Waiting On The "Grand Plan"..
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In This Issue.

* Euro continues to be well bid ahead of Summit.

* Bank of Canada hangs loonie out on a line..

* Aussie inflation weakens.

* What's Japan waiting for?

And, Now, Today's Pfennig For Your Thoughts!

Waiting On The "Grand Plan"..

Good day. And a Wonderful Wednesday to you! A day of complete rest, not even a visit to the hospital, has me feeling better this morning.. . My poor mouth, even with the 4 days of no radiation, just seems to get worse! I go back to the hospital today, I'm sure they'll send me back home again. When I was on my chemo medicine in 2007-2008, I completely lost my sense of taste for food that is. I've lost it again, but that's OK for now, because eating or putting food in my mouth is not a high priority of mine right now.

But not to worry. This gives me an opportunity to lose a little weight, which I've needed to do! See.. there's always a silver lining, eh?

The markets are looking for that silver lining in the Eurozone meeting that begins later this morning. The Eurozone leaders are saying all the right things, but saying and doing are two completely different things. The risk of disappointment remains hanging over the euro, folks. don't get all lathered up because the euro is well into the 1.39 handle. Should the Eurozone leaders disappoint this afternoon, and I truly believe they will, the euro will be taken to the woodshed, for all of this rally in the euro has come about from optimism that the Eurozone leaders will in fact deliver the Eurozone from evil.

I think Gold traders are in the same frame of mind as me on this, as Gold has rallied BIG Time, and is back above $1,700 this morning! And Japanese yen is pushing the envelope to another post WWII high VS the dollar this morning. I do believe that traders are barking up the wrong tree with their flight to yen. The Bank of Japan just keeps sending out warnings to the markets that the Bank is willing to intervene, and they certainly have the treasure chest of yen to sell.

And the euphoria in the smaller economies like Australia, New Zealand, Russia, India, etc. have backed off their lofty levels of yesterday. All of the move in Australian dollars (A$) hasn't come from the fear of disappointment in the Eurozone. Aussie consumer inflation printed overnight. While inflation is still on the rise in Australia, it slipped in the third quarter VS the 2nd Quarter. The 3rd QTR printed at +.6% VS +.9% in the 2nd QTR. Apparently the markets have taken the approach in Australia, that they employ here in the U.S. and focus on the "core inflation" which eliminates food & energy. as if we don't use those things every day! Anyway, the markets are focusing on core inflation which on a year on year basis, gained 2.3%... the experts had it pegged at 2.7%, so. the rate cut campers have crawled out from the wall boards again, and are screaming for a rate cut.

Memo to rate cut campers in Australia. Hey! Slower inflation was the goal of the Central Bank when they hiked rates. So, now, just because they've seen the fruits of their rate hikes, you say they should just reverse them? One month's data does not make a trend! And cutting rates now would be a HUGE mistake, for you would invite those inflation pressures that once held the economy in a tight grip, back to do more of the same!

So.. we are all waiting for the "Grand Plan" from Eurozone leaders. But. you know, before the meeting can get started, Germany's chancellor, Angela Merkel, has to arrive with a "yes vote" from her Parliament on the plans to boost the European Financial Stability Fund (EFSF). That's a big gamble folks. for if the German Parliament votes no. Then the whole shootin' match is off. So. there's some business to be taken care of before the "Grand Plan" can be shown to the world!

I will say that I'm somewhat confused by the decision to call off the Eurozone Finance Ministers meeting that was to take place prior to the Crisis Summit today. Hmmm. the FM's will meet after the Summit, and iron out the details of the EFSF, should, it get approval to be expanded today.

So. we've got the Crisis Summit (maybe) today.. We've got the U.S. Congressional Super Committee sitting on their hands, and what do investors turn to in these times of uncertainty? Well, they turn to the uncertainty hedge. Gold. the move by Gold yesterday was pretty impressive, and yet the shiny metal is up again this morning, adding on to yesterday's impressive move higher. Well. we all know that the CFTC (Commodities Futures Trading Commission) voted to limit position limits last week, but we didn't know how sharp the teeth were to the measure. But, take those three things. the Crisis Summit, the Super committee, and the vote by the CFTC, and we could be seeing a perfect storm for Gold, folks!

Could I be wrong? Of course I could! The price manipulators could choose to ignore the CFTC, and go for Gold's throat once again. All I'm saying is that should the price manipulators back off, the uncertainty in the world is very high, and that will underpin Gold, which should push Gold higher and higher. Sly Stone like!

And investors are fleeing to Swiss francs again. the safe havens of Gold, yen and francs, are all on the rise this morning folks. but notice a safe haven that missing?

