Daily Pfenning - 9/8/09

http://www.dailypfennig.com/

"...euro has stretched that move to the 1.4480 level! WOW! Looks to me as though the deficits that the dollar drags around are not looking to sharp to investors...

Chinese stocks were up 2% overnight, so that has led to even more risk taking this morning in Europe...

You know when the dollar is not faring well, when not only the usual suspects of euro, Aussie, kiwi, loonies and francs are taking liberties with the dollar, but also the Japanese yen... And THAT folks, is an indication to me that maybe, just maybe, cause you never know, fundamentals could be coming back to the head of the class. Oh! And one other thing, that puts a nail in the dollar's coffin is, last night I checked the price of Gold too... Then it was $999. This morning... It's $1,005!!!!!!

So... We've got euros kicking tail and taking names later, and Gold kicking the dollar when it's down. We've seen this type of rout on the dollar before... They used to take place at least once a week before the financial meltdown in August of 2008... And before the collapse of Lehman Bros. That's when the markets, traders, and investors, all had their eye on the fundamentals ball, and whacking the dollar out of the park whenever another piece of bad data came the dollar's way.

If this is the beginning of another period like we saw pre-August 2008, then get strap yourself in, and make certain to keep your arms and legs inside at all times during the ride! If it's a false dawn, it sure is a strong false dawn!

One of the best writers for a newspaper, that I've come across is Ambrose Evans-Pritchard, and I came across an article he did this weekend... This news could also be one of the reasons the dollar is getting sold across the board this morning. Here's a snippet of the story...

"Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing"... He went on to say, "If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies."

So... According to a top member of the Communist hierarchy... The U.S. Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy... Shouldn't that be enough to compel other owners of dollars to do the same? I would certainly think so, folks... I would certainly think so!

And in a not so wide spread story... The United Nations (UN) is talking about creating a new global reserve bank to issue a new currency to protect emerging markets from the "confidence game of financial speculation... HEY! The UN said this... Not me! So... Those of us who have read the book, The Creature from Jekyll Island, have the conspiracy chills going down our collective spines right now...

Isn't this the second time this year that we've heard about a "global reserve bank"? The first time we heard about it, the IMF was to assume that role and issue special drawing rights (SDR's) as a global currency... Now, we hear something a big different, but it's the same folks... I'll tell you right now what they are doing... The "powers to be" are "getting us used to hearing about this" by releasing stories here and there... That way, when the time comes for them to unveil their plan to have a global currency, they'll be able to say..."We've been talking about this for a long time, and no on had a problem with it then!"

OK... Enough of the conspiracy stuff...

Speaking of jobs... The U.S. Jobs Jamboree on Friday held a couple of surprises... 1. the number of jobs lost in August was smaller than expected at -216,000... And 2. the unemployment rate rose to 9.7%... Oh! And the previous month's number was revised up from -247,000 to -276,000... Sneaky how that do that, eh? The media is all over the better than expected -216,000, and forgot to mention the upward revision to the previous month's number, which wasn't small potatoes either!

For many years, I've tried to get people to look at the revisions, the Weekly Hours worked, and the Avg Hourly Earnings to get the "real" beef from the Jobs Jamboree report... We just talked about the revision... The Weekly Hours Worked and Hourly Earnings were a non-event, with nothing to tell us that the economy is growing stronger, or that it's getting weaker... So, to me... The Jobs Jamboree was a washout except for the revision!...

Speaking of the renminbi... The Chinese allowed the currency to gain VS the dollar by a wide margin overnight. This is the first significant move VS the dollar in some time...

And with all these strong currency moves... The dollar index has fallen to a low for the year at 77.24... This is a significant move, folks... Because... In the 1st QTR of this year, the dollar index got down to 77.40, and bounced higher from there... And here we are again... It was thought that the 77.40 figure would prove to be a resistance figure... But the dollar slid right past that figure... I would think that having the index remain below 77.40 for the day and overnight would be HUGE!

... Let's recap... The dollar has fallen big overnight... The Chinese are not happy with the Fed printing dollars... The UN is talking about replacing the dollar with a global currency that is issued by a "new global reserve bank"... And all the currencies along with Gold and Silver are rallying on these things... "