Japan's Crock Of Cheese
"The U.S. dollar is in a weak trend! This means that investors around the world need to diversify out of the dollar, so they limit their losses, and where do they look? They look for yield."
by Chuck Butler In This Issue… - Japanese data looks strong!
- Aussie dollars…
- The world becomes worries…
- Sterling on the move!
--- Advertisement --- Looking for the nation's best checking account? Everbank's FreeNet Checking Account at www.everbank.com is a Forbes "Best of the Web" pick for four consecutive years and ranked #1 by Bankrate.com! --------------------- And now…today's Pfennig! Japan's Crock Of Cheese… Good day. Last day of February, which means that spring is one step closer! I trust you all had a nice weekend. I was checking out the Japanese market last night… Hey! The competition was the Oscars! So, I chose the Japanese market! Anyway, there was a news flash that Japan had increased their Factory Production and Retail Sales had grown faster than expected. So, I immediately switched over and saw the yen pushing higher vs. the dollar. I pumped my fist in the air, turned off the computer and went to bed! I see the yen this morning has held onto those gains vs. the dollar and is trading this morning around 104.20. The data from Japan was really surprising to the markets, since they took the bait, hook, line and sinker from the Japanese government that the economy had slipped back into recession. I didn't bite on that bit of news, as I didn't see how that could have happened! Sailing along posting 4% gains each quarter in GDP, and then out of the blue a statement that they had slipped back into recession. Yeah, right. Well, all you have to do is look at this recent data to tell that was a crock of cheese! That's right. And oh, look at the Nikkei, posting a seven-month high overnight! The Japanese government was just trying to get the focus off the yen for a while…and they succeeded, but this latest data, the stock performance, and the fact that strong inflows into the stock market will all support a stronger yen. Come on, you can do it yen! I know you can! Geez Louise, some think tank writes a story about "selling Aussie dollars" and my email box in inundated this forwards asking me my opinion. Come on, folks, I write my opinion here every day regarding currencies. It's obvious that I don't agree with these folks, (the writers of the article), and I've discussed the reasons why until I'm blue in the face! In fact, I'll say this to the writers. Great article…good facts, and research…but you're forgetting a few things. Like one important one: The U.S. dollar is in a weak trend! This means that investors around the world need to diversify out of the dollar, so they limit their losses, and where do they look? They look for yield. And Aussie bonds have yield, and not only that, but they are going to get more yield very soon, when the RBA raises interest rates! And how has the Aussie dollar responded to this article calling for a weaker currency? Well, it has held steady above the 79-cent level, with designs on 80-cents. And when the U.S. dollar goes into the abyss of the weak dollar trend, the Aussie dollar will have the potential of moving past 85-cents! So, if people want to sell a currency that's rallying, I guess that's their prerogative! Okay, enough of that! There was an interesting article I read last night regarding the U.S. debt situation. And this time it was Australia's Treasurer, Peter Costello doing the talking. You see, Mr. Costello, who has done his job a long time in Australia, and has seen the trends is very worried about the U.S. situation, because it is the largest deficit on record, with no signs of backing off. One of Costello's closest advisors fears the United States is heading for a devastating financial crash. And Mr. Costello is concerned about this, because something of that magnitude would certainly hurt all other economies in the world should it be as devastating as feared. Dr. Henry (the advisor) recently spoke about the growing deficit and the need to finance it and said, "the flood of money (to finance the deficit) was "worryingly reminiscent of Federal Reserve chairman Alan Greenspan's warning in 1996 of irrational exuberance in U.S. stocks". He went onto to say, "I suspect the rest of the world will continue to finance the U.S. current account deficit. But if it did not, all that would happen would be a fall in the U.S. dollar, which would not have serious consequences." So there you have it! The rest of the world is now worried about the United States and its deficits. There's really not in the data cupboard this week that could be considered a "main course." Just lots of appetizers. Except for today's reading on Personal Income and Spending that I spent a bunch of time on this Friday. But I think it's worth going over again, until it sinks into everyone's heads! The data today will show that we continue to make less than we spend! That's not right! How long can that continue? Well, one day we'll all find out. And….oh, never mind, it's only Monday! British pound sterling really put on a show Friday, and held onto those hard earned gains in the overnight Asian session. It's about time. I've been waiting for sterling to take off, and put the bad stuff behind. And Friday was the day…sterling is trading around 1.9235 as I write, and that's a whole 2 sterling move from Thursday's figure! Should be a good week for the currencies, no Greenspan speeches, and no real data to speak of. So, the euro should be able to ratchet up to 1.33 this week. And then I'll be gone, so who knows then? Once I'm out of here, the currencies usually rally. So, we've got that going for us, eh? Oh, I almost forgot Friday's GDP for the United States. Here's the headline after the spin-doctors got to it: "Growth exceed expectations." Well, GDP was +3.8%, which is nice. Very nice…but the markets were expecting better than 4%! Disappointed again! Currencies today: A$ .7930, kiwi .7295, C$ .8125, euro 1.3265, sterling 1.9235, Swiss .8615, rand 5.8130, krone 6.21, forint 182.44, zloty 2.946, koruna 22.435, yen 104.10, baht 38.25, sing 1.6262, pesos 11.08, and gold… $437.05 That's it for today. Chris will pick up the ball for me later this week while I'm gone, but I'll be filing reports from San Diego! Frank Trotter tells me that the "gold show" in California last week was great. We are still working on our ability to sell metals…should be soon now. Have a great Monday and week! |
