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  • May Day empties the trade desks...

    In This Issue..

    * May Day empties trade desks...
    * Chrysler declares bankruptcy...
    * SEC to investigate Paulson and Bernanke??
    * China continues to grow...

    Good day...and Happy May Day to everyone. Most associate May Day with the Soviet Union, where the communists turned it into a 'celebration of the worker'. But its origins are actually in central Europe where it developed from a combination of several pagan holidays celebrating the end of winter in the Northern Hemisphere. It never really took flight in the US, but is still a popular holiday in most other parts of the globe. With the way our government has been using tax payer funds to take over struggling companies, May Day could become a larger holiday here in the US also! Most of the trade desks throughout Europe are closed today, and many of the traders left early yesterday, so the currency and metals markets were pretty quiet....
  • TARP Testimony Today...

    * What will Paulson say? * Dollar remains well bid... * How long for Safe Haven buyers? * G-20 Schmee 20! ** TARP Testimony Today... Good day... And a Terrific Tuesday to you! I've been away for a few days to deal with something, I want to thank Chris once again for taking the conn on the Pfennig since last Thursday. He'll get it again at the end of this week and the beginning of next week, as I hope to get to Marco Island for the Wealth Masters Conference. Well... Nothing has changed since I left you last Wednesday. The awful economic data just keeps piling on, and the dollar gets bid up on safe haven purchases. We did see the Eurozone and Japan announce that they are in a recession... Chris was kind enough to leave me the following, so here's some more Chris.......
  • The Junk Yard Dog Bites!

    * The dollar rallies big time! * A dollar conspiracy? * Bailing out the automakers? * Weathering the storm in N.Z.? ** The Junk Yard Dog Bites! Good day... And a Wonderful Wednesday to you! Well, the Junk Yard Dog got a hold of the euro yesterday, and even though the U.S. Banks, thus the majority of currency desks, were observing Veteran's Day, the move down in currencies VS the dollar, led by the euro, was drastic! The Junk Yard Dog I'm talking about is Jean-Claude Juncker, chairman of the Euro group... I stopped the euro in its tracks from its nascent rise in the past month, by saying the "euro's recent rise was undesirable"... He also deep sixed the euro, and thus all the currencies save yen, by saying he "didn't see any reason there couldn't be more rate cuts by the ECB"... (the ECB is of course the European Central Bank) Well... These two comments tore through any gains the currencies had mounted VS the dollar in recent weeks, like a Junk Yard Dog tears though some raw meat! It was a knife to the euro's heart......
  • Rescue plan not an instant fix...

    * Rescue plan to take time... * Pound sterling rallies (for now)... * Brazil supports the real... * Iceland cuts rates... ** Rescue plan not an instant fix... Good day...Another roller coaster of a day, as the dollar continued to slide through lunch but then rallied back up in the afternoon. As I walked out the door last night, most of the major currencies were trading right about where they were when I turned the screens on. The dollar has started to fall again in overnight trading, so the up and down of the past few weeks looks to continue. The news stories coming across the wires this morning seem to be as volatile as the currencies. I have now counted three different stories which state the markets are moving back into higher yielding currencies and riskier investments after the coordinated bank bailout plan which was announced yesterday. But several other stories are talking about how investors are moving out of the higher yielding assets because of concern that the bank rescue will take too much time to unfreeze global credit markets. I tend to agree with the latter of these....
  • 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......
  • King Henry Was Wrong Again!

    * Bailout package is voted down! * Biggest one day point drop for the DOW! * Dollar rallies hard... * Carry trades unwind... Again! ** King Henry Was Wrong Again! Good day... And a Terrific Tuesday to you! Well... Guess who was wrong AGAIN! That's right, King Henry Paulson, he of the U.S. Treasury Sec. throne... He told the world on Friday, that the bailout package was a "done deal"... And he told us again on Sunday that it was a "done deal"... The markets rejoiced, the stock jockeys danced in the streets, the karma flowed and all the stars were in alignment... And then... A (not so) funny thing happened on the way to the forum... King Henry's men revolted, and the bailout package did NOT have the votes to pass it, and the "done deal" was "undone"! Once again this man has led investors down the wrong path. I've documented the wrong statements by this man in the past year, and still, investors hang on every word by King Henry... When will they ever learn? When, will, they, ev-er learn?...
  • Turning Japanese?

