Daily Pfennig : Barack Obama

Dollar rally peters out...

Chuck Butler — Thu, 30 Jul 2009 14:24:55 GMT

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

Down on the dollar? Foreign currencies at EverBank could be your answer. If you're intrigued by the possibility of lower portfolio risk and gains against a weak U.S. dollar, look to us for:

-- Familiar products: WorldCurrency CDs and Money Market Accounts
-- Many currencies: All major and some emerging currencies available
-- Expert support: Our World Markets Trading Desk is staffed with currency specialists ready to help

Apply today. Visit EverBank.com, or call the World Markets Trading Desk at 800.926.4922
......................................................
In This Issue..

* Dollar rally peters out...
* Obama defends his policies...
* Commodity currencies should outperform...
* Global Power Shift Index...

And Now... Today's Pfennig!

Dollar rally peters out...

Good day... And happy Thursday to everyone! Hope everyone made it through the 'hump day' with no worries. We started the morning here with rainshowers, but it ended up being a beautiful afternoon and evening. Currency markets were similar to the weather here, as most currencies started Wednesday in the loss column vs. the US$, but rallied as the day progressed. The dollar had strengthened over the past couple of days due to 'safe haven' demand; but a surprisingly strong durable goods number (ex autos) combined with an 'all clear' signal from President Barack Obama had investors moving back into riskier assets. The commodity based currencies also got a boost as China signaled it would maintain an accommodative policy, easing speculation that the Bank of China would try to rein in bank lending. Lots to cover today, so lets get right to it.

Durable goods orders for June were released yesterday morning, and the overall number actually showed a pretty dramatic drop of 2.5% compared to the month prior. But the overall number includes automobiles, and with many of the big 3 automobile plants shut down for part of June, the markets were focused on the number ex transportation. Orders for durable goods, excluding automobiles and aircraft unexpectedly rose 1.1% in June following an adjusted .8% rise in May. The ex auto number was strong enough for some to reason that companies would have to start boosting output in the coming months. While the 1.1% jump in orders is nice to see, the overall drop was pretty dramatic, and the auto sector makes up a large percentage of overall output for the US.

Just after noon the Fed's Beige book survey of economic conditions was released. The report said the pace of the US economic recession slowed or stabilized in most areas of the country and pointed to a protracted period of weakness as the economy transitions to recovery. The Fed said labor markets across the country were 'extremely soft' and wages and compensation were steady or falling in most areas. Not the rosiest of pictures for the economy, but not overly negative either.

The nation's #1 cheerleader was out in full force yesterday afternoon, as President Barack Obama defended his administrations policies during a speech in North Carolina. President Obama's poll ratings have slipped as unemployment continues to be a drag on consumer confidence. So he took a break from pushing his health care reform to defend his economic policies, saying he had helped avert an economic disaster as the US economy was in a "freefall". He stated that the US "may be seeing the beginning of the end of the recession", and that his stimulus plans had "helped stop a recession from becoming a depression".

The British pound was one of the biggest gainers vs. the US$ yesterday after a report showed UK house prices rose in July for a third consecutive month. Another report showed the average cost of a home in the UK rose 1.3%. The pound will probably end up in positive territory vs. the US$ this month for a fifth consecutive monthly gain. The rally is a relief for pound sterling investors as the currency dropped more than 26% vs. the US$ last year. A Standard Chartered PLC analyst predicted further strengthening for the pound sterling in a report released yesterday. The analyst stated that the US$ is in a multi-year downtrend, and the pound will likely push up to $1.75 by year end.

But there is still the question of deficits in the UK. The BOE was one of the first central banks to institute 'quantitative easing' policies, and many are looking for them to be the first to stop the program. With the UK housing sector stabilizing, officials will likely pause the asset-purchase program which was set up to lower borrowing costs. But the UK is still going to have to deal with a record deficit, similar to the problems facing the US. The UK Treasury said it will sell a record 220 billion pounds of debt in the year ending March 2010 to offset falling tax revenues and increased government spending. Again, good news for the pound in the short term, but the storm clouds are still gathering.

Positive news out of Europe this morning has helped keep the Euro moving up in early trading. European confidence in the economic outlook increased more than economists forecast in July, as an index of executive and consumer sentiment climbed to the highest reading since November. But the economic recovery in Europe is still very fragile, as evidenced by another report which showed retail sales fell for a 14th month in July. Unemployment in the Euro region continues to be a concern, with the unemployment rate expected to reach 12 percent in 2010.

Both Morgan Stanley and BOA/Merrill Lynch told investors to sell the dollar vs. the Euro in research reports released yesterday. Morgan Stanley said investors should sell the dollar against the Euro, Norwegian krone, and Canadian dollar as the global outlook improves. "As the outlook continues to improve, we believe that currencies with strongest ties to the global growth cycle will outperform at the expense of the US dollar," a currency strategist at Morgan Stanley wrote in a note to clients. BOA raised its forecasts for the euro predicting it would rise to $1.50 by year end. The report highlighted the diversification of reserves as a key driver of the Euro. The euro is predicted to continue to gain vs. the US$ as central banks diversify reserves into Euros from US$ as the US government is debasing its currency through its program of printing money to buy assets such as Treasuries.

One currency which hasn't been performing well vs. the US$ recently is the Swiss Franc which is one of the few currencies to drop vs. the US$ over the past month. This is exactly what the Swiss National Bank has been trying to accomplish, as they have spent as much as $32 billion since March to keep the Swiss franc from appreciating. The SNB sold the franc and cut interest rates on March 12 to stem the currency's gains. The Swiss continues to be a popular choice for investors, but problems with Swiss banking and the government intervention will likely keep the Swiss franc from rallying dramatically. However, as Chuck has pointed out several times in the past, no central bank (not even the Swiss) has enough money to fight the currency markets. The markets will eventually win out, and the longer term prospect for the Swiss franc is still positive. It is just that we feel there are other currencies which have better prospects in the near term.

Norway is one such currency. Norway's central bank will likely be one of the first among the world's richest economies to begin raising rates as the global crisis shows signs of abating. Inflation in Norway is likely to increase past the Norges Bank's target, increasing pressure for Norway's central bank to hike rates. The markets are beginning to price in an increase in rates at the beginning of next year as the Norwegian economy starts to heat up. Oil revenues, and a conservative fiscal policy helped to soften the impact of the global economic crisis, and Norway is now set to be one of first European economies to recover. Retail sales in Norway were up 2.6% in May since March and underlying inflation accelerated to an annual 3.3% in June, the fastest pace in eight months. The housing market in Norway is also pushing the recovery, as property values rose 5.3% in the three months ended June, the second quarterly gain.

Norway's neighbor, Sweden, is another currency which has been performing quite well vs. the US$. The Swedish krona is second only to the Australian dollar in return vs. the US$ over the past week, and is among the top three currencies this month. Sweden's krona is benefitting from a jump in exports as Sweden's trade surplus almost doubled in June as exports to Europe and the US increased. The Swedish krona has also benefitted from recent IMF support of the Baltic region, where Swedish banks are heavily exposed.

The Australian dollar continued to climb overnight, and is the best performing currency vs. the US$ in the past week. Investors are betting that the Reserve Bank of Australia will be one of the first central banks to start raising rates. With the US Fed keeping interest rates near zero, investors are likely to search for yield, and interest rate differentials will push the AUD$ higher. We saw a similar pattern back in 2003, when the AUD$ rallied over 30% vs. the US$ on interest rate differentials. Australia's economy unexpectedly grew in the first quarter, and recent rhetoric from RBA Governor Stevens suggests the start of a tightening cycle sooner rather than later.

Brazil's real continues to be a strong performer and is expected to strengthen to 1.8 per dollar by year end according to JPMorgan Chase & Co. The real will strengthen due to faster economic growth and higher demand for commodities according to JPMorgan. The currency will benefit from a stronger trade surplus and increased foreign investment. In news released yesterday, China Development Bank Corp, the state run bank for public works projects, stated they plan on opening an office in Rio de Janeiro next year, one of its first branches outside mainland China. Close ties with China will continue to benefit Brazilian exports of commodities. The Brazilian economy will expand at an annualized pace of 4.2% in the second, third, and fourth quarters this year according to research by JPMorgan.

A great way to invest in 4 different currencies which should appreciate as the global recovery takes hold is our Global Power Shift Index CD. This newest CD offering combines the currencies of Australia, Canada, Brazil, and Norway; all countries which are perfectly positioned to take advantage of commodity price increases. The CD is available with 3 or 6 month maturities and a minimum deposit of $20,000. Call the desk for details!

Currencies today 7/30/09: A$ .8248, kiwi .6528, C$ .9213, euro 1.4061, sterling 1.6485, Swiss .9188, rand 7.7974, krone 6.2331, SEK 7.4434, forint 190.56, zloty 2.9674, koruna 18.1791, yen 95.09, sing 1.4437, HKD 7.7500, INR 48.3575, China 6.8323, pesos 13.2083, BRL 1.8935, dollar index 79.273, Oil $64.01, 10-year 3.70%, Silver $13.425, and Gold... $932.88

That's it for today... I'm running a little late this morning, as Christine is already here with the breakfast sandwiches (she even picks them up when Chuck is out!). Cardinals won again last night with a timely hit by Albert Pujols in the 15th inning. It is great to see the Cardinals coming on strong in the second half of the season, should be an interesting playoff run. Hope everyone has a Tub Thumping Thursday!!

Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

He Said What?

Chuck Butler — Wed, 13 May 2009 15:58:37 GMT

.........But First, A Word From Our Sponsor..........
Now in Print: What You Need to Know About America's Economic Crisis

On election night, Amazon.com's top-selling book wasn't about Obama or even McCain. Instead, it was a book about the four American deficits that threaten to steal your wealth-and the steps you can take to reverse them.

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluation of the global financial situation anywhere else.

If you missed your chance to see the film-or just want more of its in-depth interviews and analysis-the IOUSA book should be at the top of your reading list. The issues it explores and the solutions it provides are too important to ignore.

Get your copy today: http://rcm.amazon.com/e/cm?t=dailyreckonin-20&o=1&p=8&l=as1&asins=0470222778&fc1=000000&IS2=1<1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr
.................

In This Issue..

* Foreclosures rise...
* Green Shoots, no so green!
* getting on a bus...
* Losing a triple A rating?

And Now... Today's Pfennig!

He Said What?

Good day... And a Wonderful Wednesday to you! Not wanting to start the day off with bad news... But I just saw a flash on the TV that said, "foreclosures jumped 32% last month"... More Blood in the Streets, eh? That just happens to be the title of my presentation today... Blood in the Street: Bargain time or just a cease fire? Hey! I don't make these things up...

OK... Another day here in Sin City... This city is packed with people, everywhere we go, it's simply amazing... There's been no sign of a recession here... Of course, if you got out of the casinos, and shows, you would see some of the greatest devastation any where in the housing market here... So.. It's not a seashells and balloons in Vegas... I guess with the economy so rotten, people are hoping to strike it rich in the casinos though... Hmmm, have they not figured out that these ginormous buildings are here to make money?

The Currencies lost ground yesterday, most of the day, and then overnight too... Not major ground, but ground that had been previously won VS the dollar, not something a dollar bear wants to see. There's more rot on the economy's vine, this morning with Retail Sales, and all that euphoria that was in the markets last week, is dissipating, quickly... So, let's go to the tape on Retail Sales...

Retail Sales for April were down again (the BHI was wrong! YIKES). The .4% fall in April added to the .9% fall in March (revised to -1.1% today) tells me that after signs of consumers picking up spending again in the fist two months of the year, this is turning out to be an absolutely dreadful quarter for Retail Sales... Oh, and let's go back to the GDP print of about 2 weeks ago... There was hope in the GDP figure that "consumption" may pull the economy out of the recession, for consumption was up 2.2%... But with these Retail Sales figures so far in the 2nd QTR, you can kiss that hope good-bye!

This is the kind of stuff I was all worried about the other day in the Pfennig... Recessions are like that... You get a pop, but it has no legs, and then leads the economy right back to the depths of the recession... This is why I wanted to get the currencies back on the fundamentals of having different pricing mechanisms and low correlations to stocks... The diversification fundamentals that have been forgotten in the past 6 months....

And... Here's a good one for you... OK... Who said this... "Even though we have been having some fairly strong gains in home prices, it is our conclusion that it is UNLIKELY that we are confronting a housing bubble."

Give up? It was a quote in the 2002 Fannie Mae Annual Report... By our esteemed (NOT!) former Fed Chairman Big Al Greenspan! This guy's track record of forecasting going all the way back to his days as a consultant before he was brought on at the Fed, is absolutely horrible! Now... Why do I bring this up now? Well... Yesterday, Big Al Greenspan decided to give us a forecast that allowed stocks to recover on the day... What did he say this time? Greenspan said in an interview that "Housing May Have Bottomed and be a the verge of a recovery."

Oh boy, now that's something to hang your hat on, eh? I shake my head in total disgust... This man was at the root of the whole problem, and people still listen to him?

OK... Enough on that exercise... I could write for days about all the things he has done... But, better yet... Go to Amazon and buy Bill Fleckenstein's book on the Fed and Greenspan...

My friend, John Mauldin, wrote a great piece last Friday for his weekly newsletter regarding all the talk about Green Shoots... The Green Shoots were the thoughts that data prints were getting better (so they thought) and that the economy was getting better... John pointed out that he didn't believe the green shoots were for real, and said they probably were more like dandelions... I totally agree... Both he and I took the Jobs Jamboree data that was considered a Green Shoot, and tore it apart to expose it as the fraud it was... No Green Shoot here!

Here's another one... Import prices in the U.S. rose by 1.6%... That's HUGE folks! I saw something that said that in the last 100 prints of this data there have been only 12 larger prints! YIKES... Here's the skinny... Recall, that I've told you that China's stimulus was working and that they would be the first country to come out of the economic doldrums... Well, with their stimulus working, that means commodity prices will be rising, and if commodity prices rise, that means inflation will rise... No Green Shoot here!

OK, enough of that! Did you see where the Obama The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money?

See? I told you that you give the Gov't a foot in the door, and they will begin to push their way completely through the door... And with banks that's exactly what's happening... Isn't that sad? The Gov't wants to dictate how banks pay their employees, even if they didn't accept TARP money! How do you like being put on the train to socialism? And you can't get off?

I had better stop there, I might say something that would get me into trouble!

Well... There was another thing that showed up yesterday that could mean very bad things for the U.S. and their ability to attract financing... The Financial Times ran a story regarding the U.S.'s Triple A rating... Let's see what The FT had to say...

"Long before the current financial crisis, nearly two years ago, a little-noticed cloud darkened the horizon for the US government. It was ignored. But now that shadow, in the form of a warning from a top credit rating agency that the nation risked losing its triple A rating if it did not start putting its finances in order, is coming back to haunt us.

