Daily Pfennig : Bank of Canada

Brazil Throws The Cat Among The Pigeons!

Chuck Butler — Wed, 21 Oct 2009 14:26:05 GMT

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In This Issue..

* Real leads Commodity Currencies to the woodshed!
* Niall Ferguson speaks his mind...
* BOC leaves rates and statement unchanged...
* Bollard gives the green light!

And Now... Today's Pfennig!

Brazil Throws The Cat Among The Pigeons!

Good day... And a Wonderful Wednesday to you! How many people out there know about "network neutrality"? Well, if you don't know, you're about to find out tomorrow, when it will be decided upon... I'm not going to get into it, because after you find out what it is you'll know why I didn't explain... All I'll say is that this is just another thing that's flying below the radar that's about to be thrown in our laps...

OK... Well... Yesterday, after signing off and hitting the "send button" for the Pfennig, I saw a story that shot across the desk, and then a follow up was sent to me by Don Ries later in the morning. The story was about the Brazilian Gov't imposing a 2% tax on capital inflows... This was done in an attempt to slow down the Brazilian economy by slowing down the "hot money" that's going into the Brazilian stock market by foreigners... Talk about throwing a cat among the pigeons!

This news was like a shot to the heart and you're to blame, for the Brazilian real... Talk about pulling the rug from underneath the real! The loss for the real was 3.5% for the day! WOW! We had a reader call and accuse me of not writing about this story in yesterday's Pfennig, because I didn't want to water down the BRIC MarketSafe CD sales... WHAT? First of all, I didn't know about it until after I sent the Pfennig out... And second of all, What's a tax today that may not even be in place 6 months from now, have to do with the real's value in 3 years from now? Besides, this is good news for those that are buying the real now, for they get to buy it 3.5% cheaper! I shake my head and repeat... HOGWASH! Accusing me of hiding something!

Any way... My colleague on the Currency Capitalist newsletter, Ashish Advani, had this to say about the tax announcement in Brazil...

"Frankly, I think this move to restrict capital flows is a pointless exercise at best. It's simply a waste of time to think that they can control the strengthening Brazilian real."

OK, back to me... In addition, to Ashish's thoughts... I tend to think there's something up Bullwinkle's sleeve here... Recall that about a week ago or so, I told you that Brazil's Central Banker had mentioned the need to raise interest rates 200 Basis Points (or 2%)... So... The Gov't sees the real responding to that comment, and thinks, "Oh my God, we've got a big problem when rates really do go up 2%, for this real will skyrocket! What's a Gov't to do? Ahhh, we'll impose a tax to offset the rate hikes, thus currency neutrality"...

So... I still like the real, but this really points out what I've been trying to say for some time now... These Emerging Markets currencies are Big Swingers, when they're going good, they're really good, but when things go awry, they really go bad, fast! But, that's their game, as long as you know it, no biggie!

But like Ashish said, I see this as a short-term adjustment for the real...

OK... So, that news yesterday sent not only the real to the woodshed, but sent the Aussie, kiwi, Norwegian krone, and Canadian dollar to join the real in the woodshed! The Big Dog, euro lost about 1/2-cent, but was able to avoid the trip to the woodshed.

I also received an email yesterday from a reader that really ticked me off... And I get ticked off every time someone accuses me of this! The reader said that I was accusing the current administration with the "total deficit"... I AM NOT! I HAVE NOT! I USED TO SHOOT ARROWS AT THE PREVIOUS ADMINISTRATION FOR THEIR DEFICIT SPENDING! I CAN NOT BELIEVE I HAVE TO KEEP EXPLAINING THESE THINGS! Look... Do the research and then point a finger at me! The research in this case would show that for over 9 years, I've harped and harped about deficit spending! Remember when the U.S. Current Account Deficit reached 4.5% of GDP in 2001, and I blasted the Gov't for doing that? Of forget about it Chuck, this is akin to talking to one of your kids... One of these days when they're adults they will talk about how smart you became in your late years!

Whew! I was really pounding on the keys there... My fingers need a rest! But as long as we're on the subject of Deficit Spending, (that's been going on for more than 8 years!!!!) Ty Keough sent me this:

The U.S. is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money.

"People have predicted the end of America in the past and been wrong," Ferguson concedes. "But let's face it: If you're trying to borrow $9 trillion to save your financial system...and already half your public debt held by foreigners, it's not really the conduct of rising empires, is it?"

Given its massive deficits and overseas military adventures, America today is similar to the Spanish Empire in the 17th century and Britain's in the 20th, he says. "Excessive debt is usually a predictor of subsequent trouble."

OK... Here's some more Niall Ferguson... Ferguson dismisses the dollar loyalists, citing the British pound -the last international reserve currency - as his example. "These things don't last forever" but don't expect it to happen overnight. "It's a long multi-decade process," he states. Even with the dollar near a 14-month low against the Euro, he claims it's not without historical precedence for the greenback to lose "another 20%" this year.

For international investors the loss is enough to offset this year's stock market gains. Not exactly great motivation for foreigners to keep buying the almighty dollar."

Sounds like Mr. Ferguson has been a loyal reader of the Pfennig for the past 17 years!

Fed Head, Janet Yellen gave a speech yesterday, which her comments are usually good for a few quotes... And this was no exception... Fed Head Yellen said, "IT IS TO BE EXPECTED THAT INTEREST RATE DIFFERENTIALS WILL DRIVE CAPITAL FLOWS and that: U.S. STRUCTURAL BUDGET DEFICITS A SERIOUS PROBLEM, WILL REQUIRE PAINFUL DECISIONS"

Well now, that's two subject that I've talked quite a bit about lately now isn't it? Interest rate differentials, and the Budget Deficit problem... And some people wonder why I say that currency and precious metals diversification is a must? Really? When your own Fed Head thinks that these things will be problems, doesn't that spell it out for you? I thought so...

Not that I'm waving the flag for the Russian ruble here folks, but I think it's important to note that I've said all along that Russia is an "oil play" and nothing more... And that the currency has rallied in step with the rise in oil prices recently... And the ruble's biggest move VS the dollar came overnight after Oil briefly touched $80 yesterday!

A few people asked me yesterday why I didn't include the Swiss franc when I was talking about Aussie and loonies going to parity against the dollar... Well, for one, I wasn't talking about that, I simply gave you a quote from Citigroup's research team. But since you asked... The franc is only 1-cent away from parity, so in my mind it's already there! I just keep thinking about the Swiss National Bank's (SNB) warning to the markets about franc strength...

But hey! What could the little old SNB do to stop the franc from going to parity against the dollar?

Well... I was wrong... There I said it! (My beautiful bride says that I never admit when I'm wrong, and I say I do, it just doesn't happen very often! HA!) I said that I thought the Bank of Canada (BOC) would lift their previous statement that their near zero interest rates would remain in place until the 2nd half of 2010... The BOC did NOT lift that statement... In fact, the BOC hung the loonie out on a line to be beaten until dry! The BOC whined about the strong loonie as working against economic growth...

So... I think the BOC did what they set out to do, and that was to: 1. stop the talk about a rate hike before their stated timeline, and 2. stem the loonie's rise... The loonie dropped about 2% on the day...

But, like most things... The pain of the BOC statement will be forgotten about in a few weeks, and I suspect the loonie to be back on the road to parity against the dollar...

And then there was this... Long time readers know my dislike of the Reserve Bank of New Zealand's (RBNZ) Gov. Bollard, due to his penchant for dissing the currency, kiwi... Well, in a turn of direction... Gov. Bollard said in a speech last night that "there is little the Bank can do to bring down the value of NZD, and that the high value of NZD is not necessarily an impediment to raising the official cash rate in order to quell rising house prices."

That's Central Bank parlance for: "I'm giving you the green light to push kiwi higher"...

U.S. Housing Starts were disappointing in yesterday's print from September, where a .5% gain was very much less than expected...

PPI (wholesale inflation) declined 0.6% in September... Which is a very strange number don't you think?

To recap... Do you know what Network Neutrality is? You had better find out! Brazil imposed a 2% tax on capital inflows to an attempt to slow the economy and the real's rise. The real reacted with a 3.5% drop VS the dollar. The other Commodity Currencies followed the real down VS the dollar. The Bank of Canada also tried to stop the loonie's rise, and the RBNZ's Gov. Bollard give the green light to kiwi appreciation!

Currencies today 10/21/09: A$ .9220, kiwi .7530, C$ .9475, euro 1.4930, sterling 1.6570, Swiss .9890, rand 7.3930, krone 5.5750, SEK 6.8990, forint 177.50, zloty 2.7960, koruna 17.33, RUB 29.17, yen 90.80, sing 1.3950, HKD 7.75, INR 46.48, China 6.8275, pesos 13.02, BRL 1.76, dollar index 75.46, Oil $78.30, 10-year 3.36%, Silver $17.40, and Gold... $1,052.70

That's it for today... I hope everyone is staying healthy, and away from the flu these days... Good luck to the best baseball player today, and best Cardinal since Stan Musial, Albert Pujols will undergo surgery on his right elbow today. Had a visit from one of my all-time fave people yesterday... Ellie Williams came by! Ellie has authored a few books over the years, and in one, that she wrote about 8 years ago, she even mentions me and the Pfennig! Ellie is a fellow cancer survivor, so we always have plenty to talk about! The Big Boss, Frank Trotter, was limping around the office yesterday, having suffered an ankle injury playing soccer (why, I have no idea!) I told him we could go to the orthopedist together, as my knee has never responded to the steroids that were injected into it. Looks like a scope is in my future! And with that... I'll get this out the door! I have an eye appt. this morning, so I need to get working! I sure hope your Wednesday is Wonderful!

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

A Loss Of Confidence In the U.S.?

Chuck Butler — Mon, 19 Oct 2009 14:53:00 GMT

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* High upside potential
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In This Issue..

* Non-dollar currencies rally...
* Euros and Aussie dollars lead the pack...
* $1.42 Trillion Deficit for 2009!
* TIC's data gets ignored again!

And Now... Today's Pfennig!

A Loss Of Confidence In the U.S.?

Good day... And a Marvelous Monday to you! Another "lost" weekend for our college and professional football teams! UGH! The sun finally came out this weekend. YAHOO! It felt so good to be in the sun again... The TICs data was something that needed to be dealt with on Friday, but once again the markets ignored it... I'm telling you, this smells like, walks like, and talks like a gag order... OK... Let's get going this Marvelous Monday!

The non-dollar currencies all drifted on Friday, with the dollar seeing a bit of buying... But that's all been thrown to the curb this morning, as the non-dollar currencies, for the most part, are in rally mode VS the dollar.

The Big Dog, euro, has really pushed the envelope this morning, rising from 1.4860 to 1.4945 as I write... The Aussie dollar (A$) is also working alongside the euro pushing the dollar down. I just put the finishing touches on both the Review & Focus monthly letter, and my "other letter", the Currency Capitalist, yesterday... I had some strong words for the Gov't now and in the past that has allowed this weakness in the dollar. And trust me, if the U.S. Gov't wanted a strong dollar, all they would have to do is say so with conviction, and not this wamby pamby stuff they try to get away with just to put a governor on the dollar's decline... Think about this for a minute... It's true, it's really true... Your Gov't doesn't care about the currency... The currency that we all use, and think it will always be there for us to spend...

WOW! I really got carried away there, eh? I don't need to get up on the soapbox already on a Monday morning! But... These are the things that need to be said, and I'll say them! Not like our wamby pamby media, that will talk about the weak dollar, but never what causes it!

The Gov't finally got around to printing their final Monthly Budget Statement that would end their fiscal year (Sept 30th)... The final total was $1.42 Trillion in the red... That's 10% of GDP! That's the highest level since World War II! And remember when I kept telling you that the expenditures for this administration in 2009 would come in at $3.5 Trillion dollars? Well, that's just about where they came in... And with revenues dropping 16.6% from 2008, we are left with this atrocious Deficit of $1.42 Trillion! And don't forget (here I go sounding like an infomercial again) that the next 10 years is forecast to add an additional $9 trillion to our national debt!

OK, so what's up with the TIC's data from Friday? Remember now... The TIC's data is an accounting of the net foreign purchases which are needed to finance that atrocious deficit... So how'd we do? Well... The big picture of all flows in and out for the last 12 months turned negative and is just shy of the worst level recorded, which was in 1982. OUCH! Central Banks seem to be buying about the same amount, which isn't a good thing when you consider the increase in Treasury issuance... But the real fall off has come from the Moms and pops... The private investors if you will... So... Is this just an aberration, or... It could very well be a loss of confidence of global investors in the U.S....

There was a hint of this loss of confidence on Friday in the China Daily newspaper... And it wasn't the fact that the story was in the paper, it was the fact that the story was front and center for everyone to read... It was a quote by Big Al Greenspan, our former Fed Chairman who said that he "fears the budget deficit of the U.S. more than the collapse of the dollar." Hmmm...

What the heck is Big Al talking about? He knows well and good that the Deficit is the cause of the dollar depreciation! And just the fact that the Chinese put it front and center on their daily newspaper tells me that they are making fun of Big Al, and at the same time telling their readers that they should avoid dollars... I don't know what it tells anyone else, but that's what it tells me!

Recently, I've talked about seeing signs of a return to fundamentals... I really do believe that we're headed in that direction once again, which would be like manna from heaven to your Pfennig writer! Fundamentals are much easier to understand that these crazy trading themes that go against normal logical thinking!

Well... The boys over at PIMCO, the world's largest bond fund, seem to believe that "Fundamental forces are set to put downward pressure on the dollar as the recovery gathers momentum. Those forces include massive budget deficits, bets the Federal Reserve will keep borrowing costs near zero for an extended period, and prospects for a double-dip recession in the U.S."

Sound about right to me! Given those fundamentals for the dollar, and take away the "flight to safety" trading theme, you've got a Betty Crocker award winning recipe for a dollar decline!

The Bank of Canada (BOC) meets tomorrow... I'm going out on a limb here, to say that I think the BOC will remove that statement they've repeated for a few months now that interest rates would remain at current levels near zero until the 2nd half of 2010... Why do I think that, when the BOC has been so adamant about this statement in previous meetings? Ahhh grasshopper... First of all Australia has already raised interest rates, and their central banker has already talked very hawkish about future rate hikes... The other "Commodity Countries" of Norway, New Zealand and Brazil, are also beginning to talk up rate hikes... So, in my mind, the BOC will begin to "feel the heat" of their Commodity Brothers raising rates, and the only way they'll be able to move then is to remove the statement about leaving rates unchanged... NOW!

Getting back to the euro for a minute... I find this move higher by the euro VS the dollar this morning to be quite impressive, given that the Financial Times (FT) had an article saying, "It was time for the ECB (European Central Bank) to get serious about an overvalued euro"... Funny, the timing of this article... The Eurozone Finance Ministers are meeting today... And in the face of all this... The euro rallies!

And as I mentioned earlier in the letter, the A$ is stronger this morning... It's my feeling right now that the negativity toward the U.S. dollar is really seen and magnified in the performance of the A$... And why not? You've got the country that was not affected by the financial meltdown, a country that was the first to raise interest rates, a country that is rich in the commodities that China demands, and on a sidebar, China is forecast to grow 9% in the 3rd QTR, and a country that has a Central Banker that has given the green light for appreciation of the A$ VS the U.S. dollar!

The data cupboard is full of 2nd tier data prints this week, so I really don't think the markets will get any direction from the likes of PPI, Housing Starts, etc. But maybe they will! You never know with these fickle dudes!

So... To recap... The TICs data last Friday indicated a loss of confidence in the U.S., the Budget Deficit for the U.S. was $1.42 Trillion for the fiscal year ending Sept 30th. The currencies, for the most part, are rallying this morning VS the dollar, and the data cupboard will fail to give the markets direction this week. Some Chuck speak on the soapbox on a Marvelous Monday too!

