Good day… Chuck had a rough night, so he decided to stay home and try to get some rest. The Pfennig will be pretty short this morning, as I want to try and get it out as close to the regular time as possible. The currency markets were fairly calm yesterday, with the dollar staying in a pretty tight range before rallying some in early trading this morning.

The Euro has lost some ground in European trading as German business and consumer confidence fell more than economists forecast. The Ifo institute’s business climate index dropped to a three year low in July and consumer sentiment slumped to the lowest level in five years. Some currency traders pointed to these latest reports as further proof Europe is slipping into recession and that the ECB will need to cut rates before year end. It is obvious by now that the economies of Europe are weakening, and growth will not be able to match last years numbers. But I still believe Trichet and the other voting members of the ECB will continue their hawkish bias, and I don’t expect any interest rate moves until sometime next year. This should keep the Euro from falling dramatically away from these current levels.

One advantage of writing this so late in the morning, is that I can report on the numbers which came in today. We are expecting a plethora of data today, and have already received the CaseShiller Home price index which continued to drop. But the rate of the fall in US home prices has slowed, giving some economists reason to say the worst is over in the housing crisis. But other economists are warning investors not to read too much into the slowing of the decline in prices. The National Association of Realtors said yesterday that the median price of an existing home fell 7.1% in July from a year earlier, compared with a 6.1% drop in June.

We will continue to receive data on the housing market later this morning, as we will get July’s New Home sales, House Price index, and the 2nd QTR Housr price purchase index released in about a half hour. None of these numbers are expected to show a rebound in the housing sector, but the markets just want to see the numbers do better than the horrible expectations. Again, even if the numbers come in better than expected, they will almost certainly show the housing market is going to continue to slide.

Later this afternoon the FOMC will release the minutes of their August 5 meeting. It will be interesting to read just how fractured the FOMC is with regard to the trade off between fighting inflation and trying to stimulate growth. Bernanke has done an excellent job so far of keeping the members in line with most of them singing from the same song sheet. The recent drop in commodity prices should make Big Ben’s job a little easier, as it will calm some of the inflation fears. I still question just how long the drop in commodities will continue. China and the other emerging economies continue to grow at near double digit rates, which will likely continue to put upward pressure on the price of raw materials. I don’t think inflation is whipped, but is just taking a breather.

Oil prices erased an earlier loss and increased, bringing the Canadian dollar up also. The Canadian dollar was the best performing currency yesterday, strengthening vs. all of the most actively trading currencies. Commodities account for more than half of Canada’s export revenue, so the recovery in oil helped it rally.

Two other commodity based currencies didn’t fare as well, as both the NZD and AUD dollars declined for a second day. The Australian dollar slid toward a four-month low and New Zealand’s currency fell to its lowest in more than a week on speculation investors will continue to reverse carry trades. The overriding fear in the markets right now is that both the AUD and NZD central banks are going to cut rates, making the currencies much less attractive for investors who purchased them for the high yields. Many Asian investors have used these currencies to earn higher yields than what is available in their home currencies, but currency traders now worry that these ‘carry trade’ investors will be exiting these investments as the central banks of NZD and AUD cut rates. The New Zealand central bank has already started down the ‘rate cut’ path, and most believe the RBA will be cutting rates by 1/4 point at their meeting on September 2. If commodity prices continue to fall and the RBA does cut rates, the Aussie dollar will remain under short term selling pressure.

US labor secretary Elaine Chao said the Bush administration will keep pressing China to let the Renminbi strengthen at a faster pace to help close the US trade deficit. The Renminbi has moved up 6.7% this year against the US$ and has appreciated almost 21 percent since the end of its dollar peg in 2005. But recently the Chinese have slowed the Renminbi’s appreciation, letting it slide .4% against the dollar since Chinese leaders stressed on July 25 that maintaining steady growth is as important as combating inflation. US Treasury Secretary Hank Paulson said last week that US lawmaker’s proposals to punish China for depressing the value of its currency might spark an unproductive ‘trade war’. Growth will be slowing in China, but I still think they will be able to maintain a growth rate just under double digits. This rate will be high enough to continue China to allow a slow and steady appreciation of its currency. We have been saying all along that this currency will be a slow and steady performer, and not to expect any quick or dramatic moves. I continue to believe this is the path the Chinese will take.

Like I said at the beginning, this is a short one today. It is getting pretty late and I know many of you like to enjoy their Pfennig with their morning cup of coffee, so I’ll end it here and move on to the currency round up.

Currencies today 8/26/08: A$ .8540, kiwi .6935, C$ .9535, euro 1.4634, sterling 1.8373, Swiss .90670, ISK 83.34, rand 7.8118, krone 5.4086, SEK 6.4087, forint 161.45, zloty 2.2737, koruna 16.76, yen 109.65, baht 34.22, sing 1.4226, HKD 7.8077, INR 43.85, China 6.8510, pesos 10.17, BRL 1.6390, dollar index 77.335, Oil $114.60, Silver $13.32, and Gold… $813.03

That’s it for today… Sorry for the late delivery, but better late than never! Hopefully a little rest will get Chuck back on track, this last round of medicine has been tough on him. Cardinals have an opportunity to charge back into the playoff race tonight, as they take on the Brewers who are just ahead of us in the wild card race. Hope everyone has a Terrific Tuesday!!

Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837
www.everbank.com

Source: Dollar Range Bound…

Good day… And a Thundering Thursday to you! Well… The markets are still “hooked” and flailing about in the water over the Big Ben comments Tuesday, which were then followed up on Wednesday. What did he say this time? We’ll get to that in a minute.

But, first… Front and center this morning, we need to talk about the dollar strength that is prevalent in the currency markets right now. This all started a couple of weeks ago after the euro (EUR) hit 1.60. OK, too far too fast, right? And after an initial weakening to 1.54, the single unit recovered and all was right on the night again as it approached 1.58. Then the Big Ben Bomb…

The euro is the Big Dog of currencies, so you can use it as a proxy for the rest of the currencies. Sure, there are times that other currencies outperform the euro, but they didn’t do it alone. It takes the size and offset to the dollar capabilities of the euro to get the ball rolling. I talk to a lot of people that still don’t believe the euro is a viable currency. Well, it is. It’s here to stay… No matter what the pundits will tell you about Italy and Spain. As I’ve aid at least a dozen times, Italy and Spain should be thanking their lucky stars every night that they were asked to join the euro!