That warning from Moody's focused on the exploding healthcare and Social Security costs that threaten to engulf the federal government in debt over coming decades. The facts show we're in even worse shape now, and there are signs that confidence in America's ability to control its finances is eroding."

Hmmm... That's scary folks... And... To add to that, an attendee came up to me yesterday after my first presentation, and said, "Chuck, great talk, but you didn't mention the debt that the U.S. will have to deal with in the future." Yes, he's right... I don't do that very often because I don't want people going outside and throwing up, or even worse things. What I'm talking about here is the debt that the U.S. will be under when all the Baby Boomers are drawing Social Security and Medicare... If you are not aware of these figures, and how bad they will become... Go to Amazon and buy the I.O.U.S.A. book by Addison Wiggin and Kate Incontrerra...

OK... Time to go to the Big Finish, I've got to go through my presentation once more before I head down to the Show...

Currencies today 5/13/09: A$ .76, kiwi .5970, C$ .8590, euro 1.3610, sterling 1.5165, Swiss .9045, rand 8.4950, krone 6.5150, SEK 7.8710, forint 208.15, zloty 3.2575, koruna 19.7090, yen 96.17, sing 1.4630, HKD 7.75, INR 49.71, China 6.8230, pesos 13.34, BRL 2.0960, dollar index 82.61, Oil $59.09, Silver $14.09, and Gold... $926.90

That's it for today... A very long day for yours truly yesterday... Hopefully today will be a bit shorter! An old friend stopped by my morning presentation to say hi yesterday... Thom Calandra, who started CBS MarketWatch stopped by... I hadn't seen Thom in years! He was huge for us years ago, when we were trying to get the word out about our products... I get a lot of people stopping by the booth each day just to see if I'm doing OK... They want to know if I'm feeling well, and to let me know that they are still praying for me... WOW! Pretty amazing, I'm so blessed! And Thanks to a real "star" my travel organizer supreme... Gena, you are a star! And... Today, we have two birthdays to celebrate... Our newest person on the trade desk Aaron Stevenson... And the young lady that is the engineer for my video projects, Lori Mucho... Happy Birthday! Time to go... I hope your Wednesday is Wonderful!

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

The waiting game...

Chuck Butler — Wed, 01 Apr 2009 15:15:52 GMT

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

Down on the dollar? Foreign currencies at EverBank could be your answer. If you're intrigued by the possibility of lower portfolio risk and gains against a weak U.S. dollar, look to us for:

Apply today. Visit EverBank.com, or call the World Markets Trading Desk at 800.926.4922
......................................................
In This Issue..

* Waiting on G20 and the ECB...
* US home prices plunge...
* What will come from G20...
* ECB to cut rates, but no quantitative easing...

And Now... Today's Pfennig!

The waiting game...

Good day... The markets will play a waiting game today, and I expect the currencies to trade in a pretty flat range. The focus will be on the G20 which starts tomorrow, and the ECB announcement which will also be released tomorrow. So today I will share my views on both of these topics, but first I will report on what occurred yesterday and overnight in the currency markets.

The dollar climbed yesterday morning as data released showed US home prices plunged at a record pace and consumer confidence continues to bottom. US home prices fell nearly 19% in January according to the S&P Case Shiller index. This was even worse than economists had predicted, and December's numbers were revised down.

With housing continuing down, and employment prospects dim, it is no surprise that the US consumer confidence numbers remained near record lows in March. The Obama administration has been making an all out effort to try and cheerlead US consumers back into the old 'borrow and spend' mentality, but the bad economic data are making his efforts futile. US consumers continue to be hit with bad news, and are going to need much more convincing before they start to rush out and spend again. I know this probably won't be popular with many, but is it really so bad for US consumers to be tightening their belts? Yes, I know it may extend the recession, but I feel the US consumer will come out of this much healthier if we can permanently break the borrow and spend mentality.

The global imbalances, which contributed greatly to the situation we now find ourselves in need to be reversed. The Chinese need to increase their consumption, and the US needs to increase our savings. This is the only way the world economy can move back toward equilibrium. So a depressed and scared US consumer may be just what we need to correct these problems in the long run. I think it is foolish and shortsighted to try and encourage the US consumers to start their old borrow and spend habits; that is what helped get us into this in the first place! (I doubt if you will see that spin on things anywhere else!!)

Recent economic reports in the US had shown an indication of a pickup in consumer spending, and a rebound in durable goods orders, causing a selloff in the dollar and a nice rally on Wall Street. But yesterday's Chicago purchasing managers index threw cold water on these nascent signs of recovery. Today I expect to see additional indications the economic slowdown will continue as we get the ISM manufacturing index, construction spending, pending home sales, and US vehicle sales numbers.

We will also see our first indication of the monthly employment picture with the release of the Challenger job cuts number and the ADP employment change report for March. The Challenger number has already been released, and showed the number of job cuts jumped 180% in March YoY. The ADP number is expected to show another 663k jobs were lost in March, slightly lower than February's 697k but still bad news for the economy.

But employment is falling everywhere. The European unemployment rate increased to 8.5% in February according to a report released this morning. This is the highest since May 2006, and was above expectations. Japan also announced their unemployment rate yesterday, which rose to 4.4% in February compared to 4.1% the month before. The WorldBank and OECD released a report yesterday which warned surging unemployment will cause the current economic downturn to deepen and extend. The Organization for Economic Cooperation and Development (this is why they just go by OECD!) predicted that global GDP will contract by 4.3% this year as unemployment continues to grow. The WorldBank lowered its growth forecasts for developing countries this year by more than half to just 2.1%. In this environment, countries such as China, India, Brazil and Australia, which are predicted to beat these growth projections will continue to be attractive targets for investment.

The deteriorating world economy adds to the urgency surrounding tomorrow's G20 meeting in London. The news media has set expectations unreasonably high, with looking for a solution to the global economic slowdown to emerge.

Unfortunately I don't believe we will see much come out of this meeting. The main focus of the meetings will be the establishment of new regulations for the global financial system. Treasury Secretary Geithner laid out his design plans over the past few days, which include greater regulation of hedge funds and the extension of federal regulations into the currently unregulated world of exotic financial instruments such as credit default swaps. It would also impose tougher standards on financial institutions judged to be so big that their failure would represent a risk to the entire system.

But leaders from Germany and France don't believe these plans go far enough. In fact, President Sarkozy threatened to walk out of the meetings if the G20 doesn't put more teeth in the regulations proposed by the US and the UK.

But US financial firms still dominate the global system, and the job of regulating these firms falls to Geithner and the US. So while the rest of G20 may want to try and demand tougher regulations, the political landscape in the US won't allow it, and Geithner's plan will probably end up

Meanwhile President Obama will join the host of the event, Prime Minister Gordon Brown to try and convince others in Europe to follow their lead and put together sizable economic stimulus programs to jump-start global growth. The US has taken the lead on deficit spending (no surprise there!) with the administration spending $12.8 trillion in their stimulus efforts, close to the total GDP of the US for 2008.

But leaders from Europe worry about the inflationary consequences of these huge stimulus projects, and are hesitant to load up more debt onto the backs of their citizens. They don't want to risk the long term health of their economies for a quick path out of the current economic quagmire. Can you blame them? I know Obama is an excellent orator, but he is going to have to be at his all time smoothest to convince these other leaders to follow his lead. The UK and US economies aren't a picture of health right now, and the quantitative easing measures they are pushing others to emulate are mostly untested.

While global financial regulation will certainly be a topic addressed during the summit, I can tell you a topic which won't get any traction: a move toward a global currency to replace the dollar. For all of the press China and Russia have garnered with their proposals the past few days, the US will block any serious attempts to discuss an alternative to the US$. Much of the damage to the credibility of US$ as a reserve currency has already occurred. And regardless of whether an official alternative to the US$ is found, foreign countries will continue to diversify their reserves out of the dollar. Data from the IMF released yesterday showed the dollar's share of official foreign exchange reserves fell last year, while the yen and euro gained. The dollar accounted for 64% of the reserves, down slightly from the month prior. As with financial regulation, each country has its own agenda with regard to its reserves, and the trend away from US$ will likely continue, no matter what is or is not decided over the next few days in London.

Basically, each leader to the G20 summit is showing up with their own set of problems, and the US and UK's problems are some of the worst. To think these leaders will be able to unveil a solution to all of these diverse problems in just 8 days is ludicrous. While the meeting will hopefully start us on the path toward global financial reforms, I am expecting the global markets to be disappointed with the lack of progress after G20.

The ECB will be announcing their rate decision tomorrow, and are expected to make a 50 basis point cut in their main lending rate. The main topic of discussion on the currency trade desks is the question of quantitative easing and whether the ECB will look to follow the US, UK, and Japanese central banks.

The media's inflation/deflation pendulum has started to swing back toward inflation again benefiting commodities. Gold gained almost $10 overnight as investors moved back into this inflation hedge. While the US and UK are encouraging others to ignore the future consequences of pumping huge amounts of liquidity into their financial systems. Commodities prices benefit in two different ways from this quantitative easing. First, some of the huge amounts of stimulus will be spent on infrastructure projects which will increase demand for commodities. Also, if the stimulus works as planned, the economies will start growing again which will cause demand for commodities to increase. Finally, the liquidity which is being pumped into the system will likely spur inflation, with commodity prices again moving higher. So commodities, and those countries which produce/export them will likely be some of the best performers going forward.

Went a little long today, so I'll end it here.

Currencies today 4/1/2009: A$ .6946, kiwi .5628, C$ .7913, euro 1.3269, sterling 1.4416, Swiss .8777, rand 9.418, krone 6.7161, SEK 8.2415, forint 230.01, zloty 3.4397, koruna 20.4272, yen 98.85, sing 1.5215, HKD 7.7504, INR 50.73, China 6.8343, pesos 14.0859, BRL 2.3228, dollar index 85.43, Oil $48.52, Silver $13.025, and Gold... 926.80

That's it for today... Shaping up to be a beautiful spring day here in St. Louis. We have several visitors from out of town here this week, as we are hosting the Women's Final Four so I hope the weather holds out for them. Short handed here on the desk today as Tim Smith headed out to vacation today. It is Tim's birthday today, so I guess I can't blame him for taking it off! Hope everyone has a Wonderful Wednesday!!
Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

A Day Of Healing...

Chuck Butler — Thu, 12 Mar 2009 14:54:08 GMT

...But First, A Word From Our Sponsor...
Now in Print: What You Need to Know About America's Economic Crisis

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluation of the global financial situation anywhere else.

Get your copy today: http://www.amazon.com/dp/0470222778?tag=dailyreckonin-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0470222778&adid=03WYRVDX49DN6K6GRQ4G

In This Issue..

* Currencies have a mini-rally...
* Only to see profit taking overnight...
* Gold rebounds too!
* Retail Sales on board today...

And Now... Today's Pfennig!

A Day Of Healing...

Good day... And a Thunderin' Thursday to you! It was a Tub Thumpin' Wednesday yesterday for the currencies and Gold, after seeing them back off earlier this week! I'm in Jacksonville for a company event, and then on Friday morning, I head south to start my spring vacation! But first, some work to do here, and then on to the south!

It was 29 degrees when I got in the car to leave for the airport yesterday morning... And it was 77 degrees when I finally arrived in Jacksonville! YAHOO! But even as loud as I can say YAHOO for the warm weather, which I've said over and over again, I've got to go where it's warm, it wasn't as loud as a the YAHOO yelped by currency owners as the euro led the currencies higher and higher all day long!

And the Gold holders weren't far behind, as the shiny metal got back to $900, after seeing 3 days of selling in a row! A lot of the people here asked me about Gold, and I had to tell them the same thing I've told you dear readers for some time... These are uncertain times, and in uncertain times, it calls for the "uncertainty hedge"! And that's what happened today... Stocks, which had rallied on the Citicorp news the day before, failed to follow that up... So, what's a stock jockey to think? I'll give you my two cents here, which I told the Vice-Chairman last night... And that is... Do you believe that Citicorp really had a profitable first two months? I mean, just a couple of weeks ago they were begging for more TARP money! Keep this in mind... Liars figure, and figures lie... Not that it wasn't true, but come on! They were begging for money just a couple of weeks ago when they supposedly were booking profits? OR... Maybe they DID book the profits, good for them! But if they were booking profits, why were they knocking on TARP's door looking for more handouts?

I had better go on record and say that's just my opinion and not that of EverBank's... Even though the disclosures all spell that out!

So... For once in the past few months, the currencies broke from the stocks... Yes, I know they gained a tiny bit on the day, but not the kind of gain that would match the rally in the currencies! But... And here's where things get unwound... But, in the overnight markets, traders and investors just couldn't stand to see the euro at 1.2850, so they took the profits they had, and brought the single unit back below 1.28. It's trading about at the same level as yesterday morning... So... All that hoopla yesterday, gone down the drain overnight... The Spinners had a great song titled... It's A Shame... Appropriate here...

China's Trade Surplus for February came in at $4.84 Billion down from January's $39.1 Billion... That's a HUGE decrease, eh? But still a surplus, and in today's economic environment that's something to be proud of, eh?

German manufacturing orders fell 8% from a year earlier, so face it folks... Everything around the world is slowing down!

And in something you may have missed, because it certainly wasn't covered in the mass media... U.S. Treasury Sec. Geithner, said that the Obama administration will press Congress for legislation to allow the IMF to sell part of its stockpile of Gold... UH-OH! If the IMF is going to resort to selling Gold... Then the you know what is about to hit the fan!

Speaking of Geithner, and those that threatened me with physical harm if I kept calling him "the cheater" won, since I stopped... But trust me, I'm an old crippled, cancer fighting man now, but if someone had threatened me in my earlier life, I don't know anyone that would want to deal with me, because I didn't know the word, "give up" / or "stop"... But, I'm a big, declawed pussy cat now, so threats do get to me!

But, I digress... What I wanted to say was Speaking of Geithner... Here's what the Wall Street Journal had to report yesterday...

"Obama and Geithner are failing in their efforts to revive the economy, according to participants in the latest Wall Street Journal forecasting survey.

A majority of the 49 economists polled is dissatisfied with the administration's economic policies. On average, they gave the president a mark of 59 out of 100, and although there was a broad range of marks, 42% of respondents graded Mr. Obama below 60."

The Reserve Bank of New Zealand (RBNZ), reduced their Official Cash Rate (OCR) by 50 BPS the other day... RBNZ Gov. Bollard had this to say.... "The world economy deteriorated very rapidly late last year, amid ongoing losses and extreme volatility in international financial markets. While monetary and fiscal policy responses in many countries have been substantial we still expect the adverse economic forces generated by the crisis to remain dominant throughout 2009. The timing and extent of global recovery remain highly uncertain."

