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  • Now, That Wasn't So Bad!

    In This Issue.

    * Currencies & metals lick their wounds.

    * Aussie Treasurer in talks with China.

    * China 2nd QTR GDP prints @ +7.6%...

    * Are the markets wrong on Norway?

    ...
  • Germany's Merkel gets her way...

    In This Issue..

    * Germany's Merkel gets her way...
    * Confidence in the US ebbs lower...
    * China to stick to renminbi policy...
    * Gold stops sliding...

    Good day, we had another strong day for the dollar yesterday, with the greenback gaining against all of the majors. But overnight, the Asians and then the Europeans sold the dollar and moved money back into the currencies. So after another rollercoaster ride, we are basically right back where we were at this time yesterday morning. These volatile markets are likely to continue, as investors try to figure out if the global economy will recover or if we will slide back into recession. With all of this uncertainty, you would think investors would be moving into 'hard assets': Gold and Silver. But the markets for these two precious metals have been surprisingly quiet this year. More on the metals a bit later, first I will try to figure out these currency markets....
  • German ZEW Underpins The Euro...

    In This Issue..

    * Currencies rally on tariff news...
    * Norway's election doesn't move krone...
    * Canada's Gov't problems to hurt loonies?
    * 1-year since Lehman Bros...

    Good day... And a Terrific Tuesday to you! Well, just as I suspected yesterday in the Pfennig, when the U.S. traders came in and got word of the new Chinese tariffs on tires, the dollar got sold like re-mastered box sets of Beatles albums! So, we've got that to talk about, and some other items I'd like to discuss... So, here we come Terrific Tuesday!

    OK... Well, just as I stated above, the U.S. traders didn't care for the new tariff, feeling that it would project a trade war, and therefore sold the dollar. The Big Dog, euro, traded to 1.4635 by mid-day... There was some profit taking late in the day, which brought the euro back to below 1.46, but then this morning, the euro got another boost from a report on German Investor Confidence, to bring it back to 1.46, as I write......
  • U.S. Manufacturing On The Rise...

    In This Issue..

    * Risk Assets Get Sold!
    * ISM hits 52.9!
    * Aussie GDP rises!
    * China leading the way!

    Good day... And a Wonderful Wednesday to you! Well, all that back and forth between rally and sell off for the currencies came to an abrupt halt yesterday, when the dollar bulls went on a rampage. There was some very strong economic data to help the move, but the real thing that brought the currencies to their knees was the stock sell off of 185 points...

    Get this... Now we all know that the risk assets of stocks, commodities, and currencies have all been tied together for some time now... So, I was surprised to see a story titled: 'Currency Markets Taken For A Ride By Stocks' Hmmm, maybe this person just woke up from a 9-month coma, eh? Any way, that doesn't matter, it's just another opinion that coincides with mine!...
  • Gold Vending Machines!

    In This Issue..

    * More range trading...
    * SNB doesn't target the franc...
    * Norges Bank cuts rate but looks forward...
    * Buy your gold and Snickers!

    Good day... And a Tub Thumpin' Thursday to you! It was 95 here yesterday, and forecast to be even warmer, or should I say hotter, today! WOW! Like overnight, it turned to summer, after the coldest, most wet, spring I can ever recall... I know, I'll get 100 emails reminding me that summer doesn't officially start until next week... I'm just talking about the summer-like weather!

    The currencies remained in that range I talked about yesterday, with a slight bias to sell dollars, but not much of one. Crude Oil prices moved higher on the day and overnight, which doesn't play well with a dollar rally, and therefore, has pushed the dollar down a bit... But again, we're talking minor moves. It's as if someone (traders) are waiting for something BIG to happen with data, the Fed, the Treasury, before taking one direction....
  • ECB rate decision looms...

    In This Issue..

    * ECB rate decision looms...
    * China pushes for a bigger seat at G20...
    * Declining global reserves hurt US Treasuries...
    * Commodity currencies come back...

    Good day... The dollar held on to its gains through out most of the day yesterday, as investors continued to look for a parking place in the volatile markets. But late in the day, the sentiment changed and the dollar started getting sold vs. most of the currencies. This dollar weakness continued overnight with the Euro gaining back 1 cent to trade back above 1.33 and the commodity based currencies of Norway, New Zealand, Australia, and South Africa all gaining over 1 percent vs. the greenback.

    What caused this sharp turn around? I had to look hard to find anything which set this reversal in motion, and could only find references to the upcoming ECB rate decision due on Thursday. The euro had come under selling pressure the past few days as currency traders bet the ECB would be cutting rates by 50 basis points on Thursday. This cut would, of course, narrow the yield advantage the Euro holds over the US$ and therefore make it less attractive to investors. There were also many who believed the ECB should follow the path of the US, UK, and Japan and begin using quantitative easing to further force down rates....
  • UK data boosts the dollar...

    In This Issue..

    * UK data boosts the dollar...
    * US GDP falls further...
    * Norway cuts rates...
    * Big wins by MIZZOU and BLUES...

    Good day... I want to start this mornings Pfennig with a big congratulations to the MIZZOU Tigers who pulled off what most believed was an unlikely win over Memphis last night. What a game! They move on to the Elite Eight to play powerhouse UCONN on Saturday.

