Joe Weisenthal, Business Insider

In his latest weekly letter, John Hussman warns of an imminent and disorderly collapse of the US dollar, courtesy of Ben Bernanke’s move towards more quantitative easing.

The whole thing is worth reading, but here’s the key part of it:

From the standpoint of the two parity conditions, the very long-term implication of quantitative easing is a gradual devaluation of the U.S. dollar (an increase in the dollar price $/FC of foreign currency). If this increased inflation risk was reflected in interest rates (so that real interest rates were held constant), the U.S. dollar would simply move along that gradually sloped PPP line, and likewise, foreign currencies would gradually appreciate against the dollar.

However, because of economic weakness and credit strains, coupled with the demand for Treasuries by the Fed, quantitative easing instead moves U.S. interest rates in the opposite direction, falling rather than rising. From the standpoint of interest rate parity, capital market equilibrium then requires the U.S. dollar to depreciate immediately, by a sufficient amount to set up the expectation of future appreciation in order to offset the shortfall of U.S. interest rate returns.

In short, quantitative easing is likely to induce what the late MIT economist Rudiger Dornbusch described as “exchange rate overshooting” – a large and abrupt shift in the spot exchange rate that occurs in order to align long-term equilibrium in the market for goods and services with short-term equilibrium in the capital markets.

This adjustment is depicted in the diagram below. In response to the monetary shock, a modest but long-term depreciation in the dollar (a rise in the U.S. dollar price of foreign currency) is required, depicted by the blue line. However, since nominal interest rates in the U.S. actually decline, ongoing equilibrium in the capital market requires that the U.S. dollar must be expected to appreciate over time by enough to offset the lost interest. As a result, quantitative easing is likely to result in an abrupt “jump depreciation” of the U.S. dollar (that is, a spike in the value of foreign currencies).

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We keep hearing that “The worst is behind us”, but the spin doesn’t square with the facts. Sure the stock market has done well, but scratch the surface and you’ll find that things are not as what they seem. Zero hedge–which is quickly becoming the “go-to” market-update spot on the Internet–recently posted an eye-popping chart which traces the Fed’s monetization programs (Quantitative Easing) with the 6-month surge in the S&P 500.

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Well, Friday’s Jobs Jamboree was quite interesting to say the least. I had already told you about the forecasts for a HUGE drop in job losses for July from 467,000 to 325,000… But the number, according to the BLS, was 247,000!!!!!!! Way to go corporate America! Geeze Louise, I wish it were that full of seashells and balloons! This smells of yesterday’s fish, folks. OK, let me get this straight… The forecast was for 325,000 job losses, and an unemployment rate of 9.6% (up from 9.5% in June). And the jobs lost were 247,000, a difference of 78,000, and the unemployment rate fell to 9.4%… So, the BLS is telling me, and you, that 78,000 jobs not being lost, was equal to 0.2% (9.6 to 9.4)? Come on! I didn’t just fall off the turnip truck!

So… You know what? I’m not even going to go down the road I usually travel of digging into the numbers, and pointing out what buffoons the BLS people are… No! I’m going to take the road that tells me to smile, and be happy about the fact that the job losses have peaked, and maybe, just maybe, we’re on the road to recovery… How about that?

Of course the little guy on my other shoulder is telling me to say something about how Corporate America rushed to the exit doors with jobs cuts to prepare for the tough row to hoe, which was to be 2009, and therefore maybe, just maybe, cause you never know, all the jobs that can be cut have been cut, there are no more to cut, without going out of business!

But you won’t hear that from US officials, who took Friday’s Jobs Jamboree as an opportunity to remind everyone that this wouldn’t have happened without the stimulus. Hmmm… The current administration is in real bad need of a “win”… You know… Something that makes them look like they know what they are doing, so they can get the Health Care plan shoved down our throats. I won’t say anything else about this, because it’s not for this discussion… But in my backyard with neighbors all around, I let them all know how I feel, for sure!

