A Week Dominated By Data...
Daily Pfennig

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In This Issue..

* Both sides of the ship...            
* Currencies remain well bid...              
* ECB and Riksbank meet this week...                            
* Baiting the hook for more stimulus?                                                           

And Now... Today's Pfennig!

A Week Dominated By Data...           

Good day... And a Marvelous Monday to you! The Heat Wave finally broke Saturday night, and we had just one of the most beautiful days yesterday that I have ever seen! Which was good, because we had a backyard full of first kids, and then family to celebrate Alex's 14th birthday!

Well... We have a week ahead of us that will be dominated by the U.S. data cupboard. And this week, we'll get the June Jobs Jamboree (JJJ) on Thursday instead of Friday. Saturday is the 4th of July, and I guess the Bureau of Labor Statistics (BLS) isn't working on Friday! HA! No, they do this every now and then when the markets will be quite thin on a Friday before a Holiday weekend. And this week qualifies BIG TIME! It will be the 4th of July! And maybe, just maybe because you never know, someone in Washington D.C. will realize that the it's supposed to be about WE THE PEOPLE, not we the politicians...

Friday, I left you with the currencies moving higher on yield demand, I held by breath this morning when I turned on the currency screens, as I was concerned that another "demand" was going to be the headline. Because that's how it's been lately, eh? One day this "demand" the next day some other "demand"... But, no such new trade direction today. WHEW! I totally dislike getting whipsawed around like that, when we all know, and the traders all know, and the Hedge Fund managers all know, that in our collective heart of hearts, that in the end, the dollar will be much weaker... It's just all this stuff that goes on between now and when the end of the trend takes place.

For instance, one of the headline stories on the Bloomie this morning is that the "Best Currency Forecaster says the Dollar to Rise Most Since 1981 by year end"... WOW! Now that's an interesting forecast... But, it's just that... The "forecaster", believes that the U.S. recession will have come to an end in the U.S. this year, and U.S. growth will outpace everyone else, making the dollar the King once again... Now... I talk about going out on limbs all the time with my opinion / look ahead on things, and this is "forecast" qualifies as going out on a limb!

It's important that I tell you about these things, because... This is market commentary, and I wouldn't be doing it right, if I only told you stories on one side the ship... Right? Of course that's right! Of course, you know me, I just don't see it happening that way, and the one thing I think of when I read something like that is: rose colored glasses...

And... Speaking of the sides of the ship... Union Bank of Switzerland (UBS), the world's 2nd biggest currency trader, has just revised THEIR CURRENCY FORECAST for year end, believing the dollar will be lower... So there you go... Two stories from both sides of the ship!

Playing well with the "forecast for a strong dollar" is a story overnight that China has once again backed off their statements calling for a replacement to the dollar as the world's reserve currency. Of course, that's what the "markets read"... I don't read it that way... Let's see what you think... "China ruled out "sudden changes" to its foreign-reserves policy"... I think it's strictly China being China, aloof, cunning, and other things... Of COURSE they don't want any "SUDDEN CHANGES", they haven't had enough time to rid themselves of hundreds of billion of dollar reserves!

Even with those two stories this morning, the dollar remains on the down side against the currencies, with the euro remaining above 1.40 through Friday, overnight Sunday, and so far this morning... The euro did get a boost this morning from a report on economic confidence, as the data moved upward to an index number of 73.3, VS the 71 that was forecast...

The European Central Bank (ECB) will meet this Thursday, and I do NOT expect them to make any moves with rates, leaving their internal rate at 1%. The most important thing will be if ECB President Trichet, has something to say that could me the markets after the rate announcement.

Sweden's Central Bank, the Riksbank, also meets on Thursday this week. (there's a ton of stuff going on Thursday, eh?) With internal rates at just .50%, I guess they could cut, but what would be the point?

The Swiss franc is getting caught in the middle of a war between the Swiss National Bank (SNB) and traders... The SNB has been in the markets quite a few times recently intervening (selling francs) to keep the currency from getting too strong. And traders see that as a great opportunity to test the SNB's intestinal fortitude... I've always loved watching these things develop... If the traders "really" want to test the SNB, they'll win, as the SNB doesn't have the war chest that, say a Japan has... Unless they want to get into the "printing" business....