    * Profit taking in the currencies... * German Business Confidence falls... * More talk of the bailout package... * A strong statement on Aussie dollars... ** Turning Japanese? Good day... And a Wonderful Wednesday to you! Another crazy day not only in the markets but on our trading desk, where the phones continue to light up. There's a ton of volatility in the markets these days, as witnessed by the roller coaster ride stock jockeys take every day, the no direction is a good direction course of currencies, and the ups and downs of bailout plans. It's all a little too much for yours truly some days, but I carry on... Take this morning... Please somebody take this morning! The euro was showing signs of wiping out yesterday's profit taking session early on, only to see its gains wiped out by a weaker than expected German Business Confidence report. Yes, German Business Confidence, as measured by the think tank, IFO, declined more than expected this month, to the lowest level in almost 3 years. I would say that with lower Oil prices, and weaker inflation, these German Business people's attitudes will be changing soon... The German economy, other than this report, is showing signs of strength, which is bang on what I've been trying to tell everyone that was throwing darts at the Eurozone economy... Remember 80% of trade in the Eurozone is among the Eurozone members......
  • Some Healing...

    * largest one-day move up in the euro! * largest one-day move up in Oil! * Gold and Silver rebound! * Renminbi finally moves! ** Some Healing... Good day... And a Terrific Tuesday to you! I heard from one of my two sisters that live in the Houston area yesterday. They rode out the Hurricane together, have some damage to her house, and is still without electricity. I can't imagine what that's all like. But they are both safe at that's what's important at this point. Well... The euro had it's largest one-day move upward VS the dollar since its inception in 1999, yesterday... We've seen some profit taking in the overnight markets, but just for good measure... I think it appropriate to show that the euro reached 1.48 yesterday... That was a 3.5 euro move, and after falling to a low of 1.3869 on 9/12 (before bouncing big that day), the euro has now recovered about 7%... I would call that "some healing"......
  • Paulson and Bernanke ride to the rescue...

    * Paulson and Bernanke ride to the rescue... * More debt for the US taxpayer... * Emerging markets rally... * Congrats to EverBank Soccer Greats... ** Paulson and Bernanke ride to the rescue... Ahoy thar maties.. Yesterday was a very volatile day in what has become an incredibly choppy week. The currency and metals markets began the day rallying vs. the dollar as it seemed yet another huge financial firm was circling the bowl. But late in the afternoon the dollar came charging back, and gold fell back below $850 after surpassing $900, ARRGH! So what caused this quick reversal? Senator Schumer was credited with turning the markets around. He announced, mid afternoon, that the Federal Reserve and Treasury were going to create a new government institution which would purchase all of the toxic debt instruments being held by Wall Street. Wall Street obviously thought this was just a fantastic idea, and the stock market immediately rallied, taking the dollar with it. The details of the plan still aren't available, but the markets have been desperately searching for a hero to come and rescue them, so even the hint of a rescue was enough to shoot stocks back up. The proposal currently being discussed in congress involves moving troubled assets from the balance sheets of American financial companies into a new government backed institution. The SEC also instituted a ban on short selling of financial stocks, copying a similar ban which was instituted yesterday in London. Chuck had a travel day yesterday as the FXU moved from San Diego to Dallas, but he was keeping an eye on the markets and sent me this last night....
  • Paulson speaks with forked tongue...

    * Paulson speaks with forked tongue... * Fed leaves rates unchanged... * A look back at the data... * Japan to weather the financial Tsunami... ** Paulson speaks with forked tongue... Good day...Another day, another $85 billion of US taxpayer used to bail out an ailing financial firm. Yes, our Treasury Secretary went on another shopping spree, and this time he was accompanied by Fed Reserve Chairman Ben Barnanke. Just two days ago, Paulson drew a line in the sand when he let Lehman Brothers collapse into bankruptcy. The non-action from Paulson was seen as a good move by most, as he was sending a signal to the markets that the US taxpayer couldn't be seen as the buyer of last resort for failed financial firms. And Paulson talked tough with regard to AIG. Paulson was asked about reports that AIG wanted an emergency loan to help it through its troubles. "What is going on right now in New York has got nothing to do with any bridge loan from the government," he replied. "What's going on in New York is a private sector effort, again, focused on dealing with an important issue that's, I think, important that the financial system work on right now, and there's not more I can say than that....
  • Financial storms claim two more...

