Daily Pfennig : BOE

Dollar remains in a narrow trading range vs. most currencies . . .

Chuck Butler — Wed, 21 Mar 2012 15:36:00 GMT

.........But First, A Word From Our Sponsor..........

Foreign exchange for business - the way it should be

Is your business among the many small-to-midsized businesses looking for a better alternative for sending or receiving international payments? Well, solution found. With EverBank, a proven global market leader, your business will benefit from:

*A wide selection of FDIC insured (2) foreign currency accounts

*Multiple currencies available to help minimize foreign exchange conversions

*Expert support from a dedicated World Markets team backed by over 30 years in the field

Learn why we're the better solution for your business.

Call 855.417.4843. Or visit https://www.EverBank.com/business/foreign-exchange.aspx FOR MORE INFORMATION AND IMPORTANT DISCLOSURES.

In This Issue.

* Dollar stays in a fairly narrow range. . .

* Euro dips but then recovers. . .

* BOE policy makers are split. . .

* Physical demand for gold drops as Indian jewelers close in protest. . .

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

Dollar remains in a narrow trading range vs. most currencies . . .

Good day... And welcome to Spring. I should have used that opening yesterday, as the vernal equinox was yesterday. It feels like we missed spring totally and just went right to Summer with temperatures remaining in the 80's here in St. Louis. With the days growing longer I was actually able to get home and enjoy some of this warm weather last night. But these warm temps during spring always seem to bring thunderstorms with them, and we are expected to see some roll in tonight and tomorrow.

The currency markets were fairly calm yesterday, with the dollar pretty much unchanged from the levels I reported in yesterday's Pfennig. There really wasn't much new information to push the dollar one way or the other, and the news scrolling on the currency trading screens mainly rehashed concerns over China's slowdown.

As I reported yesterday, a couple of the big raw material suppliers to China warned the markets that they were reducing their projections of demand as China's economy slows. This had an especially dramatic impact on the currencies of commodity exporters such as Australia, Canada, and Brazil. Concerns over China also spilled over to the high yielding currencies such as the New Zealand dollar and South African rand as traders worried global growth would slow. But the initial sell off of these commodity based currencies reversed later in the day and this reversal continued overnight bringing all of them back to levels they were trading at before the Chinese growth worries hit the markets.

The euro traded lower yesterday morning, losing against both the US$ and Pound Sterling as data showed European economic growth is continuing to slow. The German Statistics Office said Producer Prices climbed just .4% in February compared to a .6% rise the month before. The median estimate from analysts taken by Bloomberg predicted a .5% increase, so the drop was greater than expected. The European economies are struggling to stay in a growth mode, and economists are almost unanimous in their opinion that Europe will slip back into a recession later this year.

The euro recovered overnight, and reached the highest level in almost two weeks against the greenback as Greece won approval for their new bailout. Traders are also expecting reports to be released tomorrow to show German services and factory output expanded last month. Economists predict the German Purchasing Manager's Manufacturing index will increase from 50.2 to 51 and the Services index increased from 52.8 to 53.1. Any reading above 50 indicates expansion.

Numbers released in the US yesterday painted a more positive picture as housing starts stayed near a 3 year high. Builders broke ground on just under 700k new homes in February, in line with forecasts. Another report showed building permits, a more forward looking piece of data, climbed to the highest level since October of 2008. Permits increased an impressive 5.1% in February to 717k. In addition to the good numbers from February, January's data was also adjusted higher. I'm sure the warmer weather which has gripped the nation helped push these numbers higher, and we will still need to see these permits turn into actual construction, but the data are definitely a positive sign for the housing industry.

While the new home construction looks to be moving in a positive direction, there is still a huge overhang of existing homes for sale. Today we will see if the existing home sales can match the impressive pace of new home construction. Existing home sales were up 4.3% in January, but are only expected to rise .9% this month. Consumers who want to purchase all of these homes need to be able to get financed, and the cost of those loans have been rising. Another report released this morning showed Mortgage applications fell 7.4% during last week, a direct reflection of the rising interest rates which could put an abrupt halt on any housing recovery.

Interest rates have moved higher as investors have moved their money out of the treasury markets and back into equities. The gains in the equity markets have been at the cost of higher rates. Maybe that is why all of the Fed Heads have been sounding a more cautious tone lately. While they like to see the equity markets moving higher, they can't have interest rates shoot skyward as higher rates would definitely crimp our nascent recovery.

Barclays Capital sent a note to clients which said US growth will keep pushing the dollar higher in the short term. "US growth has surprised on the upside and the recovery seems to be on its way, suggesting structural issues that linger on its horizon are likely not as badly perceived by markets." The note also notes that the recent increase in the price of oil will not have as dramatic impact on growth in the US because of a decrease in our dependence on foreign supplies. Another report by RBS Securities suggested investors should sell Swiss francs and purchase the US$ as US economic data will continue to push the dollar higher. RBS expects interest rates in the US to move higher, combining with stronger than forecast employment and manufacturing data to help move the dollar higher. While I don't necessarily agree with these dollar bulls over the longer term, I can see where the dollar may climb higher on the short term.

The minutes of the BOE meeting held earlier this month were released today and showed some BOE policy makers were pushing for another increase in stimulus measures. Two policy makers pushed for a 25 billion pound increase in the target for bond purchases which the UK Central bank is using to pump liquidity into the markets. The seven remaining members voted to keep the bond purchase program unchanged. The pound dropped after the release of the minutes, as currency traders are worried that some policy makers feel additional stimulus is necessary to keep the UK economy from back pedaling. UK Chancellor of the Exchequer George Osborne will release his annual budget today which could cause some additional volatility for the pound sterling. A report released yesterday showed Britain's budget deficit almost doubled in February as spending surged and tax revenue fell. Osborne is clinging to his goal to erase UK's structural deficit by 2017, citing the ratings agencies threats to strip Britain's top credit rating if they don't lower the deficits.

Investors took advantage of the recent drop in the price of the Brazilian real, making it the best performing currency vs. the US$ yesterday (albeit with a gain of just .33%). The currency has lost over 5.5% in the past month as government officials continue to implement measures designed to reduce the value of the real. This currency has traditionally been one of the most volatile currencies, and the tug of war between the Brazilian government and currency investors certainly seems like it will keep the volatility high.

I haven't written much about the precious metals, mainly because there really hasn't been much to talk about. Gold has stuck within a fairly narrow $30 trading range over the past 5 days, and doesn't seem to have any real direction. I would have expected yesterday's worries over Chinese growth to push gold higher as it is typically sees 'safe haven' purchases. But we didn't see any push into the metals, and as I reported the market sentiment turned around as the day progressed. A report which was shared by our metals traders indicated there was no physical demand in the markets leaving them to trade in this tight range. One reason may be that gold jewelers in India have been closed for the past 5 days in an organized protest to demand the withdrawal of increased taxes announced last week by the Indian finance minister. India is one of the world's largest buyers of physical gold, so this shutdown definitely could have caused this drop in demand. It will certainly be interesting to see what their reopening will do to the price of gold tomorrow.

Then there was this.

Chuck sent me a story which someone forwarded to him while he is enjoying Spring Training down in Jupiter FL. It talks about an upcoming summit of the BRIC nations on March 28 in New Delhi. Apparently the host country, India, is going to try and set up a joint bank similar to other existing supranational authorities (IMF, World Bank, .) in order to give the group more power in global decision-making.

What I find interesting is that the IMF and WorldBank were set up by the powerful Western nations in part to help finance emerging nations such as the BRIC countries. But the tables have now turned, with these same Western nations looking to countries like China for their financing needs. So these BRIC nations are looking to set up their own bank, using the joint funds to help finance projects within their countries or in other developing nations.

"Basically India, China and perhaps Russia are trying to show off their economic clout; they are trying to demonstrate to the west that they can do without them. Above all they need freedom from western financial influence."

This is just another sign that a financial power shift in underway. You can read the entire article which was authored by Kester Kenn Klomegah at the following link: http://ipsnews.net/news.asp?idnews=107115 .

To recap... The dollar traded in a fairly narrow range, increasing yesterday morning only to drop back down towards the end of the day. The housing data was positive, showing a dramatic increase in the number of housing permits. But higher rates have decreased mortgage apps. BOE policy makers were split, with 2 voting for an increase in stimulus. The UK budget will be released today, and cuts will be needed to reduce their rising deficits. Gold has been range trading but the return of Indian jewelers could make an impact in the markets as they have been closed in protest for the past 5 days.

Currencies today 3/21/2012. American Style: A$ $1.0472, kiwi .8170, C$ $1.0106, euro 1.3258, sterling 1.5878, Swiss $1.0994. European Style: rand 7.6163, krone 5.7396, SEK 6.7131, forint 219.59, zloty 3.1279, koruna 18.5248, RUB 29.1995, yen 83.94, sing 1.2634, HKD 7.7644, INR 50.5462, China 6.3225, pesos 12.6537, BRL 1.8147, Dollar Index 79.485, Oil $106.54, 10-year 2.37%, Silver $32.14, and Gold $1,654.02.

That's it for today... As I said in the opening, I was able to get out and enjoy some of our warm weather last night. The air in my backyard was full of wonderful smells as the Bradford pear, Redbud, and Cherry trees are in full bloom and combine with our Lilac bushes to create some pretty amazing scents. I sure love the spring time! Hopefully everyone will have a Wonderful Wednesday, and take some time to get out and smell the flowers! Thanks for reading the Pfennig!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Austerity package approved, but EU still needs to see more from Greece...

Chuck Butler — Fri, 10 Feb 2012 17:17:18 GMT

.........But First, A Word From Our Sponsor..........

Are you getting the most from your retirement investments? EverBank Wealth Management, Inc. may be able to help.

Tax season is the perfect opportunity to take a fresh look at your plans for retirement. Do you have an IRA or old 401(k) that may be under performing? Now is the time to make sure you're on track to meet your future goals.

EverBank Wealth Management's team of seasoned financial advisors is well-equipped to determine if your investments are adequately designed for today's economy to meet your unique long term goals.

It all starts with a conversation(SM) ... 877.613.EVER (3837)

http://www.EverBankWealthManagement.com

EverBank Wealth Management is an investment adviser registered with the Securities and Exchange Commission. It is not a bank. Investment solutions offered through EverBank Wealth Management are: NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE.

.....................................................

In This Issue.

* Greeks continue to hold markets hostage...

* Ireland says they won't need any additional bailouts...

* BOE adds another 50 B in stimulus...

* China's currency hits a new high...

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

Austerity package approved, but EU still needs to see more from Greece...

Good day. It was a very long day for yours truly yesterday, but I got a good night's rest and am ready to hit it again this morning. The currency markets were pretty exciting yesterday with the dollar losing steam early on but slowly building some momentum on the upside throughout the day. This morning the dollar has spiked higher as investors start to seek out the 'haven' of US treasuries.

