June 2008 - Daily Pfennig

A free, quick-reading daily e-letter on world currencies, economic trends, and the occasional baseball score.

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Have You Seen This?

  • Paulson Speaks With A "Double Tongue"

    * The U.S. economy in a wreck! * More problems to come... * Funky accounting at the Fed... * SNB leaves rates unchanged... **Paulson Speaks With A "Double Tongue" - Good day... And a Tub Thumpin' Thursday to you! I was alone last night, and decided to write... Oh Boy! Are you, dear reader, in trouble when I begin writing at night for the next morning! My Cardinals were losing again, so my attention turned to putting down all these thoughts that keep coming into my head... Like Michael Keaton in Night Shift (what a great movie!) I need a recorder to put all these thoughts down... Like... Feed the mayo to the tuna! OK... Front and Center this morning, the euro's rally that went on all day yesterday and into the early Asian session (all the way to 1.5580) ended this morning... Someone, somewhere decided that the U.S. will be able to squeeze by this slowdown... Unfortunately, I don't agree! I see the U.S. being involved with the multi-car accident on the highway... But as Pfennig readers you already know that... However, instead of just hearing from me all the time about this meltdown of the U.S. economy, let's hear from an organization that tracks these things......
  • Fundamentals Rule!

    * Stocks fall 358 points! * Japan's inflation problem... * Profit taking in reals... * Buffett warns of stagflation... ** Fundamentals Rule! Good day... And a Happy Friday to one and all! Hopefully a Fantastico Friday too! It's the last Friday of June... Where did the month go? WOW! Next Friday, we'll be celebrating our nation's birthday... Can you believe that? The 4th of July? It just finally warmed up here in St. Louis, and it's already the going to be the 4th! Amazing... How the time flies when you're having fun! And Fun is what I'm having... With every day that passes, I get a little stronger, and another day further from the pain and problems of last summer... How could I not be having fun? OK... Well... Recall yesterday when I told you a Big Bank's chartist said the euro would top out at 1.5726, and that I hoped it would fly right by that? It did! It did! It did fly right past that! I love it when fundamentals rule! The euro has climbed to 1.5765 this morning as I write after spending most of the day yesterday taking liberties with the dollar. Another chartist said yesterday that the euro would re-visit the 1.60 level if it breached 1.5785... So, we've got that going for us, eh?...
  • Dollar Receives Some Stimulus...

    * Dollar receives some stimulus... * G8 to support $ over the weekend... * India surprises with a rate increase... * BOJ likely to keep rates unchanged... **Dollar receives some stimulus..... Good day... We had a pretty calm day in the markets yesterday as the dollar drifted lower vs. most of the major currencies. But when the Europeans picked up the trading overnight they all but wiped out any advances the currencies had made and the dollar is now sitting slightly higher than it was trading at this time yesterday morning. But I will get to that later; let me start this morning's Pfennig off with some comments Chuck left me on the markets as he signed off his computer last night: "OK... So quite a few of you liked my conspiracy theories yesterday, and even a few had one of their own! This whole mess of Bernanke and Paulson finally sitting up and taking notice in June is just too much for me. I think there's got to be a story here that we don't know about... Yet!...
  • FOMC Meeting Day!

    * What will the Fed do? * Going into the fryer? * Trichet tries to cool the jets... * India raises rates 50 BPS! ** FOMC Day! Good day... And a what should be "Wild" Wednesday to you! This is the day the Fed's "true" colors come through in my opinion. The markets were all fired up a couple of weeks ago, and the air in their balloon has been slowly let out up to now. But today, we'll see if their balloon get re-inflated or goes "pop"! You see, today is the day the Fed's FOMC meeting adjourns and a rate announcement along with a new bias will be the order of business at the end of the meeting. The Fed Heads normally eat their lunch, which was probably packed in brown bag consisting of a baloney sandwich (since that's what they normally spew is baloney!), some chips and ho-ho's... HAHAHAHAHA!...
  • Jobs Jamboree Friday!

    * Trichet talks tough! * Kohn sends warnings... * The currencies bounce back! * Will the BLS create ghost jobs?...
  • BIS Disses The Dollar!

