A Jobs Jamboree Friday!
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    In This Issue.

    * Greeks get 83% participation in bond swap.

    * CAC's will be invoked for the rest.

    * Brazil cuts rates again.

    * Draghi tells banks the ball's in their court.

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

    A Jobs Jamboree Friday!

    Good day. And a Happy Friday to one and all! Well, it's a Jobs Jamboree Friday today, and I'm wondering just what kind of shenanigans the Bureau of Labor Statistics (BLS) will put out of a hat, to paint a pretty picture for the government. But, before we see the color of the labor report here in the U.S. for February, we have other things to talk about, so let's not dawdle around!

    Well, the results of the Greek Bond Swap (GBS), which on a sidebar, is what the skillet breakfast is called at the Juno Beach Café, and we all love it! OK, back to the GBS. here's the skinny on the whole operation from the WSJ this morning. "Just over 80% of Greece's private-sector creditors agreed to turn in their bonds for new ones with less than half the face value, touching off a massive debt swap that marks a seminal moment in Europe's long-frustrated efforts to rescue its most financially vulnerable nation.

    The Greek government announced the results of its proposed restructuring early Friday morning. It said 83% of bondholders had voluntarily submitted to the deal. The government said it would invoke so-called collective-action clauses that will impose the exchange on the vast bulk of reluctant creditors, bringing participation up to 96%.

    The announcement that the restructuring will go ahead precipitates the largest-ever sovereign-debt default and the first for a Western European country in half a century."

    I guess now we wait to see what the ISDA people decide about this invoking of the CAC's (collective action clauses). The euro has backed off its drive to 1.33 which it was on yesterday, but still remains above 1.32 this morning. This Greek deal does not remove the debt problem from the Eurozone, folks. it simply kicks the can down the road, with a lot of tears and blood on the side of the road from those that took losses in this deal.

    But it's part of the stabilization (temporary, not ever lasting) that's going to allow the Eurozone some breathing room. I know I've said this before, but for those of you who missed class that day, I truly believe that the euro will survive all this. In 5 years, the Eurozone may not have all the members it has today, but the center will hold, and will be far better off because of all this. At least the Europeans have recognized their deficit spending problem, and have taken steps to correct it. And in 5 years, the euro will be stronger because of these steps they have taken to reduce debt. The Eurozone found the road to reducing debt. Here in the U.S. I doubt seriously if we EVER find the road! Our GPS just doesn't have the Political will to go there!

    But. as always, I could be wrong about all this. It's just the way I see it playing out. It's the same sight I used to be the first to call the multi-year weak trend for the dollar in 2001, and the same sight I used to make the call that 2003 would be the "year of the euro" in 2002. The same sight that talked about a housing bubble in 2004. And the same sight that called for QE2 a couple of years ago.

    Gold slipped back below $1,700 late yesterday, but has been steady Eddie since the slippage. I've written a lot about Gold this week, so I won't go there again, except to say, that while the shiny metal could very well get weaker in price, it certainly looks as though it's forming a nice base at $1,700. I guess we'll have to wait-n-see, eh?

    I said to Mike Meyer yesterday, that it sure appears to me that the euro has been dragging Gold around lately. And I don't like that. these are two different asset classes, that have different pricing mechanisms, and while they very well could rally at the same time for different reasons, they "don't have to rally" at the same time just because one or the other does.

    The flight to safety that started on Tuesday, after the Chinese announcement about lowering their target for GPD from 8% to 7.5%, has backed off, and the U.S. Treasury 10-year's yield is back over 2% this morning.

    Yesterday, the European Central Bank (ECB) met, and did leave rates unchanged as I had suspected, but ECB President, Draghi, did make a comment that was quite interesting in the press conference that followed the rate announcement. Draghi basically told the Eurozone banks that the ball was now in their court, after providing them two rounds of the LTRO (long term recovery operations).

