Jim Rogers In The News...
Daily Pfennig

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In This Issue..

* Currency rally overnight...
* U.S. Retail Sales drop -1.2%!
* The Chinese respond to Geithner...
* History to repeat?...

And Now... Today's Pfennig!

Jim Rogers In The News...

Good day... And a Marvelous Monday to you! WOW! What a great weekend enjoyed by yours truly... Lots of friends, to share good times with! The weather tried to ruin everything, but we didn't let it! I'll begin this week's Pfennigs with a little story that happened this morning...

I arrived in the parking garage across the street from our building, not exactly the best situation for someone that's partially crippled and has a blood clot in their leg, but that's a story for another day. I got out of my car, and said, "Hmmm... Wouldn't it be nice to see the euro trading with a 1.22 handle this morning?" Then said, "Nah, it didn't look too good on Friday."...

I then came into the office, turned on the screens, and to my shock and amazement, there was the euro trading with a 1.22 handle! Now... Maybe I should be booking me a flight to Vegas, eh?

Let me set this up for you... Friday, I signed off, and said that instead of an overnight sell off, the currencies had consolidated, and held onto their gains from Thursday... But then the roof caved in! The consolidation that we saw first thing Friday morning in the currencies, was wiped off the face of the currency map, once the awful Retail Sales data printed on Friday... The whole feel good feeling about the U.S. economic recovery was thrown to the road side, and the currencies could not recover throughout Friday.

Now... In the "old days" of currency trading, a Retail Sales figure as bad as the one that printed on Friday (and remember, I told you that the BHI indicated it would be disappointing) would have knocked the stuffing out of the dollar... But once again, the mental giants running the markets right now, are all about the U.S. driving global growth, and any signs to the contrary, causes a sell of in risk assets, and a flight to dollars...

Since I've talked about it a couple of times now, I guess I had better give you the skinny on the Retail Sales from May... U.S. retail sales declined for the first time in eight months in May, tumbling a surprising 1.2%, the Commerce Department estimated Friday. Whoa, there partner! Did you say the figure tumbled 1.2%? I would say it did more than "tumbled"... It dropped like a rock!

But, that sell off of the risk assets on Friday, was reversed in the Asian markets overnight, and added on to by the European markets this morning. What I think I'm seeing here is the markets throwing the Retail Sales figure aside, and thinking back to the strong data we saw from China on Thursday. The high yielders are the Big Winners overnight, and I think they are dragging the euro along for the ride...

The Aussie dollar (A$) is up over 1-cent overnight, along with Kiwi, the loonie, and krone... Brazil, which got a HUGE boost on Friday, after the rate hike of 75 BPS was announced on Thursday, is stronger once again.

And for the first time in a week or so, Gold is moving higher along with the currencies / euro... Recently, we've seen Gold move along with the dollar... I told the boys and girls on the trading desk last week, that this would not last long, for it was not a fundamental move... Gold is the "anti-dollar" asset... But, you can see why it happened, albeit briefly... The dollar was moving higher on the "recovery" rumors, and with interest rates so low, for so long, if the U.S. economy was in "recovery mode" then inflation was about to begin to show up... And that would boost Gold...

I was going to talk about a Jimmy Rogers interview last Friday, and completely forgot! But, it's still a good thing to talk about so, a day late and a dollar short, but here it is from CNBC... "Everybody is so bearish about the euro that it looks like now is a good time to buy the single European currency, famous investor Jim Rogers told CNBC Thursday.

Rogers' long-term bet is on commodities, as he predicts that governments will keep printing money to get out of their debt problems and this will flare up inflation.

"I'm as confused as anybody else. I'm basically short stocks and long commodities and trying to figure out whether to add to the euro yet," Rogers told CNBC.

"Everybody is terribly negative on the euro right now, it's unbelievable how many bears there are and usually that indicates a rally," he said."

Ok... He's certainly going to look like a genius if the euro continues to take off from Thursday's figure of 1.2050...

This morning, the Bloomie is reporting that China has a response to U.S. Treasury Sec. Geithner's claim that China's currency policy was an impediment to global growth... Hmmm... Well, the Chinese answered, "China hopes that U.S. politicians will "seriously consider" how to solve the structural problems in their economy and not blame others. The U.S. should not politicize the renminbi or use it as an excused for protectionism."

Here's my take on this... The U.S. politicians are so darn dumb, and truly believe that China's currency level is the end all to what ails the U.S.'s economic and fundamentals problems... They will end up doing something stupid like slapping trade tariffs on Chinese goods, and start a trade war... This is similar to what happened in our history, and what that ended up causing was some very bleak economic times for us!

I believe we are destined to relive the past, given the mental giants we have in the House and Senate...

OK... I have to go on to something else here... I could feel my blood pressure rising...

The data cupboard is being restocked today, for the remainder of the week is chock-full-o-data... Some of it worth talking about, and some of it, like CPI, worthless! Tomorrow, we'll see the Net TIC Flows for April... Wednesday we'll see PPI, and some Housing data, and my fave Capacity Utilization, along with Industrial Production. The Current Account Deficit prints on Thursday, and so on...

Then there was this as reported by the Washington Post... "President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery.

In a letter to congressional leaders, Obama defended last year's huge economic stimulus package, saying it helped break the economy's free fall, but argued that more spending is urgent and unavoidable."

I told you that we would need more stimulus... Not that I'm a fan of stimulus and want to see more and more of it... It's just that I've seen this all before... Just go back to Japan in the 90's... '

I had someone challenge something I said last week about Deficits do Matter, and pointed to Japan, and said their Gov't has run up huge deficits, but it hasn't hurt their currency... Ahem... Two things make the difference here... 1. Japan has a HUGE Trade Surplus war chest, and 2. they are a nation of savers... So, Japan is not as dependent on foreigners to finance their deficit... The U.S. on the other hand, does not have a Trade Surplus, to help with the deficit spending, and 2. we are NOT a nation of savers!

To recap... The risk assets are on the rally tracks this morning, led by the high yielders who have all added 1-cent to their figures overnight. The euro is being dragged higher by the high yielders. Jim Rogers says that it just might be the time to buy the euro, with everyone so bearish on it, and Gold looks like it might have broken that link to the dollar that existed for about a week...

Currencies today 6/14/10: American Style: A$ .8610, kiwi .6965, C$ .9720, euro 1.2240, sterling 1.4730, Swiss .88, ... European Style: rand 7.6470, krone 6.3875, SEK 7.8050, forint 228.05, zloty 3.3275, koruna 20.98, RUB 31.64, yen 91.80, sing 1.3960, HKD 7.7925, INR 46.45, China 6.8323, pesos 12.59, BRL 1.81, dollar index 86.60, Oil $75.17, 10-year 3.28%, Silver $18.45, and Gold... $1,226.80

That's it for today... A big point for the U.S. men's soccer team on Saturday, as they gained a tie with England... Sure it was a fluke goal by the U.S. but I would argue that 1. it was a shot on goal, and 2. it was a fluke that Altidore's shot glanced off the inside of the goal pole and did not go in! Cardinals come limping home from an awful road trip out west, maybe some home cooking and a bath in the sea of red will heal them! My beautiful bride takes off this morning to San Francisco with a group of her old teacher friends, watch out California! That trip will certainly do wonders for the June Retail Sales! So... My darling daughter Dawn, and oldest son, Andrew will be helping me get Alex to all his things during the day when I'm working. There's still plenty to do at night when I get home! And with that, I think I'll get going, and hope that today is a Marvelous Monday for you!

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





Posted 06-14-2010 10:58 AM by Chuck Butler