In his first note released in the post Sakwa world, Craig Schmidt continues to attempt to restore confidence in retail REITs. It would, after all, seem prudent to bang clients’ heads into their desks until they see the light at the end of the tunnel (oncoming bullet train?) at a time when the only cash, and equity value, REITs can create is by raising expensive, dilutive equity in order to repay the cheapest form of capital (that of secured loans previously held by Mr. Schmidt uber parent, Bank of America). This is especially true, after these same clients have plunked down about $20 billion in new equity in companies that at this point exist on fumes of hope, speculation and short covering. not surprisingly, the report comes just prior to Realtors’s release which indicates that Commercial Real Estate activity in Q1 fell 4.8% from Q4 of 2008 and 12.9% year over year, while vacancy rates are poised to rise to 12.1% from 9.7% last year.

While the title is expected, even Mr. Schmidt is at a loss to present the REIT “green shoots” that would substantiate his note. Amsuingly, Schmidt quotes favorable restaurant trends to back up the stabilization thesis:

Some positive signs included Dr. Mark Zandi’s (Chief Economist, Moody’s economy.com) citing that restaurants reported stronger same store sales gains than supermarkets in the most recent period, which suggests an increase in consumer confidence. Additionally, retail trends, while still negative, have improved from 4Q08, which were so dramatically negative that retailers were behaving like “deer caught in the headlights.”

Now that people are rushing to Nobu, maxing out their Centurions and hoping, very much like YRC, they can apply for and receive TARP funding, all must be good. The other “solid” positive:

Of the most seriously troubled retail markets (Southern California, Florida, Phoenix and Las Vegas), the only market that seems to have improved somewhat is Southern California. We still hear very distressing things about the other markets.

Nothing like Californians spending with reckless abandon, concurrently with voting down Schwarzenneger’s hail mary proposals to scrape up some semblance of a budget. Next stop: California’s utter fiscal collapse, and Geithner fixing that problem as well, by securitizing all default credit cards through a AAA rated TALF issue. Now, as for that foreclosure moratorium ending in Cali – don’t worry, TurboTaxTim has that covered as well: banks will hold those shadow homes on their books until such time as 10% inflation has set in and debt is worthless, just in time to reflate the next Inland Empire housing bubble. Nothing is f****d here.

Among the bullet points presented by Schmidt, who after all has to maintain some semblance of objectivity, are the following stabiliziation zingers:

• Low attendance at annual ISCS Spring Convention shows pain
• Leasing with already constructed projects are a priority
• Few see recovery to positive NOI until 2010 or later
• Downturn accelerating bifurcation of shopping centers
• Detroit sales finally succumbs to downward pressures
• Asset sales still hard to come by
• Greater emphasis on service tenants
• Thinking outside of the box becomes a necessary skill-set
• Store closing selections may surprise outsiders

So, yes, aside from all these points, retail REITs are certainly on the road to stabilization.

Lastly, and most curiously, is the reported departure of Ross Nussbaum, yet another Bank Of America/ML REIT banker to go to… UBS, which just yesterday had virtually its entire REIT team poached by Bank Of America itself. Is this tango merely normal Wall Street rotations, or is it indicative of something deeper at Bank Of America. People are still scratching their heads over Steve Sakwa’s departure.

Read more….

pardon the horrendous spelling… but focus on the ideas. Bob is a smart man, even if he was a little overcaffeinated on this particular occasion.

Bob’s World: Mini-May turn?
05/13 10:59:08

Turning to mrkts, some moans 1st:

A – UNEMPLOYMENT – the double digit peaks will happen late next yr. Unemployment is ugly & evil – it MATTERS and impacts ALL of our spending/saving/behaviours. Yet I am shocked at how many ‘commentators’ keep telling me it does not matter, it lags, its all priced in, blah blah blah. It is so sad to hear this nonsense, which is ’sold’ as credible mrkt thinking.

