Renminbi Rises To Highest Level Since Peg Was Dropped.
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In This Issue.

* New Zealand 1st QTR Employment soars!..

* Aussie April Employment rises.

* Is China ready to widen trading band?.

* All the heavy lifting is done.. NOT!

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

Renminbi Rises To Highest Level Since Peg Was Dropped.

Good day. And a Tub Thumpin' Thursday to you! Uh-Oh, our Blues are in deep dookie folks, as they lost on home ice last night! UGH! The Defending Stanley Cup Champion L.A. Kings are proving to be very difficult to beat, and now lead the Blues 3-2 in their best of 7 Series, that now heads back to L.A.. This is BIG news here in St. Louis, folks, so sorry if you couldn't care less about hockey!

Well, yesterday's currency rally that we talked about in the early morning, remained in place throughout the day, and for the most part, has carried on in the overnight markets. The euro, which once again got within sniffing range of 1.32 yesterday before backing off, is flat this morning. It's been a pretty exhausting week for the euro, given the strong economic reports out of Germany t, and all the euphoria going on in the U.S. with the stock market. It's a case of: let's buy euros, no let's not buy euros.

I mentioned the U.S. stock market above. Isn't the stock market something? Never mind that it's all about smoke and mirrors, stimulus and ZIRP. When the train leaves the station, and builds up steam, you certainly don't want to be standing idle on the tracks in front of that train, and therein lies what's going on with moms and pops that feel this is wrong, but don't want to be standing idly on the tracks. And who can blame them? They can't get any gas, groceries or giggles out of their deposits in the bank or credit union. And besides, the Gov't, the Fed, and all the brokerage houses are all telling us that everything is hunky dory and not to worry about all the bond buying, stimulus, ZIRP, and deficit spending. I saw someone said it like this: "The thinking seems to be: things are okay for now, not great, but okay. We will worry about the other stuff later and cross that bridge when we get to it. But for now, it's equity buying time."

I hope you read the sarcasm in that statement. For we don't know where all this stuff I just mentioned is going to take us. I have a very educated idea as to where It takes us, but we just don't know. And that's uncertainty folks. Which is why, in my opinion, Gold should be soaring right now. But it's not, because not only are there "outside forces" suppressing the price of Gold, but there are also the Goldman Sachs, and Soc. Gens. Telling their clients to sell Gold, that all's right on the night in the world. HUH? Well, that's what they said, folks.

Speaking of Gold, it's flat to down a bit this morning, but that can turn on a dime as we all know too well. You know, there are a lot of people out there making the forecasts for a soaring Gold price, and I try to filter them down to the people I respect and believe their track record is good. Like the other day, when I featured analysis, author, James Rickards.

OK. The teeter totter that kiwi is riding shifted back to kiwi strength last night, after a night of seeing it get sold like funnel cakes at a state fair on the news that Reserve Bank of New Zealand (RBNZ) Gov. Wheeler, was selling the currency. Last night, New Zealand saw the color of their latest employment report, and with the unemployment rate falling from 6.9% to 6.2% in the first Quarter, and Employment rose by 1.7% in the quarter VS the previous quarter. WOW! Now that's a strong labor report!

But don't get too excited about the gains in kiwi overnight. I can see RBNZ Gov. Wheeler licking his chops that he gets to sell kiwi again, at profits! Remember, Wheeler made it perfectly clear on Tuesday night, that he had no problem going back to the selling window to sell more kiwi. I would simply steer clear here, for Wheeler and the markets are going to play this game of tug-o-war. and no reason to get caught in the middle of their game.

The Aussie dollar (A$) also printed their employment data but for Australia it was just a monthly report covering April. Employment rose at a faster clip than forecast in April, with the consensus at 11,000 and the actual printing at 50,100, and the Unemployment rate ticking down to 5.5% from 5.6% in March. This data has also pushed the A$ higher this morning, and now the rate cut on Monday night seems to have gone out of the rear view mirror.

And in China, the People's Bank of China (PBOC) raised the fixing level for the renminbi / yuan to the highest level since dropping the peg to the dollar in July of 2005. Remember, when I told you a couple of weeks ago, that China had mentioned that the trading band for the currency needed to be widened? Well, it looks like the currency is now bumping up against the top end of the band, so a widening should be coming soon. And with inflation rising again in China (latest print was +2.4% up from the previous print of +2.1%) a stronger currency is needed to combat that inflation.

OK. Madness.. and not the 80's rock group (sorry Rick!) Madness is what's going on these days in my opinion. I've got a real doozy for you in the Then There Was This section of the letter today. And that has Madness written all over it, and so does this which I came across yesterday. It was a story in the Washington Post, and the headline reads: "As Red Ink Recedes, Pressure Fades For Budget Deal". OK. if you're like me, and I'm sorry for that, but you're probably scratching your head right now, and saying, "What kind of stupidity does that sentence reek of?"

The premise of the article is that after 4 years of trillion dollar deficits, Federal Revenue is up and spending is down, so now the lawmakers that held trump cards in a summer deal on the budget, have lost their bargaining chips. What? You're telling me, that just because tax increases went into place, and the automatic budget cuts are beginning to hit, that now we don't have to do the heavy lifting any longer with the budget? Madness I tell you, simply Madness!

Why. and this is just little old me thinking out loud here, but why wouldn't we take this as an opportunity to really make a difference for the future? Not just sit back and say, "hey, we've done enough, no need to keep working".