Currencies today 10/19/09: A$ .9225, kiwi .7475, C$ .9670, euro 1.4935, sterling 1.63, Swiss .9865, rand 7.35, krone 5.5910, SEK 6.9580, forint 178.50, zloty 2.8130, koruna 17.29, RUB 29.33, yen 90.80, sing 1.3915, HKD 7.75, INR 46.30, China 6.8268, pesos 13.07, BRL 1.7130, dollar index 75.50, Oil $78.13, 10-year 3.45%, Silver $17.52, and Gold... $1,055.40

That's it for today... Hey! I forgot to mention last week that I had the featured guest essay on the Daily Reckoning (www.dailyreckoning.com) last Wednesday! If you aren't a Daily Reckoning reader, you missed it... But, because of the technology available to us, you can click here to read it: http://dailyreckoning.com/bric-nations-the-fundamentals/ Congrats to my little buddy Alex and his 8th grade Flyers teammates for completing a weekend sweep! Two football games, two smashing victories! Well, it's that time of the year again... On Friday of this week, I'll be going through a ton of tests, scans, needles and other stuff to make sure I'm still on top of the cancer that took over my body 2 years ago. So, I'll be out on Friday... But you still have me for the next 3 days! We closed out our latest BRIC MarketSafe CD last week, and opened the door to another one! This issue has been so popular that we decided to extend the funding period! OK... Time to hit send... I hope your Monday is Marvelous indeed!

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

Cautiously Positive?

Chuck Butler — Thu, 10 Sep 2009 14:12:04 GMT

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In This Issue..

* Euro & yen add to gains...
* RBNZ disappoints...
* Foreclosures continue to stack up!
* BOE & BOC meet today...

And Now... Today's Pfennig!

Cautiously Positive?

Good day... And a Thrillin' Thursday to you! Ahhh! A change! Just thought that with the thrilling victories my beloved Cardinals have been accumulating, that Thrillin' would be a nice change to our Thursday lineup!

Front and Center this morning... The currencies added to their gains this week yesterday, albeit small gains, but gains nonetheless. The Fed's Beige Book was "cautiously positive"... And... Overnight, the Reserve Bank of New Zealand met, and left rates unchanged as suspected... This and more as we begin our Thrillin' Thursday!

The Big Dog euro has been off the porch chasing the dollar down the street for a week now, one would think that a return to the porch for food and water might be in the cards... But, as I was telling someone yesterday... Even though all signs point to a major stock sell-off, it hasn't happened, so why stand in front of the stock and risk assets rally bus?

The euro climbed to very near 1.46 yesterday, before falling back to 1.4550 as the day ended... Overnight, the euro has traded within a narrow range. The Aussie dollar (A$) got slapped on the wrist by traders after it was reported that Australia lost 27,100 jobs in August (consensus was to lose 15,000)... The unemployment rate in Australia remained at 5.8%, but the weaker than expected data caused the A$ to slide from the 86-cent handle to .8550...

If the heat remains on the dollar the rest of this week, then I would expect the A$ to rebound from that sell-off last night. Much like the Brazilian real sell-off last week... You may recall me saying that it was overdone, and I expected the real to bounce back, which it did, and the bounce was like a Super Ball Bounce!

The Reserve Bank of New Zealand (RBNZ) met last night, and kept rates unchanged as expected... But I really thought the RBNZ would opt to change the wording of their last statement following a rate announcement, in which they talked about leaving rates unchanged for some time to come... Well... They didn't change... And instead repeated the comment from the previous meeting... "We continue to expect to keep the OCR (official Cash Rate) at or below the current level through until the latter part of 2010".

Here we go again with a Central Bank making statements about rate policy months ahead to time! I don't see where they have the data to do something like that... But, they do it! I'll bet a dollar to a Krispy Kreme that the RBNZ has to move rates higher before "the latter part of 2010", and when they do, they'll be pushing rates up in 50 BPS clips!

Kiwi also took a slap across the wrist by traders after the RBNZ rate announcement and statement. I'm not so sure about this currency's ability to rebound, but if the A$ does rebound, kiwi normally hangs on the coat tails of the A$...

So... As I look across the screens this morning... I see that the euro and yen are the only currencies that are really stronger today than yesterday... So, my statement at the beginning that the currencies had added to their gains this week, needs to be tweaked, to say just euro and yen have added to their gains this week!

The Norwegian krone, was really on a run yesterday, trading below 5.90... But, couldn't hold those gains. I was reading a story last night about Norway's inflation rate falling, and how that might push back the Norges Bank (Central Bank) timetable for a rate hike from late this year to the 1st QTR of 2010... That thought process is responsible for the pull back in the krone yesterday, and overnight.

Do you see the mental giant (NOT!) thought process that goes through some of these traders? Sometimes it's all about yield differentials, and sometimes it's all about economic growth possibilities. Just like a baseball player wishes for consistency from the Umpire, I wish for consistency from the markets... UGH!

The Fed's Beige Book was "Cautiously Positive" yesterday... And of course, you know me, I want to know why the Fed is Positive at all! Let's see... The Beige Book said, that... Most districts characterized consumer spending as "soft" with a majority of reporting retail activity as "flat." And that the Cash for Clunkers was a positive... HEY! FED HEADS! Cash for Clunkers is over!

On the real estate component... Both residential and commercial real estate markets were described as "weak"... So... Do you see anything in here that spells "positive" for the Fed Heads? I sure don't!

I'll stop there... These guys at the Fed drive me up a wall, and cause me to go over to the walls and scream at them!

One thing the Beige Book didn't contain was the report yesterday that foreclosures in the U.S. jumped above 300,000 for the sixth consecutive month! RealtyTrac Inc. reported that a total of 358,471 properties received a default or auction notice or were seized last month, which is 18% higher than it was a year ago!

And then add in those details I gave you yesterday about the Option ARMs that will reset in the next three years, and this is getting ugly folks...

Doesn't it seem as though the "people in power" have turned their backs on this problem? I mean, don't get me wrong, I don't want the Government sticking their hands in everything, but they already started down this road, and then turned around and headed down a different road... That's the Gov't's way isn't it? As my football coach used to describe someone not giving everything to a play as doing it half-a_ _ ... That's what the Gov't does... I don't want you sticking your hands in the private sector! But! If you're going to do it, do it right and until it's fixed!

The Bank of England (BOE) and the Bank of Canada (BOC) both meet today... The BOE's meeting is going on as I write, while the BOC meeting will take place later today. I look for both Central Banks to remain steady at the wheel. The BOC will really tick me off later today when they repeat their earlier statement that interest rates will remain at near zero until June of 2010... The BOC also talked about the strong Canadian dollar / loonie in their last statement, as "significantly moderating growth"... As if a strong currency is a "bad thing", which it certainly is not! But here's an opportunity... If the BOC doesn't talk about the strong currency this time out, we could see a "relief rally" in the loonie...

Today, the U.S. data cupboard has July's Trade Balance, and since it's Thursday we'll see the latest Weekly Initial Jobless Claims. The Trade Balance is a misnomer as far as I'm concerned... It should read... The Trade Deficit! And while this Trade Deficit isn't as bad as it once was, due to the depression, it remains a bugaboo...

And talk about sticky! Those darn Weekly Jobless Claims! Last week they printed 570,000 new claims, and this week is expected to be 560,000 more! I wonder when these people will be counted as "unemployed" by the Bureau of Labor Statistics (BLS)! OK... You know me... The BLS is one letter too long, as the "L" should be removed!

And... Before I recap, is it just me? Or does anyone else see stock market bubbles all over the world? I've already talked till I'm blue in the face, which is normally red!, about the U.S. stock market being overbought... But there was news yesterday that Asian stock index hit a 1-year high... And that the FTSE, London's stock exchange, returned to the 5,000 level for the first time in a year! Bubbles Greenspan, should be in hog-heaven with all these bubbles floating around!

OK... Almost ready to go the Big Finish... Let's recap first though... Euro and yen have added to this week's gains, while other currencies have seen profit taking. Central Banks in the U.K. and Canada meet today, while New Zealand's Central Bank was a disappointment. U.S. Beige Book is "cautiously positive", and Foreclosures are greater than 300,000 for the 6th straight month!

Currencies today 9/10/09: A$ .8560, kiwi .6940, C$ .92, euro 1.4530, sterling 1.6560, Swiss .9585, rand 7.6150, krone 5.9650, SEK 7.0520, forint 188.10, zloty 2.8710, koruna 17.5725, RUB 30.93, yen 92.10, sing 1.4270, HKD 7.75, INR 48.65, China 6.8292, pesos 13.54, BRL 1.8330, dollar index 77.12, Oil $71.69, 10- year 3.46%, Silver $16.07, and Gold... $984.55

That's it for today... I got the opportunity to sit down and talk with the Big Boss, Frank Trotter, yesterday... That doesn't happen very often, as he is a busy man! Frank always has a way of calming me down, or bringing me back to square one, when I'm all ticked off or keyed up about something. Get the brooms out! Cardinals sweep the Brewers! I was one of the millions probably that got my hands on the new box set from the Beatles, with all their albums re-mastered... My friend and colleague, Ann Hopkins, went to buy one for her husband, and asked me, knowing what a fan of the Beatles I am, if I wanted her to get me one too! How Sweet! And Too Sweet! It was bonus day for me, as I also received in the mail yesterday, my 40th Anniversary Woodstock CD's and DVD! WOW! OK... Enough! Time to get this Thrillin' Thursday started... I sure hope your Thursday is Thrillin'!

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

Home sales improve...

Chuck Butler — Fri, 24 Jul 2009 14:29:00 GMT

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In This Issue..

* Home sales improve...
* Are we there yet...
* Intervention talks...
* Buying on dips...

And Now... Today's Pfennig!

Good day...and a Fabulous Friday to you. As I was sitting here this morning collecting my thoughts, it just hit me like a ton of bricks that we're already towards the end of July and next weekend brings us into August...where's the pause button when you need it. Anyway, yesterday started out like any other quiet morning so far this week but we did see a nice little run in the currencies only to see profit taking as we moved into the late afternoon. As I turned the computer screens on this morning, I see where the overnight markets brought us right back up to the levels we began with this time yesterday. The big story that moved the markets was the better than expected housing numbers that, again, gave investors that warm and fuzzy feeling that I touched on yesterday. Since I already let the cat out of the bag, I'll jump right in...

Sales of existing homes rose for a third consecutive month in June to an annual rate of 4.89 million, which was better than the forecast of 4.84 million that most economists were expecting. May's figure was actually revised down to 4.72 million from the original posting of 4.77, so the month on month rise came in much higher at 3.6% than the expected 1.5% increase. June is traditionally seen as one of the busiest months in the real estate market as families try to make the adjustment in between school years so it wasn't exactly a surprise to see better than expected numbers.

Lower borrowing costs, foreclosure driven price declines, and tax incentives also contributed to these higher numbers. This is certainly good news to hear and I hope the bottom has already passed us by or is near, but as I mentioned yesterday, I won't get too excited until unemployment gets back to a supportive level and the full backing of the consumer underpins this move. If anything, this may end up being a protracted bottom and a slow road to normalized levels.

We also had the weekly initial jobless and continuing claims released yesterday but was overshadowed by the positive housing numbers that came out. The initial jobless figure came in 30,000 higher than last week to 554k but continuing claims backed off a bit to 6.23 million from last week's revision up to 6.31 million. Bernanke said earlier this week that job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending. With that being said, it still looks like we have plenty of breakers to get through before we reach the safety of calmer waters.

Today doesn't bring us much in the way of reporting as the only data due out is the final printing of the U. of Michigan consumer confidence number for July. The preliminary figure was released a couple of weeks ago and fell more than forecast to 64.6 from June's 70.8 reading. This generally isn't a big market mover but its expected to settle in a tad higher at 65. This one is a tough call as the stock market has risen quite a bit in that time period but we'll see if job and income concerns keep this month's number grounded. Since this is all we get today, it will be interesting to see how much attention the markets give this report.

Just as we saw the Dow hit the 9000 mark for the first time since January and the euphoria of the housing market has gained momentum, well respected economist Nouriel Roubini, had a different take on things. In a report released today, concern was expressed that a perfect storm of fiscal deficits, rising bond yields, soaring oil prices, weak profits, and a stagnant labor market could blow the recovering world economy back into a double dip recession. He went on the to say that its getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented. I guess the moral of the story here is to proceed with caution and buckle your seat belt because the ride could get bumpy.

Moving on to currencies, the Swedish krona and the Canadian dollar both posted 1% gains yesterday while the Japanese yen, New Zealand dollar, and Swiss franc rounded out the bottom. The two currencies at the top of the list had much different reasons for ending the day where they did as the krona traded higher primarily on the back of risk appetite. As investors feel more comfortable with buying riskier assets, the thinner traded currencies like the krona, benefit even though Sweden's unemployment rate rose for a second month in June to 9.8%.

The Canadian dollar, on the other hand, rose to a 7 week high as the central bank said the recession is nearing an end brought on by higher commodity prices and consumer confidence. The central bank kept rates at the record low of .25% a couple of days ago and reiterated they will stay there for a while unless inflation becomes a problem. Since Chuck is across the border in Canada right now, it's a perfect time to get our daily dose:

"I was reading the local paper the other day, and the business section had a big story on the Bank of Canada's (BOC) Gov. Carney and how he vows he will intervene to keep the loonie from going higher... In the last two days since that story appeared, the loonie has done nothing but gain vs. the green/peachback... 91-cents it traded through yesterday! I can't help but think that traders are beginning to believe that Central Bankers are imitating the boy who cried wolf... We had the Brazilian Central Bank, the Swiss National Bank, and now the BOC... They all are giving verbal warnings about traders taking their currencies higher...

The Central Bankers do this under the disguise of "we don't want deflation in our economy" opting for the weaker currency to introduce inflation... I think this is all a smokescreen! I think this is a coordinated effort to keep their currencies from going hog-wild VS the dollar... The Central Bankers all know that the dollar is teetering, and without speed bumps we could see a mad exit for the door for dollar holders... Just what I think... Nothing more, nothing less... Just my thoughts... "

Thanks again Chuck, its always great to get your insight. Since we're already talking about central bank intervention, I saw a report today that has some looking for the Swiss National Bank getting back into the game. According to the Big Mac index, which is a purchasing power parity figure using the cost of a Big Mac as the measure, the Swiss franc is the second most expensive in Europe. Its just a fun little tid bit I thought would be good to break the monotony. Anyway, the Swiss franc is largely influenced by the euro and risk appetite so while the SNB may step in, there's really no way to stop the moving train. As Chuck has said many times before, the markets have much deeper pockets than a central bank.

As I got to the office yesterday, the euro was hovering around 1.42 and climbed just shy of 1.43 to 1.4291 before we saw the profit taking drag it down to 1.4150 on my out the door. I saw a report where the euro had established a base at 1.4050 and calls to buy on dips, which is certainly a strategy that would be consistent with our views. As I touched on above, the Asian and overnight markets have run things right back to the levels from yesterday but as the European traders hand the books to those in New York before heading out for the weekend, the dollar is still getting sold. Don't look now, but I see the euro at 1.4250...hopefully we can hold on to this and finish the week on a positive note. It looks like the euro is also getting some help from within as reports showed the contraction in European manufacturing and services slowed more than expected and German business confidence improved.

