All Eyes On Retail Sales...
Daily Pfennig

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In This Issue..

* Currencies rebound          
* Singapore's big announcement...          
* China's currency gets back on rally tracks...                          
* BHI says to expect a rebound in sales...                                              

And Now... Today's Pfennig!

All Eyes On Retail Sales...       

Good day... And a Terrific Tuesday to you! I'm feeling marginally better today, so I've got that going for me! You should have seen the currency screens lighting up yesterday... WOW! A lot of pent up trading from a Friday that saw thin volume due to the Holiday. This type of volume, even with a few countries still on Holiday too!

The volume... Was all good for the currencies, as that bias to sell dollars I talked about really came shining through on the day. As I signed off yesterday, I told you that the euro had rallied since I had come in, and that rally took off in the early morning trading. The single unit climbed to near 1.34 before giving back ground in the afternoon.

The euro euphoria was interrupted by a report in a newspaper that talked about how the European Central Bank (ECB) will probably have to cut rates further, due to the depth of the recession in the Eurozone. Nothing like a party pooper to ruin a rally, eh? But, that's what happened! The euro in the overnight market gave up more ground, and has now fallen back below 1.33...

Instead, the low yielders took the conn and rallied overnight, with yen leading the way... Strange... But true... 5 days of high yielders rallying, and then yen comes back... Strange... Very strange...

At one point yesterday, with the euro rallying to near 1.34 and the Aussie trading at 73-cents, I said to Jennifer, "I bet stocks are soaring" ( I said that because of what I've explained recently that stocks and currencies had been tied together with the Risk bow), a quick check of stocks showed that stocks were off... Selling was the order of the day... I then said, "Maybe, just maybe, because you never know... Stocks and currencies are breaking the link."

Boy, wouldn't that be sweet, to get this back to fundamentals! Especially during the stocks earnings period! But, as I told the Big Boss, Frank Trotter, when he called in to get an update, "as I always say, one day of trading doesn't make a trend." We'll have to keep our eyes out for this pattern to see if it really gets back to fundamentals, where stocks and currencies have a low correlation to each other!

A couple of weeks ago, when Chris was writing the Pfennig for me, he wrote about Singapore, and how the Monetary Authority of Singapore (MAS) had indicated it might push the Sing dollar lower. In fact, here's what he had to say in the Pfennig, March 30th, "Another currency you may want to consider exiting is the Singapore dollar. According to a story I read on Bloomberg this morning, the Monetary Authority of Singapore may devalue their currency and allow it to drop 4 percent against the US dollar in the next few months."

Well... Last night, the MAS announced a downward re-centering of the Sing dollar trading band while maintaining the width of the trading band and the policy of zero appreciation. OK... There it is... Forget all the trade widening and so on, and center on the "policy of zero appreciation"... That does not bode well for the Sing dollar... And for Chris' statement on March 30th? Bang On! Timely!

The thing I can't get out of head, is the fact that Singapore needs to keep its currency in line (value VS the dollar and euro) with the other currencies in Asia in order to keep its exports competitive... I guess, the MAS is thinking there aren't going to be any exports! And the ones that are there, they (Singapore) will have a "cheaper currency" and an advantage!

At least the MAS didn't devalue the currency, as these types of small countries tend to do to tilt the playing field toward them! And believe or don't... The Sing dollar rallied on the news that the MAS didn't devalue the currency... So... This is like manna from heaven for anyone trying to switch out of Sing dollars and into something else... The currency rallied overnight!

Of course... What to go to, is the question... But I think I've told you enough about how Norway was named the safest currency in the world by Time... And that I've always been a fan of Surplus countries... And that I've recently told you we should be looking only to the countries that have not entered into Quantitative Easing... There! That should narrow it down for you!

Speaking of the other Asian currencies... I already told you that Japanese yen rallied overnight... But so did the Chinese renminbi, which posted its best move VS the dollar in almost 3 weeks!

So... Did you see that Goldman Sachs is going to raise $5 Billion to repay the U.S.? Rumor has it that Goldman Sachs, wants to repay the Gov't, to shed the Gov't's pay limits... I think we'll see more and more of this... As, these financial institutions took the funds as a way to raise cheap capital, and did not have strings attached... Once the strings were attached, the capital didn't look so good any more, and therefore I believe we'll begin to see quite a few give back the money the Gov't gave them to begin loaning out to consumers...

We, as taxpayers are happy to see these guys give the money back!

Speaking of taxpayers... Tomorrow is the dreadful day! You have one day to get your taxes all done, if not already done... Mine have been done for a while, and just sitting there, as if they might go away if I don't sign them and mail them away! HA!

OK... Back to the task at hand! 

Today, all eyes are on the U.S. Retail Sales report for March, which will print. The forecasters are looking for an improved Retail Sales report in March VS the negative result for Feb. As I said yesterday, the BHI (Butler household index) indicates to me that I should agree with the forecasters. The "experts" believe Retail Sales will be better because of the auto industry's incentives that began last month.

I also hear that the Gov't's turn-around on tax returns is stepped up this year, which gets money back into the hands of consumers at a faster pace than previous years... And we all know what happens when consumers get money in their hands! They spend it!

Gold rebounded nicely for most of the day yesterday, climbing to within spittin' distance of $900 once again... But lost ground, along with the euro and the high yielders at the end of the day. I have to say that I like the fact that Gold has stuck around this level for about 10 days, in that it allows more and more people to buy it at this sub $900 price.

Obama gives us "his view", which probably won't coincide with reality, of the economy today... This should be interesting at least!

Big Ben Bernanke speaks today... Some of you will say, whoop-de-do! He doesn't do anything for me! And some of you will say, I don't believe a word he says! And then some will say, I can't wait to hear what this windbag says next! And I could go on, but won't... You get my drift, that everyone is across the board on this guy... Me? You needn't ask! You know where I stand on this guy... Borrowing a few lines from Charlie Daniels...
He's a snake in the grass, I tell ya guys.
He may look dumb but that's just a disguise,
He's a mastermind in the ways of espionage...

OK, enough fun... Time to head to the Big Finish!

Currencies today 4/14/09: A$ .73, kiwi .59, C$ .8240, euro 1.3285, sterling 1.4920, Swiss .8760, rand 9.0275, krone 6.6240, SEK 8.17, forint 218, zloty 3.29, koruna 19.99, yen 99.80, sing 1.4975, HKD 7.75, INR 49.89, China 6.8323, pesos 13.07, BRL 2.1720, dollar index 84.81, Oil $50.48, Silver $12.70, and Gold... $896.45

That's it for today... Yesterday was a blur for me... I worked here until about 3, went home took some cough medicine, sat in my recliner and fell asleep immediately... Woke up in time to see the last 15 minutes of 24, and went back to sleep... Nice win by the Cardinals last night in the desert. Well... Today is the day... I go for my quarterly scans this afternoon. I think that after this quarterly scan, I'll have one more on a quarterly basis, before I go to 6-month intervals... That is as long as they remain clean! Which I don't have any reason to believe they won't be clean. Of course I never knew in the first place I had cancer until they scanned me for something else! Talk about the luck of the Irish! OK... Let's get ready for Retail Sales, and have a Terrific Tuesday!

Chuck Butler
EverBank World Markets

Posted 04-14-2009 8:27 AM by Chuck Butler