OK… So, dollar buying is on the agenda these days. Let’s just go with that, and then talk about how that might continue. Well… More jawboning by the Fed would help… So would Fed rate hikes… But come on, do you really believe the Fed is going to raise rates now, or in the near future with the economy teetering on the edge of a deep dark recession? Not a snowball’s chance in you know where! So, that leaves us with jawboning, because the economy isn’t going to be a reason for people to buy dollars… And the jawboning is where we circle back to Big Ben.

Yesterday, Big Ben was talking about inflation, and how it was too high… Oh my gosh! Isn’t this what I’ve been screaming at the walls about? Anyway, folks… That’s jawboning the dollar higher, because the markets read any talk about high inflation as a wink and nod that interest rates are going higher. Well, that may be the case in countries that have central banks that really care about fighting inflation… But that’s not the case here! This central bank has no intention on fighting inflation. They look at inflation and thank their lucky stars that it’s not deflation! Big Ben is just jawboning.

And in my opinion, and that of one of my fave economics professors, Big Ben is doing all this jawboning in an attempt to lower oil prices. He has nothing else to work with here to accomplish lower oil prices, so let’s jawbone the dollar!

It’s working, Ben… The dollar is stronger, and oil prices are weaker. But, there’s a fly in the ointment here, Big Ben. Oil prices may be weaker, but gas prices aren’t budging! That’s right; gas prices aren’t budging. Uh-Oh… You forgot about that part didn’t you, Big Ben?

So… I have to follow up on the rant I gave yesterday regarding Big Ben, at this point. So again, if you don’t want anything to do with my soapbox antics, just skip ahead to the section marked “***”.

OK… After my rant yesterday, I came to a couple of conclusions (with the help of readers!) First of all… Tell me, dear reader, wasn’t Big Ben the guy who talked about the Fed having a printing press to print as many dollars as needed to avoid deflation? And wasn’t he the one that talked about throwing those printed dollars out of a helicopter? (Thus his nickname: Helicopter Ben) Now, I know that my college economics classes are not nearly on par with those at Princeton, but come on, you mean to tell me he didn’t think that printing all those dollars was going to cause inflation? I learned that in Econ 101! At Meramec Community College!

And then there’s this, and I’ll leave it alone (I promise!)… With the markets believing that his comment means the Fed will intervene in the currency markets, I think this leaves him exposed. What if the markets decide to test Big Ben’s will, and he doesn’t have the arrows in his quiver to back up the threat of intervention? Uh-Oh! And I don’t believe he has a “war chest” to defend the dollar, like the Bank of Japan has to defend the yen… Or sell it, like they did in 2003.

***

Unfortunately… Right now, all the momentum – along with the investors jumping off the bandwagon of the weak dollar trend – has the dollar in favor. Look… If the dollar had the fundamentals to back this up, I would be telling you so… But it doesn’t!

And the economy isn’t going to shine for the dollar either! Look… The economy has survived the past few years on consumer spending… But where is the consumer going to get money to spend now? The dotcom busted… The House ATM busted… The housing market busted… And now credit cards are maxed-out.

The Big Boss, Frank Trotter, and I were talking yesterday, trying to come up with something that would keep the consumer spending. We’ve gone through all that above… We’ve put two people to work in households… We’ve maxed-out hours worked… The gains from the technology phenomenon have hit the ceiling… It’s been a tough row to hoe folks… But you would think that it’s all seashells and balloons! And that’s exactly what the government wants you to think. Everything is beautiful in its own way, like a starry summer night, or a snow covered winter’s day.

Two recent surveys tell a lot about the U.S. consumer. One says that 9 out of 10 Americans are making lifestyle changes to cope with rising energy costs… And 4 out of 10 Americans are considering moving closer to their place of work.

Oh, United Airlines is cutting up to 1,600 jobs and cutting flights… But don’t look for those 1,600 job losses to show up in the Bureau of Labor Statistics Jobs Jamboree. They’ll just create some ghost jobs and everything will be beautiful, in its own way.

OK… The Bank of England (BOE) and European Central Bank (ECB) are meeting as I pound away at the keys. I don’t expect a move from either of these two central banks, but what I am looking for is some strong Hawkish statements from ECB President, Trichet… Let’s see if he can jawbone the euro back up.

The Reserve Bank of New Zealand (RBNZ) met last night, and left rates unchanged. Unfortunately for kiwi (NZD), RBNZ Governor Bollard had some damaging words in the press conference afterward. Bollard mentioned that the RBNZ would entertain a rate cut this year. That news hit kiwi hard, and before anyone had a chance to bail, kiwi was off 1%, and not looking very good.

Good day… And a Terrific Tuesday to you! I hope your three-day Holiday Weekend plans went well, and you had a grand time… The weather people told us all week that Saturday and Sunday would be sunny and 80, and that Monday we could expect rain. We got rain Saturday and Sunday, while Monday was the “pick” day… Figures, eh? We put men on the moon using slide rulers, and can’t forecast the weather.

OK… Friday was a “get out of town” day for many, and the currencies were left “for another day”, which is to say… We traded within a very tight range. Yesterday, I checked what was going on, as the United States and the United Kingdom were both on Holiday. Talk about thin markets! Anyway, I checked and it looked as though the dollar was drifting lower most of the day, only to see a reversal this morning as London returned. I don’t know what’s on their minds, buying dollars… But that’s what’s happening as I write.

One currency bucking the bias to buy dollars right now is the New Zealand dollar/kiwi (NZD), which had taken a backseat to the Aussie dollar (AUD) in recent times. New Zealand has seen some better data lately that has helped kiwi to higher levels. The recent business survey was mixed, but had more “good things” than bad things. This has left some traders believing the Reserve Bank of New Zealand (RBNZ) will have to delay their first rate cut in years.

To me, I think there are too many questions hanging over New Zealand like the Sword of Damocles to outweigh the high yield offered by kiwi. The RBNZ next meets on June 5th… That will be a very important meeting, and I personally would hold off with any kiwi purchases until you know more from the June 5th meeting.

The euro (EUR) hit 1.5820 overnight in Asian trading, but has seen that move erased during the London trading session… As I said above, I don’t know what the Londoners know that the Asians don’t with regard to euros… But, they certainly have a bias to buy dollars this morning!

Inflation in the Eurozone is really making things difficult for European Central Bank (ECB) President, Trichet. Oil prices have been the main culprit here, but that’s what Trichet was forecasting as he led the ECB to raising rates, while the United States was slowing down. Those weren’t popular rate hikes, except with me, and anyone else that loves to see a central bank provide price stability.

However, now the ECB and Trichet are to the cheese that binds. The Eurozone economic growth is slowing down, and inflation is still rising… What to do, what to do? I’ll tell you what I would do if I were in Trichet’s shoes… I would turn the money supply spigot to “Off” and hike rates again! Want to nip inflation at the heels? Or do you want to take a huge bite at inflation? Doing just one of those things, nips inflation at the heels… Doing both, takes a huge bite out of inflation, and that’s what is needed here!

