Chuck Butler's
Daily Pfennig
A free, quick-reading daily e-letter on world currencies and economic trends.
Wednesday, September 08, 2010
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A free, quick-reading daily e-letter on world currencies and economic trends. |
Wednesday, September 08, 2010 |
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EverBank World Markets A Pfennig For Your Thoughts Friday, July 16, 2010 ........But first a word from our sponsor....... Strike while the metal's hot and the market risk none Growing demand for gold, silver and platinum attracts many of today's leading investors. Is fear of market volatility and high costs keeping you from adding precious metals to your portfolio? Find out why the new EverBank® MarketSafe® Diversified Metals CD could be a safe and rewarding way to gain exposure to these three popular commodities. 100% deposited principal protection and a low minimum $1,500 deposit. Just what the smart investor looks for: high upside potential with no market risk. Find out if this precious metals CD is right for you and apply for one today. Go to: http://www.everbank.com/001CertificatesMSDiversifiedMetals.aspx?referid=11600 EverBank is an Equal Housing Lender and Member FDIC. ................................................ In This Issue…. * Only a handful of currencies rally... * New Zealand GDP prints soft... * Canadian Manuf. Continues streak... * Seeing what's in the Bill... And Now... Today's Pfennig! A Euro Story Today... Good day... And a Happy Friday to one and all! Looks like it will be a Fantastico Friday, as a cap has been put on the Oil well in the Gulf, and for the first time in 88 days, no oil is gushing into the Gulf! YAHOO! We have that, and... Well, it's a Friday! Well, front and center this morning, the euro is rising once again, and now this recovery is beginning to smell like it's gone too far too fast to me... Yesterday I told you the euro had gone through the 1.27 handle quickly... Well, 1.28 didn't last 1 day either, and now the euro is poking through the clouds to sniff 1.30 again... The single unit is trading right now, as I write, at 1.2975... I've seen it a bit higher when I first turned on the screens, but Shoot Rudy, talk about a rise! Actually, that's a 5.5% rise in the euro in the past month... 5.5% sounds good, but... It's not even in the top 2 currency gains in the past month... 5 Pfennig Points if you can name the best performing currency VS the dollar in the past month... Pat yourself on the back if you said, Swiss francs... That shouldn't have been too difficult to figure out, but the number two currency in the past month will be a shocker, or at least it was to me! It's Swedish krona! OK... Enough of that! I just put the finishing touches on our monthly letter to clients, called the Review & Focus, and in it I talk quite a bit about the euro's recovery, as it appears Europe is overcoming its peripheral countries' debt problems. At least that's how it appears... But, hear me now and listen to me later... Europe is NOT out of the woods, just yet... Yes, they've adopted some very aggressive austerity measures to cut deficit spending, but we've got to see how that all pans out before taking the "overcoming its debt problems" too seriously... And don't forget, at the end of next week, the European Bank Stress Tests results will be out there for everyone to see... Could be skeletons in the closet for the euro, and then again, if their stress tests are as worthless as ours were, it's open seas for the euro again... Of course that's my opinion, and I could be dead wrong, or a little wrong, or as I like to say... So wrong, I was almost right! HA! Well... I have to get to this early in the letter today because this news has rocked the New Zealand dollar / kiwi overnight... Here's the skinny... Kiwi has fallen 125 BPS or 1.25-cents overnight after their 2nd QTR GDP report disappointed. The New Zealand economy only grew .3% in the 2nd QTR, while it was forecast to have grown .5%... I think the reaction has been overdone, folks... I still expect the Reserve Bank of New Zealand (RBNZ) to hike 25 BPS on July 29th... So... If you were thinking of buying kiwi, you certainly can buy it today a whole lot cheaper than yesterday! OK... The Canadian dollar / loonie, has bounced around between 95-cents and 98-cents for sometime now... It ratchets down when the price of Oil drops, and bounces higher when the price of Oil rises... It's been that simple to track. Canadian data has been very good, but for the most part, the markets aren't paying attention to the data, just the price of Oil... For instance, yesterday, Canada printed a rise in manufacturing for the 8th month in the last nine! And... The loonie drifted on the day... And continues to be soft this morning, as the price of Oil slipped from a $77 handle yesterday to a $76 handle today... Norwegian krone is off today too... In fact it looks like it's a "euro story" today, with not many other currencies having a good day... In fact you can count the currencies in the "green" on one hand... We've got euros, Czech koruna, Chinese renminbi, and Russian rubles! Not exactly a murderers' row, eh? I think the New Zealand soft GDP print is the culprit here... The economic growth currencies don't like it when one of their brothers gets whacked... Dr. Marc Faber was on the Bloomberg TV this morning, talking about the U.S. economy, and I found that his thoughts were pretty much in line with mine that I've shared with you previously. He too believes the Fed and Treasury are going to have to step back into the markets and attempt to stimulate the economy again... However, yesterday's data was