A Greek Bond Rollover Agreement?
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In This Issue.

* Juncker attempts to deep six the euro.

* Greek debt pressures ease.

* More on Jobs. or lack of them.

* Correct Accounting from the CBO!

And, Now, Today's Pfennig For Your Thoughts!

A Greek Bond Rollover Agreement?

Good day. And a Terrific Tuesday to you! Recall when I told you yesterday that I sure could use some rest? Well, I got home from work, went to my recliner, and fell asleep, basically on contact with the chair! 3 hours later I woke up, had some cereal and went to bed! And it worked. this morning, I feel great!

Well. yesterday was an interesting day in the currencies. I left you yesterday morning, with the euro barely hanging on to the 1.46 handle, and falling because of some German Gov't official spouting off about the Greek bailout. Well. the markets soon figured out just what I told you yesterday morning, and that was, that the German official was merely trying to throw the markets off the scent of a rallying euro.

But then, along came another, brandishing a different kind of sword in which he would try to cut off the euro's rise. This time it was Belgium's Juncker, who has been a real thorn in my side lately with all his comments. But yesterday, Juncker decided to shout out that "the euro is overvalued VS other major currencies". Those words deep sixed the euro on the day, with it falling back into the 1.45 handle with ease.

But, dear reader. that was yesterday. when all my troubles seemed so far away. no wait! That was yesterday. today, is a different story! The European Central Bank (ECB) approved the Greek bond rollovers that we talked about yesterday. This latest development, has eased Greek debt concerns, and it's back to "game on" with the euro VS the dollar, as the ugly contest between the two sees some additional lipstick applied to the euro. Remember when I would use that lipstick on a pig comment, and then Sarah Palin used it with regards to a pit bull? Well, not that I have anything against the former Gov. of Alaska, but I figured if I used the lipstick on a pig line again, new readers would think I got it from her! And I'm an original! HAHAHAHAHA!

Another thing weighing on the dollar this morning, is the news from China, where a Chinese official was quoted on the newswires saying that the dollar will continue to weaken against other major currencies, and then went on to give a "warning of the risks in holding large sums of U.S. dollar assets." This really got the overnight markets to sell dollars, but then the heavy selling was cut to just selling, when the Chinese official stated that the comments were he personal views only. Yeah right. I'm sure that this Chinese official received a "call" and was reminded that the Chinese held Trillions of U.S. dollar assets. And he decided that the views were his "own personal views".

The Reserve Bank of Australia (RBA) left rates unchanged last night, as I said they would. I'm still calling for a rate hike in August here. The RBA blamed the uncertain goings on with the debt in the Eurozone, as the main reason for not hiking rates at this time, which plays well with my thought that rates will be hiked in August. For, by August, I think the Eurozone debt problems will have been sufficiently kicked down the road enough, to allow first: Allow the ECB to hike rates in July, and the RBA to follow that with a rate hike in August.

So. the non-move by the RBA gave some holders of Aussie dollars (A$) a reason to take profits above $1.07. I had the darling Kristin Kuchem ask me yesterday if the RBA would hike rates, and if they didn't would it cause a drop in the A$... I said, no. and yes. but not much of a drop, for long term investors have their eye on August. Right now, that looks like what's happening this morning. A$ is down a bit.

OK. There are a ton of Fed Heads on the speaking circuit this week, but the most important one will speak today. Big Ben Bernanke will take the microphone, and let everyone know his thoughts on the "U.S. Economic Outlook". I think that Big Ben could have something up his sleeve, ala Bullwinkle, today, to squash people like me that believe he and his band of Fed Heads will opt for more stimulus this fall (QE3). If I were him, I would tread cautiously in these waters, because if he comes out and tells us all how wonderful the economy is, and how wonderful it looks going forward, and then the economy continues to fall on its face. then Big Ben will lose even more credibility than he has during QE1 & 2, and his "Transitory" comments when talking about rising inflation.

But for now, at least. if he squashes the "more stimulus is eventually needed thoughts" the dollar could see some love. So, watch for that today.

The Canadian dollar / loonie finally got off its duff, and received some wind in its sails, yesterday/ this morning. It looks to me like the C$'s line of resistance is $1.02. it briefly dipped below $1.02 yesterday and the hit the booster rockets to $1.0270! I would have to think that seeing some breathing room added to the neckline of the shirts being worn in the Eurozone, went a long way toward C$ strength. I say that because all the things that normally move the C$ were already in place.