Brazil is experiencing some of the same problems as Australia… And it would behoove Brazilian officials to talk to Australian officials for some help in dealing with a rising current account deficit, while the trade surplus increases. Yes, this is a strange bird… But when you have a strong domestic economy, and a rising currency, you see imports grow, which eats at the trade surplus, but when you take in investments the current account takes on water.

OK… We’re not talking billions here… $1.5 billion is the Brazilian current account deficit, but, as I said, they’ll want to nip this in the bud before they start having problems with the current account like New Zealand has!

Speaking of current account problems… The U.S. has a colossal problem there… And its biggest drag comes from the trade deficit. There are a couple of things to think about regarding the trade deficit in the United States. First and foremost is that with the weak dollar it has “narrowed”… However, oil has not allowed the weak dollar to really work on the trade deficit, as oil’s part of the deficit soars. Which brings me to another reason why I believe the dollar will continue to weaken in 2008.

And that is… Drum roll please… Protectionism… As I’ve explained many times in the past, the currency markets do not like any form of protectionism, and a country that puts protectionism in place usually sees the currency suffer. So, think about this for a minute… We have an election process going on in the United States that will come to a head in November, which is six months away. During that six months there will be candidates taking shots at OPEC and China (the two main “outside” culprits of the trade deficit… But we would never go after the U.S. consumer and tell him to save instead of spend now would we?). So, anyway… I see the candidates taking shots at these two “outside” culprits of the trade deficit, which will bring about thoughts of protectionism.

My friend, David Galland, has an excellent newsletter (he actually has a hand in many newsletters!) and on Saturday, he sent me a note with some great figures on oil for U.S. consumers. Let’s look at what David had to say…

“As we head into the Memorial Day weekend, Tom Kloza, chief oil analyst at the Oil Price Information Service, toted up the cost: ‘It looks as though we’ll pay about $1.5 billion to $1.6 billion each day during the four-day Memorial Day weekend, and that adds up to $6 billion to $6.4 billion in U.S. motor fuel expense,’ he said. ‘That compares with about $2 billion for the total Memorial Day weekend six years ago.’

“With consumers paying about $1 billion more each day for gasoline than they did six years ago, Kloza said, ‘You really wonder how much the U.S. consumer can take.’ And he added that the ‘more insidious increases are in the diesel segment… A back-of-the-envelope extrapolation would put diesel and heating-oil costs at about $807 million per day currently vs. about $217 million six years ago.”

“Net result: ‘We are seeing numerous bankruptcies among small and mid-sized trucking firms with more to come,’ Kloza forecast grimly.”

You can sign up for David’s daily letter here.

OK… This week the data cupboard will yield lots of home data, with the S&P Case/Shiller Home Prices data, and New Home Sales data today. Tomorrow we get Durable Goods. Thursday will see Personal Consumption, and on Friday, we’ll see two of my faves… Personal Income and Spending.

It’s a short week, and that’s fine with me! I’ve said it before and I’ll say it again… I love three-day weekends!

Before we head to the Big Finish… I want to tell you about Addison Wiggin’s new book. Addison has revised his Best Seller, Demise of the Dollar. Yours Truly wrote the foreword to the book, so that alone is worth the going price! Here’s a link you can click to find out more about the book and how to order one.

Good day… And a Marvelous Monday to you! Man… Talk about hitting the wall! I got home on Friday afternoon, sat down in my recliner, and fell asleep for hours! The last few days on my four weeks of cancer meds, this last week has been awful for me… But… I carried on, and I doubt anyone at the Money Show noticed me being uncomfortable and in pain.

The Las Vegas Money Show was quite good I believe, one of the better ones with regards to people having interest in what we do. It’s still nice to receive the “good to see you” and well wishes from readers that stop by the booth.

OK… Well… Friday saw some chinks in the dollar’s armor, and the euro (EUR) was marked up as the day went on. The U. of Michigan consumer sentiment index dropped to 59.5 in early May, its lowest level since 1980, from 62.6 in April. The decline was below the experts’ expectations calling for a dip to 62.0.

There was also news that U.S. housing starts posted an unexpected increase… But, really folks, is that a good thing? Empty homes a.k.a “inventory” is the major problem in this housing glut, so should we really get excited about “more homes” being built? I don’t think so… And apparently neither did the currency players, as this news was largely ignored.

In the overnight market, the Asians have really taken the dollar to the woodshed, pushing the euro to 1.56. Wasn’t it just last Monday that the euro dropped to 1.5365? This overnight move is being pushed by the thought that home sales, the more important part of the housing data, will show another decline, thus dropping for the second consecutive month.

Then there was a subtle little statement by the U.S. Treasury Undersecretary that I believe helped usher the dollar on its way to the woodshed. U.S. Treasury Undersecretary, David McCormick urged China to quicken their currency reforms. Now, I know, you’re saying what’s new about that, Chuck? Ahhh grasshopper… The dollar had rallied lately and the calls for Chinese currency reforms were nowhere to be seen. This statement reminded the markets that in the end… The U.S. Government wants a weak dollar… And if that’s what they want, currency traders and participants are happy to oblige them!

I don’t know at this point if this is a true reversal of the dollar rally or a false dawn… But either way… Just to see some chinks in the dollar right about this time is probably a good thing to currency holders!

The key focus for the United States this week will likely be the release of April’s FOMC minutes on Wednesday, which should provide some indication as to who is winning at Battleship. No wait, we’re looking for indication on who is winning the battle for rate hikes or rate cuts. The rate hike hawks have dominated of late on speculation that the Fed has ended its easing cycle, and the next U.S. rate move will be a hike later this year.

Of course you know me… I’m still keeping the light on for another rate cut by the Fed this year, which should really throw a spanner in the rate hawks’ works.

And getting back to last month’s -20K job loss posting… I’ve already highlighted the BLS ghost jobs that totaled 260K… But now this… The sum of state payrolls just came out for April showing -151K jobs, versus the actual preliminary release earlier this month of -20K. This hints at a potentially large downward revision to April payrolls when the May data is released.

I’m currently reading a new book called, Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve written by William Fleckenstein. You know that name as the guy who writes financial columns on MSNBC. I met Bill Fleckenstein a few years ago… He told me I was bang on with my banging on the Fed. Well, his new book is awesome at pointing to the mistakes that Big Al Greenspan and the Fed Heads made over and over again… More on this in the future…

Today, we’ll see the color of the latest printing of leading indicators here in the United States. I suspect they will show no gains, thus leaving the people like me that believe the recession is already in place, with reinforced thoughts.