The currency markets continue to be held hostage by the Greeks. As I mentioned in the closing lines of yesterday's Pfennig, the leaders of Greece's coalition government reached an agreement on implementing the austerity measures demanded by the EU and the IMF in order to secure a second round of much needed financing. As predicted, this news caused a rally in the euro which reached a high of 1.3320. But Eurozone finance ministers said they want to see the measures approved by the full Greek parliament, which is set to vote Sunday. While Greek leaders certainly feel the measures will be passed by the parliament, workers staged a strike in Athens today in order to protest these measures. The EU leaders gave the Greek leaders 15 days to institute the new austerity measures, so they could possibly delay the vote further if they see it has a risk of not passing; but I'm sure they would much rather get this over and done.

The debt holders who have reached preliminary agreements for a debt swap which would cut Greek's debt load in half are also waiting for the results. The bonds held by the ECB are not subject to this debt agreement, but many of the Greek leaders are assuming the ECB will go ahead and agree to take a haircut on these holdings in line with what the other debt holders have agreed to. The ECB is reluctant to enter into a debt swap agreement as it could open the door to requests from Portugal, Ireland, or even Spain and Italy for additional debt concessions.

Irish Prime Minister Enda Kenny made me proud to be 50% Irish when he said his government is not going to be looking for any further debt concessions from the ECB. "It's very clear that Ireland will not seek any writedown," Kenny said in an interview on Bloomberg yesterday. "We'll pay our dues in full and on time." This may look like Irish pride, but it is in fact a smart move by Kenny who will need to refinance about 30 billion euros of debt. By letting bond buyers know they will not be seeking any debt concessions, Kenny is trying to make sure he will be able to refinance the debt at more favorable terms and over a longer period of time. We haven't heard much from Ireland lately, as they go about their business trying to get their economy back on solid ground. But the attitude of their PM certainly leads you to believe they are moving in the right direction and won't be looking for any additional hand outs.

I had a couple of Pfennig readers ask me to not spend so much time on the Euro debt situation, and to let them know what was going on with some of the other currencies. I will certainly try to touch on a number of different currencies today, but as I said at the opening, the currency markets are really being held hostage by the events in Greece right now. This is the big news and the euro will continue to move the markets one way or the other, dragging along all of the other currencies behind it. So I've got to touch on the Euro first, but then I promise to move to some other currencies.

The ECB meeting was a non-event, with rates remaining where they are and no new announcement of bond purchases. Data released in Germany showed the inflation rate remain unchanged at 2.3% during the month of January, which was in line with forecasts. The ECB has pumped a lot of liquidity into the markets, so they had to be relieved when inflation remained subdued.

ECB President Mario Draghi signaled the economic outlook has improved, as the economic stimulus pumped into the markets back in December seems to have stabilized the credit markets. European banks borrowed nearly 500 billion euros in December, and the ECB will offer another round of lending at the end of this month. It will be interesting to see what the demand is, but I would expect the banks will again eagerly accept the cheap funding from the ECB.

Draghi would not discuss the ECB's Greek debt and if the central bank would accept losses on these holdings in order to cut Greece's debt load. "All this talk about the ECB sharing the losses, it's ungrounded, it's unfounded."

The Bank of England is opening up the spigots again on bond purchases, raising their target for bond purchases by 50 billion pounds to 325 billion. This equals more than a quarter of current outstanding bonds, and is something investors in the pound should be worried about. Here is why. Bond purchases by the central bank is basically 'monetizing the debt' and is the most inflationary measure a central bank can take. The bank issues bonds, sells them to the markets, and then buys them back; really no different from throwing buckets of cash from helicopters. Again, this is the most inflationary measure a central bank can undertake, and will likely lead to an eventual devaluation of the pound sterling. But this is sometime down the road, and the BOE obviously feels the present need for more stimulus outweighs the inevitable problems this will bring in the future.

Staying with the European theme, I will move to Hungary where the forint dropped for a third day and is headed for a weekly loss. Hungary is the EU's most indebted eastern member, and would like to grab the attention of the IMF for some help of their own. But the EU and IMF have been focused on Greece, so Hungary has been left to their own devices. The forint has actually been performing pretty well since the beginning of the year, appreciating 9.1% vs. the US$.

Another of the former eastern bloc currencies which has been performing well this year is the Polish Zloty which is up over 7.7% vs. the US$ this year. And according to a fund manager at the Franklin Templeton group Poland's zloty is still 'undervalued'. "Poland demonstrated its economic robustness by being one of only a handful of countries globally to not fall into recession during the global financial crisis," the Templeton manager wrote in a note to clients. And he is putting his clients money where his mouth is as the Templeton Global Bond fund is the largest foreign holder of Polish debt.

Moving away from the European continent, the commodity currencies performed well through most of the trading day on Thursday, but are off of their highs this morning. Both the AUD and NZD reached multi month highs yesterday after the news that Greek leaders had reached an agreement on austerity measures. But the currencies turned sharply as the day progressed and the EU pushed for further confirmation from Greece.

The Australian dollar was negatively impacted by the Reserve Bank's lowering of its forecasts for growth and inflation during 2012. The RBA said it sees the economy expanding at 3.5% in 2012, down from its earlier estimate of 4%. And "inflation is forecast to remain around the midpoint of the target range for most of the next couple of years," the central bank said today. Consumer prices are predicted to rise 3% during 2012, less than a previous prediction of 3.25%. The lower growth and inflation estimates would seem to insure the RBA will remain on an easing bias even after it surprised some in the markets by not moving rates lower at their last meeting.

The South African rand has been the worst performing currency, dropping 2.33% yesterday and over 3% vs. the US$ over the past week. Commodity prices retreated yesterday after the EU pushed Greek officials on the bailout agreements. There is a general 'risk off' mood in the markets this morning, and investors are moving away from the rand and higher 'risk' currencies; retreating back into the haven of US treasuries. We will probably see more of this today, with investors not wanting to take risks with the Greek vote scheduled on Sunday.

Data showed Brazil's consumer prices are still rising, increasing .56% MOM in January. The annual rate of change slowed slightly to 6.22%; a number which is still much higher than what the government would like. Central Bank President Alexandre Tombini said last week that policy makers would work to bring inflation back down to 4.5%. The government has backed itself in a corner with their attempts to control the value of the real at the same time they are trying to keep inflation in check. By pushing their currency lower, they have triggered inflation as commodity prices have remained on an upward track. The government will quickly have to decide which one is more important, a cheap currency or lower inflation. One way to bring down inflation would be to allow their currency to appreciate, in the mode of the Singapore monetary policies.

Indian factory output was less than estimated in December, signaling weaker domestic demand as the global recovery faltered. Output at factories climbed 1.8% from a year earlier, after a 5.9% advance in November. Economists had predicted a 2.6% gain, so the number was a fairly large surprise to the markets. Both India and China have attempted to temper growth, and the tap on the brakes has seemed to work as planned with growth slowing in both of these emerging markets.

The Chinese renminbi increased to an 18 year high yesterday, just ahead of a visit to the US by Chinese Vice President Xi Jinping next week. The unexpected acceleration in Chinese inflation has pushed Chinese leaders to allow faster currency appreciation. As I mentioned above, Chinese growth has slowed, and exports are predicted to have fallen in January according to the Chinese Commerce Minister.

Moving back to the US, the initial jobless claims posted a 358k number which was less than the expected 370k increase. Continuing claims were slightly higher at 3515k. Another piece of data showed consumer confidence rose to the highest level in a year. Today we will see the Trade Balance (or more appropriately the Trade Deficit) which is predicted to have widened in December to a six month high.

Both Gold and Silver prices are down this morning, as investors again move into the US$ and away from what I consider the true 'safe havens'. I will dig into the metals a bit more on Monday, as I am quickly running out of time this morning.

To recap. The Euro rallied yesterday but then turned sharply as the EU/IMF demands a positive vote by the Greek Parliament which is scheduled for this weekend. ECB left rates unchanged and did not announce anything new regarding the Greek debt. The BOE announced an increase of 50 billion pounds to their QE bond buying program. Commodity currencies were sold off as risk became a bad word again. And the Chinese Renminbi was pegged at an all time high overnight.

Currencies today 2/10/12. American Style: A$ $1.0656, kiwi .8267, C$ $.9981, euro 1.3199, sterling 1.5794, Swiss $1.0916. European Style: rand 7.7192, krone 5.777, SEK 6.6775, forint 223.29, zloty 3.1989, koruna 19.2069, RUB 30.052, yen 77.79, sing 1.2620, HKD 7.7568, INR 49.41, China 6.2998, pesos 12.8097, BRL 1.7255, Dollar Index 79.061, Oil $98.26, 10-year 1.98%, Silver $33.44, and Gold. $1,715.30

That's it for today, It was great to see the Blues pick up a road win last night even if they had to go into a shootout to secure the win. I am running really late this morning, and we are having some connection problems with our internet, so this may be even more delayed in reaching all of you. Hope everyone has a Fantastic Friday and a great start to your weekends!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

A successful bond auction in Spain has investors moving back into euros...

Chuck Butler — Thu, 12 Jan 2012 17:27:09 GMT

.........But First, A Word From Our Sponsor..........

Announcing EverBank Wealth Management, Inc.

It's another great day for the EverBank family of services. We're delighted to announce the launch of a new wealth management company offering global investment advice through a personalized approach.

Led by you. Guided by experience.(sm)

EverBank Wealth Management brings together a team highly experienced in the global marketplace that will listen, evaluate and then advise you to create a plan to meet your goals. Our team uniquely understands how you view the marketplace. We offer comprehensive and unbiased institutional grade investment advice based on what you have and what you want to accomplish.

It all starts with a conversation...877-613-EVER (3837)

http://www.EverBankWealthManagement.com

......................................................

In This Issue.

* Spain's bond auction a success...

* ECB and BOE to meet today...

* Traders test the SNB...

* Official jobs numbers are questionable...

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

A successful bond auction in Spain has investors moving back into euros...

Good day. We woke up to a winter wonderland this morning as we have a couple inches of snow on the ground and it is continuing to come down pretty hard. It is a really light snow and the winds are blowing it all around which is making driving a bit tricky. I passed several accidents on my way in, and I just heard the closed down one of the major highways. Chuck may have mistimed his escape from winter by a few hours as he was scheduled to fly down to Florida today. It sounds like the snow will be ending mid morning, so hopefully his flight won't be delayed.

Investors continued to escape the problems in Europe yesterday as the euro got sold throughout the trading day. Fears of another debt downgrade by Fitch and worries about inaction by the ECB were the main drivers of all of the selling. The euro weakened to a 16 month low of 1.2662 before starting to move a bit higher in late trading. The ECB will be meeting today and currency traders fear they won't take any additional action to stimulate the European economy. As Chuck pointed out in yesterday's Pfennig, the latest data doesn't really suggest any additional help is needed but bond buyers want to see the ECB step up their purchases of debt in order to help support bond prices.