B – PHONEY MONEY – as absurd is the shrill chorus that is busy spinning that fact that coz central banks are going print-tastic, this means stocks are going higher and higher. Have folks learnt NOTHING!! The events of the last few yrs highlight the difference between ILLUSORY wealth/growth and REAL wealth/growth. The illusion can win out for a while, but ultimately REALITY WILL BITE HARDER the longer the illusion persists. But somehow this shrill chorus is given air-time and column inches – I am stunned by this. Be Warned – reckless central bank printing has NEVER succeeded over any meaningful investment horizon as a means of delivering real grwth and real wealth gains, and it is NOT going to wrk now. In fact, if the REFLATION/NOMINAL GRWTH policy trick does get legs, it will be simply setting up the next even more nasty balance sheet recession, from which the road back to normality will be horrible and much worse than what we have now.

C – GREENSPAN – apparently he made some comments yest. Why does this guy still get airtime – he will, after all, go down in history as one of the worst central bankers of all time.

D – BERNANKE – made some cmmts abt how important, useful and beneficial the Stress tests were. Who are you trying to kid Ben?? History will judge these tests – in my view the judgement will be scathing.

I could go on with my whinge-athon but for now, I want to repeat and clarify some key views:

1 – The longer term, multi-mth/mult-qtr view remains UNCH as it has been all year. Since Jan Kevin and I have both felt that H1 09 would be a positive surprise in terms of data and mrkts, setting the scene for a nasty H2.. This view is fleshed out a bit more below and remains UNCH. Over the next 2mths or so, which overall will be a bullish time for risk (subject to ‘2′ below), supported by less bad data, I fully expect positioning, sentiment, valuations and expectations to FULLY price in the ‘V’. When folks realise that we have a multi-yr U or even, in some places, an L ahead of us, the re-price of risk, esp. equities but also credit, EM and risk currencies, will be savage. I am looking for new lows in equities late this yr, new wides in HY spreads, and moves back to the wides in IG corps & EM spreads. And I am looking for 10-yr Bund yields down in the mid/low 2s. Deep deflation is ahead of us – it is real already in asset prices, but will become very obvious in the official ‘inflation’ data in H2

2 – Shorter tem, I continue to see a 10/15% correction lower in equities in May, which as I have said for some weeks now (see below) would begin near/just above 900 S&P at which point the iTraxx XO index would be sub-800 and the 10-yr Bund yield would be up at 3.3% We have seen S&P peak recently intra-day at around 930, below BOTH the Jan high and the 200-day MOVAVE, we saw the XO index gap down to low 700s late last week, and the 10-yr Bund yield peaked up in the 3.40s.

3 – I THINK the mini-May sell-off is underway – albeit the real action may not be seen until next week – and as such I am happy to position NOW – on a trading basis – for a move down in S&P to 800/780, for a move higher in credit spreads with the XO index up in the high 800s/low 900s, and for a move down to 3.20s in the 10-yr Bund yield. I would stop myself out if S&P rallied and closed above the 200-day MOVAVE for 4 consecutive days..

4 – Note however that the mini-May sell-off call is only a medium conviction tactical call for a pull back from overbought conditions in stks. Any May sell-off will likely only last a few weeks and will I think suck in bears just ahead of another June/July assault on the Jan highs and the 200-day MOVAVE. It is this rally leg that will have folks FULLY pricing in the V and which will consign the green shoots to the bin, to be replaced by ‘the V is here, its real, and its time to get fully invested’ shrill call from all those same folks who got you long and wrong into 2007. AT THIS POINT, and subject to what the data and our indicators are telling us (rather than what we WANT to believe), I will likely want to get UBER BEARISH risk assets across the board (bullet point 1 above). I maintain my view that, from current levels, we can see global stks off by 30/40% in H2 09, with a 550 S&P target.

