Daily Pfennig 8-4-2009

http://www.dailypfennig.com/

"...piece of data that really pushed the dollar lower yesterday, was actually a "good piece of data" for the U.S. economy... The ISM Index (manufacturing) came in higher than expected and has reached a pre-Lehman Bros collapse level of 48.9... This was a BIG move from the previous month's 44.8... It's still below the "line in the sand figure" of 50, which is the indicator of contraction or expansion... I would say given the move from 44.8 to near 49, that expansion is already happening...

And why would that be given the rot on the U.S. economy's vine? Ahhh grasshopper... Here's a key ingredient, that I've pointed out to you for years now... The dollar... The dollar, measured by the dollar index has lost 13.4%... The dollar index, in case your new to class or have forgotten a previous lesson, is a basket of U.S. trading partner's currencies. It is heavily weighted toward euros though... And therefore you have one of the reasons I always talk about the euro being the Big Dog... That, and the fact that the euro is the second most liquid trading currency in the world, and... It's the offset currency to the dollar!

And... So... Here's a note to the dollar bulls... Mess with this, and you'll see manufacturing go right back into the dumpster!..."

"...Wal-Mart just issued $1 Billion in bonds but denominated them in yen? Is there a message there? I believe there is a message there, folks... Now, if we begin to see more Corporations doing this, then the message will be loud and clear. These Corporations don't believe they can sell their debt denominated in dollars, as the world is choking on dollars right now..."