I've had my differences with Gov. Bollard in the past, as he was once who openly talked about the need for currency weakness... So, different from my one time acquaintance, and a "hero" of mine when he was Gov. of the RBNZ, Don Brash! But at least this time Bollard is bang on with his observance!

The Japanese yen, which a few days ago, looked like it was on shaky ground, has put in two days of stellar performances, which makes one wonder if what "Mr. Yen" had to say the other day is working its magic with yen... Recall, I told you that the former currency guru of Japan, Sakakibara, who is known as "Mr. Yen" said yen could rise to 70 VS the dollar, and trade in a range between 70 and 100... I disagreed with the 70, but thought 100 might hold...

But I didn't wonder too long here on this subject, because I know in my heart of hearts that yen does not have the intestinal fortitude to climb past 85... (remember, yen is a European priced currency, so as the price goes down, the more value it returns in dollars)

On Data-Watch today, we have the usual Weekly Initial Jobless Claims, which continue to be horrific week after week, and Retail Sales for February... Retail sales unexpectedly rebounded in January with a 1.0% gain, after a 3.0% drop in December. But the stronger number, which came off a low baseline in December, was likely due to heavy discounting to move inventories sitting on store shelves. The Chain stores seem to be reporting decent sales, but everyone else's sales are in the dumpster. And then I do the quick check of the Butler Household Index (BHI), and I'm convinced that today's printing of Retail Sales for Feb. are going to be disappointing!

And finally, we'll see the Business Inventories data for Feb. Last month when I reported the Business Inventories data, a reader asked me what was up with reporting this data, as they didn't know what it was about... So, I promised them that this month, I would hold class on Business Inventories, so get out your pads of paper, and a sharpened # 2 pencil, to take notes...

Business inventories are the dollar amount of inventories held by manufacturers, wholesalers, and retailers. The level of inventories in relation to sales is an important indicator of the near-term direction of production activity. This is called the "Inventory to Sales Ratio" or I-S...

Business Inventories tend to rise when economic conditions are strong; since sales are rising at the same time, the inventory-to-sales ratio may remain stable, or rise at a very slow pace. Inventories tend to drop when economic conditions are weak; since sales are falling at the same time, the inventory-to-sales ratio may remain relatively stable. The I-S ratio then begins to rise as sales fall more quickly than inventory growth.

So... If things play out the way I think they will, recall that I've said over and over again, that this dance is gonna be a drag, no, I've said over and over again that soaring inflation is going to be on the other side of this current asset price deflation... And one of the reasons will be buyers wanting to buy and spend again, and businesses that don't have the products on their shelves because of the depression... Money chasing too few goods... And we'll see the proof in the pudding right here in Business Inventories and the I-S Ratio!

OK, that's enough, put your pads of paper and #2 pencils away, as we're finished for the day! Let's go to the Big Finish!

Currencies today 3/12/09: A$.6455, kiwi .5130, C$ .7760, euro 1.2780, sterling 1.3770, Swiss .8650, rand 10.26, krone 6.9620, SEK 8.8320, forint 239.80, zloty 3.6225, koruna 21.21, yen 96.30, sing 1.53, HKD 7.7545, INR 51.80, China 6.8388, pesos 15.16, BRL 2.35, dollar index 87.93, Oil $42.79, Silver $12.86, and Gold.... $912.80

That's it for today... Thanks to Mike for Pfilling in on the Pfennig yesterday, great job! He doesn't know it, but I'm going to back out of writing from my hotel room tomorrow... Mike, you did such a great job, you get to do more! Yeah for you! Our little Christine, loves to say, "yeah for whomever" so... We have that going for us! The trip here was somewhat uneventful, I didn't have anyone drop their hard case luggage on my head or anything! The plane out of St. Louis was delayed as there was a "maintenance issue"... I told Kristin, when I got here, that I wish they wouldn't tell me these things! Just say, "we're waiting for a passenger to board, or something" One time, years ago, the Big Boss, Frank Trotter, and I were looking out the window of a plane, and saw what appeared to be oil pouring out of the plane's wing... We were just about to get up and get off the plane, when a maintenance truck pulled up to stop the bleeding... Things you wish you didn't know about, for sure! OK, I give a presentation on World Markets this morning, so I have to look sharp, no wait, that won't happen, I have to feel sharp, no wait, that won't happen, OK, I just have to get up there and do it! HAHAHA! Time go... I hope you have a Thunderin' Thursday!

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...
Now in Print: What You Need to Know About America's Economic Crisis

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluation of the global financial situation anywhere else.

Get your copy today: http://www.amazon.com/dp/0470222778?tag=dailyreckonin-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0470222778&adid=03WYRVDX49DN6K6GRQ4G

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

Labor Market Continues To Deteriorate...

Chuck Butler — Fri, 20 Feb 2009 14:31:16 GMT

In This Issue..

* Merkel leaves us wanting...
* Gold soars higher overnight!
* Indian rupees' worst week!
* Greenspan = Very Bad Idea!

And Now... Today's Pfennig!

Labor Market Continues To Deteriorate...

Good day... And a Happy Friday to one and all! It got cold here again... I can't wait for my March trip to a warmer climate! GM's Swedish unit Saab is filing for protection from creditors, so that it can reorganize into a business independent of GM... Hmmm... Everyone is jumping the GM ship...

Well, it's Friday, and that means yesterday we saw the print of the Weekly Initial Jobless Claims... And once again, the rot on labor's vine was exposed... The total Claims files last week was 627K, the experts had forecast 600K... But here's the thing that really hits home... The number of Americans collecting unemployment benefits has jumped to 4.99 Million, and each week and new record number is established... It certainly tells me that the labor market is still deteriorating...

At this rate... Obama's hope that his $787 Stimulus would create 3.5 million jobs, might fall well short even if it's a Smashing Success!

There was a boat-load of other data yesterday, of which none of it was good, except the Leading Indicators, which again will be goosed up by stuff that ends up being no good to the economy!

Today, we end the week with the "stupid" CPI data for January... Long Time readers know my dislike for CPI and what it does to people who depend on checks each month, and to our pocketbooks... WE all Know inflation is higher than CPI says it is, but the Gov't, and the markets go with CPI as the "official" inflation gauge... Dolts... All of them!

Well... The euro had a day in the sun, and today the clouds are forming over the single unit once again. Yesterday, I left you with a rallying euro, based on a rumor that Germany would step in to ease the financial turmoil in Europe (Eastern & Western)... Well, Germany's Chancellor Angela Merkel left the markets "wanting" more... She acknowledged that Germany "could" help... But didn't have a plan, didn't have an idea of what to do, didn't do squat! Why have the stupid press conference if that's all you're going to do! Get up there, have your plan, and act like you know what you're doing... People will follow! Geez Louise! Now I have to rip on the dolts overseas too? I'm getting too old for this stuff!

So... The euro is back to 1.26 and change this morning, and the other currencies are following along... Risk Aversion has plopped right down, smack dab in the middle of what appeared to be a Risk Takers "sighting"...

Gold even saw selling as the day went along and the Risk Aversion crowd won the battle... That is until the overnight markets saw the lower prices in Gold, and you should have seen the "rush" into buy Gold! The shiny metal is up $13 this morning to $988.30... I heard one our sales people talking to a prospective buyer on the phone... The prospective buyer admitted wanting to buy Gold below $900, and was very upset to learn it had leaped over $900 a couple of weeks ago, and not looked back. Shoot Rudy! You never know, it could fall back there again... But the view from the cheap seats, where I sit, is a changing landscape, where fiat currencies are traded in for hard assets, like Gold... I've mentioned this for the past couple of weeks now, so this shouldn't come as any shock to you dear reader... That is unless... You just "delete" the Pfennig each day! OH! The Shock! The Horror! The Humanity!

On a sidebar... I mention that, because one day about 4 years ago, Chris Gaffney and I were meeting with some investment advisors that we knew from Mark Twain Bank days... And I told them they should sign up for the Pfennig... Chris, then said, "if you don't want to read it you can always just delete it"... Of course he didn't mean it the way it sounded, but I give him a very difficult time still today... As evidenced by the above!

One currency that had moved stealth-like to higher ground VS the dollar since the beginning of 2009, was Indian rupees... Notice, I said "was"... As all that stealth-like move to higher ground VS the dollar was wiped out this week... I saw a headline last night that said this was the worst performance week by the rupee... OUCH! Time for the Central Bank to get back on the intervention horse, and repair this damage...

While I wrote those last two paragraphs, Gold has moved up another $2!

There was more selling in stocks yesterday as the Dow fell 1.2% to a new five-and-a-half year low, breaking through the previous bear-market closing low of 7552.29 hit on November 20, 2008.

And during my radio interview yesterday, I was asked about the comments from former Fed Chairman, Greenspan, that he "favored nationalization of banks"... I had seen that comment a day earlier and even commented to the Big Boss, Frank Trotter, that he sure didn't make comments like that when he was the Fed Chairman... And referred to as the "Maestro" and "Mr. Free Markets" But now that he is retired and looking at the mess he created, and yes folks, he wasn't the sole culprit, but he was the "provider"... And now that he's looking at the mess he created, he thinks we're in a huge pile of dookie, and had better do something, fast!

My friend, Bill Bonner, of the Daily Reckoning, (www.dailyreckoning) had this to say about Greenspan's comments... "Greenspan backs nationalization," says a headline.

Well, that does it for us here at The Daily Reckoning. If Greenspan is in favor of it, we're against it. No one man bears more responsibility for the present worldwide financial crisis and coming depression that Alan Greenspan.

The Fed's job is to take the punchbowl away when the party gets too wild, said former Fed chairman William McChesney Martin. Greenspan did no such thing. As soon as the party began to quiet down and people began fumbling for their car keys, Greenspan added more rum to the punch and turned up the music. By the time the credit cops finally shut it down, people were dancing on tabletops all over the world."

This "nationalization" cry is a very bad idea folks... Very bad... How bad? Very Bad! Did I say that it was a Very Bad idea? OK... Is that clear? ... Crystal... I hope!

Ty Keough sent me a note on something he saw while watching Jay Leno the other night. So, let me set the stage for this note... It's Monday night, the country had celebrated President's Day... And President Obama celebrated Past President's Day by signing the $787 Billion Stimulus Bill... OK.. Here's what Jay Leno had to say...

"Today was Presidents Day. Congress commemorated George Washington's throwing a dollar across the Potomac by throwing $780 billion down a rat hole."

I see where the New York State Attorney is taking a run at the Bank of America / Merrill Lynch merger that took place last year... NY State Attorney, Mr. Cuomo's office is trying to determine if investors were misled about the depth of Merrill's losses in late 2008 and whether details of the bonuses to Merrill employees, contained in a nonpublic document, should have been disclosed to investors. Now... I'm not saying that there was anything misleading or scandalous here... But it reminds me of about 8 years ago... Remember?

Remember about 8 years ago, when the tech-bubble burst, and we had one Corporate Scandal after another? Well, we're not doing too well these days either... Madoff... Stanford... And there will be more... I shake my head in disgust...

Time to head to the Big Finish...

Currencies today 2/20/09: A$ .6415, kiwi .5075, C$ .7950, euro 1.2640, sterling 1.4350, Swiss .8450, rand 10.1650, krone 6.9125, SEK 8.7365, forint 241.50, zloty 3.76, koruna 22.8825, yen 94, sing 1.5360, HKD 7.7540, INR 49.77, China 6.8370, pesos 14.77, BRL 2.3850, dollar index 87.63, Oil $37.75, Silver $14.36, and Gold... $993.65 (still moving higher this morning!)

That's it for today... Had a great interview on the radio yesterday, about 20 minutes long... You give me 20 minutes to talk, and I'll fill your airwaves! And besides, I've always said that I had a "face for radio"! I made the Big Boss, Frank Trotter, wait outside his own office, as I used his office to do the interview. Hey! I sit on the Trading Desk, it's too loud to do an interview there! My "Les Nessman" office was converted into our studio, so, whenever I have an interview, and this week I had 4 of them, I have to go find an empty office... Tomorrow is the 2nd largest Mardi Gras party in the country, right here in St. Louis! It's going to be a COLD one too, unfortunately! But I doubt it slows down the revelers that are die hard Mardi Gras partiers... I used to go... But I can't do all that walking around any longer... And... I got too old! I hope everyone has a great time! But BE Careful! I hope, you have a Wonderful Weekend!

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

Geithner's Plan Disappoints...

Chuck Butler — Wed, 11 Feb 2009 15:19:14 GMT

.........But First, A Word From Our Sponsor..........
Gold and silver prices moving higher again.

For a simple and inexpensive way to own gold or silver, consider the non-FDIC insured Pooled Metals Select Account from EverBank®. This economic alternative to buying actual bars or coins lets you "pool" your metal with other investors, saving you from costly storage or maintenance fees.

Invest for as little as $5,000, avoid costly broker commissions, and receive account statements every month.

Apply online. Simply go to EverBank.com, mouse over "Products" then select "Precious Metals." For important disclosures visit: http://www.everbank.com/001MetalsTBLegal.aspx?TB_iframe=true&height=400&width=700
......................................................

In This Issue..

* Trade Deficit to narrow further...
* Currencies rally, then sell off...
* Obama's stimulus loses backers...
* Riksbank cuts 100 BPS unexpectedly...

And Now... Today's Pfennig!

Geithner's Plan Disappoints...

Good day... And a Wonderful Wednesday to you! Well... Tim Geithner didn't experience a Terrific Tuesday, as I had wished for him... And now, it looks as though the shine is coming off the new President as more and more individuals are "not buying" his appeal to the nation to get a stimulus package passed... The currencies rallied and then sold off after Geithner gave the details of his "new and improved" plan... We've got some potential market moving data printing today and more! So... Let's go to the tape!

Front and Center this morning, we have some data that could potentially move the currencies today. I'm talking about the Trade Deficit for December. The "experts" have forecast a narrowing of the December Trade Deficit from $40.4 Billion in November, to $35.7 Billion. Now, that all sounds wonderful, as this is one of the twin deficits that I have banged on for years now. But the resolution is completely different than what I wanted to see. I wanted to see U.S. exports bring the Trade Deficit down... Instead we have a complete collapse of demand for imports... And with the dollar stronger than it was 7 months ago, exports are falling like a house of cards.

Now, here's the potential market moving piece of this data... Last month (January) when the November $40.4 Billion Deficit printed, it was more narrow than forecast, and sparked the dollar to a 1.5% gain in one day. But that's not all, the rest of that week the dollar gained 2.5% (in the dollar index)... So... While this isn't the path I would have liked to see the Trade Deficit narrow, it is narrowing...