So… Last week, I told you that given the way currencies and stocks had traded together as risk assets for the last nine months, that should the Jobs Jamboree print as forecast, it would be negative for the dollar. I WAS WRONG! OK… Let me play this out for you… For the last six months, any time a piece of data gave the impression that the US could weather the recession/depression the dollar got sold. Remember, the only reason people/investors were holding dollars was as a “safe haven” play with Treasury purchases… So, if things were looking brighter there was no reason to hold the “safe haven” purchase. Treasuries were unwound, and dollars were sold.

But… Friday’s Jobs Jamboree played out differently! The strong data (I know, there were still 247,000 jobs lost, it’s not like it was 0!) caused this HUGE dollar buying binge, and it went fast, and furious, and all day on Friday! The euro (EUR) traded through the 1.43 and 1.42 handles like a hot knife going through butter. Japanese yen (JPY) fell through two big figures, too, along with pound sterling (GBP)… It was ugly for the Big 3… The selling carried over to the Swiss franc (CHF), and Canadian dollars (CAD)… Not as ugly as the Big 3, but a noticeable loss just the same.

Not all currencies got sold though… The high yielders like Aussie (AUD), kiwi (NZD), and Brazil (BRL), all held onto – and in some cases added to gains – versus the dollar. I have to clarify something I wrote about on Friday, as I had more than a few questions about what I was saying… In speaking about the Australian government issuing inflation-indexed bonds again after a six-year hiatus, I said that it was a sign… Well, I should have gone further and explained that if the Australian government is going to sell inflation-indexed bonds, then they see the need to do so based on their inflation projections, and if they see inflation, the Reserve Bank of Australia (RBA) will see inflation and adjust interest rates higher accordingly. Higher interest rates for Australia are like manna from heaven for the Aussie dollar.

So… Risk asset appetite is changing… It’s getting picky… And only wants yield; tired of the paltry yields that Treasuries provide, or most government bonds for that matter! Our Foreign Bond Trader, Don Ries, tells me that he is swamped with calls for Brazilian bonds, which have a nice yield advantage.

To prove this further… Gold and silver were sold, along with the currencies I already talked about, that have no yield! Shoot, Rudy! Even the Mexican peso (MXN) is on the rally tracks, and that they don’t even have a huge yield advantage! But they have a yield advantage, and that seems to be the line in the sand right now… So, currency traders should be wearing shirts that say: “Got Yield?”

Speaking of Australia… I also noticed that they had a bond issue last week. They did a 4+ year Treasury auction of $800 million 6.5% bonds. The reason I mention this is to point out the difference of the auction size between Australia and the US and the yield… Hmmm…

I guess I can’t avoid saying this, so I might as well get it out there… Equities are certainly the choice of investors right now, too. I just can’t help but think this is a one HUGE trap for equity investors… But that would involve more conspiracy theory, and I’m not going there today.

There is no data scheduled to be printed today, so the markets will deal with Friday’s trading, and begin to look at the central bank meetings this week, which are dominated by the Fed meeting on Wednesday… Norway’s Norges Bank will also meet on Wednesday. It will be interesting to hear what the Fed has to say after their meeting on Wednesday.

And then there was this… I call this: Stealth QE… Let me see what you call it after reading.

Well… Have you ever wondered who was buying all those Treasuries that the US keeps forcing on the markets? If we follow the results of the auctions we know they were all bought… And the markets continue to think… “I guess deficits aren’t anything to worry about”… BUZZZZZZZZ! Wrong! Thank you for playing, there’s a nice parting gift for you at the door… Johnny… Tell them what they won! You see…

It was uncovered this past weekend by a guy named Chris Mortenson that the past auction of $28 billion in seven-year Treasuries had a twist to it… A large chunk was purchased by Primary Dealers to the tune of $10 billion worth of the auction, and then, very quietly, without fanfare, and right under the noses of the currency traders and media, who are supposed to be following up on this stuff. The Fed bought it all back from the Primary Dealers… That’s quantitative easing, folks, they monetized the debt, and with all the fanfare of being more transparent, they did it under the dark of night in a back alley. Shame, Shame, Shame!