We won’t see the above-mentioned existing home sales report until Friday… So, we’ll probably drift around all week… But at least we’re drifting in the right direction!

I was writing our monthly newsletter to clients, The Review & Focus, last night (yes, on a Sunday night!) and highlighted the Aussie dollar (AUD)… Through all the dollar strength the past couple of weeks, there were a couple of currencies that remained resilient… Aussie dollars, Brazilian reals (BRL), and Canadian loonies (CAD)… That’s no coincidence either! As I kept telling people last week… Look at positive balance of payments currencies and currencies from countries that provide the world with something they need! Voila! Aussie, Brazil and Canada!

The Aussie dollar has pushed the door of 95-cents wide-open overnight, and Canadian loonies have passed the parity level to the green/peachback. Aussie is looking quite perky, which is good for my thought that Aussie too would reach parity to the green/peachback.

Aussie dollars have a central bank that will either keep rates unchanged or move them higher, while the loonie has to fight with a central bank that wants to keep in step with the Fed’s rate cuts… So… Look for Aussie to outperform loonies, kiwi (NZD), and reals going forward based on this rate outlook.

Now that was some great news that Chris brought to you regarding Iceland on Friday, eh? The poor krona (ISK) was in need of some good news, and when the Nordic Banks pledged to provide liquidity to the Icelandic Central Bank, it was just what the doctor ordered! But… Please do not take this as an endorsement to buy Iceland again. Instead, I believe that this news gives us better levels to sell when our CDs come due.

Someone asked me at the Money Show last week, what I would buy with the Icelandic krona proceeds… Well… I would either cross to Norway (NOK) or Aussie… There are two great economic stories right there, with little chance of going the way of Iceland.

And how about bold? The shiny metal enjoyed its best week in about two months it seems, and has come back to the $900 level and beyond. I have to admit that the $900 handle looks much better hanging on gold than the lower number it wore for too long!

Good day… And good morning from beautiful downtown Panama. Chuck had to get on a plane back to St. Louis early this morning, so he asked me to pfill in this morning. The dollar mostly traded within a range versus most of the major currencies yesterday as negative news from the United States was offset by predictions of a possible FOMC rate rise. The biggest movers yesterday were the commodity currencies and the ISK, which was helped by the Nordic central banks. More on that later, but lets start with the data due out in the United States.

The Reuters/University of Michigan consumer sentiment index will likely show a drop to a 26-year low when it comes out later this morning. The other major report released today will probably show that housing starts in the United States fell to a 17-year low in April. Home construction and property values “seem likely to decline well into 2009,” Federal Reserve Bank of San Francisco President Janet Yellen said earlier this week. And a jump in foreclosures, as values fall and adjustable rate mortgage costs rise, is adding to concern. Foreclosure filings climbed 65% and bank seizures more than doubled in April compared with a year earlier, according to figures issued this week.

The U.S. economy is in a recession, and the over-leveraged U.S. consumer won’t be able to ride to the rescue as they have in the past. And I don’t expect the stimulus checks to help much either, as they are way too little too late. The fundamentals of the U.S. economy don’t look good and this dollar rally will not last past the end of the second quarter. But short term, we could see additional dollar strength as investors focus on future FOMC moves.

Both the Federal Reserve and the Bank of England have had to admit that inflation is rising faster than they expected, leading currency traders to predict an end to their interest rate cuts. Higher inflation numbers have caused future traders to increase their bets that the Fed will reverse recent cuts later this year. This change in sentiment has helped push the dollar higher, but the move will likely be short-lived as the markets will realize that the FOMC is just too far behind in their fight with inflation. As prices continue to move higher, the U.S. economic growth will slow even further and the dollar will resume its steady decline.

Nordic central banks rode to the rescue of the Icelandic krona (ISK) this morning as they announced they have agreed to provide as much as 1.5 billion euros in emergency funds to Iceland’s central bank. We’ve written at length about how the credit crisis has spilled into the Icelandic banks, and recently the liquidity in the ISK has all but dried up as currency dealers questioned the financial stability of the Icelandic central bank. Traders have been concerned that the Atlantic island’s commercial banks may seek help from Sedlabanki (Iceland’s central bank) which doesn’t have the funds to bail them out. While the size of the swap agreement wasn’t large enough to move the krona, the announced cooperation seems to have restored at least some of the lost confidence. With the support of the central banks of Norway, Denmark, and Sweden, the Icelandic krona rallied more than 4.4%, the biggest gain on record.

In other news from the Nordic region, the Danish central bank raised its benchmark interest rate by 0.1% to 4.35% today.

Japan’s economy grew faster than economists estimated as exports to the rest of Asia helped offset the U.S. slowdown. Gross domestic product in the first quarter of 2008 grew 3.3% in Japan, well above estimates. Net exports accounted for most of Japan’s growth as demand from Europe and Asia continues to be strong. The figures coincide with reports released yesterday that showed the German economy expanded at the fastest pace in 12 years. Both of these reports confirm our thought that the global economy will not be dragged down by the slowdown in the United States.

But the currency markets ignored the positive surprise in Japan and the yen (JPY) continued to sell off. As Chuck pointed out earlier in the week, the carry trade is back as market volatility has eased. Japan’s currency slid the most against the Aussie dollar (AUD) and New Zealand dollar (NZD), both of which benefit from the return of the carry trades. With the markets generally range bound, volatility has decreased encouraging investors to borrow funds in the nations with low rates and invest where returns are higher. This week’s sell off of yen reflects a return to risk-taking activity and a revival of carry trades. Ultimately the currencies will return to trading on economic fundamentals, but for now the carry trade is continuing to dominate.

Currencies today 5/16/08: A$ .9449, kiwi .7675, C$ .9992, euro 1.5457, sterling 1.9479, Swiss .9465, ISK 74.43, rand 7.4835, krone 5.0855, SEK 6.0402, forint 160.20, zloty 2.1922, koruna 16.16, yen 104.77, baht 32.285, sing 1.3715, HKD 7.80, INR 42.65, China 6.9950, pesos 10.436, BRL 1.653, dollar index 73.28, Oil $125.58, Silver $16.81, and Gold… $886.90

That’s it for today… Had a great dinner with the folks from the Sovereign Society last night. I know it sounds like I came down here to Panama kicking and screaming, but this conference has far outweighed my expectations. The investors are knowledgeable and excited by the opportunity to diversify out of the U.S. dollar. Hopefully I will be able to convert a few of them over to the EverBank family. Got to get back downstairs now, as I don’t want to miss an early presentation by one of last night’s dinner hosts. Hope everyone has a Fantastico Friday and a great weekend!!