The rating agencies also weighed on the euro yesterday was a rumor that France's top credit rating would be cut and Fitch Ratings said Italy faces a 'significant chance' of a downgrade. The French Finance Minister Francois Baroin denied having been notified of such a move, and I couldn't find any confirmations of a move by the ratings agencies on news wires this morning.

The euro is actually rallying in early trading, up almost a full cent from yesterday's low. The move higher was sparked by the successful bond auction in Spain. The Spanish were able to sell almost twice their maximum target of debt at an auction today, including a new three year benchmark. Spain sold just under 10 billion euros of notes vs. the target of 5 billion. And these bonds were sold at rates which were slightly lower than previous auctions, which was welcome news to EU leaders. The good demand for Spanish debt, combined with the better than expected data yesterday will definitely decrease the pressure on the ECB to step in and do something during their meeting later today. It is widely expected that the ECB will leave interest rates unchanged at 1% and the successful debt auctions which have been occurring over the last few weeks will definitely decrease the pressure for stepping up their bond purchases.

It isn't like the ECB has just been sitting on the sidelines watching the debt crisis. The ECB injected a record amount of liquidity into the markets back on December 20 when they awarded 489 billion euros of three year loans to European banks. In fact, the ECB has been a bit more active than our own Fed in pumping money into the markets, which is saying something! But desperate times need desperate actions, and the moves certainly seem to have stabilized things in the European debt markets. While we will continue to see volatility in the euro, I firmly believe the single currency will survive.

The Bank of England will also be meeting today, and the pound sterling is being sold in early trading. Sterling touched a three month low vs. the US$ this morning as investors worry the UK economic recovery will stall out. A report showed UK manufacturing contracted for a second month in November, falling .2% which was in line with economic forecasts. This report follows another yesterday which showed the trade deficit widened more than economists forecast. These stories sparked worries that the economy isn't on as solid a footing as previous reports indicated

The BOE was one of the first to institute an aggressive program of bond purchases, but the current program is scheduled to end next month. Speculation is increasing that the program will now be extended with another round of purchases, with an announcement coming as soon as today's meeting. While investors pushed the euro lower on thoughts the ECB wouldn't be doing any additional purchases, the pound is being sold on the thought that the BOE will be increasing their debt purchases. It doesn't make since to me either, but that is just how crazy these currency markets are right now!

Investors are using the uncertainty created by the resignation of Swiss National Bank President Phillip Hildebrand to try and test the SNB's self imposed floor of 1.20 CHF/EUR. The move lower by the euro yesterday gave currency investors a perfect opportunity to test the resolve of the remaining board members. The SNB has passed this test so far, and they were helped out by the euros move higher his morning. A strategy piece from Standard Bank in London early today suggested Hildebrand was ready to move the floor up to 1.25, but these plans will probably be delayed now. "Had Hildebrand remained at the helm of the SNB, he might have led the bank to raise the target to 1.25 or more, but now that prospect has been dimmed," Steve Barrow of Standard Bank wrote today. Thomas Jordan, who was appointed the SNB interim chairman has reiterated he's ready to defend the currency ceiling with the 'utmost determination' if needed. I'm sure the currency traders will continue to test the SNB as the Swiss government has indicated it will take as long as four months to appoint a permanent replacement for Hildebrand.

With the euro selling off yesterday, most of the other currencies followed suit. But things have shifted this morning and the emerging market and high yielding currencies are moving higher. The Brazilian real was off a bit yesterday, snapping a 2 day gain, but it is the big winner this morning pushing almost 1% higher vs. the US$. The South African rand, Australian dollar, and Swiss franc round out the top performers vs. the US$ this morning.

We have a lot of data out this morning in the US, with Retail Sales expected to show a slight increase and the weekly jobless claims expected to be unchanged (more on the jobs data in the closing paragraphs). We will also see the business inventories data for November which is expected to show a small increase as Christmas sales weren't as strong as expected. Finally, the Monthly Budget Statement will probably show the US slipped $83.7 billion further into our debt hole in December. None of this data would seem to support a stronger dollar, so I think the moves we have seen in early trading will probably continue through the rest of the trading day.

Then there was this. Both Chuck and Mike Meyer, knowing I was writing this morning, gave me some pfodder for the Pfennig. And both of them were thinking along the same line as their contributions were very similar (I guess great minds think alike!). Mike left me a stack of 4 different news stories which all seem to contradict the latest jobs data put out by our administration. Archer Daniels Midland Co. announced plans to cut 1,000 jobs or 3% of its workforce yesterday, MetLife Inc. said it will shut down its home mortgage origination operation costing close to 4,300 employees their jobs, an analyst on Bloomberg yesterday predicted banks and other financial firms would shed 150,000 workers by the middle of 2013, and finally, St. Anthony's Medical Center here in St. Louis said they were laying off 85 workers. These were stories which Mike found on Bloomberg yesterday, and all would certainly indicate that the labor market here in the US isn't going to improve too quickly. Chuck was also thinking about the job market, and sent me the following:

Well. did you hear about this? Hostess Brands filed for Chapter 11 bankruptcy protection Wednesday, a move that marks the second significant court restructuring for the Twinkies and Wonder Bread baker in the past several years.

The privately held Irving, Texas, company, which employs roughly 19,000 people and carries more than $860 million in debt, has been facing a cash squeeze amid high labor costs and rising prices for sugar, flour and other ingredients.

Hmmm. how can they be experiencing rising costs for sugar, flour and other ingredients, when the Gov't tells us there is no inflation? And The Fed Chairman tells us that the inflation we're seeing is "temporary". Hmmm. Hostess Cup Cakes, and an RC Cola, on my way home from baseball practice at the confectionary around the corner from my house, were a staple.

Well... The Fed Beige Book was put out there for us all to view late yesterday afternoon... among the hootin' and hollerin' about how the Fed districts all showed stronger economic activity and consumer spending in the 4th QTR... there was this ditty... Overall inflationary pressures were noted to be "very limited" as the upward pressure from rising commodity and input prices eased substantially.

Hmmm... again... tell that to the Hostess Cup Cakes and Twinkies people!

Thanks to both Chuck and Mike for their contributions this morning. An election year always brings out the spin masters, and we will probably see a lot of data which just doesn't seem to match up with reality.

To recap. The euro was off yesterday as the ratings agencies and expected inaction by the ECB worried investors. But the euro moved higher this morning after a successful bond auction in Spain. The BOE will be meeting today, and some expect them to extend their latest round of QE. Currency traders tested the remaining members of the SNB, but the franc remained above its 1.20 floor vs. the euro. Data out today could lead to further dollar weakness, as the weekly jobs numbers are expected to disappoint. And both Chuck and Mike gave me stories which show the layoffs continue here in the US.

Currencies today 1/12/12. American Style: A$ $1.0363, kiwi .7975, C$ .9845, euro 1.2756, sterling 1.5352, Swiss $1.0539. European Style: rand 8.0310, krone 6.0156, SEK 6.9335, forint 240.58, zloty 3.4740, koruna 20.0275, RUB 31.6275, yen 76.86, sing 1.2887, HKD 7.7684, INR 51.5837, China 6.3181, pesos 13.5432, BRL 1.7865, Dollar Index 81.064, Oil $102.13, 10-year 1.92%, Silver $29.66, and Gold. $1,630.80

That's it for today. My son will be happy today, as I just received a call from his school telling me he has a snow day. No word from my daughter's school, but I'm pretty sure from the look of the highway below that most schools in St. Louis will be cancelled today. Hard to believe after we had temps in the mid 50's yesterday, but that is typical St. Louis weather! I hope Chuck's plane will be able to make it down to Florida without too much of a delay, I know he is looking forward to getting some sand between his toes. Blues have a very big game tonight at home vs. the Canucks. I think I have a lot to do with how well the Blues are playing as I didn't renew my tickets this year (after 20 years!) and I told everyone at the beginning of the season that this would be the year the Blues make it to the Stanley cup! But I'm still a huge fan so GO BLUES!!! Thanks for reading the Pfennig, and I hope everyone has a great Thursday.

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

No Peg, No Intervention.

Chuck Butler — Wed, 17 Aug 2011 16:18:00 GMT

.........But First, A Word From Our Sponsor..........

Announcing EverBank Wealth Management, Inc.

Led by you. Guided by experience.(sm)

It all starts with a conversation...877-613-EVER (3837)

http://www.EverBankWealthManagement.com

......................................................

In This Issue.

* SNB statement gooses currencies.

* BOE unanimously leaves rates unchanged.

* Aussie wages are rising.

* Oil price takes baby steps higher.

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

No Peg, No Intervention.

Good day. And a Wonderful Wednesday to you! Well. We had the Swiss National Bank (SNB) meet already this morning, and Bank of England (BOE) minutes released, so it's been a busy morning overseas. Here on our trading desk, we've been swamped, but that's all good, eh? I'm really busy and on top of that, have to step out this morning for a while. When it rains it pours, eh?

Front and Center this morning. Gold is inching toward $1,800 again. Wonder what the "manipulators" have up their sleeves this time? The rally in Gold this week, has really played along well with my rant on Monday about how when all else has failed, where will investors put their money? Gold. You know, I ran into a guy earlier this year on the speaking circuit that didn't believe that Gold was going higher, and instead chose to hold his money in dollars. Let's see. that was the beginning of May. Since May, Gold has gained $292.00. That's not working out too well for him, but then, he can always hope for more manipulation.

OK. yesterday, we saw the currencies trade in a tight range, with a slight bias to dollars, but that has turned around in the overnight markets. Early this morning we had a SNB meeting, and they didn't have one mention whatsoever about a peg for the franc. That news got the franc back in the rally gear, and the other currencies have followed along.

The BOE's meeting minutes printed this morning, and to the surprise of the markets, two "hawks" have switched over to the "no rate change" side. That news took the wind out of the pound sterling's sails. I'm not a big fan of the pound and haven't been for a couple of years now. The recent rally has been all about dollar weakness, folks. I doubt it has anything to do with strong pound fundamentals, because. THERE ARE NONE!

Yesterday, the leaders of Germany and France (Merkel, and Sarkozy) came out of their "special meeting room" with yet another idea to protect the euro. their plan included a proposal to form a new Eurozone Council, which would govern Eurozone items. I cracked up at Sarkozy's description of the new Council saying it was a "veritable Eurozone Economic Governance". Ahhh, yes, the old "veritable Whitman's Sampler" HA!

The two leaders also stated their absolute will to defend the euro. Then they announced that they will push the 17-Eurozone members to adopt a "golden rule" to balance their public finances, before next summer.

So, no "real meat" here, which was how the meeting was advertised. But, I think that the markets get a feeling of calm whenever the Eurozone's two largest economy countries get together and sing from the same song sheet.

