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In This Issue.
* Trichet deep sixes euro.
* And Gold!
* German Business Confidence rises.
* Have we become Comatose?
And, Now, Today's Pfennig For Your Thoughts!
IEA Releases Oil Reserves.
Good day. And a Happy Friday to one and all! My beloved Cardinals finally won a game last night, and I'm heading to the ballpark tonight, so those two reasons are enough for me to make the call already, that today will be a Fantastico Friday! And on top of that, I've got a special treat for you today. So. we've got that going for us, eh?
Well. yesterday morning, I told you that European Central Bank (ECB) President, Trichet, had deep sixed the euro's two-day rally. But that was just the start, my friends. OMG! Once the U.S. traders arrived at their desks with their bright shiny faces, and saw what Trichet had to say, they took among themselves to bury the euro further, which brought down the other currencies. Remember when I said that the Chinese renminbi had slipped a bit, which was something we hadn't seen very often? Well, that was just the start! The renminbi slipped quite a bit yesterday.
It couldn't have been all on Trichet's words, could it? Nah. But once that selling begins, watch out! One sell, begets another, and triggers more selling. That's exactly what happened with Gold yesterday. Remember when I said that Gold had gained $8 on Wednesday, but had given back $7 on Thursday morning? Well. once the U.S. traders arrived, the $7 loss soon became $15, then $20, then $25, and the selling finally stopped when Gold had posted a $30 loss on the day! .
The IEA (international Energy Agency) announced yesterday that they would release 60 million barrels of Oil in the next 30 days, to alleviate some of the pressures on the price of Oil due to the disruption of production in Libya. The U.S. Dept. of Energy said it would release 30 million barrels a day as its contribution toward the measure. So, you don't even have to guess what the price of Oil did yesterday.
So. the Commodities and Currencies were getting whacked all day. until. This news item came across the screens. Greece Reaches Agreement with the European Union and IMF Inspectors on 5-year Austerity. And you should have seen the turn-around! Well. it tried. and some of the losses on the day were recovered, but not even close to all of them.
Greece. I have to tell you that I'm really beginning to break out with a rash every time I hear Greece, or Greek Debt, or whatever. But, will this latest round of "relief" last? Yes, Greek leaders may have agreed to the 78 Billion in euros of spending cuts, but that still has to be approved by the Parliament. So, we should know next week if that's going to happen. It's not a given, folks.
And I see this morning, that the U.K. and the Bank of England (BOE) are seeing an opportunity to point the blame finger at someone else. Just like today's youth, it certainly can't be their fault, it's got to be somebody else's fault. (Wait! Isn't that like the leaders in the U.S. saying that China's strong renminbi is the reason we have economic problems? Well, yes it is, Chuck!) The BOE should be flagged for 15 yards, for "piling on"! The BOE made comments about how the problems in the Eurozone are "their biggest financial risk". Yeah, right, like you didn't already have problems in the U.K.? Give me a break!
Also this morning. German Business Confidence, as measured by the think tank IFO, surprised most observers and improved this month. Most economists were looking for the index number which stood at 114.2 in May to fall to 113.4, but instead Business Confidence gained to 114.5. People this morning are thinking that this gain might signal that Germany is weathering the storm that's swirling all around them. That might a be little premature, but. it is what it is, and so the euro gets a bump this morning from this data.
It's being reported that German companies are boosting output and hiring, which plays well with the fact that the German unemployment rate is at its lowest level in two decades! Given that not only has the Debt crisis in the Eurozone, dragged on the German economy, but so too has the U.S. economic slowdown, and debt crisis of their own, it's pretty impressive that German businesses are feeling that Confident, and tells me that the German economy is strong.
Geez Louise, wouldn't it be nice to be able to just buy the German currency? Remember those? Deutsche Marks. Oh well, that's water under the bridge now.
Speaking of the U.S. debt crisis. Did you see that the group of lawmakers that were joined to find a way to cut spending, so the debt limit could be raised, saw a key member walk out because of the deadlock on whether tax increases should be considered or not? Now, little old me, (HAHAHAHA) sitting here yesterday, and seeing that news thought that kind of news should deep six the dollar. But, the media downplayed it, and in the end, was no big deal.
Long time readers will remember that I used to call this, becoming Comfortably Numb (one of my fave Pink Floyd songs). I'm afraid we've moved past Comfortably Numb, and have become comatose to news about our debt. That's sad, dear reader. very sad.
The news I shared with you yesterday from the CBO, about our debt, should have ruffled some feathers, and it was as if the CBO didn't exist, as far as the media was concerned. But, boy have we got 24/7 on the Casey Anthony case? Yes, we do!
Oh, Chuck, forget about it! It's not like a media member reads the Pfennig, and decides to do a story on the problems of our debt that begins to get traction. No, just my family of Pfennig readers that "know" the score.
