January 2009 - Daily Pfennig

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

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  • Passing Out The Dollars...

    * Risk Takers return... * Bank of America gets more cash! * 30-year mortgages below 5%! * Looking for direction... ** Passing Out The Dollars... Good day... And a Happy Friday to one and all! A Fantastico Friday so far, let's keep it going, eh? It is downright cold here. I'm reminded of that one looooonnnnngggg winter I spent in Des Moines, Iowa... This artic cold was the "norm" for that winter there... I didn't need any other reason to move back to St. Louis, once the spring thaw came around! Well... Right out of the starters blocks this morning, we have a change in sentiment going on... The Risk Takers are back in the driver's seat this morning, as the markets are feeling better about things given that the remaining TARP money has been given to the Obama campers to dole out, and Bank of America came away with an emergency lifeline from the Gov't that totals about $138 Billion... $20 Billion in cash, right here, right now, with the rest spread out between liquidity access and guarantees... And... The TARP money... Given the fact that the Obama people have been itching like they just rolled around in poison ivy, to get their hands on that money... You've got to wonder... Are these guys going to do their best to out do the previous administration when it comes to piling up debts?...
  • A New Year’s Jobs Jamboree Friday...

    * Will the ADP report be a good indicator? * China to slow treasury purchases? * Gold as a store of wealth... * Dealing with the devil... ** A Jobs Jamboree Friday... Good day... And a Happy Friday to one and all! A Fantastico Friday, as it is forecast to get to 50 degrees today here in St. Louis. Never mind that tomorrow's high will be 29! It doesn't take away from today! What a trading day in the currencies yesterday... Whew! It's a Jobs Jamboree Friday, so let's not beat around the bush... It's time to Jamboree! Today is the day the Gov't prints the December Jobs Jamboree, and if Wednesday's ADP report did what they said it was going to, and that is change their methodology to mirror the BLS (Bureau of Labor Statistics) then this morning's Jobs Jamboree will be a nightmare. Of course not the kind of nightmare that the over 2.5 million people that lost jobs in 2008 had! I was once in those numbers, as our old Bank, Mark Twain Bank, was bought by a bigger bank, Mercantile Bank, and Mercantile decided after a few months to perform ethnic cleansing of Mark Twain employees... I called it "my retirement" but with a 3 year old at home and on my lap most of the day, "retirement" couldn't last too long! My point is that you don't know the emptiness and failure you feel when they show you the door... So my thoughts are always with those that lose their jobs......
  • Inauguration Day 2009...

    * Rogers and Roach... * Dollar gaps higher! * Ireland's problems... * Bad data... ** Inauguration Day 2009... Good day... Well... And a Terrific Tuesday to you! I got to enjoy a nice restful 3-day weekend. I realize not everyone got yesterday off, so I won't carry on about it. Can you believe it? The St. Louis Cardinals Football Team A.K.A. The Big Red, no wait, Chuck, they left town 20 years ago... OK, the Arizona Cardinals are going to the Super Bowl? When they were here, I never thought I would live to see the day... Front and Center this morning, I have two quotes from people I truly respect... first from Jimmy Rogers... second from Stephen Roach... If I were you, I would be worried about the U.S. dollar,' said Rogers, 66, in a speech at the Asia Financial Forum in Hong Kong today. 'The Americans are printing U.S. dollars. The Americans are going to do whatever they can to revive their economy, even if it means destroying the U.S. dollar.'...
  • Euro Rally Fizzles Out...