I had a reader send me a note yesterday regarding Frank Trotter's thoughts on the 40-year anniversary of the removal of Gold as a backing for the dollar. He thought we were being a little tough on Richard Nixon. that, Nixon had no choice given what President Johnson had left him. And while that may have some truth to it, Johnson's Great Society, and Vietnam War expenses had turned the country into a deficit spending machine, it doesn't take the blame completely away from Nixon, who also ran up deficits and refused to balance the budget. I've just finished a book on this subject, by Richard Duncan called the Corruption of Capitalism. If you're a history buff, and want to know the "root" of our problems today, this book will answer your question!

Did you see or hear that Texas Gov. Perry, who has thrown his hat in the Presidential campaign ring, took a swing at how the Fed has forced its power on the U.S. economy. He also took a swing at the Fed Chairman Bernanke. I can't go there any longer, so I won't. But. I can talk about how I feel that the Fed has too much freedom and power, to exert their will on the economy and our monetary system. I would think that anyone that went through the paperwork that revealed how and to whom the Fed gave loans to would be enough to come to that decision. But there's more. there's always been more, folks. and now, as we head for more Quantitative Easing or whatever the Fed chooses to call it, there's never been a better time to question what their goals are.

I told you about a talk I had with a guy that told me that he was told by big time dudes that there would be no more Quantitative Easing. Instead, there'll just be the printing of money. What? Isn't that the same thing? Well. QE is money printing, but. with QE you also get asset purchases. Which is what I told you yesterday that Fed Head Lockhart was talking about. So. should this "guy" be correct, then the economy will be flooded with dollars. The Fed has stated that they want more inflation in the economy, and if that's their route, then, we'll certainly have it, eh?

And then as long as I'm walking on a thin line here. a friend of mine sent me a note (thanks Brad!) that reported General Electric was going to move their X-ray division from Wisconsin to China and train 65 engineers. Hmmm. Isn't GE Chairman Jeff Immelt the "job czar" for the president? Does anyone else see the complete craziness of this announcement? I shake my head in disgust, for sure!

OK. I've been off on one tangent leading to another here this morning. Focus, Chuck, Focus!

Let's see here. Oh! This is interesting. The Royal Bank of Scotland (RBS) issued a new report on the dollar / euro this morning, and they have backed off their previous call for the euro to be 1.32 at year's end. they have raised that forecast to show the euro at 1.42 at year's end. They also had this to say. "The prospects for a meaningful dollar rally over the next 4 quarters have been reduced sharply."

I see that VP Biden is in China to assure the Chinese that the dollar and Treasuries are safe. Now, I'm no scholar, nor am I the sharpest tool in the shed, but I don't think the Chinese are going to be swayed by anyone. But the timing of the visit is interesting, given that the Net TIC's Flow that printed the other day showed another loss of foreign investment, and I already told you that the 30-year Auction of Treasuries was awful. it was awful, because the Chinese didn't show up.

I find this to be scary folks. but once again let me attempt to get this message to the White House. Stop sending people to China, and wasting tax dollars, the Chinese will do what they feel best behooves their country and will not be swayed by visitors bearing gifts.

Speaking of China. I love it when they try to throw the markets off the scent of a rallying currency, by stopping the appreciation, and marking the renminbi down. It's like a Chinese speed bump, or circuit breaker just to remind everyone that was beginning to think that renminbi was a "one way street" that it isn't!

In Australia overnight, their latest print of Wage Prices, showed an increase of .9% in the 2nd QTR VS the previous QTR. This was in line with expectations, but. in my mind, really proves the Reserve Bank of Australia (RBA) is not able to cut rates, as some analysts have called for. In fact, with wages rising, the RBA has to seriously consider raising rates again. And like I said yesterday, I'm still keeping the light on for another rate hike before year end.

The price of Oil is inching back baby step by baby step. After falling to $79.30 on August 9th, the price of Oil has gained back to $87.63 this morning. That can't make the deflation crowd very happen, but, it does put a shine on the Canadian dollar / loonie.

I've been serenaded for the past 13 minutes by a live version of Neil Young's Down By The River, which was recorded at the Fillmore East, probably in very early 70's. Very raw, but vintage Shaky.

U.S Industrial Production increased in July .9% VS June's revised number of .4%... With the increase of Industrial Production the Capacity Utilization rate rose slightly. So. the economy still has a pulse, folks. which is what I believe we'll experience for quite a few years. muddling through, barely growing, with tons of unemployment.

Then there was this. long time friend, Bill Bonner, stopped by to say hi to me, when I was in Vancouver. Bill has been so right on so many things over the years that it makes one's head spin thinking about it. yesterday, I checked in to see what Bill was talking about, and he was talking about what he would do if he was president. you should read the whole thing at: www.dailyreckoning.com but, here's a snippet. here's Bill Bonner.

"My fellow Americans, I don't know about you, but I'm tired of supporting all these zombies. Why are there so many zombies? Because there's so much meat for them...

You wanted change...I'll give you change...

Here's how to get rid of zombies. I'm proposing to scrap the entire tax code. From now on, Americans will pay 10% of their income...no deductions...no nonsense. You'll fill out your tax return on a postcard.

Serfs in the Dark Ages were only required to work one day in 10 for their lords and masters. You shouldn't have to do more.

The federal government will have to get by on that. That's all. I'm proposing a Balanced Budget Amendment...with a permanent 10% tax rate. No ifs. No buts. No zombies."

Chuck again. I don't think the "super Rich" would like that too much. but, according to the President, they need to pay more anyway!

To recap. The currencies traded in a tight range yesterday with a bias to buy dollars, but that all changed this morning, as the SNB met and made mention of a peg or further intervention, giving the franc a boost, which led the other currencies higher. Merkel and Sarkozy came out of their magic room with another plan for the Eurozone. Nothing earth shattering, but gave the markets a warm a fuzzy. And the price of Oil is rising again.

Currencies today 8/17/11. American Style: A$ $1.0560, kiwi .8380, C$ $1.0220, euro 1.4465, Sterling 1.6460, Swiss $1.2680, . European Style: rand 7.0730, krone 5.3915, SEK 6.34, forint 186, zloty 2.8550, koruna 16.8685, RUB 28.66, yen 76.50, sing 1.2015, HKD 7.7918, INR 45.42, China 6.3875, pesos 12.17, BRL 1.59, dollar index 73.68, Oil $87.65, 10-year 2.22%, Silver $40.03, and Gold. $1,792

That's it for today. Crazy days, for sure! The "dog days" of summer, that make or break baseball players and teams. And it looks like they have broken my beloved Cardinals! UGH! College Football will start soon, YAHOO! And our Rams might be good enough to make it to the playoffs this year. So, we've got all that going for us! Little Delaney Grace called me at work yesterday, and wanted to know when I was coming home to see her. How cute! And Alex, Dawn, and Andrew all had their first day of the school year yesterday. I wonder what this school year will bring us? And with that. I have a ton of stuff to do, and then I need to get out of here for awhile. I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Downgrade rumors hit France...

Chuck Butler — Thu, 11 Aug 2011 15:34:53 GMT

.........But First, A Word From Our Sponsor..........

Now get 5 metals & forget the market risk(1)

With the all new MarketSafe® Timeless Metals CD, we've brought together 5 of the world's most valued metals-gold, silver, platinum, copper and nickel-into one CD. Now through August 18, 2011, you have the unique opportunity to seek gains from this robust and diverse collection of metals without any risk to your deposited principal.(1,2)

Returns based on the performance of these 5 equally weighted metals:

*If prices increase for these metals, earn a market upside payment plus all principal(1) *If prices decrease for these metals, receive 100% of deposited principal(2)

Min. deposit: $1,500

Account fees: None

FDIC insured: Yes(2)

IRA eligible: Yes

Don't miss the August 18, 2011 funding deadline. Review important disclosures and apply today at https://www.everbank.com/personal/timeless-metals-cd.aspx?referid=11808

In This Issue.

* Downgrade focus shifts back to Europe...

* BOE keeps rates unchanged & cuts growth forecast...

* China lets Renminbi trade below 6.40...

* Crude oil jumps 4.5%...

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

Downgrade rumors hit France...

Good day. Record levels of volatility continued in the markets yesterday with just about all asset classes gyrating like teenagers on the dance floor at prom. The equity markets in the US faced another day of triple digit swings and the Dow closed down over 500 points. Gold climbed $70 to trade above $1810 before dropping back into the 17 handle. But interestingly enough, the currency markets were fairly calm. I noticed this morning that over the past 10 trading days the dollar index has remained within a 2.5% range. Now there have certainly been some currencies which have been more volatile than the dollar index, but given the tumultuous markets, the currencies have been relatively stable.

Chuck was watching the markets from the floor of the San Francisco Money Show and sent me this note late last night:

Well. another day of reeling for the stock jockeys. but hey, their pain is being felt in other assets too. I sat here in San Francisco and watched Gold continue to climb, finally going over $1,800. and then once again, late in the day, and probably in the afterhours market, as I kind of lost track of time, being on the West Coast, Gold gave up $30. What? Isn't that twice now this week that this has happened? Why aren't Gold investors flooding the CFTC's phone lines asking them for an explanation as to why or how this happened, not once, but twice in the same week..

I gave my presentation on the Change of Currency Regime on Wednesday. I think a scared a lot of people. but, I'm just presenting the facts, and adding one and one to get to the end story. I did have someone ask me about the euro, even though I didn't mention the euro once during the presentation. I told him and the audience that the euro was winning the ugly sister contest. Since the euro is the offset currency to the dollar, and is still more than 1/3 rd of a cent stronger than the dollar, obviously, investors feel that the dollar is uglier. interesting, eh?

And then there was this survey that the Washington Post did, and nearly three-quarters of Americans doubt Washington can repair the economy. But, at the same time, people are all-in on the thought that the Fed can! I could spend all day on that survey. shoot holes in it. but, I think that most long time readers will know what I see wrong with that poll. And with that, I'm going to bed.

Chris again. Chuck has just two more days on the road and then he will fly back home and grace us with his return to the trading desk. We are excited to get him back, and I'm sure he is looking forward to getting back in the saddle.

Attention shifted back across the Atlantic as rumors swirled that ratings agencies would strip France of their AAA ranking. French officials and all three ratings agencies denied the rumors, and Fitch, S&P, and Moodys all affirmed France's current AAA credit rating.

I'm not a big conspiracy guy, but these rumors certainly smell a bit fishy. Investors are on edge and the volatility in the markets makes them vulnerable to a well placed rumor. It only takes a bond trader who is short sovereign debt to post a whisper on a message board or begin a chain of 'telephone tag' among other traders. Suddenly yields on the debt begin to climb and the rumor gets legs. The next thing you know the Credit Default Swap spreads widen as bond traders become convinced a ratings announcement is imminent. By the end of the day the trader who started it all cashes out on his short position and the President of France and all three ratings agencies are forced to make statements.

Not saying that this is what happened here, but it is certainly a plausible possibility. Traders are constantly trying to predict the next 'big event', and a quick scan of the AAA rated countries would put focus on France which has a debt to GDP ratio of 82%, among the highest of all top rated countries.

