One In 5 Households Now On Food Stamps.
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In This Issue.

* U.S. GDP disappoints.

* Currencies & metals rally.

* Kiwi gains VS dollars U.S & A$.

* PIMCO likes Norwegian krone fundamentals..

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

One In 5 Households Now On Food Stamps.

Good day. And a Marvelous Monday to you! Well, I told you on Friday, that the rain was coming our way, and we had a rain soaked weekend, but, I didn't know it was going to be so darn cold, and raw. We're almost to May, folks! This is not supposed to be what the weather is like for this time of year! But, all my complaining won't change anything, so I just need to settle down, and take it one day at a time, eh?

Sort of like what we've done with the Eurozone for almost a year now, for it was about a year ago, that I started telling you that the relative calm was coming over the Eurozone, and that the threat of a major sovereign default was dissipating. But, we had to take it one day at a time, for around every corner there lurked a debt ridden country and their problems obtaining financing. And now one year later, not much has changed in the Eurozone. The problems have moved from Italy and Spain to tiny Cyprus, but no matter how time Cyprus is, these occurrences remind the markets that the Eurozone and euro is not out of the woods.

Speaking of Italy. it now appears that their political mess is going to get worked out, and to reward them for working that out, Italy's bond auction today saw their borrowing costs drop to the lowest level in over 2 years! This news has really goosed the euro by about 1/2-cent this morning. And with the euro moving higher, it allows the other currencies to also get off the porch and chase the dollar down the street.

OK. The markets really were not happy with Friday's U.S. data and the reaction or response to Friday's print of 1st QTR GDP, which did not meet the consensus for growth at 3.2%, instead printing at 2.5%... Now. 2.5% growth is far better than the .4% that the 4th QTR printed. Right? Yes! But is it sustainable? Well, in my opinion, no. I think what you have to do, is look under the hood here. I looked at something called domestic final sales, which to me is nothing more than a measurement of domestic demand, and that component was up 1.9% in Q1. And that's right in line with what it has been for the past two years! So. Inventory accumulation was up big. Is any of this registering with you like it is me, that it's not sustainable? Add in the increased taxes on consumers, and the proof that the economy is already slowing down, from recent economic data, and I think you'll agree that this strong showing (relative to what we've seen in the past 5 years) is a one-and-done.

And maybe that's why the markets were not enamored with the number. But, the more likely reason was that it was just like the reaction to a stock of a company that has good earnings, but. doesn't meet expectations. The markets expected 3.2% growth, and they didn't get it.

On Friday morning, I told you that the Chinese renminbi / yuan had been allowed to appreciate to a record level (a 19-year high VS the dollar). OK. So there I was reading Dennis Gartman's letter on Friday morning, that always arrives just as I'm sending the Pfennig to the legal beagles for approval, and I see he's talking about the Chinese renminbi / yuan. Let's listen in. "We note that the dollar is making new multi-year lows relative to the Chinese renminbi. The Obama Administration, just as the Bush Administration did all too often during its tenure in office, has complained bitterly that China's currency is "undervalued" and thus gives China a huge advantage in global trade, but clearly that argument is losing its validity. if it had any to begin with. Since the spring of last year, the renminbi / dollar rate has gone from 6.40 to 6.1650, or a 3.7% increase in value. In a world of foreign exchange, a sustained movement over the course of one year of this sum is material. However, we shall expect to hear nothing from the Treasury, or from Commerce, regarding this shift and will instead hear that China has to do even more to stabilize global trade."

I thank Dennis Gartman for allowing me to use his excellent view of how we treat China, even though they have gone about allowing their currency to gain VS the dollar for the past 8 years (except 2008). I read Dennis Gartman almost every day.

OK. So. The Currencies and metals are stronger this morning. Again we've had to take this stuff one day at a time for some period of time now, given the way the markets change their minds on a dime. One day, they believe something, and the next day something else. And then when we get down to an annual review, there hasn't been much movement at all. But, in reality, for a diversified investor that's using currencies and metals as a diversification tool to have a portion of their investment portfolio outside of the dollar, not much movement is like manna from heaven.

Gold is up $10 this morning. You should have seen the way Gold flip-flopped from positive ground to negative ground and back on Friday. Or maybe you're a Gold watcher, and you saw it. I bet if you're a Gold watcher, you're a Gold watcher, watching Gold go around. (did you start singing? I bet you did!) Then you were worn out completely by the end of the day! I have a story for the TTWT section in today's letter, that plays well with just why investors look to own Gold. But you'll have to wait, that is unless you skip ahead, because I've got more to talk about this morning before I head to the Big Finish.

Well. Looky at the New Zealand dollar / kiwi this morning. Trading over 85-cents! WOW! The kiwi has been gaining not only VS the U.S. dollar, but also against its kissin' cousin across the Tasman, Aussie dollar (A$). This HUGE move by kiwi was fueled by the Reserve Bank of New Zealand (RBNZ) leaving rates unchanged but talking hawkish, and. the slower than expected U.S GDP report last Friday. One of the reason kiwi is gaining against A$'s is that as we've talked about for some time now, the markets are pushing the Reserve Bank of Australia (RBA) to cut rates, while the same markets believe the RBNZ has room to hike rates. Right now there's a 50 BPS spread in official cash rates (that's 1/2%) in favor of the A$, but that spread could be narrowing as we move through 2013, and that's what's got kiwi moving against the A$.