Is this not a sad state of affairs… Not only did the Fed HAVE to monetize the debt, they did so in a way to manipulate the markets, and pull the wool over the eyes of the public! Would this have been a “failed auction” if the Fed hadn’t worked out this deal with the Primary Dealers? I think so! And the Fed dealt a blow to currency holders by pulling off this shell game! And the calls for the current administration to be transparent, along with the Fed… All comes back to haunt them… So… I hope the major media picks this story up… I know for a fact that some of them read the Pfennig, and laugh at my claims of market manipulation… Let them all laugh, one day they will be crying.

I shake my head in disgust… Oh, and for all of you who think I’m trying to tell you something that isn’t true… I’ve got facts; so don’t even think about calling me out on this!

OK… Enough of that! OH! I see that Paul Krugman thinks that Big Ben Bernanke should be approved for another term as Fed Chairman. If I were Big Ben, I don’t know how I would take that… Hmmm… I better think about that one!

Of course, if I had any say in the matter, I would fire them all! Anyone that had anything to do with the bailouts, stimulus, brokering banks and broker deals, deciding who remains open and who closes their doors… Fire them all, I say! I won’t even go down the road regarding the politicians.

Data this week will include the Trade Deficit, Productivity, Unit Labor Costs, and Monthly Budget statement, which ought to be something to see… We’ll also see Retail Sales, which you would think would be better, but given the Chain Store retailers report last week, Retail Sales would certainly be a question mark…

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. Follow the Daily Reckoning on Twitter.

Stealth Quantitative Easing

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Zero Hedge

After having purchased over $243 billion in treasuries to date via a the QE bond buyback program announced in March, in some cases buying the bonds form primary dealers just days after an auction’s completion, the Fed is now expected to wind down its $300 billion Treasury-buying program. As Bloomberg reported recently, “The FOMC “is unlikely to extend the life of these
programs, unless, of course, either the economy or the financial
markets take a significant turn for the worse,” Meyer, vice
chairman of St. Louis-based Macroeconomic Advisers LLC, wrote in
a report released yesterday. “We therefore expect the FOMC to
announce at its upcoming meeting that it will allow the Treasury
purchase program to expire in mid-September.”

An article in MarketWatch highlights the major risks to near-term Treasury levels: “with the Fed no longer a constant, large buyer of Treasury notes and bonds, benchmark yields and mortgage rates will likely rise. But that threat isn’t expected to prompt policymakers, some of whom have expressed increasing alarm over the prospects of higher inflation from the Fed’s ultra-loose monetary policy, to extend the program.”

Expectations that the Fed will allow the Treasury-buying program to die a natural death are part of a broader view that the central bank is moving towards a change in monetary policy.

“If the economy continues to improve, and signs indicate that it is, the Fed will believe that rising rates will be an acceptable cost,” Barclays’ Rajadhyaksha said.

If indeed the FOMC reveals next Wednesday a substnatial change to its ongoing monetary policy vis-a-vis treasuries, the volatility in bonds is likely set to materially increase, and the 4% yield threshold is likely to be promptly breached.

The other major question, of whether the Fed is actually truly convinced that the economy is improving based on data such as today’s “optimistic” BLS report, whose interpretation could just as easily imply that the economy is still trudging along below expectations, is an open one, and for a direct answer look for a change in the tone as pertain to the Fed Fund rate… However, as PIMCO has often noted, do not expect that number to change for at least a year. And if anyone should know, PIMCO is it – of course, meaning that while the mainstream media and other agencies are thoroughly convinced the recession/depression is over, the Fed is nowhere as wide-eyed in its assessment.

And lastly, as disclosed yesterday, the Fed has purchased over $80 billion in agencies over the past month. Don’t look for any monetary moderation in this particular bond buyback program: after all, the U.S. consumer needs to continue living in the bubble of artifically low mortgage rates for as long as possible.

In tangential news, Zero Hedge contributors have provided data that demonstrates that the Fed has monetized roughly 10% of the roughly $1.1 Trillion in debt offered in UST auctions in 2009 alone: of this amount, about $120 billion has been acquired via Open Market Operations, on occassions breaching 40-50% of the purchases allocated to given dealers by unique CUSIP. We well present the statistical evidence over ther weekend.

