IFO, U.K. Retail Sales Push Euro-Bloc Higher.
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In This Issue.

* IFO rises for 7th consecutive month in Germany.

* U.K. Retail Sales soar!

* Norway ditches Swiss idea.

* A$ & kiwi end the week down.

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

IFO, U.K. Retail Sales Push Euro-Bloc Higher.

Good day. And a Happy Friday to one and all! I can tell right out of the starters blocks this morning that it will be a Fantastico Friday, because. It's my good friend, and long time colleague, Frank Trotter's birthday! Frank and I have worked together a very long time now. When we used to do tag-team presentations together, I would always tell the crowd that we had worked together so long that when we began working together, the Dead Sea wasn't even sick!

The problem is that I've grown older and look much older, while Frank has that Paul McCartney, thing going for him, as he doesn't seem to grow older looking. Frank has me by one year, so, I know how old I look, but he doesn't! Oh well. Happy Birthday, my friend. May you have many more, and that I get to chronicle them in the Pfennig!

The euro has gotten another boost this morning from a think tank report in Germany, and what's called the "euro-bloc" of currencies, are moving along with the euro this morning. The "euro-bloc" consists of: euro, Norway, Sweden, Denmark, Switzerland, U.K. and could even throw in the euro-wannabes. Hungary, Poland and the Czech Republic.

German Business Climate (Sentiment), as measured by the think tank IFO, increased for a 7th consecutive month during April. So did the Current Assessment and Expectations components of the survey. As I've said quite a few times previously. If only we could just buy Germany. and not have to get all of baggage that comes with the euro. Sort of like Chevy Chase's Christmas Vacation, and the cousins show up in the RV. pretty funny stuff!

I'm really having fun this morning. My I-Pod just played a song that we heard in Florida, when my baseball buddies and me, met up with Erika & Pat Nolan. The Zombie Jamboree. Back to back, belly to belly, I don't give a damn cause I'm stone dead already. That should bring a smile to all that were there that night!

And a sigh of relief comes over me, as I read a story on the Bloomberg this morning, that says "Norway Rejects Cap as Krone Hits Five-Week High". Recall me telling you that Norway's Central Bank, the Norges Bank, and Gov't were thinking of doing what Switzerland had done, and place a cap on the gains that the krone could make VS the euro. I was about to throw in the towel should Norway decide to do that. But, they didn't!

The Norges Bank rejected the proposal to peg the krone to the euro. And once that news was heard by the overnight markets, the krone was bought up by the truck load. The Norges Bank Gov. Olsen said that "we have other measures" . He's referring to weakening the krone VS the euro. A rate cut is probably on the way here. but I would rather see a rate cut than a peg.

Yesterday, I told you that the currencies had rallied in the overnight markets, but that rally was losing steam as my fat fingers typed out the Pfennig. Well, the rally came back on the rally tracks later in the morning after U.S. Data proved to be disappointing.

For instance. The Weekly Initial Jobless Claims, which just two months ago, looked like it was on its way to better times, posting a low of 361,000, continued its climb back towards 400,000, posting a 386,000 number of people making initial jobless claims last week.

In addition, Existing Home Sales in March unexpectedly fell. but, home prices posted their first gain since November 2010. But you see what happened here don't you? The prices rose, thus negating the "bargain basement prices" previously seen by buyers. So they didn't buy, and thus Home Sales fell.

I think what we have here with these two pieces of data, and others that have printed recently are signs that we're beginning to move out of the "eye of the storm". And as I told you many times, while in the "eye of the storm" things began to look better, and everyone (but me and a few others) thought that "happy days are here again, your cares and troubles are gone. There'll be no more from now on."

But as I opined. that we would move to the other side of the storm that hit us in 2008, at some time this year. and lo and behold, maybe that move is beginning to take place.

Look, I don't want to see this happen, so don't get the idea that I'm proud that I made that call. I'm proud of the call if it made one investor look at his investment portfolio and decide that he needed protection, diversification, and help.

I think that the warmer winter experienced by most of the U.S. really padded the economic reports and now that's beginning to show the rot on the vine.

And that brings me to Gold. if my "eye of the storm" theory plays out. Gold will be once again on the rally tracks. but again, that's just my opinion, I could be wrong. I was reading a report on the WSJ site last night, which was talking about Gold. But, this report was not as up-beat for Gold as most of them that I read. So, being fair. Here are snippets of the story.

The WSJ sat down with Jon Spall, director precious metals sales at Barclays. When asked how he saw Gold performing this year, he responded, "Basically gold is an anti-government trade. People are buying gold now because it's an uncertainty hedge. It's not really about inflation or deflation. What we're seeing more of this year is the theme that central banks and governments might be getting more in control of events. so people are more relaxed. And that's why Gold has come off a bit this year. People are hoping that's the end of the problems."

OK. Chuck again. first of all. he's right. the "eye of the storm" complacency has led people to remove their "uncertainty hedge". by the way, I wonder where he heard that term? I'm almost certain I was the first to use that term! But, an "anti-government trade"? Well, as long as we're talking about being scared about what the Government is doing then OK. but no politics, eh?

