Daily Pfennig : Economy

Jobless recovery?? Not going to happen....

Chuck Butler — Fri, 23 Oct 2009 14:56:00 GMT

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In This Issue..

* Leading indicators up, but employment down...
* 11 million new jobs in China...
* Pound sterling gets pounded...
* A Great Day for EverBank...

And Now... Today's Pfennig!

Jobless recovery?? Not going to happen....

Good day...and happy Friday! It has been a fairly busy week here at EverBank, with the issuance of another big BRIC MarketSafe CD, the maturity of another MarketSafe, and a big acquisition (more on that later). While things were a bit crazy at EverBank, the currency markets were fairly uneventful. The dollar started the day off with a move up after a positive report on US leading indicators, but it gave back most of the gains as the trading day wore on. At the end of the day, only one currency moved more than 1% vs. the greenback, with the pound sterling dropping almost 1.5%.

As just mentioned, the leading indicators for the US rose in September for a sixth straight month, giving confidence to those calling for continued expansion in 2010. The gauge which attempts to predict the economic outlook for the next 3 to 6 months climbed 1%, beating most economists forecasts. But much of the good news on the US economy is due to the government stimulus programs, and two other reports indicated future growth for the US is still a question mark.

Offsetting this positive report was the weekly jobless claims which rose, and a report which showed home prices fell. So apparently the leading indicators are predicting a recovery without jobs, and without a strong housing market. You can see why Chuck and I question reports of a 2010 recovery. The US economy will not be able to post strong growth with near double digit unemployment and with both residential and commercial real estate in the dumps.

One of the Fed heads agrees. Federal Reserve Bank of Boston President Eric Rosengren said the US economy is at risk of relapsing into recession after expanding in the second half of 2009. "It's certainly a risk," Rosengren said in an interview with CNBC. "That is why we don't want to take away the stimulus too quickly." I don't look for the Fed to move interest rates higher anytime soon; the leaders of our Fed realize a full US recovery is still a ways off.

Here is a question which needs to be asked: Can the world grow without a robust US consumer? I believe the answer is yes! Growth in Asia and Europe can propel the world out of the global recession without the help of the US consumer; and I think that there is a very good chance that is what is going to happen. Chuck has compared the current state of the US to what happened in Japan after its stock and real estate markets crashed in 1990. Japan plunged into a 10 year period of stagnant growth while the rest of the global economy prospered. Many will question how the global economy can grow without the help of its largest contributor, but Japan was the second largest economy during the 90's, and the rest of the world barely skipped a beat during their malaise.

With the emergence of the consumer in both China and India, the global economy can and will continue to grow even if the US is stagnant. I read a report this morning which stated China will create over 11 million jobs this year, 2 million more than the government had earlier predicted. These new jobs will continue to increase the standard of living in China, and create 11 million 'new' consumers.

While the current administration may talk about reversing the stimulus and government spending as the rest of the world starts to recover, their actions won't match their talk. I believe we will see interest rates stay low in the US for an extended period of time. We will also probably see additional stimulus proposals as US unemployment continues to rise and US consumers continue to tighten their purse strings.

As the rest of the world continues to recover, and central banks begin to increase rates in order to fight rising inflation; the US dollar will continue its slide. A strong dollar just isn't in the interest of the US if we have any plan to try and pay down the tremendous debts and stimulate growth through increased exports. The dollar will fall victim to policies which will be designed to try and push the US economy up to keep pace with the global recovery occurring in Asia and Europe. Despite all of the rhetoric about a 'strong dollar policy', the administration is willing to sacrifice the dollar in order to keep the US from slipping further into recession.

I don't think this is the right course to take for the US, but I firmly believe this is what is going to happen. The future is too far off for politicians to worry about; they focus on the short two year election cycle. They will continue to leverage the future of America with borrow and spend policies designed to keep the US economy on life support until it magically recovers. Their policies will cause a dramatic fall in the value of the US$ which will eventually make our exports competitive and finally spur growth in the manufacturing sector. This drop in the value of the US$ will also enable us to pay down our debts to foreign holders with cheaper US dollars.

I am not suggesting that the US will slip into a 'great depression', but I believe we will see an extended period of stagnant growth. Certain well run companies (like EverBank) will still be able to make a good profit, and the falling dollar will create opportunities for companies with a strong international presence. As an investor, you should look to hedge your portfolio against the inevitable fall in the value of the US$ by investing in non-dollar assets such as our WorldCurrency and MetalSelect accounts.

One major problem the sliding dollar causes for the rest of the world is that the price of oil is inversely related to the value of the dollar. As the dollar has steadily declined this year, the price of oil which is price in $, has risen. In fact, a study released yesterday showed oil is relatively cheap at $80 per barrel. The study showed the price of oil should be $88 per barrel with the euro trading at $1.50. As the dollar continues to slide, there will be further calls for oil to be priced and traded in some other currency besides the dollar, as countries try to de-link it to the falling greenback. If this would occur, it would be a major blow to the reserve status of the US$.

And the folks at PIMCO, the global bond giant based in California seem to agree. Richard Clarida, a strategic adviser at Pimco wrote a note to clients yesterday pointing to "an orderly dollar decline" as the "most likely scenario". He added "a disorderly decline, while unlikely, cannot be ruled out." In the note, he states that a collapse in the value of the dollar would jeopardize its status as the world's reserve currency. Not a rosy picture for the greenback.

Both the central bank of Sweden and South Africa announced they would be keeping rates unchanged yesterday, but the announcements have very different effects on the values of their currencies. The Riksbank of Sweden stated that they would keep their benchmark interest rates at .25% and said that level would be maintained until 'autumn' of next year. The Swedish krona slid against the dollar after the announcement. But later the

South Africa also left their rate unchanged at 7%, but the rand rallied as some had expected a 50 basis point cut. South Africa's central bank leaders said rising energy costs had added to inflationary pressures, and therefore rates would have to be maintained at their relatively high levels. The rand rallied after the announcement.

As mentioned earlier, the big loser overnight was the pound sterling, which fell over 1.5% vs. the dollar. A report this morning showed UK gross domestic product unexpectedly dropped in the third quarter, falling .4% from the previous three months. The British economy has now shrunk over six consecutive quarters, the most since records began in 1955. The report confirms the BOE will continue to keep the 'quantitative easing' policies of low interest rates and government purchases of debt in place. Both Chuck and I have railed against these policies, as they largely untested, and will likely lead to a spike in inflation down the road. Unfortunately the US has been following the UK in their attempts to borrow and spend their way out of recession. I don't think the future is too bright for either the pound sterling or the dollar.

Before leaving work yesterday, Chuck wrote me the following to add to today's Pfennig:

OK... I sure stirred up a bee's nest with my rant yesterday... It's always interesting when I do that, for the people that agree with me will far outweigh those that don't. But that's not the point... The point is that I got people to think about what's going on in the U.S. whether they agree or not!

So, with that, I'm going to talk about... GOTCHA! No opinions just facts...