While I'm talking about Europe, we had some positive new come out of the UK as retail sales quadrupled the estimate and surprised the markets with a June gain of 1.2%. Year over year sales are actually up 2.9% and has economists looking for a near zero GDP figure in the second quarter. HSBC actually raised their forecast for the pound from 1.60 to 1.75 by year end 2010 and justified the call by saying the likelihood of an interruption in the asset buying program from the BOE could be as soon as next month. They also feel rates will rise before the Fed but this is a long way off and a lot can happen. Just like the US, I don't see enough at this point to be comfortable buying this currency, but hey, we've been early on some calls too.

One of our newest multi-currency CDs, the Global Power Shift CD, has also been keeping the phones busy lately. With commodities and commodity based currencies leading the charge, it seems like we talk about at least one of them everyday, so I thought I would give it a mention. This CD combines the Australian dollar, the Brazilian real, the Canadian dollar, and the Norwegian krone into one instrument and just provides you with a little bit of everything...not a bad way to provide that hedge against a weakening dollar and gain exposure to commodities at the same time. Well, its about that time and I need to wrap it up so on to the big finish...

Currencies today 7/24/2009: A$ .8170, kiwi .6573, C$ .9214, euro 1.4230, sterling 1.6462, Swiss .9353, rand 7.7236, krone 6.2308, SEK 7.4710, forint 188.04, zloty 2.9538, koruna 17.9280, yen 94.86, sing 1.4407, HKD 7.7500, INR 48.2750, China 6.8316, pesos 13.1903, BRL 1.8991, dollar index 78.686, Oil $67.25, Silver $13.7850, and Gold... 952.86

That's it for today...its your Friday!! I just wanted to send congrats toward St. Louis native Mark Buehrle, pitcher for the Chicago White Sox, as he became the 18th player to throw a perfect game...truly a remarkable feat. Our office has a team in a local kickball league so I wonder if our pitcher, Tim Smith, was able to match that performance...lol. It was a rough go this morning as the words just didn't come all that easy for me but hopefully I was able to make some sense of it all. Alright, its really getting late so I need to get going here. Have a great Friday and a wonderful weekend...Until next time
Mike Meyer
Assistant Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

Desperately Seeking Yield...

Chuck Butler — Fri, 26 Jun 2009 15:27:32 GMT

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In This Issue..

* Currencies rally...
* More on the BRIC's...
* New Zealand's GDP contracts..
* Bernanke gets grilled!

And Now... Today's Pfennig!

Desperately Seeking Yield...

Good day... And a Happy Friday to one and all! The end of what seemed to be a very long week... The last weekend in June, can you believe that? Next week, we'll be getting ready for the 4th of July celebrations! WOW!

Well... What a volatile week it has been in the currencies! Up, down, all around, and settling back to levels that we saw before the Fed's FOMC meeting earlier this week. Suddenly, investors are looking for yield again... Looks like they are "Desperately Seeking (not Susan) Yield! And why not? The Fed, and the Bank of Canada (BOC) have come out and said that there will be no interest rate hikes until we've turned quite a few pages on the 2010 calendar.

So, with investors clamoring for yield, the dollar gets taken to the woodshed... As I said earlier this week, one of these probes above 1.40, need to take hold of the figure and build on it, otherwise we're doomed to remain in the 1.35-1.40 range, and range trading is for the birds! Talk about counting flowers on the wall, and watching paint dry! UGH!

I was shocked yesterday to see but a few emails asking me more about the SDR's story that I talked about... Men, women, boys and girls, all... This is important stuff! Don't take it lightly! There's a movement underway that could end up costing you dearly, if you do not take the diversification steps...

I think it is important to know that the BRIC countries (Brazil, Russia, India, and China) are serious about replacing the dollar with a "global currency" i.e. the IMF's SDR's... And... That the BRIC's want more power on the World's stage... And why not? These countries currently have almost 3 Trillion in foreign reserves... And... A very large piece of the world's population... (Thanks for that fodder, Kevin!)

OH! And guess who was banging the drum for a "super-sovereign" currency overnight? China, that's who! So... They're Baaaaaaaaccccckkkkk! OK... This was the People's Bank of China (the Central Bank), that made this statement, along with a call for the IMF to manage part of member's foreign exchange reserves... Hmmm... OK, I just said that China wants more power on the world stage, and here they are saying that their puppet will be the IMF! OK, I took some liberty with that, but it's the way I see it!

OK... Back to what's going on in the currencies today... Hmmm... The dollar is getting taken to the woodshed to end the week, that's what's happening! And the currency leading the pack with regards to performance VS the dollar, drum roll please.... The Brazilian real... A 3 day "winning streak" has the real back to levels it saw before the Brazilian Central Bank (BCB) cut rates about 10 days ago...

The way I see it, and long time readers know this will be interesting in the least, is that investors want to invest in the BRIC countries, but there's very little liquidity there in each of those currencies, along with very little yield, except... In Brazil... Liquidity isn't what the majors enjoy, in fact it's still traded on what's called a "non-deliverable forward", which means it can only settle in dollars, with no deliverability, but... It's traded easier and less costly than the other BRIC's and... It has the highest interest rate available... So... You can see why investors are buying reals...

Having said that though... You must know about the volatility... Look at what happened this week... On Monday, we started the week with the real at 1.9750, only to see it rocket to 2.0326 in one day's trading, a near 3% move / loss in one day! Then we saw it rally back to 1.9795 the next day, and after 3 days of gains the real sits at 1.9420 this morning, thus generating a "gain" for the week! And... The other thing, is that Brazil is considered an Emerging Market... And long time readers have learned over the years that when one Emerging Market gets slammed, they all get taken to the woodshed... So... Be careful out there!

A high yield currency that far removed from the early days of trading like Brazil, but offers yield, is the New Zealand dollar / kiwi... And kiwi has been held back, although still posting a gain VS the dollar, overnight as 1st QTR GDP printed at a negative -1%, thus marking the 5th consecutive quarter of negative growth in New Zealand...

I'm probably out there on the big fat limb (to hold me up, of course!) by myself on this one, but... I personally believe that both the Reserve Bank of New Zealand (RBNZ) and the Reserve Bank of Australia (RBA) have seen the lows in their interest rates, and no further rate cuts will come from these respective Central Banks. I know, that last week, we were all hyped up about future rate hikes from the RBA in 2010, and we probably got a little ahead of ourselves with that thought... I'm probably ahead of the curve on the "end of rate cuts" talk... But that's where I like to be!

So... When the world's investors are looking for yield, they don't have to go to Brazil, or India... They can go to the old reliables... Australia and New Zealand, with a reduced fear of further rate cuts... At least that's they way I see it! And yes, I could be wrong...

And how about Gold and Silver this week? What a week on Mr. Toad's Wild Ride for precious metals... The main thing though is that they are finishing the week with a rally, and Gold which was trading at $922 on Monday, is $944.85!

And how about that grilling that Big Ben Bernanke received yesterday by legislators over the Fed's conduct in the Bank of America (BOA) takeover of Merrill Lynch... You may recall that BOA's CEO, Ken Lewis said he was "bullied" into taking over Merrill and not disclosing to his shareholder all of Merrill's losses that were on the books... Big Ben denies that he participated in any bullying... (doesn't that lead to Paulson then? Did Big Ben just throw Paulson under the bus?)... Any way... Big Ben did little to convince the legislators that the Fed didn't keep their hands out of the cookie jar... And that, my friends, may be the foot in the door that we've been looking for... Maybe, just maybe, because you never know, but with the legislators having questions about the Fed and Big Ben, they probably aren't in any mood to hand over the regulatory powers that the President wants to give them...

And... My old fave Central Banker, NOT! Big Al Greenspan was back in the news last night... I'm trying to figure out how he and I got on the same side of the ship... But, here was Big Al, my nemesis for years, talking about inflation being a concern... Let's listen in to Big Al... Alan Greenspan, former chairman of the Federal Reserve, said the threat of inflation needs to be confronted because it poses a threat to economic recovery. "Excess capacity is temporarily suppressing global prices. But I see inflation as the greater future challenge," Greenspan said. "If political pressures prevent central banks from reining in their inflated balance sheets in a timely manner, statistical analysis suggests the emergence of inflation by 2012."

Of course, I think inflation will be showing its ugly face next year, not 3 years from now!

And on the data front... The Weekly Initial Jobless Claims "surprised" economists by moving back up, after falling last week... 627,000 unemployed Americans filed for unemployment claims last week... No "green shoots" here! In fact... We need to see if we can use these so-called Green Shoots that the President and Big Ben keep talking about, for ethanol... They've got to be good for something! HAHAHAHAHAHAHAHA! I must say that a reader gave me that line!

And here's Warren Buffett on Green Shoots... "I had a cataract operation on my left eye about a month ago and I thought maybe now I'll be able to see green shoots. We're not seeing them. Whether it's retailing, manufacturing, wherever. We have a big utility operation. Industrial demand is down like we've never seen it for a simple thing like electricity. So it hasn't happened yet. It will happen. I want to emphasize that. But it hasn't happened yet."

And... Then... There was this... A good story to end the week and head to the Big Finish with...

Barclays Capital Inc. (Barclays) the world's third largest currency trader, have lowered their one-year forecast for the dollar, saying foreign investors will reduce their purchases of U.S. assets... Barclays referred to the dollar's status as "safe-haven paradise lost", due to the ballooning fiscal deficit and the printing of money by the Central Bank... Barclays believes that the euro will be trading at 1.50 in a year...

Hmmm... Nothing new there for Pfennig readers, but, I always find it to be good to see others with their BIG research departments, no divisions, yeah, divisions, that's bigger than a department! Wait, get back on track, here Chuck! Yes, the Big research divisions, that finally come around to what little old me has been saying for months now... Oh! And that "little old me" has just got to crack up any one that knows me, and have seen me lately!

And one more thing... Oil is back to $71 this morning, as there has been more problems in Nigeria... Let's hope these problems go away!

Currencies today 6/26/09: A$ .8055, kiwi .6450, C$ .8710, euro 1.4085, sterling 1.6490, Swiss .9210, rand 7.9680, krone 6.4250, SEK 7.8125, forint 196.20, zloty 3.1975, koruna 18.50, yen 95.40, sing 1.4540, HKD 7.75, INR 48.21, China 6.8338, pesos 13.18, BRL 1.9420, dollar index 79.86, Oil $71.07, 10-year 3.55%, Silver $14.25, and Gold... $945.65

That's it for today... Well... Today marks the 2-year anniversary of the surgery that removed my cancer ridden femur, and replaced it with a prosthetic. Quite an ordeal, but... Here I am! Rock you like a hurricane! Oops, sorry, got carried away there! I'm so happy that's behind me now! Well... Michael Jackson has died at 50 years old... When I think of Michael Jackson, I just remember my two oldest kids, playing that Thriller album over and over again. The heat wave over us continues, but is expected to back off next week... My little buddy, Alex, turns 14 on Sunday. WOW! We began a tradition when he was quite young, of the two of us going to breakfast on his birthday. Two years ago, when I was in the hospital, my darling daughter, Dawn, brought Alex to the hospital with breakfast, so we could continue the tradition. I hope I can continue celebrating with him for many years to come. So... Happy Birthday Alex! Real long time readers might recall when Alex was 3, and would sit on my lap as I wrote the Pfennig from home, and every once in awhile the text would look like this... 9087lkndy7, and I would say, "sorry, Alex is helping me again"... Alex has already made me aware that he can get his drivers permit next year... YIKES! OK, time to head off into the sunrise... (not sunset, as I'm writing at daybreak, HAHAHAHA) The currencies are having a Fantastico Friday, so why don't we joining them?

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

Currencies Bounce Back!

Chuck Butler — Tue, 19 May 2009 15:12:34 GMT

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In This Issue..

* Risk Assets soar!
* German Investor Confidence surprises!
* High yielders kicking tail...
* Who's afraid of the SNB?

And Now... Today's Pfennig!

Currencies Bounce Back!

Good day... And a Terrific Tuesday to you! Finally! Spring has arrived and for more than one day at a time here in St. Louis! YAHOO! A very cold and wet spring for us, brought us to the middle of May before normal spring weather was upon us... Good things come to those who are patient, right?

OK... Speaking of patience... I think that's what we'll all have to possess a lot of going forward with these currencies and stocks... Here's what I'm talking about... Yesterday morning it looked as though the recent rally in stocks was over, complete, pack up the bags, get on the bus, Gus... And with the trading theme of throwing all risk assets in the same bag and trading them alike that's been in place since last July, this would seem to be a nail in the coffin of the currency rally we've seen going on since March 1st....

But, NOOOOOOOOO! Let me tell you all about it now... First, we had what I called the potential White Knight for risk assets yesterday, the Indian election results, which pushed the Indian stock market to levels it hadn't seen in some time. That carried over to the Japanese stocks, which carried over to Europe and finally the U.S. It took most of the day to really get things going, but by the time I was packing up to head home, the move was on... And risk assets all around, save for the safe haven Gold, kicked into gear, and were off to the races. And Currencies were in the pole position of this rally!

I just can't get my arms around this stock rally folks... What are they rallying for? Corporate earnings are awful... And the prospects of future earnings are awful... Why do I say that? Well... Have you seen the rot on the labor market's vine lately? "Real" unemployment is north of 16%... And with announcements like the one last night from American Express, where they say they will layoff 4,000 employees, hitting the news wires each day... There's just no way that consumers are going to have the "juice" to support corporate earnings... Those that do have the "juice" will probably squirrel it away, and those that don't, well... They don't have any to squirrel away or spend!

But... I always think of things logically, right? This is logical that stocks would suffer going forward... But will it play out this way? Who knows? I'm certainly not even your last choice for a stock jockey! But... It just seems to me that this is just the way it is... Some things will never change... It's just the way it is...

OK... The "other" news this morning that's fueling a huge currency move overnight... German Investor Confidence, as measured by the think tank ZEW, rose more than the "experts" were forecasting, and reached a 3-year high this month! WOW! OK, I hate to throw cold water on this, but this "investor confidence" is all tied to the rally in stocks... And what's good for the goose (the U.S.) in stocks, is good for the gander (EUROPE) in stocks...

But hey! Why step in front of this bus? If the stock jockeys want to take their assets higher, then I'm not going to throw myself under their bus! The ZEW report is "supposed" to predict economic developments 6 months ahead... Well... By the time we sit down to eat our Turkey on Thanksgiving, I'll look back and see if the ZEW think tank predicted correctly!

The Huge currency rally is across the board, including the once beaten and battered pound sterling, which has really mounted a strong performance in recent weeks... Yes, things in the U.K. are still teetering... But the pound sterling has seemed to have weathered the storm... At least for now!

Of course, in this crazy mixed up world we live in with currencies, a Huge rally currently means that Japanese yen is back on the selling blocks. And... The high yielders are soaring...

The Aussie dollar (A$) seemed to ignore the news from China overnight that the Chinese had ordered an immediate 30% Steel production cut by all mills to address 25-30% over-capacity. Then it seemed for certain the A$ would back off when Reserve Bank of Australia (RBA) Gov. Stevens' gave a speech and revealed his bias toward easing rates further. Watch... At some point in the near future, there will a story that hits the news wires that claims traders are selling the A$ because they believe the RBA will lower rates further... And they will all act as though they "just found this fact out!" But for now... The A$ is kicking tail and taking names later!

I keep seeing one story after another these days from people that claim they "know" the Bank Stress Tests were a "sham"... Well? Didn't I tell you that first? Didn't I tell you the Gov't would not tell us the "real facts" because if they did, they would spook the markets, and even more important spook our foreign buyers of U.S. debt! And we can't afford for that to happen!

But just for kicks... Here's a sample of the stories I'm talking about... Put away the sharp objects before reading, we don't want any injuries.... This is... Howard Davidowitz, Chairman of Davidowitz & Associates, talking... (NOT ME!) "The stress tests were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can't get more money from Congress. It's the 'greater fool' theory. We're now in Barack Obama's world where money goes to those that should never receive a penny....we're bailing everyone out. The bailout money is in the sewer and gone."