Q4 08, and the spill over to Jan/early Feb 09, was an all-time historically bad time for the global economy. Its trends could NOT persist and we were ALWAYS going to see a slowdown in the pace of decent. Of course the masses who are now calling the recovery were wrong all of 07 and 08, and only just caught up in Q1 09 with the reality. Q2 09 and some of Q3 09 was ALWAYS going to be the period where 1st the shrts covered and then 2nd where the masses go on to extrapolate a shorter term slowdown in the pace of decent into a V shaped recovery. We are in this zone now but there are still too many bears for my liking, so hence why June and July shud be good for risk assets. In Q3 09 the masses will be fully positioned for a V, valuations will be fully pricing in a perfect V, and expectations and sentiment will (secretly) be even more bullish, all aided and abetted by policymakers, spin-meisters and alike. This will be similar to the time leading up to and into Q3 07. IF we are right on our H2 call for grwth/earnings/defaults, then the back end of 09 will be far more nasty than the back end of 07, and may even in some cases approach the levels of nastiness seen in late 08. Plse be careful abt getting too long in what can turn very quickly into very illiquid risk assets shud our H2 09 call be right. For avoidance of doubt, this specifically refers to corporate bonds and EM.

LONGER TERM policymakers, led by the US and UK, either have or soon will use up all fiscal room for manoeuvre, and thus will be forced to further abuse their monetary channels. This means QE, monetisation and currency debasement. Why? Because none of our leaders are willing to understand and accept that monetary inflation is at least as evil, if not more so, than a multi-yr period of austerity and deflation. The end result will be that the USD is the biggest long term tail risk out there – I have said it before but the risk will I think get bigger and bigger (assuming we are right) that at some point in the next 12/24mths we see a 30/40% USD devaluation.Which also means that longer term (2/4yr basis) I want to own GOLD and CRUDE, and if I have to own currency I prefer the EURO. I trust Mr Weber with my cash. I cannot say the same for other central banks, not least because they are all (most of them) now tools of government and exist only now to serve the agendas of their masters, with the number 1 agenda item clearly being to carry on with the hopeless policy of PRINT/BORROW/SPEND/BUY MORE RUBBISH/DELAY THE TROUBLES TO ANOTHER YEAR for as long as is possible. Sad. But hey, at least we have a EURO to park cash in – for now anyway.

Cheers

Bob Janjuah

Read more….

• As ZH anticipated, the BGI troubles are much deeper than expected. Barclays urgently selling quant fund BGI, government darlings Blackrock and BONY in line to gobble it up (Bloomberg)
• Obama says U.S. long-term debt load is unsustainable (Bloomberg)
• GM says Chrysler-like deal best bankruptcy option (Reuters)
• Foreign direct investment in China tumbles on crisis (Bloomberg)
• The global financial crisis in pictures: the beginning to the end… and back again (Good)
• Communism special: private trucker YRC Roadway to seek $1 billion in bailout funding (WSJ)
• Speaking of communism, four more insurers to get to get TARP funding (Bloomberg)
• Two employees probed for insider trading at… SEC? (Reuters)

PS – One of these days I need to find a corporate sponsor who is willing to underwrite the overallotment option. Would ML’s REIT team be interested?

Read more….

As Zero Hedge’s all time favorite investment bank Merrill Lynch is all too happy to attest, the REITs have proven to be a phenomenal source of underwriting revenue. Amusingly, the REITs which face staggering near-term maturities are still unable to access the debt capital markets (with one or two notable exceptions), yet have raised well over $10 billion in equity to date (which they have used almost exclusively to pay down the cheapest form of capital: secured credit facilities: why?) leaving one to truly wonder just what is the big picture here really all about (aside from ML pocketing dilution cash). So just how far down the road are recent equity raises going to take the (still) very troubled REIT space? (Why still? Redo the FFO calc with a 9% cap rate. Come back then). Answer- not all that far.

Below, I present a summary of the most notable REIT follow on offerings done in the past 2 months: as one can see the amount raised is staggering, and the main lead underwriter (sole or joint) by a vast margin is Merrill Lynch.

The two immediate take home messages here are that despite an average 24% dilution for REITs which have undergone the ML Cohen and Steers treatment, they have still outperformed the general REIT universe in price appreciation (P/FFO) by a factor of almost 300% (8.4x to 9.6x for broad universe compared to 11.7x to 14.4x for the diluted names). Odd you say?