P.S. To get The Daily Reckoning sent directly to your inbox, sign up for our free email newsletter, or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Source: U.S. Housing Continues to Slump

Good day… And a Tub Thumpin’ Thursday to you! Well… It’s the third day of the show today and I’m beginning to hit the wall. I’m draggin’ the line, as Tommy James used to sing. The people here at the show have been great, stopping by to see how I’m doing, and so on. We had a great Town Hall Meeting for EverBankers yesterday, and today, I finish up my duties here, as I am the moderator of a panel this morning.

The currencies remained in a tight range with a bias to sell dollars yesterday and in the overnight markets. The euro (EUR) received a boost when Eurozone GDP printed stronger than expected, coming in at +0.7 or 2.2% annual. At the same time Eurozone inflation was reported to register a 0.3% increase or 3.3% annual. These reports will ease some of the pressure on the European Central Bank (ECB) to call off the dogs – (interest rate hikes).

I was talking during the Town Hall Meeting yesterday, and emphasized to anyone listening to me that a central bank that is willing to stick to its guns, and fight inflation to provide price stability is the kind of central bank you want the currency you own to have! There’s no two ways about it folks. Inflation is a baaaaaaaaaddddddd thing… And I believe we will all rue the day that the Fed turned its back on inflation here in the United States. But Hey! That’s just me! Don’t let me get in the way of a “feel good” party.

The New Zealand dollar (NZD) received a smack in the face overnight as they printed an extremely weak first quarter retail sales report. Retail sales in the first quarter fell 1.2%, six times worse than the forecast for a negative 0.2% (see how I used that new math to figure that one out?) I think this could mean a sea change in New Zealand interest rates by this summer. This has worked for the Reserve Bank of New Zealand (RBNZ). They had tremendous growth and inflation that the RBNZ fought with aggressive rate hikes… Now, the growth is slowing and inflation might soon follow, which would indicate to me that the RBNZ could be easing rates by the end of this summer. That won’t be a good thing for kiwi, as its strength is derived mostly from the high interest rate it sports.

In Japan, March Machine Orders printed worse than expected at a negative 8.3%… But, a funny thing has happened on the way to the forum lately for yen (JPY). As has become the norm lately, yen simply ignores the data and has its fortunes decided by carry trades, which in last night’s case, showed carry trades being unwound. So, that means that yen gets some lovin’ today.

This data update can get a little boring so stick with me here as we’re almost to the end…

U.S. industrial production printed much worse than expected this morning… Production for April fell -0.7% (versus -0.3% forecast), and the prior report was revised lower from +0.3% to +0.2%. The declines were broad based, with auto production collapsing -8.2%! This print was so bad that a look back to see if we’ve had anything like this before shows me that since 1990, worse prints than this one have only occurred around Katrina, the start of the Iraq War, and during the 1990 recession.

So… Doesn’t it look more and more everyday that I was bang on with my call that we’re in a recession now?

And then finally… The TICs data… You know, the net foreign security purchases that are used to finance our current account deficit… As I’ve been explaining to people for months now, the United States has experienced a shortfall when it comes to the financing of its deficit, which requires about $80-85 billion per month in foreign investment in U.S. assets. To relieve that shortfall, the government has chosen the lesser of two evils by allowing a debasement of the dollar, which is used to purchase the assets at a discount, rather than aggressively raising interest rates.

This move has paid off, at least for March (remember that’s when the euro was knocking on the door to 1.60). The total for the TICs in March reached $80.4 billion, up from the nearly $65 billion attracted in February. The trick here is to keep the dollar weak to allow the deficit to continue to be financed! I love it when a plan comes together!

So… Gold has finally caught some wind in its sails. Gold has gained almost $16 today. My friend, and writer extraordinaire, David Galland wrote a piece on gold that was featured here in The Daily Reckoning a few days ago, and he’s soooooooo good that I thought I would treat you with a snippet of his thoughts on gold…

“The current correction is not yet exceptional: Since the current bull market began in earnest in 2001, there have been 9 corrections in excess of 8%.

“During the three worst pullbacks, gold fell 15.98%, 18.27%, and 27.7%, respectively. And the average of those corrections is 13.6%, so the latest, which touched 18% at its worst, is only marginally worse than average.

“Put another way, for the current pullback to match the sharpest correction to date, a drop of 27.7%, gold would have to fall to about $730. Could it happen, again? Sure, why not?

“And if it does, rest assured that, just as they did when gold moved down by that percentage in May of 2006 – falling from $725 to $567 – analysts will line up to say that the back of the gold bull has been broken. But if you had listened to the naysayers back then and bailed out at the bottom of that correction, you would have missed a rebound of close to 100%.

“I mention this to stress that the fits and starts we are currently experiencing are nothing unusual. Quite the opposite, they’re the norm for any sustained bull market. In the 1970s’ sustained gold bull market, a similar pattern occurred.”

Time to head to the Big Finish… Thanks to David Galland for his thoughts on gold! Be sure to check out his full article here.

Currencies today 5/15/08: A$ .9370, kiwi .7575, C$ .9990, euro 1.5480, sterling 1.9445, Swiss .9490, ISK 77.70, rand 7.6075, krone 5.0760, SEK 6.02, forint 161.20, zloty 2.19, koruna 16.19, yen 104.70, baht 32.35, sing 1.3775, HKD 7.80, INR 42.59, China 6.9940, pesos 10.49, BRL 1.66, dollar index 73.21, Oil $126, Silver $16.93, and Gold… $883.10

That’s it for today… Can’t wait to get home and off my feet! I hear that my little buddy Alex didn’t fare too well in his baseball game last night… Tough night at the plate… That’s OK, there’s always the next game! An old Mark Twain Bank colleague dropped by the booth to say hi and catch up yesterday. It was good to see Mark Elmore again! Mark was our assistant back “in the day”, and now he’s doing quite well trading bonds, so I like to think that I taught him well! HA! I’ve gotta get out of this place… If it’s the last thing I ever do! Can’t wait to get out of here, this place is just too spread out for me! So… Let’s get the last day of the Show over with, and I hope you have a Tub Thumpin’ Thursday!

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Source: I Love it When a Plan Comes Together! 

Good day… And a Wonderful Wednesday to you! Well… All the healing in the currencies we saw yesterday has been wiped out by one statement from a Fed Head. Imagine if you will that a Fed Head actually mentioned “inflation”! Well… One did! I feel like Tweedy Bird here… I saw a Fed Head mention inflation, I did, I did!