    * Yen continues to kick! * Jim Rogers disses sterling... * China's 4th QTR GDP... * Singapore announces stimulus... ** Euro Rally Fizzles Out... Good day... And a Tub Thumpin' Thursday to you! A nasty day in the currencies yesterday, except Japan of course. The Dow jumped 290 points yesterday, maybe an Obama bounce? You all know that I subscribe to an Obama bounce for stocks and the dollar in the first part of this year... But given what I know about, and what you now know about, after I drew it all out yesterday, the additions to the deficit that Obama will make, the focus on the fundamentals should return by late spring, early summer... That's my story and I'm stickin' to it! Well... As I said in the opening, the currencies led by the Big Dog, euro, suffered through a nasty trading day, with the euro touching below 1.29 for a good part of the day. The risk takers are nowhere to be found. Where have all the risk takers gone... Long time passing... A Reuters reporter asked me yesterday if I was still of the opinion that the yen had more to rally or was it overbought? I said, that as long as the risk takers are nowhere to be found, yen should continue on its path higher VS the dollar, euro and sterling. The RSI (Relative Strength Index) for yen, shows that it is a tad overbought, but that's not enough to change my mind. Nor is it enough to change the mind of a currency trader at the Bank of New York (BONY), who believes yen may rise to 85 VS the dollar by midyear... Another currency trader at the Royal Bank of Scotland (RBS) believes the Bank of Japan will step in and intervene to stem the yen's rise.......
  • Gold Moves Higher With The Dollar...

    * Currencies in a tight trading range... * Bank of Canada follows the Fed... * Look who's Talking Gold... * Adding up the spending... ** Gold Moves Higher With The Dollar... Good day... And a Wonderful Wednesday to you! The first full day of the new regime... I will say this, it makes one proud to be an American when you can watch a peaceful, even extravaganza, handing over of leadership... It really rips me up when I read that the Wall Street Boys really contributed cash to the inauguration proceedings... Making certain the new President knows who contributed cash to his party... Probably cash they received from the Gov't in bailout payments! Nah... That couldn't happen... Could it? Well... The currencies didn't really trade outside of a very tight range yesterday, except for the pound sterling, which continues to fall VS the dollar, euro, yen, and probably even the Zimbabwe currency! OK, that's harsh! But I wanted to paint the picture, so that everyone understood the grave situation the pound sterling is in... The Bank of England has decided to take 70% control of the Royal Bank of Scotland, and nationalization isn't far behind for that bank, and a few others......
  • A "New & Improved Stimulus Package"

    * The dollar fights back! * Another $900 Billion in the red... * RBNZ cuts rates 150 BPS! * Jamie Dimon tells it like it is... ** A New & Improved Stimulus Package Good day... And a Thunderin' Thursday to you! Well... The Fed kept rates at near zero, as if they had any ability to raise them, the House sent the Stimulus Bill on to the Senate, the dollar rebounded on all these two items, and I have some very strong quotes for you at the end of today's lesson... So, get your coffee, or OJ, or V-8, sit down, and let's go! OK, I had better start with the dollar reaction to the two items yesterday, as what looked like an end to this dollar strength mess, was about to take place as the euro pushed to 1.33, taking the other currencies along for the ride, was just a head fake... The dollar had more strength to show us, after the Fed kept rates unchanged, and the House passed the Stimulus Bill....
  • A Jobs Disaster!

    * Retail Jobs are cut in December! * Dollar rallies on renewed Trading Theme... * Looking for the Obama bounce... * High yielders get sold... ** A Jobs Disaster! Good day... And a Marvelous Monday to you! A grand weekend for yours truly with time spent resting, watching football, Alex play basketball, dinner with friends, and finally a wonderful dinner with my kids as we celebrated my oldest son, Andrew's, birthday. Whew! I'm at work about an hour earlier than usual this morning, as I couldn't sleep, and just decided to get up and come in... UGH! OK... Well, the big news this morning, is that the Jobs Jamboree was just awful, but "not as bad as some forecast" and therefore the dollar rallied. OK, I'm shaking my head in disgust too, but that's what the headlines reported later in the day on Friday, as the reason for the dollar rally. But let's get to the meat of the Jobs report... First of all, jobs lost in December were -525K, which was bang on the forecasts. But here's the two things I found to be very scary in the report... First of all, November's awful print of -533K was revised downward to -584K (recall, I questioned a month ago if it would reach -600K on the revision)... And here's the really scary number... -67K Retail jobs were cut in December... That's right, December! The month when retailers are supposed to be on fire!...
  • The Dollar Swings A Mighty Big Hammer!

