Good day… And a Wonderful Wednesday to you! Another All-Star Game, another win for the American League… I truly believed that with Tim Lincecum going for the National League, that we would win this year… But that didn’t work out… I did truly enjoy the game though, and got to experience it with sons, Andrew, and Alex, with Darling Daughter Dawn’s husband, Jerry… A truly memorable night…

The currencies slowly moved a bit higher yesterday, and the euro is back to 1.40 this morning… The move came as stocks rebounded some, after reports of a better than expected earnings report for Goldman Sachs. Hmmm… Now, doesn’t that just tick you off a little? Here’s Goldman Sachs who just months ago, changed to a Bank Holding Co, so it could take TARP money, then paid it back a month ago, and now, prints a Moon Shot profitable earnings report… I guess I should be happy for them… Unfortunately, I smell a rat…

It’s as if the Risk Aversion crowd just took their dollars and yen and went home! They are nowhere to be found this morning! The euro is pushing toward 1.41 again, which… Lately has been a tough row to hoe for the euro… Every time it gets close to 1.41 or even past it, albeit briefly, it comes back… So, it will be interesting today to see if the euro can add to the overnight gains.

The negativity toward the U.S. dollar and the so-called green shoots is really building steam once again.

We saw Retail Sales for June yesterday… The “experts” believed the report would print at a positive .4% gain, following up May’s .5% gain… And that’s exactly what it did! Just goes to show you that no matter how many people are unemployed, and how bad the recession / depression is… Consumers still spend! And that’s what makes the world go around, as my dad used to say! The Butler Household Index (BHI) was a little fuzzy this month, as I haven’t exactly seen the shopping bags come into the house, but I have a funny suspicion that they were there! Lots of UPS Deliveries for sure! So… The BHI believed that June Retail Sales would be probably better than expected… ( I wrote that yesterday when I thought Chris had bailed on me… Only to find out he had already written the Pfennig! UGH!)

The German Economic Sentiment, as measured by the think tank, ZEW, printed weaker yesterday for the current month… This report had trended upward in recent months, but with the recent loss of momentum in stocks, you can understand the reason for the weaker print.

And down under… Reserve Bank of New Zealand (RBNZ) Gov. Bollard, gave a speech Tuesday night, that, as far as I’m concerned pretty much drives the final nail in the New Zealand rate cut coffin… Bollard’s speech was titled, “Savings, Investment, Funding Markets Are Key To Recovery.” In the speech, Bollard really made a point of expressing his fear of reigniting the housing market… Therefore, I was sure after reading the speech that the RBNZ will NOT cut rates further, since the Gov. fears reigniting the housing market! And… We all know, even if Big Al Greenspan still doesn’t admit to knowing, that those low interest rates ignite housing bubbles!

You know, I just won’t let Big Al Greenspan off the hook will I?… NO! Never! You can’t make me do it! Pink Floyd said that money is the root of all evil today… But… I believe that Big Al Greenspan is the root of all evil today!

OK… On to other things!

There are reports this morning of a major earthquake hitting New Zealand… 8.2 magnitude, I believe I heard… If so, it would cause a short-term loss for kiwi, but afterward, it would probably be a springboard for the currency, given the re-building needed… More importantly though, I truly hope this isn’t as bad as first reported and that there isn’t any loss of life.

Aussie dollars are back to 80-cents again this morning… I’m sure there was some moves from kiwi to Aussie on the earthquake news…

Chris talked a bit about this yesterday, but I thought it was very important to give it to you again…

With three months left to go in the budget year, the U.S. government’s deficit has hit an all-time high of $1 trillion. The Congressional Budget Office predicted that by the end of the year, the deficit will be 13% of the country’s GDP. That compares with a recent high of 6% of GDP in 1983 during the Reagan administration and 30.3% in 1943, when the U.S. spent a huge amount of money to fight World War II. OUCH! But, that’s nothing folks! This budget Deficit is going to get larger and larger! And IF all the beans are counted… This will be quite ugly!

But, that just means more supply of Treasuries that will have to get auctioned folks… More and more… And it just scares the bejeebers out of me, what will take place…

OK… Before I go to the Big Finish… I want to talk to you about two things that hit the newswires yesterday… I get a lot of flak from some readers whenever I talk about the direction the U.S. Gov’t is taking our “republic”… But that doesn’t stop me, no sirree Bob!

Here’s the first one…

Increased taxes for households with an annual income of more than $350,000 could pay for an overhaul of the U.S. health care system, according to a plan supported by House Democratic leaders. Proposed measures include a 5.4% surtax on couples earning more than $1 million a year. Charles Rangel, chairman of the House Ways and Means Committee, said the wealthiest Americans were singled out to pay the extra taxes because that option imposes “the least amount of pain on the least amount of people.”

I guess it all depends on who you are talking about with regards to people experiencing pain!

And then there was this…

U.S. government officials are weighing a plan that would let borrowers who have fallen behind on their mortgage payments avoid eviction by renting their homes instead, sources familiar with the administration’s thinking said on Tuesday.

Under one idea being discussed, delinquent homeowners would surrender ownership of their homes but would continue to live in the property for several years, the sources told Reuters.

Officials are also considering whether the government should make mortgage payments on behalf of borrowers who cannot keep up with their home loans, tapping an unused portion of a $50 billion housing aid kitty.

As part of this plan, jobless borrowers might receive a housing stipend along with regular unemployment benefits, the sources said.

Remember the famous line by President Reagan when he said the scariest words someone could hear… “I’m from the Government and I’m here to help”…

I see that Gold has finally shown some life this morning, adding $12 overnight… A reader sent me a link to a story about the manipulation of the Gold price, which I truly believe has been going on for years, but keep it in my back pocket only to bring out when it makes sense to do so… Here’s a snippet of the report by GATA (Gold Anti-Trust Action Committee Inc.)

New York and Tokyo commodity exchanges have been permitting their gold futures contracts to be settled not in real metal but in shares of gold exchange-traded funds (ETFs). This essentially allows the gold shorts (and the exchanges themselves, which guarantee futures contracts) to transfer their obligations to third parties that may not have the metal they claim to have and that, in any case, are operated by the investment banks running major short positions in gold.

Thus it is likely that the paper claims to the world’s supply of gold are greater than even GATA has suspected — that the gold supply is even more oversubscribed and that “paper gold” is being created at an ever more frantic rate to suppress gold’s price.

OH BOY, now that should stir up the drink, eh?

Currencies today 7/15/09: A$ .8030, kiwi .6475, C$ .8910, euro 1.4090, sterling 1.6450, Swiss .93, rand 8.1550, krone 6.3965, SEK 7.7820, forint 193.75, zloty 3.0425, koruna 18.38, yen 93.60, sing 1.4515, HKD 7.75, INR 48.60, China 6.8317, pesos 13.66, BRL 1.9460, dollar index 79.41, Oil $60.50, 10-year 3.50%, Silver $13.34, and Gold… $936.95

That’s it for today… A late night for yours truly, got me into work later than usual this morning, thus the lateness of the Pfennig! There was a very interesting moment in the pre-game ceremony last night, that took me by surprise… It occurred during the talks by the past Presidents… I was also very disappointed in the way our Greatest Cardinal, Stan, the Man, Musial was presented… This was our chance to show the world what an unbelievable talent he was on a ball field, and off the field as a gentleman… We blew it! Can’t go back and correct it now! A great moment by our catcher, Yadier Molina, getting a two-out RBI hit… And some spectacular defense by all-world player, Albert Pujols, but after a first inning error. UGH! OK. It’s over… The All-Star week is over… Time to go to Vancouver! See you there! Wait, I don’t leave until Monday! OK… Then let’s make this a Wonderful Wednesday!

Source: Currencies Rebound

I heard yesterday someone say “well, we sure turned around today in the currencies”… And I thought, Shoot Rudy, why not name it Turn Around Tuesday? Then I went back to the history page on my trusty Bloomberg, and saw that on 4 of the last 5 Tuesdays, the currencies did in fact “turn around” their performances from the day before! Not that this is something we can hand our hats on, and make trades accordingly on Monday nights / Tuesday mornings… But, it’s an interesting fact nonetheless!

So… The currencies, led by the euro, came back strong VS the dollar yesterday… There were quite a few things on the list of reasons for this rally… I could do this David Letterman style… But I don’t have 10 reasons… So.. I’ll start with Chuck’s Top 5 Reasons the currencies rallied yesterday… (imagine me throwing the card away after reading each reason!)

#5 There were rumors that a Big Swinger Fund Manager was interested in some large chunks of Euros, Aussie and Gold…
#4 The supply thing again… $35 Billion in Treasury Notes had to be auctioned off…
#3 The Risk Traders were out in force, with the news that 10 Financial Institutions were going to be allowed to pay back their TARP funds.
#2 Goldman Sachs issued a “buy euro” recommendation to their clients…
And the number 1 reason the currencies rallied yesterday…

#1 The markets are celebrating the 345,000 job loss as reported by the BLS, last Friday, as proof the recession is coming to an end, and therefore there’s no further reason to own the safe haven dollar!

