Columbus Day
"Gold has reached a 17-year high overnight, its highest level since 1988, with the overall weakening of the dollar. That pushes gold's return this year to 9.1%…"
By Chuck Butler In this issue… - A new leader for Germany.
- Cooked Books?
- Hawkish sounds from Canada!
- Gold hits a 17-year high!
--- Advertisement --- A CD made of Gold. Invest by October 20th. Diversify, seek higher yields, and safely invest in Gold Bullion market returns. You can do it all with the new MarketSafe(SM) Gold Bullion CD from EverBank®. 100% principal protection, market-driven upside potential, no account fees, and FDIC insurance. Click here to open your new MarketSafe Gold Bullion CD today! http://www.everbank.com/main.asp?idpage=pro_mscd&affid=eb&referID=11694 --------------------- And now…today's Pfennig! Columbus Day Good day. I hope your weekend was grand! My Cardinals will move on and play Houston in the National League Championship Series. This is going to be a nail biter! The Jobs Jamboree was very interesting in how well the books were cooked last Friday, so let's see what's in the hopper for this coming week! Today is actually a bank holiday - the Fed, U.S. Postal Service, and banks are all closed. I know, you're asking, "So, Chuck, why are you in today?" Ahhh…grasshopper, I can't imagine how many calls we will get today, but there would be a huge number of people that don't realize today's a bank holiday, that would be very upset if we weren't here to answer the phones! First of all, we should recap Friday's Jobs Jamboree, where the government told us that only 35,000 jobs were lost in September. But catch your breath, and figure this one out: The unemployment rate jumped from 4.9% to 5.1%, only losing 35,000 jobs. I've got my hands on my face, and saying, in my best Vinnie Barbarino voice, "I'm so confused." The dollar rallied on that news, and at first I thought, "What's going on here, can't the markets smell a cooked rat?" But then the aroma must have filtered down for them to smell, and a reversal took place. As the day went on, the euro was able to re-establish a foothold on the 1.21 handle, and move higher, taking the rest of the currencies along for the ride. As I turn on the screens this morning, I see that there has been just a little movement in the currencies overnight. Most of the lack of major movement has been caused by a holiday in Japan. There are no scheduled data releases today in the United States with the holiday and all, and not much tomorrow, but as Wednesday rolls around, we'll see the monthly trade and budget deficits. Then CPI comes around the next day, and we finish the week with retail sales. In Germany this morning, yet another data release indicating a recovering economy was printed. German exports for August rose 3.5% in August. Yes, the weaker euro helped out there, but think about that for a minute. The euro's drop this year has given the German economy a shot in the arm with regards to exports. But where are those exports going? And if the euro is weaker, the dollar is stronger, and therefore it just adds to the trade deficit in the United States. The rumors last week that Merkel and Schroeder were able to work out a coalition were true, and last night it was announced that the next leader of Germany will be Angela Merkel. I would imagine that in the deal making process, a lot of her campaign promises have been left on the floor in the cutting room. As my old boss used to say when the company leaders would have a meeting, "There was a lot of sawdust left on the floor." So, what I'm saying here, is that Merkel will lead the coalition government, but don't expect to see the tax cuts and other welfare cuts that she talked about during the campaign. I was hoping to see these things happen to spur Germany's growth from being a "nascent recovery." Gold has reached a 17-year high overnight, its highest level since 1988, with the overall weakening of the dollar. That pushes gold's return this year to 9.1%, but as I've said before, longtime EverBank friend, Doug Casey believes that this is still just the tip of the iceberg with regards to the gold price increase! Today is Thanksgiving Day in Canada. So, they are on holiday today, too! I'm really beginning to question why I'm here! But while I'm talking about Canada, they did post a jobs report on Friday, and they lost 2,300 jobs in September…no big deal. In addition, Canada posted their business outlook survey, taken in August, on Friday, and it was very bullish for the Canadian economy and the loonie. When you consider that the business outlook is bullish, and the Bank of Canada's latest comments have been so hawkish, I can't help but think that interest rates are going higher in Canada, and so too, the loonie! And the other commodity currencies are looking as though they want to move higher this week, after spending a week spinning their wheels…the Aussie and the kiwi, I'm talking about here, in case there are new readers. China is back from a week-long holiday, and the renminbi was moved to 8.0864 versus the dollar in its first day of trading. That's a nice move from the last recorded level versus the dollar of 8.0920. And as I wrote a couple of weeks ago, the general direction of the renminbi since it was removed from the peg to the dollar on July 21st, has been stronger. If the current rate of improvement continues, we could be looking at a much stronger renminbi at this time next year! Currencies today: A$ .76, kiwi .70, C$ .8515, euro 1.2120, sterling 1.7595, Swiss .7820, rand 6.53, krone 6.50, forint 207.03, zloty 3.21, koruna 24.40, yen 113.90, baht 40.83, sing 1.6850, China 8.0864, pesos 10.79, and gold $477.65 That's it for today. I was holding out waiting for Chris to show up, to report on his performance in the Chicago Marathon, but no such luck. I'll have to bring you that update tomorrow. Off to San Francisco later this week. I hope to see you there! Have great Monday! |