And while the chart above shows not only the ridiculous prominence of ML in the pantheon of busy little underwriters, it also demonstrates just how much capital REITs have raised to date. The reason of course is the imminent maturity schedule for the vast majority of these. The chart below shows the 2009-2011 maturity schedule for the bulk of the major REITs split by category. One can see that based on just these main 15 companies, there is almost $20 billion in upcoming debt maturities over the next 3 years, which explains why any and all REITs will take advantage of every single orchestrated market bubble from now until they ultimately follow in the shoes of GGP, to sell the pieces of paper better known as common stock.

In other words, mother Merrill will likely not stop (and the market squeeze will likely not loosen) until there is at least another $10 billion in additional dilution from the remaining usual REIT suspects (and until ML has pocketed at least another $100 million in underwriting fees). Even so, I have not disclosed the 2012-onward maturities, where things really start to get interesting. But by then, as everyone knows, we will either have hyperinflation, and all the REITs’ exiting debt would be payable down with one mere $1 trillion bill, or the S&P will be at 6.66, in either case current investors will long be gone, having sold to whatever hot potato holders are the most fervent believers in Jim Cramer’s economic “fundamental analysis.”

hat tip IMA5U

Read more….

Finally coming to mainstream media near you.

Now taking bets on who will succeed the mega quants as market liquidity provider once they are made redundant.

Read more….

MOSCOW, April 30 (Reuters) – Russian hydroelectric giant RusHydro said on Thursday it plans a 19 billion rouble ($576.3 million) secondary share issue, and will put the proposal to shareholders at an annual meeting on June 10.

Read more….

MOSCOW, April 30 (Reuters) – The Russian rouble firmed in early official trade on Thursday to a weighted average for tomorrow settlement of 32.9740 per dollar compared with 33.2491 in the previous session.

Read more….

MOSCOW, April 30 (Itar-Tass) – The US dollar mean weighted exchange rate against the Russian rouble in “tomorrow” deals plunged by 27.51 kopecks and stood at 32.9740 roubles per one U.S. dollar in Thursday’s unified trading session as of 11.30 Moscow time.

Read more….

MOSCOW, April 29 (Reuters) – The Russian rouble hit a three-month high against the euro/dollar currency basket on Wednesday, boosted by domestic tax payments as well as a rebound in oil prices and global stock markets.

Read more….

MOSCOW, April 29 (Reuters) – The Russian rouble firmed in early official trade on Wednesday to a weighted average for tomorrow settlement of 33.2491 per dollar compared with 33.5533 in the previous session.

Read more….

MOSCOW, April 28 (Reuters) – The Russian rouble eased in early official trade on Tuesday to a weighted average for tomorrow settlement of 33.5533 per dollar compared with 33.3904 in the previous session.

Read more….

Peso drops more than any other currency in forex trading

An outbreak of swine flu is wreaking havoc in Mexico right now. Mexican assets are threatened as concerns surrounding the deadly flu surface. The Mexican peso has been especially hard hit in currency trading on the FX market.

Indeed, the peso has sunk more than any other currency in forex trading. With concerns over tourism, stocks and other problems, swine flu is causing a mass exit from Mexican assets. 

Until this outbreak of swine flu, the peso had been starting to make up ground. Risk appetite — thanks to an improvement in the global equity markets — was returning to the FX market, and emerging market currencies like the peso were benefitting. Now, though, risk is back, and Mexico is especially troubled.

See Also

• Mexican Peso in Currency Trading
  Emerging market currencies in forex trading

Read more….

MOSCOW, April 27 (Reuters) – Mechel , Russia’s largest coking coal miner, said on Monday it is planning to issue 45 billion roubles ($1.35 billion) in bonds.

Read more….

MOSCOW, April 27 (Reuters) – The Russian rouble firmed in early official trade on Monday to a weighted average for tomorrow settlement of 33.3904 per dollar compared with 33.4187 in the previous session.

Read more….

There is an ongoing debate as to whether the yen is a sensible safe haven currency considering the financial and economic troubles Japan is suffering.

Read more….

