth to range between 1.8% and 2.5%, which is down from its previous forecast of 2.5% to 2.75%. All this means is that the Fed is setting itself up with a series of reasons to continue cutting interest rates next year.

Plus, the Fed's inflationary forecast for the core Personal Consumption Expenditure (PCE) index was also lowered to between 1.7% and 1.9% from its previous level between 1.75% and 2%. That's essentially an admission that core inflation is well within the Fed's "comfort zone" and that it can continue to cut interest rates.

Even at its new level of 4.25%, the Fed Funds rate remains significantly above market interest rates based on the three-month T-bill rate of 2.87%. The Fed simply cannot fight market rates for too long, so more rate cuts are definitely in the cards.

And last but certainly not least, we should remember that the Fed is the lender of last resort. It still has a lot of work to do to fix the credit crisis. Speaking of the credit crisis, banks, money managers, Treasury Secretary Paulson and the White House are all taking steps to resolve these problems. In my new January Blue Chip Growth issue, I explain all of this and more in detail, and why I believe we'll be seeing significantly lower rates in 2008. The issue will be out on Monday, but I'll give my readers a sneak peek of my buy list on Saturday.

Good news! So much for the consumer being tapped out!

Retail sales increased by 1.2%, the Commerce Department said Thursday. Sales went up an unrevised 0.2% in October.

The median estimate of 10 economists surveyed by Dow Jones Newswires was a 0.6% advance in November. Analysts have been expecting consumer spending -- and the economy as a whole -- to slow sharply in the final months of 2007 compared to the third quarter because of falling home prices and rising energy costs.

The retail sales report illustrates where Americans are spending their money. Consumer spending is a big part of the economy. It makes up about 70% of gross domestic product, which is the scoreboard for the economy.

The other news today is that wholesale prices soared last month at their fastest pace since the Nixon Administration. It appears most of the problem is due to energy and light truck prices. Scary headline, but that's about it.

Last Wednesday, Beijing turned the tables on Treasury Secretary Hank Paulson. After enduring years of criticism from Washington on its handling of the Chinese economy and its currency, China's Chen Deming, the incoming Chinese Commerce Minister, said the falling U.S. dollar had pushed up the cost of imported resources and has been a destabilizing factor. Deming stated that "What I'm worrying about is the weakening dollar and its potential impact on global growth." Hmmm. I wonder if the Chinese are starting to feel jealous of our new manufacturing advantage.

The U.S. seems to be the new hot spot for global firms looking for lower production and transport costs. France's Alstom, for instance, said it will build a $200 million plant in Chattanooga to take advantage of the weak U.S. dollar and reach its biggest customer base without trans-Atlantic shipping costs. Since the dollar is down so dramatically to the euro since 2001, many European firms are opening up manufacturing divisions here, including car-makers Fiat and Volkswagen. The German steel giant Thyssenkrupp is also building a $3.7 billion plant in Calvert, Alabama. Earlier this year, Airbus opened an engineering center in Mobile, Alabama, for cost advantages.

Technology firms are also opening up plants in America. The Swiss drug company Novartis has a huge research center in Cambridge, Massachusetts. Another example is Finland's Nokia, which opened a research and development center in San Diego, focused on designing and developing handsets for the North American market. In addition, memory-chip maker Samsung Electronics spent $3.5 billion on a new plant that opened earlier this year in Austin, Texas.

Some prominent politicians keep telling us that a weak U.S. dollar in bad for the U.S. economy. Any time I run into politicians of either party, I am asked about my opinion on the U.S. economy, since some of them recognize me from appearing on CNBC or Fox News. This happened on Saturday night, when I ran into Clinton acolyte James Carville at an event near my Florida home. Carville asked me about the status of the U.S. economy. I told him that the weak U.S. dollar is causing exports to soar and is responsible for much of our economic growth. This was clearly not the answer Carville wanted to hear. He walked away, mumbling a response I could not decipher.

I hope that James Carville and other key political advisors can see what is unfolding. The weak U.S. dollar may be very controversial, but it can also be beneficial. The fear is that the weak U.S. dollar could cause hideous inflation as the price of imported goods rise. In fact, some might cite the dramatic rise in the PPI and CPI in November as evidence that the weak U.S. dollar is bad. But provided that the U.S. dollar does not strengthen too much, it will likely help to unleash an incredible economic boom as more multi-national companies shift their operations to the U.S.

An Emerging Growth subscriber recently asked for my opinion on Astronics (ATRO). If you're not familiar with the stock, the company is riding the boom in commercial aviation. Astronics makes the lighting systems, especially the emergency lighting, on many airplanes.

ATRO has both a Quantitative and a Fundamental "A" grade, so it naturally has an Overall "A" grade, making it a Strong Buy. I should that ATRO is a very small-cap stock, so it's very sensitive to liquidity. This is the kind of stock that tends to do well in a rising volume environment, especially January, when many smaller stocks have historically performed well.