That's the kind of stuff that drives me crazy, folks. And I appreciate the ability to vent right here in the Pfennig. Hopefully, the venting, brings things to you, that you don't normally hear about, and should be thinking about. Let's call our representatives and tell them that now is not the time to sit back and think they've done enough!

Speaking of Madness. I haven't talked about Japan lately. And there's always madness of some kind going on there! And today is no different! The Elliott Wave people are thinking that the yen has gone as weak as it's going to go, for now, and that a rally back to 91 (currently near 99) is in the charts. I found this on the Bloomie this morning, and thought. See, this is where I just don't agree with chartists. Throw the fundamentals out the window, and even with the bond buying going on, and Kuroda demanding a weaker yen, the charts show that yen is going to rally. Oh well, I guess we'll have to see, but if you're an Elliott Wave person, this is your shot.

I saw a great cartoon yesterday, that was titled: Currency Wars: Who's Winning? And it has the U.S. on one side of the fence with piles of dollars, and China on the other side of the fence with piles of Gold. Well, I know who I would proclaim as the winner! And speaking of the "Big Paper Sale" last month. The more I think about that, the more I think that maybe, just maybe, the players that put on that Big Paper Sale, shot themselves in the foot with the size of the sale. They truly unleashed a flood of physical metal buying that has been something to behold.

Remember, for the past couple of years, I've told you repeatedly, that the only way we can stop this price manipulation is to buy physical metals. For, we know all too well, that the Regulators and the people that are supposed to be OUR watchdog, is turning away from this. What? Was it 5 years ago now that the CFTC decided to "look into manipulation"? 5 years?

OK. Let's go to the Big Finish, for my blood pressure is rising to dangerous levels!

Then There Was This. Here we come again, ooh, ooh, ooh, catch us if you can, ooh, ooh, ooh Time to get a move on ooh, ooh, we can run with all of our might.

Catch us if you can.. Catch us if you can.

I read the following story on CNBC's website yesterday, and then I couldn't get that great Dave Clark 5 song out of my head! I think you'll see why, here: "Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young said in a survey Tuesday.

One in five of almost 3,500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said.

In addition 42 percent of board directors and top managers questioned in the fraud survey said they were aware of "some type of irregular financial reporting.

And despite scandals and regulatory failures in the wake of the credit crunch, almost a quarter of top financial services staff surveyed said they were aware of manipulation, and almost 10 percent of all staff said their companies had understated costs, overstated revenues or used unprincipled sales tactics."

Chuck again. Now do you see what I'm talking about? Oh, and you noticed that the story didn't mention the U.S. and you think that stuff isn't going on here? Think again, my friend. And Didn't we experience all these Corporate Scandals at the turn of the century? Are we going there again? Sure looks that way to me!

And add to this another story I found in the WSJ that plays well here. "Former Enron President Jeffrey Skilling and the Justice Department reached an agreement that would cut his federal prison sentence to as few as 14 years from 24 years."

For those of you that have forgotten about the Enron Corp Scandal, I suggest you Google it, and refresh your memory, cooking the books was the rate 13 years ago. And it'll be coming to a company near you, soon!

It's not as if, these companies don't have a mentor to learn from. The U.S. Gov't has been cooking books since the mid 90's.

To recap. The currency rally from yesterday morning held throughout the day, and carried on in the overnight markets. The Aussie and kiwi dollars are the high flying currencies this morning, after both countries posted very strong Employment data, for April in Australia, and for the 1st QTR in New Zealand. The euro is flat to down a bit this morning, but did get good results from a Spanish bond auction this morning. China's renminbi / yuan reached a high VS the dollar since the renminbi was removed from the peg to the dollar in July 2005. And we've done enough so there's no reason to work any harder at reducing the budget deficit.. NOT!

Currencies today 5/9/13. American Style: A$ $1.0230, kiwi .8460, C$ .9965, euro 1.3140, sterling 1.5560, Swiss $1.0685, . European Style: rand 8.9805, krone 5.7450, SEK 6.4980, forint 223.05, zloty 3.1390, koruna 19.6310, RUB 31.11, yen 98.80, sing 1.2285, HKD 7.76 INR 54.24, China 6.1925, pesos 11.98, BRL 2.0050, Dollar Index 81.95, Oil $96.27, 10-year 1.78%, Silver $24.06, and Gold. $1,469.56

That's it for today. Do you have any friends that you keep in touch with that you went to kindergarten with? I do. and I'm going to meet up my oldest, in terms of years known, friend today. Robin and I were best friends during our high school years, he played quarterback, and I was the only receiver he trusted to throw the ball to. I'm looking forward to catching up with him, as it's been about 3 or 4 years since we last saw each other. My beloved Cardinals come home from a successful road trip, hopefully the weather will turn warmer for this home stand. And I got to go see Delaney Grace's pre-school spring program last night. Those little kids are so cute, waving to their parents and grandparents. Delaney was a duck, that got to shake he tail feather, so cute! Hey! Early notice to you. Sunday is Mother's Day. Make sure you take care of your mother! Whew! I almost got emotional thinking about my mom, who I lost 15 years ago. OK. so, I'll have more on that tomorrow. now, go out and have a Tub Thumpin' Thursday!

Chuck Butler
EverBank World Markets

Posted 05-09-2013 10:24 AM by Chuck Butler
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