OK... That's just a sample of the things I read each day and night... Of course last night I didn't do any reading, as I was glued to my TV for the final 2 hours of my fave show, 24!

And in a story that makes you wonder what the heck these people are thinking... Two economists, Gregory Mankiw, former White House advisor, and Ken Rogoff, former Chief Economist at the IMF, believe that the U.S. economy is in need of a dose of good old-fashioned inflation! WHAT? They believe the Fed should have a looser rein on inflation, to help debt-strapped consumers and governments to meet their obligations... Again... WHAT? I have to wonder just what else the Fed can do to create an inflationary environment! Come on! They've cut rates to near zero... The implemented Quantitative Easing... They've pushed Trillions into the system... And these two dunderheads want more? Did they stop, in the name of love, and think about what they were saying before they said it?

And... I can't understand why they believe that running 6% inflation for "at least a couple of years" is a good thing! Talk about "spooking our foreign investors"! And talk about sending the dollar to the woodshed! Let's hope these two go away... Don't go away mad, just go away...

And then... It sure looks like the Bank of Canada (BOC) is doing everything they can to put a 100 miles of desert between them and Quantitative Easing... There will be a speech today by BOC Gov. Murray titled: "Unconventional Monetary Policy Measures and the Zero-Bound, Differing International Approaches and Critical Considerations"... Now, that looks like a speech title that his marketing team came up with... Why not say... "the rest of the world is doing Quantitative Easing, and we're not!"

Of course... Should this be the "real" gist of his speech, the Canadian dollar / loonie should look to continue its recent strong performance!

The Swiss franc is nearing 90-cents again... Every time it gets to this level, the Swiss National Bank (SNB) makes a statement that "they are watching the currency gains closely" This is supposed to scare traders to not take the franc higher... Who's afraid of the SNB? Of course "real traders" like the ones that were around when I began to deal in currencies, would take this message as a challenge, and push the franc to the point that the SNB had to intervene or lose credibility... And then they would attempt to push the franc higher! But today's traders, are not your "father's traders"... They are wimps! Every time a Central Bank jawbones their currency lower, traders just put their tails between their legs and go home... Give up, quit... Hey! Quitters don't win, and winners don't quit! You can't quit here! When the Germans bombed Peal Harbor, did we quit? NO! (ok that's a line from Animal House, I don't want 100 emails telling me that the Germans didn't bomb Pearl Harbor! HA!)

Today, the data cupboard yields Housing Starts for April... I saw a news story on the TV yesterday that said "Home Builders were seeing a pick-up of new homes being built"... Well... That should be our indication that Housing Starts for April will be stronger! See how easy this stuff is? HAHAHAHAHA!

I always get a kick out of my friend, The Mogambo Guru, and the ending each week of his newsletter... Each week he ends his letter with some message about buying Gold and Silver... And then this line... "Whee! This investing stuff is easy!"

The Mogambo always puts a smile on my face!

Currencies today 5/19/09: A$ .7760, kiwi .6050, C$ .8640, euro 1.3635, sterling 1.5480, Swiss .8990, rand 8.4620, krone 6.42, SEK 7.6675, forint 203.85, zloty 3.20, koruna 19.5660, yen 96.20, sing 1.4610, HKD 7.7510, INR 47.79, China 6.846, pesos 12.91, BRL 2.07, dollar index 82.12, Oil $59.89, Silver $13.94, and Gold.... $922.80

That's it for today... It was good to get back in the saddle yesterday... I actually will be in the saddle for 2 months before travel begins again... WHEW! My beloved Cardinals' good start to the season has just about been turned completely around... They just got swept by the Brew Crew! UGH! And two HUGE Rivals come to town the Cubs and Royals... They need help! NOW! We have another birthday in the office today... Charlotte Reeves is celebrating a birthday... That does it for birthdays this month... Our office here has really added some people in the past couple of years... I don't even know all the people in the office these days! This coming weekend is Memorial Day weekend. Time to make plans! Oh! And don't forget what the day is all about! Time to go... I hope your Tuesday is Terrific!

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

The Rot On The Vine Goes Deeper...

Chuck Butler — Mon, 04 May 2009 15:07:29 GMT

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

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In This Issue..

* The 31st bank is closed in 2009
* China is showing signs of improvement...
* The so-called "decoupling" taking place?
* Jobs Jamboree ends the week...

And Now... Today's Pfennig!

The Rot On The Vine Goes Deeper...

Good day... And a Marvelous Monday to you! I'm Back! Once again, the traveling troubadour returns to the saddle... I'm here for two weeks, then gone again for the Las Vegas Money Show, then I get a nice reprieve in June before heading to Vancouver in July. There's a day game at Busch this Thursday, and I've already been invited to go, so I'm already getting in the frame of mind for that!

OK... Chris did a great job bringing you the Pfennig each day last week... I was still writing each day, giving daily updates to the FXU people. Chris will be traveling with me to "lost wages" , I mean, Las Vegas, so I'll be writing from the road, which long time readers know I just absolutely love!... NOT!

The currencies rallied for most of the week, after the Swine Flu scare filtered through the markets... On Friday, the currencies were range bound, as it was May Day across the globe, and many countries were on holiday. So... We start this week with the news that Citigroup may need $10 Billion to keep afloat, and news that Federal regulators shut down Silverton Bank in Atlanta, along with another smaller bank in New Jersey, bringing the total count of banks closed in the U.S. this year to 31! The FDIC estimated that the cost to the insurance fund would be $1.3 Billion...

The Silverton Bank was supposedly a key cog in the Southeast, according to the Wall Street Journal, and bankers in Georgia are saying that Silverton's collapse could take down at least 8 to 12 other banks with ties to Silverton. Domino dancing...
(All day, all day) Watch them all fall down
(All day, all day) Domino dancing
(All day, all day) Watch them all fall down
(All day, all day, domino dancing)

I'm not being flippant about this folks... I'm trying to point out that the rot on the vine is deeper than the media and the leaders of this country would have you believe them to be. I keep coming back to that interview with Ron Paul that I saw in March, where he said, "people are saying that problems in other countries are worse than ours... Those people are wrong!"

Oh, and did you hear that Boston's most storied newspaper, the Boston Globe, is going to be shut down? And one more item... Those "stress tests"? Well, wouldn't you know it, the results are being delayed, due to the Banks debating the findings... Well, they have that right to do so... Maybe, the regulators didn't understand something in their accounting methods, or something like that... Unfortunately, I believe the banks' debating will be like arguing with an umpire over balls and strikes!

OK... Enough of the blood in the streets! Let's talk about some good things... Like last week when the Bank of Canada (BOC) decided to do a Nancy Reagan, and just say "no" to Quantitative Easing... Let's hope they don't end up with egg on their collective faces should they need to implement Quantitative Easing at some point in the future... But I'm sure they have weighed all the facts to this point. Canada's Banks are in tip top shape, compared to their neighbors to the south, and I'll explain this about the Canadian dollar / loonie once more for those new to class... When Oil returns to higher levels, the loonie will follow... This currency is so juiced by energy prices, and Oil is the Big Kahuna...

And remember what you heard here first, last month, and that is that China would be the first to come out of the economic doldrums... I had someone ask me last week, why I thought China's stimulus worked better than anyone else's... Ahhh grasshopper, I've explained that before... But again, it's very simple... With China being a Communist Country, they can dictate not only to whom the stimulus goes to, but HOW the stimulus is used... Imagine if you will the initial $150 Billion that was sent out last spring... If there were stipulations on how it was to be spent, maybe you'd have something, or better yet... The initial $700 Billion in TARP funds... They didn't have strings attached, and the receivers didn't use the funds to loan out, as "requested by the Treasury", they threw it in the nearly empty treasure chest and sat on it... See the difference in the two methods?

It appears that the so-called "decoupling" is back on the table, as China and India seem to be coming out of the economic doldrums long before the U.S., Europe, and Japan will... Hmmmm...

OK... The Chinese renminbi has begun to move higher again, just when everyone thought the Chinese would batten down the hatches on currency appreciation. This is only happening because the Chinese economy is beginning to show signs of improvement.

Those signs of improvement in China are doing wonders for the Aussie dollar (A$)... Don't look now, but the A$ has climbed past 73-cents! Aussie's kissin' cousin across the Tasman, New Zealand, is not seeing the same kind of McLovin the A$ is seeing... The Reserve Bank of New Zealand (RBNZ) left the door open to further rate cuts last week, while the Reserve Bank of Australia (RBA) is giving signals that the rate cuts may be nearing an end. The Tale of Two Central Banks...

A long time readers sent me a link to a story on Morningstar regarding our fave shiny metal... Gold... Here's a snippet...

"Jon Nadler, a senior analyst at Kitco Bullion Dealers, points out that all of the world's above-ground gold amounts to around 0.6% of total global wealth, so even if gold were at $10,000 per ounce, the metal would only amount to 6% of total global wealth." (I know Jon, so I just had to use his quote!)

Here's another snippet from someone else... "Singapore, Norway, Saudi Arabia and other member nations of the Organization of the Petroleum Exporting Countries are likely already increasing their allocation to gold, or likely to do so in the coming months. They would be somewhat ignorant and financially and economically illiterate not to do so."

Everyone at the Total Wealth Symposium in Bermuda last week was talking about Gold... I see that it has slipped back below the $900 level, which I have taken as the line in the sand for buying opportunities... Could it go lower? Of course it could, but that wouldn't change my mind as far as a sub $900 level being a buying opportunity to get it cheaper than where most people see it going...

Did you see that China announced last week that they had increased their holdings of Gold by 76% in the past 6 years? Hmmm... No wonder the last 6 years have been so kind to holders of the shiny metal, eh?

And... How about this for some "good news"... Ford outsold Toyota in April! Now, that's something you don't see every day! Well, maybe when Ford was selling their pick-em-up trucks like funnel cakes at a state fair... But not often, at least not to my recollection.

OK... The data cupboard is pretty feeble this week until we get to the end of the week, where the April Jobs Jamboree gets printed. We'll see Pending Home Sales, Construction Spending today, and then not much, until later in the week... The initial forecast for jobs in April are showing a job loss of 606K... The weekly numbers show this forecast to be quite understated... But, as I've explained many times in the past, the Bureau of Labor Statistic (BLS) doesn't use those Weekly Initial Jobless Claims... The BLS uses a survey of corporations, and then puts the survey in their witch's caldron and stirs in the Birth / Death model, and comes out with "their number"...

Bad news for my little river town this past week, as Chrysler closed down the plant that had been operating in our city since the 60's. Good thing we decided back in the late 90's to diversify our income stream in the city! I was an alderman then, and recall this to be my greatest fear, that the city depended on one corporate entity so much... And the alderman at that time made great strides to diversify the city's portfolio of income streams... So... That today, when the bad news hits, it doesn't hit as hard as it would have if no diversification had taken place. You see... The overall risk to the portfolio was reduced!

Well, what does that lesson teach us? It should teach us the diversification is the most important monetary thing anyone should be thinking about! Diversification so that the asset classes in your portfolio have a low correlation to one another. That they have different pricing mechanisms. Currencies and metals represent the best diversifying assets to your already existing portfolio of stocks, bonds, mutual funds, and land... It is a proven fact that by adding currencies and metals to a portfolio, you will reduce the over risk in the portfolio! And.... Remember... 94% of a portfolio's return is based on asset class selection...

Just thought I would give you an example of diversification in real life, and then apply it to the lesson for today... That's how I always tried to explain things to my kids, and the older two are teachers today, and probably use the same methods for explanation!

The U.K. is on holiday today, as they decided to do May Day on the 4th! Either way, it was a 3-day weekend for those that celebrated May Day!

Currencies today 5/4/09: A$ .7330, kiwi .5720, C$ .8415, euro 1.3230, sterling 1.4845, Swiss .8770, rand 8.38, krone 6.5750, SEK 8.08, forint 218, zloty 3.33, koruna 20.14, yen 99.30, sing 1.4815, HKD 7.75, INR 49.90, China 6.8220, pesos 13.76, BRL 2.1725, dollar index 84.77, Oil $52.89, Silver $12.61, and Gold... $890.60

That's it for today... A very good road trip for yours truly last week, and my beloved Cardinals! My little granddaughter, Delaney Grace, came by to see me on Saturday. She sings songs now... She is so darn cute! She tips her head from side to side while singing! Too much work in the yard yesterday, has my hip and leg quite sore this morning, but that's a good thing! My little buddy Alex, can cut the grass now, so that's a good thing for my beautiful bride you had to take that over after my surgeries 2 years ago... Speaking of my beautiful bride... Her and I walked into a restaurant last week, and a long time reader saw us and said to me, "hey Chuck, she really is your beautiful bride"... Now how nice was that? On that note, I'll move onto to something else, wish you a Marvelous Monday and hit the send button!

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

Currencies Continue to Rally...

Chuck Butler — Fri, 24 Apr 2009 16:08:07 GMT

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In This Issue..

* An auction announcement...
* Euro soars!
* Gold back to $900...
* Who's telling the truth?

And Now... Today's Pfennig!

Currencies Rally...

Good day... And a Happy Friday to you! A Fantastico Friday to boot! I leave for Bermuda very early tomorrow morning, so no late night shenanigans for me tonight! HA! I'm still trying to make sure I've beaten that pneumonia, and being a "good boy"!

Well... Front and center this morning, we have a Big currency rally going on... Recall yesterday, I told you of the beginning of the rally... Well, it really got legs as the day went on, and once again, it was not sold off overnight, but added to! Here's what I believe, and you won't see this anywhere else, my friends, is moving these currencies so violently higher VS the dollar...

First, let me set the stage... I've been carrying on about how the Deficit Spending here in the U.S. was going to require a TON of Treasuries to be sold to finance that Deficit Spending... I even told you the other day that the U.K. Gilts were getting clobbered because of the largest Budget Deficit in the U.K. since World War II, and that what happened in the U.K. had been carrying over to the U.S.... OK... Got the picture, right?

Well... Yesterday morning the U.S. announced that they would sell Treasuries in these amounts, and tenors... $40 Billion 2-year, $35 Billion 5-year and $26 Billion 7-year next Monday, Tuesday, and Wednesday respectively... OMG! That's over $100 Billion in new Treasury issuance that the markets are going to have to digest... Is it the straw that breaks the proverbial camel's back? Are the markets saying, "we don't believe you will be able to successfully auction that amount without aggressively raising the yield?" I think so... Now, see if CNBC, MSNBC, FBN, CNN or any of the other media stations run this story!

There's nothing else THAT BIG that could have moved the euro like this... Oh! I haven't even told you where the single unit is trading this morning! My Bad! 1.3230! That's right... It skipped to my Lou right through the 1.31 handle, like a hot knife goes through margarine! The euro did get an additional boost this morning when it was announced that German Business Confidence, as measured by the think tank IFO, rebounded from a 26-year low this month...

So... Let's slow down, those beginning paragraphs have me out of breath! OK, I'm calmed down now... So, let's look around the horn to see what the other currencies are doing, now that the BIG DOG, euro has left the porch to chase the dollar down the street. Well, the usual suspects like the euro-alternative currencies like Norway, Sweden, Switzerland are all much stronger VS the dollar this morning... And a look to the High Yielders, shows that they too have moved in step with the Big Dog.. Aussie, kiwi, rand, and real are all taking liberties VS the dollar.

There's another high yielder that I don't talk about all the time, and the last time I did, I gave it the kiss of death, watching it fall a couple percent after I mentioned it... The Indian rupee... Well... The rupee is on the rally tracks again, and this time, someone other than me is noticing... The folks over at Reliance Equities International have noticed that the Indian stock market has risen for 7 straight weeks, and believe that they will see additional flow into this market... Therefore they believe the rupee may be in store to gain 6.7% in the coming weeks... Now, for you big swingers out there... 6.7% probably doesn't even show up on your radar... But for all the rest of us, worried more about the "Return of Capital, rather than the Return on Capital" these days... That doesn't sound too shabby!

