G-7 Takes China To The Woodshed!
"I believe that this is the day in history that Paul Revere rode through the streets of Boston warning that the Red Coats were coming…see the connection? According to Mr. Goodale, China needs their own Paul Revere!"
by Chuck Butler In This Issue… - Paul Revere's Ride!
- Dollar Bears come out of hibernation
- More Caribbean Treasury purchases….
- Confidence takes a hit!
--- Advertisement --- Not sure which currency is right for you? Visit the Currencies Research Center at www.everbank.com for handy research tools. Or, give the Everbank World Currency Desk a call at 800.926.4922. --------------------- And now…today's Pfennig! G-7 Takes China To The Woodshed! Good day. Wake up Sunshine…Whew! I am beat! Too much yard work, good thing it wasn't a three-day weekend! Sounds like the Finance Ministers of G-7 were working hard this past weekend too. They came out with their harshest words against China's peg to the dollar, yet. We've got that to talk about, along with a rally in the currencies, and last Friday's NFSP data. So, if I don't lay my head down and take a nap, I'll get to the skinny on this right away! First, the G-7 meeting this past weekend has got the dollar bulls on the run this morning, and euros are 1.2985, sterling 1.90, and so on. The meeting was led by our own Treasury Sec. John Snow, who told the Chinese that they should embrace a looser exchange rate immediately. But the harshest words came from Canada's top Treasury gun, Ralph Goodale, who said, "China should understand there is a freight train coming as U.S. and the European Union weigh tariffs or import restrictions on Chinese goods." WOW, now that there is fightin' words! I believe that this is the day in history that Paul Revere rode through the streets of Boston warning that the Red Coats were coming…see the connection? According to Mr. Goodale, China needs their own Paul Revere! Anyway, I find this G-7 meeting to be very interesting indeed. John Snow and his band of merry men were noticing the dollar below 1.30 euro, and decided that this meeting would be used to let everyone know, in case there were some questions, that the U.S. wants a weaker dollar. Forget what Greenspan says, he doesn't have anything to do with the Treasury! So, the dollar bears have come out of their three-week hibernation, and are marking down the dollar once again. It's like thunder…lightening…it's frightening…I better knock on wood! Ooops, got carried away there! Oh yeah, I did, but these dollar bear sightings get me all lathered up! Friday's Net Foreign Security Purchases (NFSP) data come in higher than expected, which on the surface is good news for the dollar, but with the total at $85 billion, the dollar should have rallied hard on that news, and it didn't. Oh, it did a little bit, but still remained in our recent range. No, because when you scratched the surface you found that once again, like last month, a huge chunk of Treasury buying came from the Caribbean. Yes, offshore hedge funds. Like I said last month, that type of buying isn't a long term relationship, and one (dollar bulls) shouldn't get too excited about this data. The dollar began its slide on Friday morning after the U. of Michigan Confidence report showed a sizable drop in Confidence. Let me say what I said on the desk after this report was printed: ever since Big Al's bomb on March 22nd, every piece of data that has been printed has showed a soft side to the economy…and now this drop in Confidence. And next week we'll see first quarter GDP, which is expected right now to be around 3.5%… Good, but not the stuff the Fed was telling us about! But first, this week, we'll see both PPI, and CPI inflation reports. I think these are huge…say hello to my little friend! Okay, enough of that! Yes, PPI and CPI, for whatever they are worth! For new readers, I say that because a long time ago we all learned that the government takes out things that we use everyday in their inflation reports. However, the markets believe these reports, so we have to play along! Looks like getting back over the 1.30 figure is going to be a tough row to hoe for the euro. There will be a ton of trades sitting there waiting for the bell to go off, and trigger them to take a profit, but once those profit-taking trades have been executed, and the dust settles, the euro should be able to make this push, because in the end…this is the End of the Innocence for dollar and it's need to attract over $2 billion a day. Currencies today: A$ .7680, kiwi .7170, C$ .8025, euro 1.2990, sterling 1.9005, Swiss .8390, rand 6.2725, krone 6.3250, forint 191.50, zloty 3.2275, koruna 23.26, yen 107.45, baht 39.57, sing 1.6540, pesos 11.1250, and gold… $426.03 That's it for today. Great weekend for my Cardinals…now let's see if they can go a roll! We received some rave reviews on our new Asian Tiger Index CD that I announced last Friday. Again, if you're interested call our desk at 1-800-926-4922. All right…made it through without that nap! Have a great Monday and week! |