mixed so it wasn't all bad! Capacity Utilization was unchanged, instead of falling as forecast, and Industrial Production actually posted a +.1% gain instead of falling as forecast. The Philly Fed (manufacturing for the region) was weak, and PPI showed that wholesale inflation is falling... In other words wholesale prices are falling again... Can you say deflation? I knew you could! The Weekly Initial Jobless Claims fell, but remained above 400,000 each and every week! The total last week was 429,000, falling from the previous week's 458,000... There are two ways to look at this reduction in Claims... Sort of like a glass half full or half empty thing... You could say, WOW! That's a good sign for the labor markets! OR... You could view it like this... It was only a matter of time before the number began to fall given the 450,000 that have filed each and every week for over a year now... Sooner or later, you're going to run out of people that have lost their jobs, you've already counted all of them! Soooooooo... The Financial Regulation Overhaul Bill passed the Senate yesterday, and will be signed by the President as soon as it lands on his desk... Don't you wonder just what else is in the bill? For instance, did you know that in the Health Care Bill, there's a report at numismaster.com that says... starting on January 1st in 2012, U.S. federal law will require coin and bullion dealers to report to the Internal Revenue Service all gold and silver coin purchases and sales greater than $600. Apparently this little jewel was an add-on to the national health care legislation... Now, I understand that there are lawmakers already working on a bill to repeal this little jewel... But, now we understand don't we, what the speaker meant when she said, "we have to pass it to find out what's in it" or something like that... Excuse me for a minute while I go over the wall and yell... OK... I'm back now... Feeling better too! For it IS a Friday! You know, I really got carried away for a minute, when I was going to talk about the Cartel, you know them as the Fed, receiving more authority in the new Finance Bill... Well, all I have to say about that is... YECH! Weren't they already at the helm before the last crisis? Oh Boy, now their more powerful! Ron Paul? Where are you buddy? We need you to slap some people around in Washington, and make them see that the Fed needs to be abolished, not given more authority! OK... I was going to go the "nice section", but as long as I'm on this road, I might as well tell you about this little ditty.... Ready? Then there was this... You can find the whole story over at law.com... Bank of America Corp. has admitted to maneuvering as much as $10.7 billion in debt from its balance sheet and then back again through repurchasing deals that the bank called "dollar rolls." The deals involved short-term agreements in which the bank would move mortgage-backed securities off its books to another entity, while agreeing to repurchase the package at a later date -- usually after it had reported its quarterly financial statement to the Securities and Exchange Commission. In a letter (pdf) responding to questions from the SEC, the bank admitted it wrongly classified the moves as "sales" when they were really a form of secured borrowing. Critics have said it was an effort by the bank to hide the extent of its investments in risky mortgage securities. Hmmm... Guess what would happen to you and me, if we did something like that to hide things from the Gov't? But what's worse, in my opinion, is the fact that over $10 Billion of mortgage-backed securities are not worth very much, otherwise the bank would not have "hid" them... To recap... It's a "euro story" today... With the single unit flying higher and higher each day, while the rest of the currencies, save but a few, lose ground to the dollar. New Zealand GDP printed softer (.3%) than forecast (.5%) which sent kiwi lower by over 1-cent. Canadian manufacturing posted a positive number for the 8th time in the past 9 months, but the price of Oil is weaker, thus pushing the loonie lower today... Currencies today: 7/16/10: American Style: A$ .8810, kiwi .7185, C$ .96, euro 1.2980, sterling 1.5385, Swiss .9590, ... European Style: rand 7.5380, krone 6.1975, SEK 7.2970, forint 216.10, zloty 3.1485, koruna 19.5640, RUB 30.37, yen 87.15, sing 1.3755, HKD 7.7735, INR 46.74, China 6.7743, pesos 12.80, BRL 1.7625, dollar index 82.30, Oil $76.60, 10-year 2.98%, Silver $18.28, and Gold... $1,206.80 That's it for today... And for me for the next week, as I'll be in Vancouver, and Chris will have the conn on the Pfennig... I'll file reports of what I see to Chris, but for the most part, it will all be Chris! I'll be traveling on Monday, early... St. Louis has become a non-entity for American Airlines, who took over our hub airline TWA years ago... Non-stop flights for us do not exist... That is unless you're going to one of the cities Southwest goes to... That means, to go to Vancouver, I have to fly through Dallas? That's the wrong direction! Same for San Francisco next month! AA sure sold St. Louisans a bill of goods when they told us St. Louis would remain a "hub"... I'll be traveling alone, which always presents problems given my handicap... But, Hey! I'm still moving, and that beats the alternative! Time to go show off my "new eye" and see if the people in Vancouver can tell the difference! OH MY! Look at how I've carried on here today! YIKES, I've got to let you go have a Fantastico Friday! Chuck Butler President EverBank World Markets 1-800-926-4922 1-314-647-3837 www.everbank.com PFENNIG DISCLOSURE |
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