Of course, we've talked about the RBA and the markets will to have them cut rates this year, and Chuck's point of view that a rate cut is not needed in Australia. So, we don't have to get into that again, but just remember, that I've put it all out there for everyone to view, and in my opinion no rate cut is needed in Australia. We'll see if the RBA has the intestinal fortitude to stand up to the markets.

The A$ is up by 1/2-cent this morning, as it gets dragged along with the rest of the currencies. I say dragged along because the threat of a rate cut is hanging over the A$ like the Sword of Damocles right now. And the fact that the IMM futures positions showed a 20,000+ drop in long A$ positions last week. The rest of the currencies only had what I would call, modest gains or losses from the previous week's holdings. So, the A$ is going to have to work hard to get through this gauntlet of bad news.

Well. I saw this story headline flash across my screen this morning, and since it caught my eye, I was assured that you would want to see it too! HA! Here's the headline: "PIMCO Makes AAA Rated Norway in Retreat the Favorite". So, the story goes on to talk about how the Norwegian krone hasn't really performed well this year, but that hasn't stopped PIMCO from taking a flyer on the krone. Let's listen in to Thomas Kressin, head of European Foreign Exchange at PIMCO. "From a relative domestic fiscal position and relative interest rate position, Scandinavian currencies still look appealing. We are reconsidering entering a long position." And then the boys and girls over at Citigroup issued a statement that "the krone is more attractive than the euro"

Now, doesn't that ring a bell? Which reminds me of an old joke. Any way. Isn't this the stuff I've been telling you for some time now about the Norwegian krone? That one day, the markets will wake up, have a V-8 moment, and realize that the krone's fundamentals are far better than those of the euro, and the krone should not be tarred with the same brush used on the euro? I certainly hope so, because I think I've said it and written it so many times that I'm sure some people think I've lost it, for I keep repeating myself.

Well, the U.S. data cupboard gets restocked today, with two of my fave reports. Personal Income and Spending. Right now, the "experts" believe that Personal Spending will be flat for March, and given the rot on the economy's vine starting with March, I would have to think the "experts" will get it right this time. That could mean that Personal Income is greater than Spending, which doesn't happen that often folks.. But it certainly would be great if it did!

The rest of the week is chock-full-o-data, ending with the Jobs Jamboree on Friday. Between now and Friday, we'll see stuff like the S&P Case/Shiller Home Price for Feb (such old data, eh?) Consumer Confidence, the ISM Manufacturing Index, Vehicle Sales, and a Fed FOMC rate decision on May 1st. So, buckle up, this could be like Mr. Toad's Wild Ride this week.

Then There Was This. This is the story that I said earlier today played well with the reason to look to own Gold. This was sent to me by colleague, Aaron, who found it on The latest available data from the United States Department of Agriculture (USDA) shows that a record number 23 million households in the United States are now on food stamps.

The most recent Supplemental Assistance Nutrition Program (SNAP) statistics of the number of households receiving food stamps shows that 23,087,886 households participated in January 2013 - an increase of 889,154 families from January 2012 when the number of households totaled 22,188,732.

The most recent statistics from the United States Census Bureau-- from December 2012-- puts the number of households in the United States at 115,310,000. If you divide 115,310,000 by 23,087,866, that equals one out of every five households now receiving food stamps.

As previously reported, food stamp rolls in America recently surpassed the population of Spain. A record number 47,692,896 Americans are now enrolled in the program and the cost of food stamp fraud has more than doubled in just three years."

Chuck again. Sad but true, eh? And the Gov't keeps recruiting people to enroll in the program. Do I need to say more about that's not how I was raised, or my dad, or my grandfather? Oh well, it is what it is, right?

To recap. The Currencies & Metals are stronger this morning as the tide has shifted back in their favor after a weaker than expected GDP print on Friday. Kiwi is outperforming the A$ these days, as rate outlooks for the two country are narrowing the spread that currently exists. PIMCO thinks the Norwegian krone is a buy, and Citigroup likes the krone's fundamentals. And Dennis Gartman shares his thoughts with us on China.

Currencies today 4/29/13. American Style: A$ $1.0345, kiwi .8555, C$ .9860, euro 1.3085, sterling 1.5525, Swiss $1.0650, . European Style: rand 9.00, krone 5.8180, SEK 6.5360, forint 228.75, zloty 3.1630, koruna 19.6495, RUB 31.08, yen 97.75, sing 1.2340, HKD 7.7615, INR 54.24, China 6.2208, pesos 12.09, BRL 1.9985, Dollar Index 82.16, Oil $93.35, 10-year 1.66%, Silver $24.41, and Gold. $1,476.12

That's it for today. Well, after beating the #6 and #5 teams in the state Thursday & Friday nights, Andrew and Alex's water polo team ran into a real problem playing the #1 & #2 teams on Saturday. But they finished 4th in the Tournament, and head into the state playoffs this weekend. Alex did score 3 goals this weekend, so good for him! It was so rainy and cold this weekend, that it didn't seem like a weekend at all! Our Blues start the playoffs at home tomorrow night against the defending Champion, LA Kings. Go Blues! It was spooky driving along our river road the other day, with the flood water lapping up against the curbs. But! I think it's supposed to dry up and warm up this week! YAHOO! And with that. I hope you have a Marvelous Monday!

Chuck Butler
EverBank World Markets

Posted 04-29-2013 12:02 PM by Chuck Butler
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