More articles from Zero Hedge….

n its latest e-mail poll, the Shadow Monetary Policy Committee (SMPC) unanimously voted to leave UK Bank Rate at ½% when the Bank of England’s rate setters meet on 4th June.The unanimous SMPC vote reflected the belief that there was little case for a rate increase in the near future – despite signs that the lower turning point of the international and domestic business cycles may not be too far off – combined with the view that ½% was close to the effective lower limit where Bank Rate was concerned.

The SMPC had been an early advocate of quantitative easing (QE) and there was a general belief among its members that QE was the ‘least-bad’ option available under current circumstances. Some members of the IEA’s shadow committee thought that the scale of QE would need to be stepped up. Others thought that the current thrust of monetary policy was about right for the time being.

The SMPC also welcomed the Bank of England’s belated publication of a back run of quarterly statistics for ‘core’ M4 broad money, excluding the deposits of other financial corporations, and the Bank’s accompanying announcement that it would resume publication of the table showing the links between public borrowing, funding policy, bank credit and broad money in early June, having previously suspended publication last autumn.

This information was vitally important, given that QE was essentially an attempt to boost ‘core’ M4 using open market operations in the hope that the links between money and activity would then prove tight enough for this to stimulate demand. However, there was concern about the longer-term consequences of present policies. A particular worry was whether it was possible to make a smooth re-entry from QE without provoking either a renewed downturn or losing control of inflation.
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Levels of housing activity still look to be too low to support a rise in house prices but that is what the Nationwide has reported, for the second time in three months. It says prices rose by 1.2% in May, reducing the annual rate of fall from 15% to 11.3%. Limited supply may have pushed prices higher, it says, while stressing that it is too early to call the turn.

It is indeed possible that we are seeing a delayed supply response and that when supply does come on to the market prices will lurch down again. The Halifax index has yet to show convincing signs of a slowing pace of decline, let alone increases. Nonetheless, taking all measures together signs of stabilisation are evident in the data. The Nationwide release is here.

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Michael S. Rozeff writes: I begin by describing quantitative easing in technical terms. I go on to describe what it means when a central bank and its government engage in quantitative easing. What is quantitative easing? It is a central bank’s “purchase” of government securities (bills, notes, bonds) directly from the government.

The term “purchase” does not capture the essence of the actual transaction. The government issues a Treasury bill, say. This is a liability of the government. The central bank takes this bill and holds it as its asset. It provides the government with its own official and legal State money or notes (or a checking account for such). The central bank accounts for this note issue as its liability. It is an IOU transferred to the government (or State). In the usual setup, these notes cannot be redeemed for anything. That is, if the government brought these notes to the central bank, it would get nothing in return for them. Hence, the money issue is not really a liability of the central bank. The government accounts for the receipt of these central bank notes as an asset.

The net result of the transaction is that the government succeeds in transforming a liability (its issue of Treasury bills) into a new asset (its holding of central bank notes). If a person issues a debt and receives an asset from someone else in return, there is no new asset involved. If a baker issues an IOU and gets an oven in return, the oven is not an increment to the stock of ovens in the world. But when the government issues its IOU (the Treasury bill), it gets an entirely new asset, the central bank money. In the U.S., the government pays interest to the FED that holds the bill, but the FED returns this interest to the Treasury. Hence, the Treasury bill held by the FED is really no liability to the government. The net result of the transaction is that the government has a new asset that it can spend, namely, the FED’s Federal Reserve notes.

There will be further effects on the banking system and the economy when the government circulates the notes. These occur through the fractional-reserve banking system, but it is not my aim here to discuss these as plenty of other sources have done this already.

The main technical point is that the government has a new asset that is made an asset by coercion, since the money has, by the power of law, been made legal tender. If we had t-accounts for the government and FED and the government issued $1,000 in t-bills, we’d see the following:

• The government debits its asset: $1,000, Federal Reserve notes.
• The government credits its liability: $1,000, Treasury bill outstanding.
• The central bank debits its asset: $1,000, Treasury bill.
• The central bank credits its liability: $1,000, Federal Reserve notes.

