U.S. Companies To Repatriate Profits?
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In This Issue..

* Non-dollar currencies rally...                             
* More deficit spending...                                   
* 10-year yields at 3 month highs...                                        
* A nice 9-year run for the non-dollar currencies...                                                                                                   

And Now... Today's Pfennig!

U.S. Companies To Repatriate Profits?                                      

Good day... And a Marvelous Monday to you! The last Monday of 2009! And Yes... I'm Baaaaaacccckkkkk! Bet you were wishing I would remain on vacation through to the New Year... That's OK, I was wishing for the same thing last night! HA! I hope your Christmas or other celebration was grand... Mine was... Little Delaney Grace stole the show... I sat there watching her, thinking, how great it must be to not have a care in the world, except if her "baby" needed changing!

To not have to worry about deficit spending, knuckleheads making decisions against the wishes of their constituents, nut cakes running around shooting off missiles, and ramping up nuclear capabilities, and the beat goes on... The beat goes on...

OK... Before I left on vacation, I shipped out with the thought that I was getting too stressed out over all this ridiculous deficit spending and so on... But, several readers reminded me that "venting" was good for me! HA! So... I'll get back to beating the drum for an end to deficit spending, and a repeal of 1913...

While I was gone, didn't Chris do a great job, by the way?, I didn't really follow the currencies daily, only what Chris would say about them. I did notice that all the currencies had backed off significantly from where they stood about a month ago... And I know that the dollar bulls have come out of the woodwork, and are scattering all about the kitchen floor right now, and if you listen closely, you can hear them shouting about a reversal of the weak dollar trend...

As we end this week, a short week, we'll be heading into the Year-End, so there will be further position squaring, profit taking, and mostly likely, dollar strength... That will cause many to shout from the rooftops that the dollar is back on terra firma for 2010... That may be, I mean, I can't control the markets once they get a hold of some bad fruit! But, fundamentally, the reasons for the dollar to remain in the weak dollar trend remain, and will remain even more so in 2010!

There's new speculation in the markets this morning that U.S. Companies doing business overseas are bringing back their profits before the year ends, which would give the dollar a further boost going into year-end... But what happens after we turn the calendar page to 2010? What happens when Dick Clark sees the ball drop? Well, first of all, if you ask me, I think that there will be two hang-overs to get past... First the hang-over of New Year's Eve partying... And second, the hang-over of the dollar bulls euphoria from the year-end position squaring, and profit taking... I think they (the dollar bulls) have a big surprise waiting for them in 2010... If you get my wink and nod...

Gold, certainly lost a lot of luster in the last couple of weeks didn't it? I can't help but thinking that I tried to say that a sell off of currencies and commodities was due, but it just doesn't help when it does, because people take paper losses, and some panic and sell into the weakness, like amateurs... OOOPS! Did I say that out loud? Shame on me!

But, getting back to Gold... I know that before I left, I kept thinking out loud of course, that Gold had found a bottom... At that time Gold was $1,133... It is now trading at $1,111... Hmmm... Looks like I was wrong there... Gold has slipped below $1,100 a couple of times since I was gone, but, like I said, is trading at $1,111 this morning, so maybe, just maybe, cause you never know, $1100 is the resistance... The line in the sand, that can be broken, but only momentarily...

Even the Chinese renminbi got into the dollar strength pile up on the currency highway... The renminbi went back above 6.83 after trading below that figure for about 3 months... I know the move is miniscule at best, but significant any way, as it suggests the Chinese are using it to rub it in the U.S. President's face... I certainly do not like the games that the Chinese play with the world, regarding their currency... But, it's the golden rule... They have the Gold... They get to make the rules! I still don't have to like it though...

Speaking of China... The IMF has forecast that China will overtake Japan as the world's 2nd largest economy next year...

Did you see that the U.S. Treasury vowed to cover Fannie and Freddie's losses for the next two years? Isn't that nice? OK... I had to step away for a minute, but I'm back now... When the heck did the U.S. Treasury get in the insuring mortgage companies from losses? What the heck is going on around here? Doesn't anyone use the Constitution any longer? Where in the Constitution does it say that the U.S. Treasury can get involved with this kind of loss insurance?

Oh, I know... We don't want a little thing like the Constitution getting in the way of "saving the world" do we now? Again... Stepping away, will be back in a minute...

OK... Hey! The Aussie dollar (A$) is the best performing currency overnight, but the range is quite tight, like Tupperware... Or like a guy I know, that I swear, throws around quarters like they're man-hole covers! Now that's tight!