To that… I have to say HOGWASH! Not that I’m going to say the markets are wrong, because that’s something I learned many moons ago, that the markets are never wrong… Stupid… But never wrong! What I’m saying is that #1 I’ve proved that the BLS number was a farce, printed to make us feel good, and what a job it’s doing, eh? And #2 Even if we accepted that the number was -345,000, why would that be a good thing?

On my list of economists that I often read, is Paul Kasriel of Northern Trust… Let’s hear what he had to say about this… “The last thing Fed Chairman and Great Depression scholar Ben Bernanke wants to do is “abort the recovery by premature tightening,” which is what his predecessors did in 1936 and 1937, says Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago. “At what other time has a 345,000 job loss been a reason to celebrate?”

OK… Let’s not look a gift horse in the mouth, eh? The euro rallied all the way to 1.41 and change… Right now, as I type it’s 1.4090… As I left you yesterday morning, the euro was trading, according to the currency round-up, at 1.3890… I had my head down doing some reading before trading, and looked up to see the euro had skipped right through the 1.39 handle… I never saw it trade with a 1.39 handle! It was that quick!

You know, the number 2 reason for the currencies to rally yesterday was quite interesting… Goldman Sachs Group Inc. advised buying the euro versus the dollar as risk aversion eases, prices of commodities rebound and talk of alternative reserve currencies undermine confidence in the greenback.

And the number 3 reason for the currencies to rally yesterday has more “air time” today, as the U.S. will have to auction $19 Billion of 10-year Treasuries… Yesterday’s 3-year auction was well bid… But think about this for a minute… The Chinese have shortened up their Treasury holdings to average 3-years… So, a 3-year note probably wasn’t going to have that much trouble getting sold… But 10-years? Ahhhh grasshopper, this could be the cheese that binds… We’ll have to see if this auction is as “well bid”…

The Commodity Currencies are watching the price of Oil rise to over $71 a barrel, and loving every minute of it… I’m not of course, as it will affect the price of the gas I put in my vehicle. But… This is the fuel the Commodity Currencies needed to get moving (get it? The fuel, oil? HAHAHAHA) Aussie, kiwi, loonies, real, and rands really got moving yesterday and overnight… Regarding the loonie… I’ve told you over and over again that the price of Oil could be the harbinger for a better loonie price… And voila!

I was talking to a very good / old friend, one that I’ve known since we were in the 2nd grade, the other day, and he asked me what was going on with the price of Oil, as he reasoned that with the recession going on, gas consumption was down, and thus the demand would be reduced… I agreed with him, but added… The difference here, I believe, is the fact that investors are looking ahead and believe they already see inflation, and are buying Oil contracts as a hedge VS that inflation they see in our future…

Loonie holders don’t care where the move comes from, they are just rejoicing a move to 91-cents!

The “winner” for the day in performance VS the dollar, was… Drum roll please… The New Zealand dollar/ kiwi… I found this strange given the fact that the Reserve Bank of New Zealand (RBNZ) meets tonight to discuss rates… I take it that traders don’t believe the RBNZ will cut rates. In the Pfennig on Monday I said that “I was on the fence with this one… I’m leaning toward leaving rates unchanged, but jawboning for further rate cuts… Which is about the same as actually cutting them! So… Just cut the darn things! Quit beating around the bush!”

So… Kiwi was the winner for the day! Now we need to wait-n-see what the RBNZ does tonight!

Kiwi’s kissin’ cousin across the Tasman, Australia, saw June Consumer Confidence rise sharply by over 12%, the biggest one-month rise since 1974… Ahhh, 1974… Grand Funk’s The Loco-Motion was the number 1 song of the year… The Top Ten also included Sweet Home Alabama, Come and Get Your Love, and The Joker… 1974 wasn’t a great year for Billboard hits… But the underground FM radio stations were hitting it big then, and the music was awesome! Oh boy, did I digress or what here? Geez Louise, somebody pinch me, I’ve gone completely off course!

OK… I’m back from 1974 now…

Gold and Silver also enjoyed the day on Tuesday, and overnight, with Gold moving to $960… Recall, yesterday, when Gold had dropped the previous 2 days that… “With Gold hovering around $950 and Silver around $15, it certainly provides an opportunity to buy at cheaper levels than last week’s lofty figures, eh? I would use these dips to my advantage… But then that’s just me… It doesn’t mean that it’s the right thing to do!”

As I’ve been talking about all week, the Trade Deficit and Budget Deficit both print today… The Trade Deficit is expected to grow to $29 Billion from $27.6 Billion because of the steady rise in the price of oil… The Budget Statement which couldn’t even post a positive balance in the month April, will probably add $180 Billion to the deficit column… UGH!

This afternoon, the Fed’s Beige Book will print, which gives us a glimpse of what the Fed Districts see going on… There’s rarely something here to move the markets, so… These are not the droids you’re looking for… Move along there’s nothing here to see!

And finally… I wonder what’s going to happen with this one… I’m talking about the House of Representatives issuing a subpoena to the Fed for the documents related to the Bank of America (BOA) purchase of Merrill Lynch… You may recall that BOA Chairman, Ken Lewis, told the lawmakers that the Fed and U.S. Treasury made him take on Merrill Lynch, and not disclose the losses on Merrill’s books… There’s more laws broken in that statement than you can shake a stick at… So… This will be interesting, to see if the lawmakers find anything there… I doubt they will, because they are all in cahoots with each other in this financial mess… But, to me… There’s smoke here… And I always tell you that where there’s smoke there’s fire! And I believe that the fire is raging here… I’ll tell you what we need here… We don’t need no stinkin’ lawmakers going through the records… We need old ironsides… Barnaby Jones… Or Mannix! Now, those guys would get to the bottom of this!

I did a 15-minute radio interview on True News yesterday… I got to speak my mind on some things, and the interviewer never interrupted me, told me “he was losing me”, or made fun of anything I was talking about… Now… That was a good interview! I got to talk about things on my mind, our products here at Everbank, the website, the phone number and the Pfennig… And the listeners got 15 minutes of “Chuck speak”… I want to thank the people at True News…

I also had a production meeting for my “other” newsletter, which is always interesting… The editors sit around and ask me… “So, Chuck, what do you want to write about this month?” Hmmm… I always say, because… Since I write something every day, you can only imagine how difficult it is come up with something new for a monthly newsletter! But I always do, somehow! If you’re interested in this letter, it does cost… But it’s a value at any cost! You can click here… https://www.web-purchases.com/CUC/WCUCJ900/landing

Currencies today 6/10/09: A$ .8110, kiwi .6335, C$ .9080, euro 1.41, sterling 1.6390, Swiss .9290, rand 8.03, krone 6.2810, SEK 7.6425, forint 198.28, zloty 3.1750, koruna 18.99, yen 98, sing 1.4480, HKD 7.7510, INR 47.33, China 6.8332, pesos 13.53, BRL 1.9440, dollar index 79.74, Oil $71.31, 10-year 3.87%, Silver $15.42, and Gold… $961.35

That’s it for today… Did you hear about the fisherman who reeled in a missile from an F-15 fighter jet? That’s a pretty interesting story, eh? Not much else to talk about this morning, as my beloved Cardinals are in a major June Swoon… UGH! When do the Rams report to training camp? Nah… I can’t be that thin skinned with the redbirds, they’ll break out of this… Hopefully! So… With nothing more to say, I’ll get this out of here, but not before telling you to hopefully have a Wonderful Wednesday!

Source: A Turn Around Tuesday

Good day… And a Marvelous Monday to you! You know the Jobs Jamboree data that printed on Friday, and created some HUGE euphoria among the media types that love to just “read the news” and not actually do the research to report it? Yes… It was a very good number, on the outside… Not that losing 345,000 jobs in a month is a good thing, but it is far better than the near 700,000 jobs lost a couple of months ago.

So… I’ve got that to talk about today… And the rebound by the dollar that has taken the euro to the 1.38 handle and looking as if it is going to go lower… And, then finally, I have to get on my soapbox again, because I don’t think I want my President calling me names! So, all that and more as we begin this 2nd week of June…

OK… Well… Did you get all caught up in the euphoria of the Jobs Jamboree on Friday? I know the 2 different cable news stations we have on here in the office, sure took the number, hook, line and sinker. The markets all reacted violently to the number too… At first… You see, when the number was reported, which was -345,000 for May, the euro took off, and the dollar selling was incredible, but the flurry only lasted about 1/2 hour, then someone with an ounce of gray matter, looked closer at the number. It was like a game of Who’s foolin’ Who?