There is an ongoing debate as to whether the yen is a sensible safe haven currency considering the financial and economic troubles Japan is suffering. This is argument that will carry over into next week – and just as the market?s tolerance for risk is put to the test through a wave of major fundamental catalysts.

Read more….

Good day… And a Happy Friday to you! A Fantastico Friday to boot! I leave for Bermuda very early tomorrow morning, so no late night shenanigans for me tonight! HA! I’m still trying to make sure I’ve beaten that pneumonia, and being a “good boy”!

Well… Front and center this morning, we have a big currency rally going on… Recall yesterday, I told you of the beginning of the rally… Well, it really got legs as the day went on, and once again, it was not sold off overnight – but added to! Here’s what I believe is moving these currencies so violently higher versus the dollar – and you won’t see this anywhere else, my friends…

First, let me set the stage… I’ve been carrying on about how the deficit spending here in the United States was going to require a TON of Treasuries to be sold to finance that deficit spending. I even told you the other day that the U.K. gilts were getting clobbered because of the largest budget deficit in the U.K. since World War II, and that what happened in the U.K. had been carrying over to the United States… OK… Got the picture, right?

Well… Yesterday morning the U.S. announced that they would sell Treasuries in these amounts, and tenors… $40 billion 2-year, $35 billion 5-year and $26 billion 7-year next Monday, Tuesday, and Wednesday respectively… OMG! That’s over $100 billion in new Treasury issuance that the markets are going to have to digest. Is it the straw that breaks the proverbial camel’s back? Are the markets saying, “We don’t believe you will be able to successfully auction that amount without aggressively raising the yield?” I think so… Now, see if CNBC, MSNBC, FBN, CNN or any of the other media stations run this story!

There’s nothing else THAT BIG that could have moved the euro (EUR) like this… Oh! I haven’t even told you where the single unit is trading this morning! My Bad! 1.3230! That’s right… It skipped to my Lou right through the 1.31 handle, like a hot knife goes through margarine! The euro did get an additional boost this morning when it was announced that German Business Confidence, as measured by the think tank IFO, rebounded from a 26-year low this month.

So… Let’s look around the horn to see what the other currencies are doing, now that the BIG DOG, euro has left the porch to chase the dollar down the street. Well, the usual suspects like the euro-alternative currencies like Norway (NOK), Sweden (SEK), Switzerland (CHF) are all much stronger versus the dollar this morning… And a look to the high yielders shows that they too have moved in step with the Big Dog. Aussie (AUD), kiwi (NZD), rand (ZAR), and real (BRL) are all taking liberties versus the dollar.

There’s another high yielder that I don’t talk about all the time, and the last time I did, I gave it the kiss of death, watching it fall a couple percent after I mentioned it. The Indian rupee (INR)… Well… The rupee is on the rally tracks again, and this time, someone other than me is noticing. The folks over at Reliance Equities International have noticed that the Indian stock market has risen for seven straight weeks, and believe that they will see additional flow into this market. Therefore they believe the rupee may be in store to gain 6.7% in the coming weeks. Now, for you big swingers out there, 6.7% probably doesn’t even show up on your radar… But for all the rest of us, worried more about the “Return of Capital, rather than the Return on Capital” these days… That doesn’t sound too shabby!

On the data front yesterday we had the Initial Weekly Jobless Claims, which came in as expected, which doesn’t make it any better! The total of unemployed people filing claims last week totaled 640,000! Something that most people don’t look at, but that I’ve trained the folks here to do, as Chris Gaffney yelled out yesterday morning… “Continuing Claims are awful; they have risen to 6,137,000!”

Existing Home Sales continued to show that the housing markets is still in search of a bottom… Existing Home Sales fell 3%, and the home prices continue to fall with the median price down 12% from a year ago… The other day, I made a statement for which I should have been taken to the woodshed… I said that with interest rates this low, people should be taking advantage of them and buying those houses now… But… As I keep saying, home prices will continue to fall… So why buy now if you can get it cheaper tomorrow? Sorry… What I should have said was to refinance now is a very good idea!