On the data front yesterday we had the Initial Weekly Jobless Claims, which came in as expected, which doesn't make it any better! The total of unemployed people filing claims last week totaled 640,000! Something that most people don't look at, but I've trained the folks here to do, as Chris Gaffney yelled out yesterday morning... "Continuing Claims are awful, they have risen to 6,137,000!"

Existing Home Sales continued to show the housing markets is still in search of a bottom... Existing Home Sales fell 3%, and the home prices continue to fall with the median price down 12% from a year ago... The other day, I made a statement that I should have been taken to the woodshed for... I said that with interest rates this low, people should be taking advantage of them and buying those houses now... But... As I keep saying, home prices will continue to fall... So why buy now if you can get it cheaper tomorrow? Sorry... What I should have said was to refinance now is a very good idea!

In Canada yesterday... The Bank of Canada (BOC) explained the details of Quantitative Easing "should they need it"... That was HUGE for the loonie, as the BOC hasn't implemented this monetary policy yet... They just have it ready and on the shelf should they need it... Good plan!

Another item that has helped to boost the loonie (Canadian dollar) was a report yesterday that showed Retail Sales unexpectedly rose .2% in February... Geez Louise, can't they get this data on a more timely basis? February seems like a month of Sundays ago to me! Any way, the Canadian economy does have a pulse... And that's a good thing!

Gold didn't like the color of the Treasury Auction announcement yesterday either, and the shiny metal pushed back over $900 once again. Oh... And here's a story that just hit the news wires this morning... It is reported that China has increased their Gold holdings 76% to the 5th Biggest Country (of Gold holdings). China increased their holdings from 454 Tons to 1,054 Tons... For those of you keeping score at home that's $31 Billion dollars worth of Gold!

OK... Before we head to the Big Finish today... Have you heard or seen the story going around about Bank of America's (BOA) purchase of Merrill Lynch (Merrill)? OMG! This is HUGE! BOA's CEO, Ken Lewis testified this week and said that Fed Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America to not discuss its increasingly troubled plan to buy Merrill Lynch -- a deal that later triggered a government bailout of BOA... Now, all my licenses in the brokerage business tell me that that's a HUGE NO-NO! A Company is supposed to alert their shareholders of any materially significant financial hits... If I were a shareholder of BOA, I would be steaming mad right now! As a market participant it still ticks me off!

Now... Here's the latest from the Wall Street Journal this morning... "The Federal Reserve didn't advise Bank of America or CEO Ken Lewis "on any questions of disclosure," a spokeswoman for Fed Chairman Ben Bernanke said."

Oh Great! Now we have a "he said - no he didn't" scenario! That's their plan folks... Attempt to confuse the masses, throw up smoke screens, and maybe it all goes away... Not on my watch! We need to know who's telling the truth!

And one of the things they will use to direct everyone's attention away from this awful thing, is... Drum roll please.............. The Stress Tests! That's right! They are supposed to be talked about today... I still hold to my beliefs that we won't really be told the truth about these 19 largest banks... I can only hope to be wrong!

Oh, and one more thing... A reader asked me why I never talked about Silver, always choosing to talk about Gold... Hmmm... I guess it's sort of like the Paris Hilton thing... Or let's see what else could I compare it to.... Any way, I don't mean to short change Silver, when I talk about Gold you can believe that it includes Silver... Imagine my poor fat fingers if I had to type Gold and Silver every time I talked about Gold and Silver...

And... On that note... Time to go to the Big Finish!

Currencies today 4/24/09: A$ .7185, kiwi .5680, C$ .8225, euro 1.3250, sterling 1.4625, Swiss .8775, rand 8.8550, krone 6.5650, SEK 8.20, forint 223.40, zloty 3.4150, koruna 20.1950, yen 96.88, sing 1.49, HKD 7.75, INR 49.88, China 6.8272, pesos 13.12, BRL 2.2050, dollar index 84.78, Oil $49.91, Silver $12.82, and Gold... $911

That's it for today... And for me for the next week! Chris Gaffney will have the conn on the Pfennig next week. I'm very excited about going to Bermuda, although it looks like the good folks at the Sovereign Society are going to keep me busy! Cardinals sweep the Mets! Wow! That has a great sound to it... The Cubs come to town tonight, it sure would be sweet to sweep them too! But that's getting greedy, I would be giddy with 2 of 3! Tomorrow is the draft for the NFL, the Rams have the second pick... Memo to the Rams... Don't blow it! An absolutely beautiful day here yesterday... My dad used to say to me when it would be blue skies, sunny, warm days... He would say... "Chuck, they don't have days like this in the Soviet Union"... I use that saying with my kids, and they look at me like I should be wrapped in a white suit! OK... Time to go... Hope all's well with everyone, and you have a Fantastico Friday!

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

Currencies Rally Yesterday...

Chuck Butler — Thu, 23 Apr 2009 13:03:03 GMT

.........But First, A Word From Our Sponsor..........
Record 2008 results take EverBank® to new heights.

In a year that saw many of the nation's largest financial institutions falter, EverBank excelled. Our 2008 achievements, which came as no surprise to us, included:

EverBank is a Member FDIC and Equal Housing Lender.
......................

In This Issue..

* Euro climbs back to 1.30...
* High Yielders bounce back...
* Gold to hit $1,500?
* Kurt Richebacher...

And Now... Today's Pfennig!

Currencies Rally...

Good day... And a Tub Thumpin' Thursday to you! Yes, it's a Tub Thumpin' Thursday because it's finally supposed to be warm here today, and... The Card and Mets in a day game at Busch today... Wink, wink... It's also a Tub Thumpin' Thursday because... I said so! HA-HA!

Well... We had a rally in the currencies yesterday and this time the rally wasn't reversed overnight by profit taking! WOW! It's been some time since we could say that! Maybe it was the good karma the overnight markets received by my little buddy Alex's base hit last night to drive in 2 runs! Or, the good karma from a Cardinals pitcher going into the 9th inning of a game! WOW! Or... Maybe, just maybe, cause you never know, fundamentals are creeping back into the currency markets?

A one day rally does not make a trend... Nor does a bear market rally that lasts 9 months! Fundamentals dictate trends... Charts do not... And neither does bear market rallies! For they are built on short covering, deleveraging, safe haven flows, and profit taking... Not Fundamentals!

I've been wanting to get that off my chest for some time now... I know, I've explained this before, but it's been awhile, and thought it needed to be said once again for a refresher or for the new readers! On that note... Did you know that the Pfennig is now read by a very large number of people each day? It something to behold, for your humble Pfennig writer, that began this endeavor with hand written notes about the overnight markets on the desks of the bond salesmen so they didn't have to spend their mornings trying to catch up!

OK... Back to the task at hand... Well... I see that Commerzbank is telling their clients that these rallies in the euro are opportunities to sell their positions... Hmmm... Of course they must be talking about "trading positions" clients... Not investment portfolio diversification clients!

The euro, which tried for a week to get back to 1.30, finally climbed above the figure yesterday morning, and has remained there. The single unit received an additional boost this morning when the Good ZEW Business Confidence report that printed earlier this week, was followed up by the European Manufacturing Index rising... Does this mean the Eurozone's recession is easing? Hmmm... I don't think so... I just think it shows what I've been talking about for some time, and that is the fact that in the Eurozone, 80% of their trade is among themselves... But! You have to like the resiliency, eh?

The Big Dog (euro) was off the porch yesterday chasing the dollar down the street, which means the rest of the smaller dogs get to stretch their legs too! And so, currencies like Aussie, Swiss, kiwi, rand, and real all enjoyed their exercise! One of these things is not like the other, can you guess which one it is? Right! It's Swiss francs! All the other currencies mentioned are high yielders...

So, what's with Swiss getting mixed in with the high yielders? Ahhh grasshopper, Credit Suisse posted a return to the black... A profit... And that's a good thing for Switzerland, as Credit Suisse, and UBS had really pulled the franc down in the past quarter... But don't look for any sustained gains here, as The Swiss National Bank's (SNB) vice-chairman, Hildebrand, that the bank would continue to limit gains in the franc... That's Central Bank parlance for they will intervene, and sell francs to keep it weak...

Now... I find that statement by Hildebrand very interesting... Because just last week, the SNB issued a statement that said they didn't think it was a competition by countries to weaken their currencies... Hmmm... When a Central Bank makes two different statements within a month talking about how they will extend currency purchases as long as necessary to prevent appreciation of the franc to ward off deflation... You've got to wonder how many other Central Banks will follow?

Just to explain further for those of you new to class... A strong currency goes a long way toward fighting inflation... Well, if inflation isn't your concern, and you would like to actually see some inflation in your economy (not deflation) then a weak currency would go a long way toward achieving that goal...

I think the U.S. Fed and Treasury would love to follow, but they just can't right now, with all the safe haven flows into the U.S.

Gold pushed higher yesterday and then again this morning at the London fixing... There's a great story on the U.K. Telegraph by Ambrose Evans-Pritchard regarding Gold, and how it could rise to $1,500... Here's a link to the whole story... http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5184036/Gold-price-could-hit-1500.html

But for those of you with no spare time to play on the internet, here are a couple of snippets...

"In normal times, gold mining companies sell - or "hedge" - a chunk of their output in advance through bullion banks. These banks cover their positions by leasing gold from central banks. This bread-and-butter trade created excess supply of 500 Tonnes each year until the start of this decade.

Low real interest rates have caused the process to reverse, creating a shortfall of about 500 Tonnes. The process accelerates as rates turn negative, leading to a scramble by market players to find physical gold."

OK... Back to me... I'll follow that up with a story I read the other day that the claims that The NYSE-Liffe futures exchange has, it seems, run out of 1 kg bars of gold. WOW! This physical demand for Gold is really beginning to get very serious... We did some research on our Metals Select product, and found that comparing March 2008 to March 2009, our trades for physical Gold increased by over 200%! I just finished an outline to a presentation that I'll be making at the Las Vegas Money Show that will be web-cast on Gold... And in the presentation, I talk about these uncertain times... The fear that everyone walks around with, from the crackpots shooting missiles, to those gearing up nuclear capabilities, to those throwing good money at bad situations... Gold, is the answer...

Well... Speaking of throwing good money at a bad situation... I received a couple of emails from people that weren't happy that I made fun of the $100 million that the Obama camp was told to cut from the Budget... The claimed that I was being unfair to Obama... Well... I said, very quickly... That apparently they hadn't been readers very long, or else they would recall me lambasting the previous administration for their deficit spending too! Shoot Rudy, I don't care who's making the decisions, as long as it involves adding over $3 Trillion to the National Debt in one year, I'm going to point out how bad that is for us, our kids, and our grandkids...

Think the call for an alternative reserve currency by China is a thing of the past? I think the Chinese are just getting warmed up! Memememememememe... Testing, testing, 1,2,3... Ahem, there my voice is clear! Seriously though... The research folks over at ING said that they believe with China's Trade Surplus swelling to $325 Billion this year, thus boosting their currency reserves (read dollars), it will add pressure on the Chinese to push for an alternative reserve currency, other than the dollar. Recall, that the Chinese earlier this month threw a cat among the pigeons by saying they wanted to create SDR's (special drawing rights) that would include a number of currencies, and that would be the global currency...

That was met with a cold shoulder at the G-20... But for how long? With that kind of a war chest of dollars, the Chinese could really start throwing their weight around. Recall that Chinese PM Wen Jiabao said earlier this month that he feared that the dollar was going to weaken given the spending, and thus their need to borrow in the U.S.

The Bank of Canada will give the details of their announcement the other day to cut their target rate and place a hold on it, but not the discount rate. They'll also give details on what they will do with regards to Quantitative Easing...

And... The Bank of England didn't back off reports that they would issue a budget deficit larger than any since World War II yesterday... That's exactly what they did... Not, good stuff for the U.K. economy or the pound sterling, folks...

Time to head to the Big Finish, and eat my apple...

Currencies today 4/23/09: A$ .7115, kiwi .56, C$ .8090, euro 1.3050, sterling 1.4525, Swiss .8640, rand 8.9475, krone 6.6750, SEK 8.4125, forint 227.80, zloty 3.3840, koruna 20.60, yen 98.20, sing 1.5010, HKD 7.75, INR 50.07, China 6.8299, pesos 13.22, BRL 2.21, dollar index 86.03, Oil $48.57, Silver $12.47, and Gold... $894

That's it for today... Do you Twitter? I keep getting asked to join people's twitter conversations... I have to say that I understand what it is... But don't understand the need... And, think about it, the base word to Twitter is Twit... That cracks me up! Of course there's more to that discussion but not here! Late game for my little buddy Alex last night... And on a school night! Good thing I got a 3 hour nap in when I got home! Ok... This is really serious stuff... My friend, Addison Wiggin at Agora Publishing made an announcement the other day that I asked if I could relay to my readers. Remember the late, great Kurt Richebacher? Well, his newsletter is being continued in the framework of the great Austrian economics guru. Here's a link for more information...
http://www.richebacher.com/the-dr-richebacher-legacy/

OK... Time to get going if I'm going to sneak out of here and head to downtown... Ooops! Guess I let the cat out of the bag! Oh well, I'm sure you figured that out when I first told you there was a day game today! I sure hope our Thursday is Tub Thumpin'!

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

A Leak Of The Stress Tests?

Chuck Butler — Wed, 22 Apr 2009 16:58:24 GMT

.........But First, A Word From Our Sponsor..........
Record 2008 results take EverBank® to new heights.

In a year that saw many of the nation's largest financial institutions falter, EverBank excelled. Our 2008 achievements, which came as no surprise to us, included:

EverBank is a Member FDIC and Equal Housing Lender.
......................

In This Issue..

* Currencies trade in a tight range...
* U.K. Budget announcement...
* When will Treasuries follow Gilts?
* Gold as a currency...

And Now... Today's Pfennig!

A Leak Of The Stress Tests?

Good day... And a Wonderful Wednesday to you! Another bad night for your Blues, which means their season has come to an abrupt halt... They are a young team, so they'll be back, next year...

OK... The euro traded in a very tight range yesterday with a bias to sell dollars, but like I said, it was very tight... The Aussie dollar rallied very strongly during the day, adding over 1-cent to its figure. It sold back some of that 1-cent gain overnight though. As the upbeat stock session, immediately turned sour after the close... As I said yesterday, there was a lack of data to help the currencies along, and they had to rely on the earnings season for direction.

Stocks did enjoy a 127 point rise yesterday, so that helped things... But to me, that's nothing more than a dead cat bounce for stocks... But then, I'm not even your last choice as a stock jockey!

OK... The BIG News yesterday that was going around the horn was that Turner News and the AP apparently got hold of the stress tests results for banks, ahead of the Gov't. telling us what they contained on Friday of this week. Recall, I've maintained that the Gov't wouldn't "really" tell us what the results of the stress tests. I believed that the Gov't would tell us what they wanted us to know, and that's it! I also have maintained that then, the Gov't will be able to step in and really get their hands in the cookie jar of these large banks...

For instance, when asked, U.S. Treasury Sec. Geithner has said over and over again that he believes the stress tests will show most of the 19 biggest banks have enough capital... Shoot Rudy, they had better! Each and every one of these 19 have received TARP funds! And again, the relaxing of the mark-to-market rules should also free up some Capital. But... Again, let us, well not us, because we wouldn't know what we were looking at, but us as in people that do know what they are looking at, take a look under the hood... Shoot, why not? We as taxpayers paid for what's under the hood!

