Counting Flowers On The Wall...
Daily Pfennig

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In This Issue..

* A non-movement day in currencies...                                              
* Euro gets hit again by Greek debt levels...                                              
* Asia is bellwether for global growth...                                                     
* Gold rallies!                                                                                                              

And Now... Today's Pfennig!

Counting Flowers On The Wall...                                               

Good day... And a Thunderin' Thursday to you! I hear that the "rains" are coming today, and will be around until next Tuesday! We'll be water logged, eh?  I want to thank everyone who sent along the "welcome back" notes yesterday. I need to make something clear... I'm not at the office... Not yet, they won't let me... So, I'm writing from home, and I have to pat myself on the back because I didn't complain one iota about writing from home yesterday! HA!

Talk about counting flowers on the wall, playing solitaire till dawn with a deck of 51, and all those other things that fall under the category of being bored, and dull... That was the day in currencies yesterday...

The euro continued to have pressure applied from Greece, and the Canadian dollar / loonie remained above parity all day long! And other than that... I was smoking cigarettes and watching Captain Kangaroo, now don't tell me... I've got nothing to do!

In the overnight markets, risk assets were sold off in Asia, and then bought in Europe, leaving them trading in the same clothes as yesterday.. The Canadian loonie did slip back below parity overnight, but really the move is miniscule.

Gold really mounted a charge during the day. And I know that we really only care about how Gold does VS the dollar, since the majority of us are dollar based investors... But the real move by Gold yesterday came VS the euro... Which makes sense given the decline of the euro in recent months.

A rise in commodities and risk taking is going on folks... Are you a part of it?

The boys and girls over at Morgan Stanley reported that their risk taking in commodities increased by 17% in the 1st QTR... And the boys and girls over at Goldman Sachs reported that their risking in commodities increased by 29%...

Many times over the past 10 years, I've talked to you about the Commodities Bull Market, and how in Jim Rogers' book he explained how in the recorded history of Commodity Bull Markets, the average length of them were 17-22 years... We've only been on this road of a bull market in Commodities for 10 years folks... Sure, they back off at times... But doesn't that mean it's a great time to buy more, because when they are cheaper you can buy more!

The news this morning regarding Greece just continues to get worse... Greek debt levels for last year are now forecast to exceed 14% of GDP... The last forecast was 12.7%...

Of course, if we counted the beans correctly here in the U.S. our debt level to GDP would be something to behold, and not in a good way! And that's just the Budget Deficit... Which leads to a higher national debt, but shoot Rudy, why would we need to be concerned about that now? We're just passing the 56th floor, and so far... So good...

In case you're new to the Pfennig, that last line is a funny story I tell about how the people that say deficits don't matter, remind me a guy that decides to jump off the Empire State Building, as he passes the 56th floor, he says... So far... So good!

OK... Yesterday, there was news from 1/2 of the BRIC's... Brazil and India issued a statement that said they agreed with the U.S. in regards to the need for an upward revaluation of the Chinese renminbi... Hmmm... I found that to be quite interesting in that, these two have been all snuggly with China, but then say something that might rattle China's cage...

Meanwhile back at the ranch, grandma is holding off the Indians! What I mean here is that all the while, these two currencies from India and Brazil, continue to gain VS the dollar... So, you could see why these two countries, that have a ton of trade with China, would like to see the renminbi keep in step with their own appreciation...

Speaking of India... Yesterday, I mentioned that the rupee had been Asia's best performer... The currency has been stealth like in its move higher in recent months... I mean the daily move is so small that no one seems to notice, and then before you know it... Wham! You have a nice gain... The thing that I have in the back of my mind now, is simply that in the past 5 years, whenever the rupee got to this kind of appreciation VS the dollar, the Reserve Bank of India (RBI) would step in and intervene, taking the rupee lower...

Asia continues to be the bellwether for global growth... We've seen strong economic expansion, fueled by consumer spending and investment in China and India. And then, we had the upward revaluation in Singapore... So, it's natural that the thoughts should be centered on a Chinese revaluation...

But... The Chinese are the Chinese, and they will NOT be told, coerced, or even "nudged" toward a revaluation, especially if it looks like they did it because of outside influence! So, in my opinion, you should resign to looking for a return to slow, daily, appreciation of the renminbi, like we used to see before the financial meltdown...

As I get ready to head to the Big Finish, I notice that the euro is in somewhat of a tailspin from the Greek news this morning...

Today, we get some data on PPI (wholesale inflation), and Existing Home Sales, along with the Weekly Initial Jobless Claims... Now somewhere in the black mountain hills of Dakota... Behind the curtain, in hopes that no one notices... The Treasury will announce their next funding amounts for 2, 5, and 7 year T-Notes... This should be interesting folks, and the beat goes on...

To recap... The currencies didn't move much yesterday, while Gold did, especially VS the euro. The overnight markets sold risk assets, and the European markets bought risk assets, but, the euro is getting smacked around because Greek debt levels are being revised higher, and we get the funding announcement today by the Treasury...

Currencies today 4/22/10: American Style: A$.9265, kiwi .7115, C$ .9995, euro 1.3350, sterling 1.54, Swiss .9320, European Style: rand 7.4750, krone 5.9210, SEK 7.2050, forint 198.10, zloty 2.9060, koruna 19, RUB 29.16, yen 92.90, sing 1.3725, HKD 7.7615, INR 44.54, China 6.8264, pesos 12.22, BRL 1.75, dollar index 81.37, Oil $82.92, 10-year 3.73%, Silver $17.93, and Gold... $1,143

That's it for today... Happy Earth Day! I remember when I was a young man, going to Forest Park here in St. Louis for these HUGE Earth Day celebrations, but then it was a "hippie thing"... Everyone had on their "earth shoes", their tie dye shirts, and cut off jean shorts, or jorts, as we used to call them... Day two of this experiment of me getting up early to write from home is in the books. My eye socket is healing, I can tell, the itching is driving me nuts! But now that I no longer have that piercing pain I can keep my right eye open, and hopefully I'll get to drive again... For, I can see clearly now, the pain is gone... It's a Great Day! So... I hope your Thursday is Thunderin' and you stay out of the rain!

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





Posted 04-22-2010 9:42 AM by Chuck Butler