Ok.. onto other things. Well, I warned you yesterday morning that the risk of disappointment was hanging over the Canadian dollar / loonie. The loonie has risen to parity when I signed off yesterday. But, then the Bank of Canada (BOC) hung the loonie out on a line. The BOC not only did not raise rates, but they also lowered their growth forecast for the Canadian economy.. Shot to the heart, and you're to blame! The loonie lost more than 1-cent following the BOC shot to the heart.

I can't say that I'm surprised. I did think that there was enough strong data to warrant a rate hike here. But, no one knows the discussions that take place. I can just imagine Big Ben Bernanke or U.S. Treasury Sec. Geithner calling the BOC, and asking them to keep rates unchanged so that the dollar can hang on. That's just my imagination working. But it was just my imagination, running away with me. Ahhh, the Temptations on a Wednesday morning.

Not that this is a stock letter. but the Company earnings do play a part in the recovery of the economy here in the U.S. And so far, no Company has hit the ball out of the park. Some have done well. Some have hit the forecasts bang on, and so far, a lot have missed their targets for earnings. I think that this will be the theme that repeats the most during this earnings reporting season. I don't think investors should just shrug off an awful report like Amazon printed yesterday, just because they don't own that stock. Investors need to look at the big picture. And think. Hmmm, I wonder why this happened, has consumer buying hit the skids? And so on. So, keep all that in mind during the earnings reporting season.

The U.S. Consumer Confidence took a dive last month to levels not seen in the index since March of 2009. Remember March of 2009? That's when the financial meltdown of 2008 hit bottom, and from that point on, risk assets rallied again. Well, with that in mind, there are analysts out there in the hinterlands that are calling for a repeat. Hmmm. I have to say that I don't agree with them. I truly believe the Consumer Confidence has lagged. In other words, it's very far behind the curve, and if that's true, we're nowhere near a bottom. Hey, at least I'm not complaining about who they surveyed for the report this month!

The only real piece of data that will come from the data cupboard is Durable Goods Orders for September. Look for them to be down. Capital Goods Orders, would be a good thing to look at to see if Companies spending money on Capital Goods. But that hasn't happened in so long now, that I doubt that anyone even notices this data any longer.

Then there was this. From Bloomberg this morning. "Oil traded near its highest in 12 weeks in New York on speculation China's government will boost the economy of the world's second-biggest crude consumer, while European leaders prepared to tackle the region's debt crisis.

Prices gained as much as 0.8 percent after settling yesterday at the highest in almost three months. Chinese Premier Wen Jiabao said economic policy will be fine-tuned as needed and the industry ministry said it is studying "stimulative policies" for smaller companies. European government heads will hold a summit today to agree on a plan to rein in a sovereign- debt crisis that threatens to curb economic growth and slow demand for commodities."

Chuck again. there you have it. I had been looking for reasons that the price of Oil was rising so significantly the past week.

To recap. the euro remains well bid ahead of the debt Crisis Summit in the Eurozone. The Eurozone leaders will try to craft the "Grand Plan", but Chuck looks for disappointment. and therefore, the euro has the risk of disappointment hanging over it. Japanese yen is near a new post WWII high VS the dollar. Chuck doesn't know why the BOJ hasn't begun to spend the treasure chest of yen it has on hand to intervene. not that Chuck likes intervention. But the BOJ keeps warning the markets. money talks. bulldookie walks.And Consumer Confidence falls to levels not seen since March 2009.

Currencies today 10/26/11. American style: A$ $1.0380, kiwi .7965, C$ .9860, euro 1.3935, sterling 1.5980, Swiss $1.1425, .. European Style: rand 7.9530, krone 5.5145, SEK 6.5245, forint 213.35, zloty 3.1370, koruna 17.8840, RUB 30.55, yen 75.85, sing 1.2675, HKD 7.7730, INR 49.50, China 6.3535, pesos 13.48, BRL 1.7610, dollar index 76.09, Oil $93.45, 10-year 2.13%, Silver $ 33.43, and Gold. $1,707.95

That's it for today. the BIG Game 6 is tonight. I have tickets to Game 7, I sure hope I get to use them! I loved my friend, David Galland's letter last Friday, where he talks about the OWS. go to Casey research to find it. David is one of a kind when it comes to writing! Alex left early today, to go to school and lift weights. He was very excited last night when he came home from his swim meet. he broke 1 minute in the 100 freestyle. (yes, I know great swimmers do it much faster, but this is his first year of concentrating on swimming). His older brother, Andrew, who happens to be his swim coach, must be proud. I've had a few people contact me and offer to bring me anything I need. I think they can't believe that I can be getting through the day by myself. Seriously. Thanks to all who have offered, you are too kind! And with that, I'll get back to resting! I hope you have a Wonderful Wednesday, and that I get to use those Game 7 tickets!

Chuck Butler


EverBank World Markets



Posted 10-26-2011 11:05 AM by Chuck Butler