OK… Fed Head Hoenig has thrown a cat among the pigeons this morning by stating that “inflation pressures may spur a rate rise by the Fed.” Hmmm, is he serious, or just blabbering some currency intervention, seeing the dollar beginning to lose ground again? Well, that’s the question of the day.

To me… It’s the right thing to say for a Fed Head if it’s true. If he’s just trying to provide some verbal intervention for the dollar, then he should be stripped of his Fed Head Title and given the Title of court jester!

So, the dollar is back with the hammer in its hand again. The selling has been strong again too. The euro (EUR) has fallen 0.5 cents since I came in to the office about a half hour ago! UGH! I bet the writer from the Los Angeles Times is wondering why he printed that interview with me yesterday at this point…

Los Angeles Times writer Marty Zimmerman has a blog on the paper’s web site, and he writes about money. He called yesterday and said that he thought he saw the dollar getting sold again, and wanted my take on it. I told him that the markets had probably come to grips with the Fed’s statement last week, which ended up being quite “unsure” and vague, while the European Central Bank (ECB) would meet this week and keep rates unchanged, thus giving the euro the strong rate differential to the dollar.

But, then Hoenig came along and threw a cat among the pigeons!

Well… The euro had Hoenig’s comments going against it all night, and then ran into some weak data this morning, which really has the single unit selling like funnel cakes at a State Fair. Retail sales in the Eurozone fell 1.6% year-on-year, which was much larger than the forecast slide of 0.7%. Sales were off 0.4% from the previous month.

This is the first report that really slams the euro and shows a slowdown happening in the Eurozone. I’ve still got my colors pinned to the mast of “the Eurozone will pass the test of a U.S. recession”. But this report sure shakes my confidence. Oh, retail sales, you’re breaking my heart, you’re shaking my confidence daily.

OK… I’m back now, I was away for a moment…

The price of oil again set another new record level, moving to $122.73 yesterday. So, if Hoenig is sincere about his inflation talk, then he should be shaking in his Hugo Boss Patent leathers today… But there’s more to make him shake, and that’s all the market chatter surrounding the possibility of oil prices hitting $200 by the end of the year. OUCH! Our friends at OPEC (NOT!) have something to say about this, and OPEC’s President, Khelil, warned last week that oil prices could touch that level by the end of 2007.

For a while yesterday, it looked as though gold had gotten some wind in its sails, with the wind being oil prices… But that just couldn’t last, as the dollar strength overnight and this morning has gold running for the hills again with a $5 loss. Should $200 oil continue to dominate the markets’ discussions, I would think that gold would get some wind in its sails again.

The Canadian loonie (CAD) sure likes the look of oil prices. I was doing a trade yesterday in loonies, and looking at the daily graph I had a V-8 moment… Wow! The loonie had moved stealth-like back to near parity to the green/peachback. I know that I’ve said over and over again that this dance is gonna be a drag… In other words, the loonie will be pushed higher by commodity prices, and pulled lower by Bank of Canada rate cuts… But if $200 oil continues to dominate, it could push the loonie past parity once again.

Well… It looks like the Eurozone will have to set another place at the table, as the European Commission approved the Slovak bid to adopt the euro next year. You know, I find this strange that the Slovaks will move ahead of Poland, Hungary, and the Czech Republic, which were once thought to be on the euro “fast track”. That was in 2002! They still haven’t moved to the euro! But… Those three have done quite nicely moving along side the euro the past six years!

Pound sterling (GBP) is weaker this morning too, as it has absorbed the euro selling, and some weaker domestic data too. U.K. consumer confidence fell to a new record low in April, dropping from 77 to 70… OUCH! Now that’s going to leave a mark! Ever since the Bank of England started be weak kneed with the credit crunch like their friends on the other side of the Atlantic, I’ve not been a fan of sterling. We even moved it out of the World Energy Index!

The Reserve Bank of New Zealand (RBNZ) printed their Financial Stability Report last night, and contained a note that I thought was interesting. RBNZ Governor Bollard noted that “banks appear to be tightening the availability of credit” and that “there is a risk that if credit conditions are tightened too much, the slowdown in the economy will be exacerbated, putting additional pressure on households and businesses.” Governor Bollard also left out the word “significant” from his statement that rates would remain on hold for “a time yet”. It was just six weeks ago that he stated, “rates would remain at current levels for a ’significant’ time yet.” Hmmm…

I don’t think that means the RBNZ will run out and cut rates at their next meeting… But Bollard is greasing the tracks here folks. He’s making overtures of lower rates. I would look for additional follow up comments in the coming weeks for more indications of what he plans to do. If he continues to grease the tracks, kiwi (NZD) will not react favorably.

There’s a note on the Bloomie this morning that Greg Gibbs of ABN Amro Holding NV, said in an interview that “the commodity currencies is where the action is.”

I’ve never wavered on that thought. I keep telling anyone that will listen that we’ve been hearing the stories about how the commodity bull market has been over for five years now… And those calls have been wrong for five years now, and I still believe they will be wrong now too. For new readers to the Pfennig… Let me explain…

Famous and well respected (and a friend of ours) investment analyst Jim Rogers, explained a couple of years ago that in over 200 years, bull markets for commodities have averaged 17-22 years in length. This bull market has only been going for about seven years now.

I’m a true believer of trends… So… With that in mind… Commodity currencies should be “where the action is” or as the Dave Clark Five used to sing… Come on, let me show you where the action is!

And on that note… It’s time to head to the Big Finish! But first, the Big Boss, Frank Trotter has an announcement (no they didn’t name me employee of the year! HA!)

Here’s a note from Frank:

“We are looking forward to seeing EverBank customers next week while Chuck and Chris and I are at the MoneyShow in Las Vegas! Be sure to stop by our booth (#106) to say hello, attend the three talks Chuck is doing, and talk about adding more money to your EverBank accounts. I wanted to add to the excitement of the event by making a special invitation for you to join the EverBank team and some of the great financial editors attending the MoneyShow for an exclusive private dinner Monday night. This is an incredible opportunity to spend some one-on-one time with Chuck and enjoy dinner prepared by a Michelin-rated chef. We have a very limited number of slots for this dinner that will occur in one of the canyons north of Las Vegas on Monday night May 12th. We’ll depart the Mandalay at 4 PM, enjoy an evening of fine dining in the great outdoors, and return to the hotel by 10 PM. If you are interested please email me at EverBank-LasVegas@everbank.com – of course not everyone can come so we’ll let you know by Friday if we have space. Be sure you include an email address that you monitor and a phone number so we can provide you with the details.”

Alrighty then… It’s not every day that the Big Boss adds to the Pfennig, but I love it when he does!