I think investors should be more worried about the large European banks instead of focusing on the next country to be downgraded. Both French and German banks have large exposures to the sovereign debt of Greece, Portugal, Spain and Italy. While the ECB has been supporting the debt markets with direct buying, any future bailout will certainly involve another 'restructuring' of this debt which will mean further losses to the European banks.

As Chuck has said in last night's note, the Euro is currently in second place in the ugliest currency contest, so it has been able to maintain its value vs. the US$. While I continue to believe the euro will hold its value, I just don't see it appreciating sharply as it remains incredibly vulnerable to continued problems throughout Europe.

The IMF and EU have prepared a review of Portugal's first rescue package which should be released today or tomorrow. Officials will then decide whether or not to give Portugal the second tranche of its bailout. As I said earlier, the debt crisis in Europe is going to continue to force its way into the news for years to come.

The Bank of England releases what one analyst called a 'relentlessly bleak outlook' for Britain's prospects as it left rates unchanged. The BOE downgraded its growth forecast for the next three years, cut its longer term inflation projections, and warned that the risks remain 'on the downside'. The BOE now believes inflation will peak at 5% in the next few months before falling back at the end of the year and dropping below the 2% target in 2013. So much for the Pound Sterling becoming a safe haven currency for euro investors!

The pound weakened against the euro on the face of the bleak economic outlook and worst British riots in 30 years. Chancellor of the Exchequer George Osborne will be addressing parliament today to defend the steepest government spending cuts since WWII.

The Swiss franc weakened a bit yesterday after a Swiss central bank Vice President voiced the possibility of pegging the franc to the euro. "Any temporary measures to influence the exchange rate are permissible under our mandate as long as these are consistent with long-term price stability," SNB VP Thomas Jordan said in an interview. Swiss exporters are feeling the pain of the high values of the Swiss franc vs. the euro, as the vast majority of Swiss trade is completed with European companies and consumers.

Perhaps the SNB would be wiser to attach the anchor of the US$ on to the high flying Swiss franc. It has certainly seemed to work for the Chinese, and instead of keeping the Swiss stable with the euro, a peg to the dollar would probably cause an adjustment lower for the value of the franc.

In an interesting twist, China is just starting to move in the opposite direction, relaxing their peg and allowing the Renminbi to appreciate vs. the US$. China is borrowing a page from Singapore's playbook and will apparently use their currency value as another tool to combat inflation. China's Renminbi rose .37%, the largest gain in nine months, and closed below 6.40 for the first time since the peg to the US$ was relaxed.

The recent moves higher by the Renminbi are welcomed by the IMF who said last month that a stronger Chinese currency would help stabilize the global economy. A higher currency value will also assist the government in its effort to tame inflation and rebalance the nation's growth toward domestic demand and away from exports. As I reported yesterday, China's trade surplus reached a record level, but imports actually grew at a faster pace than exports. The burgeoning middle class in China will benefit global growth, and hopefully Chinese officials can continue to encourage domestic spending.

Speaking of trade deficits, data will be released today which is predicted to show June's US trade deficit narrowed to 48 billion from just over 50 billion in the previous month. The poor consumer spending data which we have seen over the past few months should seem to support this view.

We will also see the weekly jobs numbers this morning, with jobless claims predicted to stay

above 400k for another month. Continuing claims probably declined, as more unemployed individuals fell off the roles.

The price of crude oil jumped 4.5% yesterday as a report on US inventories showed a surprise decline. Oil had been falling due to the uncertainty of the global economic recovery, trading as low as $79.73 per barrel. Prices of oil were down over 9% for the year, and 13% for the month, but inventory data released yesterday reversed the trend.

The Energy Information Administration (boy that certainly sounds like a shadow group, and a good candidate for govt. cuts!) reported its estimate of domestic crude inventories dropped by 5.2 million barrels, matching a trade group's forecast released late Tuesday. Earlier Wednesday the International Energy Agency trimmed its 2011 forecast for global oil demand by 60,000 barrels a day, citing slower economic growth.

The oil based economies of Norway, Canada, and to a lesser extent the UK and Brazil all should benefit from this latest rise in crude prices.

The Norwegian krone could use some good news after the Norges bank delayed a predicted rate increase. Officials of Norway's central bank left rates unchanged for a second consecutive meeting as worries over the global economy and the recent drop in oil prices calmed fears of rising inflation. I was in agreement with a majority of economists and fully expected rates to rise, and the currency was sold after the announcement.

Even without a rate increase, Norway's krone remains one of the fave's of the desk and I think this latest move lower should be seen as an excellent opportunity for investors to purchase more krone.

To recap. France is the latest country to come into the cross-hairs of the rating agency, or are they? All 3 ratings agencies denied they are going to strip France of their AAA rating. The BOE kept rates unchanged, and released a bleak outlook for the UK economy. Switzerland could look to peg the franc to the euro, and China is allowing their currency to adjust away from the peg to the US$. Crude oil jumped 4.5% as inventories showed a decline, and Norway surprised the markets with a 'non-move' for interest rates.

Currencies today 8/11/11 American Style: A$ $1.0215, kiwi .8174, C$ $1.0062, euro 1.4188, sterling 1.6162, Swiss $1.3481. European Style: rand 7.2622, krone 5.5261, SEK 6.5577, forint 194.56, zloty 2.9494, koruna 17.005, RUB 29.5735, yen 76.62, sing 1.2137, HKD 7.7996, INR 45.3763, China 6.3937, pesos 12.4060, BRL 1.625, dollar index 74.66, Oil $82.82, 10-year 2.20%, Silver $39.2563, and Gold $1,780.65

That's it for today. The desk enjoyed a happy hour arranged by Jennifer last night and apparently it went well into the night. Unfortunately I wasn't able to join them as I went right from a late meeting to my daughter's first soccer game. Just one more day of Pfennig writing for me, as Chuck will be back in the saddle on Monday! Hope everyone has a Tub Thumping Thursday. Thanks for reading the Pfennig!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

US data disappoints . . .

Chuck Butler — Wed, 18 May 2011 15:49:17 GMT

.........But First, A Word From Our Sponsor..........

New Product Alert: The MarketSafe Timeless Metals CD Now get 5 metals & forget the market risk(1)

Great news. With the all new MarketSafe® Timeless Metals CD, we've brought together 5 of the world's most valued metals-gold, silver, platinum, copper and nickel-into one CD. Now through June 9, 2011, you have the unique opportunity to seek gains from this robust and diverse collection of metals without any risk to your deposited principal.(1,2)

Returns based on the performance of these 5 equally weighted metals:

*If prices increase for these metals, earn a market upside payment plus all principal1 *If prices decrease for these metals, receive 100% of deposited principal2

Min. deposit: $1,500

Account fees: None

FDIC insured: Yes(2)

IRA eligible: Yes

Don't miss the June 9, 2011 funding deadline. Apply today at https://www.everbank.com/personal/timeless-metals-cd.aspx?referid=11808

=====

In This Issue.

* US data disappoints

* BOE minutes showed 6-3 split on rates

* Sweden's move to share the risk of a falling $

* Japanese economy in 'severe' state

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

US data disappoints . . .

Good day.

The dollar sold off through most of the day on Tuesday, but seems to be stabilizing this morning. The sell off began early yesterday morning with the release of US housing data and the Industrial production numbers. Housing starts, which were expected to show a small increase actually were down 10.6% MOM. And the future isn't so bright either, as building permits also fell 4% MOM in April. The previous month's numbers for housing starts were revised up slightly, but this revision was offset by March's permit number which was revised down. As I wrote yesterday, the US housing market continues to be a drag on the economic recovery, and a rebound isn't in sight.

The other big data released yesterday was the Industrial Production and Capacity Utilization numbers for May. Industrial production in the US was flat, and capacity utilization edged lower. Both numbers were less than estimates, and reflect an economy which is struggling to find a foothold on the climb back out of the depths of recession.

The biggest news on this morning's wires is the Bank of England's release of the minutes from their May 5th meeting where they left rates unchanged. The vote was 6-3, with one member calling for a 50 basis point increase and two other for a 25 basis point rise, but the majority still warning against any rate increase. The minutes stated a rate increase now "could adversely affect consumer confidence, leading to an exaggerated impact on both spending and firms perceptions of their desired productive capacity." The pound sterling had risen in anticipation of a future rate increase by the BOE, so the minutes were not good for the pound which dropped 1.5 cents after the announcement.

The pound had rose against the dollar yesterday as a report showed inflation accelerated 4.5% last month from a year earlier. But jobs data released this morning convinced the BOE that their economy is just too weak to allow a rate increase. Jobless benefit claims in the UK increased 12,400 from March and stand at 1.47 million.

The BOE finds itself in a very similar position to the FOMC, which shouldn't be a surprise, as the US followed the UK down the path of QE. Both central banks are now dealing with risks to their economy of a stubbornly high unemployment rate offset by rising prices. The UK, like the US, has decided to try to stimulate their economy first, turning a blind eye to the inflationary pressures which continue to build. But while both economies benefitted from the additional stimulus in the short term, neither economy seems to be able to pull themselves out of the malaise of low growth and continued joblessness. QE has not, in my opinion, had a long term positive impact on either economy. And worse, this Quantitative Easing 'experiment' which both the BOE and FOMC have been conducting could have very dangerous consequences for the long term health of our economies. Neither central banks seem able or willing to stop the ultra loose monetary policies. Stimulus spending has become a drug to which both administrations have become addicted.

As expected, the US blew through the debt ceiling yesterday, but Treasury Secretary Timothy Geithner prevented a default by arranging a short term 'loan' of billions from the government pension program. The money should allow the US to continue to pay its bills through the summer, and most are expecting a deal by congress to raise the debt ceiling sometime soon. To his credit, Secretary Geithner did sound warnings about the deficits, saying they put the US economic foundation in danger. He warned that "neither Congress nor the administration should be able to use unrealistic assumptions about future economic growth or future political courage, or any other forms of magical thinking, to minimize the magnitude of the reforms that will be necessary". Strong words by the Treasury Secretary, and hopefully they won't fall on deaf ears (more magical thinking!).

The Euro gained against the dollar for a third day as European stock markets moved higher. The euro rose in spite of data which showed German investor confidence declined for a third month in May. The ongoing sovereign debt crisis, and higher energy prices have lowered the level of confidence in the German recovery. European Union President Herman Van Rompuy fired a shot at China, saying the euro is "too strong" compared with the Chinese renminbi. Von Rompuy was giving a speech in Beijing and was encouraging the Chinese leadership to invest into Europe, which would cause a further appreciation of the euro vs. Renminbi, which is exactly what he doesn't want to see. He is in a similar position with the Chinese as the US. Both Europe and the US want and need the Chinese investments, but at the same time they are beating up the Chinese on the low value of their currency.