In Canada yesterday… The Bank of Canada (BOC) explained the details of quantitative easing “should they need it”… That was HUGE for the loonie (CAD), as the BOC hasn’t implemented this monetary policy yet… They just have it ready and on the shelf should they need it… Good plan!

Another item that has helped to boost the loonie (Canadian dollar) was a report yesterday that showed retail sales unexpectedly rose 0.2% in February. Geez Louise, can’t they get this data on a more timely basis? February seems like a month of Sundays ago to me! Anyway, the Canadian economy does have a pulse… And that’s a good thing!

Gold didn’t like the color of the Treasury Auction announcement yesterday either, and the shiny metal pushed back over $900 once again. Oh… And here’s a story that just hit the news wires this morning… It is reported that China has increased their gold holdings 76%, to the fifth biggest country (of gold holdings). China increased their holdings from 454 Tons to 1,054 Tons… For those of you keeping score at home that’s $31 billion dollars worth of gold!

OK… Before we head to the Big Finish today… Have you heard or seen the story going around about Bank of America’s (BOA) purchase of Merrill Lynch? OMG! This is HUGE! BOA’s CEO, Ken Lewis, testified this week and said that Fed Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America to not discuss its increasingly troubled plan to buy Merrill Lynch – a deal that later triggered a government bailout of BOA… Now, all my licenses in the brokerage business tell me that that’s a HUGE NO-NO! A Company is supposed to alert their shareholders of any materially significant financial hits. If I were a shareholder of BOA, I would be steaming mad right now! And as a market participant it still ticks me off!

Now… Here’s the latest from the Wall Street Journal this morning…

“The Federal Reserve didn’t advise Bank of America or CEO Ken Lewis ‘on any questions of disclosure,’ a spokeswoman for Fed Chairman Ben Bernanke said.”

Oh Great! Now we have a “he said – no he didn’t” scenario! That’s their plan, folks… Attempt to confuse the masses, throw up smoke screens, and maybe it all goes away. Not on my watch! We need to know who’s telling the truth!

And one of the things they will use to direct everyone’s attention away from this awful thing, is… Drum roll please… The stress tests! That’s right! They are supposed to be talked about today… I still hold to my beliefs that we won’t really be told the truth about these 19 largest banks… I can only hope to be wrong!

Oh, and one more thing… A reader asked me why I never talked about silver, always choosing to talk about gold… Hmmm… I guess it’s sort of like the Paris Hilton thing… Or let’s see what else could I compare it to…. Anyway, I don’t mean to short-change silver; when I talk about gold you can believe that it includes silver… Imagine my poor fat fingers if I had to type gold and silver every time I talked about gold and silver…

And… On that note… Time to go to the Big Finish!

Currencies today 4/24/09: A$ .7185, kiwi .5680, C$ .8225, euro 1.3250, sterling 1.4625, Swiss .8775, rand 8.8550, krone 6.5650, SEK 8.20, forint 223.40, zloty 3.4150, koruna 20.1950, yen 96.88, sing 1.49, HKD 7.75, INR 49.88, China 6.8272, pesos 13.12, BRL 2.2050, dollar index 84.78, Oil $49.91, Silver $12.82, and Gold… $911

That’s it for today… And for me for the next week! Chris Gaffney will have the conn on the Pfennig next week. I’m very excited about going to Bermuda, although it looks like the good folks at the Sovereign Society are going to keep me busy! Cardinals sweep the Mets! Wow! That has a great sound to it. The Cubs come to town tonight; it sure would be sweet to sweep them too! But that’s getting greedy… I would be giddy with 2 of 3! Tomorrow is the draft for the NFL, and the Rams have the second pick… Memo to the Rams… Don’t blow it! An absolutely beautiful day here, yesterday… My dad used to say to me when it would be blue skies, sunny, warm days… He would say… “Chuck, they don’t have days like this in the Soviet Union.” I use that saying with my kids, and they look at me like I should be wrapped in a white suit! OK… Time to go… Hope all’s well with everyone, and you have a Fantastico Friday!

This article originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a “uniquely refreshing” perspective on the global economy, investing, and today’s markets.