    The ECB also lowered the growth forecast for the Eurozone, which was no surprise. You don't implement the austerity measures that are being implemented in the Eurozone, and not expect to see slower growth.

    A currency dealer friend of mine told me yesterday afternoon that they had seen a jump in volume, after what had been a pretty tame week up to that point, with significant flows into G10 currencies.

    This could be a very volatile day, not that we've had many recently that weren't! But, given the Greek news, the Jobs Jamboree, and what how the markets feel about these things could lead to a very volatile day.

    Besides the Jobs Jamboree, which is forecast to show that 210,000 jobs were created in February, down from the 243,000 that were supposedly created in January, we'll see the color of the January Trade Deficit, which will continue to creep closer to $50 Billion. On Monday, we'll see the Monthly Budget Statement, which is expected to be $229.4 Billion!!!!!! or maybe it might be more scary to type it like this. $229,400, 000, 000. I don't think that I have to use my new math abilities to say that annualized, this is about double the budget that was presented!

    But, shoot Rudy, who's counting any way? Certainly not ½ the Americans that don't pay taxes. why would they care? But I need to stop right here, right now, before I go down a road I don't need to go down. But if you ask me nicely when you see me, I'll tell you all about my plan for voting and those that don't pay taxes.

    OK. Well, the Brazilian Central Bank (BCB) cut rates again yesterday. UGH! For the first time in a long time, the Brazilian Celic Rate (like our Fed Funds rate) is in single digits at 9.75%... The BCB cut 75 Basis Points (3/4%), which surprised the markets who were looking for 50 Basis Points to be cut.

    Again, the Brazilian Gov't and central bank are like a comedian who, with one hand waves off the applause he's receiving, and with the other hand gives the crowd the "give me more" hand gesture. It's all a big game for the Brazilian Gov't and central bank. They know they need the investment flows to finance their infrastructure projects that are required to hold the World Cup and Olympics, but don't want investors to think that buying into Brazilian reals is a One-Way street, so they keep throwing out the spike strip to slow down the rise of the real.

    Just let the markets decide what rates should be, has always been my theory. Not a central bank that arbitrarily sets a rate, that most likely is stale by the time they get around to raising the rate! If the markets decided what rates should be, instead of a central bank, I think you would have less violent recessions and boom sessions. But that's just me.

    And I know that there will be some readers that attempt to take me to the woodshed saying that it was the markets that got us in this mess to begin with. and that appears to be true, but. there were regulations that were in place to prevent all that from happening, they just weren't enforced! And who was supposed to be the sheep dog watching the herd? The President of the Fed Reserve New York. and I'll leave that there.

    The Chinese finally allowed the renminbi to appreciate overnight. The first time this week, so they were glad to see Greece kick the can down the road. I've told you many times in the past but, again there are new readers every day. China has a vested interest in the Eurozone, staying afloat. China exports more to the Eurozone than they do to the U.S., so they can't have their number one market collapse.

    And a reader sent me a story yesterday that plays well with my thought that China's economy will not collapse, as many others have said it would for over two years now. from Yahoo, "A sharp jump in sales of its luxury cars and sport utility vehicles in China helped German automaker BMW AG increase net profit by 51% last year."

    I had an opportunity to talk to a couple of customers yesterday at a lunch meeting, and I made a point that plays well with this story. and that is that in the past decade, we've seen a growing middle class in both China and India, that was never there before, that now wants cars and the gas to drive them. That's demand for oil that was never there before, so there's no surprise that the price of gas is higher.

    In Canada yesterday the Bank of Canada (BOC) met, and left rates unchanged, as BOC Gov. Carney's bunker mentality remains in place. But, Carney did throw the markets a bone, with a comment about that "signaled conditions that kept him sidelined are easing". In other words, he's ready to come out of his bunker.

    So. I guess you've all heard about how Germany is asking for the return of their Gold that's held in the U.S.. Pretty interesting to me. So, not only are individuals here in the U.S. questioning holding Gold here, the Germans are too!