    * Euro & Aussie on the rise... * Yen continues to rise on stock sell off... * Another depressing warning... * Gold takes off! **BIS Disses The Dollar! Good day... And a Marvelous Monday to you! June the 30th... I had a fabulous weekend, with a Cardinals' win Saturday night to top it off! I'm waiting for news from the blood doctor on my latest ultra sound on my leg. And my goofy car is acting up again! UGH! But... Not even that kind of stuff could ruin my weekend! OK... Front and Center this morning, we have the euro climbing above 1.58, and the Aussie dollar hitting a 25-year high! The dollar is getting sold again, as the negativity toward the dollar grows strong again. We also have The Bank for International Settlement (BIS) talking about how a disorderly decline in the dollar can't be ruled out completely, while U.S. Treasury Sec. Paulson is talking about how a strong dollar is a good thing for the U.S....
  • Jawboning The Dollar Higher...

    * More bias to buy dollars... * Printing money... * Kiwi gets hit hard! * Rate announcements today......
  • More Awful Data For The U.S!

    * Housing continues to rot... * Fed Officials warn the markets... * A new "junk bond" house... * David Galland's thoughts... **More Awful Data For The U.S! Good day... And a Wonderful Wednesday to you! A full day in meetings yesterday had me ready for the easy chair upon arriving home... The Celtics are NBA Champions for the 17th time, congrats to them and their fans, of which I was one as a kid, and through the Larry Bird era... Kind of lost track of the NBA over the years... Another full day of meetings on the docket for yours truly, can't wait! NOT! OK... The currencies really had a boring day yesterday... The bias was to sell dollars, but not by much. The euro gained a little, but has given it all back this morning. The data in the U.S. yesterday was weak if not awful, but the markets are still hanging by a moment on the Fed's rhetoric... Shoot Rudy, even the Financial Times is calling out the Fed and those that are getting carried away with thoughts of 75 BPS in rate hikes this year... The title of the FT article was... "Rate rise expectation overplayed, believe Fed officials"...
  • When Will The Fed Be Called Out?

    * More dollar strength... * Conspiracy theories... * BOC leaves rates unchanged... * A euro chart discussion... **Front and Center this morning, the dollar continued to hold the advantage over the euro and other currencies yesterday and in the overnight market... The euro did attempt to rally overnight, but that move was thwarted, as an European Central Bank (ECB) member, Stark, threw cold water on the rally. Stark, said that "the markets have understood the Governing Council's signal", which meant the markets understood that the ECB was going to raise rates in July... But then the cold water came flying out of the bucket as Stark then said, "However, we are not talking about a series of rate increases."...
  • Removing Fed Rate Hike Bets...

    * The euro rallies 1-cent! * U.S Data continues to be a drag... * Canada's Carney underpins the loonie... * RBS issues a warning! **Removing Fed Rate Hike Bets... Good day... And a Happy Friday to one and all! Looks like it could be a Fantastico Friday as traders are Finally coming around to Chuck's way of thinking regarding Fed rate hikes... And as traders remove their bets for aggressive Fed rate hikes, the luster begins to fade on the dollar rally. The meetings are over for this week (they start up again next week!), YAHOO! I get to spend the day on the trading desk... I've missed everyone! OK... Front and Center this morning, we have the euro trading 1-cent higher, knock, knock knocking on Heaven's Door, I mean, the 1.56 handle. As I said in the intro, it appears that traders don't have the stomach to hold on to their bets that the Fed will aggressively raise interest rates this year. Recall, the other day, I told you that the bets were ratcheting up and had reached 75 BPS of rate hikes this year... I doubt we have any... In fact, as I told you the other day too, I believe that when the dust settles on the fact that the Fed isn't going to raise rates, things will have gotten so bad here that the Fed will be entertaining thoughts of cutting rates again!...
  • Fighting Inflation...

