It's Halloween…Boo!
"The dollar bulls are howling (it's Halloween!). This week we'll see a data deluge, with the data cupboard getting emptied, starting today with personal income and spending. It's my new favorite piece of data to follow."
By Chuck Butler
In this issue… A GDP upward surprise! Thoughts from Bill Gross. Even the loonie gets sold. Backing off on Big Ben… For now!
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Now…today's Pfennig! It's Halloween…Boo! Good day. Happy Halloween to one and all! My little Darth Vader was ready to Trick-or-Treat yesterday! Good luck to the teachers today! It's supposed to be a very rainy Halloween for us here, that's too bad, because the little kids are always a treat, and they'll probably have to stay home. I'm very late today; I have no idea what happened. So, this will be short and sweet, as it's a Monday, and those are crazy on the Trading Desk! Speaking of crazy, and no I'm not going to break out Patsy Cline this morning, no wait, I just did, UGH! Anyway, Friday's price action was crazy after the third quarter GDP was printed at +3.8% better than expected (3.6%). The dollar bulls were out in force and pushed the currencies down on the day. The indictment announcement didn't have any influence on the dollar, and by the time the University of Michigan consumer confidence survey came around later in the morning, showing weaker confidence, the markets shrugged it off, and remained focused on the GDP showing. You know, on Friday, I made a big deal out of the composition of GDP, and while the personal consumption was strong, so was the government spending, which was my point on Friday. I won't go into that any more, but those that think that all is right on the night with economic strength are going to see the error in their thinking at some point in the future. My friend, John Mauldin, had a quote from Bill Gross (You know, the head of PIMCO, the world's largest bond fund) in his weekly column (http://frontlinethoughts.com): "Typically an economic slowdown occurs 18 months after the beginning of an upward move in five-year rates, and this cycle appears to be no exception with industrial production and service-related indicators having peaked nearly a year ago. We are due for what appears to be a 2% or less GDP growth rate in 2006, a rate sure to stop the Fed and to induce eventual ease at some point later in the year." But for now, the dollar bulls are howling (it's Halloween!). This week we'll see a data deluge, with the data cupboard getting emptied, starting today with personal income and spending. It's my new favorite piece of data to follow, and it helps point out how we continue to spend more than we make! No wonder the consumer consumption piece of GDP is strong, personal income is expected at .3%, while spending is expected at .5%… UGH! Tomorrow, on all Saints Day, the Fed will raise interest rates another 25 BPS. I would suspect this is already priced into the markets, so the statement afterward will hold all the water tomorrow. We'll also see ISM manufacturing tomorrow. Then there's a ton of stuff to sift through before reaching the Jobs Jamboree on Friday. So, buckle yourself in first and then help anyone needing assistance! I say that because there has been a real unorthodox trading pattern around major data releases lately, so it's hard to put your finger on exactly which way things are going to trade, going in and out of the data announcement. Therefore, it could be a wild week, and I want you buckled in! No currency was spared the dollar's wrath on Friday; even the Canadian loonie got sold. So it goes… You know, on a sidebar, I saw a report last week that the earnings at an oil company were going to increase 75% or so. Hmmm, you can make your own judgments on that, but I was thinking about that when I filled my gas tank the other day. OK. Sorry, I got carried away with that. Just one more thought before I head to the big finish. I know a lot of things have been written about the Big Al's replacement, Big Ben Bernanke. I've been a little hard on the Big Ben over the past few years for his comments, but I think that I will back off for now, and see how he navigates the Slip-N-Slide that Big Al has wet down for him, before I go any further. Currencies today: A$ .7510, kiwi .7040, C$ .8515, euro 1.2050, sterling 1.7795, Swiss .7795, rand 6.70, krone 6.48, forint 208.25, zloty 3.31, koruna 24.59, yen 116, baht 40.77, sing 1.6930, China 8.0845, pesos 10.82, and gold $472.30 That's it for today. Uh oh, my Tigers bit a big one at KU on Saturday, UGH! Now we just need for the dollar to do the same, eh? Did you remember to "fall back" on Saturday night? I did, and it still didn't help me get going this morning! Maybe tomorrow. Get ready for a wild week. Have a great Halloween! |