Unfortunately, for the Twin Deficits, the other Deficit, that resides in the Budget, is taking up the slack... I now figure that the Budget Deficit could very well hit $3 Trillion this year... We already have $1.2 Trillion from the Congressional Budget Office, $838 Billion in the "new and improved" stimulus package the Senate passed yesterday, and don't forget the $350 Billion in TARP money that was carried over from last year, that will be spent this year... And you know, there will be "another" spending package coming in the future, because people like you and me are calling out this "new and improved" stimulus package...

A recent poll by Pew Research Center found that a narrow majority of Americans, just 51%, support the stimulus. And that's down from 57% in January. Even worse for the administration, support seems to be dropping among people who say they've learned more about the stimulus:
Notably, support for the proposal is now much lower than it was in January among those who have heard a lot about the economic stimulus. By 49% to 41%...

And here's something in the plan that I bet you didn't know was a part of it. I thank a dear reader for bringing this to my attention. He's a doctor, so I believe he knows what he's talking about here folks...

"This past weekend and Monday I took the time to read "The Obama Stimulus Plan." I will leave politics to the side and will leave my interpretation from an Economic perspective aside ( I double majored at Bucknell in Chemistry and Economics ). What I will NOT leave to the side is what is buried in "The Bill" from a health care standpoint. YOU NEED TO KNOW.....the "stimulus bill" is a Trojan Horse.....hidden in "this horse" is the legislation to NATIONALIZE HEALTH CARE."

So... Do I have your attention now? Here's a link to the story by Betsy McCaughey on Bloomberg...
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLzfDxfbwhzs

OK... I won't carry on about that... I've given you the information to do with as you please.

Back to the task at hand... The Geithner Plan was a bust according to the markets... Here's what the Wall Street Journal had to say about the stock sell off... "Financial stocks led a broad move down in the market on the heels of Geithner's unveiling of the Treasury's bank-rescue plan and Senate passage of the stimulus measure. The Dow Jones Industrial Average dropped by roughly 350 points, or 4.2%, reaching its worst levels of the day in mid-afternoon trading. Bank of America and Citigroup experienced double-digit percentage losses."

Currencies followed along with stocks, like they have for a couple of weeks now. The euro, which had traded up to near 1.31, fell back to yesterday morning's figure of 1.2975, as if nothing had happened. The high yielders like Aussie, kiwi, and Brazil, had all been trading higher this week on hopes that the Geithner Plan would bring the risk takers back to the markets. But that didn't happen, as Geithner really disappointed the markets with his plan...

It was reported yesterday that economic advisors for Obama were in a tug-o-war with Geithner on this Plan, and that Geithner had won... Given the reaction by the markets, I think I would like to see what the Advisors had planned, to make a choice between the two! Maybe Geithner is swayed by the old regime at the Treasury, given he had his hands in there helping the old Treasury Sec. Paulson, with his bailouts and TARP last year... Hmmmm... Makes you wonder...

I read the text of the Geithner Plan... And was very disappointed... I will say that the Treasury's plan to make this all transparent is good... In fact you can follow the money trail at this website: www.finacialstability.gov But, the rest of it was the same old, spending taxpayer funds on shoring up financial institutions... Could go up to $1 Trillion!

You all know where I stand on this spending that we can't afford, and placing the burden of paying it off on our grandchildren... It's downright immoral! Let the financial institutions that can't cut the mustard sell themselves to someone who can, or close, and when all the dust settles, we'll be left with the financial institutions that are strong and ready to grow! But that won't happen, as my friend Bill Bonner (www.dailyreckoning.com) says about the Fed and Treasury propping up these institutions... He calls them "the meddlers"... Great term!

So... As I said above, the Geithner Plan rubbed the markets the wrong way, and stocks and currencies hit the skids... Bonds had a banner day... Of course you knew they would after I talked about how they had started the year off with the worst performance since 1980! UGH! And... As always, well for the past 6 months... As the risk takers took their high yielders rally and went home... Japanese yen, rallied... There was another currency that rallied along side yen yesterday... Swiss francs... But that didn't last through the night...

One of the biggest losers (to use the name of the TV show my beautiful bride can't miss each week), was the Swedish Krone, as the Swedish Central Bank, the Riksbank, made a larger than expected rate cut of 100 BPS (50 BPS was forecast). The Riksbank also basically outlined their plan to cut rates further in future meetings.

British pound sterling lost ground too, when the Bank of England's (BOE) Gov. Mervyn King made some statements about the U.K. being in a "deep recession" and that it will "probably require lower interest rates and an increase of money supply"....

Now, the lower interest rates aren't what put the kyboshes on the pound's recent strength... It was the comment about increasing money supply... Which in my book of how to value a currency is one of the top valuation indicators. You see, inflation in the U.K. has fallen to .05%, 1.5% below the ceiling target for inflation, and lowering the interest rate is one thing, but increasing money supply? I truly believe that increasing money supply places the velocity of money rule in place, and inflation can spiral when that happens... It's akin to "playing with fire"... Somebody is going to get burned!

And here's a sign that a country's currency is on the downward slope... Mexico's Central Bank said that it will "continue to intervene to support the peso"... UH-OH! Let's see what this intervention has gotten the Central Bank so far this year... The peso is down 4.7% this year, and lost 2.3% of that yesterday! The Central Bank bought $1.1 Billion worth of pesos last week to prop up the currency... Their foreign reserves now stand at $82 Billion worth, so they could play this game for some time... But, in the end, the markets have deeper pockets, and if they smell blood in the water, like I think they do now with pesos, they will test the Central Bank's willingness to spend those foreign reserves!

The folks over at Citigroup, issued a report on China yesterday, and they are bucking the trend to downplay China in 2009... Citigroup believes China will surprise on the upside, and their currency, the renminbi, will continue to gain VS the dollar in 2009 to 6.6, from current levels of 6.83... So... This is one of the few reports that follow along with my general feeling of China...

The Geithner Plan was good for Gold, as the shiny metal gained $20 yesterday, and is up another $10 this morning, and is trading at $924.69... I gave a long interview yesterday regarding deflation and inflation. I tried to explain how the deflation we are seeing right now is asset deflation, not your ordinary monetary deflation, for that would require a contraction of money supply... I was asked what assets perform well in a deflationary cycle... Cash... And while Gold is the same as cash... Gold! I have a new term that I came up with for Gold... An "uncertainty hedge"... How do you like that one? Everyone is uncertain as to what's going on and what will happen with all this spending going on, and what performs well? The "uncertainty hedge"!

And on that note... I think I'll head to the Big Finish! And don't look now but the price of Oil is falling again....

Currencies today 2/11/09: A$ .6530, kiwi .5230, C$ .8025, euro 1.2950, sterling 1.4360, Swiss .8655, rand 9.8980, krone 6.7175, SEK 8.2430, forint 227.50, zloty 3.5140, koruna 22.0850, yen 89.90, sing 1.5060, HKD 7.7510, INR 48.69, China 6.8330, pesos 14.60, BRL 2.2890, dollar index 85.60, Oil $37.84, Silver $13.39, and Gold... $924.69

That's it for today... I tried and tried to get "something" out of the Geithner Plan last night, but it totally lacked specifics, and I understand why the markets began to circle the bowl. Speaking of last night... I tried to watch our Blues play hockey, but they were just not playing well, so I switched it off, and began to research for today's letter! Now that's how bad the Blues were playing! Lots of young talented players, but it looks like they won't make the playoffs again this year. UGH! T-minus 3 days left till Valentine's Day... Are you ready? Tomorrow is Lincoln's Birthday... His 200th birthday! WOW! Can anyone explain to me why he doesn't have a holiday? That putting all Presidents into one holiday, is a bunch of bunk in my book! OK... Suzy Q just arrived, so that tells me it's time to get this all wrapped up in a bow and sent! I hope your Wednesday is Wonderful!

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

Gold As An Inflation Fighter!

Chuck Butler — Thu, 05 Feb 2009 19:50:03 GMT

...But First, A Word From Our Sponsor...
Now in Print: What You Need to Know About America's Economic Crisis

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluation of the global financial situation anywhere else.

Get your copy today: http://www.amazon.com/dp/0470222778?tag=dailyreckonin-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0470222778&adid=03WYRVDX49DN6K6GRQ4G

In This Issue..

* BOE to cut rates today...
* ECB will wait to cut for now...
* Black clouds forming for India?
* German factory Orders plunge!

And Now... Today's Pfennig!

Gold As An Inflation Fighter!

Good day... And a Tub Thumpin' Thursday to you! Day One at the Orlando World Money Show (WMS) went well. My room for the presentation was packed! It was standing room only, and the good part was the fact that there were only about 30 Pfennig readers in the crowd. I say that not because I have something against Pfennig readers, oh Lord, they are dear readers! The reason I say that is I like to know how many of the non-readers I can convert to Pfennig readers!

Well... As you know, when I'm on the road like this, I'm not sitting in the saddle back home, and watching the markets all day long, and reading stories about what's happening, etc. So, the "road Pfennigs" tend to be a bit shorter. But as my friend, and once editor of our monthly newsletter, David Galland, used to tell me... "you've got to get it out every day, no matter what!"

So... From what I can tell this morning, the currencies traded in a very tight range after the sell-off from the previous night that I told you about yesterday. Japanese yen is a bit weaker, from yesterday morning's currency round-up, but other than that small move in yen, the levels look like they are wearing the same clothes as yesterday!

Today we have the Central Banks of England and the Eurozone meeting to discuss rates. As I said earlier in the week, I truly believe the Bank of England (BOE) to cut rates aggressively once more to bring their internal rate to 1/2% or 50 BPS, just like here in the U.S. The forecast is for the BOE to cut to 1%... But I'll go out on that limb and say they'll be even more aggressive. Here's the thing that just gets my goat though... The more aggressive the BOE is in cutting rates, the better pound sterling will trade. Now this should be the opposite, as a rate cut is a true debasing of one's currency. But the mental giants in today's trading world don't see it that way. They see it as a plus for the economy and so for the currency.

I could really go off on a tangent now about how trading desks are run by Ivy leaguers that got that job right out of grad school and don't carry the same "valuation tools" as old timers... And quite frankly could very well be one of the reasons we're in this mess today... But I won't go there, as that's too touchy of a subject!

The European Central Bank (ECB) will also meet today, but ECB President, Trichet, has pounded it into everyone's heads that the ECB will NOT cut rates today, and to look to the March 5th ECB meeting as the next "chance" for a rate cut.

Here's another example of not carrying the same "valuation tools"... The ECB is being prudent and waiting to see the results of previous rate cuts, so as to not "over cut" and get in trouble with spiraling inflation, etc. Why debase the currency when you don't have to? But.... NOOOOOOO! The mental giants these days are punishing the euro because they believe the ECB is now "behind the curve" with regard to rate cuts. See how crazy this has all become? Crazy... I'm crazy for thinking about you... I'm Crazy... Crazy for feeling so blue... Ahhh, the soothing voice of Patsy Cline... Now, I can get back to writing without carrying on about "valuation tools"... Or as the kids say nowadays those guys are "tools"... HAHAHAHAHAHAHAHAHAHA!

Yesterday, I told you about the surprise Pending Home Sales report, and how maybe it's a sign of better times, but I needed to be shown more before I would commit to saying that it's a true sign. Well, my friend, Bill Bonner, author, and Daily Reckoning fame (www.dailyreckoning.com) had this to say yesterday about this very subject...

"Our guess is that the little light investors thought they saw will turn out to be another torpedo blowing up. Millions of homeowners and stock market investors have gone down already...but there are many still afloat.
And many torpedoes that still haven't found their marks.

In Japan, for example, property prices began falling in 1991. They fell for the next 13 years...reaching a low in 2004 equal to where they had been in 1973!

If that pattern plays out in the United States, the housing market won't hit bottom until 2020...when you'll be able to sell your house for what you paid for it in 1989."

Our old Fed Chairman, who is highly regarded for his inflation fighting in the early 80's, Paul Volcker, spoke last night and he's none too happy with the delay in starting the economic advisory group that the new President, Obama, set up. Obama picked Volcker, but Volcker isn't seeing any moving forward with this advisory panel. Volcker wants to help, and I believe we need his voice, but no one wants to "include" him... Hmmmm... I wonder what's going on there... Does the new administration believe they don't need Volcker's voice? I sure hope that's not true!

In another sign that the German economy has fallen into a recession, German Factory Orders for December fell -6.9% bringing the annual number to a staggering decline of -25%, according to the report I saw this morning... This is just another reason why the euro no longer trades at 1.60...

I saw a report this morning regarding India and the rupee... I don't talk about India very often, because not much in the way of market moving news comes out of India... But, this report is talking about black clouds hovering over India, so I thought I had better fill you in... An advisor to the Prime Minister said last night that the 2009 Budget "may" reach 7.5% of GDP! The forecast is for 2.5% of GDP. If this is true, the writer believes that the rupee could sell off from today's level of 48 and change to 52... If that all holds true, then holders of rupees will be thankful for the above market interest rates to cushion that blow... But again, this is all based on a "may" and could turn out to be a boy crying wolf!

I'll end today's letter with a "feel good story"... Gold rallied to $915 yesterday... Gold traders say that they believe Government spending will spur inflation, the dollar will weaken, and gold will take off on the strength of its inflation fighting make up.

Goldman Sachs Group, Inc. (which probably has so many research people you can't count them with stick) said that they believe Gold will reach $1,000 within three months. And a commodity analyst at Dresdner Bank said this, "expectations of future inflation and dollar depreciation are driving the market right now."

I told the crowd at my presentation yesterday that Gold IS an excellent inflation fighter... And not to listen to those that preach otherwise, as they use the high of the 80's at $800 and say Gold hasn't done a very good job of fighting inflation since then! But! Not so fast Tim! I say you have to go back to when President Nixon closed the Gold window, and took the dollar off the gold standard. Gold was trading then at $35 an ounce... Now follow Gold's price through the years to the present at $915... Now... That's what I call an inflation hedge!

And finally on Gold... Kristin sent me this note that she came across... "Short term, said Tom Pawlicki, of MF Global in Chicago, "Investment has been a key supporting factor for gold," and thus "Passage of the stimulus package in its current form would likely be inflationary and bullish for gold while a Senate filibuster would be bearish."

On to the Big Finish! Wait! There's been a nice move up in the currencies since I got up this morning! WOW! Alrighty then, let's go to the currency round-up!