Canada posted a stronger than expected Retail Sales in August printing at +.8% (forecast at +.4%)... Then that report was followed by the Bank of Canada's (BOC) Monetary Policy Report for this month, in which the BOC admitted that "Canada's economy is recovery due to monetary and fiscal stimulus, increased household wealth, improving financial conditions, higher commodity prices, and stronger business and consumer confidence."

Hmmm... Seems to be the same exact things I've been saying about Canada!

There is an important point in on the items the BOC talked about... And that is the stimulus... Once in a while I get notes from people telling my I bang on the U.S. for stimulus when every other country in the world did the same thing... Well, not quite... While every other country might have implemented stimulus... They were in a fiscal position of strength to do so, while we merely raised the national debt to levels that now place more than $38,000 of debt on each civilian in this country! So... There was a difference, folks... And that leads me to the point I've tried to make for years now, and that is why it is so important for a country to be a Surplus Country!

Colleague Aaron Stevenson brought this to my attention yesterday regarding the price of Gold... The charts show that the price of Gold basically traded back and forth for a flat result for 6 months prior to August 25, 2009...

From August 25th of 2009, Gold has gained 12%! So... Guess what was announced on August 25th that probably has a ton to do with this gain in Gold? Give up? August 25th was the day that the President announced that Ben Bernanke would be reappointed Fed Chairman...

Coinquidink? I don't think so!

I really appreciate it when Chuck gives me these notes to get me going when I am pfilling in for him. It gets the juices flowing instead of staring at a blank sheet of paper!

Both the high flying Australian and New Zealand dollars fell a bit vs. the US$ yesterday as investors worried about China pulling back there stimulus. The currencies, which were trading near their 14 month highs, were ripe for profit takers after China announced accelerated growth in the third quarter. With China clearly back on the growth path, some investors feared they would reverse some of the stimulus programs put into place over the past year. China will certainly start to pull back some of their expansionary policies, but I think this was just a good opportunity for 'traders' to book some nice profits. The Chinese economy will continue to grow, and their demand for raw materials will keep the exporters of Australia and New Zealand busy. As Chuck stated the other day, this isn't a crying opportunity but is rather a buying opportunity! We still feel the Aussie dollar is a solid currency to own.

Before moving on to the currency wrap-up, we had some great news from headquarters yesterday. It was announced that we reached an agreement to purchase Tygris Commercial Finance Group, Inc. Tygris is a private company that specializes in providing lease financing to small and mid-sized companies in specific industries such as healthcare and technology. In addition to diversifying our assets and earnings stream, the acquisition will provide more than $500 million of growth capital. You can read all of the details in the press release at http://www.tygriscf.com/press-releases.aspx#ctrlDeailsDiv It truly is another Great Day at EverBank!!

Currencies today 10/23/09: A$ .9252, kiwi .7555, C$ .9509, euro 1.5022, sterling 1.6386, Swiss .9929, rand 7.4514, krone 5.5395, SEK 6.81, forint 177.05, zloty 2.7790, koruna 17.2425, RUB 28.9797, yen 91.94, sing 1.3928, INR 46.52, China 6.8285, pesos 12.8944, BRL 1.7156, dollar index 75.323, Oil $81.12, 10-year 3.47%, Silver $17.70, and Gold... $1,060.95

That's it for today, by now Chuck is at the doctors for a full day of poking and prodding. I'm not sure how he keeps so calm going to the doctor for his checkups after all he has been through; and then to have to wait a few days before finding out the results! I'm sure he would appreciate all of your prayers for another round of good results! I spent the evening last night celebrating my father's 72nd birthday. He is in the advanced stages of Parkinson's, so we brought cake and ice cream to the nursing home and enjoyed a night with all of his 'housemates'. While he has probably already forgotten the celebration, he flashed us all a huge smile when we showed up with his presents. Hope everyone has a fantastic Friday and a wonderful weekend!!

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

Fundamentals Return...

Chuck Butler — Thu, 21 May 2009 15:48:14 GMT

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In This Issue..

* Currencies & Gold move together!
* Fed downgrades economic growth...
* More on China...
* Yen breaks the trading pattern...

And Now... Today's Pfennig!

Fundamentals Return...

Good day... And a Tub Thumpin' Thursday to you! It's Tub Thumpin' here, as the warm winds of spring have finally sprung, the Cardinals have won two in a row from the rival Cubs, and I'm headed to Busch Stadium tonight! Oh! And fundamentals, as far as currencies and metals are concerned, seemed to be in place yesterday...

That's right... The rout on the dollar was on (recall yesterday, Wayne and Garth playing street hockey... Game On!) and this time... Not only did the currencies rally VS the dollar, Gold and Silver took part in the proceedings too! It's been a long time since we've seen this happen... For the most part, whenever the currencies (minus yen) rallied, Gold would back off, and vice versa... Not yesterday! For the first time in a long time, the negativity toward the dollar was front and center BIG TIME!

The currency rally began early in the morning, and really gained steam as the day went on, and especially after the minutes of the FOMC meeting printed. You see, the Fed Heads had discussed that the economy is in a weakened condition and the economic projections for 2009 and 2010 were actually revised lower. The thing I took out of the minutes was this statement by the Fed Heads... the housing market "remained depressed but seemed to have leveled off"...

Memo to Fed Heads... Better be careful with those kind of statements... Did you all make a similar statement late in 2007? Look how well that prognostication worked out!

So... This news from the Fed about downgrading the growth outlooks for 2009 and 2010, is the key folks... You see, during the July 2008 - Feb. 2009 timeline, we traded under a different Trading Theme, that was well documented in this letter. But for new readers, the Trading Theme threw fundamentals out of the window, and rewarded the dollar every time data indicated the economy to be deeper, darker, and more dangerous in the recession / depression. This was against all fundamentals...

But yesterday, with the Fed downgrading growth forecasts, the dollar got sold like funnel cakes at a state fair! Finally! A return to fundamentals! Well, at least for one day that is. We certainly need to see more than one day of this to make any kind of final change in the Trading Theme trend... But it sure was nice to see for one day!

The Big Dog, euro, led the way for the other currencies (little dogs) yesterday. The euro finally, traded above its key resistance of 1.3740. A level that had stopped the euro "cold" three previous times. You may recall about a week ago, I told you that this is what happens with currencies, in the time (since 1992) that I've followed currencies. They make a run at a resistance level, and get knocked down. They make another, only to get knocked down, and then another with the same result. Sooner or later, love is gonna get ya', no wait! Sooner or later, traders and market participants either 1. take this as a challenge and push the currency through the resistance level, or 2. they give up, take the ball and go home... And the currency then falls back through previous gained ground.

In this case, the euro finally moved higher and through the 1.3740 level, and traded all the way up to 1.38 on the day... The good news for euro holders is that there has been little to no profit taking overnight, and the Big Dog is still trading with a 1.38 handle this morning!

Long time currency followers would have to admit that this all looks very similar to previous periods where the negativity toward the dollar was very strong, and seemed take on a life of its own. Even your run of the mill dollar bull, begins to see things they way his counterpart the dollar bear sees them...

I think that the markets have come to the realization that the U.S. has taken the road that leads to easy monetary policy... And everyone knows what's at the end of that rainbow! Inflation!