I'll get down from my soapbox now, sorry... Geithner told the oversight panel on TARP yesterday that each bank that needs help will get a mix of help, including more TARP funds. Great... Just great! Throw more good money at a bad situation... Makes perfect sense to me... NOT!

Geithner also told the oversight panel that regulators are doing the review of the stress tests not the Treasury Dept. Hmmm... OK, so now we have to believe that the regulators are going to blow the whistles right? That's not going to happen folks, it would cause panic in the markets, period!

The currency guys think that the stress tests will be bad, and to that they have been buying Japanese yen... Recall, that when the financial meltdown in the U.S. was in its darkest hour, to date that is, the Japanese yen was all the rage, as a safe haven currency... Now, to me, that makes about as much sense as

Over in the U.K. this morning, the Chancellor of the Exchequer, Alistair Darling, is going to announce the Budget for the next year. He's already heard the news that Unemployment in the U.K. has hit 2.1 million in the 3 months through February, which is the most in 12 years. The bond market in the U.K. is feeling the pain as they anticipate Darling announcing the biggest deficit since World War II, which means more bonds (GILTS) will need to be sold... And that outlook as caused Gilts to fall in value...

Now, remember what I told you a couple of weeks ago, about how the U.K. has seemed to be ahead of the U.S. with regards to the timing of these disastrous events? Well... It Gilts are getting sold because of the need for additional supply... When will that shadow be cast on U.S. Treasuries? I realize that with the Fed buying debt, monetizing the debt, that Treasury prices have received a boost... But, you've got to wonder with the U.S. deficits, and the amount of debt that will have to be issued, can the Fed support the price forever? I don't believe they can... And the Treasury bubble will eventually pop, causing prices of Treasuries to spiral downward...

What does that have to do with currencies I hear you asking? Ahhh grasshopper... The dollar's strength since July of last year has been predicated strictly on safe haven Treasury buying... Unwind those purchases because of spiraling downward prices, and you have dollar selling once again... It's that simple...

So... All you potential home buyers out there... Now's the time to get on the ball and get it done, for these mortgage rates in the 4's aren't going to last forever! Now... I sounded like one of those snake oil mortgage sales people on the radio! UGH! But it's how I feel! If Treasury prices begin to go down, their yields will go up, and when Treasury yields go up, mortgage rates go up... Again, it's that simple...

Speaking of the U.S. deficits... Did you see where President Obama has asked for $100 million to be cut from the Budget? HAHAHAHAHAHAHAHAHAHA! That's like removing a bucket of sand from a beach! But, I'd rather let you see what my friends Ian Mathias and Addison Wiggin over at the 5 Minute Forecast, which you should read daily!, had to say about this announcement... Here's the "5"...

"These radical cuts will come by "purchasing office supplies in bulk" and teleconferencing when applicable. And they account for roughly five one hundredths of a percent of last month's -- just March's -- $192 billion federal budget deficit!

Ooooh.

That's like making a $5 payment on a $10,000 monthly credit card bill.

If your neighbor sent the bank a check for $100 on a $200,000 loan, he'd be a bum on the verge of personal collapse -- the village idiot. In Washington, he'd be the leader of the free world."

>>>>>> Those guys at the "5" are the best!

Don't know if you read Outstanding Investments, by Byron King... But he wrote a very interesting report the other day on Oil... He believes that the Saudi oil reserves are considerably less than what the Saudi's tell us... But they can't tell us the truth, because it would send oil prices back to $150 in a heartbeat. Mr. King didn't just make this stuff up, his "intell" is what he believes to be a good, reliable source in the industry...

Oil heading to that price again would be disastrous right now... So don't expect this to happen overnight, next week or next month... It's a situation that will have to take time to work itself through... So... Let's hope it doesn't come to light for a Looooonnnnngggg time!

Gold gave back some of the ground it gained the previous day, as the stocks rallied and Geithner calmed the markets' nerves about banks... I found that the Gold move down was interesting given the IMF's report that said the losses from the financial meltdown will reach $4.1 Trillion... This gloomy outlook by the IMF could take some time to work its way toward a Gold rally... But it should!

Speaking of Gold... A reader sent me a note the other day, when I said, "doesn't anyone want to have a strong currency any more?" He, the reader, said, you forgot about Gold! Well... No, I didn't forget about Gold... Long time readers of this letter know that I truly feel that Gold is a currency, that's why I talk about it in my "currency newsletter"! The difference is simply that no country issues Gold as their currency.

Still no "real" data to look at today, just the House Price Index, which we wouldn't expect any surprises there, eh?

The Bank of Canada (BOC) surprised me yesterday by announcing a rate cut of 25 BPS... This was an interesting cut, in that the BOC cut the target rate, but not the deposit rate... Under normal circumstances, the deposit rate would also be cut by 25 BPS to avoid distortions in short-term money markets. Not sure what the BOC hopes to achieve with this move, except that they could at a later date come back and cut the deposit rate as a symbolic rate cut. You see the BOC made a statement that they will hold their target rate at the current level of 25 BPS until the end of 2010... Again, that's a very curious announcement by the BOC... The loonie, however, wasn't fazed, and rallied on the day.

The Chinese renminbi finally moved higher VS the dollar overnight, finally moving to the 6.82 and change level. The renminbi had remained in the 6.83 and change level for a month!

That's quite a bit to digest on a Wednesday morning, I think I'll head to the Big Finish now!

Currencies today 4/22/09: A$ .7055, kiwi .5555, C$ .8065, euro 1.2950, sterling 1.4650, Swiss .8570, rand 8.9550, krone 6.77, SEK 8.53, forint 230.30, zloty 3.41, koruna 20.91, yen 97.80, sing 1.5060, HKD 7.75, INR 50.36, China 6.8298, pesos 13.17, BRL 2.22, dollar index 86.44, Oil $48.79, Silver $12.15, and Gold... $886.65

That's it for today... I'm finally feeling almost human again. That pneumonia was a real pain... Not that it's completely gone, but I'm no longer coughing my head off, etc. The miracle of drugs! And a lot of sleep! Nice comeback win by my beloved Cardinals last night... When I went to bed both the Cardinals and the Blues games were tied... One bad outcome, one good outcome... I finished up my 3 presentations for Bermuda yesterday, so I've got that going for me! Now, I just have to find my passport! Got to get going here, I have a long meeting to start the day... I hope your Wednesday is Wonderful!

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

Riksbank Holds Off On QE...

Chuck Butler — Tue, 21 Apr 2009 13:34:22 GMT

.........But First, A Word From Our Sponsor..........
Record 2008 results take EverBank® to new heights.

In a year that saw many of the nation's largest financial institutions falter, EverBank excelled. Our 2008 achievements, which came as no surprise to us, included:

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In This Issue..

* Currencies trade in a tight range...
* German Investor Confidence rises!
* Thoughts from Jim Rogers...
* Kohn on the economy...

And Now... Today's Pfennig!

Riksbank Holds Off On QE...

Good day... And a Terrific Tuesday to you! I'm staring at all this white space on the Pfennig template, and I absolutely drew a blank... I couldn't think of, or can't think of a thing to say! Whoa there partner! That can't happen! There's got to be something, anything, to talk about... OK! I'm back now, I really have no idea where that was going, it was an out of body experience! HAHAHAHA!

OK... The currencies traded in a very tight range yesterday, after the dollar had ambushed them on Friday and in the Sunday night trading sessions. It's been a week since we saw currency strength, other than Japanese yen. So, we should be due for a bounce. There continues to be more whispering about the eventual dollar weakness, but for now, it's not enough to get us back to where the dollar should be trading on a fundamentals basis.

The euro got a lift this morning when German Investor Confidence as measured by the think tank ZEW, rose to the highest level in nearly two years during April. WOW! The index rose to 13 from a -3.5 in March... Quite the turnaround, eh? It is reported that Investor Confidence rose due to the Gov't's efforts to revive the economy. Don't know if you follow this or not, but European stocks just posted their 6th consecutive week of appreciation... You have to wonder if the stocks are telling us something here... Like, has the financial crisis in Europe bottomed out and is now on the recovery path? Don't know... And like I always say, one report doesn't make a trend, just like one swallow doesn't make a summer.

Sweden's Riksbank met this morning and surprised the markets (and me) by cutting only 50 BPS (75 BPS was the consensus), and in the other more important announcement... Riksbank Gov. Ingves said, "measures such as buying bonds were not on the cards at the moment". So, no Quantitative Easing (QE) for Sweden, just yet... But, unless things turn around soon in Sweden, the Riksbank will have to come back to decide on QE at sometime in the future... But for now, the krona is seeing a nice bid, and rallying on the news...

You know... Yesterday I talked about Canada, and how I "believed" that the Bank of Canada (BOC) was going to introduce QE, and IF they did I would mark them off my Hit Parade... But, I didn't say that the BOC was going to do that for certain! So... They could put it off like the Riksbank did... We'll just have to wait-n-see! Of course, I certainly fully expect them to go that route now, rather than later... But, I'm just saying, you never know...

Fed Head Kohn, was speaking yesterday, and said something that I sort of agree with... Kohn said the, "U.S. economy may stabilize this year, and begin a slow recovery". Hmmm... Well... By the end of the year, I see unemployment, by BLS accounting methods, at 10%, maybe 11%... Of course if you count all the people that have seen their unemployment benefits expire, or people that are working part time jobs because they can't find full employment, the unemployment rate is probably somewhere around 16% now... And heading to 20% when all the heads are counted as unemployed that should be counted as such.

So... With that in mind, I have to wonder how the economy "stabilizes"... Credit will still be hard to find, and so on... But, I do believe that our -6% GDP now, will turn to something better by year-end... Maybe -1 or -2% or, we might even squeeze out a small positive number, which you would then hear the media and politicians claim, that "we're out of the recession"... HOGWASH! But, that's just my view on it... But, I liked the fact that Kohn at least sounded a bit worried, and with caution regarding the economy. Apparently he left Big Ben Bernanke's rose colored glasses at home!

Even with a small gain in GDP, the Fed will keep interest rates at current levels, as they can't appear to smashing the golden egg too soon...

The high flying high yielders, which basked in the early spring sun during March, have retreated to their dressing rooms, as risk aversion has cast a shadow on the high yielders. Risk Aversion is a result of the earnings season for equities. So, that means the like of Aussie, kiwi, rand, real, are all softer and not looking as perky as they did a couple of weeks ago. But... Once currencies and stocks hit splitsville, and get back to fundamentals, investors looking for any yield, no matter how small, as long as it beats the paltry yields they get now in the U.S., Japan, and most of Europe, will look to these high yielders... So... That could mean that buying them now, when they are cheaper than they were a couple of weeks ago, just might be the ticket! But who's to say that they won't get cheaper? Ahhh grasshopper, that's the dilemma we face everyday with every purchase we make, weather it be the Aussie dollar, or auto tires, or new computers... You see my point, I'm sure...

Speaking of the Aussie dollar... The Reserve Bank of Australia (RBA) just released their minutes of the last meeting, where the RBA voted to cut interest rates 25 BPS... It appears that the decision was a close one between no cut and 25 BPS. RBS Gov. Stevens believes the Aussie economy is well placed to rebound... All this has helped the A$ to remain above 70-cents overnight and this morning.

OK... I've been champing at the bit all morning to get to this interview in Barron's with our long time friend, and investment guru, Jim Rogers... I can't get to all of the interview, so I pulled out a few quotes that plays well with what I've been talking about... Here's Jim Rogers!

"Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn't last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous.

It's laughable on its face, but politicians think they've got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse."

He then talked about something that I've been talking about for a couple of months now... The Treasury bubble... Let's listen in...

"I am anticipating shorting bonds -- the U.S. long bond. It's about the only real bubble around that I can see right now -- other than the U.S. dollar. I am not shorting bonds at this moment because I've shorted plenty of bubbles in my day, and I have learned that you better wait because they go up higher than any rational person can anticipate. But my plan is to short the long bond in the U.S. sometime in the foreseeable future."

Isn't that amazing... I just talked about this again the other day!

So... The Gov't's "stress test" results are going to be revealed beginning this Friday... It will be interesting to see what the results are... But, I wouldn't get too excited about all of this, as I don't think we'll get a chance to look under the hood at these financial institutions... Not that I want to or have the time to anyway! But I'm sure there are those out there that would love to get that chance... Buzzzzzzzz, wrong answer! Thank you for playing, there's a nice parting gift for you at the door!

Yesterday, Leading Indicators for March printed worse figure than forecast, but the previous month's -.4% initial print was revised to -.2%... March's figure was -.2%... So... Leading Indicators is still telling us that there will be more pain to suffer through ahead... Hey! That's why they are called "Leading Indicators!"

The U. of Michigan preliminary reading of Consumer Confidence for the first two weeks of April, printed stronger than expected at 61.9, up from the previous month's total of 57.3... Of course when this report was compiled, stocks were still in rally mode... Before earnings season, etc. I doubt the final report will be so pie in the sky...

No real data to deal with today in the U.S. or Europe... So... Once again, focus will be on the earnings... We will get some more Fed speak this morning from Fed Head Hoenig... And then mid morning will see U.S. Treasury Sec. Geithner testify before the oversight panel... Would that be oversight on TARP or Tax returns? HAHAHAHAHA!

I did it again last week... I placed the kiss of death on a currency by talking nice about it! This time it was Indian rupees... Last week I talked about how the rupee had performed nicely / stealth like, under the radar... But, the rupee has now given back all that stealth-like gain! In the past, a move like this would have the Central Bank's hands all over it (with intervention)... But this move might just be associated with the high yielders, and the risk aversion.

Gold rebounded nicely yesterday, up about $15, and has added $3 this morning... Just didn't see right to see it getting sold like that last week... Maybe calmer, cooler, more intelligent heads took over!

Well... It's time to head to the Big Finish. We have a birthday girl here today, and I've got to get to work on my presentations for Bermuda! UGH!

Currencies today 4/21/09: A$ .7005, kiwi .5540, C$ .8075, euro 1.2950, Sterling 1.4535, Swiss .8555, rand 9.13, krone 6.80, SEK 8.63, forint 231.90, zloty 3.4125, koruna 20.90, yen 98.10, sing 1.5080, HKD 7.75, INR 50.41, China 6.8317, pesos 13.39, BRL 2.2375, dollar index 86.58, Oil $45.87, Silver $12.18, and Gold $888

That's it for today... Except to say a Big Happy Birthday to our accountant magnificent, Mary Owens... Mary is not only a magnificent accountant, but also a magnificent quilt maker! It's down to the last 5 hours for my fave show 24... It's so intense! Did you see the Washington Nationals' jerseys they had on Friday night? Nationals was spelled Natinals... How embarrassing, and they wore them! That's a shame, Washington waited so long for a baseball team, and now they have one that can't win, and a marketing department that can't spell! Crazy! The NFL Draft is this Saturday. Our Rams have the second pick... I sure hope they don't blow it! This team needs help! Good luck to our Blues tonight, they are down 3 games to none. Their goal is almost impossible.. Slim and none, and Slim just left town... But... You have to believe! I hope you have a Terrific Tuesday!

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

Dollar Shows Additional Strength...

Chuck Butler — Mon, 20 Apr 2009 14:19:05 GMT

.........But First, A Word From Our Sponsor..........
Record 2008 results take EverBank® to new heights.

In a year that saw many of the nation's largest financial institutions falter, EverBank excelled. Our 2008 achievements, which came as no surprise to us, included:

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

In This Issue..

* Euro at one-month low...
* Trichet talks rate cuts...
* Riksbank & Bank of Canada this week...
* The Mogambo on a Monday!

And Now... Today's Pfennig!

More Dollar Strength...

