Eurozone Economy Stumbles, Fumbles...
Daily Pfennig

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In This Issue..

* Euro gets sold on weak data...                                            
* China tries to slowdown again...                                        
* A$'s get slapped on the China slowdown attempt...                                                
* Retail sales & confidence print today...                                                                                                            

And Now... Today's Pfennig!

Eurozone Economy Stumbles, Fumbles...                                              

Good day... And a Happy Friday to one and all! A Fabulous Friday, in hopes of becoming a Fantastico Friday! It is a 3-day weekend, and we get paid today, so there are some good steps toward Fantastico... Alex's Fox "gig" went great, he stood up, strong and tall, and ripped off a smokin' guitar solo that lasted about 1-2 minutes... But, it was a very late night for yours truly, and so I'm draggin' the line this morning...

Front and Center this morning, the non-dollar currencies led by the euro, are sliding against the dollar... Yesterday, the currencies range traded all day, and in the overnight Asian session that pattern remained tight... But in the European session this morning, as Economic growth in the euro zone slowed in the fourth quarter of 2009, as only one of the currency area's four largest economies expanded.

Gross domestic product in the 16 countries that use the euro rose by a weaker-than-expected 0.1% from the previous quarter, and fell 2.1% on an annual basis.

It appears, folks, that the nascent Eurozone economic rebound has lost some steam, eh? I read where economists believe the loss in economic growth here came from a loss of the boost it received from global restocking... That and the fact that the European Central Bank (ECB) began to remove stimulus in the 4th QTR, helped to slow the Eurozone economy... And with the goings on in Greece and the rest of the PIIGS, I would have to believe that as of right now, the Eurozone economy will take a double dip on the recession front...

There's also a story out this morning from a strategist at Societe Generale by the name of Albert Edwards, who sent out a report saying that he believes the Eurozone is headed to a break-up because of the problems of the PIGS... (notice I left one "I" off, for Ireland, as this is mostly centered on the Club Med countries of Portugal, Italy, Greece and Spain)

Now... I don't believe, right now, that a break-up is in the cards, for as long as Germany is committed to the Eurozone, they will make every effort to keep it alive... I think statements like the one about the break-up, are a bit none too comforting to euro holders... Well... There's always the euro-alternative, Norway sitting in the shade over there, with their powerful fiscal position... (surplus)

So... The euro has lost the 1.36 handle and is looking quite sickly this morning. It's in need of some vitamin D, for sure! The problem is that when the old Blue Tick Hound gets whacked by the dollar, it drags all the other currencies along for the whacking! Even the commodities see red! Gold, which was up $24 yesterday, is down $10 today! UGH!

And... One more thing to think about with the threat of a double dip for the Eurozone economy... If it happened there, it most likely will happen here...

There's another black cloud hanging over the non-dollar currencies this morning, and that came from the direction of China... China's central bank raised the reserve requirement for the second time this year, to 16.5%. (a .50% move) As usual, the kneejerk market reaction was to sell Aussie dollars (A$) and buy the so-called safe haven yen. Aussie gets sold when it appears that China will slow their economy because of the shipments of raw materials that Australia sends to China... So, the thinking here is that if China does slow down, it will slow the shipments, thus slowing the funds flowing into Australia, and thus slow down their economy...

I think these guys get too carried away with this stuff, before it even happens... But that's the markets for you, always looking at what's ahead, and trading today on what they see...

It's rumored that the Swiss National Bank (SNB) was intervening again last night to weaken the franc VS the dollar and euro... I don't know why they bothered on the latter, given the weakness that occurred in the euro later in the day! I think the SNB "knows" something that could really drive the franc higher, and so they are weakening it in preparation of this "thing"... So... Now I've got you wondering, eh? Well... You could say that my "spider sense" is tingling... I hope I'm wrong, but for some reason this SNB intervention smells of something... Something like geo-political problems that drives people to the safe haven franc...

Or, maybe the SNB just wants to be stupid and get the franc weak to introduce inflation to their economy... Yeah, that's probably the ticket! Yes, and my first wife was a young Elizabeth Taylor, yeah, that's the ticket! HA!

In New Zealand overnight, December Retail Sales printed and were disappointing... December Retail Sales were flat. (they were expected to rise .6%) It's reports like this that will keep the Reserve Bank of New Zealand on the sidelines folks... And keep the kiwi from gaining VS the Aussie dollar...