The Swiss franc, which had slipped a bit earlier this week, is back on the rally tracks, as Trichet's words yesterday, really sent investors heading for safety. looking left and seeing the dollar, and looking right and seeing the euro, they opted instead for Swiss francs. Yes, in Chuck's world of what moves investments, I would have thought, that investors would opt for Gold. But, that's not what happened yesterday. strange, I know. but, we'll get through it, before we know it Gold just might gain back the $30 it lost yesterday. So, if that's bang on, then today's price for Gold, certainly has the looks of a blue light special. But, that's just my opinion, and as always, I can be wrong.
And yesterday, I told you how the Canadian dollar / loonie was keeping steady Eddie with all the other currencies selling. Well. that didn't last all day, and the loonie finally succumbed to the pressures of U.S. dollar strength. But that doesn't change what I told you yesterday about all the good data that's been piling up for Canada. And today, should be any different, as Canada will print their 3rd estimate for 1st QTR GDP, which should remain unchanged at 2.2%...
And. Does anyone really believe that the price of Oil is going to keep falling? Just another reason to keep a hold of those loonies.
Well. yesterday, the Weekly Initial Jobless Claims added 9,000 to last week's number of 420,000, thus using my new math skills, the total last week was 429,000. Thus marking 10 consecutive weeks of this data printing at +400,000 each week. The 4-week average is 426,000, and the Continuing Claims continue hover around 3,700,000. That's 3 million 7 hundred thousand, folks. I didn't want you to just skim past that number, quickly. let it soak in. and you'll quickly come to the realization of what ails this economy.
Today's data cupboard, has May Durable Goods orders, which really fell off the table last month, when it showed a fall of 3.6%... We'll also see the stupid Personal Consumption data, and the last revision (I think) of 1st QTR GDP, which should remain sub 2%...
I had someone send me a chart, and ask me to talk about how the supply of Silver at the COMEX has fallen like a rock off a cliff this year. So. there you go! I talked about it! Seriously, though, it plays well with what I was talking about the other day, regarding the question of whether the Silver supply is going to be enough to meet the demand, which continues to be quite strong.
And for all those people, and writers that believe that China's inflation is cooking them and their economy, they might want to stop and listen to what Premier Wen Jiabao had to say about China's inflation problem. Here's Wen. "There is concern as to whether China can rein in inflation and sustain its rapid development, my answer is an emphatic "yes". He went on to say that, "China has mad capping price rises the priority of macroeconomic regulation and introduced a host of targeted policies, that have worked. The overall price level is within a controllable range and is expected to drop steadily."
Hmmm. doesn't sound like China's inflation problem is going to overtake the economy like many are saying. But, I guess, only time will tell, eh?
Ok. I was just about to head to the Big Finish, when I looked over at the currency screens and saw that the euro had lost ½-cent in about 20 minutes since I last looked at them! I totally dislike currency movements that don't have a "reason behind them". OK. on to the Big Finish.
Then there was this. OK. here's your special treat today. you have to click the link here, and then when you get to the website, you have to scroll down to find the video interview with James Grant (they call him Jim Grant). He is interviewed by Bloomberg's Margaret Brennan. James Grant has always been a fave of mine, and the Big Boss Frank Trotter's, and can be read in his letter called Grant's Interest Rate Observer. A great mind! Ok.here's the link, and then after seeing and hearing the video, ask yourself, this question. "Isn't this all the stuff that Chuck's been telling us for years now, but James Grant said it more eloquently?"
To recap. Trichet's words yesterday morning, led to a major sell off of currencies and commodities, with the euro losing 2-cents, and Gold losing $30! Greek leaders have accepted the austerity measures put before them by the EU and IMF, and that news calmed the markets a bit in the afternoon. This morning, German Business Confidence surprised the markets by gaining, thus indicating the German economy is very strong with all that's going on around them right now. And the IEA released Oil reserves to relieve the price pressures on Oil. and it did just that!
Currencies today 6/24/11. American Style: A$ $1.0570, kiwi .8150, C$ $1.02, euro 1.4225, sterling 1.6025, Swiss $1.1960, . European Style: rand 6.8765, krone 5.47, SEK 6.4480, forint 189.10, zloty 2.8050, koruna 17.1190, RUB 28.19, yen 80.20, sing 1.2365, HKD 7.7885, INR 44.97, China 6.4739, pesos 11.86, BRL 1.59, dollar index 75.38, Oil $91.75, 10-year 2.94%, Silver $34.74, and Gold $1,518
That's it for today. Glad it's Friday. I have our usual Friday band playing on the I-Pod, Led Zeppelin, and like I said above, I'm going to the game tonight. The spring training guys, minus -1 will be heading down to watch the Cardinals play the Toronto Blue Jays, in a battle of the birds! I went for a drive, as a passenger, with Alex last night. I've done this with my two older kids, so, I know what to expect. But he did pretty good. he turns 16 in 4 days. I can't believe this! Another Chamber of Commerce weather day outside, we'll pay for this, as my dad used to always say when the weather would turn nice. And with that, I'll get this out the door and onto your computer screens. Now go out and make this a Fantastico Friday!
EverBank World Markets
06-24-2011 10:32 AM