A couple of weeks ago, I participated in an editorial roundtable with my publishers for my "other" newsletter, The Currency Capitalist, (shameless plug!) and in the meeting I was trying to get everyone to agree with me that China was up to something. This was right after the announcement of their currency swap line with Argentina... Someone raised the question, a very astute question I might add, about why would China want to see the dollar lose value, when they own so many Treasuries...

I then pointed out something I had researched... That China had been stealth-like in doing so, but had shortened their maturities to less then 3 years... Which would mean that they could allow these to mature and not sell them pre-maturely... Could this be a "time-line" toward the lines of thought that China wants to replace the dollar as the world's reserve currency?

OK... That was a couple of weeks ago, in a meeting... But yesterday, Chris Gaffney sent me a story that appeared on Reuters... Here's a snippet... "China has engineered a subtle yet significant shift in the investment of its foreign exchange reserves, a sign of how it is willing to act on concerns about financing an explosion of U.S. debt."

And then this... "China's move to the shorter end of the U.S. debt spectrum is a defensive tactic adopted by the wider market as well on the view that the United States will have to raise interest rates down the road to control inflationary pressures when the economy recovers from the financial crisis."

So... Now there are "others" that are sniffing around this trail of tears I think I've discovered, for if there is no "long-term" plan by the Chinese to replace the dollar as the world's reserve currency, then I'll have egg all over my face! Well... The good thing for me, is that this is a very long tailed story... And I'll get to point to it over and over again in the coming years!

Doesn't that just make you get chills of excitement? HA!

A currency that "I like" but had fallen badly last summer, the Brazilian real, has really pushed higher in recent months (since March 1st). Yesterday it looked as though it would trade below the 2 handle for the first time in 8 months! (BRL is a European Style currency, where as the price goes down, it returns more value VS the dollar) For those of you keeping score at home, the real has gained 17% since March 1st... With Brazil being a "high yield" currency, the return grows even more... But, that's in the past... And past performance does not indicate that future performance will duplicate... (that's for the legal beagles!)

Well... Recall earlier this week I talked about pound sterling nearing its 200-day moving average? Well... Forget about it! Yesterday, Standard & Poors (S&P) decided to place the U.K. on negative outlook... And the pound sterling quickly became the G-10's worst performing currency on the day... For those of you wanting to know what's what with these ratings from S&P... When S&P imposes negative outlook they foresee a greater than 50% chance of downgrade within the next two years, this is compared to negative watch which implies a greater than 50% chance of downgrade within the next few months.

I said earlier that the euro (Big Dog) had seen little to no profit taking overnight, and was trading with a 1.38 handle this morning... It has just slipped below that level, as I prepare to go to the Big Finish... Data wise for the Big Dog, Eurozone PMI's (manufacturing indexes) surprised to the upside for this month. Now... It's true that this manufacturing data is still in negative territory, but this data supports the thought that the worst is behind the Eurozone... That remains to be seen... But for now, that's good news!

In Japan overnight... In yet another sign that the Fundamentals may have re-emerged, if for only one night, the yen rallied with the other currencies. Yes, this has not been the case for several months now. When the dollar rallied, yen rallied along with it... But not yesterday and last night... Yen pushed to a 94 handle for the first time in 2 months!

The data cupboard comes back with a plethora of data this morning... The Weekly Initial Jobless Claims prints first, followed by Leading Indicators and the Philly Fed Index (manufacturing for the region)...

And then there was Gold... And Silver! Year-to-date, Silver is outperforming Gold! Silver is up almost 25% this year, while Gold is up 6.6%. Our newest member to the currency and metals desk, Aaron Stevenson, pointed something out to me the other day regarding Silver... "the Gold/Silver ratio has increase to about 64 from 51 this time last year." Hmmm... Very interesting...

Speaking of Gold... I had a long discussion with a long time customer last week in Las Vegas at the Money Show. We were discussing Gold confiscation... Again, I said it before and I'll say it again, I don't believe the Gov't would do this again... But... The customer gave me something to think about. In "his scenario" the Gov't devalues the dollar, and pushes Gold to $10,000 an ounce... Well... Now that's "out there"... But as a Gold holder, I certainly would love to see $10,000 an ounce... My problem is that I don't want to see what the U.S. economy looks like with $10,000 Gold! It may not be worth it folks...

OK... Before I go to the Big Finish, I need to make certain everyone understands that the previous paragraph was just a "discussion" of scenarios... I'm not saying, and neither is my customer saying that we believe Gold is going to $10,000 an ounce! It was just a figure to use to see if I would "bite" at confiscation at that level!

Currencies today 5/21/09: A$ .7715, kiwi .6050, C$ .8765, euro 1.3795, sterling 1.5660, Swiss .9080, rand 8.3950, krone 6.4075, SEK 7.5990, forint 201.20, zloty 3.1850, koruna 19.35, yen 94.97, sing 1.4570, HKD 7.7525, INR 47.33, China 6.8247, pesos 13.03, BRL 2.0330, dollar index 81.18, Oil $60.73, Silver $14.25, and Gold... $940.67

That's it for today... $7 Billion more being injected to GM by the Gov't... The sound of that just doesn't give me a warm and fuzzy! I was sitting in the high school auditorium with my little buddy, Alex, last night at a meeting for football players and parents. Alex's football coach came up to him and told him he needed to "gain weight"... I had a major flashback... When I entered high school I weighed 125 pounds, and the football coach told me I needed to "gain weight", I tried and tried, but to no avail. The coaches even had me tested to see if I had a "tape worm"... But finally, the weight began to cling to me... And... After my football career was over, I had to fight to keep my weight down, now that I'm somewhat immobile, I really have a fight on my hands... And I can't stop thinking about how I needed to "gain weight" in high school! I told Alex, "I was a skinny kid like you at your age, look at me now... You had better be careful... Oh, look at how I've carried on with this story... Shame on me! I hope your Thursday is Thunderin'!

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

A Trading Pattern For Gold...

Chuck Butler — Wed, 07 Jan 2009 16:12:39 GMT

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In This Issue..

* The currencies rally back!
* The risk takers are back!
* Mixed bag of economic reports...
* A "cross thing" for sterling...

And Now... Today's Pfennig!

A Trading Pattern For Gold...

Good day... And a Wonderful Wednesday to you! No ice this morning, thank goodness! Winter, in my mind, is bad enough without the slip-sliding away! Snow is one thing, ice is another and it's not high on my Hit Parade!

Well, front and center this morning is a rally in the currencies that began yesterday mid-morning, and has carried through the Asian and European markets. I'd tell you why the euro is 2.5 figures above yesterday morning's level, but you'd laugh at me... No wait! That's what you're supposed to do, Chuck, tell the people what's going on! HA! Seriously though... I don't think you'd laugh at me, maybe the dolts that run trading floors around the world, or the pundits that write stories about the markets, but not me!

