Everbank World Markets: A Pfennig For Your Thoughts
January 5, 2004 excerpt: "My good friend and former boss, wanted me to comment on the phenomenon going on right now with stock prices going higher, but the dollar circling the bowl... Kind of strange he thought... Yes, it is kind of strange, but from what I can see, the stock buying is being generated strictly from U.S. buyers... Foreigners are stilling this one out... So far... Which, if I were them, I would be too... I would let U.S. buyers run up the stocks, then I would sell, not only the stock but the dollar, and take my currency and profit home! But that's just me role playing a foreign investor!"
January 6, 2004 excerpt: "Another Fed Gov. Chimes In
Good day... Well... It certainly looks as though we're seeing something that was last seen around 1986-87... What happened then? Oh... The infamous Plaza Accord, when Central Bankers got together and decided that the dollar was too strong, and needed a correction, and did it ever! The Plaza Accord started the dollar's last weak trend, that lasted from 1986 through 1995!
After the dollar took a dive yesterday, from Fed Gov. Ben Bernanke's weekend words, sort of like Paul Volker's Saturday Night Special... Ooops... Got off on a tangent there... Anyway, the dollar has taken another giant step toward the 1.35-140 range I told you yesterday, would be my target for 2004, when Fed Gov. Guynn suggested yesterday that interest rates here in the U.S. will remain low for the foreseeable future. This has given dollar bears, yet another green light toward that target I mentioned earlier.
Right now the euro is trading 1.2755... That's a 27 handle in case you skipped on by that! OK... New members of this class will probably want to know why the low interest rates are hurting the dollar. Basically it goes to our Current Account Deficit that requires $1.5 billion a day in financing from foreign investors... And low interest rates aren't attracting the foreign investors that are needed... And if rates are going to remain low... Well... The only thing left to help fill the gap in the Current Account Deficit is a falling dollar so that exporters have more ability to sell their goods...
You see, this is where the Bush Administration, right or wrong, feels they can gain ground with manufacturers... And I think it's working...Look at last week's manufacturing data... Very strong... And the reason? The dollar is so darn weak! And... It's going to get weaker folks... The only thing handing over the dollar like the sword of Damocles is whether the dollar continues this orderly grind down, or it begins to circle the bowl and falls too quickly... An orderly fall is fine with the Fed and the Bush Administration... A rout, would be something that scares the bejeebers out of those in charge, and would probably lead to intervention, or maybe even an interest rate hike...
OK, enough of that... Pound sterling just hit an 11 year high VS the dollar! Talk about getting on that rally train just in time! Once that puppy began to pull out of the station there was no dawdling! I'm still looking for another interest rate hike from the Bank of England here, and today's strong showing from Retail Sales, should move that rate hike right along... So, this run is certainly is not over!
You know... Another problem that I continue to harp on is the mounting debt in this country, not only by the Federal Government, but by the general public too! Johnny Rivers used to sing a song about "A Mountain of Love" ... Well, what we've gotten ourselves into is "A Mountain of Debt"... Mountain of debt, Mountain of debt, you should be ashamed...Consumer debt hit a record $1.98 trillion in October 2003, according to the Federal Reserve's most recent figures. The debt includes credit cards and car loans, but not mortgages. It translates to about $18,700 for each U.S. household.
Meanwhile, the government says the nation's savings rate dropped to just 2 percent of after-tax income in the first half of last year. So, many people lack the means to deal with financial emergencies, much less their retirement.
Bankruptcies and foreclosures continue to rise... I'm pretty concerned about this... Aren't you?"
everbank.com
Vic, I thought you might enjoy reading someone who has no political axe to grind as I'm sure his bank wants deposits from all parties. I've been reading him for years and he's very good on making the macro calls. When Chris changes trend direction it's definitely time to act. He sends out a brief daily email update and no spam. Eu |
