FOMC Day

Good day… And a Wonderful Wednesday to you! A very cold and snowy Wednesday here in St. Louis. I got caught behind the line of snowplows this morning, and it took me what seemed like for-ev-er to get here! Oh well, I’m here, so let’s get going, eh?

Well… The currencies saw some profit taking yesterday, only to rebound overnight, which seems to be the recent pattern. The overnight markets’ participants drive the euro (EUR) and other currencies higher, and the U.S. market participants sell the euro and other currencies… Makes you want to side with the overnight markets participants, eh? Oh well, the euro is trading with a 1.3255 look to it this morning, as I turn on the screens…

The World Economic Forum in Davos, Switzerland began today. This is usually a huge economist boondoggle, but this year, it has a different look to it. You see, the U.S. boys and girls that normally attend, are missing this year, as they don’t want it to look silly after they took bailout, TARP, and any other kind of government handout. Sort of like the story yesterday that Citigroup was going ahead with their plans to purchase a $50 million jet plane, after taking TARP money. Once the media got wind of that story, Citigroup backed off and announced that they would NOT go through with their plans to buy the jet plane!

If anything, maybe all this will cause a “corporate conscience”… Probably not, but maybe!

Right out of the starters blocks this morning, we have the economists that did show up in Davos, ripping U.S. Treasury Secretary Geithner, a.k.a. “the cheater”… The “ripping” centers around “the cheater’s” statement that China was “manipulating” their currency and that they should seek to allow the currency to appreciate… Let’s listen in on some of the comments regarding this first call of “the cheater’s”…

“Allowing the yuan to strengthen would be ‘economic suicide’ amid an economic slump, Stephen Roach, Morgan Stanley’s Asia Chairman, told a panel in Davos, Switzerland, today. ‘I’ve never seen an economy in recession voluntarily raise their currency. It’s horrible advice.’” (Remember, that the renminbi is the official name of the Chinese currency and the yuan is the slang name… It’s easier to say, and spell, so the media uses the slang name! HAHAHAHAHAHA!)

“‘Shouting from Washington to Beijing is not going to make a difference,’ said South Africa’s Finance Minister Trevor Manuel on the same panel.”

So, the boys over in Davos have Geithner’s back…. NOT!

Oh… And just for the record, ever since Geithner (I got tired of typing “the cheater”) made his call on Monday, the Chinese have basically told him what to do with his thoughts! The Chinese officials have allowed the renminbi (CNY) to weaken versus the dollar the last 3 nights! Those Chinese, they are wild and crazy guys! But seriously… This is what happens when you have a house in disarray and you begin pointing the blame finger at other houses that have done everything they need to do to rise up from the sleep they’ve been in for eons… The house that gets blamed bites back! Of course, I prefer the Chinese pushing the renminbi softer, than the alternative of selling their Treasuries!

You know what gets my goat about what Geithner said? (It’s important to remember that I believe it was Obama’s words that Geithner spoke.) It’s why point the finger at China and not every other country in the world that “fixes”, “pegs”, and manipulates their currencies? There’s a whole laundry list starting with Hong Kong, and ending with Saudi Arabia, with the likes of Japan, Singapore, and the other oil states in between.

OK… Well, the FOMC will end today… I received two calls yesterday from writers that wanted to interview me regarding what the Fed was going to do… First an old contact at the Wall Street Journal, and then Reuters… I told them both the same thing… Wouldn’t it be nice if we could wake up in the morning when the day was new… NO! WAIT! That’s not what I said… Come on Chuck, stick with the program!

Here’s what I said… Wouldn’t it be nice if Big Ben Bernanke came true on his promise to make the Fed more “transparent” when he was sworn in? And in doing so, wouldn’t it be nice if the Fed made a statement that said what it was they were going to do… For how long… How much… And how they would monitor it? Of course it would! But you can expect more cloak and dagger from them!

So… Did you see the S&P/CaseShiller House Price Index yesterday? I told you it would probably show an 18% fall in home prices year-on-year… And the figure was -18.2%, and in November the fall was -19.1%… The annual figure of -18.2% is a record low for a year.

In addition to the House Price Index yesterday, we also saw consumer confidence, which I had thought would give us a head fake improvement… Unfortunately, consumer confidence fell to a HISTORIC LOW of 37.7, falling from 38.6 the previous month. I wonder, wonder, wonder, wonder, who… No, WHEN… When we’ll get the Obama bounce. It’s beginning to look as though it’s not going to come… And that’s not a good thing for a new administration.

Speaking of the new administration… They’re waiting on the next stimulus package… And the House will vote on the “new and improved” stimulus package that totals $816 billion today… Again… And I won’t beat the proverbial dead horse on this, but we don’t have the money to do this, and we’re only getting deeper into debt!

Gold backed off $15 last night, and is back below $900… Wink, wink…

I’m rushed this morning because it took me so long to get to work, so I’ll head to the Big Finish and get to radiation.

Currencies today 1/28/09: A$.6695, kiwi .5297, C$ .8190, euro 1.3260, sterling 1.4305, Swiss .8770, rand 9.9150, krone 6.7150, SEK 8, forint 215.10, zloty 3.2825, koruna 20.66, yen 89.20, sing 1.4980, HKD 7.7585, INR 48.93, China 6.8450, pesos 14.11, BRL 2.31, dollar index 84, Oil $41.25, Silver $12, Gold… $887.34

That’s it for today… A great big HAPPY BIRTHDAY to my long-time friend, colleague, and Pfennig Pfill-in… Chris Gaffney! I have known Chris for a long time now, and the guy looks the same now as he did 20 years ago! He has been a great support for me during these past two years of trials and tribulations… So… Happy Birthday! Hey! I was quoted in the Chinese Wall Street Journal yesterday! That was tre’ cool! I have a customer conference call this afternoon… This ought to be interesting… OK, time to get on the road again… I hope your Wednesday is Wonderful!

The Daily Reckoning