    * Financial storms claim two more victims... * Yen and Swiss Francs move back up... * Euro approaches 1.45 before reversing course... * Oil below $100... ** Financial storms claim two more... Good day... The financial storm claimed another victim this weekend as Lehman Brothers Holdings Inc. filed for bankruptcy after being unable to find a buyer. Bank of America, who was rumored to be bidding on Lehman ended up buying Merrill Lynch & Co and AIG Inc. is asking the fed for an emergency loan. All of this financial turmoil has sent the dollar lower vs. most of the major currencies as investors are beginning to realize the situation in the US markets is worse than the rest of the world. Over the past three months, currency traders have rallied the dollar on the basis that the US was in better shape than Europe. They will now need to rethink their strategies, as the past few weekends show just how bad the US financial sector is ailing. And unfortunately, their will likely be more to come. Risk aversion is a popular theme in the markets again, and the purchase of US treasuries actually helped to keep the US$ from falling further....
  • Dollar bulls take a breather...

    * Dollar bulls take a breather... * Paulson is out of control... * From the mouth of babes... * Fingers crossed for Chuck... ** Dollar bulls take a breather... Good day...Just as Chuck predicted, we had a Thundering Thursday yesterday, as thunderstorms moved into the St Louis area early yesterday and are expected to stick around throughout the weekend. Yesterday was a pretty slow day in the currency markets, with the dollar trading in a fairly tight range, but overnight the dollar changed direction and we saw it lose ground across the board for the first time in weeks. This turnaround was seen in the European markets as traders finally started to realize the speed of the increase in the US$ was overdone. But before I get going this morning, I need to run a public service announcement for Chuck. Yesterday's Pfennig announced that the Reserve Bank of New Zealand cut interest rates .25%. This was in error, the bank actually cut .50% to a rate of 7.5%. Chuck realized his error just after hit the send button, and wanted to make sure I let everyone know (He received more than a few emails from readers letting him know his error). The extra quarter point cut was aimed at giving the NZD a good jump start, and Governor Alan Bollard is indicating more rate cuts will be on the way: "We've got room to move,.. We're in a loosening mode." The reaction of the currency markets was the same with a 50 bps cut as it would have been with a 25 bps cut, they sold off the kiwi as the interest rate differentials narrowed....
  • Paulson Speaks With A "Double Tongue"

    * The U.S. economy in a wreck! * More problems to come... * Funky accounting at the Fed... * SNB leaves rates unchanged... **Paulson Speaks With A "Double Tongue" - Good day... And a Tub Thumpin' Thursday to you! I was alone last night, and decided to write... Oh Boy! Are you, dear reader, in trouble when I begin writing at night for the next morning! My Cardinals were losing again, so my attention turned to putting down all these thoughts that keep coming into my head... Like Michael Keaton in Night Shift (what a great movie!) I need a recorder to put all these thoughts down... Like... Feed the mayo to the tuna! OK... Front and Center this morning, the euro's rally that went on all day yesterday and into the early Asian session (all the way to 1.5580) ended this morning... Someone, somewhere decided that the U.S. will be able to squeeze by this slowdown... Unfortunately, I don't agree! I see the U.S. being involved with the multi-car accident on the highway... But as Pfennig readers you already know that... However, instead of just hearing from me all the time about this meltdown of the U.S. economy, let's hear from an organization that tracks these things......
  • A War Of Words...

    * Undynamic duo sound off! * The dollar rebounds! * Inflation expectations? * BOC to cut rates today......
  • On The Soapbox Again...

    * Euro loses 1 1/2-cents... * Currencies get taken to the woodshed... * Bernanke joins Paulson, but why? * A China comment explanation......