So… Here’s the skinny… If the jobs losses were really just -345,000 in May it would have signaled a bottoming of the job losses, and a bottoming of the recession / depression, which would feed right into the inflation story, albeit a lot sooner than anyone would have expected… And with that thought, the dollar got sold. But… A funny thing happened on the way to the forum, and the currencies were soon to reverse their recent trend, and it all came back to the Jobs Jamboree…

First of all… The Bureau of Lying Statistics, I mean Labor Statistics, reported on their website that 220,000 jobs were created in May through the Birth / Death Model… And 43,000 of the 220,000 “ghost jobs” were Construction jobs… Really? You’ve got to be kidding me! But if you think that’s all… That’s just the tip of the labor iceberg… The number of unemployed persons actually increased by 787,000 in May! The number of long-term unemployed (those jobless for 27 weeks or more increased by 268,000 over the month to 3.9 million and has tripled since the start of the recession.

Not that I’m trying bum you out on a Monday morning, I just think you “should know” the score… The total number of unemployed persons is 14.5 Million… In January of this year 5 months ago it was 11.6 million… And… Oh, by the way… The 9.4% Unemployment Rate? It’s probably nearing 20% in “real terms”…

The thing that gets me is that people, investors, traders, hedge funds, etc. all react to data and make investment decisions based on the data when it prints… I guess this will teach them to wait until all the dust settles and the numbers have had a chance to be exposed to the daylight! I just think it’s a shame that we have to deal with these liars, and cheats, just to make us all “feel good”…

So… Eventually the truth comes to the top, because the truth… Is out there! So… Why is this bad for the currencies? Well… In normal times this news would be manna from heaven for the currencies… But these aren’t normal times, as the President, U.S. Treasury Sec. and Fed Chairman all remind us at least once a week… And the trading pattern for this type of bad news, is that the inflation picture everyone was thinking of last week and the week before, just isn’t going to come that fast… So… The currencies gave back gains that they had made in the last two weeks…

Whew! I typed all that “non-stop” and have to give my fat fingers a chance to rest here for a minute!

The euro also has had to deal with the Irelands rating was lowered by S&P to AA… But, I do have to say that since I’ve come in this morning, the bias has been to sell dollars, and buy euros… But, the move has been very small…

There’s not much in the data cupboard this week, until Thursday when the May Retail Sales report prints… The Butler Household Index (BHI) tells me to expect stronger Retail Sales in May. Wednesday we’ll get the May Budget Statement, which will be around a deficit of -181 Billion… Did you all get that notes I wrote last week about the month of April and the Budget Deficit… Did it hit home with you? Maybe I should repeat it just for GP…

Here’s what I said on Thursday… The Budget Deficit this April was $20.9 Billion, the first deficit in this “tax-paying” month in 26 years! Can you imagine that? In April when taxes are paid, we recorded a deficit? That’s pretty amazing folks… April 2009 tax receipts dropped 44% compared with those in April 2008.

And Here’s what I said on Friday… And I also believe that we will return to the underlying Weak Dollar Trend for good in the 2nd half of this year… Because… By then… the U.S. Budget Deficit, which has already breached 5% of GDP (late last year), will be heading beyond 10% of GDP this year. So… Do you want to own a truck load of dollars when the markets are staring at a Budget Deficit of greater than 10% of GDP? I don’t think so!

And… Then this week we get the actual data to tie it all together in a nice bow!

I just saw a news story flash across the screen quoting the President… Hmmm, seems President Obama believes that his “stimulus package” will create 600,000 jobs… Well, that should be in the bag, right? I mean if it’s not people being hired to take the census, then the BLS will just create them out of thin air, and the President will be able to say… “See! I told you I would create 600,000 jobs!”

I shake my head in disgust… I really do folks… And speaking of the President… I don’t know about you… But I’m tired of him apologizing to other countries… And I really don’t like him calling me names… OH! He’s calling you names too!

OK, back to regular stuff… The Reserve Bank of New Zealand will meet this week, and I’m on the fence regarding what they will do… I’m leaning toward leaving rates unchanged, but jawboning for further rate cuts… Which is about the same as actually cutting them! So… Just cut the darn things! Quit beating around the bush!

And… U.S. Treasury yields continue to climb higher, and that means further losses to holders… The 10-year U.S. Treasury yield hit a seven-month high this morning… Treasuries have to deal with more supply this week. Hmmm… I have to blow my own horn here and tell you that I told you a couple of months ago that this would happen… That the deficit spending would create a monster, and that monster would be the need to issue more Treasuries than ever before, and the more you issue, the less the value of those outstanding become… So, to sell them, you have to allow the markets to let the yields rise to attract investment, and… As the yields rise, those previous issues lose value, in the secondary markets… Sure, if you hold them to maturity, there’s no principal loss… But how many of those Treasuries were bought last year in the flight to safety, to hold until maturity? I don’t have an answer, but my guess is… Not many!

See? Deficits Do Matter! And these days it’s the Budget Deficit that’s taking the hits… The Trade Deficit, which used to be the Big Kahuna, is no longer adding $700 Million to the Current Account each year. In fact, the Trade Deficit will print this week for April, and is expected to remain below $30 million… Not a Surplus, but still, much better than the $65 million figures we used to see every month! As I’ve explained before though this is simply, not the preferred way to reduce one’s Trade Deficit… To have a recession! No, it would have been far better to have our exports be competitive…

And in the “here we go again” category… Saudi Arabia, Bahrain, Kuwait and Qatar signed an agreement to create a Persian Gulf monetary union, committing themselves to working toward a common currency despite the withdrawal of the United Arab Emirates and Oman.

These “oil states” threaten to do this about once a year… Kuwait finally go tired of waiting and dropped their peg to the dollar over a year ago! But, an oil monetary unit? Now that would really put a dent in the dollar’s armor, eh? Just don’t go hanging your hat on that happening any time soon!

I think that we’ve seen some real profit taking in the past few days… A reversal of the risk taking that was going on… And… The feeling that we went too far too fast… This move back in the euro and other currencies does give all those that were sitting on the sidelines and just couldn’t pull the trigger on the rally that began in March, an opportunity to get in at cheaper levels than the past two weeks…

And with that… I’ll head to the Big Finish!

Currencies today 6/8/09: A$ .7870, kiwi .62, C$ .89, euro 1.3850, sterling 1.59, Swiss .9130, rand 8.1850, krone 6.4470, SEK 7.8645, forint 207.35, zloty 3.2810, koruna 19.50, yen 98.55, sing 1.4585, HKD 7.7520, INR 47.57, China 6.8372, pesos 13.40, BRL 1.9615, dollar index 81.30, Oil $67.45, Silver $14.96, and Gold… $951.02

Source: Who’s Foolin’ Who?

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…

Of course, you know me… And I always say that one swallow doesn’t make a summer… And that can be used here, as this IFO report is just one sliver of hope for the German economy… There needs to be more, or this will report will be put in the rear view mirror soon. So, I’m not pinning my colors to the mast of a German economic recovery, just yet! But, the data did “goose” the euro higher, and for taking part in that, I give the IFO kudos!

The Big Winner of the day though, was pound sterling… In a case of an asset “falling too far, too fast”… The pound sterling has done a Super Ball Bounce from Friday’s price, and has rebounded to 1.4190… Of course, that’s a rally from Friday’s figure of 1.3570… It certainly STILL shows the rot on the vine in the U.K. from last summer’s 2.00 for pound sterling. I would be very careful here, as the U.K. is in the same boat, smaller in size, but the same boat as the U.S….

I had a great lunch yesterday with the Big Boss, Frank Trotter, and we were discussing what we would talk about next week at the Orlando Money Show. I told Frank that I really believe in the prospects of a nice big rally in Norwegian krone… Let me tell you why… First and foremost, it remains a Surplus country… A positive balance of payments… And that surplus has allowed Norway to weather the storm that’s hit just about every other country in the world… See, why I believe the Surplus countries should always be considered when buying currencies? Anyway… The main reason it lost ground from last July’s levels is the drop in Oil prices… They like the other types of Commodity driven currencies like Aussie, Canada, Brazil, New Zealand, South Africa, just got hammered due to the selling in Commodities… But… You know my outlook for the inflation in this country, and that will be driving Commodity prices higher by year-end… But the leader in the forefront of all this move will, in my opinion, be Oil prices… And IF Oil prices rebound like I suspect they will, that will be a very nice underpin for Norwegian krone…

And Gold traded above $900 yesterday… It has seen some profit taking overnight, and fallen back to $896… But, again, these are stair steps to higher levels for the shiny metal… But then that’s just my opinion. You have to make your own investment decision…

OK, the data yesterday was not good, Yes, the Existing Home Sales moved higher, but only at the expense of a falling Home Price… The median home price was $175,400 in December, down 15.3% from $207,000 in December 2007, the National Association of Realtors said Monday. The median price in November this year was $180,300. Here’s the real indication that this rise in sales wasn’t at good levels… Of all sales in December, about 45% were distress sales at discounted prices. That’s foreclosures and auctions on foreclosed homes folks… I don’t think we want to get up on the fence and crow about this report…

And then, after all my harping about how the markets should pay closer attention to Leading Indicators data, the report for December showed an unexpected gain of .3%… Again, the one swallow doesn’t make a summer, applies here too… I’m from Missouri, and I’ll need to be shown more of this to believe it…

Today, we get the color of the S&P/CaseShiller Home Price Index, which will repeat what yesterday’s Realtors report showed… Expect more rot on the vine here though, with home prices showing an -18% drop…

And we’ll see Consumer Confidence, which I suspect will bump higher in December, although in reality I don’t know why… But it most likely will, based on the stock market’s head fake rally in December…

I see that “the cheater” a.k.a. Tim Geithner was confirmed as our U.S. Treasury Sec. I really didn’t think I would ever have another punching bag Treasury Sec. like I had with King Henry Paulson, but, then along came “the cheater”… I have to tell you that this is scary stuff folks… In his confirmation he said, not once, but twice, that “President Obama, backed by the conclusions of a broad range of economists, believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China’s currency practices.”