Here's the skinny... Yesterday, I told you about how the markets were convinced the European Central Bank (ECB) was going to follow the Fed and reduce interest rates this week on Thursday. I also told you that I DID NOT believe the ECB would cut rates, right? OK... Well, yesterday, and I don't believe for one minute that these guys read the Pfennig and said, "Hey, that Chuck Butler says the ECB won't cut rates, we had better change gears"... But, yesterday, the thought that the ECB would lag the Fed with interest rate cuts began a whispering campaign, and before you know, there's a headline story on the Bloomberg, say just that!

Fickle dudes, eh? One day they think this, the next day they think that. To think it is one thing but to spew it all out for everyone to read, is another! I know, I know, I change my mind sometimes, and I'm always reminded of the saying by John Maynard Keynes..."When the facts change, I change my mind. What do you do, sir?"

So... Anyway, back at the ranch, the euro is rising again, and the Aussie dollar is trading above 72-cents for the first time in three months! I've explained why this is going on, but in case you missed class that day... The Obama bounce, is giving a warm and fuzzy to the risk takers, and when risk comes back on board, the high yielders get a huge boost... Aussie, kiwi, reals, rands, they, even though their interest rates have been cut off at the knees, are still considered "high yielders", and therefore, get all the love and attention, when the risk takers come on board...

U.S. stimulus spending is all the rage in the high yielders and the emerging markets, who have been beaten about the head and shoulders for far too long now! Yes, stimulus spending could be the key master to all that ails the world's economic engine here in the U.S.... But at what cost?

I know, I know, you don't want me getting on my soapbox and carrying on about the rising debt in the U.S. and our national debt going into the stratosphere, so I won't... Not today...

There's been a particular pattern going on in Gold that I think is worthy of mention. You see, yesterday a saw a story about Gold, and I decided to run a graph on what I thought had been happening, and the chart confirmed my thoughts... You see, Gold has been in a pattern of rising to fresh highs, and then falling back, but the falling back sees the lows at higher levels each time... A stair step if you will... Here's a look at what I'm talking about...

In the past 3 months... Gold hit a low of $712.30 on Nov. 12, and rose to $821 to Nov 25
Then fell to $$756 on Dec 5, and rose to $852 on Dec 18.
Then fell to $846 on Dec 25, and rose to $882 on Dec 31.
The fell to $859 on Jan 5...

Where will it rise to this time? $900? Difficult to call, but this type of pattern usually indicates that each fall back in price (but to a higher low) creates a new base from which an asset can move higher. So, with that in mind, the outlook for a higher price in Gold in this pattern is possible.

Of course, $900, is a far cry from those that believe that Gold will get to $2500. But, I like small steps in assets, that way, it allows investors to still jump in without the asset getting away from them and then they chase the price higher and higher. Again, though, I shiver at $2500 Gold, because, if Gold is $2500, I can't imagine the condition of the U.S. economy and the dollar...

The data yesterday in the U.S. was a mixed bag of bad stuff for the economy... The most important print was the ISM (non-manufacturing) Index. Recall yesterday I told you that the most important component of this report is the Employment component, which is my "secret" indicator of the National Jobs report (Jobs Jamboree). So... A quick look at the employment component indicates that the Jobs Jamboree, on Friday, will be close to negative -500K... This is what the "experts" are forecasting right now, and for once in a Blue Moon, I agree with them... Although, to me, I want to see the color of the November revision, which I explained all about the other day... Will it be -600K?

Factory Orders printed worse than expected yesterday... Factory Orders for November, collapsed 4.6% (remember the "experts" forecast -2.3%), and the prior was revised lower from -5.1% to -6.0%. I think that the back to back decline represents the biggest since data began in 1992.

The mixed bag part came in the form of the ISM (non-manufacturing) Index which measures the pulse of the Services industry, and for the first time in 4 months it did not contract. The index rose to 40.6... However, this is the 3rd month of below 45, which I've explained in the manufacturing side of this report indicates recession...

The Labor picture in Germany took a hit this morning, as the unemployment rate ticked up to 7.6% in December. You see, the Germans don't have the Bureau of Labor Statistics (BLS) to help them out each month with "cooked books"... If the U.S. unemployment rate was accurately calculated it would be much higher than the 6.7% the BLS gives us, and wants us to believe...

Anyway... I didn't mean to have that turn into a discussion about the BLS, I wanted to point out that even with a sour report like that in Germany this morning, the euro is rallying...

Speaking of unemployment... Did you see that ALCOA announced that they would cut its work force by about 15,000, or roughly 14.5% of its current employees and contractors. It also plans salary and hiring freezes, more plant closures and production cuts, and a 50% cut in capital expenditures? I did, and if that right there doesn't illustrate the dark clouds over the global economic picture, nothing does!

One currency in Europe that rallied like there was no tomorrow, yesterday was the British pound... Before I knew it, the pound was taking names and pushing higher. This has to be a "cross thing", because there's nothing, nada, zero, zilch, in the way of good news from the U.K. economic and financial problems... So, when I talk about a "cross thing" I'm simply talking about how the currency "pairs" get crossed against other currencies, and in the end, a particular currency, which is a part of a lot of "pairs" gets marked up... Or down... It can go both ways... But in the pound's circle, it got marked up yesterday... But, I just don't think the pound can hold these gains... The Bank of England (BOE) WILL cut rates tomorrow, and before you know it... Voila! A weaker pound once again.

Here lately, it seems that I've highlighted a "Currency of the day"... I don't want to keep going with that, because it could become a real pain to come up with a "currency of the day"... For now, I'm highlighting currencies that have BIG moves in a day... If I carried on with a "Currency of the day" I could be stuck highlighting a currency that moved .1%! UGH! So, I'll steer clear of that one...

So, the latest on the Madoff scandal as reported by the Wall Street Journal... "Ten days before his arrest, Bernard Madoff received $250 million from a man who helped give him his start on Wall Street, a move that shows how the investment manager tried to raise cash to stave off his firm's collapse."

Geez Louise, how'd you like to be the guy that gave Madoff $250 Million and watch it go away, and the guy get carted off to jail? (well not yet) I guess if you have $250 Million to "give away" there's more where that came from, eh?

Currencies today 1/7/08: A$ .7210, kiwi .5965, C$ .8455, euro 1.3630, sterling 1.4955, Swiss .9090, rand 9.40, krone 6.9350, SEK 7.7975, forint 195.50, zloty 2.9120, koruna 19.25, yen 93.20, sing 1.4715, HKD 7.7525, INR 48.76, China 6.8335, pesos 13.35, BRL 2.2070, dollar index 82.29, Oil $48.29, Silver $11.38, and Gold... $864.25

That's it for today... Looks like the could come to some sort of peace agreement (for now) in Gaza... Let's hope so! I went home and took a short nap yesterday, when I woke up I was thinking about sleep... It just cracks me up, I started thinking about a discussion a friend and I had last week. He was talking about what a great night sleep he had and that he had slept until 10 am (he was on vacation) the next day. I began thinking about how, that must be a sign that we're getting old... Discussions on sleep! Talking about sleep, instead of baseball, or music, or any thing else! Oh well, you can't fight it, it's nature's way of telling you... Better than the alternative, eh? Oh well, I'm just carrying on now, better get to work... I hope your Wednesday is wonderful!

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

The NBER Finally Says So!

