The U.S. stock market has run up magnificently in the last six months. The U.S. economy has begun to recover, but its performance has fallen short of expectations.

And with good reason. The United States has a bigger and more-troubled financial sector than most countries. It also has a bigger overhang from the housing bubble, has a bigger balance-of-payments deficit and has a budget deficit that’s fat enough to stall the recovery.

It would be nice to have an economic recovery to invest in that didn’t have all of these problems.

Truth be told, such an investment play does exist. What’s more, the market I have in mind is advanced enough for us to invest in it without having to go through all the rigmarole of American Depository Receipt (ADR) investing. Nor will you have to make a potentially risky foray out onto some foreign stock exchange to buy the

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Non-dollar currencies give back very little…The Unemployed are remaining unemployed… FOMC puts away the board games today… China invokes a “Public Morals” defense…

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Currencies have strong rally!  Trade Deficit jumps 16.3% in July!  HR 1207 Gets a hearing!  Gold gets back to $1,000! And Now… Today’s Pfennig!

Good day… And a Happy Friday to one and all! Today is Patriot Day in the U.S. and a day that brings back memories of cowardly attacks on our country 8 years ago. I remember the shock and horror on everyone’s faces, and that image will remain with me to the grave. I also remember trying to write the Pfennig the “day after”… It just didn’t seem that important of a thing to do, but a reader told me that to keep things as “normal” as possible was the best thing I could do… So… I wrote…

OK… The currencies, and this time I mean the majority of them not just euro and yen, added to their gains this week VS the dollar yesterday… The Big Dog, euro, is once again

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Euro & yen add to gains…RBNZ disappoints…Foreclosures continue to stack up! BOE & BOC meet today…And Now… Today’s Pfennig!

Good day… And a Thrillin’ Thursday to you! Ahhh! A change! Just thought that with the thrilling victories my beloved Cardinals have been accumulating, that Thrillin’ would be a nice change to our Thursday lineup!

Front and Center this morning… The currencies added to their gains this week yesterday, albeit small gains, but gains nonetheless. The Fed’s Beige Book was “cautiously positive”… And… Overnight, the Reserve Bank of New Zealand met, and left rates unchanged as suspected… This and more as we begin our Thrillin’ Thursday!

The Big Dog euro has been off the porch chasing the dollar down the

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Currencies rally strong! China is upset with printing of dollars…The UN talks of a new currency…Unemployment rate rises to 9.7% And Now… Today’s Pfennig!

Good day… And a Terrific Tuesday to you! A long Holiday Weekend, that was quite good for yours truly! A great tailgate, a great Missouri Tigers victory, 3 of 4 for the Cardinals, a great end of summer bar-b-que at the Butler House, and a

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Alabama regional lender, Colonial Bank, just became the 6th largest bank failure in U.S. history and the largest since Washington Mutual last year.

Regulators seized Colonial last Friday, selling the bank’s deposits and assets to their competitor BB&T. Colonial was founded by real estate developer, Robert E. Lowder in 1981. The bank stayed true to its roots, right to the end (of the housing bubble).

In a 2006 interview, Lowder said, “We’ve always been a real estate bank. We understand real estate lending. For us, we think it’s a good safe market to be in.” Evidently, they didn’t understand the market as well as they thought. The bank sunk under the weight of $1.7 billion in losses on bad real estate loans.

The real question regarding the failure of Colonial, is what this will do to the Deposit Insurance Fund (DIF) maintained by the FDIC.

The FDIC Deposit Insurance Fund started 2008

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During the summer, I had the good fortune to attend two excellent conferences focused on new findings in exchange rate economics (yes, not all economic research is focused on the financial crisis and recession). The first was a Bank of Canada-European Central Bank conference Exchange rates: The global perspective, and the second was the NBER International Finance and Macroeconomics Summer Institute session "Exchange Rates and Relative Prices".

Figure 1: Log nominal value of US dollar (blue) and real value of US dollar (red), against currencies of major trading partners. NBER defined recession dates shaded gray, assuming the recession has not ended by July 2009. Source: Federal Reserve Board.

The Bank of Canada-ECB conference papers are here. All the papers, as well as powerpoint files of the presenters and discussants, are available from the conference website; I've reproduced some of the abstracts below.

Order flows and

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Currencies trade in a tight range…Pesos, loonies and reals in the spotlight…The Mogambo on a Thursday!YAHOO!…Jobs reports dominate today & tomorrow…And Now… Today’s Pfennig!

Good day… And a Tub Thumpin’ Thursday to you! Once again yesterday, we traded all day in a very tight range with the currencies. The ADP/Challenger data didn’t give anyone a warm and fuzzy about the labor picture, and tax receipts are in the news… So, let’s go to the tape!

OK, front and center this morning, I have to talk about this deal with tax receipts in this country. So, I’ve chronicled the April and June debacles for tax receipts, but just in case someone is new to class, and missed that, let’s review… The U.S. used to count on the months of April and June for HUGE cash receipts from tax returns, but this year, both April and June’s tax receipts were so bad, the expenditures

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A strong currency move Monday… RBA leaves rates unchanged…And moves bias to neutral…Central Bank warnings have no teeth! And Now… Today’s Pfennig!

Good day… And a Terrific Tuesday to you! First day back yesterday was a killer for yours truly… Went home, and went to sleep… But, I’m back today, and feeling good. I did something to my left knee on vacation that left me hobbling, and leaning on my cane more than I usually do.

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Here's another installment in a series attempting to move the discussion from "my estimate vs. your estimate" (or "prior", as the case may be) [1] [2] [3] [4] [5] [6] to something more constructive (and hopefully more nuanced). From the conclusion to "Expectations and Fiscal Stimulus" by Troy Davig and Eric M. Leeper:

This paper has embedded estimated Markov-switching rules for U.S. monetary and fiscal policy into an otherwise conventional calibrated DSGE model with nominal rigidities to deliver some quantitative predictions of the impacts of government spending increases. When monetary and fiscal policy regimes vary -- from active monetary/passive fiscal to passive monetary/active fiscal to doubly passive to doubly active -- government spending multipliers can vary widely. An increase in government spending of $1 in present value raises output by $0.80 in present value under [Active Money/Passive Fiscal] AM/PF, while it raises output by as much

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