    And when I go home from watching my beloved Missouri Tigers beat Oklahoma St last night (Alex and I went to Buffalo Wild Wing (his fave place), to eat dinner and watch the game), I saw a short clip of a Lou Dobbs interview of Bart Chilton, of the CFTC. Now, long time readers know that I don't hold the CFTC in high regard, given their inability to recognize manipulation that's going on in Gold & especially in Silver. I thought it was interesting that Bart Chilton did say that he was aware that "one player controls 30% of the silver market." Of course he wouldn't blurt out the name of the "player", but we all know who he's talking about.

    And in other news from last night. 3 top executives of MF Global Holdings are set to receive bonuses of as much as several hundred thousand dollars each under a plan by the trustee overseeing the firm's bankruptcy case. Look. I know there are contracts that people have that have to be paid, but couldn't this stuff be kept under the table? This can't sit well with the investors that lost truckloads of money in the company.

    Then There Was This. my friend, and fellow guitar playing analyst/ writer, Steve Sjuggerud, went back to a thought he's previously talked about the other day, and one that I've talked about before (so, see great minds think alike! HAHAHAHAHA like I have the same amount of gray matter as Dr. Sjuggerud!) The thought. That Australia is Steve's favorite candidate for the next Switzerland. here's a snippet of Steve's latest letter called Daily Wealth, and you can sign up for it here: www.dailywealth.com

    The situation in Australia today shares a lot of similarities with what caused Switzerland's currency to soar:

    . Australia is very rich (its government owns its gold and resources).

    . Australia has very little debt (it will be net debt free by 2020).

    . It's a safe haven (it likely won't be invaded).

    . It has strong banks today (particularly after the economic crisis).

    . It has a legitimate rule of law.

    . It has a strong currency (implicitly backed by resources).

    A lot of that sounds like Switzerland of old to me! - Steve Sjuggerud

    Chuck again. Thanks Steve! And Oh, by the way, it was great to share a table for lunch in Orlando last month.

    To recap. Greece got 83% of old bond holders to agree to the new bonds at losses, and they announced that they would invoke the CAC's which will force those not accepting the terms to accept them. We're still waiting for the verdict from the ISDA people on whether is triggers the CDS's. The euro has slipped a bit from yesterday's euphoria, which has dragged down Gold to just below $1,700 this morning. It's a Jobs Jamboree Friday, so let's all get our camping gear, and head down to the river for the jamboree!

    Currencies today 3/9/12. American Style: A$ $1.0625, kiwi .8240, C$ $1.0085, euro 1.3220, sterling 1.5805, Swiss $1.0965, . European Style: rand 7.5225, krone 5.6410, SEK 6.7330, forint 221, zloty 3.1010, koruna 18.7065, RUB 29.31, yen 81.85, sing 1.2515, HKD 7.7570, INR 49.85, China 6.3110, pesos 12.70, BRL 1.7690, Dollar Index 79.43, Oil $106.90, 10-year 2.02%, Silver $33.98, and Gold. $1,702.10 (just went back over $1,700). and since it's a Friday, and you won't have me to kick around for another Friday for a month. here's the U.S. Debt Clock for your to peek at, and then go put away the sharp objects! http://www.usdebtclock.org/index.html

    That's it for today! A strong win last night not only for the Missouri Tigers, but also our Blues. The Blues are the surprise team of the NHL this year. But being a long time fan of the Blues (going back to their expansion entry into the NHL), I sit here and wonder when the wheels fall off the wagon. Maybe this year will be different! Now that would be tre' cool to have the World Champion Cardinals and Stanley Cup Champion Blues at the same time! Well, the unsupervised weekend for Alex and Chuck began yesterday. And then we get on a plane next Wednesday. So, we're good to go! And this is late, so I'll get it out the door. I hope you have a Fantastico Friday!

    Chuck Butler


    EverBank World Markets



    Posted 03-09-2012 1:10 PM by Chuck Butler
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