Calling All Growth, Calling All Growth!
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In This Issue.

* Hedge funds bail on euro now...

* G-8 is full of hope...

* Big dogs and little dogs...

* Thoughts on Gold...

Calling All Growth, Calling All Growth!

Good day. And a Marvelous Monday to you! I'm writing from home this morning, as I'm headed to the doctor right out of the starters blocks this moring. So, since I'm writing from home, this will be short-n-sweet for sure, especially since I overslept on top of it all! You would think that the "West Coast" time would be out of my system by now! UGH!

Thanks to Chris and Mike for picking up the conn on the Pfennig while I was gone. The crowds that came to listen to me in Las Vegas were HUGE! And the group of EverBankers at the booth were great! Mike H, Dina, Luis, Mike B, Diane, Lauren, and Jason! If you came to our booth, you we had you covered!

OK... when I last talked to you, besides the notes that I sent to Chris, I told you we were going to celebrate a Happy Hour... It was tre' cool, with a James Bond theme... thanks Danielle! OK, now, on to the task at hand...

Well, the old saying that they had on the desk about when I was gone, the currencies would rally, came to a screetching halt. And that "perfect storm" for the dollar that I talked about at the end of last year is really flexing its muscles now... I read this weekend that while the euro has been quite resilient through all the bailouts of Greece, Portugal, and Ireland, that hedge funds don't believe the euro can withstand the exit of Greece... so, these Hedge Funds are blowing out of the euro at warp speed..

And when the euro is getting sold like funnel cakes at a state fair, the rest of the currencies chances of rallying are slim and none, and Slim left town! Shoot Rudy even the Japanese yen can't seem to find terra firma, although it remains strong.. Old faithful, the Chinese renminbi is really wishy-washy these days... But remember what I told you a couple of weeks ago about the renminbi... in 2008 and 2009, during the financial meltdown, when investors flocked to the dollar and Treasuries, the Chinese kept the renminbi steady Eddie VS the dollar, I wouldn't be surprised to see them take that approach now, again..

A reader sent a note and asked me to explain why the Swedish krona was performing worse than the euro... Well, it's unwinding the gains it made when the Riksbank (Sweden's Central Bank) was in a rate hike mood... Like I've explained in the past... The euro is the Big Dog on the porch... all the other currencies are the little dogs... the little dogs can out run the Big Dog, (outperform) but not unless the Big Dog gets off the porch to chase the dollar down the street... the same holds true for when the dollar chases the Big Dog back to the porch!

I've talked about Norway and Sweden being tarred with the same brush as the euro, and that hopefully, one day, and hopefully soon and not far away, traders will realize that Norway & Sweden are not Greece! But, until that day, we have this scenario to deal with.

Well.. G-8 world leaders met this past weekend, and they have all decided that the best course of action is to promote growth... Hmmm... Sounds Great! Global Growth all around, eh? Ahem, how did they say they would promote this growth? Oh, they didn't? Hmmm.... Now that sounds about right for G-8, schmee 8... But to come out and make all these statements about promoting growth without a plan, unless you count more stimulus, that has been about as helpful long-term as a broken crutch...

In China, Premier Wen, said that more stimulus for his economy was coming, and when Wen speaks investors listen... You see, China can dictate where the stimulus goes, and this gives them an advantage. We saw this in 2009, how the Chinese economy quickly reacted to the stimulus measures applied by the Gov't, and was the first to gain ground, while the rest of the world's economies were still stuck in the mud and yuck of the financial meltdown.

Wen said that "the government will give priority to maintaining growth while it continues to implement a proactive fiscal policy and a prudent monetary policy." Sounds like Central Bank parlance for "get ready for a truck load of stimulus"...

At least China has the treasure chest from which they can dig into to get this stimulus... What's the rest of the world going to do? Go deeper into debt... Spend to get out of debt... That's been the mantra of the U.S. and they've finally gotten their message across to the rest of the world!

How many times have we heard U.S. Treasury Sec. Geithner tell the Chinese that they need to be more like the U.S.? Too many, is the answer...

Ok... I've got to go on to something else here, there were thoughts going through my mind that would have seen me on the carpet if they had gotten to my fat fingers!

How about those U.S. Treasury yields? I bet you didn't think, like I didn't think that they could go lower, but they did! Well.. let's see how well those low yields hold up this week when the U.S. Treasury has to auction about $99 Billion of new bonds / debt this week, starting tomorrow...

And I had quite a few people last week ask me about Gold... (and Silver of course!) I told them that it was my opinion that Gold's rise from $250 to $1,200 was all about people realizing that Gold was a store of wealth, etc. the rise from $1,200 to $1,900 was all about the "anti-dollar trade"... since the dollar has become the darling of investors again, like we saw in 2005, 2008, and 2010, the need for the anti-dollar gets reduced, and thus the price of Gold being reduced...

Sure a lot of it has been "paper trades" the price manipulators must be smiling like Cheshire Cats... But that's not all of it, folks... people are hopping off the Gold & Silver bandwagon as if they just found snakes on the wagon! But, I personally will not sell! It's my personal opinion that these people jumping off the bandwagon are going to be sorry for doing so...

Well, today we have Fed Head Lockhart speaking, and he's been a proponent of more stimulus for the U.S. economy... Any kind of talk like that should be dollar negative today... but only slightly, as he's just one voice...

It's a pretty light week, data wise, here in the U.S. so the markets will really get to focus on the $99 Billion of new Treasuries that will hit the street!

Then There Was This... Last week, Chris was talking about economic reports and how they had all looked a bit better than recent data reports here in the U.S. And I got to thinking... I wonder what John Williams over at would say about the economic reports... For years now, I've talked about John Williams and, but thought that new readers might get a kick out of going to the website and seeing what John Willians says about how the U.S. accounts and reports its data... It's all lies and videotape!

To recap... the G-8 meeting called for growth... Calling all growth, calling all growth! The dollar is in the driver's seat these days, and that means the currencies and metals are getting sold like funnel cakes at a state fair.

Currenciest today 5/21/12... American Style: A$ .9845, kiwi .7575, C$ .9780, euro 1.2755, sterling 1.58, Swiss $1.0620, ... European Style: rand 8.3020, krone 5.97, SEK 7.1470, forint 233.05, zloty 3.3910, koruna 19.7585, RUB 31.23, yen 79.25, sing 1.2720, HKD 7.7640, INR 55, China 6.3219, pesos 13.78, BRL 2.0210, Dollar Index 81.20, Oil $91.86, 10-year 1.74%, Silver $28.45, and Gold... $1,592.60

That's it for today... congrats to youngest son, Alex, as he was elected as the President of his class... and only 3 more days of school this year... He's a happy camper! I've got to get this out the door, as I'm supposed to be at the doctor in about 20 minutes! I hope you have a Marvelous Monday!

Chuck Butler


EverBank World Markets



Posted 05-21-2012 12:32 PM by Chuck Butler
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