Citi Gets More "Gov't Money"...
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In This Issue..

* Bailout fuels a rally...

* How long the rally last?

* A slew of data today...

* Thoughts from Jim Rogers...

And Now... Today's Pfennig!

Citi Gets More "Gov't Money"...

Good day... And a Terrific Tuesday to you! Now that was quite the Investment Conference I just attended and gave two presentations to! Someone sent me a headline that appeared on the internet prior to the Conference that read: Three Kings of the Financial World on Tap to Speak for the Next WMI M2... And guess what? They considered me as one of those in the headline! WOW! OK, no... I'm not getting a big head, I've got my beautiful bride to keep me humble. She responded to hearing about this article with a heaping helping of, "OK King, take out the trash!" HAHAHAHAHAHA!

OK... Chris left me some notes about the currency markets yesterday, so let's listen in to what Chris had to say, since he was here, and I was driving an hour to the airport in Fort Meyers, flying, and driving home yesterday. Herrrrreeee's Johnny! I mean Chris!

"The currencies continued their assault on the dollar today as investors felt more comfortable returning to the higher yielding currencies. Brazil was the biggest mover, advancing over 6 percent vs. the US$. Sweden also advanced for a second day, moving up over 5% against the greenback. The only currency which gave ground vs. the dollar was the Japanese Yen which was sold as investors moved back into the carry trades.

There really wasn't a single event which sent the dollar down, but instead the currencies steadily increased throughout the day. Bad housing data in the morning confirmed that house prices are continuing to fall and while sales have tumbled. The median price of homes in the US fell 11.3 percent from a year earlier, the largest drop on record.

But equity investors weren't frightened by the data, and were actually encouraged by President elect Obama's call for a large stimulus package. With the stock market rallying, currency investors felt comfortable enough to pick up some bargains in the Brazilian real and other higher yielding currencies. This is the pattern which we have been seeing over the past few weeks, and one which looks to continue through the end of the year. I don't personally think this is the turning point for the dollar, as we will likely see some more safe haven buying before the end of the year. But longer term investors can still take advantage of the prices on some of the beaten down currencies which still have good fundamentals. I would include the Nordic currencies of Sweden and Norway along with the commodity currencies of Australia and Brazil."

Thanks Chris... That makes my job a bit easier this morning!

I did receive a note from a chartist that mentioned that the S&P 500 index was nearing a very critical level last week, and the timing of the Citicorp bailout couldn't have come at any better time for this index. On a side bar... I told the over 300 people in attendance at the Wealth Masters Conference on Saturday, that they should market this down... "I fully expect the Gov't to make a Capital infusion / bailout in Citicorp next week." WOW! Was I bang on with that call or what? OK, or what, I hear you! But getting back to the bailout... I was wondering....

How this is all gets paid for without impacting the dollar negatively... And then that made me wonder just how long this "rally" can last given all the rot on the vine, and that the problems still don't have any answers to them! But.... I guess we should enjoy this for now, eh?

And then there's Gold... Talk about a rally for the ages since last Thursday! Gold traded up to and over the $800 figure in the past two trading days. However, in keeping with the thought above regarding just how long this "rally" can last... It looks like the shine is off the new car as stock futures are down 1% this morning, and Gold has lost $16 since the London Morning Fixing, which took place while we were all sleeping. Even me!

The euro has given back 1-cent too... So, I guess I'm answering my own question with this update of the prices, eh?

I guess a lot of people are wondering what I think of the new Obama Economic Team... I would say that with Larry Summers, it quite strong... But shoot Rudy, you never know what these guys will do under pressure... I mean, it sure looked as though the Bush Administration did well with Henry Paulson after Paul O'Neil told them to shove the job where the sun doesn't shine... Oh, you don't know about that story? Well... I suggest you either find where the movie I.O.U.S.A. is playing right now, or pick up the book at Amazon... It's all there...

Getting back to Bush's pick of Paulson... And for that matter, Bernanke... The Un-dynamic duo, have really let the country down, but given their credentials you would have never imagined this quagmire we're in would happen under their watch, when they were first appointed, would you?

So, I'll reserve judgment until I see what the color of their economic plans are... If it's more of the same-o, same-o, stimulus plans, rate cuts and no cut in Gov't spending, then you can rest assured I'll go after them with the same brush that I use to tar the current knuckleheads...