Chuck Butler — Tue, 02 Dec 2008 16:16:46 GMT

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

In This Issue..

* RBA cuts 100 BPS...

* It IS a recession!

* Paulson to ruffle feathers?

* Yen to rally hard?

And Now... Today's Pfennig!

The NBER Finally Says So!

Good day... And a Terrific Tuesday to you! Quoting one of my all time fave Christmas songs, Baby, it's Cold Out There! Winter has arrived, and I had to drag out the big heavy winter coat this morning. So... The seasons pass us, which is a good thing, because without winter, we couldn't have spring, and spring training!

OK... Right out of the starters blocks this morning, the Reserve Bank of Australia (RBA) pulled the rug right out from under the "high yield status" of their economy, with another HUGE rate cut overnight... This time, the RBA cut 100 BPS, to an internal cash rate of 4.25%. This brings the total since September to 300 BPS! WOW! Talk about effectively unwinding seven years of tightening! The statement following the rate announcement leads me to believe that the RBA is probably finished cutting rates for now... It will be a wait-n-see what happens globally, before the RBA entertains any talk of further rate cuts... At least that's my opinion!

Had a long talk with the legal beagles yesterday... The just don't like what / how I say things. This all stems from complaints we've received that claim that, "I give investment advice". Of course when the currencies were going up, up, up and away, in my beautiful balloon, for 6 years, we didn't hear of any complaints or claims that I was "giving investment advice"... Any way... It is what it is... I call it "Market Commentary"... And everything I say is "Chuck's opinion" not that of EverBank's and the last time I looked... Opinion is: not to provide investment advice or to manage your money - THOSE ARE DECISIONS THAT YOU HAVE TO MAKE.

Well... Now that I've said all that... Guess what finally happened yesterday, that I've said was the case since January? Yes, the National Bureau of Economic Research (NBER) finally came clean and said that the U.S. has been in a recession since December, 2007. Here's where I could go totally sophomoric on you and say, "I told you so!" but I won't, no wait, I already did! But, that's not my intention. I only carry on about his because recently I've had a few people tell me that I have no foresight, and that I merely react to things... Hmmm... I said this was a recession 11 months ago, long before the un-dynamic duo of Paulson and Bernanke would admit it, and long before your friendly neighborhood economist would admit it, and way before the NBER, the official arbiters of this call, admitted it.

The currencies remained in a very tight range yesterday with a bias to buy dollars, with the Huge stock sell off... The stock jockeys didn't fall all over themselves on this news, and that surprised me... Here's why... You see, most times, in the past, by the time the NBER gets around to calling a recession, the recession is either over or about to be over. So, knowing this, I figured the stock jockeys would be falling all over themselves, calling out that the light at the end of the tunnel could be seen...

The problem with that mentality is that not all recession calls by the NBER have signaled the end of the recession. Take... The recession that started in July 1981, which was announced in January 1982, and that recession ended 10 months later in November 1982. That's the scenario I'm afraid that we are going to revisit this time. I've already said that I believe 4th QTR GDP will show a negative -5% figure, so that's right now, and there's no way, the economy rebounds from a negative -5% drop in a heartbeat... This is going to be a long, protracted recession, but then, the song remains the same here for me... I've said that for a long time now!

We heard from Federal Reserve Chairman Big Ben Bernanke yesterday... Big Ben said "further interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive an economy likely to stay weak well into next year."

Mr. Bernanke also said the "Fed's powers don't end with the federal funds rate, and its ability to inject liquidity into markets through its balance sheets "remains effective."

I guess, that was the wink and nod that interest rates are going lower, and that... The Fed is going to continue to take in toxic securities on their balance sheet...

OK... There's a story on the news wires this morning that according to the charts at the Bank of Tokyo, yen could push to 79.75 VS the dollar. WOW! I think these chartists should go back and check their angles again, because that's a phenomenal move in yen, and I can't believe the Bank of Japan (BOJ) wouldn't be in the markets intervening (selling yen) to keep that from happening... But for what its worth... There you go!

Today, we'll see U.S. Treasury Sec. Paulson speaking about the U.S. / China economic strategy... Hmmm... I wonder if old Hank, will ruffle a few Chinese feathers with his speech, or will he go quietly? I think that after yesterday's .75% drop in renminbi, followed by a "regular" .30% drop last night, which puts renminbi at a 5-month low, that Paulson will be in a feather ruffling mood, especially, given the thought that he only has about a month left on his Treasury Sec. watch...

Remember about a month ago, I told you all about the early part of this decade, when the global economies were all fighting with recessions, and that the currencies were getting rewarded whenever a Central Bank cut rates to promote growth? I said then, that we could very well relive that scenario, and each time the RBA gives us one of those "mega rate cuts" I notice the A$ rallies... I guess, after we get through the next two weeks of Central Bank rate cuts, we'll have a better idea if this is going to play out again, but for now, it sure is beginning to look like it will...

Looks like the airlines are "hurtin' for certain" as I saw two different ads in the weekend paper for $49 flights... Southwest and American Airlines were promoting those discount flights... Of course there were tons of "terms and conditions" but the key here is the offer of discount flights...

I see from the U.K. Telegraph that AIG is beginning to sell off assets in an attempt to pay back the $153 Billion "loan" the Gov't gave them. And I see where JP Morgan Chase is going to lay off 9,000 employees. And that there are rumors that Britain is entertaining thoughts about joining the euro again... They can forget about that! The people of Britain are NOT going to vote for that to happen... At least that's how I see it from the cheap seats.

And yesterday... The piece of data that "told me" we were in a recession, the ISM (manufacturing) Index printed... And the index number fell by a greater margin than the "experts" forecast, and brought it to the lowest level (36.2) since 1982! Again, folks, this is a very "telling" piece of data, and confirms my belief that we're in for a long, protracted recession, as this looks like the early 80's recession and not those willy nilly ones of the 90's and 2000's!

The only data we'll see today, is the vehicle sales, which is expected to fall again... I see where Ford is going to announce that they are going to change their focus to small, fuel efficient cars instead of Trucks and SUV's, hoping that will "win over" Congress to give them a loan... I also see where Ford is offering "employee prices" plus a rebate for a select group of their cars... (that "employee pricing" is a bunch of bunk if my opinion any way!)

So, there's a collection of some of the items that's will drag on the U.S. economy... And eventually the dollar, once we get past this credit crisis...

Next on the rate cut block is the Reserve Bank of New Zealand, (RBNZ) who meets tonight... I think the RBNZ will play a game of poker with the RBA, and say..."I'll see your 100 BPS, and raise you 50 BPS"... That's right, I think we'll see 150 BPS rate cut from the RBNZ... Like I've said a few times now, rates are going lower all over the world folks, we should all get ready for this!

I sure ruffled a few feathers yesterday when I printed a comment from someone else about the Energy Dept... Folks... The point was simply that we don't need the Gov't operating private businesses, like banking... That's all it was...