    * Another dollar rally.... * Rumors in Ireland... * Trade Deficit narrows... * Retail Sales to disappoint? ** The Dollar Swings A Mighty Hammer! Good day... And a Wonderful Wednesday to you! I'm writing from home today, as I will not be in the office on this wonderful Wednesday. Writing from home, or the road, always presents problems for me, as I'm so used to being in the "saddle" at my desk, and having information all around me. But, my little work desk at home has some of those amenities... So, what the heck, quit your grumpiness, and get to writing, Chuck! The dollar ripped through the 1.32 handle of the euro yesterday, like a hot knife goes through butter! There was little to no resistance in that 1.32 handle, and before you could tell one of the many people on the desk here that sneeze all day, God Bless you, we were trading with a 1.31 handle in euros. The talk about a European Central Bank (ECB) rate cut has really ramped up this week, and taken its toll on the single unit. No one is mentioning that even if the ECB cuts 75 BPS this week, they'll still have a an interest rate / yield advantage over the U.S! I guess they'll sort that all out somewhere down the line, eh?...
  • Chock-Full-O-Data Week!

    In This Issue.. * BNP Paribas weighs on the euro... * China and Treasuries... * Euro forming a base? * Gold continues its rally... ** Chock-Full-O-Data Week! Good day... And a Marvelous Monday to you! And a new week... The last week of one of my least fave months too! A week for us, that's supposed to be snowy, icy and cold, all starting, supposedly, tonight. A fitting way for January to end! I don't have my currency screens again this morning, don't know what happened over the weekend here, but, once again, I could have remained at home to write this, if I "KNEW"! OK... Enough! No whining to start the week, Chuck! There's so much economic happenings, and data this week, that should be enough to get your mind off of not having currency screens! OK, I'll try... Here's goes! OK, right out of the starters blocks this morning, we have the fear of such rotten data due this week, that the Trading Theme that rewards the dollar for this deep, dark, more dangerous data (strange thinking, I know, and against all that I've ever learned about what makes up a value of a currency, which leads me to believe this will end at some time), should be set in stone this week... The euro is trading below 1.30 this morning, but stronger than it was on Friday morning. Let me tell you about a story that hit the news wires (wires that I can't see this morning!) on Friday mid-morning......
  • Gold Ends The Week Strong!

    * The dollar continues to rally... * No risk takers to be found... * Simply awful data yesterday... * Gold continues its rally... ** Gold Ends The Week Strong! Good day... And a Happy Friday to one and all! A Fantastico Friday for me, as it was a Tub Thumpin' Thursday as well! You see, I got the results of my latest scans yesterday afternoon, and my oncologist is thrilled! (as I too am!) This marks 1 year of clean scans, and if it weren't for this rogue metastasis in my left eye, it would be all seashells and balloons! I go on Monday to see if the blood clot that has made things difficult for me for 15 months now, has finally dissolved. If so, there's another biggie off my list! I have to personally thank God, who has chosen to cure me, and it's probably a result of all you wonderful readers that have sent along good wishes and prayers... I also thank my family for their support, and my doctors who have never once not taken the aggressive course to getting me well......
  • Retail sales disappoint even more…

    * Retail sales disappoint.... * Chuck's views on the Lone Prop... * Waiting on the ECB... * Emerging market currencies sell off... ** Retail sales disappoint... Good day... The big news yesterday was the retail sales numbers, which fell twice as much as expected. Chuck predicted a tough Christmas season, and the BHI was right again. Sales dropped 2.7 percent according to yesterday's report from the Commerce Department. The falling home prices, rising job losses, and tighter credit have all combined to finally force US consumers to adjust their spending habits. No matter how low retailers slashed prices during the recent Christmas season, US consumers just weren't buying. The economy is forcing consumers to wean themselves off of the dangerous drug of easy credit. In spite of Bernanke and Paulson's attempts to get consumers borrowing and spending again, the economic slowdown is forcing the US consumers to reign in their spending. But while this change in consumer habits is good for the longer term economic health of the US, it only serves to drive the economy even further into recession over the short term. And the bad economic data just keeps rolling in. U.S. foreclosure filings spiked by more than 81% in 2008, a record, according to a report released Thursday, and they're up 225% compared with 2006. The total foreclosure filings in 2008 topped 3 million and showed no signs of slowing down in spite of the efforts of both the government and banking industry to slow them down. Foreclosure filings actually accelerated in the 2nd half of the year, increasing 17% in December over November of 2008....
  • Risk Aversion Reigns Supreme!

