Blogs

  • Hereeeeeee's Baaaaaacccckkkkk!

    * Dollar rally continues... * Who's buying U.S. debt? * Homeowners upside down.... * U.S. data continues to be bad! ** Hereeeeeee's Baaaaaacccckkkkk! Good day... And a Terrific Tuesday to you! I'm Baaaaaaaaaccccckkkk! Well, actually, I made it to the office yesterday morning, after flying all night from San Francisco (with a stop in Dallas)... I told the crew ahead of time I didn't want to hear anything about how I looked... And they obliged, but I could see that they were giggling inside! I'm still worn out, but Hey! I got back yesterday, to find out I get to go back out on the road all next week... Geez Louise, somebody get me a private plane! HA! Well... The joke on the desk used to be that "When Chuck was gone, the currencies rallied"... That certainly wasn't the case with this past absence! I had pre-written a large part of what I was going to say in yesterday's Pfennig, before I was not able to connect, flying in a big airliner....
    Posted to Daily Pfennig by Chuck Butler on 08-12-2008
  • One Year and Counting

    commentary from this week's "Sectors and Styles Strategy Report : “Of all the newfangled financial creations that have caused problems this past year, arguably the most nerve-wracking are derivatives traded over-the-counter…”...
  • Central bank intervention is the reason...

    * Central Bank intervention is the reason... * Busy data week... * Australia's central bank to mirror the BOE?... * China to slow appreciation ... ** Central bank intervention is the reason... Good day... I know most of you opened the Pfennig up this morning hoping to get a blast of Chuck's witty writing style. Well the airlines arranged for Chuck to stay in San Francisco a little longer, so you'll have to wait another day. The currency markets continued to get hammered by the US$ on Friday with the dollar index climbing all the way back above 76, a level we haven't seen since mid February. The dollar did sell off a bit in early European trading, but it has started to climb again as I write. Several readers sent me an excellent opinion piece by James Turk which appeared on GoldMoney's website. Mr. Turk points to central bank intervention as a major reason for the recent dollar strength. The article agrees with what I was saying last week; that the dollar has no fundamental reason to be rallying. The reports and news out of the US have not been favorable to the greenback, and the twin deficits in the US continue to soar out of control. I mentioned that the recent moves of the dollar smacked of intervention, as the dollar only wanted to move in one direction, ignoring any data which would typically send it back down. Turk points to some data which backs up this intervention theory....
  • A New Asset Class, Part Two

    Last week's letter was the first part of a speech I have been giving on what I think will be the rise of a new asset class. This week will be the second and final part. Let me set up this section with a few paragraphs from last week's letter and then a quick summary. If you want to read the entire letter from last week, you can go to the website archives. But first, a quick note. George Friedman from Stratfor was at my daughter's wedding rehearsal dinner last night. He had just found out about the invasion of South Ossetia by Georgia and was keeping track of the events over his Blackberry from his correspondents on the ground in Georgia....
  • Nowhere to hide...

    * Nowhere to hide... * Trichet sounds dovish... * US fundamentals haven't changed... * Olympics open up in China.. ** Nowhere to hide... Good day...The dollar continued to take no prisoners in its move higher. The newly strong greenback was up vs. every currency we track yesterday, and has rallied over 3% vs. the major currencies over the past week. It has been a pretty tough week for yours truly, as I have tried to make sense of this dollar rebound. Chuck can't get back to St. Louis quick enough! The dollar started its big move just after the Trichet gave his statement on his views of the European economy. The ECB left rates unchanged, but Trichet said economic growth will be 'particularly weak' through the third quarter, suggesting policy makers will be wary of raising interest rates again to curb inflation. While the ECB's decision to raise borrowing costs last month was justified by the inflation threat, risks to growth 'are materializing,' Trichet told reporters. 'Overall, downside risks prevail.'...
    Posted to Daily Pfennig by Chuck Butler on 08-08-2008
  • Quotable Quotes: Paris Hilton's Energy Plan

    In the time honored news tradition of man bites dog, Paris Hilton, pool side in a leopard bikini and gold pumps, demonstrates that she can actually speak in whole sentences as she shares with us her energy plan for the US. Only in America. To view the...
    Posted to Musing on the Markets by Vinny Catalano, CFA on 08-08-2008
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  • Mediterranean Flyover: Telegraphing an Israeli Punch?

    Kudos to my friend George Friedman and his crew at Stratfor. If you didn't see the article in this week's Barron's about Stratfor's analysis of the geopolitical risk premium built into oil prices, you missed a really good piece of work. You've probably heard Napoleon's quote that 'Amateurs discuss strategy, and professionals discuss logistics.' If you want a perfect example of how that quote plays out for the markets, take a look at Stratfor's article below. It's precisely the kind of sober, fundamental research that makes Stratfor my invaluable source for geopolitical intelligence. No matter where you're looking at putting your money today, the impact of energy prices simply can't be overstated. The commodities trade, US and foreign equities, debt and interest rates, everything is being driven by energy prices right now. Whether you're trying to factor energy as a direct input into the price and consumption of manufactured goods or dealing with monetary policy's impact on the dollar and debt markets, you're implicitly making an energy trade....
  • Week of 08/07/2008

    In This Issue:

    Investors Are Searching For Direction
    The Ying And The Yang Of Today's Market
    Chase Value, Not The Rally
    Many See The Merrill Lynch Write-down As Positive
    The Oil Price Decline Will Help The Economy
    If Energy Costs Go Down, These Investments Should Go Up
    The Bottom Line This Week

    Last week stock prices had some of the biggest ups and downs we've seen in months. After tanking 240 points on Monday, stocks shot up 267 points on Tuesday and another 186 points on Wednesday. The next day they dropped back 206 points and we started to reach for the Dramamine. On Friday, however, the market eased back a more tranquil 52 points.

