Catching Up With Richard Duncan...
Daily Pfennig

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In This Issue..

* Non-dollar currencies give back very little...                
* The Unemployed are remaining unemployed...              
* FOMC puts away the board games today...                                   
* China invokes a "Public Morals" defense...                                                                               

And Now... Today's Pfennig!

Catching Up With Richard Duncan...                             

Good day... And a Wonderful Wednesday to you! Well, the Fed Head put away the board games today, and make an announcement this afternoon... Yawn... Norway's Norges Bank will also make an announcement with theirs coming this morning. I still contend that the Norges Bank will keep rates unchanged and give a hint as to when their rate hike cycle will begin. If that were to happen as I think, then it would be very bullish for the krone...

Well! The non-dollar currencies held ground gained yesterday, giving back, oh-so-little to the profit taking. The euro didn't hold 1.48, but it's so close it could spit in the 1.48's back yard! The negativity toward the dollar, and all that goes with it, like Huge Deficit Spending, low yields, economic depression, inflation fears, and more, just keeps mounting... All these pundits with their "discovery" that the dollar has bad fundamentals, just make me laugh. Welcome to my world! In this world, we don't wear rose colored glasses... We call dolts for what they are... And we fully understand the bad affects of building deficits...

HEY! One of the first books I ever read about the dollar, was written in 1972, by a guy named Gerald Krefetz, called, "The Dying Dollar"... But, the one that really pushed things to the forefront in 2003 was Richard Duncan's "The Dollar Crisis"... For the longest time, when someone would ask me what book they should read to get started, I would give them Richard Duncan's "The Dollar Crisis"...

The Dollar Crisis was followed by two books by Addison Wiggin and Bill Bonner, "Financial Reckoning Day" and "Empire of Debt"... Addison also wrote "The Demise of Dollar", and then Craig Karmin wrote, "The Biography of the Dollar", in which he writes one chapter around my story... All of these have done a wonderful job of explaining things to people that normally wouldn't understand all that's going on, financially...

The reason I brought this up is that Richard Duncan was in the news last night,  as he gave an interview in Hong Kong yesterday... Let's listen in to Richard Duncan...

"The bad news is at the end of a 10-year period we're still not going to have fixed the problem. Eventually it will lead to high rates of inflation well down the line and really destabilize things to the point where they may be irreparable damage. A kind of "Fall of Rome" scenario."

Of course Mr. Duncan was talking about the U.S. Budget Deficits, which he feels will continue to pile up in the next decade, eventually reaching an unsustainable level that may result in an economic collapse...

I think it would behoove us to listen to Richard Duncan, for in his book, "The Dollar Crisis" published in 2003, he told us that persistent Current Account Deficits by the U.S. were creating an unsustainable boom in global credit that was destined to break down, resulting in a worldwide recession... Hmmm... Does he have everyone's attention now? Good!

Ok... Enough of the "book tours"! I was listening to the Evening News while icing my knee last night, and something that Brian Williams said struck me as strange... He said..."The poll of more than 1,000 adults, taken within the past week, shows growing optimism that the economy has begun to turn around."  Hmmm... I guess they didn't ask one of the 7.4 Million people that have lost their jobs!

I've got two things to talk about here with this... 1. is that people would be listening to Big Ben Bernanke which is where I believe this "optimism on the economy" is coming from... I have a YouTube video at home, that you can find, I'm sure, that's titled "Bernanke" that has shot after shot of him saying something that was so completely wrong, that you have to wonder how the heck he kept his job! Any way... I can't get to it here at work, you know they would never want me "wasting my time looking videos of the Fed Chairman!"

And then 2. is the question that I have regarding those people surveyed... How could they have optimism when 7.4 million Americans have lost their jobs during this depression (what they call a recession)... But that wouldn't be bad if these 7.4 million Americans turned around and found jobs right away, eh? Well... Unfortunately... The average duration of unemployment at 25 weeks is now the longest since the Department of Labor started tracking the data in 1948. By the end of August, nearly five million people had been unemployed for longer than six months...

Whew! Now that was a depressing piece... Hmmm... What can I talk about that brings the smiles back on everyone's faces? I've got it! Gold!

I was telling Jen yesterday that the commercials for Gold on TV are really starting to add up... You've got Gordon Liddy, Jay Johnson, and others telling you how Gold is a store of wealth, and inflation fighter, and more dependable than fiat currencies... And of course you should buy Gold where "they buy their Gold"! I really think we should have our own Gold commercial, and say, "yes, you can buy it from those other guys, but why pay more for your Gold?"! HA! Now that would get 'em!