    * CPI increases... * Eurozone inflation increases too! * G-8 lets currencies slip by... * TIC Flows data today... **Fighting Inflation... Good day... And a Marvelous Monday to you! I hope you had a grand Father's Day... Mine was fabulous! And a great weather day too! Cards take 2 of 3 from the Phillies after getting royally spanked on Friday night! UGH! And I got to see my first ever Polo game on Saturday! I've seen 100's of water polo games, as son Andrew was a good player in High School, but never a Polo game on horses... Absolutely cool! OK... Friday was not a good day in the currencies as once again the dollar took the hammer and swung a mighty swing. The euro spent the day in the 1.53 handle, as more and more talk about the Fed fighting inflation took hold of the markets. I'm still resisting this rhetoric by the Fed, and believe that eventually the markets will come to the realization that the Fed is simply "talking the talk" and are unwilling to "walk the walk"......
  • Dollar's Mini-rally ends...

    * Record iron ore price! * Ben Stein in the Pfennig! * Top 11 currency returns... * Mogambo on Gold... ** Dollar's Mini-rally ends... Good day... And a Terrific Tuesday to you! The dollar's mini-rally yesterday stalled overnight, and once again the dollar bulls are having to cover euro shorts they put on. Yes, they NOW believe the Fed will not come through on it's claim to be an inflation fighter, and leave rates unchanged. That will keep the positive yield differential in the euro's favor (well, it would have anyway, but it keeps it unchanged). Remember though, who called out Fed Chairman Big Ben Bernanke when he said early this month that the "falling dollar had caused an unwelcome increase in inflation, and that he was "attentive" to the problem." Hogwash, said I!...
  • "Somewhat Receded"?

    * Fed leaves rates unchanged... * A dovish tone to the Fed... * Dollar Bulls run for the hills! * Norway raises rates... ** "Somewhat Receded"? Good day... And a Tub Thumpin' Thursday to you! Well... If you are a non-dollar owner, you might want to quickly go to the currency round-up to check on your currency / currencies... The Fed left rates unchanged and were quite dovish in their statement, and the dollar has been sent to the woodshed... Welcome back! Front and Center this morning, we have a currency rally going on, with the euro leading the dogs off the porch to chase the dollar down the street. The single unit has pushed past the 1.57 handle this morning, and the high yielders of Aussie, kiwi, and Brazil are all dancing in the streets because their positive rate differentials are even more in the face of traders now....
  • German Business Confidence Falls...

    * The euro gives back 1-cent... * The Economist agrees with Chuck! * RBNZ takes a shot at kiwi... * FOMC week! ** German Business Confidence Falls... Good day... And a Marvelous Monday to you! Friday turned out to be Fantastico, as I hoped it would, and it ended with a nice surprise retirement party for long colleague, John Kaupisch. I couldn't talk about it Friday, because it was a surprise... But it was real nice, and John was surprised... His last day is July 3... First guy to retire here... I'll probably be the next, but with a 13-year old, I doubt that happens any time in the near future! The currencies held steady Eddie on Friday, with the euro popping up to 1.5660 at one point, only to end the day around 1.5620. Still, a nice day given all the negativity the euro had been receiving because of the Fed's rhetoric, and other minor stuff in the Eurozone... Overnight though, the euro has gotten treated like a red headed step child (OK no nasty comments, it's just a saying). The German Business Confidence as measured by the think tank, IFO, fell to the lowest level in more than two years this month... Business leaders are feeling the pinch of record Oil prices and the threat of higher interest rates....
  • Questioning The Fed's Rhetoric...

    * More dollar strength... * Retail Sales surprise... * SARB raises rates! * Gold on the slippery slope... **Questioning The Fed's Rhetoric... Good day... And a Happy Friday to one and all! It will be a Fantastico Friday (Hopefully) for the boys and girls in the St. Louis office, as we head to Busch Stadium tonight for a Cardinals baseball game... We even have a special guest that will be with us, so party on Wayne... Party on Garth! Well... Things went a little crazy on the desk while I was away yesterday... When I returned home last night, I had a ton of emails from the Big Boss, Frank Trotter, and that's usually a sign that things didn't go well! Frank plays hockey on Friday mornings, and said he will call me to bring me up to date on his way to hockey......

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