This week the Fed altered their end-of-meeting statement by just a few words, but those words have a lot of meaning. It seems they are paving the way to a new round of quantitative easing (QE2), if in their opinion the situation warrants it. A trillion dollars of new money could soon be injected into the system. Tonight we explore some of the implications of a new round of QE. Let's put our speculation hats on, gentle reader, as we are moving into uncharted territory. There are no maps, just theories, and they don't all agree. (Note: this letter may print a little long, as there are a lot of charts.)

But first, as a reminder, next Wednesday, September 29 (9:00 AM PST/12:00 PM EST), I will be doing a special "webinar" with Jon Sundt, President & CEO of Altegris Investments, where we'll discuss the forces that are shaping today's economy and their potential influence on financial markets (the very things I write about in this week's letter and in my new book!). This is an excellent opportunity to learn about alternative investment strategies designed to provide noncorrelated diversification for your investment portfolio in the "new normal" economy. We'll set aside a lot of time to answer your questions.

A replay of the call will be available for two weeks starting Thursday, September 30, for registered participants only. Even if you can't make it at this specific time, I recommend you still register so you can listen to the replay at your convenience after the event.

You can register by going to www.accreditedinvestor.ws and signing up for my free accredited letter, and a representative from Altegris will call you to give you the details. Sadly, this is available only to accredited investors ($1.5 million net worth and up) and/or registered financial professionals, due to current regulations. I will be giving a preview of the conclusions from my new book, The End Game, which I think you will find interesting. (In this regard, I am president and a registered representative of Millennium Wave Securities, LLC, member FINRA.)

I am on a plane (yet again) from Zurich to Mallorca, where I will meet with my European and South American partners, have some fun, and relax before heading to Denmark and London. With the mad rush to finish my book (more on that later) and a hectic schedule this week, I have not had time to write a letter. But never fear, I leave you in the best of hands. Dr. Gary Shilling graciously agreed to condense his September letter, where he looks at the risk of another recession in the US.

I look forward at the beginning of each month to getting Gary's latest letter. I often print it out and walk away from my desk to spend some quality time reading his thoughts. He is one of my "must-read" analysts. I always learn something quite useful and insightful. I am grateful that he has let me share this with you.

If you are interested in getting his letter, his website is down being redesigned, but you can write for more information at .(JavaScript must be enabled to view this email address). If you want to subscribe (for $275), you can call 888-346-7444. Tell them that you read about it in Thoughts from the Frontline, and you will get an extra one month on your subscription. And now, let turn to Gary.

This week you will get a kind of preview as this week's letter. I am desperately trying to finish the first draft of my book and am one chapter away from having that draft. I have promised my editor (Debra Englander) that she would see a rough draft next week, and the final version will be delivered on the last day of September. More on that process for those interested at the end of the letter. But this week's letter will be part of what will probably be the 4th or 5th chapter, where we look at the rules of economics.

There is just so little writing time left that I have to focus on that book for a little bit. I am writing this book with co-author Jonathan Tepper of Variant Perception (who is based in London), a young and very gifted Rhodes scholar with a talent for economic analysis and writing. We each write the first draft of a chapter and then go back and forth until the chapter has been much improved. Alas, gentle reader, you will only get my first draft. You will have to wait for the book to get the new, improved version. But this is the last one I have to write. And Jonathan has done all his initial chapters. We are on the home stretch.

But first, my partners at Altegris Investments have written a White Paper entitled "The New Normal: Implications for Hedge Fund Investing." It is a very instructive read. If you are in the US and have already signed up for my Accredited Investor letter, you should already have been sent a link or a copy. If not, and you are an accredited investor (basically net worth of $1.5 million or more) and would like to see the paper, or are interested in learning more about how hedge funds, commodity funds, and other absolute-return strategies might fit into your investment portfolio, I suggest you click on www.accreditedinvestor.ws and fill out the form, and a professional will get back to you. And if you live outside the US and are interested, I have partners around the world who can work with you, so you can sign up as well. (In this regard, I am president and a registered representative of Millennium Wave Securities, LLC. Member FINRA.) And now let's look at part of a chapter from The End Game.

In the pre-crisis days, I used to write about things like P/E ratios, secular bull and bear markets, valuations, and all of the things we used to think about in the Old Normal. But what about those topics as we begin our trip through the New Normal? It's time to reconvene class and think through what might change and what will remain the same. I think this will be a fun read - and let me tip my hand. I come out on the side of a new secular bull that gets us back to trend - but not just yet. The New Normal has to have its turn first. (Note: this will print out longer than usual, as there are a lot of charts.)

And speaking of first, I once again need some help from readers. I will be in "jail" next week for the Muscular Dystrophy Society. I need you to help bail me out. You can go to https://www.joinmda.org/downtowndallas2010/johnm and make a donation to help kids and families who really need help in these difficult times, and also help sponsor research that will eventually cure this disease. If you follow the link, you can see a cute video - and then make your donation!

I thank you and I am sure Jerry's kids thank you too!

What are the basic premises which determine your investment portfolio? Is there a consistency to your thought, or is your portfolio a blend of ideas which may not agree with one another? How sound do your ideas appear when subjected to critique? This week we start a series on my basic investment premises and then see how those premises should perhaps inform your investment portfolios.

This series comes courtesy of an idea triggered by last week's letter. I was talking about a CIA researcher who was writing about the importance of subjecting the views of an analyst to intense scrutiny. I thought it might prove useful to my readers to review the basic investment themes and models which shape my own strategies, and perhaps offer some of the pros and cons about those ideas. We will let the devil's advocate speak up and see if we can deal with his objections.

Reader response to my prediction that we are in the Muddle Through Economy has been interesting. While most readers seem to agree, a few think I am being too pessimistic and we are poised for a boom and many of you think we are headed for a far worse economic scenario.

This is a slightly longer than normal e-letter. I have put a lot of thought into this week's letter, and lay out a case as to why we are at a very critical juncture. Serious investing requires serious study. Simply making predictions with no rationale is useless and potentially harmful. In this issue, I make more than a few predictions. This should be a very useful letter for investors. I hope you find it helpful.

I would have to count myself as a member of the Rick Nelson School of Writers. For the benefit of younger readers and at the risk of dating myself, Rick was the son of Ozzie and Harriet Nelson who went on to become a teen singing idol and one of my favorites as a kid.