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In This Issue.

* Euros & A$'s give back Monday's gains.

* Gold attempts to rally 3-consecutive days.

* U.S. Manufacturing Index climbs back above 50.

* China's Manufacturing Index remains above 50 .

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

China & Russia Build Gold Reserves.

Good day. And a Wonderful Wednesday to you! Tomorrow is Independence Day here in the U.S., which should be celebrated by all accordingly! And get those flags out! Also, be very careful with fireworks. But have fun out there! It! Tomorrow is the 4th of July! I saw a quote by the well respected analyst Dennis Gartman that I'm going to borrow here. It's our Independence Day celebration that no matter how many time we ask, we just can't seem to get the British to join us in celebration. - Ha!

I'll be taking Friday off, making it a 4-day weekend, so either Chris or Mike will have the conn on the Pfennig that day. The dollar is having its way with the currencies this morning, as its pride swells heading into the 4th of July. Chicago's great song, Beginnings, is playing right now, which is a great song to start the letter with!

Well. As I just said, the dollar is having its way with the currencies this morning. The euro which has been pretty stalwart in its attempt to remain strong, has been hit by a double whammy this morning, of a weak Manufacturing Index, and confirmation of the Finance Minister in Portugal resigning. The relative calm of goings on in the Eurozone has been the underpin for the euro in recent months. I don't think the move this morning below 1.30 is something that will have staying power. However, I'm sure everyone in the Eurozone knows all too well that a euro around 1.20 would do wonders for that Manufacturing Index. I'm not saying the euro is heading to 1.20, I'm just making a point that has been made here in the U.S. for over 11 years now, and that is a weak currency goes a long way toward keeping the wheels of manufacturing spinning..

By the way. The Manufacturing Index in Germany alone was 50.4. The Eurozone as a whole was 48.3. Just for comparison purposes. China's was 50.3 and the U.S. was 50.9. But, I would say that manufacturing is far more important to the economy as it stands now, in China and Germany than it is in the U.S. I'm not saying that this is the way it should be, I'm just saying that right here, right now, it's the way it is. The U.S. has become a nation of servicing, not of manufacturing, which we once were and proud to say!

Ok. With the dollar taking liberties with the currencies this morning, my eye quickly moved on to other things to see how they were performing. And the price of Gold is up $3 this morning, not bad, considering the losses in euros, Aussie dollars (A$), etc. The price of Oil pushed past $100 yesterday, and is trading at $101.20 this morning. I would think this is just a by-product of the holiday weekend. You know, people traveling by car, etc. So, the dollar isn't gaining against all anti-dollar assets this morning. No wait! You dolt Chuck, Let's not forget that Egypt is a hot spot once again, and anytime we've seen things heat up in the Middle Ease, the price of Oil rises.

The A$ is reeling this morning on a weak May Retail Sales report and comments from Reserve Bank of Australia (RBA) Gov. Stevens, who said made the point of letting everyone know that the "board deliberated for a very long time" at their meeting Monday. OK. I told you yesterday that a weak Retail Sales report would not be good for the A$, as the rate cut campers would be crawling out of the walls again, and that's what we have this morning. I told you that the RBA had been a thorn in my side for the past year or so, and they will continue to be a thorn in my side when they meet next month and cut rates again. But that won't be all folks. Unless the economy turns around in quick fashion, the RBA will cut rates again before year-end.. And none of this will be healthy for the A$... I'm just saying.

Sweden's Riksbank met earlier this morning (for us, afternoon for them) and did indeed leave rates unchanged as I said they would, given the recent strong economic data. And the Swedish krona is one of the few currencies that is holding up against the dollar this morning. As well it should given the fundamentals. But in reality, fundamentals just haven't had a chance to be the straw that stirs the drink for some time now.

The Norwegian krone is another currency holding up against this strong dollar today. And one would think that the krone is getting a lift from the rise in the price of Oil. That's not the case with the other "petrol-currencies" that include: Canada, Brazil, Mexico, U.K. Russia, and so on. But there IS a difference between Norway and these other "petrol-currencies". And that is, drum roll please. excellent fundamentals.

OK. All you diversification people, you're going to have to become very deaf to what is being said. If you remember 2005, 2008, or 2010, we had the same thing going on in the currencies. The dollar gets some strength, and the calls for a multi-year strong dollar trend grow louder and louder. And each of these times, the calls for multi-year strong dollar trend (in honor of my friend, the Mogambo Guru the multi-year strong dollar trend is now referred to as the MYSDT) they eventually fade away. I call these dollar moves: circuit breakers. The markets get all the Johnny-come-latelys to panic and bail, then they scoop up the cheap currencies and make profits as the currencies rise again.

You can either choose to bail and go back to dollars, which hasn't worked out so well in 2005, 2008 and 2010, and then hold dollars that everyone knows have to be made cheaper eventually to pay our bills, or. you can batten down the hatches and ride out the storm.. Yes, there's always a chance that this time might be different, and the dollar could be getting ready to go a MYSDT. But like the flight attendant on the Geico commercial says to the pig seated in first class. "I'll believe that when pigs fly".