Currencies today 2/5/09: A$ .6485, kiwi .5130, C$ .8125, euro 1.2875, sterling 1.4515, Swiss .8615, rand 9.9765, krone 6.83, SEK 8.2625, forint 230.32, zloty 3.62, koruna 21.98, yen 89.70, sing 1.5050, HKD 7.7540, INR 48.77, China 6.8367, pesos 14.44, BRL 2.3075, dollar index 85.60, Oil $40.44, Silver $12.71, and Gold... $915.80

That's it for today... I had a very nice dinner last night with current colleagues and one old colleague... It was nice to see Walter Meyer again! I'm going to have dinner with one of my faves, Mary Anne Aden tonight! Mary Anne is in the "house"! She'll be giving a main stage talk today... Me? They send me off to the side rooms! Hey! At least I fill the side rooms to the brim! My publisher and editor of the "other" monthly newsletter that I write, the Currency Capitalist, are in town for meetings with me today. Sure hope they didn't come here to give me a pink slip! Nah.... They "love" me, they really "love" me... (I'm doing my Sally Field here)... OK... Time to hit the send button and get ready to meet Chris for breakfast... He's probably already gone out and run 10 miles this morning! He's amazing! Oh, well, that's not for me, I'd rather spend my time with you dear reader! On that note, I hope you have a Tub Thumpin' Thursday!

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

A "New & Improved Stimulus Package"

Chuck Butler — Thu, 29 Jan 2009 15:32:02 GMT

...But First, A Word From Our Sponsor...
Now in Print: What You Need to Know About America's Economic Crisis

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluation of the global financial situation anywhere else.

Get your copy today: http://www.amazon.com/dp/0470222778?tag=dailyreckonin-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0470222778&adid=03WYRVDX49DN6K6GRQ4G

In This Issue..

* The dollar fights back!
* Another $900 Billion in the red...
* RBNZ cuts rates 150 BPS!
* Jamie Dimon tells it like it is...

And Now... Today's Pfennig!

A "New & Improved Stimulus Package"

Good day... And a Thunderin' Thursday to you! Well... The Fed kept rates at near zero, as if they had any ability to raise them, the House sent the Stimulus Bill on to the Senate, the dollar rebounded on all these two items, and I have some very strong quotes for you at the end of today's lesson... So, get your coffee, or OJ, or V-8, sit down, and let's go!

OK, I had better start with the dollar reaction to the two items yesterday, as what looked like an end to this dollar strength mess, was about to take place as the euro pushed to 1.33, taking the other currencies along for the ride, was just a head fake... The dollar had more strength to show us, after the Fed kept rates unchanged, and the House passed the Stimulus Bill.

You see, it's very simple... Or maybe I mean to say it's simple minded people... Nah, I won't go that far! These dollar bulls are thinking, it's simple... that with the Fed greasing the tracks with ZIRP (zero interest rate policy), and now with the ability to buy Treasuries that everyone else wants to sell, because of the paltry yields they receive on them, and... Another "NEW AND IMPROVED" Stimulus Bill, the economy is going to flourish, and it will be all seashells and balloons from here on out... So... Why not buy the dollar, eh?

I'LL TELL YOU WHY NOT! First of all the Fed is out of control, doing whatever they want to do, with no one, to stop them... And they are NOT making the best decisions, they are following the same footprint that Japan made a decade ago! But don't let that get in the way of the euphoria the dollar bulls have going for them right now!

And second... Now this is really going to get my blood boiling, but this newest Stimulus Bill... Another almost $900 Billion on the red side of our ledger... And for what? The same graft and cronyism that went on in the 30's with the WPA, and spending on people that if you give them money, what incentive will they have to work on that bridge or highway that needs to be repaired? I'm really sick in my stomach about all this folks... I really just don't know how the media is taking this hook, line and sinker!

I know that the House approved $819 Billion, but I believe that by the time the Senate gets finished with it the Bill will have grown to $890 Billion, or close to $900 Billion as I sate above! When it's all said and done, I bet there's some pork there... And some money allocated to things you wish you knew about and could vote on before it was passed... But wait, we can't vote on these things, we can only vote for the dolts that passed the Bill... Hey... It's your representative, folks... We The People put them there!

OK, I had better stop there... Let's talk about the Fed... Well, the Fed's FOMC decided to keep rates unchanged, which was the consensus view, and made a statement that the "economy has weakened further"... NO DOOKIE SHERLOCK! What a bunch of dolts! We ALL KNOW THE ECONOMY HAS WEAKENED FURTHER... WHAT WE WANT TO KNOW IS... WHAT ARE YOU GOING TO DO ABOUT IT? Well, for that, we go to our correspondent on the scene... Hello? Are you there? Yes, I'm here, and I'm with Fed Chairman Ben Bernanke... Mr. Chairman the folks at home want to know what the Fed is going to do to stimulate the economy, as apparently, cutting interest rates to near zero hasn't done the trick... Ahem... Let me clear my voice, because I want the folks back home to hear this clearly... We, at the Fed, are prepared to buy long-term Treasuries, to get private interest rates down, which we believe will reduce the spreads in Treasuries and mortgage backed securities. If we can get mortgage rates even lower than the multi-decade lows we are now seeing, then we believe we'll have stimulated the economy... Thank you Mr. Chairman for you time...

Well... I'm of the opinion that should the Fed begin buying long-term Treasuries, which in reality, I believe they have been doing all along, through their offshore accounts (this is all conspiracy thoughts folks, this does not exist according to our leaders)... But... If they do come out in the open and do it, then I believe we should move to abolish the Fed!

And... I told you yesterday that it would be nice if the Fed spilled their guts, and told us everything... What they were doing, how they were going to do it, how much of it will they use, and how they will monitor it... But that didn't happen, of course! Keep us in the dark, right? Because we're not as intelligent as them, right Fed Heads? Well, I don't know what schools they attended to learn their economics and communications... But, my small little local school taught these things better than theirs!

OK, I had better go on to other things before I get in trouble with the legal beagles... The Reserve Bank of New Zealand (RBNZ) did cut rates yesterday, as I suspected they would... But the went even further with their rate cut than I had forecast. Recall, that I said earlier this week that the RBNZ would probably cut 100 BPS? Well, they cut 150 BPS! WOW! Talk about cutting into a fat hog! That pushes the total rate cuts since July 2008, at 475 BPS! RBNZ Gov. Bollard had a lot to say afterward, and I don't have the time or space to give you everything he said, so... Here's a snippet... "Globally, there has been considerable policy stimulus put in place and we expect this to help bring about a recovery in growth over time. However, there remains huge uncertainty about the timing and strength of a recovery."

The news knocked the stuffing out of kiwi, which had rallied yesterday to 53+ cents... Kiwi, is now at 52-cents...

All of the currencies are off their levels from yesterday, as the dollar strength has hit every currency...

OK... I just read an interview that Jamie Dimon, CEO of JP Morgan Chase gave at the World Economic Forum in Davos, Switzerland... This is interest stuff folks, and I wasn't planning on coming across this, so the Pfennig is going to be a bit longer today than usual, by the time I highlight Mr. Dimon, and then the other "quotes" I promised at the start... So... With no further ado... Here's Jamie Dimon...

"Banks gave consumers weapons of mass destruction by loading them up with debt." WOW! OK, there's more... "We gave them the weapons of mass destruction to borrow too much. I don't blame them, I blame the CEO's of their own businesses." Then there's this... And this is the good stuff...

"To policy makers, I say where were they? They approved Basel II that didn't work, (these were the rules governing how much capital banks hold to back their loans) they approved all these banks. Now they're beating up on everyone, saying look at these mistakes, and we're going to come and fix it." And he ended with this ditty... "God knows, some really stupid things were done by American banks, and by American Investment Banks."

WOW! Mr. Dimon probably won't be getting a Christmas card next year from his fellow Bank CEO's! But I love his doing his best Aaron Neville, and telling it like it is... Don't be ashamed to let your conscience be your guide...

Of course, I have to say right here, right now, that the bank I work for, EverBank, didn't and doesn't fall into that category of American Banks that Dimon was talking about! We didn't "play the subprime, creative loans game" and we didn't get in bed with these guys either! And... I'm sure there are quite a few American Banks that are in our category... But the spotlight always gets shined on the "bad apples"...

OK... Now that I've completely gone off my pre-typing path... Let me get back on that path, and go to my two quotes for today... I believe that I ran this Thomas Jefferson quote before... But the Marx quote is a real zinger!

"If the American people ever allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered ... I sincerely believe that the banking institutions having the issuing power of money are more dangerous to liberty than standing armies." --Thomas Jefferson

And then this... "Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism"
-Karl Marx, Das Kapital, 1867

Boy oh boy! This is getting very strange, eh?

And then there was this... I can't understand why the public isn't gathering their pitchforks and rakes on this one... Or maybe, the media didn't tell them about this... Hmmm. That's probably more like it... Any way... Here's what I'm talking about...

Bloomberg reported this... American International Group Inc., the insurer that nearly collapsed because of losses on credit- default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.
About 400 workers at the financial products unit may get the money in two installments, said the people, who declined to be named because the payments were confidential. The business was responsible for about $34 billion in write downs since 2007 as the market value of swaps AIG sold to banks plunged amid the subprime mortgage market collapse.
The payments bring to more than $1 billion the amount AIG has committed to keep its employees from leaving. The New York- based insurer took a federal bailout in September to avoid bankruptcy and is selling units to repay the government. AIG disclosed the existence of the unit's retention program in regulatory filings, including a quarterly report in August.

Geez Louise! I'm going to go yell at the walls right now! Serenity Now!

OK, I'm back now... Hey!, I don't want to be like this! I'm really a fun loving person! But since you don't get this stuff on your cable news or national news or even local news, I'm here to deliver that! I can't help but get all caught up in the doltness of these people!

We'll get more data today here in the U.S.... Weekly Initial Jobless Claims, and Durable Goods, and New Home Sales... None of this will be good for the economy...

Currencies today 1/29/09: A$ .66, kiwi .5210, C$ .8235, euro 1.3120, sterling 1.4320, Swiss .87, rand 9.9220, krone 6.7150, SEK 8.02, forint 218.40, zloty 3.3325, koruna 20.9050, yen 89.60, sing 1.5025, HKD 7.7566, INR 48.98, China 6.8380, pesos 14.02, BRL 2.2580, dollar index 84.59, Oil $41.09, Silver $11.78, and Gold... $878.70

That's it for today... The customer call in conference yesterday went well... We didn't have that many callers... I guess people didn't want to hear what I had to say! My poor little buddy Alex, had to spend most of yesterday and into late last night, in the emergency room at the hospital, as he did a number on his nose in a sledding accident. He'll be fine... Nothing new for boys! That will put the kyboshes on basketball and wrestling for this year though... He won't be happy about that! Don't know what I was thinking the other day when I said "6 more weeks till pitchers and catchers report for spring training"... We're about 2 weeks away! YAHOO!, not that sounds better than 6 weeks! Then... Before we know it, March will be here, and my annual sojourn to Florida... YAHOO! OK... I'm doing good on time this morning, so I must have been typing faster than normal! HA! Any way... Time to go, I hope your Thursday is Thunderin'!

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

Gold Ends The Week Strong!

Chuck Butler — Fri, 23 Jan 2009 15:17:07 GMT

...But First, A Word From Our Sponsor...
Now in Print: What You Need to Know About America's Economic Crisis

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluation of the global financial situation anywhere else.

Get your copy today: http://www.amazon.com/dp/0470222778?tag=dailyreckonin-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0470222778&adid=03WYRVDX49DN6K6GRQ4G&
......................................................

In This Issue..

* The dollar continues to rally...
* No risk takers to be found...
* Simply awful data yesterday...
* Gold continues its rally...

And Now... Today's Pfennig!

Gold Ends The Week Strong!

Good day... And a Happy Friday to one and all! A Fantastico Friday for me, as it was a Tub Thumpin' Thursday as well! You see, I got the results of my latest scans yesterday afternoon, and my oncologist is thrilled! (as I too am!) This marks 1 year of clean scans, and if it weren't for this rogue metastasis in my left eye, it would be all seashells and balloons! I go on Monday to see if the blood clot that has made things difficult for me for 15 months now, has finally dissolved. If so, there's another biggie off my list! I have to personally thank God, who has chosen to cure me, and it's probably a result of all you wonderful readers that have sent along good wishes and prayers... I also thank my family for their support, and my doctors who have never once not taken the aggressive course to getting me well...

OK... So, you can see why yesterday was Tub Thumpin' for me! And today, will be just as good, no matter what the currencies do, or the dolts in Washington D.C. do, or that my beloved Cardinals' third baseman had to have shoulder surgery yesterday!

I'm on cloud nine right now, but will be brought back down in about 2 hours when I'm going through my radiation treatment for my eye! UGH!

Well... Enough of all that, you didn't sit down with your cup of coffee to read all that, you want your currency / economies news! And I don't blame you! So... Without further babble, here we go!

Yesterday, we received some really awful data here in the U.S. but the dollar rallied... This just shows to go you that the Trading Theme of rewarding the dollar every time the data shows more deeper, darker, and dangerous times for the economy. What this does, is send the "risk takers" hiding behind rocks, and afraid to come out of the locker, they are as nervous as they can be... And no, it's not because they're wearing an itsy bitsy yellow polka dot bikini! It's because the waters for them are rough when the Trading Theme is in place.

With no risk takers, the currencies just don't have any support... Except for... Drum roll please... Japanese yen! I've explained this phenomenon so many times in the past 6 months that I just can't get myself to do it again this morning, but you know the story... Risk takers leave, unwind their "risky trades" and this all benefits yen... The yen is trading within spittin' distance of an 87 handle this morning... WOW! And to think people laughed at me for the last couple of years when I said this would all happen... That the carry trades would eventually unwind, and the high yielders would get sold, and Japanese yen would get bought thus producing a rally for yen...

Yen would tease us, and go to 105, 104, and then back to 110, 115... But I held true to my thoughts that the next leg down for the dollar would be VS the Asian currencies led by Japanese yen.

OK, so the dollar has the other "non-yen" currencies on the run going into the weekend. The data yesterday had a lot to do with this, so let's review what printed yesterday...

First of all, we had the Weekly Initial Jobless Claims... OMG! The forecast was for 542K Jobless Claims to have been filed last week... But the number was actually 589K! OUCH! That's crazy folks, nearly 600K people filed unemployment papers last week! First of all, these last two reports (last week was 527K), show that the drop below 500K in the previous two reports were not an indication of any kind that layoffs had bottomed, instead this was caused by the holidays, as I said at the time... A Head Fake as we call it in the markets... I think that this number is going to be maintained in the next few reports too, unfortunately!

Then we had the Housing Starts and Building Permits data... Housing starts for December collapsed to 550K, a new record low. Building permits for December also collapsed to a new record low of 549K. These two pieces of data go back a long way (1959)... You have to go back to 1991 for Housing Starts to show this kind of weakness and even then they were higher than this print... And you would have to go back to 1975 to show this kind of weakness in Building Permits... And again even then they were higher...