    The currency markets weren't as exciting as the basketball games yesterday, as the dollar held in a fairly tight range. The big move came in early morning trading as a report was released in the UK showing their economy's contraction was worse than previously thought. This news was GDP in the UK fell 1.6% in the 4th quarter of 2008 vs. the previous quarter. And the outlook presented by the Bank of England is not rosy. BOE Chief Economist Spencer Dale said this morning that the British economy's short term prospects are 'bleak'. Chuck has brought up the comparison between the UK and US economies several times, as the UK economy looks like mirror image (albeit smaller) of the US. The UK economy has been slightly ahead of the US in the race toward economic meltdown. Unfortunately the US Fed seems to be shadowing every move by the UK, cutting rates to near zero and then using 'quantitative easing' to force them down even further....
  • The Treasury Secretary rides to the rescue...

    In This Issue..

    * Geithner rescues the stock market...
    * Commercial real estate, the next big drag...
    * Norway: the new safe haven...
    * China pushes for a new reserve currency...

    It was a dramatic day on Wall Street yesterday, with the major stock indexes surging as much as 6 percent, including the Dow Jones which jumped more than 400 points. The reason for all of this euphoria on Wall Street? A combination of Geithner's plan to rescue the banks from the toxic debt in which many are mired, and a surprisingly large uptick in existing home sales. I touched briefly on the Giethner plan in yesterday's Pfennig and readers know I am more than a little skeptical about its possible success.

    But the housing numbers really caught me off guard. Existing home sales jumped a tremendous 5.1% in February, clearly above all expectations. But Chuck pointed out that the almost 1/2 of the sales were either foreclosures or short sales, hardly what you would call a 'rebound' in home sales! And these additional existing home sales came at deep discounts. The median price for an existing home fell 15.5% in February 2009 to $165,400 as compared to $195,800 in February of 2008....
  • "The Cheater" Speaks...

    * Currencies rally... * IFO unexpectedly rises... * Norway looks good... * Gold hits $900 again! ** The Cheater Speaks... Good day... And a Terrific Tuesday to you! We received the snow and ice they forecast, but the drive in to the office was no biggie, so the street crews did a fair job, I would say... We'll see when I head into the city for my radiation this morning... Hey! What a day for the currencies yesterday! Geez Louise, it's seems like it's been a month of Sundays since I could say that! And there's been follow up overnight, although, I do believe I'm seeing some profit taking right now... I went to radiation yesterday with the euro trading around 1.2965... I came back 2 hours later, and it was 1.31! And it didn't stop there, trading up to 1.3175, but running into a wall of resistance there... But that was temporary, as the overnight market pushed the single unit higher to 1.3250... It did trade all the way up to 1.33 and change on news that the German Business Confidence, as measured by the think tank IFO, unexpectedly rose for the first time in 8 months. This improvement was a result of the European Central Bank (ECB) cutting interest rates......
  • Santa rally continues...

    * Santa rally continues... * Norway cuts 175 basis points... * Japanese intervention possible... * Indian rupee moves up... ** Santa rally continues... Good day... The dollar is falling much faster than it rose, the euro surged over 6 cents vs. US$ since yesterday at this time. The 5 day return chart for the major currencies vs. the US$ is pretty impressive: Swiss Franc +12.55%, Euro +9.5%, Danish Krone +9.44%, New Zealand $ +8.41%, Australian $ +5.08%, Swedish Krona +4.85%. And it continues. The past two weeks have been the most dramatic move by the dollar that I can remember. The dollar index, which tracks the US$ vs a group of major currencies is back trading right where it was at this time last year. I pulled a chart of year to date currency returns vs. the US$, and there are now 5 major currencies which have appreciated vs. the greenback: Yen +26.44%, Swiss + 8.07%, and Singapore, Danish Krone, & Euro + 1%. And with the recent big moves, our phones have been lighting up with investors moving back into currencies. I love the fact that all of these investors are diversifying, but the speed of this recent move demonstrates why we suggest keeping your investments spread across all asset classes. Trying to time into or out of a market can be frustrating, while keeping consistent asset allocations is the key....
  • A Downward Revision of Eurozone Growth...

    * Euro rally ends quickly! * Housing Data continues to be bad... * OECD wants Norway's rates increased... * The Aden Sisters on a Wednesday! ** A Downward Revision of Eurozone Growth... Good day... And a Wonderful Wednesday to you! I'm sitting here wondering what to write about this morning, and on the radio is a classic song by Led Zeppelin, Dazed and Confused... Seems quite apropos, eh? I say this because that's what I've been for the last month, as the dollar got up from its death bed, and there's not a sign of any medicine that was prescribed had been taken! Oh well, why would I think that things would change for me at this stage of my life, I've been dazed and confused for a long time! HA! I'm sure that's what a lot of people are saying right now anyway... The euro rebounded over 1-cent yesterday, but that rebound has been wiped out completely in the overnight markets... There's just no lasting power in any currency rally VS the dollar right now. And as I keep going saying, this is reminding me so much of 2005 when the dollar covered up its pimples and posed for GQ, only to see the pimples pop through the makeup by year-end....