Euro Ticks Up Like a Hot Knife Through Butter

MOSCOW, April 24 (Reuters) – The Russian rouble firmed in early official trade on Friday to a weighted average for tomorrow settlement of 33.4187 per dollar compared with 33.7848 in the previous session.

Read more….

MOSCOW, April 23 (Reuters) – The Russian rouble firmed in early official trade on Thursday to a weighted average for tomorrow settlement of 33.7848 per dollar compared with 34.0597 in the previous session.

Read more….

Good day… And a Marvelous Monday to you! Today is a special day, in that it is the Big Boss Frank Trotter’s birthday! Happy Birthday, Boss! Actually Frank is more of a very good, long-time friend, mentor, and then boss. We’ve worked together for a very long time… I tell people at shows that Frank and I have been working together for so long… The Dead Sea wasn’t even sick when we began working together! HAHAHAHAHAHA!

OK… A bad day a the office for the euro (EUR) and other currencies on Friday, and then last night in the overnight markets. European Central Bank (ECB) President, Trichet, once again deep-sixed the euro with talk of further rate cuts. He did attempt to water down the message by saying that “any rate cuts would be measured 25 BPS cuts.” Memo to Trichet… It doesn’t matter what the size of the debasing is, as long as you are going to debase your currency, the markets will make you pay for it!

So, the euro is at a one-month low versus the dollar this morning. Of course, remember what I told you over a week ago regarding the earnings season for U.S. corporations, and how the currencies needed to break the link to stocks before those earnings began hitting the news wires. Unfortunately, besides the one-day break that we saw, an earnest break hasn’t happened, and now the stocks are going to weigh heavily on the currencies. I know, I know… A couple of banks have announced some very nice surprise earnings… But you must draw a line between those that have received billions in aid, and those that have not! As I’ve said before, look under the hood at these banks/financial institutions, and tell me their earnings would have been as good without the billions of stimulus.

The other thing the euro has to deal with right now is what I talked about last week, and that is getting bogged down with the split among ECB ministers as to how monetary policy should be administered to combat the recession. There’s been no resolution to this disagreement, and so the euro suffers.

But don’t forget what I told you about the euro on Friday… The ECB is fully aware of what’s going on in the United States with the deficit spending and money creation, and what it’s going to do the dollar eventually. They don’t need the euro taking off versus the dollar too soon… So, this is all “noise”. As I said before… When you’re spinning and sliding uncontrollably toward the guardrail on that icy road, you know you’re going to make impact… It’s just a matter of time before it happens. The dollar is spinning and sliding toward the guardrail too… It’s just a matter of time before it happens.

Well, we have a couple of central bank meetings this week. The first will be the Bank of Canada (BOC), which will meet and discuss rates. I believe they’ll be discussing something else at the meeting as well… Quantitative Easing (QE)… In fact, I think the BOC will leave rates unchanged, but announce how they will introduce QE to their markets… That means there’s another currency on the list of ones that have seen their respective countries take on QE… And you know what that means don’t you? It means that I cross them off my list of currencies that are eligible to be on Chuck’s Hit Parade!

Sweden’s Riksbank will also meet this week… I do expect them to cut rates. The krona (SEK) has been a very disappointing currency in recent times, and the size of their rate cuts explains it all. When the Riksbank meets tomorrow, they will most likely cut 75 BPS to 0.25%, basically zero… And if they talk about “doing whatever is necessary to save the economy” then they will be setting the table for future QE.

Geez Louise! Doesn’t anybody want to have a strong currency any more? The Swiss National Bank (SNB) said last week that they don’t think that it’s a competition to see who can devalue their currency the quickest… Hmmm… Sure seems that way to me!

Gold had a very tough week along with the other non-dollar assets. I just look around at what’s going on in the United States and the world, with all the crack-pots running around acting like they’ve spent a day in the drug den, and think to myself that gold should be trading much higher, and not suffering through weeks like last week. I read a piece from my friend the Mogambo Guru over the weekend regarding this very topic, and thought it to be a good thing to add to the Pfennig this morning…

“Laurence Meyer, a former Fed governor (and so he ought to know) admitted to Bloomberg that the Federal Reserve ‘is “running a laboratory experiment” on what drives inflation: the money supply or the output gap.’