OK folks, this is where the problems begin… If in his confirmation, he’s making statements like that, you can expect that Obama will push for legislature to put tariffs on Chinese goods… Protectionism… This is ALL GOING IN THE WRONG DIRECTION!!!!!!! And believe me now and hear me later… “the cheater” didn’t just make up this response! This was given to him by Obama, and “the cheater” made certain that everyone hear him, by repeating the answer!

I’ve told you before, folks, that Protectionism is to a currency, like kryptonite is to Superman… So… Not only is the Gov’t on the path to spending even more than the previous administration spent, they look as though they will go down this protectionism path… Add to that, the recession and zero interest rates, and you’ve got the ingredients for a huge swat at the dollar…

I read a report by Stephen Jen of Morgan Stanley, where he writes that he believes the euro will trade back to 1.20 in the coming months… Well, that may be, and would play well with my Obama bounce thing… But with this all happening so fast in the past couple of days, I might have to rethink that Obama bounce thing… We may get an Obama bounce, but it may be for the euro and other currencies!

Oh… And one more thing on China, before I go on… The IMF’s Managing Director, Strauss-Kahn, was talking yesterday, and said, “I have said repeatedly that the renminbi is undervalued” He went on to add, “What we need is for the Chinese to change their policy and shift to more domestic-led growth than to focus on exports. Most Chinese officials are convinced that this is in their own interest.”

So… The IMF believes the renminbi is undervalued, and that the Chinese should do something about it, and so does the Obama administration… And you say, “Trade wars”? I bet you can! And not a good time for them either! Not when the whole globe is suffering… Dolts, all of them, they can’t see the Big Picture… Shame, Shame, Shame!

OK… I could really get going on all that… But… I’ll shift gears and talk about the bailouts… Have you seen the Neil Young, you know THE Neil Young, video on YouTube? He’s singing about the bailouts… Here are the lyrics…

There’s a bailout coming but it’s not for me
It’s for all those creeps watching tickers on TV
There’s a bailout coming but it’s not for me
There’s a bailout coming but it’s not for you
It’s for all those creeps hiding what they do
There’s a bailout coming but it’s not for you
Bailout coming but it’s not for you

So… When guys like Neil Young know that these bailouts aren’t working, and they aren’t good… It should be very apparent to the likes of Pelosi, and Obama…

Oh… And Home Depot announced 7,000 layoffs yesterday, Sprint announced 8,000 layoffs, while Caterpillar announced 20,000…

I’ll get to the Big Finish here in a minute… But first, and finally I wanted to talk briefly about New Zealand… The Reserve Bank of New Zealand (RBNZ) meets this week, and I truly expect them to continue their interest rate cutting. 325 BPS have already been cut from their once highest interest rate in the industrialized world… Finance Minister Bill English was speaking last night and said that the “economic outlook had deteriorated since the government’s Dec forecasts, and that the economy now looked to be closer to the Treasury’s “worst case scenario”.” In that scenario, he suggested that recession would continue through to 2010, the current account deficit would balloon beyond 10% of GDP, and unemployment would rise sharply rising. These aren’t “good times” for kiwis… So… Look for the weakness in the kiwi-dollar to remain in place here…

Currencies today 1/27/09: A$ .6625, kiwi .5280, C$ .8160, euro 1.3250, sterling 1.41, Swiss .8790, rand krone 6.7325, SEK 7.9660, forint 215.90, zloty 3.2950, koruna 21, yen 89, sing 1.4990, HKD 7.7690, INR 48.93, China 6.8615, pesos 14.05, BRL 2.3120, dollar index 84.36, Oil $46.27, Silver $12, and Gold… $897.40

Source: ‘The Cheater’ Speaks

Front and Center this morning, I have two quotes from people I truly respect… first from Jimmy Rogers… second from Stephen Roach…

“If I were you, I would be worried about the U.S. dollar,” said Rogers, 66, in a speech at the Asia Financial Forum in Hong Kong today. “The Americans are printing U.S. dollars. The Americans are going to do whatever they can to revive their economy, even if it means destroying the U.S. dollar.”

And at the same Asian Forum… ” Stephen Roach, chairman of Morgan Stanley Asia Ltd., recommended investors buy “anything to do with the Asian consumer, infrastructure, alternative energy and technology.”

Now… these are people that “know better” and not ones that keep telling you that everything will be OK, if we just all come together, right now, over me… No wait, I mean if we all just come together, and forget about deficits, forget about 2.6 million unemployed in 2008, and another 2 million expected in 2009, forget about the fact that the Gov’t that our forefathers created over 200 years ago didn’t want the Gov’t to get involved in the “free markets”, or build up debts, or all the other things we now do that doesn’t follow the rule of the constitution… and…. go out and get a loan, spend some money, and get this economy going again!

Whoa there partner, you’re quite spry this morning! Must have been that kickin’ bitter cold wind blowing in my face as I walked to the door this morning that got me going!

OK… The Big news this morning is that the dollar has taken another mighty swing at the euro and other currencies overnight. All day yesterday, I watched the euro hold steady Eddie at 1.31, but when I came in this morning, and did NOT turn on the currency screens because somebody messed with them this weekend, and I can’t get logged onto them, but did check the internet, and saw the euro trading below the 1.30 handle at 1.2966… There had to be something I could find on my currency screens IF I only had them available! Geez Louise, why can’t people leave things alone that work?

Alright I’ll stop my whining… Doesn’t do any good any way! So, I see that the German Economic Sentiment, as measured by the think tank, ZEW, improved a bit last month, as seen in the print this morning… That has helped the euro off the mat this morning as it has fallen to 1.2920 before this report. But, this report won’t help the euro too much, as the ZEW think tank report isn’t on the same level of importance as the IFO think tank report…

I told you last week about the rumor that Ireland was seeking funds from the IMF, and that a resident reader there had told me things were getting bad. The rumors were denied at the time, but I told you then, that I truly believe that where’s there’s smoke there’s fire… And so it is with Ireland after all… Now there’s all kinds of rumors running about regarding Ireland and their ability to make debt payments. (Hey!, haven’t they learned anything from the U.S.? Just print the currency to make the debt payment!, but no, wait, they can’t they’re a part of the euro!) This, my friends has to be the reason the euro has sunk to below the 1.30 handle this morning. I’m reading a report from a trader friend in Europe that say there are nervous Nellies over in Euroland, regarding this debt payment… The Eurozone won’t like any debt defaults under their watch, and could slap Ireland pretty hard…

I have to say that this is real folks… And presents the Euroguard in Frankfurt a real problem to deal with… No more of a problem than France rejecting the Eurozone Constitution in 2005, but a real problem nonetheless.