Sweden's krona climbed last night as the country said it would have a larger budget surplus than previously forecast. Sweden's government surplus will be 99 billion or 3% of GDP according to a report released this morning. The surplus will remain in 2012, but narrow slightly. The Swedish currency is the second best performer vs. the US$ this year, just slightly behind the euro (both are up just over 6.1%). Sales of state held shares in two major Swedish companies helped boost the surplus, but increasing tax income from the ongoing economic recovery has also added to revenues.

Sweden is expected to grow 4.7% this year following a 5.5% jump last year, so tax revenues should continue to be strong. The government is using this surplus to pay down debt, reducing the amount of bond issuance by 8 billion krona in 2011 and 16 billion lin 2012. Novel idea, a central bank which is actually spending less. What do you think the US would do with a surplus? I guarantee our elected officials would find ways to spend the extra money, and would be proud they didn't have to increase the debt limit!

Riksbank Deputy Governor Lars Nyberg wants his government to charge its banks to cover Sweden's costs to hold reserves in US$. The move is designed to persuade Swedish lenders to cut back on 'risky' loans in the US currency. Apparently Nyberg is worried about the falling value of the US$, and the mounting risks of the continued debts and deficits being run up by the US. While the total amount of US$ reserves held by the Riksbank is small, it is another sign of the growing global concerns regarding the Reserve Status of the US$.

The Japanese yen fell after Bank of Japan Governor Masaaki Shirakawa said his economy is in a 'very severe' state. Japan has been mired in a deflationary environment for the past several years, and ultra low rates haven't been able to help boost the economy. The recent earthquake will add to the negative sentiment, and a report tomorrow will likely show GDP in Japan fell at the fastest pace since the financial crisis. Surveys show the central bank's governors will keep interest rates near zero and maintain their Quantitative Easing programs when they meet later this week. There certainly seems to be a patter developing for countries engaged in QE. It simply doesn't work! It does promote spending while the money is flowing, but there is no way to exit the programs without taking away the gains which were produced.

To Recap: US housing and industrial production data disappoints, and illustrates the US continues to struggle to recover. The Bank of England minutes showed they were split on a rate increase, and markets pushed the pound lower. The US blew through the debt limit, but Geithner arranged a rescue using government pension funds. Sweden continues to be a star with a strong budget surplus, and Sweden's central bank is looking to charge banks who hold risky US dollars. Finally, the Bank of Japan Governor warned that the Japanese economy is in a very 'severe state'; so hows that QE doing for you?

Currencies today 5/18/11. American Style: A$ $1.058, kiwi .7868, C$ $1.0265, euro 1.4229, sterling 1.6145, Swiss $1.134, . European Style: rand 6.9336, krone 5.5663, SEK 6.3097, forint 188.81, zloty 2.7578, koruna 17.2169, RUB 28.048, yen 81.14, sing 1.2437, HKD 7.7749, INR 45.0575, China 6.5044, pesos 11.7254, BRL 1.6156, dollar index 75.368, Oil $98.24, 10-year 3.11%, Silver $34.5313, and Gold $1,492.28

That's it for today. The Cardinals pulled out another win last night with a 9th inning run. I wasn't able to catch any of the game, as I had dinner with one of the folks we buy a lot of our metals through. Speaking of metals, our newest MarketSafe CD, the Timeless Metals CD sure seems to be popular with investors! Looks like it is going to be a beautiful day, hope everyone has a Wonderful Wednesday!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Risk Aversion Sets In.

Chuck Butler — Thu, 05 May 2011 14:22:00 GMT

.........But First, A Word From Our Sponsor..........

Register now to attend the Global Currency Expo May 12-14 in La Jolla, California. A must-attend event, it's perfect for everyone-from the novice to elite investor-featuring workshop tracks based on currency investing experience

Attend and discover the top currency picks and practical how-to strategies from 30+ of the top investing experts-nationally and internationally. You'll hear:

>My top 5 currencies plays that could supercharge your retirement plans

>Charting patterns that expert currency analyst, Evaldo Albuquerque,

>personally uses when investing

>Special keynote presentation from Doug Casey, founder of Casey Research

That's just a fraction of all that's available. So don't delay-register for this private conference today.

EverBank is an Equal Housing Lender and member FDIC.

...

In This Issue.

* Another Risk Off Day.

* Silver on the downside of its ascent.

* BOE & ECB meet today.

* China is doing it again.

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

Risk Aversion Sets In.

Good day. And a Tub Thumpin' Thursday to you! Let's all get our tubs out, and get to Thumpin' because we need to generate some warmth, as we're still dealing with cooler than normal weather here in the Midwest. We could also Thump the tubs to cause a distraction from the current trading themes. Hey! If that worked, that would be something! HA!

Well. thanks to Chris for taking the conn on the Pfennig yesterday. As he told you I had been to a Jimmy Buffett concert the night before, and brother was it a late night, and cold! UGH! I'm still draggin' the line this morning, but I carry on despite my lack of sleep!

I'll start today's discussion with some thoughts on Silver. Yes, that same Silver that touched $50 two weeks ago, has seen the slippery downward side of its ascent VS the dollar, with only a brief pause last Thursday and Friday. Silver needs to find a bid somewhere! I talked to my friend (exchanged emails), Sean Hyman yesterday. You know, the same Sean, that broke the news that Silver had gone parabolic on the charts. Well. if it was parabolic at $40, then it must have been uber-parabolic at $50! But it finally broke to the downside. So, I asked him where he saw Silver falling back to. he said, "If the $38-39 area holds at the 50 day SMA then it could bounce back upward. But if silver crashes through that area, then $27-$30 would be the next stop (the 200 day SMA area). Parabolic moves usually eventually make it back to their 200 day SMAs. So if it doesn't do it now..there's a great chance it does it upon the next bounce and then sell-off."

Thanks Sean! Well. that's technical talk for you today! I sure wish Silver would prove the chartists wrong. But, even Silver bulls like Eric Sprott (in Canada) sold a ton of his Silver this past week. Now, if Silver guru, Ted Butler, sends out a sell signal for Silver then, I would say run for the hills! But I doubt we'll see that happen!

I have to wonder though, where the CFTC regulators are during these past few weeks, when a ton of the trading /selling is being done after hours? Doesn't that smell bad to you? It does to the guys over at www.zerohedge.com who have been following this price action, and had this to say. "Just like yesterday and the day before, 6:30pm is now the official precious metal "bang the afterhours" launch time."

OK. I know, I know. if the regulators aren't going to do anything about it, then I should just let it go, and accept the daily beatings. Ahhh grasshopper, but that's how you become a victim. So, I'll soldier up, and continue to report on this stuff!

As I mentioned the other day. The CME raised the margin requirements for Silver contracts. The CME has made it 84% more expensive for speculators to trade Silver. On Tuesday this week, I wrote in the Pfennig. "The Commodities exchange announced yesterday that they were raising the minimum amount of cash that must be deposited when borrowing from brokers to trade futures, from $14,513 to $16,200." Well. now, today, on this Tub Thumpin' Thursday, the Commodities Exchange has raised them again, and beginning May 9th (next Monday) the cost rises to $21,600 per contract.

While I commend the Commodities Exchange for raising the margin requirement to keep Silver from getting too extended in its price. I wonder why they allow this daily after-hours selling to occur?

Well. the dollar is really having its way with the currencies, as the Risk Off trading theme is really digging a deep trench, and appears to want to remain there for now. Not to get too upset, we've seen these periods of time in the past, and they don't last too long. But while they are around, you get all kinds of knuckleheads talking about the dollar going on a multi-year rally. Not me! Look. the dollar went into the weak dollar trend in Feb. of 2002, for a fundamental reason. The deficit had reached a level that historically spelled a currency crisis for any country that allowed their debt to GDP ratio to reach 4.5%...

Well.. history may not repeat itself, but it sure does rhyme! And the dollar has experienced major weakness since then (except for 6 month rallies in 2005, and 2008/09) and will continue to do so, until the fundamental reason is corrected or is well on the road to correcting. Does the dollar qualify as correcting or well on the road to correcting the debt to GDP ratio of 4.5%? Shoot Rudy, it hasn't even turned on to the road to correcting, much less traveling down it! The debt to GDP ratio is around 6% right now. and the CBO has forecast that the ratio will average 4.5% for the NEXT TEN YEARS!

So. when I turned on the currency screens this morning, the usual suspects that rally on Risk Off days, dollar, yen, francs, were all stronger. But there was a newcomer to the party. The euro was also showing some strength, which was weird, but actually happening. But now that I look at the screens, after typing away here, I see that the euro has come back to earth, and is struggling to remain in the green this morning.

On a side bar. In Panama last week, a Pfennig reader, came up to me, and said, "OK, let me see those fat fingers you always talk about". So I showed him! HA!

So. Risk Aversion rules the trading arena this morning. We've seen this all before. it panics the weak hands, and provides opportunities to the bold hands.

One thing that Risk Aversion does give us, is cheaper Oil prices. And that's a welcome sight. I'll betcha a dollar to a Krispy Kreme that Big Ben Bernanke is sitting in his office and watching the price of Oil drop from $112 to 106 this week, and smiling. leaning back in his big overstuffed leather chair, with his feet propped up and smiling like a Cheshire Cat, and saying. "See! I told you all that the inflation pressures we all felt were "transitory".

Now. don't let this "slippage" trick you. When assets rise in price so quickly, they hit targets, and profit taking takes over, and once selling is in place, it triggers more selling. until somebody says. "Hey this is stupid", and we get back to the underlying fundamentals trends.

OK. Well. the Bank of England (BOE) and European Central Bank (ECB) are meeting as I type away with my fat fingers. And, I'm still of the opinion that the ECB has an outside chance at a rate hike today, while the BOE has no chance. It would be a huge feather in the euro's cap to see a second consecutive rate hike, but I don't think that ECB President, Trichet, wants the markets to feel that every meeting will produce a rate hike. But. you never know, Trichet, may just throw caution to the wind, and strike now while the inflation pressures are still hot.

The key here is that the markets are at the very least looking for Trichet to mention the ECB's "vigilance" in fighting inflation. if he does that, the markets will be satisfied for now, and look to next month's meeting.

Speaking of Central Banks. the one that I have the most problem with, is the Fed. plain and simple. No punches pulled, and now letting them off the ropes. Well, did you see the Fed Head Rosengren's comments? Rosengren is a strong believer that the stimulus won't be removed for some time. He said, "Right now we're pretty far away from our targets, and right now we're keeping monetary policy accommodative. It's very appropriate given how far we are from our targets."

Hmmm. just for the record, the targets that this Fed Head is talking about are: full employment, and inflation. I'll keep my thoughts about these targets to myself this time, as the last time I dealt with them, I got my hands slapped, for being so hard on the Beaver.

