Beating Up The Banks...
Daily Pfennig

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In This Issue..

* Risk is back on!                                     
* Another plan by the President to punish banks...                                       
* Foreigners to back away from U.S. assets/ dollars...                                            
* Eurozone Industrial orders rise 1.6%!                                                                                                         

And Now... Today's Pfennig!

Beating Up The Banks...                                            

Good day... And a Happy Friday to one and all! Let's see if we can make it a Fantastico Friday! Of course last Friday will be a tough one to top for a long time, given it was pay-day, a Friday, the start of a 3-day weekend, and the temperature went above freezing! But, today is a Friday, so I'll do my best to make it a Fantastico Friday! It will be difficult while I'm writing today though, because, our Gov't just keeps shooting themselves in the foot, and it just ticks me off that they don't say, "hey, I/we caused this, and we'll fix it", instead opting to find someone to blame, or "deflect" the problem... I'll explain as we go along today...

Well... Front and Center this morning, we saw the Risk Aversion that had held a tight grip on the currencies and commodities for about a week, fade a bit as the day went on yesterday, and the dollar selling has carried through the overnight and morning sessions overseas... What caused this "turn-around?" I hear you asking... Ahhh grasshopper, come sit, and put away the sharp objects!

You see, yesterday, after the Weekly Initial Jobless Claims rose to near 500,000 once again putting some chinks in the Risk Aversion's armor... The President announced his "new plan" to impose limits on banks and restrict the size and activities of the U.S.'s largest biggest banks. The White House wants commercial banks that take deposits from customers to be barred from investing on behalf of the bank itself--what's known as proprietary trading...

Now let me get this straight for you... This doesn't affect my bank, EverBank... This is for the HUGE Banks like JP Morgan Chase, and Goldman, (even though Goldman isn't really a bank, remember they formed a bank holding company in 2008, so they could get TARP)... But, this affects everybody, folks... If these guys aren't doing their Mega-deals, then there's no trickle down for the rest of us... This program will hurt, and let me repeat this for you... This program will hurt U.S. assets, keeping foreign investors from buying U.S. assets!

This is what the President is doing folks... On one side, he sees the Republican victory in Mass. And his ObamaCare going down in flames... So, to deflect the bad stuff that would go along with a President that hung his hat on this health care... He says... "Hey, all you voters, I know what's making you mad, it's those fat cat bankers... So let me tell you what I'm going to do to them"...

HEY! I learned how to do that in media training! Somebody asks you something that you don't want to answer, you "deflect" it to talk about what you want to talk about!

So... In one week, the President has come up with an idea to "tax the banks" that took TARP, not everyone that took it, just the banks, and now this plan... He's playing with fire, folks... And I'm just talking about the damage the financial markets will see, I haven't and won't, talk about the damage to his political capital...

I loved this the other day... Warren Buffett, is not to pleased with the President these days, for he sees the same things I'm seeing... But Mr. Buffett had this to say about the President's tax on the banks...

"I don't see any reason why they should be paying a special tax," said Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., in an interview on Bloomberg. Supporters of the plan to tax the banks "are trying to punish people," he said. "I don't see the rationale for it. Look at the damage Fannie and Freddie caused, and they were run by the Congress," said Buffett. "Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don't think so."

In a recent survey by Bloomberg, the President is see as "Anti-Business" by 77% of U.S. Investors, and 4 out of 5 question his ability to manage a financial crisis... Hey! That's not me making that stuff up, folks... This is getting ugly, and the problem as I see it resides in our/ us / the country's ability to attract foreign investment...

So... The President deep sixed the Risk Aversion campers, and risk takers came back out to play, driving the euro back above the 1.41 handle... And Japanese yen dipped below 90 again, only to come back above it this morning in Europe.

The dollar index moved above its 200-day moving average yesterday... So, in reality, the dollar should be on the move... That just shows you how powerful the markets can be when they smell blood...

And here's a look at what one foreign entity thinks about all this damage to the U.S. assets... Kokusai Global Sovereign Open, the world's 2nd largest actively run bond fund, is going to shun U.S. Treasuries, and is betting against the dollar in 2010... You may recall a week or two ago, I told you how PIMCO, the world's largest bond dealer, announced that they were going to avoid U.S. Treasuries in 2010... Opting for German bonds instead!

