October 2008 - Daily Pfennig

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

Daily Pfennig

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  • A New Trading Theme...

    * Coordinated rate cuts...* Did the Fed reignite soaring inflation?* More pain in Iceland...* Revisiting the 90's in Japan... ** A New Trading Theme... Good day... And a Tub Thumpin' Thursday to you! Well... How about those wily veteran Central Bankers? They all got together and decided to cut rates... The Reserve Bank of Australia (RBA) went first with their 100 BPS cut, and opened the rate cut sea for the rest of the Central Banks around the world. The European Central Bank, The Riksbank (Sweden), Swiss National Bank, Bank of Canada, Bank of England, and the Bank of China all lined up at the rate cut table... The Bank of Japan, The Norges Bank (Norway), and Reserve Bank of New Zealand did not participate. The Bank of Japan doesn't have any rate to cut, The Norges Bank will wait until their regularly scheduled meeting on 10/15, and the RBNZ believes that they have taken their toxic waste bond flu shot......
  • Coordinated Rate Cuts!

    * Yen trades to 98! * Carry Trades unwinding hurt high yielders... * Gold rallies back to $900! * Central Bank rate cuts.... ** Coordinated Rate Cuts! Good day... And a Wonderful Wednesday to you! Well... There's a ton of stuff to talk about today, one of which is the amazing run that Japanese yen has had in the past month, but particularly the last week! No need to sneak a peak at the currency round-up, Japanese yen is trading 98.80! WOW! I could be acting like a contortionist and trying to slap myself on the back, but that would unprofessional... And besides, the rest of the currencies are taking shots to the mid-section. Anyway... Blow the horn, the Carry Trade (for yen) is dead, may it rest in peace! OK... The currencies tried like all get out yesterday to rally VS the dollar, the euro did end the day 1% higher on the day, which after the bloodshed of the past month, I'll take that any old time! I would love to go back to 2005 (not really, but for this conversation's sake I will) and pull out some old Pfennigs where I talked about all the naysayers talking about a break up of the euro... We had the NO votes from France and Denmark on accepting the European Union's (EU) Constitution, we had riots in the streets of France, we had rising interest rates in the U.S. and dozens and dozens of naysayers called out the euro and said it would collapse under the weight. I said then, and I'll say now... HOGWASH!...
  • Iceland Melts Down...

    * RBA cuts rates 100 BPS! * Iceland to peg the krona... * High Yielders get whacked! * Gold rallies in the face of a strong dollar! ** Iceland Melts Down... Good day... And a Terrific Tuesday to you! Well... Folks... The wheels, what was left of them, are really coming off this economy. It's a sad sight to see, but it's happening nonetheless, and there's no bailout, stimulus check, mortgage bill, truck loads of money supply, or whatever, that's going to stop this recession bus.. Memo to Paulson and Bernanke... Don't throw yourself under this recession bus... Well... The dollar continued to push the envelope against a handful of currencies yesterday. Up front and center, the high yielders got beaten about the head and shoulders by the dollar. Aussie, kiwi, real, rand, all took major hits from the dollar. It was one of the worst days I can remember seeing for these currencies. This huge sell off showed two things going against the high yielders... 1. Commodities (other than Gold) are getting whacked, and 2. The Carry Trade is Dead......
  • The Deed Is Done...

    * Adding $700 Billion to our debt... * U.S. loses 159K jobs in September! * Dollar rallies to 13-month high VS euro * Ding Dong the Carry Trade is Dead... ** The Deed Is Done... Good day... And a Marvelous Monday to you! The deed is done... The House, which had previously voted down the Bailout Package, decided to go ahead and put the country in debt by another $700 Billion... Yes, I know it the payouts will be in installments, but in my mind it was in one swoop that $700 Billion was added to our debt... And guess what? The dollar rallied on the news! More on the Bailout Package in a minute... The other thing happened on Friday was the awful Job Jamboree in which 159K jobs were reported lost by the Bureau of Labor Statistics (BLS) during September. The job losses were all over the place led by job losses in Manufacturing. And guess what? The dollar rallied on the news!...
  • Wooden Arrows?

    * A euro revelation! * House to vote on Bailout... * Yen remains strong... * Jobs Jamboree Friday! ** Wooden Arrows? Good day... And a Happy Friday to one and all! A Fantastic Friday, I hope! As the blind man said, as he spit into the wind... It's all coming back to me now... And so it was yesterday morning after I had hit the send button for the Pfennig, a trader friend called to give me some insight, and... After talking to him, it all came back to me now... What the heck is he talking about now? I hear you asking... Well, recall how I and probably all of you too, have been scratching my head and wondering just how in the world the dollar could be rallying in the face of all that's going on, and the bad data to boot. Well, here it is folks, sit back and take a sip of coffee......
  • Senate Passes The Bailout Package!

    * Euro falls to 1-year low.... * Bailing out foreign investors? * O'Neill has a better plan... * ISM collapses! But the dollar rallies... ** Senate Passes The Bailout Package! Good day... And a Tub Thumpin' Thursday to you! Rocktober started off with a bang for the dollar, as the green/peachback continued to gain VS the euro and other currencies, pushing the euro to a one-year low VS the dollar. We all sat here and shook our heads in disbelief yesterday, as the U.S. ISM Index (manufacturing) collapsed in September, but the dollar rallied anyway. The ISM Index fell from 49 to 43.5, the lowest print since Rocktober 2001, which happened to be near the end of the 2001 recession and right after the awful period following 9/11. So... To me... This really paints the recession picture clear and bright for all to see... So, why did the dollar rally with this albatross around its neck?...
  • The Bailout Lives!

    * The Senate to the rescue? * Dollar rallies big time... * Rumor day... * Consumer Confidence stronger? ** The Bailout Lives! Good day... And a Wonderful Wednesday to you! Welcome to October! Or as we say in St. Louis... Rocktober! September went by in a flash, let's hope Rocktober slows down a bit! Well... Monday we had carnage in stocks, and yesterday in currencies, while stocks rebounded. What a difference a day makes! On Monday, the House voted down the Bailout package (doesn't it just get your goat that it's still being referred to as the "rescue plan"?), and yesterday, seeing the collateral damage caused by the "no" vote, Congress decided to try and rescue the bailout plan....