The Big Winner in the currencies overnight is the Japanese yen. Yen has gained VS the dollar to less than 80 yen per dollar. The last time this happened (a month or so ago), the Bank of Japan (BOJ), gathered their central banker friends to sell yen in a coordinated intervention. See how long that lasted? I think this is just speculators and traders testing the BOJ's resolve. I don't think that fundamentally yen is in any good shape to warrant a sub-80 price. But G-7's coordinated intervention laid down the gauntlet for traders and speculators, and now it's the traders and speculators turn to hit back!

In Australia overnight. Aussie Retail Sales for March showed a decline of .5% from the previous month. and it's this kind of data that pushes the Aussie dollar (A$) down, as the rate increase forecasts get weakened.

And In New Zealand, 1st QTR Employment rose 1.4%, lowering the unemployment rate to 6.6%, but it's just not enough to offset the drag of the A$, and kiwi sold off.

I see where Gold is hanging on to $1,500, barely. One would have thought that hearing the news that broke yesterday that Mexico had bought and taken delivery of 93 tonnes of Gold, would be enough to strongly underpin the shiny metal. But Gold is down $13 this morning nonetheless.

Then there was this. Officials from China, Japan and South Korea agreed on Wednesday to study a proposal to use their own currencies for regional trade settlement instead of the U.S. dollar, according to a Dow Jones Newswires report.

Chuck again. Yes, the exit away from using dollars continues folks. Remember, that as the reserve currency of the world, the dollar is in the middle of all commodity transactions, and in terms of trade. But China is circumventing that arrangement and has been for about 2 years now. The Chinese will eventually remove the dollar from all of their trade. (except with the U.S.) When other countries see how successful these trade agreements are for China, they will want to do the same, and then. the dollar is reduced to second place. Not this year, not next year, but can you believe that by 2017, I think this will happen?

To recap. The Risk Off trading has turned to deep Risk Aversion, with the usual suspects of dollars, yen and francs as the clear winners. Silver saw another day of heavy selling, and another day of added margin requirements on Silver contracts, which has scared away the speculators and traders.. The ECB and BOE meet this morning. And China is at it again!

Currencies today 5/5/11. American Style: A$ $1.0665, kiwi .7875, C$ $1.0345, euro 1.4825, sterling 1.65, Swiss $1.1645, . European Style: rand 6.7075, krone 5.3460, SEK 6.1140, forint 178.60, zloty 2.6604, koruna 16.3150, RUB 27.25, yen 79.85, sing 1.2340, HKD 7.7725, INR 44.76, China 6.4932, pesos 11.69, BRL 1.6175, dollar index 73.09, Oil $106.75, 10-year 3.20%, Silver $37.75, and Gold. $1,500

That's it for today. It's Cinco de Mayo! Whenever we get to this day, I'm reminded of when I was in Cancun, in 1997. We passed a outdoor square and a guy was playing his guitar (electric) and had all his equipment set up. We stopped to listen, and soon, he was playing Dust In The Wind, I recognized it, and grabbed his microphone, and began singing along with him, right there in Cancun! Of course my wife was embarrassed, but the couple we were with thought it be cool. So. there you have it! There's a day game at Busch stadium today, but I'm stuck here! UGH! So, go out and thump your tub, and celebrate Cinco de Mayo, if that's what you like to do, and be careful!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Ben sets the tone...

Chuck Butler — Thu, 10 Feb 2011 15:49:41 GMT

.........But First, A Word From Our Sponsor..........

Attend and discover the top currency picks and practical how-to strategies from 30+ of the top investing experts-nationally and internationally. You'll hear:

>My top 5 currencies plays that could supercharge your retirement plans

>Charting patterns that expert currency analyst, Evaldo Albuquerque,

>personally uses when investing

>Special keynote presentation from Doug Casey, founder of Casey Research

That's just a fraction of all that's available. So don't delay-register for this private conference today.

EverBank is an Equal Housing Lender and member FDIC.

...

In This Issue.

* The market isn't a fan of QE.

* The euro rode the wave.

* BOE meets today.

* Double dip in New Zealand?

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

Ben sets the tone...

Good day...and a Terrific Thursday to you. Wow, it was a cold start for us here in the Mid West. As I was driving into the office this morning, I had the heater basically full blast and wondered why I wasn't nice and toasty warm. When I looked down on the dash and saw a single digit on the thermometer, all of my questions were answered. We haven't really seen any lasting mid winter thaw as of yet, but it looks like we're going to end the week above the freezing point. The US dollar couldn't shake the frost either yesterday as we had yet another day of selling pressure, but this time it was Bernanke moving the market.

What we lacked in the way of data was more than made up for by Bernanke's comments at the House Budget Committee yesterday. I guess the proper way to phrase it would be the lack of what was said as there weren't any earth shattering revelations thrown about, but instead, the minutes of previous meetings could have been used as it was pretty much status quo.

He said that while the declines we saw to the unemployment rate back in December and January do provide some grounds for optimism, caution is still needed as output growth will likely remain moderate for a while. With employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level.

The fact Bernanke reiterated his view that the employment picture will most likely remain a problem well into the future is what created the buzz. In fact, looking at the chart from yesterday shows everything really took off around 9am central time which is right when he was delivering his speech.

The fact that the Fed expanded its mandate to employment means that policy decisions will largely be impacted by the jobs situation as opposed to just focusing on price stability. Bernanke has repeated the fact that he needs to see a sustained period of stronger job creation before he deems the recovery firmly established.

In other words, the Fed has no intention of amending its outlook for QE2 and will press forward with its original plan of $600 billion worth of Treasuries by June. Any time we have talk about continuing or additional monetary accommodation, namely QE, count on seeing downward pressure on the dollar. As long as we have this type of accommodation and no signs of tightening on the horizon, I think a good amount of any positive data will tend to be overshadowed.

Before I move on, I got a chuckle out of this one. When Bernanke was asked about inflation, he said indications in our financial markets are lacking the proof needed to raise inflation expectations and pointed to the 1.2% figure in 2010. Despite rising oil and food prices, he still contends inflation remains quite low and deflected the blame toward China and other fast growing economies instead of the Fed's stimulus policies as to the origins of any such inflation pressures. I guess it's been a while since he paid for a tank of gas or got the grocery bill.

As I mentioned yesterday, the only economic report released was the weekly mortgage app figure and displayed the drop off that many were anticipating. The index fell 5.5% as mortgage interest rates rose to a 10 month high which has hampered much of the incentive to buy or refinance lately. Right out of the starter blocks this morning, we get the weekly jobs numbers followed by wholesale inventories and then the monthly budget statement in the afternoon.

Both the initial and continuing claims are expected to build upon gains from last week, but the winter weather effects might show differently. The initial claims are expected to drop to 410k from last week's 415k and continuing claims are expected to come in right at 3.9 million. Keep in mind that figures for continuing claims don't include those who have used up their traditional benefits and now receive emergency or extended payments.

Wholesale inventories for December are expected to show a slight increase from the previous month's contraction, but again, another muted result is expected. At this point, inventory levels look to be maintained rather than ramping up to any significant levels. If we recall, inventory building was a key component to the economic growth early on so business inventories due out next week will give us additional insight.

Moving on to currencies, the euro put together a nice run on the day and managed to pull most of the other regional currencies, including the Swiss franc, along for a ride. The overall market tendency to sell the US dollar was the main contributor to the euro's 0.75% rise up to 1.3744 yesterday. Even as I left the office last night, the euro was holding firmly onto the 1.37 handle.

As Chuck mentioned before, the euro is the offset currency to the US dollar so the essential continued confirmation of QE2 prompted over a 1 cent rise in the euro. We did have some decent news out of Germany that helped push the euro along as exports increased for a second month in December and business expectations have risen to a 4 year high.

One of the German policy makers said their recovery stands solidly on two pillars, which are trade and demand. The obvious issues remain at play in Europe, but at least Germany has both feet moving in the right direction. Oh, and one more item to keep an eye on. Rumors of Bundesbank President Axel Weber, who carries a hawkish reputation, dropping out of the race to succeed Trichet as the ECB President were floating around late in the day so we'll see how solid that actually becomes.

It's going to be a busy day in the UK as we see both industrial and manufacturing production figures but more importantly, the BOE meets to discuss rates. While the survey points unanimously toward rates remaining on hold for now, there has been quite a stir for a hike recently. Looking back to last month, two members did vote to raise rates by 0.25% but their economy is in the same boat in that inflation pressures are emerging but the economy isn't necessarily strong enough to withstand that type of action.

The New Zealand dollar came in last place and has certainly seen its fair share of issues over the past several months. We had New Zealand's Finance Minister express concern that the economy is at risk of a double dip recession. The economy shrank 0.2% in the 3rd quarter and concern that another contraction in the 4th quarter, which could be right around the corner, would put the economy into a technical recession. Depressed levels in consumer spending and the housing market along with results of the 3rd quarter are what's driving this concern.

As I came in this morning, the euro has given back that 1 cent it gained yesterday and is trading around 1.3630 as the rumors I mentioned before about Weber's withdrawal from the ECB chief race filters through. Since he is the most vocal on the hawkish side of the aisle, thoughts that any rate hike considerations which were being entertained have taken a step backward. All of the currencies are staring at losses so far this morning, but it's a long day so we'll see where they end up.

We typically see the Japanese yen benefit from a strengthening of the dollar, but that's not the case here this morning. On that note, Chuck has some additional thoughts about the yen that he wanted to share...

"Here's my thoughts as I look over the markets tonight.

Seems the markets are Pfennig readers, as I talked about yen losing ground yesterday, and lo and behold , I see yen losing even more ground tonight.. Look, folks, I told you yesterday that I saw cracks in yen's foundation. and there! They are being exposed by the markets. The Japanese yen has been so strong for so long now, that plenty of people don't believe it can get weaker. but I say "forget that thought". !

Here's something else that I ran into tonight. I'm sitting Augie's Piano Bar, minding my own business, when a well known newsletter writer, and Fox Business Channel guy (I can't mention his name) looks at me and says, "cheers to you, Chuck!" He then went on to tell me how his mother had just died (sad thought) but her lawyers handling her account wanted to know why her money market balances had 30% gains to them.. Our guy, said, because I put Swiss francs in her account, because I listened to this guy named Chuck Butler!

True story folks. true story. and with that, it's now back to Mike!"

Thanks again Chuck. That's a perfect example of how functional diversification into foreign currencies can actually be.

To recap...Bernanke's testimony yesterday at the House Budget Committee that unemployment will remain elevated along with rhetoric about low inflation have all but set in stone that the entire $600 billion stimulus measure will be used. The use of the QE word sent investors selling the dollar. Mortgage apps disappointed yesterday but we get to see the weekly jobless numbers today. The euro functioned as the US dollar offset and the BOE meets to discuss rates today. New Zealand policy makers worry about a double dip.

