$75 Billion In New Treasuries This week...
Daily Pfennig

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In This Issue..

* Currencies adrift all day yesterday...             
* Data prints begin today with Productivity...         
* Stop to think!                           
* Chinese data is impressive...                                                                   

And Now... Today's Pfennig!

$75 Billion In New Treasuries This week...                   

Good day... And a Terrific Tuesday to you! Well, no data yesterday left the markets drifting about the open waters. Stocks rebounded, which gave the risk assets a bias to be bought, but for the most part, the day was much like being a drift in the ocean, with no direction or cares!

That will all change beginning today with the Nonfarm Productivity report for the 2nd QTR... Long time readers know my dislike for this data, as I believe it simply shows that one person works longer hours! The Fed Heads used to be all over this data like a cheap suit, and probably still trip over themselves to see the data when it prints... But to me, it's not what Big Al Greenspan made it out to be...

Tomorrow is the big data day this week with both the Trade & Monthly Budget Balances printing for July... The Trade Deficit should tick up some, as Oil prices have gained in recent weeks, and the Monthly Budget Deficit? Oh my! It is forecast to be $180 Billion in the red! Which annualized would be more than $2.1 Trillion! But don't worry about it folks, no biggie according to the folks in Washington D.C. The Treasury will just issue more bonds, and the Fed will buy up any that don't get bought, and pay for them with money they printed up fresh that day!

You know that I'm be facetious with the "don't worry" talk... I've been talking about this deficit spending for quite a few years now... I like the fact that others have joined in now that the numbers have gotten so large they are as obvious as a man with a hatchet in his forehead, but at least they've joined the "stop the deficit spending movement"...

Speaking of The Treasury issuing Bonds... This week alone the Treasury will auction $37 Billion of 3-year Notes, $23 Billion of 10-year notes, and $15 Billion of 30-year bonds... Even using "new math" that brings this week's issuance to $75 Billion! That sound? That sound you hear is foreigners choking on all this issuance! Does anyone know how to apply the Heimlich maneuver?

The "got yield" scenario I talked about yesterday, didn't play out yesterday, as stocks came back... The A$ saw some selling along with kiwi, reals, and any other "high yielder"... The selling wasn't bad, so we can probably put it down to profit taking.

I'm doing some research on the years around the depression, looking at market movements, and confidence levels... It's amazing the things that were being said right up and to the stock market crash about how everything was fine... Then skip ahead to the 80's and you had the same things going on with lofty praises for the S&L industry, especially one by Big Al Greenspan, and then the S&L industry circled the bowl... Makes you wonder, and I'm not talking about wondering who wrote the book of love... No, I'm talking about how this should make you wonder, or question, what's being said about how great stocks are right now... When the President makes comments about "a good time to buy stocks", you've got to stop and think folks... Just stop!

OK... I wanted to give everyone an update on the popularity of the BRIC MarketSafe CD we introduced last month... With over a week to go until we reach the funding deadline, this CD has received a ton of newsletter writer coverage, and interest... The funding has gone quite well, and we expect to open this CD with a very large amount of cash... That's exciting for me, as I saw this as an opportunity to deal in "speculative" investments, without market risk, and jumped on getting this available to our customers...

I also wanted to follow up on the Jobs Jamboree data we talked about yesterday morning... I had a very nice reader tell me that I "hadn't fallen off turnip truck" as the participation rate fell! That's right! As she said to me... "So, all those poor men and women that were hit at the beginning of the recession have the great pleasure of no longer being counted as either employed or unemployed."

I also wanted to follow up on last week's talk on the Weekly Initial Jobless Claims that fell for the previous week... I had a reader who recently became unemployed in California tell me the problems with trying to file as unemployed!  Let's listen in to him explain his attempt to file as unemployed...

"Filled out the unemployment application on-line the day I was laid off. 
About four days latter they send you another form to fill out and return.  If not returned immediately, you lose your benefits.

Received a letter indicating they would call me 7 weeks after applying, to determine eligibility.  It is scheduled for September 27th at 1 PM to
3 PM.

About two weeks afterwards, found there is no way to reach a human.  The only way to reach them is EMAIL, which takes a couple of days to respond.  EMAIL has a canned response, we will contact you on Sept 27th."

OK... Enough of that! China came out with some data today... While exports continue to suffer the stimulus that the Gov't put into the economy, which made sense due to the fact that the Gov't had a war chest of cash to put into the economy, which is the exact opposite of the situation in most countries including the U.S.  Chinese Industrial Production growth was strong, marking three consecutive months of improvement in Industrial Production. The ongoing recovery of domestic demand is good, while consumer demand keeps holding up well with July retail sales growth up 15.2% year-on-year...

Now, I fully understand how there can be questions about the validity of Chinese data... But come on! We don't live there, we have no idea! And they don't have a John Williams (Shadow Stats) to show everyone that the Gov't's official data prints are misleading and most times inaccurate!

I saw this report on the Bloomie this morning from Zillow... "Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb."

That's depressing stuff... Very depressing... So! Before I go to the Big Finish, I've got to find a "feel good" story... Of course if I were the Gov't I would have a pocket full of those, to pull out whenever the consumers needed one! HA! But, I'm not the Gov't! thank goodness! Whenever I think of the Gov't, I think of those words that Ronald Reagan spoke regarding the scariest words a person can hear... "I'm from the Gov't and I'm here to help"

OK... The euro looks to be catching some wind in its sails this morning, as it has gained 1/4 euro since I came in... I know that's chicken feed, but Hey! You've got to start somewhere, and after Friday's bloodletting, the tourniquet was applied on Monday, and today maybe we'll see it gain back lost ground... For... It is  "Turn-around Tuesday!" (well hopefully it will be!)

And if the risk assets (like stocks) are rebounding, Gold and Silver should be on the docket to rally too... And a quick look at the Bloomie tells me they are indeed, rebounding... So, now, let's go to the Big Finish!

Currencies today 8/11/09: A$ .8365, kiwi .6715, C$ .9125, euro 1.4170, sterling 1.6475, Swiss .9250, rand 8.13, krone 6.2125, SEK 7.28, forint 191.80, zloty 2.9370, koruna 18.19, yen 96.50, sing 1.4460, HKD 7.7505, INR 48.02, China 6.8350, pesos 12.96, BRL 1.84, dollar index 79.12, Oil $70.73, 10-yr 3.78%, Silver $14.43, and Gold... $947.60

That's it for today... I barely mentioned it yesterday, and have been remiss in not mentioning it before, but next week I head to San Francisco Money Show. San Francisco has always been one of my fave cities to visit, and last year I had a blast there, except for that red-eye I had to take home so I could be on the desk Monday morning! I played in San Francisco when I was a young man playing my guitar... Right there in the Cannery... Last year, we went across the peninsula to an awesome restaurant named the Cliff House... I hope to make it back there this year! But, the real reason I go there is to talk to audiences about diversifying, and what I see going on, and or happening in the future... It's just my thoughts, but I seem to fill the rooms, so that's a good thing! Nice win by my beloved Cardinals last night. I was in bed by the 6th inning when they scored all their runs! UGH! Time to go... Try to make your Tuesday Terrific!

Chuck Butler
EverBank World Markets

Posted 08-11-2009 9:43 AM by Chuck Butler