When we consolidate the accounts, we end up with the Treasury bill disappearing. The combined entity has Federal Reserve notes (money) as an asset and as a liability. Since it is a phantom liability that can be exchanged for nothing, the government has a new asset with no real liability connected to it. This completes the technical description of quantitative easing.

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The Bank of England held interest rates at 0.5%, as expected, but it also increased the size of the quantitative easing programme from £75 billion to £125 billion, which many did not expect. It could be that the emphasis for QE will switch to purchases of corporate bonds instead of gilts, following criticism of the record so far. The European Central Bank cut its main rate to 1%, as expected.

This is the Bank of England monetary policy committee’s statement:

“The Bank of England’s Monetary Policy Committee today voted to maintain the official Bank Rate paid on commercial bank reserves at 0.5%. The Committee also voted to continue with its programme of asset purchases financed by the issuance of central bank reserves and to increase its size by £50 billion to a total of £125 billion.

“The world economy remains in deep recession. Output has continued to contract and international trade has fallen precipitously. The global banking and financial system remains fragile despite further significant intervention by the authorities. In the United Kingdom, GDP fell sharply in the first quarter of 2009. But surveys at home and abroad show promising signs that the pace of decline has begun to moderate.

“CPI inflation was 2.9% in March, significantly higher than the 2% inflation target. Past falls in sterling have continued to put upwards pressure on inflation. But the degree of spare capacity in the economy has increased and the loosening in the labour market has contributed to a sharp easing in pay pressures. CPI inflation is likely to drop below the 2% target later this year, driven in part by diminishing contributions from food and energy prices. The substantial margin of spare capacity in the economy should continue to bear down on inflation thereafter.

“The Committee noted that the outlook for economic activity was dominated by two countervailing forces. The process of adjustment in train in the UK economy, as private saving rises and banks restructure their balance sheets, combined with weak global demand, will continue to act as a significant drag on economic activity. But pushing in the opposite direction, there is considerable economic stimulus stemming from the easing in monetary and fiscal policy, at home and abroad, the substantial depreciation in sterling, past falls in commodity prices, and actions by authorities internationally to improve the availability of credit. That stimulus should in due course lead to a recovery in economic growth, bringing inflation back towards the 2% target. But the timing and strength of that recovery is highly uncertain.

“In the light of that outlook and in order to keep CPI inflation on track to meet the 2% inflation target over the medium term, the Committee judged that maintaining Bank Rate at 0.5% was appropriate. The Committee also agreed to continue with its programme of purchases of government and corporate debt financed by the issuance of central bank reserves and to increase its size by £50 billion to a total of £125 billion. The Committee expected that it would take another three months to complete that programme, and it will keep the scale of the programme under review.

“The Committee’s latest inflation and output projections will appear in the Inflation Report to be published on Wednesday 13 May.”

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10 Year Treasuries trading as if the whole QE thing never happened. Courtesy of visible and invisible hands which have made holders dump their bonds and chase after an insane market.

Totally unconflicted commentary from Paul McCulley of Pimco “The data is indicating we are in the bottoming process. The rate of decline is slowing.” Took the words right out of Grasso’s mouth.

Time for QE 2.0? Why not – the Treasury and the Fed are not know for getting things right the first time around… or fifth…

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Good day… And a Terrific Tuesday to you! I’m staring at all this white space on the Pfennig template, and I absolutely drew a blank… I couldn’t think of, or can’t think of a thing to say! Whoa there partner! That can’t happen! There’s got to be something, anything, to talk about… OK! I’m back now, I really have no idea where that was going, it was an out of body experience! HAHAHAHA!

OK… The currencies traded in a very tight range yesterday, after the dollar had ambushed them on Friday and in the Sunday night trading sessions. It’s been a week since we saw currency strength, other than Japanese yen. So, we should be due for a bounce. There continues to be more whispering about the eventual dollar weakness, but for now, it’s not enough to get us back to where the dollar should be trading on a fundamentals basis.

