Reply #29: The Daily Pfennig 10/27/06: Greenspan Is Still Crazy...

[54anickel]

http://www.kitcocasey.com/displayArticle.php?id=1031

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Yesterday, we saw some additional dollar selling, and it wasn't from any data... The dollar was sold after some comments by Big Al Greenspan... That's right, the former Fed Chairman is still crazy after all these years... No wait, what I mean to say is that he can still move the markets... Let's go to the tape and listen in on what he had to say...

"Central Banks around the world and private investors are beginning to shift holdings from the dollar to the euro..." Greenspan went further to say that "the move is due to a desire to diversify after a concentration of global investment in U.S. assets." But here's the one line that just cracked me up! "The Trade and Budget Deficits aren't a problem...

Hmmmm... First of all it sure sounded to me, and I guess the markets too, that Big Al was playing out a fantasy of directing the dollar... That's the job of the Treasury Dept... Not the Fed... But Big Al isn't either now... But he sure directed the dollar yesterday, eh? You know... Big Al just cracks me up... Here he is, the creator of all this mess, and now he decides to throw gas on the fire with talk about Central Banks diversifying out of dollars and into euros...

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Yesterday, New Home Sales in the U.S. rose 5.3%... Sounds pretty good, eh? Doesn't sound like a problem in the Housing Sector, does it? Ahhh, grasshopper, every rose has its thorn... And the thorn in this case is the fact that these houses sold because the prices of those houses plunged 9.7 percent last month, compared with September 2005, the biggest such drop since December 1970. OUCH! That thorn sure does hurt!

Today, the trading in currencies will be dominated by the printing of the 3rd QTR GDP in the U.S. The experts have GDP only posting a figure of 2.0%... That's not very good, not for the U.S., not for the world's economic engine! I would say that if GDP does have a better showing than 2%, then the dollar will finish the week on a strong note... If it is bang on the experts forecast, we'll end the week with a weaker dollar.