The Retail folks are "happy" with the sales figures from the first weekend of Christmas sales... But, "happy" isn't "giddy"... And that's going to be a problem for the retailers this Christmas... They'll see sales... But they won't be "giddy"... And wasn't that a shame in NY where a Wal-Mart worker lost his life in a store opening stampede? That's a shame, it really is... It's not like Wal-Mart was giving stuff away free! I'll stop there, the story is sad enough...

Time to head to the Big Finish...

Currencies today 12/2/08: A$ .6480, kiwi .5345, C$ .8040, euro 1.2670, sterling 1.4940, Swiss .8290, ISK 230, rand 10.38, krone 7.0875, SEK 8.3175, forint 206.35, zloty 3.0160, koruna 20.2860, yen 92.20, baht 35.50, sing 1.5285, HKD 7.75, INR 50.14, China 6.8875, pesos 13.55, BRL 2.30, dollar index 86.85, Oil $49.23 ( I paid $1.84 for premium gas this morning, YAHOO!), Silver $9.44, and Gold... $778

That's it for today... My little buddy, Alex, was writing a paper on the Revolutionary War last night, and we were talking about "taxation without representation", and thought for a moment before going to bed, that, I kind of feel like that's what we're receiving now, today! Today is my long time friend, Ed Bonawitz's, birthday! Happy Birthday Ed! Ed and I began working together at the old First National Bank of St. Louis in 1980... I don't think the Dead Sea was even sick yet, then! There's a HUGE black out here in the St. Louis area this morning... We have electricity here are work, otherwise I would have turned around and gone back home! But, there will be a few people here affected by it, and the kids in those blacked out areas are jumping for joy this morning, as schools are closed where there is no electricity. Not my kids... My two oldest, Dawn and Andrew are teachers in the school district that they attended as youngsters, and my little buddy, Alex, goes to the same school district... And it's not affected! I can hear Alex complaining now! Oh well... Time to go... Hope your Tuesday is Terrific!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

SNB Cut Rates 100 BPS!

Chuck Butler — Thu, 20 Nov 2008 15:01:41 GMT

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

In This Issue..

* Trading Theme returns...

* Automakers' bailout vote today...

* Not using all your arrows...

* Housing Starts go back to 1959!

And Now... Today's Pfennig!

SNB Cut Rates 100 BPS!

Good day... And a Tub Thumpin' Thursday to you! It's a short week for me, so this IS a Tub Thumpin' Thursday! I head to Florida tomorrow, and I'm ready! After last week, and the cold that's set in here, I'm ready! Too bad I'll be working about 1/2 the time! But, I'm not complainin'!

OK... Whew! What an awful day yesterday for the currencies... In the morning, they ere in rally mode with the euro gaining ground to well within the 1.27 handle. But then the Trading Theme set in, and those gains were wiped out. The Trading Theme was set off by the awful Housing data, which reminded everyone of the deep, dark , dangerous days ahead... I bought some euros, and watched them rise, and went off to do something else... When I returned, they had fallen... UGH! The Japanese yen, however, rallied, as is the case with the Trading Theme... Risk trades get unwound, which benefits dollars, and yen. I've explained all this before, so I won't get into it again, but there's someone that has gone into the problems (credit markets and the Fed and Treasury's response to the crisis), and does a great job of telling it like it is... So, instead of hearing from me, ranting and cursing the "leaders" I'll let someone else explain it to you... This is a fellow named Ted Cook, that Ty Keough sent my way...

"One hardly knows where to begin. America has currently embraced the monetary policies of a banana republic. The Argentine and Zimbabwe models cannot be far behind. For years (35 to be exact) we have warned about the consequences of unbridled credit expansion. We argued that artificially low interest rates would lead to catastrophe. Now the first installment of this crisis has been visited upon us. Our policymakers have greeted this dilemma with even more ruinous money and credit policies that compound the problem. We've had the earthquake. The Tsunami is yet to come.

The monetary authorities in Washington, who are supposedly the brightest among us, have adopted a short-term strategy resplendent with economic error. As usual, the politicians are clueless. Somehow the idea has gained ground that recklessly expanding money and credit (inflating) will cure our economic ills without repercussions. Nothing could be further from the truth. This is currency debasement on a grand scale."

OK... Back to me... I see where Iceland is getting $2.1 Billion from the IMF, and $2.5 Billion from the Nordic Countries of Finland, Sweden, Norway, and Denmark to help resurrect the Icelandic economy. Seems like it's a case of too little too late to me, but maybe this can unlock the markets there a bit. For those of you keeping score at home, we received a price of 182.10 on our Icelandic currency this week. Now... I know there are people out there that don't believe that we receive a price like this when the Central Bank posts a daily figure of around 139... But let me tell you how this all works... I think the easiest way to explain this is to look at the Wall Street Journal, or most newspapers' business section, and you'll see the Fed Reserve rates for currencies that day. Since currencies only really trade at the level that's posted in the paper for a mili-second, it's merely used as a reference. It's not an indication where trades are being bought and sold.

Then there was the Housing data yesterday... October Housing Starts fell 4.5%, and Building Permits fell 12%! OUCH! That's just awful data! The Housing Starts fell to an annual rate of 791,000, which is the lowest since records began in 1959! That's 1959 folks! I hadn't even started kindergarten yet! We hadn't even launched Alan Shepard into space yet! Oh, the Soviets were way ahead of us at that time, only to be caught and passed later... But I digress, with this space exploration talk!

I don't mean to try to get everyone's attention away from the awful Housing data, like the media would do... I think of the cable news people doing this story, something like this: "Today, we saw the October Housing Starts fall 4.5%, and how about Paris Hilton breaking up with her boyfriend yesterday?"

OK, I'm back now, the research team over at JP Morgan sent out a note to clients yesterday, telling them that they believe the Fed will cut interest rates to zero by the next two meetings, Dec. 16, and Jan 28, and leave them there for the rest of 2009. Recall, that I wrote about how I believed the Fed was going to cut rates to zero about a month ago? I said then that the Fed is thinking that they can be "Saved by Zero"... Well... It's nice to see the BIG research teams jump on my bandwagon!

I guess, the Nestea Plunge in the Consumer Price Index (CPI) yesterday convinced them to make that call... October CPI took the biggest Plunge in 61 years by falling 1% in the month!

Falling asset prices... Falling inflation (so they say)... Falling Home prices... And Falling Job Creation... This is getting pretty ugly folks... And here's Jimmy Buffett (a reader reminded me of this!) I don't know ---- I don't know --- I don't know where I'm gonna go when the volcano blows. Mr. Utley! (you can hear those steel drums playing in your head now can't you?)

I ran some numbers last week for our monthly newsletter to clients, called the Review & Focus, (shameless plug) because I wanted to see if our age-old portfolio theory thought about how diversifying your investment portfolio reduces the overall risk of your portfolio, was holding true, given the currency sell of since July... Lo and Behold, it's tru, it's tru, I did see a putty tat! Yes, with the S&P 500 off more than 39% in the past year, a $100,000 investment in the S&P would not have done you very good... But by allocated 20% to Gold, and 20% to 3 currencies, euros, Swiss, and yen, and you can even substitute Aussie to prove the point even more... You are left with far more money in your portfolio, than if you did not diversify.