And a real problem for dollar bears… Who would like to beat the dollar like a rented mule (no animals were really hurt here) but the offset currency to the dollar has its own problems at this time… So… What’s a dollar bear to do? Well… There’s always the old offset to the dollar, the Japanese yen, which continues to outperform all the other currencies, and has bouts of real strength followed by profit taking, so there’s opportunities to buy on dips when profit taking comes along… And this ties back to the Stephen Roach comment at the top of the page… To buy Asian… Well, he didn’t say it, but he did in a way… If you buy Asian, you have to convert your dollars to the Asian currency of the asset you’re buying… So, in a way, he’s saying buy Asian currencies…

Another hickey on the euro’s neck this morning is the report that Spain’s credit rating has been downgraded… S&P downgraded them from AAA to AA+… They’re credit rating should have never been that high to begin with, if you ask me… So this downgrade, just puts it where it should have been all along… Spain got “extra credit” for being a part of the Eurozone… My European trader friend said that the euro’s resistance doesn’t come into play until 1.27… So… There’s a gap down that could happen quickly…

Yesterday, the pound sterling was basking in the Trading Theme, after the Bank of England announced a bank bailout plan… That brought out the risk takers for just a brief moment… But they had no lasting power, and the pound began selling off, and didn’t stop until it reached a record low VS the yen, and VS the dollar it fell to below 1.40 for the first time since 2001! I’ve said since this credit crisis began that the U.K. was “into” this problem more than other countries (with the U.S. being the ring leader) and that it would take its toll on the pound… It has, and in a very strong manner…

And down under, the New Zealand dollar / kiwi keeps getting caught up in Commodity sell offs, Reserve Bank of New Zealand (RBNZ) rate cuts, and now… Talk of a downgrade to their credit rating… Commonwealth Bank of Australia (CBA) issued a report yesterday that points out that S&P already downgraded New Zealand’s foreign currency rating to AA+ last week, and that the credit rating “MAY” be cut should the current account deficit cut into growth.

Now, that’s all fine and good, as I’ve been harping about New Zealand’s Current Account Deficit for a couple of years now… But, what? S&P only looks at the “little guys” that they can handle? I mean, for crying out loud, have they taken a peak at the U.S. Current Account Deficit as a percentage of growth? OMG! What? Are they afraid of the Big Bad Wolf? I’m afraid so… They don’t have the cajones to take on the U.S. and their debt problem… So… They go around kicking sand in the face of the 90-lb weaklings around the world…

So… We start this week on a down leg for all currencies… Shoot Rudy, even the Japanese yen, is a bit weaker than it was last week, when it hit 88 at one point!

Gold had a very strong showing on Friday, going up $30… But is seeing a softer tone this morning…

All eyes will be focused on the inauguration of the new president here in the U.S. today, so don’t look for too much to happen… But, I’m reminded of the words I wrote a couple times a couple of weeks ago about an Obama bounce, which would help stocks, and the dollar… Could this be happening as the inauguration is about to happen? I’m sure a lot of investors and traders will be swayed today when President Obama talks about change and hope… He has a tough row to hoe, folks… He’s going to need more than words to get us out of this mess, and carrying on with the same policies as before with bailouts and stimulus packages isn’t change… I wish him good luck, as this is my country, and I sure don’t want to see us like this…

I have a good friend that gives me trouble all the time, (he reads the Pfennig) saying that I’m responsible for these problems because I “root for them” … (he’s kidding folks!) And I have my standard reply… I don’t “root for them”, I point them out, and try to warn people that these things will affect their investment portfolios… It’s all about diversification…

OK, on Friday, (seems like a long time ago but still important) we saw the color of the latest Industrial Production, Capacity Utilization, and the stupid CPI (consumer inflation)… Here we go with a recap…

Industrial Production for December printed much worse than expected, and it fell -2% (expected -1%) and the previous month was revised downward from -.6% to -1.3%… For the year, Industrial Production fell -7.8%, the worst performance since 1975… Capacity utilization also fell sharply from 75.2% to 73.6%, matching the low at the end of the 2001 recession. You can go back all the way to 1967, to see that this data has only dropped lower during the 1982-83 period…

Long time readers know my affection for the Capacity Utilization data, as it is one of the few pieces of data that is “forward looking”… And if this report is right… We don’t have much to look forward to in manufacturing…

The stupid CPI report showed that Consumer inflation came in at .01% for December… Which is pretty strange, as it was forecast to go into the negative. Annually CPI rose just 1.8%, an annual low since 2004… Of course if you believe that YOUR inflation experience only saw a 1.8% annual increase, then you don’t understand why I call this report names… If you’re like me, and 1.8% is a bunch of baloney… Then you know why! But… Given that my forecast has inflation rising rapidly next year, this report tells me that the inflation wolf is always at the door!

Not much on the data cupboard’s calendar this week… So, let’s go to the Big Finish!

Currencies today 1/20/09: A$ .66, kiwi .5280, C$ .7915, euro 1.2975, sterling 1.3960, Swiss .8775, rand 10.3350, krone 7.1030, SEK 8.3930, forint 221.87, zloty 3.3620, koruna 21.51, yen 90.25, sing 1.5080, HKD 7.7590, INR 49.22, China 6.8385, pesos 14, BRL 2.36, dollar index 85.92, Oil $39.78, Silver $11.08, and Gold… $831.90

Source: Inauguration Day 2009

The single unit was higher within the 1.29 handle overnight than it is right now, as it has given back a bit of ground on the news that a European Union Commissioner, Buti, said that, “economic indicators point south very badly.” This is strictly, jawboning to keep the euro’s move VS the dollar in check, folks…

The Bank of Canada (BOC) did cut rates yesterday 75 BPS… You may recall me telling you yesterday that the “experts” thought the cut would be 50 BPS, but I thought it would be 75 BPS… Maybe, one day, these surveys of “experts” will include the Pfennig writer, as he seems to be more “on target” than the current “experts”! Now, Chuck, who would you be referring to here? HA!

I also said yesterday that I didn’t think the markets would care, and they didn’t, as the larger rate cut did little to hurt the loonie. In fact, the loonie rallied a bit on the news!

Again, I don’t understand the mentality here with these Central Bank rate cuts… It’s not the cost of the credit that’s keeping the credit crisis all locked up, it’s the availability of such credit / money! So… Here’s a memo to Central Banks around the world… “STOP ALREADY!” All you’re are doing is inviting inflation into your economy, and debasing your currency!

That glimmering light that I talked about the other day for the Credit Crisis is getting smaller all the time, as the Big 3 still don’t have their bailout from the Gov’t (read taxpayers)… It now looks as though it could get done today, but at a much smaller figure than previously discussed. It now looks as though the Big 3 will get $15 Billion and they had better smile and say “thank you very much” as they leave the room!

It also looks like the Big 3 will get the “Car Czar” that they so desperately fought to keep from looking over them. The “Car Czar” will have the power to call Chapter 11 on GM or Chrysler should they not deliver a sound plan by the end of March. Geez Louise, why do they get 4 months to some up with a sound plan? They should have had one to get the funds to begin with! OK, I had better stop there, I’m really pounding the keys right now… I think I’ll step away for a minute and cool off…

OK, I’m back now, hope you didn’t miss me, or that I was away too long! No wait, this is text, you have no idea how long I was gone! Silly me!

You know… I was thinking aloud in my car yesterday, and saying to myself that it sure looks like all those pundits that called for a breakup of the European Union by the end of the year, will have to put their tails between their collective legs, and fade away… You know, the European Union (EU) had more pressure on them in 2005, when the French voted no on the Constitution, and other things, and they held steadfast then, and if they could it then, then this little tiff with Spain and Italy will pass… These pundits like to point to the problems that Italy is experiencing… And I say…”What’s so new about that? Italy has had problems since I’ve been following currencies (1985 for those of you keeping score at home)! I truly believe that Italy and Spain like to complain about the European Union and the euro, but when they get behind closed doors, when they let their hair hang down, they thank their lucky stars that they were included in the Euro Club!

The boys and girls over at Bank of America (BOA) believe they are seeing the dollar repatriation flows waning… Now, I wonder how many research people they employ over at BOA, when all it would take is for one of them to read the Pfennig, to see that I said all that yesterday! Any way… Let’s listen to what BOA had to say about this… “The repatriation demand for the dollar may have run its course, we retain our core long euro-dollar exposure and add long euro-dollar exposure today”… Now… You would think that given the size of BOA that saying something like that could really “move the market”…

But, given the markets “don’t care” attitude until the credit crisis unlocks, I understand why it didn’t! The BIG POINT here is that we could very well be seeing all this dollar repatriation end. And… Like I said Monday, the risk takers were slowly dipping their toes back into the waters which is what it will take to get the currencies and precious metals on the rally tracks again. But, put these two things working together, and voila’ you’ve got the makings of what could very well be a Santa Rally…

The boys over at the Bank of Japan (BOJ) are at “it” again… Mom… He’s doing it again! He’s looking at me! Mom! He’s got his hand on my side of the car seat! OK, I’ll stop there… But the BOJ was “jawboning” again in an attempt to keep the yen from strengthening further VS the dollar. BOJ Gov Shirakawa reminded the markets last night that the Ministry of Finance has the option of intervening if necessary… The Ministry of Finance (MOF) are the signal callers for the BOJ, and they are the ones that determine if intervention is to come into play. For new readers… BOJ intervention means the Bank sells yen in the markets to keep it from getting too strong.

In the currency world, this is called a “dirty float”… And the MOF and BOJ like to keep it “dirty”…

OK, I was laughing when I wrote that last bit, but notice I didn’t carry on… Maybe I’m growing up! HA!