“The fact that we already know the answer to this experiment is what makes me stand at the window and shout at passersby that they should ‘Buy gold, silver and oil right now, you pedestrian morons, because your Congress is spending the “too much money” that is being created by the Federal Reserve just for that sinister purpose, and which will burn you alive in the painful fires of inflationary hell!’”

That Mogambo… He certainly has a way with words! HA! He’s one of my faves folks, and can be read every day here at The Daily Reckoning.

There’s a whispering campaign going on among “those who know” or “think they know” that all this deficit spending and money creation should deep-six the dollar eventually. One of those people is another of my fave writers, William Pesek, who had this to say on Bloomberg.

“It’s a bit rich for U.S. politicians to berate Treasury Secretary Timothy Geithner for not labeling China as a currency manipulator.

“Perhaps Senator Lindsey Graham, a South Carolina Republican, hasn’t seen a newspaper in the last 12 months. With near-zero interest rates, the likely issuance of trillions of dollars of government debt and massive taxpayer-funded bailouts, the U.S. will soon make China look like a manipulation piker.

“Memo to Graham and his ilk: Your economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra- loose monetary and fiscal policies. And it will.”

I do this from time to time, so that you’re not always just hearing from me on this stuff. I don’t want to look like the boy who cried wolf.

Chris Gaffney, who will be very bummed out this morning as his Blues lost again last night, sent me a story on Friday from the Economist. COM, regarding China… I thought that the story was very good in that it said quite a few of the things I’ve been saying about how China’s stimulus is working, and that China should be the first to come out of the global recession. (Not that they’ve had a recession, but a slowdown)… There was one point the writer made that really hit home that I hadn’t thought of… China’s stimulus is working because the Chinese had complete control on where it went and how it was spent… Not the willy nilly spending going on here, and elsewhere like the U.K. and Japan.

OK… The data cupboard is relatively empty this week, with only leading indicators today, and existing and new home sales along with durable goods later in the week. So… It appears that corporate earnings will take center stage this week, and that’s not a good thing, in my opinion.

I’ll head to the Big Finish right after I mention that bank lending is just not happening… The Wall Street Journal reports that analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program. Hmmm… What they don’t mention is how many loan applications were denied! Look, it’s not just the banks fault for not lending right now… With 600,000 in job losses for five consecutive months, and unemployment running in the double digits (probably around 16%), and consumers leveraged up to their eyeballs, not many applying for loans are going to get approved given this scenario.

Currencies today 4/20/09: A$ .7075, kiwi .5615, C$ .8150, euro 1.2975, sterling 1.4580, Swiss .8550, rand 9.0440, krone 6.7834, SEK 8.57, forint 230.50, zloty 3.3750, koruna 20.85, yen 98.70, sing 1.5090, HKD 7.75, INR 50.25, China 6.8335, pesos 13.23, BRL 2.1930, dollar index 86.43, Oil $48.25, Silver $12.04, and Gold… $873.70

That’s it for today… Except to say Happy Birthday once again to Frank! I’m feeling better this morning; I rested most of the weekend. But I’m not out of the woods just yet on this… Got to see a great performance by Paul Simon on Saturday night. Slip out the back, Jack! The St. Louis Marathon was held yesterday, and the runners had to endure a day of rain… I believe our little Christine was running a half marathon, but I’m not sure… If so, it should bring back memories of when she ran a whole marathon about five years ago, in weather just like yesterday’s! I hope this pneumonia is out of my system before I leave for Bermuda this coming Saturday. Yes, I’ll be speaking three times at the Sovereign Society’s Total Wealth Symposium which will be held beginning Sunday and into next week. I’ve never been to Bermuda, so this will be exciting for me! Well… It’s that time again… So, thanks for your time, this time, till next time, and I hope you have a Marvelous Monday!

This article originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a “uniquely refreshing” perspective on the global economy, investing, and today’s markets.

More Dollar Strength