This, to me, is the adage that you're gonna get what's coming... The massive overbuild of houses in the U.S. in the past decade was bad enough... But then we had the massive credit crisis... I saw a headline somewhere that said the U.S. McMansions, were being "right-sized"...

There are scheduled data prints today... I think we probably need a day to recover from those three reports that printed yesterday!

OK... The tax cheater... Oh, that reminds me of the local guy here that had a big hit back in the 60's called "The Cheater"... Bob Kuban and the In-Men... Haven't you heard about the guy, known as the Cheater? He'll take your money and then he'll lie and cheat on his taxes...

HAHAHAHA! Our soon to be brand spankin' new Treasury Secretary, a.k.a. "the cheater" Tim Geithner is already going after the Chinese... I know why he's doing this right out of the starters blocks... He's trying to get everyone to get their minds off his personal problems with the IRS, the agency that he now heads! Now... Here's a memo from me to "the cheater"... Ahem... I would think the Chinese are now laughing their socks off, at least the old Treasury Secretary didn't have skeletons in his closet, or at least we didn't know about them!

Now, here's a guy with little credibility, in the eyes of the Chinese (I believe), telling them that "President Obama believes you are "manipulating" its currency"... Here we go again folks... Blaming the Chinese for our problems... When we should be getting down on our knees and thanking them for buying all our debt the past decade... OK... This has gone on enough, time to go to something else, I could feel my blood pressure rising, and I'm not in the mood to be in that frame of mind today!

The Fed's FOMC meet's next Wednesday... I don't expect the Fed to go the remaining 25 Basis Points (1/4%) to zero, as there's no reason for them to use the last arrow in their quiver, no matter how small that arrow is... Besides, they've done all this cutting and have little to show for it. I think it would behoove them to sit back and give the previous rate cuts a chance to work... That is if they are going to work... Remember, it's been my stance, that it's not a case of the cost of credit causing the credit crisis, it's a case of the lack of liquidity causing the credit crisis... So... In my mind... I didn't see the need to cut rates all along, and especially not to near zero! But, the longer we're here at near zero, the better my call for soaring inflation by 2010 to have a chance to come to fruition!

And the beat goes on for the pound sterling... Every day, there's more and more reason to not touch pound sterling with someone else's 10 foot pole! The Gloom and Doom is everywhere in the U.K. and analysts, and pundits are lining up to take their turn swinging the stick at the U.K. piñata... The selling of pound sterling has gotten so strong that it is now carrying over to the euro on the crosses... The euro has to deal with being sold on the crosses, and is the main reason the euro is flirting with falling below 1.28 as I write...

And after those last couple paragraphs, I'm going to go to the Big Finish on a good note, and talk about Gold... You know... You can't always think just about Gold's relationship with the dollar... Yes, I know, we're all, for the most part, dollar based investors, so that's all we care about... But you see there's more when you pull up the carpet... For instance, earlier this week I talked about how Gold and the dollar were rallying... Well, a look under the carpet tells us that Gold is rallying even more against the Russian ruble... So, knowing this, we can better understand the Gold and dollar rally at the same time. I hope you're with me on this, as I really don't know a better way of explaining this relationship...

So... Gold looks as though it will end the week with a weekly gain... I have to say that all this dollar strength is beginning to get pretty questionable, and THAT could be another reason for Gold's strength. Oh, and it's up $15 this morning!

Currencies today 1/23/09: A$ .6425, kiwi .5180, C$ .7920, euro 1.28, sterling 1.3570, Swiss .8570, rand 10.35, krone 7.0840, SEK 8.4120, forint 226.25, zloty 3.4525, koruna 22, yen 88.10, sing 1.5080, HKD 7.7570, INR 49.25, China 6.8490, pesos 14.20, BRL 2.3520, dollar index 86.52, Oil $42.84, Silver $11.50, and Gold... $873.60

That's it for today... It was 60 degrees here yesterday, WOW! But that won't last long, the January thaw, is short lived, as a cold front moves through this afternoon! I love warm sunny days, which is why I truly enjoy going to Florida in the spring before it gets too hot in the hot tub there! I see where U.S. Corporations are lining up to cut their dividends... Better get used to this in 2009... No three day weekend this week, but a welcomed weekend nonetheless, as I get to sleep in, and skip radiation treatments on the weekends! Thanks again for all who sent along encouraging remarks, and good wishes to me yesterday... I'm guessing I'll hit the "wall" sometime this afternoon, so I have that to look forward to! Time to tie this all up in a bow and send it out! I hope your Friday is Fantastico!

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

Euro Rally Fizzles Out...

Chuck Butler — Thu, 22 Jan 2009 15:19:15 GMT

...But First, A Word From Our Sponsor...
Now in Print: What You Need to Know About America's Economic Crisis

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluation of the global financial situation anywhere else.

Get your copy today: http://www.amazon.com/dp/0470222778?tag=dailyreckonin-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0470222778&adid=03WYRVDX49DN6K6GRQ4G&
....

In This Issue..

* Yen continues to kick!
* Jim Rogers disses sterling...
* China's 4th QTR GDP...
* Singapore announces stimulus...

And Now... Today's Pfennig!

Euro Rally Fizzles Out...

Good day... And a Tub Thumpin' Thursday to you! A nasty day in the currencies yesterday, except Japan of course. The Dow jumped 290 points yesterday, maybe an Obama bounce? You all know that I subscribe to an Obama bounce for stocks and the dollar in the first part of this year... But given what I know about, and what you now know about, after I drew it all out yesterday, the additions to the deficit that Obama will make, the focus on the fundamentals should return by late spring, early summer... That's my story and I'm stickin' to it!

Well... As I said in the opening, the currencies led by the Big Dog, euro, suffered through a nasty trading day, with the euro touching below 1.29 for a good part of the day. The risk takers are nowhere to be found. Where have all the risk takers gone... Long time passing... A Reuters reporter asked me yesterday if I was still of the opinion that the yen had more to rally or was it overbought? I said, that as long as the risk takers are nowhere to be found, yen should continue on its path higher VS the dollar, euro and sterling. The RSI (Relative Strength Index) for yen, shows that it is a tad overbought, but that's not enough to change my mind. Nor is it enough to change the mind of a currency trader at the Bank of New York (BONY), who believes yen may rise to 85 VS the dollar by midyear... Another currency trader at the Royal Bank of Scotland (RBS) believes the Bank of Japan will step in and intervene to stem the yen's rise....

That may be, but there's been no sign of the Bank of Japan (BOJ) to date... Of course that could be the kiss of death that I just bestowed on yen... But I somehow doubt it... Yen hasn't been a moon shot since reaching 88... In fact it has bounced between 88 and 91...

In the overnight markets, the euro rallied all the way up to 1.3080, but since I've come in it has been falling and now is barely hanging on to 1.30... The rally just doesn't seem to have legs and is fizzling out...

OK... Our long time friend, Jim Rogers, was talking again about the currencies... Let's listen in to see what this very well respected analyst / investor was talking about...

"In a Bloomberg video interview, Jim Rogers said the U.K. is "finished." According to Rogers, oil sales from the North Sea were the only thing supporting its economy, and the oil is running out. London, a global financial capital, is also a "disaster" because many of the current economic problems originated there. Bankers and money managers left the U.S. to operate with less regulation in London. Rogers has sold all of his pounds sterling.

And with the pound and U.S. dollar under scrutiny, where are currency traders putting their money? In the countries with the largest trade surpluses - Japan, Norway, and Switzerland. European banking giant BNP Paribas forecasts the yen will appreciate about 14% against the dollar by June. Norway's krone is one of Goldman Sachs' top picks for 2009 (it's one of Jim Rogers' top picks, too). And Bank of America says the Swiss franc will gain against every major currency.

Maybe as speculations, these are good ideas. Me? I prefer gold to any paper currency."

Yes... Gold... The shiny metal broke its recent trend of rallying along side the dollar yesterday, but the sell off was small... Negligible at best... But a breaking of the trend nevertheless. I believe that Gold will get caught up with the currencies in the Obama bounce, but that will be a temporary thing...

OK... I've beaten the pound sterling sufficiently for some time now... But a U.K. reader sent me a note that he saw regarding Barclays Bank... He saw this on CNBC... "The Daily Telegraph and Times newspapers reported on Thursday that any attempt by Barclays to raise extra capital could trigger a clause that would deliver control of the bank to Middle Eastern investors. Barclays opted to raise funds privately last year rather than take part in the British government bailout. Qatar's sovereign wealth fund and Sheikh Mansour Bin Zayed Al Nahyan, a brother of Abu Dhabi's ruler, invested up to 5.3 billion pounds in the bank.

According to The Daily Telegraph, a clause in the agreement states that if at any time before the end of June Barclays raised more capital at a price lower than 153.276 pence per share, the Middle Eastern investors could take their stake at that lower level."

Now that would throw a real spanner in the works for the U.K. if they truly want to go down the nationalization path for their banks... They already own majority stakes in Royal Bank of Scotland, and Lloyds... And they had to take over Northern Rock last year...

I don't know what nationalizing the banks does to the pound sterling, but the image of this happening can't be a good thing... Not in my opinion anyway...

So, did you see that China's 4th QTR GDP grew at a 6.8% clip? Now, compared to the plus 10% growth rates China was posting for the past few years, 6.8% looks pretty measly... But! Let's look around the world right now and see who has a GDP that even compares? Well, that roster would be pretty small... In fact, I can't think of anyone other than China that has GDP of 6.8%! This 4th QTR drop puts the annual growth rate in China for 2008 at 9%... Again... I'm from Missouri, you'll have to show me a country, other than China that posts a figure that strong!

In the whole scheme of things, this is pretty significant for China though. And all the reason I believe the Chinese officials will continue the slow appreciation of the renminbi... This is going to put a lot of people, investors, traders, into a lull regarding renminbi, as everything around the world slows down... But in China, inflation is still a problem, and that can be dealt with by allowing the renminbi to continue its slow appreciation...

Well, I came across something yesterday, I saw it, Kristin sent it to me, and then Chris sent it to me, so it hit a nerve with all three of us... Our friends over at Casey Research, did a chart, that I can't put in the Pfennig, but I can tell you what is showed us...

Since August, banks have built their cash position in the form of Treasuries, agencies and deposits at the Fed by $865 Billion, while their loans and leases have increased by only $325 Billion. So you can imagine the chart with one line for cash position rising, and the other line for loans falling... Here are the people at Casey Research's thoughts...

"In other words, rather than lending the billions of dollars received from the Treasury's Troubled Asset Relief Program (TARP), as was originally intended, the recipient banks have squirreled away the bailout funds in order to shore up their balance sheets.

Concurrently, the Federal Reserve is exchanging its excess reserves for toxic waste from the financial institutions.

The combined affect is a "circular bailout" with the Treasury borrowing. in order to lend money to banks. that then lend it back by purchasing more Treasuries. Of course, the expense of this entire bailout scheme ultimately falls onto the back of the tax-paying public."

>>>> back to me... We finally get a couple of data bones thrown to us today, as the data cupboard gets restocked with Housing Starts, and Building Permits for December, the House Price Index for Nov. and the Weekly Initial Jobless Claims... None of this will be good, bright, or even a warm and fuzzy, so prepare for more rot on the economy's vine...

And don't look now, but the price of Oil has pushed higher this week... Now trading at $44.50

Oh, and one more thing... Singapore officials have announced an economic stimulus package, which has been well received by the markets, and has allowed the sing dollar to bounce off the lows we've seen this week... Ok! Off to the Big Finish...

Currencies today: A$ .6565, kiwi .5275, C$ .7940, euro 1.30, sterling 1.3785, Swiss .8650, rand 10.0750, krone 6.9625, SEK 8.22, forint 217.85, zloty 3.3390, koruna 21.30, yen 88.80, sing 1.4950, HKD 7.7590, INR 49.16, China 6.8370, pesos 13.79, BRL 2.3190, dollar index 85.77, Oil $44.50, Silver $11.30, and Gold... $850.88

That's it for today... It's a good thing they told me about the fatigue I would feel from the radiation treatments, otherwise I would think that I was losing it! Just 7 more to go though. The doctor said that I had to be patient, as this procedure might take some time to clear up the eye... He also told me it would most likely cause me to have a cataract, that would have to be surgically removed... But, hey! If I get my vision back there, no worries! Well... I go today to see what my latest scans showed... I've got my fingers crossed. I find that going through this every 3 months is a real drain on me, and my beautiful bride... Maybe one day, we won't have to deal with these at all! OK, enough on my trials and tribulations! We're getting a new phone system in the office this weekend... Monday should be interesting! Well.. I had better get this all tied up and sent out, as it's time... I hope your Thursday is Tub Thumpin'!

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

.........But First, A Word From Our Sponsor..........
New 5-currency Index CD from EverBank®. Apply today.
The new Debt-Free Index CD is comprised of equal parts Singapore dollar, Japanese yen, Swiss franc, Australian dollar and Brazilian real. Why these currencies? All 5 economies have a strong balance of payments-a factor that could aid performance against the U.S. dollar.
Of the 5 economies, only Australia has a trade deficit-and the gap appears to be narrowing. Concerned about investing in a weak U.S. dollar? Consider this new Index CD, it is available in 3- and 6-month terms with a $20,000 minimum deposit. Apply today at http://www.everbank.com/001CurrencyCDIndex.aspx?referid=11808.
This CD is FDIC insured against bank insolvency, but please keep in mind that you could lose principal as a result of currency fluctuation.

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

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

Inauguration Day 2009...

Chuck Butler — Tue, 20 Jan 2009 18:52:09 GMT

.........But First, A Word From Our Sponsor..........
New 5-currency Index CD from EverBank®. Apply today.
The new Debt-Free Index CD is comprised of equal parts Singapore dollar, Japanese yen, Swiss franc, Australian dollar and Brazilian real. Why these currencies? All 5 economies have a strong balance of payments-a factor that could aid performance against the U.S. dollar.
Of the 5 economies, only Australia has a trade deficit-and the gap appears to be narrowing. Concerned about investing in a weak U.S. dollar? Consider this new Index CD, it is available in 3- and 6-month terms with a $20,000 minimum deposit. Apply today at http://www.everbank.com/001CurrencyCDIndex.aspx.
This CD is FDIC insured against bank insolvency, but please keep in mind that you could lose principal as a result of currency fluctuation.

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

In This Issue..

* Rogers and Roach...
* Dollar gaps higher!
* Ireland's problems...
* Bad data...

And Now... Today's Pfennig!

Inauguration Day 2009...

Good day... Well... And a Terrific Tuesday to you! I got to enjoy a nice restful 3-day weekend. I realize not everyone got yesterday off, so I won't carry on about it. Can you believe it? The St. Louis Cardinals Football Team A.K.A. The Big Red, no wait, Chuck, they left town 20 years ago... OK, the Arizona Cardinals are going to the Super Bowl? When they were here, I never thought I would live to see the day...