Currencies today 2/10/10. American Style: A$ $1.0051, kiwi .7685, C$ $1.0035, euro 1.3637, sterling 1.6068, Swiss $1.0382, European Style: rand 7.2775, krone 5.8285, SEK 6.4801, forint 200.07, zloty 2.8780, koruna 17.7720, RUB 29.3676, yen 82.65, sing 1.2783, HKD 7.7879, INR 45.7188, China 6.5860, pesos 12.1186, BRL 1.6631, dollar index 78.06, Oil $86.36, 10-year 3.64%, Silver $29.75, and Gold.. $1,357.00

That's it for today...and one day closer to the weekend. I don't know what it was this morning, but it took a while to shake the cob webs this morning. Talks of the Albert Pujols contract negotiations remain the talk of the town...I just hope they can find some middle ground somewhere and put this thing to bed. I'm so ready for the days of these single digit temps and highs in the teens or twenties to be over...I know winter is basically only half way over but it seems like its been here forever. Anywho, gotta run because I'm a little behind, so until tomorrow...Have a Great Day.

Mike Meyer

Assistant Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Taking Back Lost Ground.

Chuck Butler — Wed, 26 Jan 2011 15:59:00 GMT

.........But First, A Word From Our Sponsor..........

Attend and discover the top currency picks and practical how-to strategies from 30+ of the top investing experts-nationally and internationally. You'll hear:

>My top 5 currencies plays that could supercharge your retirement plans

>Charting patterns that expert currency analyst, Evaldo Albuquerque,

>personally uses when investing

>Special keynote presentation from Doug Casey, founder of Casey Research

That's just a fraction of all that's available. So don't delay-register for this private conference today.

EverBank is an Equal Housing Lender and member FDIC.

...

In This Issue.

* Bias to sell dollars remains in play.

* Norway & Sweden gain.

* Central Bank meetings today.

* BOE see inflation pressures.

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

Taking Back Lost Ground.

Good day... And a Wonderful Wednesday to you! It was "scans day" for yours truly yesterday. going from one part of the hospital to the other. You would think that all these areas where they do basically the same thing, but with different machines, would be in the same general area, eh? You know me, I'd find something that doesn't work efficiently any where!

All right! Now dig this baby. (a little Jimi to start the day). The currency markets, as far as I could tell when I got home yesterday afternoon, were once again led by the Big Dog, euro. This is so weird seeing this happen, given all the talk from people that have spouted off about this for a couple of years now, that the euro was going to collapse. OK, maybe this is a case of a shining star burns the brightest right before it burns out. But, I don't think so. And By the way, the euro has taken back the 1.37 handle this morning. Every step higher for the euro is taking back lost ground.

I like watching the little dogs, when the Big Dog gets going. for instance, Norwegian krone. The krone has long been one of my fave currencies, due the fiscal stability of the country. Time Magazine, a couple of years ago, called the krone the "safest currency in the world". Well, I wouldn't go that far, but fundamentally speaking, the krone is on terra firma for sure! And Norway's kissin' cousin, Sweden, and its krona, have become the darlings of a lot of currency pundits. (they got tired of banging the drum for Norway, and switched to Sweden, like those two guys in the TV commercial). But, when you do a quick chart of the best performing currencies (of the majors) year to date (4 weeks), the Swedish krona, sits on top. followed by the euro, and then the Danish krone. Interesting top of the heap I would say.

This morning, we'll see what Norway's Central Bank, The Norges Bank, has up their sleeves, as they will announce their rate intentions. I don't see the Norges Bank raising rates right here, right now. and, we could actually see a statement by the Norges Bank that's on the dovish side. There's a new sheriff (Central Bank Gov.) here, and you might see him attempt to put "his stamp" on the rate announcement. if that happens, I would expect the krone to back off a bit.

There's a Global Investor Poll that indicates that most global investors predict at least one nation will leave the Eurozone within 5 years, and could be 2 leaving. The two Ireland and Greece. I find this to be very interesting, because this is something I told an audience in Scottsdale AZ, last February! I also told them that the short-term hit to the euro would be bad, but eventually, it would be a good thing for the euro. I compared it to the slowest Buffalo theory. (I crack up at the comparison Cliff Clavin used on the old Cheers show). But, that's something for those that can see into the future.

Gold & Silver got whacked again yesterday, as things just keep piling on these two precious metals. Things like successful bond auctions in Europe, brighter forecasts for the U.S. economy, and now the state of the union address last night, that should leave many people feeling like they just drank one of those energy drinks. Just wait for the "crash" later.

To me, Silver is the metal that has me scratching my bald head. I had a reader send me a note that said he had gone to the mint to buy Silver coins, like he has always done, and they, for the first time, put a limit on the number of coins he could buy. 200. Hmmm. Something's strange here folks. Demand is soaring, and the price is falling.

The Reserve Bank of New Zealand (RBNZ) also has a rate announcement due this afternoon. And I don't expect any fireworks here either. Everybody's on hold, for now.

And that includes the Fed/ Cartel/ Bernank. Which will end their 2-day meeting that was filled with some competitive board games. Hey! They've got to fill the time with something! Why else would they need 2-days, to announce that they are keeping rates unchanged, and the U.S. economy is continuing at a slow pace? Hey! They have to say that about the economy, or stop the QE2!

And China's President, Hu, has returned home. It's now time for the renminbi to stop aggressively gaining VS the dollar! HA! Well, that's what's happened any time in the past whenever the U.S. visited China. As soon as it was wheels up for the plane, the renminbi would weaken.

In all my "down time" going from one area of the hospital and waiting, to another area and waiting. I got to do some reading, and one of my fave pieces to read each day is the Daily Reckoning (www.dailyreckoning.com). yesterday there was a great example of what I've been talking about for years now... And that is... having the Chinese allow their currency to gain VS the U.S. will not be that big of a deal to the Trade Deficit, but... will act as a tax on U.S. Consumers because their purchasing power was reduced, by the fact that the dollar weakened VS the renminbi... Here's a snippet of the story from yesterday's D.R....

"Imagine, for example, the Obama administration got its wish and the Chinese renminbi rose relative to the dollar and all other currencies by 20% in the year ahead. Using the example of the iPhone, such an appreciation in the value of the Chinese currency would reduce the price of all of the imported components by 20%. As a result, only the cost of final assembly in China would be affected, rising 20% to $7.20. Assuming a full pass-through, that would increase the imported price of the iPhone by a mere 70 cents, or less than 0.5%. Hardly enough to alter trade flows." (you can read the whole story by clicking the link above, and I realize there's more to the story, but I don't have the space for it all)

Chuck again... The lawmakers of this country had better stop, hey now, what's that sound, everybody looks what's going down, because one day the people of the world are going to say, "hey, if the U.S. wants their currency weaker we can darn well help them with that, now can't we?"...

OK. back to other stuff. The Bank of England (BOE) is finding itself between the proverbial rock and another rock these days. Inflation is really picking up steam here, and the BOE is nowhere near a place that would allow them to raise interest rates to combat the rising inflation pressure. BOE members are even commenting on the inflation pressures. But, I don't see the BOE having the intestinal fortitude to hike rates right now.

And that plays well with the Bernank. Look folks. the U.S. has issued tons and tons of debt in the form of Treasuries. These Treasuries have interest rates attached to them, and that interest is paid to the holder of the Treasuries every 6 months. Now. the U.S. can barely make the payments on the interest due now, because of reduced tax receipts. What happens if interest rates rise aggressively here to combat the inflation pressures we're going to see in the next year? That's right. the interest cost on the debt is going to choke us, and out economy. But, then again, deficits don't matter, right? NOT! But not to worry, because as the interest cost is choking us, our Consumer Confidence will be high. you can bet your sweet bippie on that!

Well. Home Prices here in the U.S. took another hit in November according to the S&P/CaseShiller Home Price Index, which printed yesterday, showing a drop of 1.59% in home prices for November. But get this. Consumer Confidence rose Big Time this month. the Consumer Confidence Index went from a level of 54 to 60.6! WOW! I guess all that talk about the economy on the upswing is really working, to get people feeling more confident. That, and the stock market is cooking with gas these days.

Today, we'll see the New Home Sales data from December. Home Prices, keep falling, and New / Existing Home Sales keep rising. Now, that's what we need here. we need for the home prices to continue to fall, so that Americans can get cheaper housing. And with mortgage rates at 4%... It's like the perfect scenario to kick off another housing bubble! I sure hope someone notices this is going on. The only saving grace right now with regards to holding down the possible housing bubble is the unemployment problem, and. I guess it's actually two things. the Inventory.

Then there was this. from the Kansas City Star. The crisis that nearly took down the U.S. financial system in 2008 could have been anticipated and prevented, the Financial Crisis Inquiry Commission said. "The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done," the panel said. "If we accept this notion, it will happen again."

The commission that investigated the crisis casts a wide net of blame, faulting two administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Chuck again. the Gov't could have saved some major dinero, if they had just read the Pfennig, or. better yet, hired me to compile the report! HA! Let's see here, we'll start back in the mid 90's, Big Al Greenspan was the Cartel's Chairman. That's a great place to start.

To recap. The bias to sell dollars remains, but it's a very weak bias. The euro is leading the currencies charge against the dollar once again, with the single unit trading over 1.37 this morning. Norway and Sweden are doing a great job of following the euro higher. The FOMC ends their 2-day, board game-palooza, today. no change in rate or comments is expected. And, it's time for the renminbi to stop gaining aggressively, as their President is back home from his trip to the U.S.! And. Home Prices continue to fall in the U.S..

Currencies today 1/26/11. American Style: A$ .9980, kiwi .7675, C$ $1.0050, euro 1.3695, sterling 1.5865, Swiss $1.06, . European Style: rand 7.0850, krone 5.7430, SEK 6.4835, forint 199.85, zloty 2.8270, koruna 17.6840, RUB 29.75, yen 82.20, sing 1.28, HKD 7.7845, INR 45.70, China 6.5830, pesos 12.06, BRL 1.67, dollar index 77.82, Oil $88.90, 10-year 3.37%, Silver $27.12, and Gold. $1,336.55

That's it for today. Well... another round of scans were taken yesterday... I was 3 months past my normal every 6 months... I tried to forget about doing them, but those darn doctors! HA! so... I'll find out what's up, doc, tomorrow afternoon, but I don't expect anything... In fact, I'm actually feeling better right now than I have in a long time, other than this stupid little cold I have. A great Big Happy Birthday to my youngest sister, Joanie, who lives in Houston, Texas, and I get to see about once a year.. She used to follow me around, and hang on me. But then like Puff the Magic Dragon felt, I found girlfriends. and that was the end of that. OK. We're closing in on Birthdays for Chris Gaffney and our little Christine both of whom celebrate this weekend, with Chris on Friday and Christine on Sunday. I know a lot of customers talk to both Chris and Christine, so, when you talk to them this week, you can wish them a Happy Birthday! And then one more time on the notice that the Orlando Money Show is Feb 9-12, at the Gaylord Palms in Kissimmee. It's free, and you get to come see me! HA! OK. out the door with this letter, Chuck! I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837