    * Currencies under dollar pressure * How strong can yen get? * TARP... * ECB rate questions... ** Risk Aversion Reigns Supreme! Good day... And a Terrific Tuesday to you! I'm draggin' the line this morning, but will get through this with my usual you know what and vinegar! The euro is trading at a one month low this morning, and the high yielders are getting stepped on again after enjoying a month a risk taking in the sun. That about explains everything, so I'll go the Big Finish now... Gotcha! Let's see what else is up on this cold and blustery Terrific Tuesday... So... It looks as though Risk Aversion is reigning supreme once again. I just don't buy into the dollar being the "safe haven" with all that's going on here. But, that's the way it is, and I can't change it. On a side bar, I used to have a customer that was convinced that I could move the markets with the Pfennig... I always thanked him for his complimentary remarks, but would hang up and have a chuckle, as IF I could change the way things are with my simple, humble little newsletter!...
  • The Obama Bounce Begins...

    * The dollar bounces! * ISM was simply awful! * Oil rallies... * Jobs Jamboree this Friday... ** The Obama Bounce Begins... Good day... And a Marvelous Monday to you! A weekend of football! And there's more this week with the College National Championship Game on Thursday, and then more playoff games next weekend. Crazy time of year for the sport, for sure! So... The Christmas Tree decorations came off yesterday, along with some of the house decorations. My beautiful bride doesn't like to leave that stuff up for long, but for me, I would leave it up all year long! Well... Although, technically, it's still the Christmas season (it doesn't end until Jan. 11), the Santa rally that pushed the euro to 1.45, has gone away, and we're on to the next phase, which I drew out for you over a week ago... And that is... The Obama bounce... This is something we'll have to deal with for the next few months. It all began with a huge stock rally on Friday, and that won't be the last one during the Obama bounce....
  • "The Cheater" Speaks...

    * Currencies rally... * IFO unexpectedly rises... * Norway looks good... * Gold hits $900 again! ** The Cheater Speaks... Good day... And a Terrific Tuesday to you! We received the snow and ice they forecast, but the drive in to the office was no biggie, so the street crews did a fair job, I would say... We'll see when I head into the city for my radiation this morning... Hey! What a day for the currencies yesterday! Geez Louise, it's seems like it's been a month of Sundays since I could say that! And there's been follow up overnight, although, I do believe I'm seeing some profit taking right now... I went to radiation yesterday with the euro trading around 1.2965... I came back 2 hours later, and it was 1.31! And it didn't stop there, trading up to 1.3175, but running into a wall of resistance there... But that was temporary, as the overnight market pushed the single unit higher to 1.3250... It did trade all the way up to 1.33 and change on news that the German Business Confidence, as measured by the think tank IFO, unexpectedly rose for the first time in 8 months. This improvement was a result of the European Central Bank (ECB) cutting interest rates......
  • Trillion Dollar Deficits For Years To Come...

    * CBO forecasts $1.2 Trillion Budget deficit! * And we can expect more! * ADP shows job losses mounting big time! * Brazil's real reverses course... ** Trillion Dollar Deficits For Years To Come... Good day... And a Tub Thumpin' Thursday to you! I had not realized it was Thursday until I began writing this morning! I had been buying breakfast sandwiches for the trading desk on Thursdays, and I'm sure a few people will be wondering what happened when there are no sandwiches this morning... I simply lost track of the days! UGH! Well... There are two major things on the docket for the front and center piece today, both tell us a lot, but I think I'm going to go with the announcement of the Congressional Budget Office (CBO) yesterday afternoon as the lead story, and the ADP jobs report as the second story... So, let's go to the tape!...

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