Front and Center this morning, I have two quotes from people I truly respect... first from Jimmy Rogers... second from Stephen Roach...

"If I were you, I would be worried about the U.S. dollar," said Rogers, 66, in a speech at the Asia Financial Forum in Hong Kong today. "The Americans are printing U.S. dollars. The Americans are going to do whatever they can to revive their economy, even if it means destroying the U.S. dollar."

And at the same Asian Forum... "

Stephen Roach, chairman of Morgan Stanley Asia Ltd., recommended investors buy "anything to do with the Asian consumer, infrastructure, alternative energy and technology."

Now... these are people that "know better" and not ones that keep telling you that everything will be OK, if we just all come together, right now, over me... No wait, I mean if we all just come together, and forget about deficits, forget about 2.6 million unemployed in 2008, and another 2 million expected in 2009, forget about the fact that the Gov't that our forefathers created over 200 years ago didn't want the Gov't to get involved in the "free markets", or build up debts, or all the other things we now do that doesn't follow the rule of the constitution... and.... go out and get a loan, spend some money, and get this economy going again!

Whoa there partner, you're quite spry this morning! Must have been that kickin' bitter cold wind blowing in my face as I walked to the door this morning that got me going!

OK... The Big news this morning is that the dollar has taken another mighty swing at the euro and other currencies overnight. All day yesterday, I watched the euro hold steady Eddie at 1.31, but when I came in this morning, and did NOT turn on the currency screens because somebody messed with them this weekend, and I can't get logged onto them, but did check the internet, and saw the euro trading below the 1.30 handle at 1.2966... There had to be something I could find on my currency screens IF I only had them available! Geez Louise, why can't people leave things alone that work?

Alright I'll stop my whining... Doesn't do any good any way! So, I see that the German Economic Sentiment, as measured by the think tank, ZEW, improved a bit last month, as seen in the print this morning... That has helped the euro off the mat this morning as it has fallen to 1.2920 before this report. But, this report won't help the euro too much, as the ZEW think tank report isn't on the same level of importance as the IFO think tank report...

I told you last week about the rumor that Ireland was seeking funds from the IMF, and that a resident reader there had told me things were getting bad. The rumors were denied at the time, but I told you then, that I truly believe that where's there's smoke there's fire... And so it is with Ireland after all... Now there's all kinds of rumors running about regarding Ireland and their ability to make debt payments. (Hey!, haven't they learned anything from the U.S.? Just print the currency to make the debt payment!, but no, wait, they can't they're a part of the euro!) This, my friends has to be the reason the euro has sunk to below the 1.30 handle this morning. I'm reading a report from a trader friend in Europe that say there are nervous Nellies over in Euroland, regarding this debt payment... The Eurozone won't like any debt defaults under their watch, and could slap Ireland pretty hard...

I have to say that this is real folks... And presents the Euroguard in Frankfurt a real problem to deal with... No more of a problem than France rejecting the Eurozone Constitution in 2005, but a real problem nonetheless.

And a real problem for dollar bears... Who would like to beat the dollar like a rented mule (no animals were really hurt here) but the offset currency to the dollar has its own problems at this time... So... What's a dollar bear to do? Well... There's always the old offset to the dollar, the Japanese yen, which continues to outperform all the other currencies, and has bouts of real strength followed by profit taking, so there's opportunities to buy on dips when profit taking comes along... And this ties back to the Stephen Roach comment at the top of the page... To buy Asian... Well, he didn't say it, but he did in a way... If you buy Asian, you have to convert your dollars to the Asian currency of the asset you're buying... So, in a way, he's saying buy Asian currencies...

Another hickey on the euro's neck this morning is the report that Spain's credit rating has been downgraded... S&P downgraded them from AAA to AA+... They're credit rating should have never been that high to begin with, if you ask me... So this downgrade, just puts it where it should have been all along... Spain got "extra credit" for being a part of the Eurozone... My European trader friend said that the euro's resistance doesn't come into play until 1.27... So... There's a gap down that could happen quickly...

Yesterday, the pound sterling was basking in the Trading Theme, after the Bank of England announced a bank bailout plan... That brought out the risk takers for just a brief moment... But they had no lasting power, and the pound began selling off, and didn't stop until it reached a record low VS the yen, and VS the dollar it fell to below 1.40 for the first time since 2001! I've said since this credit crisis began that the U.K. was "into" this problem more than other countries (with the U.S. being the ring leader) and that it would take its toll on the pound... It has, and in a very strong manner...

And down under, the New Zealand dollar / kiwi keeps getting caught up in Commodity sell offs, Reserve Bank of New Zealand (RBNZ) rate cuts, and now... Talk of a downgrade to their credit rating... Commonwealth Bank of Australia (CBA) issued a report yesterday that points out that S&P already downgraded New Zealand's foreign currency rating to AA+ last week, and that the credit rating "MAY" be cut should the current account deficit cut into growth.

Now, that's all fine and good, as I've been harping about New Zealand's Current Account Deficit for a couple of years now... But, what? S&P only looks at the "little guys" that they can handle? I mean, for crying out loud, have they taken a peak at the U.S. Current Account Deficit as a percentage of growth? OMG! What? Are they afraid of the Big Bad Wolf? I'm afraid so... They don't have the cajones to take on the U.S. and their debt problem... So... They go around kicking sand in the face of the 90-lb weaklings around the world...

So... We start this week on a down leg for all currencies... Shoot Rudy, even the Japanese yen, is a bit weaker than it was last week, when it hit 88 at one point!

Gold had a very strong showing on Friday, going up $30... But is seeing a softer tone this morning...

All eyes will be focused on the inauguration of the new president here in the U.S. today, so don't look for too much to happen... But, I'm reminded of the words I wrote a couple times a couple of weeks ago about an Obama bounce, which would help stocks, and the dollar... Could this be happening as the inauguration is about to happen? I'm sure a lot of investors and traders will be swayed today when President Obama talks about change and hope... He has a tough row to hoe, folks... He's going to need more than words to get us out of this mess, and carrying on with the same policies as before with bailouts and stimulus packages isn't change... I wish him good luck, as this is my country, and I sure don't want to see us like this...

I have a good friend that gives me trouble all the time, (he reads the Pfennig) saying that I'm responsible for these problems because I "root for them" ... (he's kidding folks!) And I have my standard reply... I don't "root for them", I point them out, and try to warn people that these things will affect their investment portfolios... It's all about diversification...

OK, on Friday, (seems like a long time ago but still important) we saw the color of the latest Industrial Production, Capacity Utilization, and the stupid CPI (consumer inflation)... Here we go with a recap...

Industrial Production for December printed much worse than expected, and it fell -2% (expected -1%) and the previous month was revised downward from -.6% to -1.3%... For the year, Industrial Production fell -7.8%, the worst performance since 1975... Capacity utilization also fell sharply from 75.2% to 73.6%, matching the low at the end of the 2001 recession. You can go back all the way to 1967, to see that this data has only dropped lower during the 1982-83 period...

Long time readers know my affection for the Capacity Utilization data, as it is one of the few pieces of data that is "forward looking"... And if this report is right... We don't have much to look forward to in manufacturing...

The stupid CPI report showed that Consumer inflation came in at .01% for December... Which is pretty strange, as it was forecast to go into the negative. Annually CPI rose just 1.8%, an annual low since 2004... Of course if you believe that YOUR inflation experience only saw a 1.8% annual increase, then you don't understand why I call this report names... If you're like me, and 1.8% is a bunch of baloney... Then you know why! But... Given that my forecast has inflation rising rapidly next year, this report tells me that the inflation wolf is always at the door!

Not much on the data cupboard's calendar this week... So, let's go to the Big Finish!

Currencies today 1/20/09: A$ .66, kiwi .5280, C$ .7915, euro 1.2975, sterling 1.3960, Swiss .8775, rand 10.3350, krone 7.1030, SEK 8.3930, forint 221.87, zloty 3.3620, koruna 21.51, yen 90.25, sing 1.5080, HKD 7.7590, INR 49.22, China 6.8385, pesos 14, BRL 2.36, dollar index 85.92, Oil $39.78, Silver $11.08, and Gold... $831.90

That's it for today... Each day for the next two weeks, I'll be on a time line in the morning to get the Pfennig out before 6:30 CT as I then head into the city for my radiation treatment, and then return to the desk. So, if by chance I miss the time one day, look for it later when I return to the desk, as I'll send it out then... Well, I got through today without my "normal" screens... Like writing from home or the road! Yeah for me! Sunday, my little buddy, Alex, had a busy day, as he was in a wrestling tournament, and then played a basketball game! I was worn out watching him! Basketball turned out better than the wrestling tournament... Gotta go... I hope you have a Terrific Tuesday!

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

The Dollar Swings A Mighty Big Hammer!

Chuck Butler — Wed, 14 Jan 2009 17:01:53 GMT

.........But First, A Word From Our Sponsor..........
Foreign Currency IRAs from EverBank®: diversify your retirement portfolio

Our wide range of IRAs even includes two foreign currency accounts: the WorldCurrencySM CD and WorldCurrency Access Deposit Account.

Diversify your retirement portfolio globally. You can seek gains (though loss of principal is possible), hedge against inflation and lower overall portfolio risk. Simply choose your account type and the currency that's right for you. Our currency IRAs are FDIC insured against bank insolvency only.

Build for retirement your way, only at EverBank®. Visit http://www.everbank.com/002IRA.aspx.

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

In This Issue..

* Another dollar rally....
* Rumors in Ireland...
* Trade Deficit narrows...
* Retail Sales to disappoint?

And Now... Today's Pfennig!

The Dollar Swings A Mighty Hammer!

Good day... And a Wonderful Wednesday to you! I'm writing from home today, as I will not be in the office on this wonderful Wednesday. Writing from home, or the road, always presents problems for me, as I'm so used to being in the "saddle" at my desk, and having information all around me. But, my little work desk at home has some of those amenities... So, what the heck, quit your grumpiness, and get to writing, Chuck!

The dollar ripped through the 1.32 handle of the euro yesterday, like a hot knife goes through butter! There was little to no resistance in that 1.32 handle, and before you could tell one of the many people on the desk here that sneeze all day, God Bless you, we were trading with a 1.31 handle in euros. The talk about a European Central Bank (ECB) rate cut has really ramped up this week, and taken its toll on the single unit. No one is mentioning that even if the ECB cuts 75 BPS this week, they'll still have a an interest rate / yield advantage over the U.S! I guess they'll sort that all out somewhere down the line, eh?

There's a rumor going round, that's someone's underground, no wait, there's a rumor going around that Ireland had requested aid from the IMF... Whoa there Partner! I know that things in Ireland have turned around on a dime from boom to bust, but I wasn't aware of a problem that would run that deep... The rumors were denied, of course, but you know me... Where there's smoke, there's fire... I'm reminded of an email I received 2 weeks ago from a reader in Ireland, that talked of a major slowdown in the economy. The writer, was very adamant about how bad things had gotten that he compared Ireland to a banana republic! I responded to him, and said, no... That can't be, because we've got a corner on being a banana republic right here in the U.S.A.!

You should have seen the sell off in euros when this rumor hit the streets! It was scary how fast a currency could lose a handle! But, after the rumors were denied, the single unit rallied back nearly as fast as it fell, and is now trading, as I write at 1.3225. The dollar is swinging a mighty hammer once again...

Talk about a flight to Risk Aversion! This rumor has the Risk Aversion campers battening down the hatches and heading to the cellars! Risk Aversion is NOT good for currencies and commodities.

Another reason for the Risk Aversion campers to batten down the hatches is the report from yesterday that Citigroup is going to sell their brokerage arm, Smith Barney, to Morgan Stanley for $2.7 Billion in cash... This to me, sounds like a fire sale, and that Citigroup is in deep dookie once again... Citigroup has already received $45 Billion from the Gov't in TARP money, much more than any other bank has received, for sure!

This news scares the bejeebers out of me, as Citigroup has always prided themselves on the fact that a customer could do "one-stop investing"... I guess, we'll have to wait-n-see if Citigroup announces a sale of another unit somewhere down the line, eh? But for now... This news is not good for any asset!

Well... Today, we'll see the color of the Retail Sales for December. We all know that December Retail Sales should be kicking rear and taking names later... But... And that's a BIG BUT... Not last month, unfortunately. As we get ready for the printing of Retail Sales, the experts say that Retail Sales will have fallen -1.2%, following a -1.8% in November. The Butler Household Index (BHI) tells me that while Christmas shopping was good, it wasn't on scale with other years, and I believe the Retail Sales will be very disappointing this morning.

OK, what do we have here? A Fed Head talking about our ZIRP (zero interest rate policy). I know, we're not quite at zero yet with the official rate, but the Fed Funds people would tell you differently! So, in my book, I say ZIRP! Well, this Fed Head, Lacker, thinks that interest rates will stay very low for some time... Say it ain't so, Joe! I don't want to see rates at zero for a long time, folks! That's part of the reason we're in this mess to begin with!

Oh, and yesterday, Big Ben Bernanke, was speaking over in London, and kind of threw some cold water on Obama's $800 Billion stimulus plan... I can hear Obama saying... "Hey! He backed all the other stimulus plans, but now he's throwing cold water on mine!" Well... I said "kind of threw" I didn't say he DID throw cold water on the plan... I'll let you decide... Here's Big Ben... Fed Chairman Ben Bernanke said the "stimulus package being crafted by Barack Obama and Congress could provide a "significant boost" to the sinking economy. But he warned that such a recovery won't last unless other steps are taken to stabilize the shaky financial system." And what is he talking about in the "other steps"?

Here's more Big Ben... "There will be no lasting recovery without further government action and funds to strengthen the financial system, with the timing of an economic recovery "highly uncertain." OH GREAT! More Government action! That's Central Bank parlance for "we're getting our hands deeper into the cookie jar"!

OK, I've gone this far, and have not mentioned the huge drop in the Trade Deficit that showed up in the print yesterday... The Trade Deficit fell from $56.8 Billion in October to $40.4 Billion in November! WOW! This fabulous! Or is it? Let's take a closer look at the numbers... U.S. exports fell $8.7 Billion and imports fell $25 Billion. Lower oil imports accounted for more than half of this drop, but ex-petroleum imports also fell $10.5 Billion.

So... Here's the problem folks... As I tried to explain yesterday... A narrowing Trade Deficit because of less spending and larger exports would be manna from heaven... But a narrowing Trade Deficit because spending was slashed, and exports also fell, is not a good thing for the economy. It simply means that 1. The U.S. consumer has dried up and with consumption at least 70% of GDP, we're in for a long recession... And 2. that the dollar is too strong, otherwise exports wouldn't be so far off too. Yes, I'm quite aware of the fact that the recession is hitting all over the globe, but come on, we still buy Chinese and Japanese and even German exports even in a recession don't we? These same countries would be doing the same with U.S. exports...

