Bias To Buy Dollars Remains In Place...
Daily Pfennig

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In This Issue..

* Some healing in the currencies...                                           
* What's a dead cross?                                         
* Norway, S. Africa and Norway rally...                                                
* U.S. deficit spending continues...                                                                                                           

And Now... Today's Pfennig!

Bias To Buy Dollars Remains In Place...                                             

Good day... And a Terrific Tuesday to you! I'm Back! Boy, was that ever a great idea that our little Christine had a couple of weeks ago, when she heard my schedule... "you should take off that Monday"... Yes sirree Bob! That was the best idea I've heard in a month of Sundays! So... As you can see, or will see soon, I'm full of you know what and vinegar this morning... Let's get going on this Terrific Tuesday!

Well... Front and Center this morning, the non-dollar currencies have seen some healing... Some, not much, but some... But these mini-rallies are on tenterhooks folks, they can be reversed in a New York Minute... And, now that I look back at the screens, that's exactly what's happening! UGH! These turn-arounds are beginning to give me a rash!

The euro, which used to be a Big Dog, full of pep and energy, continues to look like an old blue tick hound, that likes to lay around in the shade... My chartist friend sent me a note over the weekend, and said that he believed the euro had crossed, what he called, a "dead cross"... He said this "dead cross" comes about when an asset trades below its 50-day moving average, and its 200-day moving average...

So... Let me get this straight... Just because, an asset drops below its short dated average while being below its long dated one, the chartists believe this will indicate further declines...

Well... There is some news this morning that Greece might get the help it needs to avoid default... This is the key master to the gate keeper for the euro folks, not some chart!

And there was also this story about the "P" in the "PIGS"... Fitch's Head of EMEA (emerging markets) sovereign ratings gave Portugal a boost, saying that many of the comparisons made with Greece are "too simplistic" and that Portugal's rating is significantly higher.

Chris was kind enough to send me a note with some of the action in currencies from yesterday... He mentioned that the "usual suspects" in the Commodity Currency arena did not have particularly good days VS the dollar, but the Commodity Currencies that sit just outside the Aussies, and Canadas, like Norway, South Africa and Brazil, did have particularly good days VS the dollar on Monday.

I read a story yesterday about Norway, which has always been, and will remain, one of my fave currencies for their unmatched fiscal position, and the analyst thought that the slide in the krone had gone too far to match the fundamentals of Norway... Well, I thought to myself, "Self... This analyst will soon join you in screaming at the walls, for the markets are none too concerned with fundamentals at this point"

But... Any time a currency like the krone, can rally when the currencies all around them are getting sold... That's a good thing!

That was some scary stuff that I gave to Chris to put in the Pfennig yesterday regarding our deficit spending, eh? I just don't understand why this has to continue to go on and on like the Energizer Bunny! Think about this for a moment... The majority of people in the U.S. want the Gov't to stop spending so much... The rating agencies like S&P want the U.S. Gov't to stop spending so much... And the foreign countries that are forced to swallow the ever increasing amount of U.S. Debt, want the U.S. Gov't to stop spending so much... SO WHY HAVEN'T THEY STOPPED?

I'll tell you one thing that's on the horizon that could very well put a dagger in the Gov't's spending plans... And that's if a rating agency lowers the U.S.'s AAA (triple A) rating!

As an American, I've got to hope that I never see the day when our credit rating is dropped... For that would bring about armegeddon for the Treasuries, and interest rates, and our economy, etc. The collateral damage would also be horrendous... So, the Gov't has GOT to stop before this awful thing happens to us!

I know this is like removing a bucket of sand from the beach, but what was the U.S. Gov't doing spending millions of dollars advertising during the Super Bowl? Hey! When you get in the hole, fiscally, do you, then go book a trip to Hawaii? NO! You hunker down, until you have the money to book a trip to Hawaii! I bet the boys and girls at CBS were jumping with joy to receive that check!

Marc Faber says that the U.S. would be rated "junk" if it were a company!

On a sidebar... I sat on a panel with Marc Faber a 3 years ago in New Orleans... A very interesting, and intelligent man, I must say...