Down Under in the South Pacific, Australia saw a very nice rise in Consumer Confidence of 7.6%, adding on to November’s 4.3% gain. The index collapsed this summer, but with the rate cuts the Reserve Bank of Australia (RBA) have instituted, it seems to be rounding back into shape.

In New Zealand, Reserve Bank of New Zealand (RBNZ) Gov. Bollard, gave a speech titled “Everyone needs to play their part.” In the speech, Bollard, reminded everyone that New Zealand’s inflation rate is still very high (5.1%). Hmmm… Was that the “wink and nod” that interest rates are not going to go much lower? I think it was folks.. But I guess it all depends on if the rest of the world continues to think that by cutting rates they will unlock the credit crisis!

Both of these things for Aussie and kiwi could underpin the currencies at current levels…

And another “Commodity Currency” the Brazilian real really put on the Ritz yesterday with a very strong rally… Just another sign that the risk takers are dipping their toes again…

OK… I’ll slide away from the currencies for a minute to talk about a news article that one of my fave writers, William Pesek, provided to Bloomberg, titled: China Will Be Happy Geithner Isn’t a Goldman Guy… Here are some snippets of the article that can be read in its entirety HERE.

“Why does Goldman Sachs run your government?”

After seven-plus years in Asia, I’m no longer startled by this question. It was posed to me yet again recently — this time by Kuala Lumpur taxi driver Sumit Kotari.

“What’s wrong with America is that it’s run by investment bankers, mostly from the same bank,” the 49-year-old Malaysian said. “How can Americans stand for it? Is Barack Obama from Goldman Sachs, too?”

It has been reported in Asia that Neel Kashkari, assistant Treasury secretary in charge of the Troubled Asset Relief Program, worked for the same New York-based investment bank. President-elect Obama’s decision to seek advice from other former Goldman Sachs bigwigs, such as Robert Rubin, also grabbed attention.

Even the guy helping choose a replacement for Timothy Geithner at the Fed Bank of New York came from Goldman Sachs. It makes one breathe a sigh of relief that Geithner, who will be the next Treasury secretary, doesn’t have Goldman Sachs on his resume.

The point here isn’t to pick on Goldman Sachs. Yet it is seen by many in Asia as the gold standard of investment banks. Its name also is a byword for the perception of incestuous ties between Wall Street and Washington.”

OK, I’m back now… The point of the discussion is to acknowledge that to Asian, it appears that Goldman Sachs runs our country… Now, that may be perception, but as they teach you perception is reality. And you have to wonder if the Asian Central Banks are shaking their heads at what we’re doing, and how we’re doing it… Now, some might say, “Who cares what the Asian Central Banks think of what and how we’re doing it.?” Ahhh grasshopper… We all have to be very cognizant of what the Asian Central Banks think about us, because, you see… They hold most of our I.O.U.’s and they could make things very messy for us any time they wish!

So… How about the Illinois Gov. getting arrested yesterday? Could it be two Illinois Governors incarcerated? That whole story is pretty amazing that someone would do what he is alleged to have done, knowing that his phone was tapped!

Ok enough of that! We’ll see the Monthly Budget Statement / Deficit for November, today… Look for it to explode!

Currencies today 12/10/08: A$ .6590, kiwi .5465, C$ .7950, euro 1.2950, sterling 1.4830, Swiss .83, ISK 261, rand 10.21, krone 7.0475, SEK 8.1650, forint 203.50, zloty 3.05, koruna 19.99, yen 92.60, baht 35.50, sing 1.5010, HKD 7.75, INR 49.01, China 6.8835, pesos 13.50, BRL 2.4725, dollar index 85.71, Oil $43.80, Silver $10.02, and Gold… $792

Source: A Bailout For The Big 3

Well… Another day of doldrums in the currencies, with the bias, what little there is, to buy dollars. The stock jockeys received some manna from heaven yesterday when it was announced that the U.S. Treasury Department is considering a plan to halt the slide in home prices that would lower mortgage rates using Fannie Mae and Freddie Mac. The plan could reduce rates for newly issued loans to as low as 4.5%.

Here’s a snippet of the story that ran in the Wall Street Journal yesterday…”Government officials are under pressure to stem foreclosures, which underpin much of the current financial crisis. Treasury has struggled for months to come up with a plan that would ease the market without appearing to bail out homeowners and lenders.

Under the plan, Treasury would buy securities underpinning loans guaranteed by the two mortgage giants, which are temporarily under the control of the government, as well as those guaranteed by the Federal Housing Administration. Fannie and Freddie guarantee a large proportion of all new home loans made in the U.S.”

OK… So they came up with a plan… I have to think about this a bit, as I see the “good” it could do, but there’s always a “bad” to these things too, and once again, I’m sure it circles around the fact that Gov’t is going to be in the mortgage business… We inch closer and closer, all the time to socialism folks… It all began when they mandated that in a free country we HAVE to wear seat belts… Now don’t get me wrong, I wear them because I believe it’s the safe / right thing to do, but shouldn’t that be MY choice and not the mandate of the Gov’t? Any way, please don’t flood my email box with notes telling me how wrong I am on this… It won’t help, this is what I believe, period!

Whew! I really went off on a tangent there, eh? OK, before you begin to think I’m a nut case… Let’s get back to currencies and economies!

The Reserve Bank of New Zealand (RBNZ) did cut rates, as I suspected, by 150 BPS yesterday… This brings the total of rate cuts by the RBNZ since September to 325 BPS! I think the RBNZ truly believes that global inflation is taking a major step backwards… And it probably is to a degree, but the RBNZ had better be ready to go the “other way” once this slide in inflation tips back… Of course I don’t believe we’ll see that for some time (6-months at least), so go ahead and frolic in the sun with rate cuts while you can RBNZ… Just be ready, that’s all I’m saying…

Bond holders of New Zealand issues have to be frolicking in the sun for sure, and their “locked in yield to maturity” is now, at least 150 BPS, if not 325 BPS higher than new issues, which makes their bonds “more valuable”…

U.K. Prime Minister Gordon Brown unveiled a scheme to allow borrowers experiencing a temporary loss of income due to the downturn to defer mortgage interest payments for up to two years. The U.K. Gov’t will guarantee the lenders against the risk of loss from the deferred payments… That’s going to be quite interesting to see how that plays out… But shoot Rudy, if the Gov’t is going to let you go Ollie, Ollie, oxen free on your mortgage payment for two years, with NO bad stuff happening to you and your credit, I can see the mortgage holders lining up on the right for this!

The U.S. Fed Reserve’s Beige Book that usually gives us an indication of what to expect in the next FOMC meeting, which will take place December 16th, printed yesterday… And it could be probably listed on Amazon under “horror” books! Put away the sharp objects folks, for it’s not just me ranting about these problems any longer, the Fed Reserve, your Central Bank, you know, the people that are supposed to be protecting the value of our currency, by providing price stability, and full employment (and are failing miserably at both!), now are ADMITTING that the problems are real… Here’s a short review from the Beige Book…

Based on data collected prior to November 24th, the Beige Book painted a grim picture of the outlook for growth in the fourth quarter. Lenders tightened standards for loans and lending contracted over the period. Several districts noted increases in delinquencies and defaults.

Consumer spending, which played a lead role in the growth downturn in the third quarter, was reported to have weakened.

Hey, this little tidbit came across my screen yesterday… The number of days that the S&P 500 has moved up or down by more than 5% during the Trading Day… 1950 – 2006 34 days… 2008 44 days! With 22 of them coming since October 1st!

Talk about volatile! WOW!

OK… One of my fave economic writers, Caroline Baum, wrote a piece on Bloomberg that caught my eye… Hey! That makes sense now, since I really can only see good out of one eye! Anyway… Here’s a snippet of the story by Caroline Baum, titled, “Bernanke should buy Buicks instead of bonds”…

“It tells you just how far we’ve come when the headline, “Fed May Buy Treasuries,” gets a reaction.

Buying Treasuries is the age-old way of adding reserves to the banking system, setting in motion the money-creation process.

Historically, these so-called permanent open market operations were designed to have no impact on the shape of the yield curve. The goal was simply to satisfy the banking system’s demand for reserves.

Treasury securities used to make up the lion’s share of the Federal Reserve’s balance sheet. No longer. As of Nov. 28, the Fed held $476 billion of securities carrying the full faith and credit of the U.S. government, less than a quarter of its balance sheet. One year ago, the comparable figures for the Fed’s Treasury holdings were $780 billion and 90 percent.

When the banking system starts functioning again, and the Fed has to mop up all the excess reserves banks are holding instead of lending, the reality is “it doesn’t have enough Treasuries,” said Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.

Banks were holding $605 billion of reserves in excess of the amount required as of Nov. 19. “Maybe the Fed will have to raise reserve requirements,” Kasriel says. “It’ll be 1937 all over again.”

