A 34 Billion Euros Package For Greece!
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In This Issue..

* Currencies trade up, then back down...

* RBA to hike rates this week?

* Jamie Dimon on California VS Greece...

* Fannie needs another $15 Billion!

And Now... Today's Pfennig!

A 34 Billion Euros Package For Greece!

Good day... And a Marvelous Monday to you! And Welcome to March! My fave month! Yes, it's me this morning... You were under the impression that it would be Chris this morning, and back to me tomorrow... But here I am... I'll rock you like a hurricane! HA! Chris had some fatherly duties this morning, so I took the conn back one day early... I'll still rest today after a long, difficult week last week in Scottsdale, and will be back in the saddle tomorrow, as planned.

Well... What have we here? News broke on this past Saturday, that a package of 30 Billion euros was going to be provided to Greece from German and French state banks, and investors... The amount then turned to $34 Billion... Now... You know me... And I'm not in favor of "bail outs"... Throwing good money at bad... And all that, but... This looks like it's what the markets wanted to see, for the currencies, especially the higher yielding currencies are receiving a bias to buy this morning...

Of course, now that I've said that, I notice that the euro just dropped 20 pips! UGH! Oh well... Timing is everything, eh? I was going to talk glowingly about the currency rally VS the dollar, but... I have to switch gears and talk about something else now! (see how flexible I am? HA!)

One more thing on the euro / Eurozone before I move on... European manufacturing, which accounts for about a quarter of the economy, grew for a fifth month in February as reviving global demand boosted orders. That's good news for the Eurozone economy, folks...

The FXU Conference in Scottsdale, Arizona, last week was quite good... I spoke a total of 7 times in 3 days... At my last workshop, I asked the audience if they had grown tired of hearing from me yet! I was surprised to hear them say no! I kicked the conference off on Thursday with the first speech/ presentation... Someone said to me afterward that the Sovereign Society must really like me, putting me first, and I said, "well, I thought so too, until I saw that they put me on a panel at 8:30 am on Saturday morning!"

But that's not what I began to talk to you about... What I wanted to say was the conference went well, and there were lots of ideas presented, along with education of course! Overall, I thought it was great!

OK... Back to the currencies... I had a long conversation with other editors about what's going to happen to Greece and the euro... They all seemed to believe that in the short term, the prospects for the euro aren't good... Of course, you knew that I would take the other side of that argument, right? And I did! But only in the length of how long this dollar rally will last... I said 3-6 months longer...

However, a 34- Billion euro package to Greece could get this party started a little earlier... According to The Royal Bank of Scotland Group Plc... "The euro may strengthen to $1.40 as European officials work on a rescue package for Greece, easing concern of "default and contagion."

Hmmm.... Now that would be fine with me... To see some semblance of reality hitting the markets for once... What am I talking about here? I'm talking about how the markets have basically attacked the European Union / euro for the debt problems of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) and totally forgotten about the debt problems of California, Illinois, Michigan and New York... If you add the total GDP's of each of these groups, the U.S. states group more than doubles the PIIGS... So... Tell me, tell me, tell me true, who should be getting taking to the woodshed?

I had a reader send me along a note yesterday regarding this.... It said, "Finally somebody besides Chuck Butler is talking about California being a greater risk than Greece.." and then he attached a link to an interview with Jamie Dimon, chairman of JP Morgan Chase, where he has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.

To read the whole story click here: http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7326772/California-is-a-greater-risk-than-Greece-warns-JP-Morgan-chief.html

OK... I think I got my point across there... I'll go on from here...

Today, Canada will print their 4th QTR GDP, and from the looks of it, Canada will have exited their recession in the 4th QTR with a better than 4% GDP in the last quarter of 2009! The Bank of Canada (BOC) meets tomorrow to discuss rates, but I doubt this better than 4% print of GDP is going to move the BOC Gov. Carney to raise rates just yet... Recall, that Carney made a foolish statement last year, stating that he wouldn't move rates higher before June of this year? Well... Now we're within 3 months of that time-line, and... He's got GDP growing at better than 4%... I would have to think that Carney might have to move that time-line up a month or so given all the signals we've seen with the Canadian economy heating up...

Yes, I'm aware that Canada normally follows the cartel, I mean the Fed... But... Things have got to change some time, eh?

The Reserve Bank of Australia (RBA), European Central Bank (ECB), Bank of England (BOE) and the aforementioned Bank of Canada (BOC) all meet this week to discuss interest rates... The only one that I see with a chance of changing rates is the RBA... More on that in a bit...