Currencies today 5/7/08: A$ .9470, kiwi .7860, C$ .9965, euro 1.5440, sterling 1.9675, Swiss .9475, ISK 76.80, rand 7.5340, krone 5.0875, SEK 6.0175, forint 163.30, zloty 2.2180, koruna 16.29, yen 105.20, baht 31.70, sing 1.3640, HKD 7.7950, INR 41.37, China 6.9860, pesos 10.50, BRL 1.6580, dollar index 73.41, Oil $121.50, Silver $16.71, and Gold… $870.88

That’s it for today… So… As Frank said above, I’ll be in Las Vegas next week for the Money Show. Vegas is completely lost on me, as I’m not a gambler, and after working all day at a booth, I go out to eat dinner and return to my room. Pretty exciting guy, eh? I caught up with an old friend yesterday, Ellie, who was kind enough to mention my Pfennig in one of her books years ago. Ellie is a cancer survivor, so we have even more to talk about these days! My little buddy, Alex, got another baseball game in last night, this time it was a winner, winner, chicken dinner! However, the rain is back, and tonight’s game is going to be a washout I can tell already! Three inches of rain is forecast for our area in the next few days… Not a good thing for my little river town… But… That’s for another day… Today, I hope you have a Wonderful Wednesday!

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Good day… And a Tremendous Thursday to you! Well… Euro 1.60 (EUR) didn’t last long. More on that in a minute… But first we need to address the question of whether or not the euro hitting 1.60 was a flash in the pan. I certainly don’t think so, but it sure looks as though that could be the case given how the single unit has tumbled since reaching that level on Tuesday.

So… There were lots of reasons for the euro’s decline yesterday… But the infamous straw for the euro seemed to be the German Business Confidence report as measured by the think tank, IFO, this morning. German Business Confidence – which had surprised on the upside the past three months – came out softer than expected in April, falling from 104.8 in March to 102.4. That was quite a tumble in business confidence, and apparently wipes out the previous three months of stronger confidence. It’s a “what have you done for me lately” world out there folks.

So, is this the mini-sell off I’ve been talking about since January? Could be… I had a sneaky feeling yesterday, so I asked my chartist friend what he was seeing. Here’s what he had to say…

“As far as the euro, I’m not seeing anything too exciting. There are some signs that it may be overbought in the short term. The weekly chart is absolutely beautiful (movement from lower left to upper right), but it is also showing that we may be due for a slight pullback (buying opportunity.)”

Risk appetite is really taking flight again in the markets, but I just can’t get my arms around this willingness to take on risk. There are just too many “risk events” out there (like Bear Stearns) but, that’s just me, apparently, the markets don’t think this way. And with the risk appetite on the rise, the fortunes of Japanese yen (JPY) and Swiss francs (CHF) are on the opposite side of that rise.

Here we go again… Investors taking on risk like there’s no tomorrow. I sure hope, for them, it doesn’t end up in smoke… But I have to think that it will. My chartist friend also had this to say about risk right now…

“What I am more excited to share with you is what is going on in the whole Risk vs. Risk Aversion Arena. As you have pointed out many times, the stock market and the high yielding currencies represent Risk. The Yen and Franc represent Risk Aversion. So, what does that mean?

“If you look at the stock market (S&P 500), there is major overhead resistance in the 1380-1400 area. We are currently in our fourth retest of this 1380-1400 area and we appear to be failing yet again. Each failure drains the confidence levels of investors, so we could be setting up for some dramatic downside movement. If this happens, then Risk will be on the run, which will mean Risk Aversion (Yen and Francs) could see some much needed love. Both of these low yielders look to be primed for strong moves upward.”

Theswoop.net had this to say about what’s going on with the Fed, their collateral for loans, and everything else that I’ve yelled at the walls about recently…

“The issue here is uncertainty. Despite some signs that the worst of the banking crisis may be past, officials from the Treasury and Federal Reserve concede in private that, with regard to certain complex financial products and relationships, their knowledge is imperfect. ‘The truth is,’ one Treasury official told us, ‘we don’t have a clue.’”

Oh my gosh! Did shivers just go down your spine when you read that? “We don’t have a clue”? The old saying about the inmates have taken over the jailhouse, comes to mind right now.

Are you keeping on top of the news of the rationing of rice? Brazil suspended their rice exports to protect their supply for domestic demand. I saw on the TV yesterday, a news story flash across that Wal-Mart and Sam’s Club are rationing rice. Yesterday, Chicago rice futures hit a record price above $25 (per hundredweight). And in Thailand, the world’s top exporter of rice, the price surged to $1000 a ton.

Right here, right now, in the U.S. of A. we’re rationing rice. Can you believe that? There are underlying stories woven into this that I won’t get into, but for now… We have this to think about… We have rationing in the United States.

So… The dollar is on the rise… The only good thing about that right now is the fact that when the dollar rebounds, the price of oil goes down. This all looks as though it’s a house of cards to me… But, give the dollar it’s due… I’ll bet a fiddle of gold, against your soul, ’cause I think I’m better than you! I have no idea where that came from, but Charlie Daniels in the morning ain’t too shabby!

You know all this talk lately by G-7 ministers claiming that the markets didn’t understand their Forex message? Well… The Bank of Canada’s (BOC) Flaherty said yesterday that G-7 did NOT have discussions about currency intervention.

See! I told you so! I told you that the markets wouldn’t take G-7’s message seriously, unless there was a threat of coordinated intervention… And that, I just didn’t see coordinated intervention in the cards, not as long as the United States is still banging on China to let their currency gain versus the dollar. And now, we know! There was no discussion of intervention!

That’s an “all clear” horn for currency participants… I guess they are now waiting for the bargains to appear.

The Reserve Bank of New Zealand (RBNZ) left rates unchanged last night. I didn’t expect any movement, and quite frankly had forgotten all about the meeting. Good thing they didn’t spring any surprises on me/us, eh? Here’s RBNZ Governor Bollard…

“Economic activity has weakened more markedly than expected in the Bank’s March Monetary Policy Statement. There have been sharp falls in consumer and business sentiment, exacerbated by tighter credit conditions, a further decline in the housing market and weaker prospects for world growth. Financial market turbulence around the world continues to add to an uncertain economic environment. Further, the very dry summer is also weakening short-term growth prospects.

“However, the labor market is still strong and New Zealand’s key international commodity prices remain high. Government spending plans and the possibility of personal tax cuts can also be expected to limit the economic slowdown.”

Good day… And a Happy Friday to one and all! An All Shook Up Friday for us here in the St. Louis region, as we experienced an earthquake this morning registering 5.4 on the Richter Scale. My house started shaking, and kept shaking, which led me to believe it was more than wind. The house was shaking so bad, it woke up my beautiful bride… Which isn’t something that’s easily done! Especially at 4:30 AM!