And then there's this... News of the weird... Chris Gaffney saw a story yesterday that he sent to me, that qualifies for this category... Here's a snippet of the story... "The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy." Oh boy! Just what the pound sterling needs as a stabilizer eh? NOT! This is awful news for the pound folks...

I've said for months now that the Bank of England (BOE) was following in the Fed's & Treasury's steps, which could be to ruin, but following nonetheless! This is just another step in the Fed's & Treasury's direction. The free use of a printing press... The story went so far as to say "this will spark comparisons with the Weimar Germany and Zimbabwe, were uncontrolled use of the printing press ultimately caused hyperinflation." This is where they're getting a little out of control with the sensationalism... I prefer to say that it should compare to the U.S.... Which may still see hyperinflation in the future... But not the kind of Germany and Zimbabwe! YIKES!

So... As I get ready to head to the Big Finish... It looks as though that Trading Theme is back in force again, and the dollar will benefit any time the data shows the recession to be deeper, darker and more dangerous... Makes no sense to me! But that's the work of the mental giants these days... So... If Retail Sales is as disappointing as I suspect it to be in about 15 minutes, then the dollar should be supported today...

Currencies today 1/14/09: A$ .6670, kiwi .5440, C$ .8185, euro 1.3190 (slipped back again), sterling 1.4535, Swiss .8925, rand 10.0450, krone 7.14, SEK 8.30, forint 210.20, zloty 3.1420, koruna 20.42, yen 89.45, sing 1.4920, HKD 7.7570, INR 48.83, China 6.8350, pesos 13.83, BRL 2.3140, dollar index 84.15, Oil $38.87, Silver $10.76, and Gold... 826.50

That's it for today... Thanks to all who sent along good wishes for clean reports this week... I told you yesterday that I was draggin' the line a bit... I went home and fell asleep... Woke up to take some medicine and back to bed... Feeling a bit better this morning... Rest... It's a Godsend! I got my itinerary for the Orlando Money Show next month (Feb 3thru 7) yesterday... I'm looking forward to some warm weather already! I'll be at two presentations, and one EverBank Town Hall Meeting... So, I'll be busy! My little buddy, Alex, and beautiful bride used to accompany me on this trip each year, and Alex would go to Disney World, or Universal Studios to ride roller coasters and stuff, but now that he's older, it's not good to take him out of school, so no more rock-n-rollercoaster for him. :( OH well... Time to go... I hope your Wednesday is Wonderful!

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

A New Year’s Jobs Jamboree Friday...

Chuck Butler — Fri, 09 Jan 2009 15:36:12 GMT

.........But First, A Word From Our Sponsor..........
Foreign Currency IRAs from EverBank®: diversify your retirement portfolio

Our wide range of IRAs even includes two foreign currency accounts: the WorldCurrencySM CD and WorldCurrency Access Deposit Account.

Build for retirement your way, only at EverBank®. Visit http://www.everbank.com/002IRA.aspx.

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

In This Issue..

* Will the ADP report be a good indicator?
* China to slow treasury purchases?
* Gold as a store of wealth...
* Dealing with the devil...

And Now... Today's Pfennig!

A Jobs Jamboree Friday...

Good day... And a Happy Friday to one and all! A Fantastico Friday, as it is forecast to get to 50 degrees today here in St. Louis. Never mind that tomorrow's high will be 29! It doesn't take away from today! What a trading day in the currencies yesterday... Whew! It's a Jobs Jamboree Friday, so let's not beat around the bush... It's time to Jamboree!

Today is the day the Gov't prints the December Jobs Jamboree, and if Wednesday's ADP report did what they said it was going to, and that is change their methodology to mirror the BLS (Bureau of Labor Statistics) then this morning's Jobs Jamboree will be a nightmare. Of course not the kind of nightmare that the over 2.5 million people that lost jobs in 2008 had! I was once in those numbers, as our old Bank, Mark Twain Bank, was bought by a bigger bank, Mercantile Bank, and Mercantile decided after a few months to perform ethnic cleansing of Mark Twain employees... I called it "my retirement" but with a 3 year old at home and on my lap most of the day, "retirement" couldn't last too long! My point is that you don't know the emptiness and failure you feel when they show you the door... So my thoughts are always with those that lose their jobs...

OK, back to the Jobs Jamboree... Earlier in the week the "experts" were forecasting a -500K in job losses... But as the week has gone on, that forecast has inched up to -515K and then -523K... It's like the BLS is setting us up for a BIG number, but wants the media to carry on their charade of reporting the jobs numbers by saying they came in "just above the forecast" (as if the forecast wasn't bad!)

The other thing to think about prior to the print is the shenanigans the BLS plays with the jobs numbers... I'll tell you this... Given what we know about the state of the economy, should the Jobs Jamboree print lower than the -525K that's now forecast, then you will know in your heart of hearts that the BLS "cooked the books"... That's all I'll say about that...

The Weekly Initial Jobless Claims came in under 500K for the second week in a row... I would put this down to the Holidays... I fully expect this to catch up next week! UGH!

So... The currencies yesterday rallied hard, sold off, rallied hard again, sold off, and this went on for the bulk of the day. As I signed off yesterday, the Bank of England (BOE) cut rates 50 BPS, and sent the pound sterling higher... I know, I know, that shouldn't be, but it is, and the mental giants that are running these trading desks, reward countries that debase their currencies!

But in the end... The euro was higher on the day, along with yen, and Swiss francs... The high yielders took one to the chin, as risk takers have gone back under the covers to get warm, as the chill in the air got to them!

I had more than a few people send me a story that appeared in the NYT that played well with my screaming from the rooftops about the Budget Deficit announcement from the day before... Here is a snippet, of the story that can be read in its entirety at: http://www.nytimes.com/2009/01/08/business/worldbusiness/08yuan.html?hp

"In the last five years, China has spent as much as one-seventh of its entire economic output buying foreign debt, mostly American. In September, it surpassed Japan as the largest overseas holder of Treasuries.

But now Beijing is seeking to pay for its own $600 billion stimulus - just as tax revenue is falling sharply as the Chinese economy slows. Regulators have ordered banks to lend more money to small and medium-size enterprises, many of which are struggling with lower exports, and to local governments to build new roads and other projects.

All the key drivers of China's Treasury purchases are disappearing - there's a waning appetite for dollars and a waning appetite for Treasuries, and that complicates the outlook for interest rates, said Ben Simpfendorfer, an economist in the Hong Kong office of the Royal Bank of Scotland."

OK... Back to me... So... If, what President-Elect Obama said regarding "expecting Trillion dollar Budget Deficits for several years" is to come to fruition, then what pray-tell will we do with all the Treasuries we issue to pay for the debt?

Uh-oh! Spaghetti-o's! The Gov't will have to ratchet the yield on these bonds up so high to attract investors... OR... Allow a general debasing of the dollar to allow those purchases of Treasuries to be made at a discounted clearing price. I've said this all along folks... Over and over again and over again until I'm blue in the face... Or was I holding my breath again? Both! I hold my breath in hopes that it is all a nightmare!

I have to tell you all, especially new readers that haven't heard me screaming from the rooftops about the direction of this country, to socialism, that this is all getting completely out of hand! The Fed is well down the path to controlling the markets, taking the term "free markets" away for good... And do we expect anyone to stop them? Not unless it's us... We The People...

Ty Keough sent me a note yesterday from James Quinn on investmentrarities.com... "As the politicians scurry to "save" capitalism through the use of communist measures, more Americans are becoming disheartened. The definition of communism according to Webster's is:

A system in which goods are owned in common and are available to all as needed.

George Bush, Henry Paulson and Ben Bernanke have decided to seize money from the vast majority of Americans who lived within their means, utilized debt sparingly, and worked hard to get ahead, and give it to the most appalling failures in our society. They have shoveled billions to banks that operated their businesses like gambling parlors. They have shoveled hundreds of millions to people who bought houses with no money down, interest only mortgages and fraudulent loan applications. They are now rewarding automakers who made the wrong vehicles, pay 30,000 workers per year to not work, and have only been able to "sell" cars by giving them away with 0% financing to any schmuck who could sign on the dotted line. These acts fit the definition of communism. We are now more communist than China."

I spent a long time with a Wall Street Journal reporter yesterday... The reporter, who has interviewed me before, going back to 2002, was interested in my take on Gold as an inflation hedge... I know there are people out there that will dispute this, but if you go back to where Gold was issued when Nixon closed the Gold window in 1971 ($34), and not from it's previous high in 1981, you can see it not only is an inflation hedge but a store of wealth, and as people that own dollars look at the loss in purchasing power of their dollars, and look at the store of wealth Gold has held... It makes abundant sense to have Gold... I wonder if this will get printed in the WSJ....

And Savers... I'm a saver, are you a saver? Yes, I spend money, just like a lot of people, but I also save... And that's what ticks me off these days! The Fed has lowered rates to 0%, so there's no incentive to save if you only look at yield... But, if you look at the fact that saving has to start somewhere, then maybe the Gov't will get the hint / clue, and stop overspending! But doesn't it tick you off that the Fed has lowered rates to 0% and have basically told you, the saver, to go out and seek risk to offset that loss of yield? They don't want us to save, people... So... You know me! SAVE, SAVE, SAVE! And then SAVE some more!

And that... Leads me to a book, that a reader sent me, that he wrote! The title of the book is: Debt is Slavery... And 9 Other Things I Wish My Dad Had Taught Me About Money... The author is Michael Mihalik... I think most people don't believe they have a debt problem... But... If this financial meltdown continues at its current pace, I think they've got a rude awakening coming. Just like the U.S. and their debt problem... It's relatively the same ordeal...

So... The Bank of England (BOE) did cut rates 50 BPS yesterday, which puts their total of the last three rate cuts at 300 BPS... And what did the pound sterling do? It rallied! These are strange times, my dear reader friends... But in my humble opinion, I would view this rally as an opportunity to look to sell at these higher levels, because my view on the pound is not good... The U.K. has the same problems as here in the U.S. (not the deficit problems, but they could get there in heartbeat should they continue to bail out institutions) just on a smaller scale... And in the end, that will be enough to push pound sterling down... My long time friend, Joe Losos, asked me if he could write a piece for the next monthly newsletter to clients of EverBank World Markets. Of course I said yes... And he came back with a piece on the prospects for the pound... So look for that in the monthly Review & Focus at a newsstand near you, sometime in the future!

The Japanese yen is back on the rally tracks, as the risk takers have gone AWOL... Yen is back to below 91, trading with a 90 handle, and looking perky... Should the Jobs report in the U.S. today be rotten, yen should have a field day VS the dollar. Now there's something to look for!

The Brokerage House that owns a Bull, issued a report that said, "Dollar would slide if U.S. loses more than 700,000 jobs"... They really went far out on the limb with that one, eh? HAHAHAHAHAHAHA! No, I'm not taking a shot at our friends there, just pointing out that even the Big Boys right now, don't have a strong conviction on the direction of the markets right now... So, they tip-toe through the tulips...

Canada will also print their employment data this morning... About 1/2 hour before the Jobs Jamboree. I also didn't like hearing what the Canadian Finance Minister had to say yesterday about Canada seeing a "substantial deficit later this year"... The Finance Minister, Flaherty will present his budget on April 1... Let's hope he's setting us up for an April Fool's Day joke! Unfortunately, I don't think these Gov't people have a sense of humor, so I think it's safe to rule that thought out right here, right now!

I'll finish this up with a brief snippet from a report by one of my fave writers, William Pesek of Bloomberg... Mr. Pesek's complete piece can be found here: http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pesek&sid=aHOuXTmCv61Y

Here's William Pesek... "Beijing bookstores would be wise to stock up on Johann Wolfgang von Goethe. His work will help Chinese officials understand the "Faustian bargain" in which they are engaged with the U.S.

The reference here is to a compromise of principles for fleeting gains. In literature, Goethe's Faust is a mythic German alchemist who made a deal with the devil. And that, in a nutshell, is where China, the biggest foreign holder of U.S. debt, finds itself as America re-inflates its economy.

Treasury Secretary Henry Paulson isn't the devil, yet on his watch the U.S. has morphed into a huge debt-issuing machine. The Congressional Budget Office says the U.S. deficit will more than double this year to at least $1.18 trillion, the biggest since World War II.

Barack Obama has even bigger plans. The CBO's estimates don't include the cost of the president-elect's stimulus package, which will probably add at least $750 billion to the total over the next two years. Last year's shortfall totaled $455 billion. The U.S. needs China's money more than ever.

"I spent most of the first two quarters of 2008 marveling at the pace of Chinese reserve accumulation," Council on Foreign Relations economist Brad Setser in New York wrote on his Web log this week. "I expect to spend the first few quarters of 2009 marveling at the size of the U.S. fiscal deficit."

Currencies today 1/9/09: A$ .7065, kiwi .5920, C$ .8435, euro 1.3710, sterling 1.5260, Swiss .9150, rand 9.69, krone 6.9350, SEK 7.8350, forint 201.70, zloty 2.9575, koruna 19.3150, yen 90.75, Sing 1.4790, HKD 7.7570, INR 48.25, China 6.8355, pesos 13.76, BRL 2.2980, dollar index 81.65, Oil $41, Silver $11.18, and Gold... $853.50

That's it for today... Congratulations to the Florida Gators and their fans, as the Gators beat Oklahoma last night 24-14 to win college's BCS National Championship... (the game was tied 7-7 when I went to bed!) Of course, there's always the questions about how a 1-loss team can be national champion when there's a no-loss, undefeated team hanging around... In this case, Utah... But that's someone's else's problem, not mine! OK... On Monday... I'll be interviewed on the Financial Lifeline Radio, which is nationally syndicated. They have a live web stream where you can listen through your computer at: http://www.rockymountainradionetwork.com/FLR/ the interview begins at 3:10 CT... I've done interviews with this show several times in the past. They want to talk to me about the Obama bounce I've been writing about and the $1.2 Trillion Budget Deficit... I think I could talk to them in my sleep about these things... But this should be fun (for me at least!)...

So... Hold on today... The Jobs Jamboree could be earth shattering as far as the markets are concerned... I'm looking forward to the weekend, as this is the first "full week" of work that done in over a month! My fave show 24 returns Sunday night... Jack Bauer rules! Ok, enough of that, time to get to work on this Fantastico Friday... And Wild Weekend! (ok, I have no idea why I said Wild, as I'll probably be a lump on a log all weekend!) So... I hope your Friday is Fantastico!

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