I wanted to make note of the rot that's really being exposed on the pound sterling's vine in recent days... The pound is really taking on water, which to me finally makes sense... I kept getting email after email, asking me why the pound was so strong... It just didn't make sense to those people and didn't makes sense to me either! So... Just like when bubbles are getting blown larger and larger, when they pop, the damage is ugly... And that pretty much describes pound sterling in the past week, especially overnight last night!

Now... Back to the RBA... I heard someone last week talk about the "pause" in rate hikes by the RBA and said that it was a sign that the RBA saw weakness in global growth... And I said back to them... But what happens when the RBA hikes rates next week? And, silence... Nothing but crickets... And so, that leads me to the RBA meeting this week... You know me, I've long been a fan of the RBA, as an inflation hawk, providing price stability... So, when the RBA Gov. Stevens says, "the RBA is likely to continue to move back to a more normal setting for rates." Then I've got to believe that interest rates there are going higher this week!

Add to that the latest housing data from Australia, where New Home Sales for January increased by 9.5%, which was the largest increase since last August... And stop there for a minute, and think about this... Since August, we've seen note one, but three rate hikes in Australia... So, they have higher mortgage rates right? And they post that kind of increase? That's a strong economy folks... And one that is in need of higher rates immediately!

Here's a quick hit from Japan that's got me wondering, where have I heard this before? Japanese Finance Minister, Kan said "he wants deflation beaten this year, not over 2-3 years."

OH! That's right... I've heard that from nearly every Japanese Finance Minister in the past 20 years! So... That would be great if he can succeed... But the history there isn't going to be so kind to him...

Back in this country there's more rot on the housing sector's vine this morning as it is being reported that Fannie Mae is in trouble again... Let's go to the tape... Fannie Mae reported a $16.3 Billion fourth-quarter loss, its 10th straight quarterly loss, and will seek $15.3 Billion from the U.S. Treasury Department. "Our financial results for 2009 reflected the continued adverse impact of the weak economy and housing market, which has resulted in record mortgage delinquencies and contributed to our recording significant credit-related expenses and net losses during each quarter of the year," Fannie Mae said in a filing with the Securities and Exchange Commission.

That's just awful folks... But... Now that Fannie and Freddie were nationalized, and given a bottomless pit of financing... All they have to do is say... Hey Tim Geithner... We need $15 Billion dollars, would you please wire it over, and not send us a check!

Then there was this... Well... The clear choice as a winner for a currency that people should be buying, at last week's FXU conference, as Gold... Followed by Norwegian krone... It was as if everyone has now jumped on Chuck's bandwagon... The question was asked about if I thought Gold had reached "mainstream" yet... My answer... No! Next question, please!

Oh... And the big earthquake in Chile... Tremendous loss there... Tomorrow I'll talk about what I think will be good for Chile..

To recap... A $34 Billion euro package to Greece has been announced, with German and French state banks putting up the money. The feeling initially, in the markets was this would be good... But there's some wavering now... We'll have to see what the U.S. markets think about this news when they arrive at their desks in an hour or so... We have 4 Central Bank meetings this week, with only the RBA having a chance of raising rates...

Currencies today 3/1/10: American Style: A$ .8950, kiwi .6950, C$ .9485, euro 1.3550, sterling 1.4885, Swiss .9255, European Style: rand 7.6970, krone 5.9550, SEK 7.2050, forint 198.90, zloty 2.9090, koruna 19.1250, RUB 29.94, yen 89.20, sing 1.4065, HKD 7.7630, INR 46.08, China 6.8264, pesos 12.74, BRL 1.8075, dollar index 80.53, Oil $78.03, 10-year 3.62%, Silver $16.55, and Gold... $1,115.00

That's it for today... The Phoenix Open was being held at the TPC which is all around the Hotel we were in last week, so roads were closed, everything was packed, it was quite the mess... Especially leaving yesterday. The airport was a madhouse, and I actually feared that some of us might not make our flights! But we all did... Whew! OK... It's March! The first Spring Training game for my beloved Cardinals is only 3 days, 4 hours and 57 minutes away! I'm now down to 10 days before I leave for Spring Training! YAHOO! Congrats to Canada on winning the Gold medal in both men's and women's ice hockey... That was a good game yesterday, until the end... My little buddy, Alex, was in Chicago over the weekend as the jazz ensemble he plays in was there for a competition... They received very high marks, but no cigar / trophy... I'm sure it was fun for the kids! OK... Time to get this out the door, go back get my feet up and rest! I hope you have a Marvelous Monday!

Chuck Butler


EverBank World Markets



Posted 03-01-2010 9:20 AM by Chuck Butler