The euro got a lift this morning when German Investor Confidence as measured by the think tank ZEW, rose to the highest level in nearly two years during April. WOW! The index rose to 13 from a -3.5 in March… Quite the turnaround, eh? It is reported that Investor Confidence rose due to the Gov’t’s efforts to revive the economy. Don’t know if you follow this or not, but European stocks just posted their 6th consecutive week of appreciation… You have to wonder if the stocks are telling us something here… Like, has the financial crisis in Europe bottomed out and is now on the recovery path? Don’t know… And like I always say, one report doesn’t make a trend, just like one swallow doesn’t make a summer.

Sweden’s Riksbank met this morning and surprised the markets (and me) by cutting only 50 BPS (75 BPS was the consensus), and in the other more important announcement… Riksbank Gov. Ingves said, “measures such as buying bonds were not on the cards at the moment”. So, no Quantitative Easing (QE) for Sweden, just yet… But, unless things turn around soon in Sweden, the Riksbank will have to come back to decide on QE at sometime in the future… But for now, the krona is seeing a nice bid, and rallying on the news…

You know… Yesterday I talked about Canada, and how I “believed” that the Bank of Canada (BOC) was going to introduce QE, and IF they did I would mark them off my Hit Parade… But, I didn’t say that the BOC was going to do that for certain! So… They could put it off like the Riksbank did… We’ll just have to wait-n-see! Of course, I certainly fully expect them to go that route now, rather than later… But, I’m just saying, you never know…

Fed Head Kohn, was speaking yesterday, and said something that I sort of agree with… Kohn said the, “U.S. economy may stabilize this year, and begin a slow recovery”. Hmmm… Well… By the end of the year, I see unemployment, by BLS accounting methods, at 10%, maybe 11%… Of course if you count all the people that have seen their unemployment benefits expire, or people that are working part time jobs because they can’t find full employment, the unemployment rate is probably somewhere around 16% now… And heading to 20% when all the heads are counted as unemployed that should be counted as such.

So… With that in mind, I have to wonder how the economy “stabilizes”… Credit will still be hard to find, and so on… But, I do believe that our -6% GDP now, will turn to something better by year-end… Maybe -1 or -2% or, we might even squeeze out a small positive number, which you would then hear the media and politicians claim, that “we’re out of the recession”… HOGWASH! But, that’s just my view on it… But, I liked the fact that Kohn at least sounded a bit worried, and with caution regarding the economy. Apparently he left Big Ben Bernanke’s rose colored glasses at home!

Even with a small gain in GDP, the Fed will keep interest rates at current levels, as they can’t appear to smashing the golden egg too soon…

The high flying high yielders, which basked in the early spring sun during March, have retreated to their dressing rooms, as risk aversion has cast a shadow on the high yielders. Risk Aversion is a result of the earnings season for equities. So, that means the like of Aussie, kiwi, rand, real, are all softer and not looking as perky as they did a couple of weeks ago. But… Once currencies and stocks hit splitsville, and get back to fundamentals, investors looking for any yield, no matter how small, as long as it beats the paltry yields they get now in the U.S., Japan, and most of Europe, will look to these high yielders… So… That could mean that buying them now, when they are cheaper than they were a couple of weeks ago, just might be the ticket! But who’s to say that they won’t get cheaper? Ahhh grasshopper, that’s the dilemma we face everyday with every purchase we make, weather it be the Aussie dollar, or auto tires, or new computers… You see my point, I’m sure…

Speaking of the Aussie dollar… The Reserve Bank of Australia (RBA) just released their minutes of the last meeting, where the RBA voted to cut interest rates 25 BPS… It appears that the decision was a close one between no cut and 25 BPS. RBS Gov. Stevens believes the Aussie economy is well placed to rebound… All this has helped the A$ to remain above 70-cents overnight and this morning.