So... Yes, the currencies have fallen on difficult times since July, but they are still doing their work as a risk reducing machine for investment portfolios... Interesting... Those are the facts, Jack!

Today... The Data Cupboard will yield, the Weekly Initial Jobless Claims, which last week jumped above 500K... I would look for this to remain above 500K... And that my friends, is not a good thing. We'll also see the Philly Fed Index (manufacturing), and one of my fave data pieces, Leading Indicators... If everyone would have paid attention to the Leading Indicators in the last year, they were telling us that something was wrong... And I believe they'll still indicate something still is going wrong, as they are forecast to post a negative -.6% print for October...

The Data Cupboard will be emptied after today, with nothing to report tomorrow.

In the Eurozone... ECB member Nowotny made a clever comment that has helped the euro a bit this morning... Nowotny was talking about interest rates cuts and said, "it makes perfect sense not to use all your firepower at once." Like I always say about not using all the arrows in your quiver! Yes, this is what I was referring to yesterday when I was talking to a long time customer... I said that the ECB would be more pragmatic when it came to their rate cuts... Yes, they participated in the coordinated round of rate cuts, and they cut rates 50 BPS at the last meeting... But... I believe they will pause for the cause, and take a look at what their two previous rate cuts did to the economic landscape before going off and cutting rates like there's no tomorrow.

Speaking of rate cuts... The Swiss National Bank (SNB) decided to take the plunge this morning and take out their yield that's offered... The SNB cut rates 100 BPS! That's crazy man! Crazy!

Speaking of crazy... The automakers were on Capitol Hill yesterday pleading for some bailout money... I understand that the proceedings were a bit heated at times, as well they should be! I think there will be a vote today on whether the Big 3 get some additional bailout money... You might recall that they already received $25 Billion to put toward alternative fuel vehicles... Yeah, I bet it went there, right? Oh, that's right, I see a whole line of alternative fuel cars rolling off the lines right now! NOT! If I were in charge of the purse strings here, I don't think I would give them a dime, until they demonstrated that they will change...

And... Finally, before I head to the Big Finish... Did you happen to see or hear or read any of the conversation between Sen. Ron Paul, and Big Ben Bernanke? Oh, this is classic stuff! Here's a link to a site that has the video of the back and forth between these two... Simply classic! http://news.goldseek.com/RonPaul/1227028538.php

Currencies today 11/20/08: A$ .6305, kiwi .54, C$ .7955, euro 1.2545, sterling 1.4865, Swiss .8210, ISK 182.10, rand 10.5675, krone 7.0740, SEK 8.15, forint 215.15, zloty 3.0740, koruna 20.43, yen 95.70, baht 35.15, sing 1.5290, HKD 7.75, INR 50.15, China 6.8342, pesos 13.40, BRL 2.3890, dollar index 87.62, Oil $52.15, Silver $9.39, and Gold... $745.50

That's it for today... And that's it for me till next Tuesday. Chris will have the conn on the Pfennig till then. Hey! I paid (technically below $2) $2 for premium gas last night! WOW! It's a good thing the oil price plunged when it did, given the state of the economy right now, eh? Still no improvement in the eye... My little buddy, Alex, and I were on our own last night, so we opted to go out for dinner after his guitar lesson! Tomorrow night is the office holiday party... I don't know who set this date, but to me, it's like putting up your Christmas decorations and lights before Thanksgiving! Just a little early, eh? Oh well, I'm not complaining, just observing... I'll be gone for it anyway... OK, Mike's here, better hit the send button! I hope your Thursday is Tub Thumpin'!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Comfortably Numb...

Chuck Butler — Fri, 17 Oct 2008 14:10:38 GMT

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In This Issue..

* Comfortably numb...

* Data confirms the US slowdown...

* NZD and AUD end the week with gains...

* Hungarian forint stabilizes...

And Now... Today's Pfennig!

Comfortably numb...

Good day...These dramatic swings in the markets are becoming so common place that a move of 400 pts by the Dow doesn't really garner much notice. After all, in the past five days, the Dow Jones average has had a trading range of almost 2,000 points, but after five dramatic days the stock market is trading almost exactly where it was a week ago. And the volatility in the equity markets has carried over to the currency markets, where we continued the roller coaster ride which began a few weeks ago.

Yesterday, the dollar began the day with a strong move up in early European trading. But a plethora of bad data released here in the US caused the greenback to reverse course, and it wiped out all of its earlier gains. But the bargain hunting rally in the stock market during the afternoon pulled the dollar along with it, and we ended the day with a dollar index which was slightly higher than the day before. Today is shaping up to be a similar trading pattern, as Europe has begun the day buying dollars vs. most of the major currencies.

The numbers which forced the dollar lower yesterday included US industrial output which fell 6 percent in the third quarter, the largest fall in output since 1991. The September Industrial Production number was expected to fall .8%, but shocked the markets with a drop of 2.8%. Capacity Utilization, one of Chuck's favorite gauges of the health of the US industry, fell over 2% from last months number and sits at just 76.4%. This is an important piece of data, as it shows companies are pulling back production, and output here in the US is currently nowhere near our full capacity. The collapse of US manufacturing was further illustrated by a factory index for the Philadelphia region which hit an 18-year low this month. The slowdown in the manufacturing sector has been well documented in the past few years, but what many thought was a bottom apparently was just a pause in a further move down.

The only bright spot in the data released yesterday was consumer prices, which rose less than expected on the back of falling oil prices. The government reported that annual CPI Ex Food & Energy climbed just 2.5% during the month of September. The faltering economy seems to be keeping a cap on inflation for now. But with the government printing presses working overtime to flood the markets with US$, expect inflation to take a dramatic jump up sometime in the not so distant future.

Initial jobless claims for the past week were actually slightly less than projected with 'only' 461,000 filing first time claims instead of 470,000. But continuing claims jumped to over 3.7 million, nearly surpassing the previous peak back in May 2003. The job market continues to slide, which will continue to dampen any hope of a quick turnaround for the US economy. Today's data isn't expected to do anything to alleviate fears of a prolonged recession here in the US, as housing starts are expected to be at a 17 year low and consumer confidence will likely show another drop.

The increase in volatility in the equity markets caused the Japanese yen to advance against both the dollar and the euro yesterday. The yen gained against 15 of the 16 most-active currencies yesterday as investors took a more defensive position following the poor US data releases. Investors have again started to reverse their 'carry trades', causing the yen to drop below 100 before moving back up. The Swiss franc also benefited from the carry trade reversal. This pattern of buying and selling Japanese yen and Swiss francs according to the perceived risk in the markets will likely continue, taking currency investors along for the ride.

The high yielding currencies sold off a bit yesterday, but will end the week as the best performers. Brazilian real is up 8.41% in the past five days, and the Australian dollar is up 5.25%. Now we just need about 4 more weeks like this one to gain back the losses which have occurred over the past 3 months. But I question if we will see the past week's gains continue, as most of them occurred as bargain hunters snatched up these currencies after dramatic drops. The performance of these two currencies in particular is going to depend on global demand for commodities. If the global recession deepens, the demand for raw materials could fall further, dragging these currencies down. But the Asian economies should at be at least partially insulated from the global slowdown, and their demand for raw materials should at least put a floor under these currencies.