Good day... And a Marvelous Monday to you! Today is a special day, in that it is the Big Boss Frank Trotter's birthday! Happy Birthday Boss! Actually Frank is more of a very good, long time friend, mentor, and then boss. We've worked together for a very long time... I tell people at shows that Frank and I do together, that we've been working together for so long... The Dead Sea wasn't even sick when we began working together! HAHAHAHAHAHA!

OK... A bad day a the office for the euro and other currencies on Friday, and then last night in the overnight markets... European Central Bank (ECB) President, Trichet, once again deep-sixed the euro with talk of further rate cuts. He did attempt to water down the message by saying that "any rate cuts would be measured 25 BPS cuts" Memo to Trichet... It doesn't matter what the size of the debasing is, as long as you are going to debase your currency, the markets will make you pay for it!

So, the euro is at a one-month low VS the dollar this morning... Of course, remember what I told you over a week ago regarding the earnings season for U.S. Corporations, and how the currencies needed to break the link to stocks before those earnings began hitting the news wires. Unfortunately, besides the one day break that we saw, an earnest break hasn't happened, and now the stocks are going to weigh heavily on the currencies... I know, I know, the couple of banks that have announced, have announced some very nice surprise earnings... But you must draw a line between those that have received billions in aid, and those that have not! As I've said before, look under the hood at these banks / financial institutions, and tell me their earnings would have been as good without the billions of stimulus...

The other thing the euro has to deal with right now, is what I talked about last week, and that is getting bogged down with the split among ECB ministers as to how monetary policy should be administered to combat the recession. There's been no resolution to this disagreement, and so the euro suffers.

But don't forget what I told you about the euro on Friday... If you keep that in mind, that the ECB is fully aware of what's going on in the U.S. with the deficit spending and money creation, and what it's going to do the dollar eventually. They don't need the euro taking off VS the dollar too soon... So, this is all "noise"... As I said before, you may be spinning, sliding uncontrolled toward the guardrail on that icy road, you know you're going to make impact, it's just a matter of time before it happens... The dollar is spinning, sliding toward the guardrail too... It's just a matter of time before it happens...

Well, we have a couple of Central Bank meetings this week... The first will be the Bank of Canada (BOC), which will meet and discuss rates. I believe they'll be discussing something else at the meeting as well... Quantitative Easing (QE)... In fact, I think the BOC will leave rates unchanged, but announce how they will introduce QE to their markets... That means there's another currency on the list of ones that have seen their respective countries take on QE... And you know what that means don't you? It means that I cross them off my list of currencies that are eligible to be on Chuck's Hit Parade!

Sweden's Riksbank will also meet this week... I do expect them to cut rates. The krona has been a very disappointing currency in recent times, and the size of their rate cuts explains it all... When the Riksbank meets tomorrow, they will most likely cut 75 BPS to .25%, basically zero... And if they talk about "doing whatever is necessary to save the economy" then they will be setting the table for future QE...

Geez Louise! Doesn't anybody want to have a strong currency any more? The Swiss National Bank (SNB) said last week that they don't think that it's a competition to see who can devalue their currency the quickest... Hmmm... Sure seems that way to me!

Gold had a very tough week along with the other non-dollar assets. I just look around at what's going on in the U.S. and the world, with all the crack-pots running around acting like they've spent a day in the drug den, and think to myself, that Gold should be trading much higher, and not suffering through weeks like last week. I read a piece from my friend the Mogambo Guru over the weekend regarding this very topic, and thought it to be a good thing to add to the Pfennig this morning...

The Mogambo Guru -- "Laurence Meyer, a former Fed governor (and so he ought to know) admitted to Bloomberg that the Federal Reserve "is 'running a laboratory experiment' on what drives inflation: the money supply or the output gap."

The fact that we already know the answer to this experiment is what makes me stand at the window and shout at passersby that they should "Buy gold, silver and oil right now, you pedestrian morons, because your Congress is spending the 'too much money' that is being created by the Federal Reserve just for that sinister purpose, and which will burn you alive in the painful fires of inflationary hell!"

That Mogambo... He certainly has a way with words! HA! He's one of my faves folks, and can be read every Monday on the Daily Reckoning: www.dailyreckoning.com along with the Pfennig!

There's a whispering campaign going on among "those who know" or "think they know" that all this deficit spending and money creation should deep-six the dollar eventually. One of those people is another of my fave writers, William Pesek, who had this to say on Bloomberg. (this is just a snippet)

"It's a bit rich for U.S. politicians to berate Treasury Secretary Timothy Geithner for not labeling China as a currency manipulator.

Perhaps Senator Lindsey Graham, a South Carolina Republican, hasn't seen a newspaper in the last 12 months. With near-zero interest rates, the likely issuance of trillions of dollars of government debt and massive taxpayer-funded bailouts, the U.S. will soon make China look like a manipulation piker.

Memo to Graham and his ilk: Your economy has lost any moral high ground as it drags the world down with it. That will be even truer as the dollar eventually pays the price for ultra- loose monetary and fiscal policies. And it will."

I do this from time to time, so that you're not always just hearing from me on this stuff... I don't want to look like the boy who cried wolf...

Chris Gaffney, who will be very bummed out this morning as his Blues lost again last night, sent me a story on Friday from the Economist. COM, regarding China... I thought that the story was very good in that it said quite a few of the things I've been saying about how China's stimulus is working, and that China should be the first to come out of the global recession. (not that they've had a recession, but a slowdown)... There was one point the writer made that really hit home, and I hadn't thought of... China's stimulus is working because, the Chinese had complete control on where it went and how it was spent... Not the willy nilly spending going on here, and elsewhere like the U.K. and Japan...

OK... The data cupboard is relatively empty this week, with only Leading Indicators today, and Existing and New Home Sales along with Durable Goods later in the week. So... It appears that Corporate earnings will take center stage this week, and that's not a good thing, in my opinion...

I'll head to the Big Finish right after I mention that bank lending is just not happening... The Wall Street Journal reports that analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program. Hmmm... What they don't mention is how many loan applications were denied! Look, it's not just the banks fault for not lending right now... With 600,000 in job losses for 5 consecutive months, and unemployment running in the double digits (probably around 16%), and consumers leveraged up to their eyeballs, not many applying for loans are going to get approved given this scenario.

Currencies today 4/20/09: A$ .7075, kiwi .5615, C$ .8150, euro 1.2975, sterling 1.4580, Swiss .8550, rand 9.0440, krone 6.7834, SEK 8.57, forint 230.50, zloty 3.3750, koruna 20.85, yen 98.70, sing 1.5090, HKD 7.75, INR 50.25, China 6.8335, pesos 13.23, BRL 2.1930, dollar index 86.43, Oil $48.25, Silver $12.04, and Gold... $873.70

That's it for today... Except to say Happy Birthday once again to Frank! I'm feeling better this morning, I rested most of the weekend. But I'm not out of the woods just yet on this... Got to see a great performance by Paul Simon on Saturday night. Slip out the back, Jack! The St. Louis Marathon was held yesterday, and the runners had to endure a day of rain... I believe our little Christine was running a 1/2 marathon, but I'm not sure... If so, it should bring back memories of when she ran a whole marathon about 5 years ago, in weather just like yesterday's! I hope this pneumonia is out of my system before I leave for Bermuda this coming Saturday. Yes, I'll be speaking 3 times at the Sovereign Society's Total Wealth Symposium which will be held beginning Sunday and into next week. I've never been to Bermuda, so this will be exciting for me! Well... It's that time again... So, thanks for your time, this time, till next time, and I hope you have a Marvelous Monday!

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

A "Stock Tip From The Top Guy!"

Chuck Butler — Wed, 04 Mar 2009 13:51:47 GMT

...But First, A Word From Our Sponsor...
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In This Issue..

* Australia's economy contracts....
* Bank of Canada cuts rates to .50%
* Meeting margin calls...
* TALF...

And Now... Today's Pfennig!

A "Stock Tip From The Top Guy!"

Good day... And a Wonderful Wednesday to you! My beautiful bride is getting ready to leave this morning. I'm not used to "talking" to someone when I get up at my usual early hour! She'll be gone in a few, as I write, and then it will be my little buddy, Alex, and your Pfennig writer on their own for 5 days! YAHOO!

Well... After a day of waxing eloquently about the how well the Aussie economy was doing compared to the rest of the world, they go and post a contraction in their economic growth! UGH! That's the way to show me up! The Aussie economy shrank in the 4th QTR by .5% VS the forecast of .2% growth... The news scared the markets into believing the Asian problem will be worse off than previously thought. Oh Come On! Australia is STILL doing better than most countries, especially those that I listed in yesterday's Pfennig!

Hey! It must be "time to buy stocks", as the President made his statement yesterday that "buying stocks may be a "Good Deal". So... There you have it! The Obama endorsement... I wonder if they guy that said he "hated me" because I said I thought there would be an Obama bounce and one didn't occur, will send off a "hate mail" to the Prez, if stocks continue to melt away, as I suspect they will!

The "Obama bounce" never materialized, and in fact this showing in the first two months has been atrocious! On Jan. 2, 2009, the DOW stood at 9034, since that time the Dow has seen an overall decline of 25%! I would say that instead of an Obama bounce, we're getting clear signals that the markets don't like our "new" direction...

This all plays into what my friend Bill Bonner of the Daily Reckoning, www.dailyreckoning.com calls the "meddlers" getting in there and interfering with what should, and let me repeat that so you get the full meaning of this... WHAT SHOULD be a normal process of cleaning out the excesses of the previous boom... A recession... Where some businesses die, and those remain standing are stronger... I have a saying that I use in all kinds of situations... "What doesn't kill you, makes you stronger"...

I'm going to stop there, otherwise I'll get a mail box full of emails telling me that I'm being too "hard on the Beaver" so early in the process... I'm not being "hard on the Beaver" I'm just reporting what's happening!

Well... The dollar is stronger again this morning, with the Japanese yen pushing back toward 100 again. The euro is looking as though it will not hold on to the 1.25 handle, and everything else is just rotten looking. Even Gold got smacked for another $10 loss yesterday! I have this feeling regarding the Gold price in the past week... I have no confirmation of this, but we've seen this before when stocks get hammered like they have in the past week. And that is... Selling the one asset that's making them a profit (read Gold!) and using the proceeds to pay for margin calls... So... That's my story and I'm sticking to it!

I get asked all the time about "how long will this dollar strength last?" Hmmm... You know, I said some time ago that I believed that by late summer, early spring, the credit markets might be showing signs of unlocking, and that could bring the risk takers back out from under their respective rocks, and that a return to the "fundamentals" would bring about an end to the dollar strength... The end of July marks one year of dollar strength, when the you know what hit the fan with subprime loans, and this whole lockdown of credit and liquidity caused a huge deleveraging in the markets...

While I still believe this thought has merit, I also have to figure in the fact that the previous stimulus plans didn't work, the money was wasted on Wall Street buddies, and cronies... And now we need another one, but only this new one is centered on the wrong things... So, I'll be watching for signs... If none appear, then I'll have to go back to the drawing board...

So... In an environment when "bad news" rewards the dollar... And the "bad news" just keeps coming along that's not a good sign for a reversal of dollar strength right now. When what used to be called 100-year events, now happen almost weekly... You get my drift...

The Bank of Canada (BOC) did lower rates yesterday, as expected. The BOC cut 50 BPS down to .50%, just like their neighbors to the south, and talked about "quantitative easing" going forward. Hmmm.. That sounds like their neighbors to the south too! The BOC had to attempt to do something given the fact that the economy contracted by 3.4% in the 4th QTR!

Tomorrow, the European Central Bank (ECB) will meet, and most likely cut rates, after "pausing" at the last meeting. ECB President, Trichet, told us after the last meeting that the rate cut had been shifted to the March meeting. So... Now it's March, so expect the ECB to cut rates tomorrow.

The markets have been quite strange with their reactions to easings since this financial meltdown began, and I don't expect this time to be any different. What I'm talking about here is this environment where markets reward early policy easing with currency strength...

OK... Yesterday's data... Well... Some had thought (not me!) that the ISM Index (manufacturing) slight bump in February offered some hope that the worst for the manufacturing sector may be over. The jury's still out on that one... But, even if it is over, the economy won't improve until this housing meltdown gets corrected... And yesterday's data on Pending Home Sales did little to change someone's mind about the direction of the economy! The Pending Home Sales index fell 7.7% in January. The Pending Home Sales data is a good indicator of housing activity, and given the steep fall in January, you would have to believe that the housing meltdown is still occurring, and doesn't have any sign of correcting any time soon!

And Vehicle Sales for Jan were an awful looking 6.4 million... To give you an idea of just how deep the slide in Vehicle Sales has been... A year ago, the sales data showed 11.6 million Vehicle Sales for Jan 2008! OUCH!

In all the "speeches" that were going on yesterday, with Fed Head Lockhart, Fed Chairman Bernanke, and Treasury Sec. Geithner, one would have though that a good sound bite would have materialized... But NOOOOOOO! The only sound bit on the day was the Obama "stock tip"!

Treasury Sec. Geithner did report on TALF, and say that it would begin March 25th. So... I thought for class today, we would review what the heck TALF is!

TALF stands for Term Asset-Backed Securities Loan Facility... Basically, TALF will expand the Fed's balance sheet, and if the Fed wants to moderate that expansion, the Fed has to withdraw bank reserves from the system. The Fed usually does this by selling Treasury bills.

I guess the question would be... What happens if the Fed runs out of T-Bills to sell? Hmmmm... I guess we'll cross that bridge when we get there, eh?

I received quite a few responses to my call for "feel good stories" in today's environment from businesses doing well... That's a good sign! I hope these businesses will continue to do well! The Big Boss, Frank Trotter, and I will review all the entries, and probably print one each Friday, since I like to have Fantastico Fridays, and finish the week with a smile! So, if your note doesn't appear this Friday, don't despair, we've got quite a few Fridays left in 2009!

Currencies today 3/4/09: A$ .6395, kiwi .4995, C$ .7735, euro 1.2525, sterling 1.4110, Swiss .8470, rand 10.4950, krone 7.1650, SEK 9.2050, forint 247.50, zloty 3.78, koruna 22.18, yen 99.30, sing 1.5490, HKD 7.7590, INR 51.53, China 6.8430, pesos 15.30, BRL 2.4160, dollar index 89.20, Oil $43.30, Silver $12.75, and Gold... $910.50

That's it for today... I have to go upstairs and start some breakfast for my little buddy, Alex, as he'll be getting up soon, and his first words in the morning are, "I'm hungry"... Spoken like a true teenage boy! I was listening to him play his guitar yesterday, and he's getting soooooooo good! Writing from home this morning wasn't that bad, as long time readers know my dislike for writing away from my desk and in the saddle at work... I could get used to this... NOT! Well... It's 28 degrees outside, but by Friday, we're supposed to be getting warmer... I can only hope! Because I've told you many time before, I'm just like Jimmy Buffett in that "I've gotta go where it's warm"! I hope your Wednesday is Wonderful!

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

RBA Surprises The Markets!

Chuck Butler — Tue, 03 Mar 2009 19:59:25 GMT

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In This Issue..

* Everything but Treasuries trades heavily...
* Fundamentally speaking on Australia...
* Bank of Canada to cut rates today...
* Tell me your story...

And Now... Today's Pfennig!

RBA Surprises The Markets!

Good day... And a Terrific Tuesday to you! Well... The BIG NEWS this morning comes to us from down under, where the Reserve Bank of Australia (RBA) surprised the markets and left rates unchanged for the first time in 7 months... Now, that's the horse of a different color! How dare they? How could they? Why everybody is doing it, Where do they get off thinking they didn't have to? Ahhh, grasshopper... The RBA continues to shine in my eyes as the best run Central Bank in the world, and this is one of the reasons why... Yes, they could have gone with the rest of the crowd, and cut rates to the bone, but why stoke inflation?