OK… I’ve been champing at the bit all morning to get to this interview in Barron’s with our long time friend, and investment guru, Jim Rogers… I can’t get to all of the interview, so I pulled out a few quotes that plays well with what I’ve been talking about… Here’s Jim Rogers!

“Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn’t last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous.

It’s laughable on its face, but politicians think they’ve got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse.”

He then talked about something that I’ve been talking about for a couple of months now… The Treasury bubble… Let’s listen in…

“I am anticipating shorting bonds — the U.S. long bond. It’s about the only real bubble around that I can see right now — other than the U.S. dollar. I am not shorting bonds at this moment because I’ve shorted plenty of bubbles in my day, and I have learned that you better wait because they go up higher than any rational person can anticipate. But my plan is to short the long bond in the U.S. sometime in the foreseeable future.”

Isn’t that amazing… I just talked about this again the other day!

So… The Gov’t’s “stress test” results are going to be revealed beginning this Friday… It will be interesting to see what the results are… But, I wouldn’t get too excited about all of this, as I don’t think we’ll get a chance to look under the hood at these financial institutions… Not that I want to or have the time to anyway! But I’m sure there are those out there that would love to get that chance… Buzzzzzzzz, wrong answer! Thank you for playing, there’s a nice parting gift for you at the door!

Yesterday, Leading Indicators for March printed worse figure than forecast, but the previous month’s -.4% initial print was revised to -.2%… March’s figure was -.2%… So… Leading Indicators is still telling us that there will be more pain to suffer through ahead… Hey! That’s why they are called “Leading Indicators!”

The U. of Michigan preliminary reading of Consumer Confidence for the first two weeks of April, printed stronger than expected at 61.9, up from the previous month’s total of 57.3… Of course when this report was compiled, stocks were still in rally mode… Before earnings season, etc. I doubt the final report will be so pie in the sky…

No real data to deal with today in the U.S. or Europe… So… Once again, focus will be on the earnings… We will get some more Fed speak this morning from Fed Head Hoenig… And then mid morning will see U.S. Treasury Sec. Geithner testify before the oversight panel… Would that be oversight on TARP or Tax returns? HAHAHAHAHA!

I did it again last week… I placed the kiss of death on a currency by talking nice about it! This time it was Indian rupees… Last week I talked about how the rupee had performed nicely / stealth like, under the radar… But, the rupee has now given back all that stealth-like gain! In the past, a move like this would have the Central Bank’s hands all over it (with intervention)… But this move might just be associated with the high yielders, and the risk aversion.

Gold rebounded nicely yesterday, up about $15, and has added $3 this morning… Just didn’t see right to see it getting sold like that last week… Maybe calmer, cooler, more intelligent heads took over!

Well… It’s time to head to the Big Finish. We have a birthday girl here today, and I’ve got to get to work on my presentations for Bermuda! UGH!

Currencies today 4/21/09: A$ .7005, kiwi .5540, C$ .8075, euro 1.2950, Sterling 1.4535, Swiss .8555, rand 9.13, krone 6.80, SEK 8.63, forint 231.90, zloty 3.4125, koruna 20.90, yen 98.10, sing 1.5080, HKD 7.75, INR 50.41, China 6.8317, pesos 13.39, BRL 2.2375, dollar index 86.58, Oil $45.87, Silver $12.18, and Gold $888

That’s it for today… Except to say a Big Happy Birthday to our accountant magnificent, Mary Owens… Mary is not only a magnificent accountant, but also a magnificent quilt maker! It’s down to the last 5 hours for my fave show 24… It’s so intense! Did you see the Washington Nationals’ jerseys they had on Friday night? Nationals was spelled Natinals… How embarrassing, and they wore them! That’s a shame, Washington waited so long for a baseball team, and now they have one that can’t win, and a marketing department that can’t spell! Crazy! The NFL Draft is this Saturday. Our Rams have the second pick… I sure hope they don’t blow it! This team needs help! Good luck to our Blues tonight, they are down 3 games to none. Their goal is almost impossible.. Slim and none, and Slim just left town… But… You have to believe! I hope you have a Terrific Tuesday!

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.

Quantitative Easing Averted

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