The Brazilian real is right behind the A$ in performance overnight... So, even with the thought going around that U.S. Companies doing business overseas are re-patria ting their profits, which should underpin the dollar, these two non-dollar currencies are finding a way to push the envelope this morning VS the dollar...

And don't look now... But here in the U.S. our 10-year Treasury is at its highest yield in 3 months, at 3.84%... Imagine there's no safe haven, it isn't hard to do, nothing but losses in Treasuries, and no interest too...

Yes, think about that for a minute... Investors were fleeing to Treasuries as a safe haven... But a funny thing happened on the way to the forum, their safe haven wasn't so safe! Not like I wasn't' warning people about Treasuries or anything like that! Geez Louise, I was screaming from the rooftops about potential losses in Treasuries... I even did a special 10 minute video for my friends at the Sovereign Society on the Treasury Bubble... And now, look what we have here... The 10-year with a yield of 3.84%... (remember now, that yield and price have an inverse relationship when talking bonds, so when the yield rises, the price falls) Which, if you calc the price loss it went from around $101.20 to $96.20... And... The holder was in dollars, which continue to be a drain on one's purchasing power!

The price of Oil has gone higher since I left too... When I left it was $72... And this morning it's trading above $78...

The poor Canadian dollar /loonie... When Gold was higher, Oil was lower, and now they have reversed positions... If you get the two moving together, then you have the recipe for loonie strength...

Of course I say "poor Canadian dollar / loonie, in jest, because the loonie is still trading above 95-cents, which isn't too shabby for a currency that 8 years ago was trading around 62-cents!

Which brings me to a subject that I talk about a lot when I'm out on the road speaking at conferences... And that is... The fact that I was a lone wolf, the Lone Ranger, the only one in space that was calling for a weak dollar trend in 2001... I remember, our marketing guru, not believing me, but was willing to distribute the white paper I had put together called "The Decline of the Dollar"... At that time, people were so sure that the dollar would be strong through the end of time... But, there was this guy, in St. Louis, Mo. That saw the rot on the underside of the dollar's belly... And in those 9 years, the currencies have returned unbelievable profits to people that bought them, held them, and didn't trade them whenever the dollar would have a brief rally...

For instance... Since 2001, the Aussie dollar (A$) has gained 62%, and so has the euro...  And those figures were much higher, before the financial meltdown, and the profits were taken from the currencies to pay for the losses in other financial instruments... Oh! And Gold has gained $223% in that same time period!

I guess the thing I'm trying to get at here is simply that there have been some tremendous gains by the currencies in the past 9 years... And all the while, there were several bouts of dollar rallies... Very much like right now... Only to lose steam and fade out... You have to think that this one will too, just like all the others in the past 9 years...

With this being a short week, the data prints will be few... But we will see the color of the latest S&P/CaseShiller Home Price Index... And Consumer Confidence for this month, tomorrow... And before we head out the door to celebrate with Dick Clark, we'll see the Weekly Initial Jobless Claims... So, like I said, "a few", but there will be "some"...

Then there was this... Again with the terrorists, and this time on Christmas Day! That's all I'm going to say about that, as it disgusts me so much...

To recap... The dollar is getting a boost from a thought that U.S. Companies doing business overseas will be repatriating their profits this week. The non-dollar currencies are trying to post gains VS the dollar, although the moves are tight, and... It has been a great 9 years for the non-dollar currencies!

Currencies today 12/28/09: American Style: A$ .8890, kiwi .7090, C$ .9540, euro 1.4405, sterling 1.5975, Swiss .9675,  European Style: rand 7.5030, krone 5.7925, SEK 7.2140, forint 189.75, zloty 2.8870, koruna 18.3275, RUB 29.66, yen 91.50, sing 1.4055, HKD 7.7550, INR 46.6475, China 6.8302, pesos 12.85, BRL 1.7470, dollar index 77.60, Oil $78.32, 10-year 3.84%, Silver $17.57, and Gold... $1,111.80

That's it for today... It's tough to sit down after not paying much attention to stuff for a week, and write a newsletter! But, I found a way to get through it! What a trooper! HA! I'll tell you what was really tough... That was getting up to come in to work and write! It sure was nice to have the kids all home for Christmas. And I got to catch up with my 2 younger brothers and 2 of my 3 sisters! Everything else remains the same, health wise... I'm still dealing with a blood clot in my left leg, which means lots of swelling, etc. I'm still dealing with excruciating pain, at times, in my left knee... But other than that, my scans show no sign of new cancer, so... I've got that going for me! And with that, I'll hit the send button, but not before I remind you to have a Marvelous Monday!

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





Posted 12-28-2009 7:48 AM by Chuck Butler