Besides data, and Central Bank meetings this week, it's also the end of the quarter tomorrow... Which means the books get closed as some businesses have their year end, on June 30th. This also means that 2nd QTR earnings isn't that far off, and I think these reports will be quite interesting, maybe taking some of the shine off the thoughts that the recession ended already!

The High Yielders have remained strong since Friday of last week, with Aussie, kiwi, Brazil, all leading the way. And there was no "new News" from the BRIC's over the weekend... For those of you new to class, the BRIC's are Brazil, Russia, India and China, all emerging markets that are clamoring for change and a great influence in the world's financial matters... And why not? They have more money in reserves than you can shake a stick at, and... The have the a very large portion of the world's population!

So, let's go to the data cupboard and see what else will be on the docket this week data wise...

Today we have a couple of 3rd tier reports, so nothing to write home about, but tomorrow... We'll see the April S&P Case/Shiller Home Price Index... I truly expect this data to show that Home Prices continue their downward spiral... We'll also see The Chicago Purchasing Manager report (manufacturing), and Consumer Confidence...

When we turn the calendar page to July on Wednesday, we'll be met by the ADP Employment report, and the ISM Manufacturing Index. There's also Construction Spending, Pending Home Sales, and Total Vehicle Sales. Then on Thursday, which will be the "Mother of all Economic Data and Central Bank meeting days"... The June Jobs Jamboree, along with the Weekly Initial Jobless Claims... Which is going to look really stupid for the Jobs Jamboree... You see, the monthly report from the BLS is expected to print at -350K... Whereas the "WEEKLY" Initial Jobless Claims will print at over 600K for the week! I know, I know, it doesn't add up, folks... Which is one of the things I complain about, and point out, and make fun of all the time... The BLS... Need I say more?

And then there was this... Did you know... That U.S. Treasuries posted their largest 1st half losses in 30 years? Well, that's the facts Jack! Now... Quite a few "bond dealers" believe that the worst is over... OVER? Nothing's over until we decide it is! Was it over when the Germans bombed Pearl Harbor? HAHAHAHAHAHAHA! (ok that's a line from Animal House, please I know it's incorrect, just funny!)

Seriously though... I don't see how these "bond dealers" can say something like that, as they know all too well that the supply of Treasuries that will be issued this year will be enough to send yields higher... How can they get away with saying something like that? Oh! I know! They won't be technically wrong, if Treasuries continue to lose value, as long as they don't lose as much as they did in the 1st half of this year! Shame, shame, shame...

OH, and remember last week, when I told you about the President saying "not yet" instead of a resounding "no" when asked about another Stimulus? Well... The White House Senior Advisor, David Axelrod, said this weekend that the President is ready to discuss additional measures... And the President also casually mentioned that "we have not broken the back of the recession"... Is that like baiting the hook? I think so folks...

Now... On to the Big Finish for this Marvelous Monday!

Currencies today 6/29/09: A$ .8065, kiwi .6490, C$ .8685, euro 1.4065, sterling 1.6570, Swiss .9215, rand 7.8405, krone 6.4470, SEK 7.7390, forint 196.30, zloty 3.1920, koruna 18.4855, yen 95.30, sing 1.4540, HKD 7.75, INR 48.10, China 6.8335, pesos 13.1920, BRL 1.9355, dollar index 79.94, Oil $69.69, 10-year 3.50%, Silver $14.12, and Gold... $941.95

That's it for today... As I said above, yesterday was my little buddy Alex's birthday. We went to breakfast, as we always do... Yesterday was also my darling daughter Dawn and husband Jerry's 6th wedding anniversary. I felt bad after sending out Friday's Pfennig that I had not paid respect to Farrah Fawcett, who had passed away after losing her battle with cancer on Thursday. I wonder how many T-shirts were bought and worn back in the 70's with Farrah on the T-shirt... They were everywhere! And this weekend, the info-commercial guy, Billy Mays, passed away... OK... Our little Christine returns to work today, after a brief vacation... Yay for us! And a good show for the U.S. National Soccer Team yesterday, losing the Championship game 3-2, after leading 2-0 at halftime! Gotta go... It's a Monday, so we might as well make it Marvelous, eh?

Chuck Butler
EverBank World Markets

Posted 06-29-2009 9:32 AM by Chuck Butler