Speaking of Retail Sales... Here in the U.S. today, we'll see the color of the Jan Retail Sales figures... Recall that in December, yes December, Retail Sales were down -.3%... The experts believe that Jan will show a reversal of that negative figure from December... The wild card in January the past few years is the affect of the "gift cards", that are given as presents, and then "cashed in" during January... This "gift card affect" could make this month's Retail Sales data all jumbled up... We'll see later this morning.

We'll also see the latest reading of the U. of Michigan Consumer Confidence survey... The previous survey showed a drop in Confidence, so it will be interesting to see what this survey has in store for us, as I just don't see how with 20% unemployment, a falling stock market, and so on, that any one would be "confident"... But, somehow these U. of Michigan folks find the "confident people"!

And who dat (in honor of the Super Bowl Champion Saints) that says China's exports will dry up without the U.S. Consumer? Not according to the report overnight that showed China's exports, measured in U.S. dollars, increased 21% last month compared with January 2009... So put that in your pipe and smoke it, I say to those that don't believe in China...

Then there was this... OK... I received a ton of emails on my: Then there was this: on the BLS yesterday... Apparently I didn't go through it completely, to see that the administration is not removing the BLS 100%... So, my bad... And I apologize...

Now, I don't know if my beautiful bride will read this part or not, but if she does, she'll be surprised to see that I admitted that I was wrong... I say that I admit it all the time, but she claims that I "never admit being wrong"... Well, there you go! And just in time for Valentine's Day! (think I chalked up any brownie points there? HA!)

Today is Abraham Lincoln's birthday, a day that WE SHOULD CELEBRATE! Lincoln, the country's 16th president guided this country through the most devastating experience in its national history...

And on the 22nd, it will be George Washington's birthday, again... A day that WE SHOULD CELEBRATE! Washington was a great leader and president... You should check him out on the internet for all the famous quotes this guy made! Stuff like this: "If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter."

But, instead we lump these two great men into one day, and call it "President's Day" (and sell mattresses!) ... As if, it would include all presidents! Geez Louise, these two great men are rolling over in their graves at that thought of being lumped together with the likes of Woodrow Wilson!

I bet you thought I would say someone else! But while you're checking out Washington, you should check out Wilson, just so you can then share with me in my total dislike of this man!

To recap... The Eurozone economy stumbled and fumbled in the 4th QTR, thus leading me to believe that it will double dip...

Currencies today 2/12/10: American Style: A$ .8815, kiwi .6930, C$ .9480, euro 1.3560, sterling 1.5615, Swiss .9255, European Style: rand 7.6980, krone 5.9610, SEK 7.3240, forint 200, zloty 2.97, koruna 19.19, RUB 30.33, yen 90, sing 1.4155, HKD 7.7705, INR 46.50, China 6.8327, pesos 13.02, BRL 1.8645, dollar index 80.65, Oil $74, 10-year 3.68%, Silver $15.38, and Gold... $1,081.60

That's it for today... Tomorrow is Mardi Gras here in St. Louis... And Mardi Gras in New Orleans kicks off today at the Royal Sonesta Hotel at 300 Bourbon St! We're supposed to get snow tonight, tomorrow and Sunday, so that will throw a curveball to the people celebrating the St. Louis Mardi Gras... The Winter Olympics from Vancouver B.C. begin this weekend... That means the NHL will take a break so that players can play for their home country... Two Blues are on the U.S. team, so that will make that worth watching... Tomorrow is also the birthday of my very good friend Duane... It was also my oldest sister that we lost to cancer, Brenda's birthday... So... I have to tell you how proud I was to sit in the Fabulous Fox and watch my youngest son, stand up tall and straight and rip off that guitar solo... I played on some interesting stages when I was a young man playing my guitar around the country, but never a stage like the Fabulous Fox! On the way home, I said that I hadn't heard him practice that solo at home, and he said that he just makes it up as he goes along, and it's a little  different every time he plays it!  OK... I knew he was good... I didn't know he was THAT good! OK... Time to go... I'm waking up a bit now... HA! I hope your Friday is Fabulous! And that it has a chance to become Fantastico!

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





Posted 02-12-2010 8:09 AM by Chuck Butler
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