Well. the Jobs data from Friday continue to be massaged and the blame finger pointed at the previous administration. Shoot, I don't care who's fault this is, I just want it fixed! I saw this (thanks K.B.) .

"About 6.2 million Americans, 45.1 percent of all unemployed workers in this country, have been jobless for more than six months - a higher percentage than during the Great Depression...

Here's another problem: more than 1 million of the long-term unemployed have run out of unemployment benefits, leaving them without the money to get new training, buy new clothes, or even get to job interviews."

And then this on jobs, or better yet, the lack of them. "The argument that jobs aren't coming back because Republican business owners fear or dislike U.S. President Barack Obama doesn't make much sense, according to The Economist. One business owner's irrationality is a profit opportunity for his competitors. "By their own account, small businessmen aren't hiring because the economy is weak, not because they're worried about Democratic policies," the magazine noted."

Ok. enough on the jobs data. I typed out a long statement about that dolt representative and his twitter pictures, but decided to erase it. I shake my head in disgust.

Customers of EverBank World Markets, receive a monthly newsletter, called The Review & Focus, which has been going out monthly for as long as I can remember. Well, in the letter, we can dive deeper into things, like currencies. One of the currencies we've had a crush on for some time now, is the Singapore dollar. I don't talk about the Sing dollar much in the Pfennig, because nothing new rarely happens here! Well. months ago, we wrote about how the Monetary Authority of Singapore (MAS) had signaled that they would allow a greater appreciation of the Sing dollar in an effort to combat inflation. We gave the MAS a Gold Star, because I've long said that a country can go a long way toward combating inflation by having a strong currency.

Well the Sing dollar is up 4.5% this year alone. and in the past year it is up 15.4%! The Sing dollar is another of those Asian currencies with good fundamentals, and no interest. but, currency investors will look past the no interest part, when there's good fundamentals. and that's what they've done with the Sing dollar.

Another thing that I've stated in the Pfennig and the R&F, is that I view the Sing dollar as a good proxy currency for the Chinese renminbi. The Sing dollar is convertible, exchangeable, you can wire it, take in physical form out of the country, and has a wider band in which it can roam. than the Chinese renminbi, which can't do any of these things the Sing dollar can.

Then there was this. from CNSNews.com (thanks Scott!) - "The Congressional Budget Office (CBO) says the real cost of the federal government guaranteeing the business of failed mortgage giants Fannie Mae and Freddie Mac is $317 billion -- not the $130 billion normally claimed by the administration.

That figure has grown since August 2009 when the CBO calculated that the cost of bailing out the GSEs was $291 billion, due mainly to further weakening in the housing market.

Further, the CBO expects these costs to rise by an additional $42 billion between 2011 and 2021, an average of $4 billion per year."

Chuck again. I love it when someone has the intestinal fortitude to "call it as they see it", like the CBO has done here. Which leads me to something else.

Our office manager, the charming Danielle Goodman, got me a poster. It's from Pink Floyd, and it has a picture from their album: The Wall. and the lyrics to the song Mother are on the poster, reading: Mother, Should I Trust The Government?... She thought that was apropos for me. and it is! I just need to find a place to hang it now!

To recap. Belgium's Juncker tried to deep six the euro yesterday, by saying that it was "overvalued", but no one remembers that today. And today, it looks as though the ECB has approved Greek bond rollover, which we talked about yesterday, and would kick the can down the road for now, thus taking some heat off of the euro. This news has helped most currencies around the world to higher levels this morning.

Currencies today 6/7/11. American Style: A$ $1.07, kiwi .8215, C$ $1.0260, euro 1.4670, sterling 1.6425, Swiss $1.1980, . European Style: rand 6.73, krone 5.3470, SEK 6.14, forint 181, zloty 2.6945, koruna 16.5080, RUB 27.75, yen 80.20, sing 1.2280, HKD 7.7785, INR 44.67, China 6.4810, pesos 11.71, BRL 1.5840, dollar index 73.61, Oil $99.10, 10-year 3.02%, Silver $37.38, and Gold.. $1,548.65

That's it for today. Well. I've gone through this twice with my 2 older kids, and now once again with Alex. driving! Alex will turn 16 at the end of this month, and he's taking driving lessons, and giving us the same lines his two older sibling gave us about how nice it will be that we don't have to take him to all his practices, etc. Yeah, yeah, I've heard it before. and my kids wonder why I don't have hair! I've taken up enough of your time this morning, so I thank you for reading the Pfennig. and I hope you have a Terrific Tuesday!

Chuck Butler


EverBank World Markets



Posted 06-07-2011 10:21 AM by Chuck Butler