Alright then. back to "eye of the storm". The British pound sterling was the star performer overnight, as the U.K.'s latest print of Retail Sales beat the forecasts by a wide margin. Well, the eye of the storm isn't just here in the U.S.. The U.K. has more problems than they care to talk about, and they all begin with unsustainable debt. So, be careful here, but the pound's move last night was quite impressive!

I saw where my friends over at the 5-Minute Forecast or the "5" as it's known, quoted me yesterday. I love it when I see great letters pick up a quote of mine. Earlier this week we had CNNMoney do just that. The "5" picked up the ball and ran with some thoughts on the loss of individual liberties. You may recall that I began to do that, but got my hands slapped. So, if you want more you'll have to sign up for the "5". But thanks again to Dave and Addison, for thinking that what I had to say was important enough to be in the "5"!

The price of Oil slipped a bit yesterday, but remains above $100. Did you see the shot fired across Europe's bow by Iran yesterday? Iran issued a statement to Europe that "Iran will cut oil exports to "entire Europe" if sanctions are not lifted."

It looks like there will be several Central Bank meetings next week, including our Fed. I have a suggestion for these Central Banks around the world. Quit holding regularly scheduled meetings to tell us that rates remain unchanged and that you're doing nothing else to mess things up. The Central Bank, like the Fed, could announce a couple of days or weeks before the scheduled meeting and just say, "nothing new to talk about, so, let's cancel this one".

That would save taxpayer money for sure! It would save the markets from shutting down while Big Ben Bernanke talks, and it would free up everyone's time.

I saw this morning, a story headline that said, "Aussie and N.Z. dollars set for weekly declines on European Debt Crisis" . Don't you find that to be a strange headline? Why would the Aussie & N.Z. dollars decline on the European Debt Crisis, when the euro is rallying?

Any way. the Big Kahuna data print comes next Tuesday for Australia. Until then I would think the Aussie dollar (A$) would trade in a tight range. On Tuesday, 1st QTR GDP will print, and will be the deciding factor in whether the Reserve Bank of Australia (RBA) cuts rates at their May meeting or not. I say not. so, I've gone out on a limb on this one. Don't worry, I picked a big fat one to support me! HA!

The Bank of Japan's Gov. Shirakawa believes that the "tail risks from Europe's debt crisis are receding." Again, makes you wonder who approved that headline for Aussie and N.Z. dollars.

Speaking of Japan. the yen has weakened a bit this week. but any sustained weakening will have to be seen before I talk about how weak the yen should be again!

Then There Was This. In a recent poll done by the CFA Institute. CFA members were asked the question, "How Soon do you think easy-money policies of central banks in Europe and the U.S. will lead to inflation?". the CFA members were given 4 choices:

Two years. Three years. One Year. and Never.

40.94% chose Two Years. 29.66% chose Three Years. 19.06% chose One Year, and believe or not. 10.34% chose Never.

Chuck again. those 10.34% that chose Never must be Gov't employees, who under the threat of loss of job, had to vote that way! HA! Because CFA people are smarter than that!

To recap. German IFO rises for a 7th consecutive month, and U.K. Retail Sales print unexpectedly strong, and the euro-bloc currencies are all rallying this morning.. Gold gained $5 yesterday. U.S. Data is beginning to show signs of strain.. Could this be the beginning of the move from the "eye of the storm"? Norway decides to not go down the same road as the Swiss National Bank. Big relief for Chuck! And the A$ and N.Z. dollars will end the week on a down note.

Currencies today 4/20/12. American Style: A$ $1.0345, kiwi .8140, C$ $1.0080, euro 1.3185, sterling 1.6105, Swiss $1.0970, . European Style: rand 7.8175, krone 5.7215, SEK 6.7055, forint 224.15, zloty 3.1740, koruna 18.8750, RUB 29.47, yen 81.75, sing 1.2490, HKD 7.7615, INR 52.08, China 6.3085, pesos 13.16, BRL 1.88, Dollar Index 79.32, Oil $102.62, 10-year 1.98%, Silver $31.79, and Gold $1,644.35. and as always on Friday. here's the Debt Clock for you to take a peek at. http://www.usdebtclock.org/index.html

That's it for today. So. Happy Birthday, Frank Trotter! I would be remiss if I didn't also mention that today is our Mike Harrell's birthday too! Mike moved his family here from Jacksonville last year, and believes our winters are always like this past one. He's got a rude awakening coming! Alex scored 5 goals in his game, a win, last night against a big rival school. He was on a mission, as a HUGE kid was guarding him, so he went about showing the HUGE kid how to play water polo! And our Blues won 2-1 late last night, and now come home with a 3-1 edge in their first playoff series in a few years! Go Blues! Cards head to Pittsburgh this weekend. OK. Birthday Boys and everyone else. go out and make this a Fantastico Friday!

Chuck Butler


EverBank World Markets



Posted 04-20-2012 11:20 AM by Chuck Butler
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