Now, having said all that... It doesn't mean the RBA won't cut rates again in the future... It just means that they were being prudent, and taking a step back to see what their previous rate cuts had done to the economy, and how the economy would be affected by them. So, the proverbial "pause for the cause"... But, I believe it to be warranted, given the RBA had cut 400 BPS away from their once lofty rate in 7 rate cuts...

Fundamentally speaking, the A$ represents an economy that has fared better than most of its G10 counterparts, with a growth outlook far exceeding that of the G10 nations. Australia's 2009 GDP growth is expected to reach +1.0%, compared to -2.0%, -2.20%, -5.0%, -2.7% and -2.2% in the US, Eurozone, Japan, UK and Canada respectively. (and we all know that the U.S. growth outlook is a big fat joke! Instead of -2% it should be -4 or -5%!) Then, add in the fact that Australia's current account deficit is seen at 4.4% of GDP in 2009, its lowest level since 2002. Recall, I kept telling you that their Current Account Deficit was narrowing? Its Budget SURPLUS is expected to hover at 1.0% of GDP--a far superior display than the deepening deficits of the US, Eurozone, Japan and the UK.

So... Like the spotlight that I directed to Norway last week... Here's another example of a country that could be in the front of the race when this financial turmoil ends...

So... The A$ is stronger this morning, but I wouldn't go racing to the currency kiosk to buy A$'s because you believe this to be a turn / reversal in the A$'s fortunes... There's no end in sight to the financial turmoil that has a grip on the world right now, and knowing that, tells me that the risk takers are not participating in the markets right now, and without the risk takers, any run-up in A$ or any other currency for that matter, is not of the "reversal of trend" kind of run-up... But... There will come a day, when all these fundamentals will matter once again...

The Bank of Canada (BOC) will meet today, and they are expected to cut rates again... Don't look for any RBA-style surprises here... Canada, just fell into a deficit status, and that came as a result of the slowing economy, which fell 3.4% in the 4th QTR... So, you can expect the BOC to cut rates this morning...

Yesterday, we saw everything under the sun trade heavily except U.S. Treasuries... Even Gold has faded in the past 5 days... Sort of like my beloved Missouri Tigers Basketball team did under the bright lights of national TV on Sunday! UGH! But, nonetheless, everything is trading heavy... Stocks, corporate bonds, muni bonds, commodities, and currencies... And I could even go further in that list and say real estate, and housing!

I've gone on record with my feelings about how I believe U.S. Treasuries are the next bubble... And I read a report from one of my fave economists, Brad Setser, yesterday that tells me I'm really on to something with that belief... Here's a snippet... "That implies, if the Pandey/Setser estimates for official purchases are right, that private investors snapped up more Treasuries than the world's central banks. Central bank demand accounted for a far smaller share of total issuance than in the past few years. In 2007, for example, central bank purchases easily exceeded total issuance. The big increase in demand for Treasuries in 2008 came from private investors in the US."

Hmmm... Private investors buying Treasuries... Now that's something I've been telling you for some time now, but Brad has all the facts and figures in his report to prove it, and knowing that Private investors have bought all the Treasuries, that Central Banks didn't want, tells me that a bubble is in the making...

Speaking of Central Bank ownership of Treasuries... I read yesterday that China used to keep 100% of their dollar reserves in U.S. Treasuries. Today they keep only 70% of their reserves in Treasuries, with the difference in gold, euros, and other Asian currencies. Hmmm... What if they would decide to diversify more?

OK... The devastation the manufacturing sector has experienced in the past 14 months, looks like it might have found a bottom... The February ISM Index, which measures the pulse of manufacturing, registered a slight increase! The index rose slightly to 35.8 from a previous level of 35.6... The employment component of the index though continued to slide... Production was the biggest gainer of the report... So, something is producing a heart beat for the economy...

Speaking of producing a heart beat for the economy... I'm going to go in a different direction occasionally here in the Pfennig, and instead of always beating on the dolts in Gov't, and the talking about the rot on the vine in the economy... And... I'm going to ask you dear readers to provide the input!

Here's the skinny... I would like for readers that have businesses that might be doing well in these times, to fire me off an email and tell me of their successes, how they've done better than others, or any kind of information you would want to see printed about your company... One to two paragraphs... And if you don't want to include the name of the company, don't! But... This will be free advertising for you! But, I only want the "feel good stories"...

The other thing to think about with this offer is that the Pfennig gets picked up by news agencies all around the world... It's circulation just keeps growing and growing... So... Come on! Send me your stories! pfennigreplies@everbank.com

I just received some "hate mail"... I opened it up, and the guy said he "hated me" because of my call for an "Obama bounce" after his inauguration, that obviously didn't come to fruition... Yes, I was wrong... How was I to know that Obama would opt for a stimulus package that has more spending in it to produce short term jobs, and start nationalized health care, than shore up financial institutions? He said he was going to "fix the problem"... Unfortunately, his idea of a "fix" is create jobs, when the economists all agree that the banks and financial institutions need to fixed first... Maybe he'll be right... But right now the markets don't think so... Especially stocks...

So, the markets are tanking, with no Obama bounce... No reason to "hate" someone! And... I always say... "I'm not even your last choice as a stock jockey"... But, how could we NOT have an Obama bounce? This guy was so popular! Right?

Speaking of stocks... The DOW lost 300 points yesterday to trade below 7,000 at 6,763... The first time below 7,000 in 12 years! But how can the little guy make money in stocks when the greatest investor of all time lost money in 2008? Here's the skinny as reported by the Wall Street Journal...

"Berkshire Hathaway, the holding company led by famed investor Warren Buffett, reported its worst year ever in 2008, with its net falling to $4.99 billion from $13.21 billion in 2007. Book value per share declined 9.6%, a performance far better than the S&P 500 stock index but only the second negative year suffered by the company since Buffett took over in 1965.

Berkshire predicted the economy "will be in shambles throughout 2009 -- and, for that matter, probably well beyond."

Today, we'll see the color of the Pending Home Sales, and Vehicle Sales... In addition, we'll get some verbiage from Fed Head Lockhart speaking on the economy in Tampa, Fed Chairman, Big Ben Bernanke goes before the Senate Budget Committee, and U.S. Treasury Sec. Geithner, goes before the House Panel on Federal Budget... So... Lots of opportunities for these guys to give us a sound bite that sends the markets one way or the other. So, keep your ears to the ground... Or, just turn on cable news!

Currencies today 3/3/09: A$ .6420, kiwi .4975, C$ .7750, euro 1.2605, sterling 1.4040, Swiss .8510, rand 10.4850, krone 7.1575, SEK 9.1375, forint 243.75, zloty 3.7675, koruna 22.2650, yen 97.80, sing 1.55, HKD 7.7575, INR 51.97, China 6.8410, pesos 15.32, BRL 2.4250, dollar index 88.88, Oil $40.75, Silver $12.72, and Gold... $924

That's it for today... A very busy, long day yesterday, capped by two hours of very intense stuff on 24! My beautiful bride takes off tomorrow morning, with her friends, to Florida, leaving me and my little buddy, Alex, to fend for ourselves... No biggie, we've done this before... Lots of pizza, eating out, and not doing dishes is in our future! Jen takes off for Colorado tomorrow, and some skiing, which means, I'll be flying solo on the currency trading the rest of the week... But, again, no biggie, I've done that for years! And besides, after March 10th, Jen will be flying solo the rest of the month! My trip to the radiologist yesterday yielded very little in the way of new information, except that I, "might need to be patient a little longer." Ok, I'm patient... The time has come for me to hit the send button, so I hope you have a Terrific Tuesday!

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

Gold Moves Higher With The Dollar...

Chuck Butler — Wed, 21 Jan 2009 17:59:18 GMT

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In This Issue..

* Currencies in a tight trading range...
* Bank of Canada follows the Fed...
* Look who's Talking Gold...
* Adding up the spending...

And Now... Today's Pfennig!

Gold Moves Higher With The Dollar...

Good day... And a Wonderful Wednesday to you! The first full day of the new regime... I will say this, it makes one proud to be an American when you can watch a peaceful, even extravaganza, handing over of leadership... It really rips me up when I read that the Wall Street Boys really contributed cash to the inauguration proceedings... Making certain the new President knows who contributed cash to his party... Probably cash they received from the Gov't in bailout payments! Nah... That couldn't happen... Could it?

Well... The currencies didn't really trade outside of a very tight range yesterday, except for the pound sterling, which continues to fall VS the dollar, euro, yen, and probably even the Zimbabwe currency! OK, that's harsh! But I wanted to paint the picture, so that everyone understood the grave situation the pound sterling is in... The Bank of England has decided to take 70% control of the Royal Bank of Scotland, and nationalization isn't far behind for that bank, and a few others...

Yesterday, the Bank of Canada (BOC) lowered their official interest rate by 100 BPS or 1%... I told you long ago that the BOC would follow in the Fed's footsteps, and they have... Canada had it all going for them last year, with gold rising, Commodities like Oil, natural gas, and metals all rising, but that curtain came down hard on Canada and their dollar / loonie. It will be some time before the loonie can recover... but... if my scenario of soaring inflation for the U.S. and rising Commodities again comes to fruition, then it won't be that long, not in the scheme of things...
There was word yesterday that the Monetary Authority of Singapore (MAS) stepped in to support the Sing dollar after it had fallen to a 6-week low. This kind of intervention works in this case, as the Sing dollar is relatively small in circulation, and the intervention doesn't have to be of size to stabilize a market... But, they (the MAS) need to know when to get out, and let the markets be... They gotta know when to hold 'em, know when to fold 'em....
Gold put in another strong performance yesterday adding $21 as I left for the day. Jennifer asked me during the day if this was a first, with Gold and the dollar rising... I said that I had seen it before, but it certainly doesn't normally go that way... For Gold is another offset currency to the dollar... Which leads me to believe that it wasn't so much dollar buying as it was euro selling yesterday...

The Boys and Girls at Morgan Stanley issued a report on Gold recently that called for Gold to reach a new record within the next 3 years. They call for the Gold to "average" higher each of the next three years through 2012, with the average this year to be $900, next year $1,000, the following year $1,050, and $1,075 in 2012... Personally, I believe their call to be quite conservative, something that we're going to see a lot of in the next few years, as these research teams, back off the "hyper-calls" for assets, as they walk gently over eggshells in an attempt to not garner the spotlight...

At least they're calling for higher Gold prices... You normally don't see Wall Street firms going out of their way to talk up Gold... For that thought, you normally don't see Bankers talking about Gold either... That's where I'm different! I talk to one radio station quite often and they call me the "un-banker"! That's right, baby! I'm not even your last choice as a "banker"... I'm a markets guy...

OK, enough of that self-promotion! HAHAHAHAHAHA!

Back to the markets... Well, the Obama bounce didn't come in the first day of his Presidency, as the Dow sold off by 332 points! UGH! OUCH! That's going to leave a mark! So far, one piece of the Obama bounce, the dollar, has rallied... But the other, stocks, have fallen on their face.... We'll have to see what stocks think about the $850 Billion stimulus package that the Obama team is working on...

Here's the skinny on the package, that could still grow... It certainly isn't going to narrow! The stimulus plan covers 5 areas of spending and tax breaks... Health, education, infrastructure, energy, and support for the unemployed and the poor. All worthy areas... Unfortunately, we (the U.S.) don't have the funds to pay for this... Now... If we weren't already in a huge deficit hole, then a stimulus package to get the economy going might be the answer... But, that's not the case! I told a radio station a week ago that the Roosevelt plan worked back in 1933, but it could have just as well failed, it was that touch and go, and if it weren't for the war it might not have... This time, we're starting in a deep, dark deficit hole... I sure hope it works... I just can't get my arms around how adding $2 Trillion to our national debt this year helps...

How did I get to the $2 Trillion? Well... The Congressional Budget Office (CBO) has already told us the deficit in 2009 would be $1.2 Trillion. Recall I had a cow over that announcement! Well, the CBO's budget forecast does NOT include the new stimulus plan of $850 Billion... I'll tell you what it also doesn't include... Any new military expenses... And the remaining TARP money that the Obama team just came into...

I just heard, and sang along with, out loud, good thing no one else is here!, one of my all-time face Chicago songs... Hard Habit To Break... Yes, the habit of deficit spending is a Hard Habit to Break apparently... So, where's the change?

OK, Whew! I really went off on a tangent there, eh? Oh, some of that was from my radio interview, and some of it was from my good friend, David Galland, who recently put out a piece on the spending... David used to take my Review & Focus draft, and make music with it... What a writer!

I see where Christopher Cox, resigned from his leadership role at the SEC... I think back to the election process when John McCain was asked what he would do about the financial mess, and his first response was to say that he would fire Cox... McCain got all kinds of flak for that... But in hindsight, given the failure of the SEC to spot Madoff's alleged ponzi scheme, that call doesn't look so bad now, eh? So... According to Harvey Goldschmid, a former Democratic SEC Commissioner, the SEC was "passive" under Cox... Well, you can expect that pendulum to swing swiftly to the other side... As with all things in life... They go too far one way, and when somebody notices, they swing too far the other way... Never finding a "happy medium"...

Someone sent me a note yesterday and said I hadn't mentioned the Swiss franc and why it had fallen on hard times, after posting a great 3-month return... I pointed back to a previous Pfennig that pointed out that UBS was involved in a bond scandal in Italy, and it reverberated all the way to the franc... Of course since then the euro has fallen from 1.34 to 1.29, and that has even more to do with the recent movement in francs... Remember... The euro is the Big Dog of currencies...

I'm currently reading a research report on China, in my "spare" time I might add! The research plays well with what I've been harping about for some time... And that is rising inflation in China, and how the Chinese officials should use a stronger renminbi to combat that inflation... There are a lot of people, researchers, pundits, out there calling for China to slow down their renminbi appreciation VS the dollar... I'm on the other side of that fence, as usual, right? I think the Chinese WILL use the renminbi as an inflation fighting tool... More later, when I have some "spare" time!

For readers of our monthly client newsletter, Review & Focus, you're in for a special treat in February... The Big Boss, Frank Trotter, submitted a special report called "The March of the Presidents" which goes back to Nixon, and gives grades based on raw data, not sentimental, of "soft stuff" ... Strictly numbers... Inflation, unemployment, etc. Look for it at a news stand near you!

Currencies today 1/21/09: A$ .6510, kiwi .5210, C$ .7925, euro 1.2925, sterling 1.3770, Swiss .8750, rand 10.2725, krone 7.04, SEK 8.3250, forint 220, zloty 3.3660, koruna 21.42, yen 89.80, sing 1.5025, HKD 7.7580, INR 49.11, China 6.8375, pesos 13.95, BRL 2.36, dollar index 86.20, Oil $41.29, Silver $11.40, and Gold... $860.70

That's it for today... So far so good, getting up a bit earlier to get the Pfennig written before I head in for my radiation treatment. I walked back into the office yesterday morning after my treatment, and Tim Smith said, "hey Chuck, I finally beat you in to work"... HA! Been here and gone, my friend... I've been talking about the Orlando Money Show that's Feb 3-7, for a month now, and now that it's two weeks away, I guess I had better get to work on the 2 presentations I'll be making! UGH! It usually takes me that long to fit in working on a presentation! I'm not like the Big Boss, Frank Trotter, who normally has all the ideas in his head, and puts them together on the plane! We're 5 months away from moving into our new digs in the brand spankin' new building next door... The seating plans and so on are being worked on now, along with how the computers and screens on the desks will be routed, etc. The "move" will be a pain, but the planning is fun! OK... Time to get this out the door... Hope your Wednesday is Wonderful!

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