But, it looks as though all is right on the night, the earthquake was centered 127 miles east of St. Louis. As you all probably know, here in St. Louis, we keep the New Madrid Fault in the backs of our minds, and drag it out whenever we feel the earth move under our feet.

Well… European Central Banker, Juncker tried to “shake” up the currency markets yesterday with some comments about G-7. As I’ve said two times this week, I was afraid the markets didn’t understand the G-7’s comments about the currencies, and that thought was repeated by Juncker yesterday, as he said, “the markets did not correctly understand the G-7 message on FX”.

So, that was what put a bug in the bonnet of the euro (EUR) yesterday morning as I was signing off. And that carried through to the Asian markets last night… But, we’ve seen this before, right? Just a few weeks ago, we experienced euro weakness, but that bad “air” soon dissipated… And I would think this would too.

It all depends on the market participants and their will to push the envelope with G-7. If it were me… I would push the envelope and call their bluff. I truly do not believe a coordinated intervention will take place, for to do so, would require the United States to join in… And here’s where the oil in this machine gets all sticky. How can the United States intervene and buy dollars, when they keep harping that the Chinese renminbi (CNY) needs to get stronger versus the dollar? They can’t… If they did, the markets would take them to the woodshed… And the U.S. officials know that.

We had Fed Head Fisher our on the speaking circuit yesterday, and his comments also helped the dollar rebound. Fisher was talking “some sense” (believe or not!) on the subject of “attempting to inflate away the Financial System’s woes”, saying, “there’s danger of a wing-and-prayer promise to rein in inflation later” and then the fateful, “I maintain a strong reluctance to further interest rate cuts”.

Well… The problem here is that Fed Head Fisher is a Lone Ranger. Big Ben doesn’t share his thoughts, and when the Fed meets later this month and cuts rates, Fisher will probably be the lone wolf on dissenting.

So… After all this, the euro still has the dollar by the tail, as it maintains a strong base above 1.58… Of course, now that I’ve said that, we’ll probably see it fall further! UGH! The Chuck Kiss of Death or as in honor of my friend the Mogambo (TCKOD).

Well… The U.S. data yesterday showed more signs of recession, with the Weekly Jobless Claims jumping up to 372K from 355K the previous week. But the piece of data that really barked like a recession was the Philly Fed Index (manufacturing), which collapsed this month and fell from -17.4 to -24.9. This is the lowest level since January and February 2001, as we entered the last recession. Data back to 1968 shows that declines in the index below current levels has been consistent with recessions.

Of course you, a Pfennig reader, knew we were in a recession months ago, because I told you so! I bet you used that information as “cocktail trivia” to sound smart! Good for you! That’s they way more people see the “light”.

Alright, I went off on a tangent there… I’m just kidding you know… It’s just my nature to have fun!

So… The fundamentals haven’t changed. The U.S. deficit is soaring higher and higher, requiring us to attract more and more foreign investment… The economy is in a recession… Jobs are hard to find… House prices are falling… And we’re still fighting a war! Does this sound like the stuff that a stronger currency is made of? I don’t think so! So… If this isn’t a trend reversal, what is it? Ahhh grasshopper, it’s simply profit taking and the scared Nervous Nellies who are selling. It sure does give us some cheaper levels to buy euros, eh?

Not just euros… The whole cellblock is dancing to this jailhouse rock… So, if you can’t find a partner to dance with, grab a wooden chair! In other words… Find your fave currency and most likely it has been dancing to the jailhouse rock, and is now at cheaper levels than even earlier this week!

One currency that sat out the dance overnight was pound sterling (GBP). In fact, pound sterling has rallied on comments from the Bank of England (BOE). BOE member, Bean, tried to calm the fears of a huge sell off of pound sterling. Bean commented that the stimulus from GBP’s fall from the peak is roughly equivalent to a rate cut of 3% points and that GBP’s fall since August was “of the same order” as the fall after the ERM crisis in 1992.

All a bunch of rubbish to me… But it calmed the fears for a day at least!

Man… Did you see the awful earnings report by the brokerage that owns a Bull? In case you missed it… $1.96 billion net loss, with $9 billion more of mortgage-related write downs. I’m not picking on Merrill here, just posting what I believe will be more damage to the economy… This morning, Citigroup, posted an even bigger loss. Citigroup Inc. reported a net loss of $5.1 billion, and more than $10 billion in write-downs.

And… These reports lead one to believe they should buy dollars? Hmmm… If so, I’ve got some land.

Stocks were no great shakes yesterday, but at least they didn’t sell-off. So, that means the carry trade remains in place, and the weakness of Japanese yen (JPY) and Swiss francs (CHF) remain in place, while Aussie (AUD) and kiwi (NZD) are looking good! And always I tell you that it is better to look good than it is to feel good my friend!

There’s no data today in the United States so… It would appear that the dollar will end the week on an upbeat note. That’s OK… Even a blind squirrel can find an acorn!

Currencies today 4/18/08: A$ .9375, kiwi .7905, C$ .9925, euro 1.5845, sterling 1.9975, Swiss .9835, ISK 75.65, rand 7.76, krone 5.01, SEK 5.9285, forint 159.75, zloty 2.1560, koruna 15.81, yen 103.25, baht 31.44, sing 1.3530, HKD 7.7925, INR 39.93, China 6.9935, pesos 10.46, BRL 1.6540, dollar index 71.80, Oil $114.15, Silver $18.05, and Gold… $934.50

That’s it for today… So… Shake me, wake me, when it’s over… I thought of that great old Four Tops song, on my way to work this morning. Geez Louise, my poor face got fried yesterday at the ballgame… Good thing I had a ball cap on to protect my bald head! I was hoping last night that the red on my face would fade… But as I looked in the mirror this morning, my face is even redder! OUCH!

HEY! Sunday is the Big Boss, Frank Trotter’s birthday! Frank and I have worked together so long, that he was a young man when we started! In fact… The Dead Sea wasn’t even sick yet! That’s how long we’ve worked together! His beautiful daughters are all grown up now, I held them as babies! So… Happy Birthday, you youngster! (Frank’s 1 year older than me, so as long as I keep calling him young, I’m younger!) I hope you have a Fantastico Friday!

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Editor’s Note: Chuck Butler is the senior vice president of EverBank World Markets. He oversees the trading desk and operations for over 12,000 individual and corporate clients, both in the United States and abroad, who look to EverBank for FDIC-insured World Currency Deposit Accounts, and Single-Currency and Index CDs .