Daily Pfennig

A free, quick-reading daily e-letter on world currencies, economic trends, and the occasional baseball score.

Daily Pfennig

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  • The Deed Is Done...

    * Adding $700 Billion to our debt... * U.S. loses 159K jobs in September! * Dollar rallies to 13-month high VS euro * Ding Dong the Carry Trade is Dead... ** The Deed Is Done... Good day... And a Marvelous Monday to you! The deed is done... The House, which had previously voted down the Bailout Package, decided to go ahead and put the country in debt by another $700 Billion... Yes, I know it the payouts will be in installments, but in my mind it was in one swoop that $700 Billion was added to our debt... And guess what? The dollar rallied on the news! More on the Bailout Package in a minute... The other thing happened on Friday was the awful Job Jamboree in which 159K jobs were reported lost by the Bureau of Labor Statistics (BLS) during September. The job losses were all over the place led by job losses in Manufacturing. And guess what? The dollar rallied on the news!...
  • 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......
  • Coordinated Rate Cuts!

    * Yen trades to 98! * Carry Trades unwinding hurt high yielders... * Gold rallies back to $900! * Central Bank rate cuts.... ** Coordinated Rate Cuts! Good day... And a Wonderful Wednesday to you! Well... There's a ton of stuff to talk about today, one of which is the amazing run that Japanese yen has had in the past month, but particularly the last week! No need to sneak a peak at the currency round-up, Japanese yen is trading 98.80! WOW! I could be acting like a contortionist and trying to slap myself on the back, but that would unprofessional... And besides, the rest of the currencies are taking shots to the mid-section. Anyway... Blow the horn, the Carry Trade (for yen) is dead, may it rest in peace! OK... The currencies tried like all get out yesterday to rally VS the dollar, the euro did end the day 1% higher on the day, which after the bloodshed of the past month, I'll take that any old time! I would love to go back to 2005 (not really, but for this conversation's sake I will) and pull out some old Pfennigs where I talked about all the naysayers talking about a break up of the euro... We had the NO votes from France and Denmark on accepting the European Union's (EU) Constitution, we had riots in the streets of France, we had rising interest rates in the U.S. and dozens and dozens of naysayers called out the euro and said it would collapse under the weight. I said then, and I'll say now... HOGWASH!...
  • A New Trading Theme...

    * Coordinated rate cuts...* Did the Fed reignite soaring inflation?* More pain in Iceland...* Revisiting the 90's in Japan... ** A New Trading Theme... Good day... And a Tub Thumpin' Thursday to you! Well... How about those wily veteran Central Bankers? They all got together and decided to cut rates... The Reserve Bank of Australia (RBA) went first with their 100 BPS cut, and opened the rate cut sea for the rest of the Central Banks around the world. The European Central Bank, The Riksbank (Sweden), Swiss National Bank, Bank of Canada, Bank of England, and the Bank of China all lined up at the rate cut table... The Bank of Japan, The Norges Bank (Norway), and Reserve Bank of New Zealand did not participate. The Bank of Japan doesn't have any rate to cut, The Norges Bank will wait until their regularly scheduled meeting on 10/15, and the RBNZ believes that they have taken their toxic waste bond flu shot......
  • Who Owes Who?

    * Trading theme pushes yen higher... * Settlement day for Lehman CDO's... * Oil price fall hurts loonies... * Gold climbs back above $900... ** Who Owes Who? Good day... And a Happy Friday to one and all! It certainly doesn't look as though it will be a Fantastico Friday in stocks, as yesterday was a bloodletting, and overnight the Japanese stock market sold off 11%, and Europe is down about 9% at this point. UGH! This is getting quite ugly... But remember what I've been saying this week about the currency trading theme... When things look bleak, the dollar goes up... And when it looks as though all the stimulus might work, the dollar sells off... This has been quite evident in Japanese yen overnight, as stocks sold off 11%, the currency rallied to a 98 handle from 101 yesterday... And... Then in dollar trading, other than yen, the dollar is stronger this morning, pushing the euro back to the 1.35 handle. The high yielders, which enjoyed a day in the sun yesterday before U.S. stocks took a turn on the slippery slope, got whacked hard overnight! UGH!...