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  • Back to Risk Aversion...

    * Japanese yen rallies... * Renminbi stumbles... * A very tough data week in store... * Rate cuts all around the world... ** Back to Risk Aversion... Good day... And a Marvelous Monday to you! In addition, Welcome to December! We had our first "dusting" of snow over the weekend, after experiencing wonderful weather Thursday and Friday. As much as they tried, even my beloved Missouri Tigers losing to ultra-rival, Kansas on Saturday, couldn't ruin what was a very fun and relaxing weekend for yours truly! Well... When I left you last Wednesday, I had thought that we could be on the cusp of a "change" in the currencies, as the Trading Theme that had held a tight grip on the currencies since July, was thrown to the side for a couple of days... But, I doubt "that" has happened, as a return to risk aversion is back on the table, which means the currencies and precious metals get sold, while Japanese yen, and U.S. Treasuries (read dollars) get bought....
  • The Day After...

    * I want change too! * Euro leads a currency rally! * Factory Orders plunge! * Carry Trades back on the table! ** The Day After... Good day... And a Wonderful Wednesday to you! The day after... The day after all the election ads ended... What a beautiful day it is! Well, in January we'll have a new president, one that had a call to "change"... I sure hope we can change... The problem is what I want changed hasn't been on any candidate's agenda... That's because, as the Big Boss Frank Trotter so eloquently said the other day when I complained about the lack of talk on this subject, "They can't get elected if they talk about that"... The "that" is simply the national debt, and how we'll deal with it as the baby boomers begin to draw on their entitlement programs... I think people now like to "live for today, and not worry about tomorrow" and that's a real shame. As I said a month or so ago... I'm going to have to sit down and write a letter to my sweetheart granddaughter, Delaney Grace, and apologize to her for leaving her generation with a debt load that requires a huge tax burden that her grand father didn't have, and a loss of freedoms, and life style, that her grand father had......
  • Govt to follow Buffet's lead...

    * Govt to follow Buffet's lead... * Aussie $ has biggest gain ever... * Yen reverses on carry trades... * China's currency reserves rise... Good day...And what a day it was! As I stated in yesterday's Pfennig, Columbus day is just sort of a holiday for the markets. These 'semi-holidays' can create some volatile trading, as not all of the markets are open and many desks are short staffed. So with the Federal Reserve and the banking system closed, the equity markets had the largest one day gain in over seven decades. I guess the stock jockeys figured they weren't going to get any bad news out of the credit markets, which were closed, so no news is good news!! The rally was certainly welcomed, and hopefully some of the gains will stick today as we return to a normal trading environment. And I guess some of the credit for the stock rally has to go to finance ministers around the globe who finally agreed on a plan which seems to be able to work. The leaders of a majority of the worlds largest economies borrowed a page from Warren Buffet's playbook and decided to invest directly into some of their largest financial institutions. The Bush administration announced it would invest $125 billion in nine of the biggest US banks. The US move came after France, Germany, Spain, the Netherlands, and Austria committed $1.8 trillion to guarantee interbank loans and take equity stakes in European banks....
  • Fed floods the markets with US$...

    * Bernanke gets help opening the spigot... * Euro and Pound rally... * Yen to continue to benefit from carry reversals...* Aussie $ rallies... ** Fed floods the markets with US$... Good day...and happy Columbus day! This is an official bank holiday here in the states, so all of the banks are closed, but the stock markets are open. We will have a half day here on the desk to try and catch up with all of the work which has been piling up the past few weeks. The phones are turned off, since it is an official bank holiday, but we will be checking messages and try to get back to everyone as quickly as possible. It is a very unusual holiday, as the banks are all closed with no funds transfers possible, but the stock markets are open. Currency desks are lightly staffed, so we will have to really work to get the trades done this morning. These strange holidays usually can lead to some real market volatility, and with today will probably be another rollercoaster. In an all out effort to ease the credit freeze, the Federal Reserve recruited help from the ECB, Bank of England, and the Swiss central bank to flood the market with US$. These central banks will auction unlimited dollar funds with maturities of seven days, 28 days, and 84 days at a fixed interest rate. This move is unprecedented, as all previous dollar swaps were capped at a maximum amount while these auctions will be for unlimited funds....
  • Iceland Melts Down...

    * RBA cuts rates 100 BPS! * Iceland to peg the krona... * High Yielders get whacked! * Gold rallies in the face of a strong dollar! ** Iceland Melts Down... Good day... And a Terrific Tuesday to you! Well... Folks... The wheels, what was left of them, are really coming off this economy. It's a sad sight to see, but it's happening nonetheless, and there's no bailout, stimulus check, mortgage bill, truck loads of money supply, or whatever, that's going to stop this recession bus.. Memo to Paulson and Bernanke... Don't throw yourself under this recession bus... Well... The dollar continued to push the envelope against a handful of currencies yesterday. Up front and center, the high yielders got beaten about the head and shoulders by the dollar. Aussie, kiwi, real, rand, all took major hits from the dollar. It was one of the worst days I can remember seeing for these currencies. This huge sell off showed two things going against the high yielders... 1. Commodities (other than Gold) are getting whacked, and 2. The Carry Trade is Dead......