OK... Back to the task at hand... Earlier, I mentioned the Brazil real had gained a bit VS the dollar yesterday... There certainly seems to be this growing feeling in Brazil that interest rates will be moving higher as early as next month... And once the Central Bank opens Pandora's Box of rate hikes, the real should look to take off and leave the Sovereign Wealth Fund that has been selling real to weaken it, in the real's rear view mirror!

In Australia overnight... Reserve Bank of Australia (RBA) Gov. Stevens said that "holding interest rates too long may help create asset bubbles"... NO Dookie! Geez Louise, where do these guys come from? And I've always held the RBA high on my list of Central Banks, but making a statement like that, right after the RBA left rates unchanged is absolutely ridiculous!

Oh well, I guess we're all eligible to make statements like that... I mean, sure it's true, it's true, I did see a putty tat, but come on! I would bet that even Mr. Bubbles, Al Greenspan, would admit to that now... Just don't ask him if he saw the bubble coming!

I have to think that this statement by Stevens though, will help the A$, as the forecasts for a rate hike at the next RBA meeting next month should begin to reflect a change in rates...

There's a G-7 meeting going on in Sydney... And there was some scuffling around when European Central Bank (ECB) President, Trichet had to leave the meeting early... The rumor went around quickly that he was returning to attend an emergency meeting of the ECB... But, that rumor was put to bed after it was learned he had previously planned the early exit to attend a European Council meeting...

Then there was this... Didn't I tell you this kind of stuff would happen when they began the TARP loans? Check this out, as reported by the Wall Street Journal this morning... "U.S. Sen. Robert Menendez, D-N.J., wrote to the Federal Reserve asking the central bank to approve the sale of a New Jersey bank, of which two top officers were major contributors to his campaign, The Wall Street Journal reported. Menendez urged the Fed to approve the sale of BankAmericano of Elizabeth, N.J. He failed to disclose that the bank's chairman and vice chairman contributed to his senatorial campaign."

See? Didn't I tell you?

To recap... The bias to buy dollars remains in the markets with only mini-rallies going on for the non-dollar currencies. The Commodity Currencies of Brazil, South Africa and Norway, were the only currencies to gain ground VS the dollar yesterday. A Norwegian analyst believes the krone has fallen too far... Brazilian Banks believe that the rate hikes will begin next month... And finally, the deficit spending problems in the U.S. continue to mount!

Currencies today 2/9/10: American Style: A$ .8710, kiwi .69, C$ .9335, euro 1.3710, sterling 1.5580, Swiss .9350, European Style: rand 7.7020, krone 5.9560, SEK 7.3955, forint 198.60, zloty 2.9760, koruna 19.05, RUB 30.40, yen 89.60, sing 1.4190, HKD 7.77, INR 46.66, China 6.8267, pesos 13.16, BRL 1.8640, dollar index 80.24, Oil $72.30, 10-year 3.59%, Silver $15.18, and Gold... $1,068.20

That's it for today... Well, although it's nothing like the snow they got up east last week, we did get a good 5 inches overnight... That's always strange to be sitting outside being warmed by the Florida sun one day, and a couple days later be driving in snow! The Orlando Money Show was good... It's always good to see our customers there. Some stop to talk about their accounts, and some just stop to say hello. I'm amazed to this day, as to how many people stop and ask us who we are and what we do, and are flabbergasted to find out they can diversify their investment portfolio with currencies through us! Amazing! I stood before a big crowd one day, and showed them multiple examples of statements made by Fed Reserve Central Bankers and U.S. Treasury Secretaries that we so wrong, they were almost right, as they came completely around the circle of being wrong! I then asked how many people had come to hear me talk for the last 10 years, and there were some hands that went up... I then said, well, tell me if I'm wrong, here, but I've had one message for 10 years... That the deficit spending was going to weaken the dollar... OK... Enough of that, my little buddy doesn't have school today because of the snow, that means my two older kids, who are teachers, don't have school today either! Get the sleds out! Ok... I've carried on longer than usual in this section, so I'll sign off but first remind you to have a Terrific Tuesday!

Chuck Butler
EverBank World Markets

Posted 02-09-2010 9:30 AM by Chuck Butler