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  • US$ stuck in a rut...

    In This Issue..

    * US$ stuck in a rut...
    * Australia is rising star...
    * BOE keeps rates on hold...
    * Frank reflects on Olympic boycott...

    Good day, and welcome to Friday!  The dollar kept within the fairly tight range it has established over the past few weeks.  The dollar index has remained between 81 and 82 for the past 15 days, after jumping higher on the Greek financial crisis.  Currency traders are uncertain of where the global economy is heading, and seem to be taking a 'wait and see' approach.  Eventually a clear picture will start to emerge, but for now, the currency markets are stuck in a rut.

    The weekly jobs data released yesterday morning didn't give investors much to go on.  The numbers came in slightly higher than expected, surprising many who thought the improvement we saw in the monthly numbers at the end of last week would carry over to the weekly report.  But it still looks like any improvement in the labor picture here in the US will be slow to come, and pretty sporadic.  The Labor Department blamed the Easter holiday for skewing the numbers, saying the two weeks around the Holiday weekend are traditionally volatile making it difficult to discern an underlying trend.  But the less volatile 4 week moving average of claims, a less volatile measure, also increased to 450,250 last week from 448,000.

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  • Bad GDP numbers are overshadowed by a jump in housing...

    In This Issue..

    * GDP comes in lower, but is overshadowed by housing numbers...
    * IMF predicts debt problems for advanced economies...
    * French consumer spending falls...
    * Gold is cheap below $1,100...

    Good day...The currency markets were a bit more volatile yesterday, as we got some surprising data releases here in the US. But after the dust settled, the dollar closed out the day pretty much right where it had started vs. most of the major currencies. Gold and silver continued to slide, but the price of oil moved up a bit. Today we will get another big round of economic data, which could cause some more volatility in the markets.

    The driver of the currency markets yesterday was the economic releases here in the US. The morning started off with the Commerce Department's final reading of GDP for the 3rd quarter of 2009. The final figure showed an increase of just 2.2% for the third quarter, well below the consensus estimate of 2.8%. The report illustrates just how optimistic (and some feel unreasonably so) the folks at the Commerce department are. Their first estimate of 3rd quarter GDP was 3.5%, but after further evaluation they lowered that figure to 2.8% for their second estimate. And after a further review of the data, they settled on the 2.2% figure, a full 1.3% lower than their original estimate. This is a downward adjustment of close to 40%! I'm sure there wasn't any pressure on the Commerce dept to inflate the first couple of estimates....
  • GDP Does Not Compute, Will Robinson!

    In This Issue..

    * Currencies trade in a tight range
    * Pound Sterling, the star performer?
    * Something smells fishy...
    * Do you see trend with Gov. Reports?

    Good day... And a Wonderful Wednesday to you! We had a very tight range trading day yesterday in the currencies, which have left them trading in about the same clothes they were wearing when I signed off yesterday! We've got that to talk about, and... Another $2 Billion for the CARS program has been allocated... What a crock! OK, Chuck, slow down, you don't need to get your blood boiling this quickly, this morning!

    I'm writing from home this morning, as I have a meeting close to our old office, which means its not far from where I live, which is completely different from our current office location, which is, I'll say... Quite a distance... But, hey! I'm not complaining, just giving you the details......
  • 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....
  • Groundhog Day 2009

    * The dollar remains strong... * GDP sinks to -3.8% * Central Bank rate meeting week... * Gold outperforms just about everything! ** Groundhog Day 2009 Good day... And a Marvelous Monday to you! It's Ground hog Day (what a great movie!) today... And what a Super Bowl Game last night! WOW! Almost as exciting as the year our Rams won and the tackle on the last play of the game for a touchdown, was made on the one yard line... Seems like eons ago, that the Rams won... Well, front and center this morning, the euro and other currencies are still reeling from that shot to their mid section by George Soros at the World Economic Forum, in Davos Switzerland. The dollar has flexed its muscles a bit more and taken the euro to just above 1.27... Not that euro holders want to hear this, but this IS what I was talking about all last month with the talk of an Obama bounce. The stock market hasn't caught on yet though......
  • Trade Deficit Narrows...

    * Dollar rally continues... * Be careful what you wish for! * Prime loans now in trouble... * Norges Bank to keep rates unchanged... ** Trade Deficit Narrows... Good day... And a Wonderful Wednesday to you! Tuesday saw more volatility in the currencies as the dollar went back in forth, but well within a trading range. The euro has melted down to the 1.49 area, where it seems to have found some breathing room. The Trade Deficit for June shrunk, but the Budget Deficit widened... Again, the fundamentals in the U.S. continue to point to recession. All this and more in today's Pfennig, so grab a cup o'java, a chair, and let's go! OK... Front and center this morning, I want to talk about the Trade Deficit, which in June showed a narrowing from $59.8 Billion to $56.8 Billion, which looks good, right? Well... As I told you in yesterday's Pfennig, you have to be careful what you wish for. This drop in the Trade Deficit pushed the dollar higher yesterday morning, and got me thinking... (I know, that could be dangerous, but stay with me here...) A stronger dollar will not play well, share toys, and keep its hands to itself, with exports... And exports have been something short of amazing with the dollar being weak. In fact, exports have accounted for the largest contribution to GDP in the past 5 quarters! (with U.S. Consumer spending drying up, this is possible!) Add to that, everyone getting goose bumps regarding a global slowdown... If the world slows down, like the dollar bulls are claiming they will, thus propping up the dollar, then U.S. exports will slow even more!...