Many Great Depression scholars, including the late Milton Friedman and Anna Schwartz, point to the Fed’s doubling of reserve requirements in 1936-1937 as triggering the second leg down in the economy, which was recovering in the mid-1930s.”

OK, back to me… All this talk today is causing me to search for something “fun” to talk about, because it’s all been gloom and doom, eh?

Sweden’s Riksbank announced a 175 BPS rate cut this morning. WOW! Another Huge cut, makes you think that the Bank of England and European Central Bank might have something up their sleeves too! And in Canada, their Central Bank doesn’t meet until next week, but Canada has other problems going on, as there are rumblings about a suspension of Parliament…

The Governorator, Arnold Schwarzenegger, has called a Fiscal Emergency for the state of California… I feel like he won’t be the only governor to do so… You see, the Federal Gov’t is giving all it’s McLovin’ to Financial Institutions right now, and the States are hurtin’ for certain… The states that have for decades told the Fed Gov’t to “get out of their business”, will now be knocking on the Gov’t’s door, and be the next in line to ask for bailouts…

And then, one final thought before going to the Big Finish… I saw this yesterday, and almost fell out of my chair! (now that would not be a good thing!) Let’s see what your take is on this….

I know that sure seemed as though the Fed and Treasury had found every last way of pushing off debt from one generation to the next, BlackRock’s Peter Fisher has thought of a clever new one: a 100-year treasury bond. That way, the government can keep borrowing money to finance today’s bailouts, and won’t really have to start bleeding cash until after most of us are dead and gone…

Let’s hope that thought by Peter Fisher doesn’t even cross the minds of Paulson and Bernanke!

Currencies today 12/4/08: A$ .6470, kiwi .5365, C$ .7945, euro 1.2640, sterling 1.46, Swiss .8245, ISK 261, rand 10.2585, krone 7.17, SEK 8.3430, forint 207, zloty 3.0650, koruna 20.3425, yen 92.55, baht 35.70, sing 1.5275, HKD 7.7510, INR 49.85, China 6.8820, pesos 13.62, BRL 2.4790, dollar index 87.22, Oil $47.16, Silver $9.57, and Gold… $769.35

Source: Buying Buicks Instead Of Bonds

Right out of the starters blocks this morning, the Reserve Bank of Australia (RBA) pulled the rug right out from under the “high yield status” of their economy, with another HUGE rate cut overnight… This time, the RBA cut 100 BPS, to an internal cash rate of 4.25%. This brings the total since September to 300 BPS! WOW! Talk about effectively unwinding seven years of tightening! The statement following the rate announcement leads me to believe that the RBA is probably finished cutting rates for now… It will be a wait-n-see what happens globally, before the RBA entertains any talk of further rate cuts… At least that’s my opinion!

Had a long talk with the legal beagles yesterday… The just don’t like what / how I say things. This all stems from complaints we’ve received that claim that, “I give investment advice”. Of course when the currencies were going up, up, up and away, in my beautiful balloon, for 6 years, we didn’t hear of any complaints or claims that I was “giving investment advice”… Any way… It is what it is… I call it “Market Commentary”… And everything I say is “Chuck’s opinion” not that of EverBank’s and the last time I looked… Opinion is: not to provide investment advice or to manage your money – THOSE ARE DECISIONS THAT YOU HAVE TO MAKE.

Well… Now that I’ve said all that… Guess what finally happened yesterday, that I’ve said was the case since January? Yes, the National Bureau of Economic Research (NBER) finally came clean and said that the U.S. has been in a recession since December, 2007. Here’s where I could go totally sophomoric on you and say, “I told you so!” but I won’t, no wait, I already did! But, that’s not my intention. I only carry on about his because recently I’ve had a few people tell me that I have no foresight, and that I merely react to things… Hmmm… I said this was a recession 11 months ago, long before the un-dynamic duo of Paulson and Bernanke would admit it, and long before your friendly neighborhood economist would admit it, and way before the NBER, the official arbiters of this call, admitted it.

The currencies remained in a very tight range yesterday with a bias to buy dollars, with the Huge stock sell off… The stock jockeys didn’t fall all over themselves on this news, and that surprised me… Here’s why… You see, most times, in the past, by the time the NBER gets around to calling a recession, the recession is either over or about to be over. So, knowing this, I figured the stock jockeys would be falling all over themselves, calling out that the light at the end of the tunnel could be seen…

The problem with that mentality is that not all recession calls by the NBER have signaled the end of the recession. Take… The recession that started in July 1981, which was announced in January 1982, and that recession ended 10 months later in November 1982. That’s the scenario I’m afraid that we are going to revisit this time. I’ve already said that I believe 4th QTR GDP will show a negative -5% figure, so that’s right now, and there’s no way, the economy rebounds from a negative -5% drop in a heartbeat… This is going to be a long, protracted recession, but then, the song remains the same here for me… I’ve said that for a long time now!

We heard from Federal Reserve Chairman Big Ben Bernanke yesterday… Big Ben said “further interest-rate cuts are “certainly feasible,” but he warned there are limits to how much such action would revive an economy likely to stay weak well into next year.”

Mr. Bernanke also said the “Fed’s powers don’t end with the federal funds rate, and its ability to inject liquidity into markets through its balance sheets “remains effective.”

I guess, that was the wink and nod that interest rates are going lower, and that… The Fed is going to continue to take in toxic securities on their balance sheet…

OK… There’s a story on the news wires this morning that according to the charts at the Bank of Tokyo, yen could push to 79.75 VS the dollar. WOW! I think these chartists should go back and check their angles again, because that’s a phenomenal move in yen, and I can’t believe the Bank of Japan (BOJ) wouldn’t be in the markets intervening (selling yen) to keep that from happening… But for what its worth… There you go!

Today, we’ll see U.S. Treasury Sec. Paulson speaking about the U.S. / China economic strategy… Hmmm… I wonder if old Hank, will ruffle a few Chinese feathers with his speech, or will he go quietly? I think that after yesterday’s .75% drop in renminbi, followed by a “regular” .30% drop last night, which puts renminbi at a 5-month low, that Paulson will be in a feather ruffling mood, especially, given the thought that he only has about a month left on his Treasury Sec. watch…

Remember about a month ago, I told you all about the early part of this decade, when the global economies were all fighting with recessions, and that the currencies were getting rewarded whenever a Central Bank cut rates to promote growth? I said then, that we could very well relive that scenario, and each time the RBA gives us one of those “mega rate cuts” I notice the A$ rallies… I guess, after we get through the next two weeks of Central Bank rate cuts, we’ll have a better idea if this is going to play out again, but for now, it sure is beginning to look like it will…

Looks like the airlines are “hurtin’ for certain” as I saw two different ads in the weekend paper for $49 flights… Southwest and American Airlines were promoting those discount flights… Of course there were tons of “terms and conditions” but the key here is the offer of discount flights…

I see from the U.K. Telegraph that AIG is beginning to sell off assets in an attempt to pay back the $153 Billion “loan” the Gov’t gave them. And I see where JP Morgan Chase is going to lay off 9,000 employees. And that there are rumors that Britain is entertaining thoughts about joining the euro again… They can forget about that! The people of Britain are NOT going to vote for that to happen… At least that’s how I see it from the cheap seats.

And yesterday… The piece of data that “told me” we were in a recession, the ISM (manufacturing) Index printed… And the index number fell by a greater margin than the “experts” forecast, and brought it to the lowest level (36.2) since 1982! Again, folks, this is a very “telling” piece of data, and confirms my belief that we’re in for a long, protracted recession, as this looks like the early 80’s recession and not those willy nilly ones of the 90’s and 2000’s!

The only data we’ll see today, is the vehicle sales, which is expected to fall again… I see where Ford is going to announce that they are going to change their focus to small, fuel efficient cars instead of Trucks and SUV’s, hoping that will “win over” Congress to give them a loan… I also see where Ford is offering “employee prices” plus a rebate for a select group of their cars… (that “employee pricing” is a bunch of bunk if my opinion any way!)

So, there’s a collection of some of the items that’s will drag on the U.S. economy… And eventually the dollar, once we get past this credit crisis…

Next on the rate cut block is the Reserve Bank of New Zealand, (RBNZ) who meets tonight… I think the RBNZ will play a game of poker with the RBA, and say…”I’ll see your 100 BPS, and raise you 50 BPS”… That’s right, I think we’ll see 150 BPS rate cut from the RBNZ… Like I’ve said a few times now, rates are going lower all over the world folks, we should all get ready for this!