But seriously... There is a guy, well known guy, out there right now, writing about how the price of Gold is about to collapse... So... At least you know that I give you both sides of the story, eh? I don't agree with this side of the story, but there it is for you!

OK, now we're back on the "happy tracks"! So, let's head to the South Pacific! New Zealand pushed out of their recession in the 2nd QTR, after seeing its economy contract for five consecutive quarters... Now, don't get too lathered up over this initial news... The New Zealand GDP only increased slightly less than 0.1%. But! That technically ends the nation's worst economic downturn in three decades.

This was very bullish for kiwi, as now the markets are beginning to talk about a rate hike in New Zealand... I would say that's a little premature, wouldn't you? I mean, they have barely climbed out of the red, and the talk turns to a rate hike? Yes, definitely... That's premature... But! The talk has kiwi on the rise... Let's hope that traders don't get disappointed too quickly!

And then back in the Eurozone... Germany's Manufacturing PMI came in less than forecast, but! Hit a 13-month high of 49.6! Still not above 50, but the trend is Germany's friend right now in the manufacturing sector! Tomorrow, we'll see the think tank IFO's Business Climate, and I truly believe this will be strong, and these two together, strongly suggest that the euro is trading at a proper level!

I'm still waiting for news from the Norges Bank...

I read some real disheartening news last night regarding foreclosures in the U.S. It seems that they are really backlogged... As of July, mortgage companies had not begun the foreclosure process on 1.2 million loans, according to LPS Applied Analytics. Also, 1.5 million seriously delinquent loans were still caught up in the foreclosure process... Hmmm... You don't think the processing of these foreclosures are being held back by someone do you? I mean, what better way to get people "feeling good again" than to not have them hear "bad news"...

OK, that's just the conspiracy blood in me... Sorry...

Things have been quiet in Japan since the election... And the Japanese yen has range traded... Waiting for a direction from the new Gov't... What will they do? Will they promote growth? Will they continue to authorize intervention to keep the yen weak? Lots of questions here in Japan...

I had a reader send a note that made me chuckle... He asked if the Chinese were going to sell Treasuries to buy the IMF's Gold... He called it... "junk for Gold"... HAHAHAHAHAHA!

Speaking of China... Have you noticed that the renminbi has ever-so-slightly gotten stronger VS the dollar? This is micro-moves... But, "moves" nonetheless! And not weaker!

Further with China... Did you see where China was arguing their position in the World Trade Organization (WTO) regarding not allowing Hollywood Movies, and other Western media into their country? The Chinese invoked a defense of "Public Morals"... We'll have to keep an eye on that to see how that turns out!

I'll come back to North America, before I head to the recap and Big Finish...

Yesterday, I told you that Canadian Retail Sales was the only "real" data to print that day... Well, I might as well, tell you what printed, eh? Canadian Retail Sales backed off the consecutive gains of 1.1% in May and June, and posted a negative -.6% in July... This won't do anything to get the Bank of Canada off their duffs... However, one would have thought that data like this would hurt the currency, in this case the loonie... And it did... But only for a short time... The loonie is back on the rally tracks this morning!

OK... So... The FOMC ends today, we're still waiting for the Norges Bank's announcement, and the dollar is holding on for dear life! The negativity toward the dollar has returned, and Richard Duncan gives us his latest forecast...

Currencies today 9/23/09: A$ .8740, kiwi .7250, C$ .9365, euro 1.4780, sterling 1.6440, Swiss .9775, rand 6.8250, krone 5.8225, SEK 6.83, forint 183.50, zloty 2.8275, koruna 17, RUB 30, yen 91.30, sing 1.4125, HKD 7.7505, INR 48.02, China 6.8261, pesos 13.35, BRL 1.7925, dollar index 76.14, Oil $71.15, 10-year 3.47%, Silver $17.13, and Gold... $1,014.45

That's it for today... Cardinals' magic number is now 2... This will be their 7th trip to the playoffs in since the 2000 season... That is if they win 2 more games! That's a nice run! I forgot to mention above that Addison Wiggin also wrote an update to the Demise of the Dollar book, for which I wrote the foreword! One of these days, when I retire, maybe I'll sit down and write a book.... And then, maybe not! Probably not! We've had a visitor this week to the trading desk, Megan Davis, is here from our Islandia office... We've been on our best behavior for her too! Our little Christine surprised everyone yesterday, and brought in coffee drinks for the coffee drinkers... She brought me a decaf, as I really try to not partake in caffeine drinks any longer, except... When I'm camping! OK... Enough of that, let's get to work, and make this a Wonderful Wednesday!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837





Posted 09-23-2009 9:35 AM by Chuck Butler
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