I just have to hope that they can pull a Bullwinkle, and have something up their sleeve! The data continues to leave a sour taste in one's mouth, and now with Citicorp needed Gov't money, you've just got to figure the other Big Banks are lining up to get their heaping helping of Gov't money... Of course, we all know that it's not really "Gov't money" right? IT'S OUR MONEY!

Speaking of data... Today, we'll see 3rd QTR GDP, which is expected to be negative... Did we expect anything else? This will be a preliminary number and is expected to be -.5%... I fully expect this number to jump big time into negative territory when the updates/ revisions are eventually printed. We'll also see Personal Consumption for the 3rd QTR, which is expected to also be negative (-3.2%). But that's not all, if you order now, we'll also send you these lifetime guaranteed Ginsu knives!

No wait! What I wanted to say is that's not all, we'll also see the S&P/CaseShiller Home Price Index for September, which is expected to continue to show more home prices falling. Probably to the tune of around -16%! Consumer Confidence will also print today, (Whew! This is a ton-o-data, eh?) and some other second tier data will also print.

I think the markets looked at the data Calendar and decided to take some profits on some items that had rallied for two days, because none of this data is going to give anyone a warm and fuzzy... No way, no how! UGH!

In Canada last night... Finance Minister, Flaherty, said that the worst of the financial crisis is probably not over and that he may take fiscal stimulus measures before the end of the fiscal year, which is next March... Folks, this is Central Bank parlance for "there will be more rate cuts"... Too bad for the Canadian dollar / loonie... Every time it looks like it could build some steam, either the Finance Minister or Bank of Canada come along and release the steam.

Our long time friend, Jim Rogers, was back in the news yesterday, as he gave an interview to Bloomberg... Here are some snippets of the interview... Jim Rogers...

"The dollar is going to lose its status as the world's reserve currency."

"it will be devalued and it will go down a lot. These guys in Washington, they want to debase the currency."

"If I were doing it today, and what I have done today, is buy the yen."

"But, it is also an artificial move, it's a difficult problem to find out what is a sound currency."

"In Mid-October, I started buying commodities."

"It's astonishing how low some of these prices (in commodities) are."

Well... I've always enjoyed listening to or reading what Jim Rogers has to say, and this is no different...

Another old friend, Thom Calandra, is back in the newsletter writing business, and Thom was kind enough to put me on his mailing list. Thom gave me and our currencies a huge lift back in 2002, when at the time, he was the editor of CBS MarketWatch, and wrote about our currency CD's, especially Aussie dollars... Glad to see you back Thom!

Currencies today 11/25/08: A$ .6410, kiwi .5410, C$ .8070, euro 1.2875, sterling 1.51, Swiss .8330, rand 9.8955, krone 7.0250, SEK 8.0250, forint 202.70, zloty 2.98, koruna 19.76, yen 96.35, baht 35.25, sing 1.5150, HKD 7.7539, INR 49.99, China 6.8260, pesos 13.38, BRL 2.2860, dollar index 86.12, Oil $52.50, Silver $10.39, and Gold... $812.50

That's it for today... I got a chance to rest a bit while on Marco Island for the Conference. And had a real treat there... I know that I've told you that cancer took my mom, dad, and oldest sister... Well, my oldest sister, Brenda, lived on Marco Island, (I actually had to go there to bring her home for cancer treatments) and was married with two young boys. (my nephews) Well, after she died, her husband, Robert and the boys, went back home to Marco Island, and I had not seen him in 20 years. I found him this year, and we got to spend one night together, with dinner and lots of catching up to do... It was great to see him again! This will be a short week for yours truly... And I will not be writing on Thursday or Friday, so you'll have to settle for reading archives at the Pfennig's website: ! My darling granddaughter, Delaney Grace, left us a picture on our refrigerator... It's a hand turkey, and a bunch of scribble... It had been awhile since we had "artwork" on our refrigerator! She's so darn cute! Are you ready for Thanksgiving? If you're traveling this Thanksgiving, please travel safely! Well... Time to get to work and get caught up on stuff... I hope your Tuesday is Terrific!

Chuck Butler


EverBank World Markets



Posted 11-25-2008 10:18 AM by Chuck Butler