I sure ruffled a few feathers yesterday when I printed a comment from someone else about the Energy Dept… Folks… The point was simply that we don’t need the Gov’t operating private businesses, like banking… That’s all it was…

The Retail folks are “happy” with the sales figures from the first weekend of Christmas sales… But, “happy” isn’t “giddy”… And that’s going to be a problem for the retailers this Christmas… They’ll see sales… But they won’t be “giddy”… And wasn’t that a shame in NY where a Wal-Mart worker lost his life in a store opening stampede? That’s a shame, it really is… It’s not like Wal-Mart was giving stuff away free! I’ll stop there, the story is sad enough…

Time to head to the Big Finish…

Currencies today 12/2/08: A$ .6480, kiwi .5345, C$ .8040, euro 1.2670, sterling 1.4940, Swiss .8290, ISK 230, rand 10.38, krone 7.0875, SEK 8.3175, forint 206.35, zloty 3.0160, koruna 20.2860, yen 92.20, baht 35.50, sing 1.5285, HKD 7.75, INR 50.14, China 6.8875, pesos 13.55, BRL 2.30, dollar index 86.85, Oil $49.23 ( I paid $1.84 for premium gas this morning, YAHOO!), Silver $9.44, and Gold… $778

That’s it for today… My little buddy, Alex, was writing a paper on the Revolutionary War last night, and we were talking about “taxation without representation”, and thought for a moment before going to bed, that, I kind of feel like that’s what we’re receiving now, today!

Source: The NBER Finally Says So!

And Japanese yen is “getting bought!” Yen is trading in the 93 range this morning… Strong, very strong!

When this all began, I truly believed that it would last through the elections and on to the end of the year… Then the magnitude of the problems were revealed, and I changed that to lasting probably through to spring. The longer it takes the “boys” Paulson and Bernanke, to get this credit market crisis unlocked, the longer it will take before we return to the fundamentals that continue to get worse by the day.

On Friday, Chris printed some thoughts I had left him regarding the data that printed on Wednesday, wasn’t that just downright scary? I know that a ton of you all had the day off on Friday, and didn’t see the Pfennig that day, so for those of you that missed class on Friday, here’s what I had to say about the data prints from Wednesday…

New-Home Sales Sink 5.3% to Lowest Level in 17 Years U. Mich. Confidence – new low since ‘80
Chicago PMI collapses Consumer Spending Fell to 7-Year Low in October (manufacturing for that region)
Americans’ Food Stamp Use Nears All-Time High

And can’t imagine what in the world the people that make the official call on a recession the NBER (National Bureau of Economic Research) are thinking… I called this a recession back in January, and they have yet to make the call… Amazing!

Of all that bad data, the only one that will have a good outcome in the end, is the Consumer Spending falling to a 7-year low. We’ve gone on with this spending more than we make, for far too long! Now, if we could just get the Gov’t to do the same!

Now onto this week… So, as I said above, the risk aversion theme is back… There will be a ton o’ data print this week with it all culminating on Friday with the Jobs Jamboree… Just peeking ahead at Friday, the “experts” believe the job losses for November will be 320K, with the unemployment rate moving to 6.8% from 6.5%. That’s downright ugly folks.

Speaking of ugly… Today, we’ll see the color of the Nov. ISM (manufacturing) Index, which collapsed to 37 last month, and is expected to have fallen to 32 in Nov. All this “bad data” does is put the Trading Theme front and center even more…

OK, The Chinese renminbi has fallen .73% overnight, which is the largest drop for the currency since dropping the peg to the dollar in July 2005. I find it interesting that the banking officials allowed the renminbi to drop by that large of an amount right before, U.S. Treasury Sec. Paulson is about to visit… Can’t you just hear the Chinese saying something like this to Paulson… “See, Mr. Treasury Sec. we can play games with our currency too, and so now if you’ll just get yourself back on that plane, and leave us alone, we’ll see where the currency goes next.”

The Chinese have their own problems right now, and making sure their currency continues to strengthen isn’t one of them! China has shifted from “inflation fighting” which requires a strong currency, to “promoting growth” which doesn’t! And with exports set to collapse next year, given the U.S. recession, a currency strengthening just isn’t on their agenda any longer.

There will be a truck load of Central Bank rate meetings this week, beginning with the Reserve Bank of Australia (RBA) tonight. The Reserve Bank of New Zealand (RBNZ), Bank of England (BOE) and European Central Bank (ECB) are all expected to cut rates this week, and then next week, we’ll see rate cuts from the Bank of Canada (BOC) and the Fed Reserve…

Global rates are going lower and lower folks, we had all better be prepared for this, as it is going to happen, no doubts. For instance, I fully expect the RBA to announce a 75 BPS rate cut tonight or tomorrow, whenever they do it…

Now… Enough rate talk… How about we visit the goings on with the bailouts? Oh, goodness gracious, no! I don’t want to go there! My blood pressure is doing just fine today! Oh? I have to? The little guy on my right shoulder is telling me to not go there, and the little guy on my left shoulder is telling me to do it, NOW! Hmmm… Ok, I won’t do it, but what I will do is give you a thought from a reader, who is an investment advisor regarding all of this and the Gov’t taking ownership of banks… Let’s listen in…

“Does anybody out there have any memory of the reason given for the establishment of the DEPARTMENT OF ENERGY during the Carter Administration? Anybody? Anything? No? Didn’t think so. Bottom line .. . we’ve spent several hundred billion dollars in support of an agency the reason for which not one person who reads this can remember. Ready? It was very simple, and at the time everybody thought it very appropriate. The Department of Energy was instituted 8-04-1977 TO LESSEN OUR DEPENDENCE ON FOREIGN OIL. HEY, PRETTY EFFICIENT, HUH? AND NOW IT’S 2008, 31 YEARS LATER, AND THE BUDGET FOR THIS NECESSARY DEPARTMENT IS AT $24.2 BILLION A YEAR, THEY HAVE 16,000 FEDERAL EMPLOYEES, AND APPROXIMATELY 100,000 CONTRACT EMPLOYEES AND LOOK AT THE JOB THEY HAVE DONE! THIS IS WHERE YOU SLAP YOUR FOREHEAD AND SAY ‘WHAT WAS I THINKING?’ Ah yes, good ole bureaucracy. And now we are going to turn the Banking system over to them?”

Now, that’s one of those things you say, Whoa There Partner! I’ve warned about this Gov’t sticking their hands into banks and acting like owners before… But that’s exactly what’s happening folks…

OK, enough… Let’s talk Gold a bit… Mark O’Byrne, executive director at Gold & Silver Investments, has his attention on the open interest numbers.

Comex gold futures open interest—the number of outstanding contracts—declined sharply this month, falling to 289,700 contracts in the week ended November 18, according to the Commodity Futures Trading Commission. That’s down 9.3% from a month ago.

What the low open interest means is “that nearly all the speculative froth has been liquidated and remaining longs are ‘strong hands’,” O’Byrne says. “This will encourage more long interest to enter the market and should contribute to markedly higher prices in the coming weeks.”

OK… But… We need to see the markets return their focus on the fundamentals to weaken the dollar before we get any “real traction” in Gold… At least that’s my opinion, although Gold did have its best month in 9 years in November, gaining 11%…

Well, the good news from the weekend was that the Black Friday retail Sales were stronger than expected… But what’s going to happen when, as I said above, job losses post a 320K figure at the end of the week? I think it takes the wind out of those sails in a heartbeat!

I’ve gone on a bit this morning, but there’s lot to talk about, and that means an Iceland update! Reuters reported on Friday that… REYKJAVIK, Nov 28 (Reuters) – Iceland’s parliament passed legislation on Friday to curb currency outflows and the central bank vowed to restrict credit as authorities moved to restart trade in the collapsed Icelandic crown.

“The bank will maintain tight control over the access of banks to central bank credit until exchange market stability has been achieved,” Sedlabanki said on its Web site.

It said temporary currency restrictions, which had been necessary for Iceland to function at a basic level, would be lifted in stages.

“A considerable proportion of crown-denominated securities are owned by foreign investors. Lifting restrictions by stages will make it possible to unwind their crown-denominated positions in a systematic way, as the external balance permits, without undue impact on the exchange rate.”

There have been quite a few individuals that have ripped us for our handling of the Iceland meltdown, but as you can read above, there WERE CURRENCY CONTROLS in place…

One industry that’s not experiencing slowing sales… Guns… Barack Obama apparently is the best salesman the gun industry has had in years! With many buyers worrying about higher taxes or limits put on guns and ammo, sales are quite brisk since the election… I sure wish I was talking about home sales being brisk, or computers, or something like that…

Currencies today 12/1/08: A$ .6425, kiwi .5355, C$ .8045, euro 1.2675, sterling 1.5040, Swiss .8285, ISK 230, rand 10.25, krone 7.0280, SEK 8.1825, forint 207.35, zloty 3.0425, koruna 20.2330, yen 93.90, baht 35.75, sing 1.5285, HKD 7.7518, INR 50.29, China 6.8842, pesos 10.25, BRL 2.3735, dollar index 86.71, Oil $52.07, Silver $9.94, and Gold… $794.00

Source: Back to Risk Aversion

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.