Sometimes we get an early January effect in December, so the stock is an outstanding buy right now. In the past four quarters, ATRO's sales are up 35.9%, while its earnings have climbed 142.9%. In the past three months, the analyst community has revised their earnings estimates 17.2% higher. Typically such positive earnings revisions precede earnings surprises. My opinion is that Astronics' recent pullback is an incredible buying opportunity.

This is from MarketWatch:

Louis Navellier, president of the Navellier funds and editor of the Blue Chip Growth Letter and Emerging Growth Letter, says that the current stock market is "very narrow," with leadership coming from just a few sectors.

While some investors are bargain-hunting in financial services and real estate, Navellier said in a radio interview that he's avoiding domestic financials completely because "even when you find a good one, there's no buying pressure." Instead, Navellier favors defense, health care and resources companies right now.

Navellier told Chuck Jaffe, MarketWatch senior columnist, that growth stocks -- even some names that have been flying high with huge gains for 2007 -- remain at reasonable valuations right now compared with value stocks, which may be cheap but which have no prospects for growth.

Navellier recommended that investors buy Southern Copper (PCU), Tsakos Energy Navigation (TNP), United Healthgroup (UNH), Graftech International (GTI), GigaMedia (GIGM) and Vasco Data Securities International (VDSI), characterizing Southern Copper, Graftech, GigaMedia and Vasco as particularly strong buys.

He suggested selling Mobile Mini (MINI), despite liking the business, as well as Wellcare Health Plans (WCG).

You can listen to the radio show here. You have to listen for a bit until I'm on, or you can drag the "seek" button about one-third of the way across to my segment.

The Financial Times reports:

Metal and oil prices rose on Wednesday following an announcement by China that it was to scrap import duties on copper, coal and aluminium, and halve tax on oil products from the beginning of next year.

Export taxes on some steel products, coking coal and coke will also be raised to curb profits on exports of polluting products, the finance ministry said on Wednesday.

Export taxes on semi-finished steel products will be raised to as much as 25 per cent and a 15 per cent export tax will be imposed on some stainless steel, welded pipes and other steel products in an effort to cool investment in the steel sector, the ministry added.

This will help Southern Copper (PCU). Thanks to its big dividend ($2 a share last quarter), PCU is one of the most popular stocks on my Blue Chip Growth Buy List. PCU is a great buy up to $117.

At MarketWatch, Peter Brimelow compliments me...I think.

I've occasionally bashed quant-turned-out-of-the-closet hypster Louis Navellier for his wild promotion. See July 14, 2006, column.

So I should acknowledge his Blue Chip Growth Letter appearance in the Top Ten, up 25.5%.

But the paradox has always been that Navellier really does have a strong record and a sophisticated, systematic approach. See Oct. 30 column.

His Emerging Growth letter, focused on smaller-cap stocks, more or less matched the market this year, up 7.8%, but has beaten it over the much longer term.

By my count, the Blue Chip Growth Buy List is up 260% over nearly 10 years.

On Thursday, the Chinese government backed up its recent words with actions when it allowed the yuan to appreciate against the U.S. dollar at the fastest pace since China ended its peg to the U.S. dollar in mid-2005. Specifically, the Chinese yuan rose 0.37% to a new high of 7.3175 to the dollar ($0.1367), up 13% from a pegged rate of 8.28 ($0.1208) in 2005. Win Thin, the senior currency strategist at Brown Brothers Harriman, called this "a huge move," adding that it was not a "response to outside pressure, but rather to help China's domestic situation and fight inflation."

Thursday's jump in the yuan capped several sessions of previous gains that brought the yuan's monthly gain to 1.1% and its one-year rise to just under 7%. For the fourth straight quarter, the yuan has gained ground, rising 2.6% in this quarter, up sharply from 1.4% in the third quarter, 1.5% in the second quarter and 1.1% in the first quarter. Yao Jingyuan, chief economist of China's National Bureau of Statistics, made it very clear that the faster appreciation in the yuan will likely help offset inflationary pressures from a weaker dollar and rising global commodity prices. China has apparently decided to allow the yuan to appreciate at a faster pace to help solve its domestic inflation problems, especially the high cost of food. Naturally, this is great news for our China stocks, since it means that the currency tailwind behind the yuan is getting stronger.

China recently passed Israel as NASDAQ's largest source of overseas stock listings. There are now 75 Chinese stocks listed on NASDAQ, including 21 new stock listings in 2007. Ernst & Young forecast that Chinese companies will raise another $100 billion in 2008 through new stock market listings. The accounting firm also predicted that $45 billion would be raised from A-share listings in Shanghai and $33 billion from H-share listings in Hong Kong. Ernst & Young also predicted that more than $20 billion could also be raised on the smaller Shenzhen exchange, as well as more China listings in London, Singapore and the U.S.

In 2007, Shanghai raised more than $60 billion in A-share listings and passed both London and New York in new listings for the first time ever. Paul Go, a partner at Ernst & Young, said, "We expect the amount raised by mainland companies outside greater China to be similar to this year...now that some of the regulatory issues have settled down." He's referring to the more relaxed Sarbanes-Oxley standards for new stock listings for smaller companies. This is great news from my Global Growth service, since we have nine China stocks now, and likely more will appear on our Buy List in 2008.