The U.S. economy might be getting a lift on all fronts from the announcement that the 2010 Affordable Care Act requirement that companies with more than 50 full-time employees provide health insurance, is being delayed for a year to 2015. (it was supposed to begin in 2014) . OK. I see this as a good thing for the economy, as small companies on the cusp of 50, wanting to hire people can now go ahead and do so. Of course my Spider Sense is tingling here folks. And I'll just say that I find it interesting that the implementation of this was delayed until after the mid-term elections. I'm just saying. Of course the other provisions that the majority of Americans don't want, will still begin next year.

No matter how much I try to not think about Gold, my mind keeps going back to the shiny metal. So, I go to research and try to find out more about the price drop, the reasons to remain optimistic, and so on. I did come across some research that shows that the last time Gold reached this same level VS the Chinese renminbi, that the Chinese scooped up a truck load of Gold, and the next upswing in the price of Gold was on its way. Of course things in China were a little different in 2009 than they are now. But, given the choice between spending reserves on Gold or the slowing economy, I would choose Gold. And I would like to think that the Chinese leaders feel the same way!

With the U.S. closed tomorrow for the Independence Day Holiday, the Initial Jobless Claims for last week will print today, instead of tomorrow. We'll also see the color of the latest Trade Deficit. The real focus today though will be on the ADP Employment Change data for June. This month, ADP says that 160,000 jobs were created in June. And like I've said before, I would certainly use the ADP data before I would count on the BLS (Gov't) data. The ADP report for May said that 135,000 jobs were created, while the BLS data said 178,000. The swings in previous months tended to be wider.

And, since I'll be gone on Friday, that brings us to the Jobs Jamboree. Right now, the experts have forecast that 175,000 jobs were created in June, and that the Unemployment Rate will fall from 7.6% to 7.5%... Of course they say that! Remember, that without the BLS adjustment to the jobs number the last two months, that they would have printed a negative jobs # each month. It's all lies and videotape folks. But. the media and the markets get all lathered up about this stuff, and so we must follow it..

For What It's Worth. OK. You all hear from me all the time about how I don't agree with the Fed Head's call that the economy is strong enough to stand on its own. When I saw that PIMCO's Mohammed El-Erian, of whom I've quoted before, was talking about the Fed being "overly optimistic" I thought it would be good for everyone to see that I'm not the only one out there crying wolf. I found this on Moneynews.com and It's Mr. El-Erian talking about the economy.

"The Federal Reserve's economic forecasts are probably too high. If the forecasts prove correct, which, unfortunately, we question given current economic realities, the Fed would have a positive reason to exit gradually from its prolonged highly experimental monetary policies.

It is also apparent that the Fed is getting more concerned about the 'costs and risks' of its policy experimentation.

While the rate increase may have created some bargains among Treasuries, investors should also note that markets remain vulnerable to technical overshoots and, thus, quite a bit of volatility."

Chuck again. Yes. I seem to recall another time or two that the Fed thought the economy was ready only to have to go back and implement another round of QE. Remember Green Shoots? It's just not ready for primetime folks. But then maybe it would be a good thing, to finally get the Fed out of the economy, let it fall on its face, crash and burn, and then start all over again, for THAT is the say economies are supposed to work, instead of having central banks insure that they don't.

And since this is the last workday for me this week, I have a funny for you. from Jay Leno. "The Girl Scouts announced that their pension plan has a $347 million deficit. The Girl Scouts are $347 million in debt, so in addition to teaching girls about camping it also is preparing them for careers in government."

To recap. The dollar is stronger this morning against most currencies, with only the Swedish krona and Norwegian krone, the pound sterling, and kiwi on the green side of the ledger VS the dollar. The euro has slipped below 1.30, as it received a double whammy this morning consisting of a weak manufacturing index and confirmation of the resignation from the Portuguese FM. The A$ is getting whacked again on the weak Retail Sales and comments from RBA Gov. Wheeler

Currencies today 7/3/13. American Style: A$ .9090, kiwi .7755, C$ .9490, euro 1.2955, sterling 1.5270, Swiss $1.0535, . European Style: rand 10.0825, krone 6.12, SEK 6.7190, forint 227.25, zloty 3.3460, koruna 20.06, RUB 33.26, yen 99.45, sing 1.2725, HKD 7.7540, INR 60.21, China 6.1803, pesos 13.11, BRL 2.2540, Dollar Index 83.38, Oil $101.20, 10-year 2.43%, Silver $19.83, Platinum $1,368.88, Palladium $685.30, and Gold. $1,254.55

That's it for today. Another loss for my beloved Cardinals last night, it appears that the wheels are about to come off their great start to the season. I sure hope not! With tomorrow being Independence Day / 4th of July, it should be sunny and hot! But NOOOOOOOO! It's raining and cool. I'm so tired of rain! Last summer it was drought. Oh well. we carry on. And here's an Independence Day poem by a guy named David Todd that I thought was on key.

As the sun begins to set

The children become antsy

To hear the crackle, sizzle and pop And see something fancy...

It's that time of year for family fun and frolic With warm summer days and of course something alcoholic...

As we celebrate this fourth

Viewing spectacular shows in the sky

Lets not forget that its

Independence Day

Independence

Lets not give it away,

...Don't let Freedom die.

Now, let's go out and make this a Wonderful Wednesday, and celebrate our Independence Day!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837





Posted 07-03-2013 11:41 AM by Chuck Butler
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