    As it turned out, the market's gyrations came to nothing. When the numbers for the five days were tallied, the Dow was only off 0.4% and the Nasdaq was essentially flat.

    Nothing much happened on Monday of this week either. Then oil prices fell to $118 and the Fed decided to leave interest rates alone for awhile. The market immediately shot up 332 points on Tuesday, and another 40 points yesterday.

    ...
  • Reducing the Mortgage on Your IRA

    Most people are busy accumulating large balances in their IRAs and 401(k)s and managing the accounts. They forget that the IRS holds a mortgage on those accounts. You put mostly pre-tax dollars in the accounts and let income and gains compound tax deferred...
  • ECB to change dollar's direction?...

    * ECB to change dollar's direction?... * BOE leaves rates unchanged... * The worst is not over in US housing... * Japan's government signals expansion is over.. ** ECB to change dollar's direction?... Good day...The dollar continued its assault on the world's currencies yesterday as the dollar index moved above the 74 handle. I pulled a chart off the Bloomberg on my way out the door last night, and it showed the only major currency which was up vs. the US$ yesterday was the Swedish krona, which managed a .07% increase. This dollar rally has legs, but I still question the fundamentals behind the dollars surge. Today may be the day we see the dollar finally make a turn, as the ECB will be announcing their rate decision. It is not that I expect Trichet to raise rates, but I do expect him to sound hawkish and refocus the markets attention on Eurozone inflation and away from worries about growth. Two reports out of Germany this morning will bolster Trichet's hawkish stance. German exports rose more than economists expected in June, defying a stronger euro and pushing the trade surplus to a record. Exports increased 4.2% from may, the most since September 2006. German industrial production also increased for the first time in four months with output rising 1.7% from a year earlier. The IMF last month rose its forecast for German economic growth this year and said the global slowdown linked to the US financial crisis was less severe than it expected....
  • Notes from NYSSA's Market Forecast event and the Forbes and Furman interviews

    The great value add in moderating events and conducting interviews is the ability to select the topics to discuss and questions to pose to some of the best minds in the investment, economic, and geopolitical worlds. So, here are a few takeaways from this...
  • Beyond the Sound Bite: An Interview with Jason Furman

    In an exclusive befitting the major cable networks, I am pleased to provide listeners with the ability to compare and contrast the US presidential candidates' economic plans - last week's interview with McCain economic advisor Steve Forbes and...
  • Fed not as hawkish as expected...

    * Fed not as hawkish as expected... * Markets now turn to ECB and BOE... * Canadian dollar slides... * Aussie hit by 1-2 punch.. ** Fed not as hawkish as expected... Good day...I want to start off today's Pfennig by apologizing for those of you who were waiting to receive their Pfennig yesterday. I sent it off at the normal time, but we had some problems with the program which sends it out, so it was delayed in getting delivered. You can always view the current Pfennig at www.dailypfennig.com where we post it first thing in the morning. That website also has archived versions of past pfennigs for your reading pleasure! They tell me the problem has been fixed, so you should get this pfennig right on time. The dollar drifted higher throughout most of the day yesterday as the markets prepared for the FOMC rate announcement. The sentiment driving the dollar higher was that the Fed would sound much more hawkish in order to keep an overall consensus among the FOMC members. Dollar bulls were expecting a signal from Bernanke that an increase in interest rates would be just around the corner. These higher interest rate expectations encouraged traders to take the dollar index back up to just under 74, a level we haven't seen in almost two months....
  • The Hero's Dilemma: Kill the Dragon or Rescue the Princess?

    The Hero's Dilemma: Kill the Dragon or Rescue the Princess? Our previous experiences with "stagflation," as the double economic whammy of slowing growth and rising inflation is known, occurred in the '70s and early '80s. Market veterans...
  • Thoughts On China, The Olympics & Investing

    This week, I turn our attention to this year's Summer Olympics which will be held in China beginning this Friday, August 8 and running through the closing ceremonies on August 24, assuming all goes as planned. China has long been a mystery to the rest of the developed world, and the Olympics will no doubt shed much light on China, its communist government and its culture. Our friends at Stratfor.com offer an interesting analysis of China from a political perspective and what that might mean for the Olympics. With their permission, I have reprinted that analysis in the pages that follow - enjoy. Finally, if you are invested in China, you might consider taking some profits this week, just in case anything bad should happen during the Olympics....