In the Eurozone this morning, we saw Eurozone Industrial Orders for November, rise more than economists forecast, on demand for goods such as steel and car parts. Orders increased 1.6% in November... So... Things aren't "that" bad in the Eurozone, despite what some writers would have you believe!

Well... I heard yesterday, that Big Ben Bernanke's re-confirmation to Fed Chairman isn't a slam dunk as it was once thought to be... I belong to the "Audit the Fed Coalition" and they sent me a note yesterday, asking me to question by Senators and tell them to tell Harry Reid that they would not vote on re-confirmation until Bernanke allows the Fed to be audited... Well, I think my senators are probably tired of hearing from me on all sorts of things, so add this one to the list!

I'm not a Bernanke fan... I wasn't a Greenspan fan... I was a Volcker fan... But that takes us all the way back to the 80's! you know, the music that had electric drums! Not dissing on 80's music, Rick, just pointing out the time period... HA! My good friend Rick, spent his young adult life in the 80's, like our Chris Gaffney, and that time period is the music they know / like best... Me? I'll stick to the 60's and 70's... Because everything that came after those two decades of rock, was just variations of the originals...

But I digress... And apologize for that!

So... Yesterday, as I said above, the Weekly Jobless Claims jumped to 482,000, from 444,000 the previous week... This marks the 3rd straight increase in the Weekly Claims figures, and the 5th increase in the last 6 weeks... Do you see a trend here?

Here are some ugly figures... 40,000 people had their unemployment benefits drop last week, while more than 650,000 received emergency compensation... UGH!

So... I was giving an economic talk to a group yesterday, and I said that I truly see the U.S. economy slog along with bumps up in GDP, and then drops back down... Unemployment will remain very high (right now 17%), and we could very well see another drop of 10% in home prices... Now, that's downright cheery isn't it? NOT!

Then there was this... Did you happen to catch the news last Thursday regarding the CFTC's commission that was researching position limits in energy? Well, they went one step further, and also talked about how they will look into the precious metals, gold and silver in addition to energy...

This is HUGE folks! And the media just swept it under a rug! Shame on them! Could this be the end of the price manipulations of Gold and Silver? I truly believe that it very well could... And that would be HUGE for precious metals holders... For, the "true" market value of the precious metals could be sought, without manipulation to keep it weak..

If you are interested in the commission's statements check them out here...

http://www.cftc.gov/newsroom/cftcevents/2010/oeaevent011410.html

But, it's not helping Gold and Silver right now! Gold has fallen below $1,100, which I believe is an indicator to buy, but I could be wrong of course!, And Silver has fallen below $18... UGH!

To recap... The Risk Aversion party was brought to an abrupt halt, when the President announced, yet another plan to punish Big Banks. I truly believe this plan will hurt U.S. assets, thus driving away foreign investors. The currencies have rallied back overnight and through the European morning session. But Gold and Silver are still seeing profit taking, and selling...

Currencies today 1/22/10: American Style: A$ .9075, kiwi .7155, C$ .9555, euro 1.4150,  sterling 1.6240, Swiss .9625, European Style: rand 7.54, krone 5.7860, SEK 7.1925, forint 192, zloty 2.8840, koruna 18.4320, RUB 29.81, yen 90.30, sing 1.4010, HKD 7.7730, INR 46.13, China 6.8270, pesos 12.92, BRL 1.7945, dollar index 78.12, Oil $76.30, 10-yr 3.38%, Silver $17.45, and Gold... $1,095.60

That's it for today... Well... Day one was a breeze, we have move a little earlier this morning though, as Alex has jazz band practice at 6:30! I like that he has broadened his guitar skills to more than just rock... Only 47 days until I leave for spring training! The AFC and NFC Championship Games are this weekend. I sure hope we get more entertaining games than we got last week! I'll be rooting for, the Saints, and Colts, although that's a tough one, as ex-Mizzou star, Brad Smith, plays for the J-E-T-S, Jets, Jets, Jets! So, if he runs a kickoff back for a touchdown, and the Colts win, then that would be grand! Chris's son Brendan had his confirmation last night, so congrats there... And little Delaney Grace called last night, and said that she missed "her Alex" and wanted to talk to him... OK... I hear the shower going, which means Alex is getting ready... Time to hit send, and start making this a Fantastico Friday!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837





Posted 01-22-2010 9:26 AM by Chuck Butler