Yesterday I informed readers about events in Hungary which had caused a dramatic fall in the forint. As I reported, the ECB stepped in yesterday and said it would support Hungary's money-market operations with a loan of as much as 5 billion euros. This, along with other emergency measures enacted by the National Bank of Hungary over the past few days have apparently assuaged the foreign exchange market. The Hungarian forint ended the NY trading day flat vs. the US$, indicating the worst may be over. Hungary has a 'near zero' chance of defaulting on its debt, central bank President Andras Simor said on state television yesterday. But the ratings agencies are still downgrading the currency. Fitch today cut its outlook on the nations debt rating to negative from stable.

Mexico's central bank will probably leave its benchmark interest rate unchanged today on concerns that a reduction to help a sagging economy would further depreciate the currency and fuel inflation. While a rate cut would help the economy resist a worldwide slowdown and credit crunch, it would work against the bank's efforts to prop up the weakening peso. The Mexican central bank has sold $11.2 billion worth of US$ since last week and purchased pesos in a bid to stem a rout in the currency. The peso tumbled to a record low last week and the central bank is scrambling to stop the slide. Both Mexico and Canada are exposed to the US recession, and each country is trying to shield their economies from further slowdowns in the US. The tumble in oil from its record highs in July have also impacted the Peso and Canadian dollar. The effects are more pronounced for Mexico, where oil accounts for more than a third of fiscal revenue.

Currencies today 10/17/08: A$ .6783, kiwi .6127, C$ .8385, euro 1.3407, sterling 1.7290, Swiss .8805, ISK 260.0, rand 10.4099, krone 6.6635, SEK 7.5087, forint 202.10, zloty 2.6878, koruna 18.824, yen 100.83, baht 34.26, sing 1.4821, HKD 7.7576, INR 48.89, China 6.8332, pesos 13.0449, BRL 2.1335, dollar index 82.59, Oil $71.03, Silver $9.66, and Gold... $794.28

That's it for today...I took my son along with a few others on the desk to a fantastic Blues game last night. The Blues won 6-1, and my son, Brendan, ended up getting a game puck which dropped right into our seats after flying over the boards. This could be the Blues season, as the youngsters which they recently added to the roster seem to have sparked some life into the old veterans. It is finally starting to feel like fall here in St. Louis, we could actually have a light frost overnight. Hopefully the market volatility will cool down a bit too! Hope everyone has a Fantastic Friday, and a wonderful weekend.

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Trichet "Gets The Memo"

Chuck Butler — Mon, 07 Jul 2008 14:10:00 GMT

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

The currencies. The free expert insights. The latest global economic information-all in one place. And only in the new Foreign Currency Resource section on EverBank.com. Visit today for a detailed and timely look at over 20 major and emerging currencies. There's a page devoted to every currency we offer. And inside each page, read what Chuck Butler has to say about the currency. Everything you'll find, including Chuck's insights, is updated regularly so you can diversify with confidence.

Come see the products mentioned in "The Wall Street Journal" and "New York Times". Go to EverBank.com, click Research & Planning, then Foreign Currency Resources.

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

In This Issue..

* ECB raises interest rates...

* More jobs losses in June!

* An embarrassment for the Fed...

* Buying opportunities?

And Now... Today's Pfennig!

Trichet "Gets The Memo"

Good day... And a Marvelous Monday to you! What a fabuloso 3-day Holiday weekend! WOW! The weather was great, I relaxed max time, and shot off some fireworks just to keep the tradition going... The weekend was working hard to make me forget the happenings of Thursday...

The Perfect Storm that was possible for the dollar turned out to see the tables turned and it was the euro that went into a tailspin on Thursday... Here's the skinny...

The European Central Bank (ECB) did indeedly do raise rates 25 BPS and say that it was inflation running high that caused them to raise rates... And about the same time, the Jobs Jamboree posted a job loss for June of 62K, and the storm clouds were forming... But then, ECB President pulled a rabbit out of his hat and said... "Starting from here, I have no Bias"... Folks, that's just as good as saying, "here's your rate hike, don't expect another one"... No hawkish tone... No pointing out how inflation pressures are causing the ECB problems with their mandate to provide price stability... No nothing, nada, zilch, zero, and the euro was sent to the woodshed... And the whippin' was awful!

So, what happened here? Ahhh grasshopper, this is the "Beware the Thin Markets" conspiracy stuff I was talking about on Thursday morning. I believe in my heart of hearts that Big Ben Bernanke and Treasury Sec. Paulson, sent ECB President, Trichet, a memo. The memo said... "please help us out here... You are going to raise rates and talk hawkish on the same day we are going to post a huge negative jobs number, thus telling the markets the Fed is NOT going to raise rates soon... Could you please not sound so hawkish? That would help us greatly... Thanks, Big Ben and Hank"

Trichet "got the message"... That's how I truly believe the day went. So, we are sitting with the euro almost 3-cents lower than on Thursday morning when I signed off... U-G-L-Y... With the Big Dog euro getting whipped, the rest of the currencies suffered as well. Not much else to say about all that...

So, let's get back to basics... The fundamentals of the U.S. economy continue to be rotten... The Jobs Jamboree posted a net negative jobs of 62K, and the previous month's job losses were revised up to negative -62K (from -49K)... The Bureau of Labor Statistics (BLS) did their part, just as I suspected they would on Thursday, by adding 177K jobs with their Birth / Death Model... They even had the gall to add 29K Construction jobs! Geez Louise, Serenity Now! This is getting preposterous! When will this all come back to bite the BLS? Probably not for awhile, as they will want the dust to settle for some time before they come clean... But for the record... The job losses in June would have been -239K, added to May's -279K, if there were no Birth / Death Model.

The data cupboard is empty and needs restocking... But... Did you hear this little ditty about the Fed Reserve? The Fed is going to be faced with a general inspection by the IMF... The story printed on Wednesday last week, but you didn't hear about it on your favorite cable news station, now did you? Here's the skinny... Officials with the International Monetary Fund (IMF) have informed Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system. The IMF's board of directors has ruled that a so-called Financial Sector Assessment Program (FSAP) is to be carried out in the United States. It is nothing less than an X-ray of the entire US financial system. No Fed chief in U.S. history has been forced to submit to the kind of humiliation that Ben Bernanke is facing.

I wonder what the IMF will say about those "wonderfully performing bonds" that the Fed took in the Bear Stearns bailout? The writer of the story, Gabor Steingart, had this great line, that sounds like it came right out of the Pfennig... Here it is... "Inflation is going up and up, and this year's average will likely top 4 percent. But this time Mr. Dollar is also Mr. Powerless. He can raise interest rates in the fall, or he can pray, which would probably be the better choice. At least prayer would not prevent the US economy from growing, a highly likely outcome if interest rates go up."

So, the Fed has to deal with that embarrassing "audit" from the IMF, while the economy is melting down... I truly believe that Consumers are being beaten around the head and shoulders with high gasoline and food prices, their house values falling, credit as tight as a drum, the stock market going to hell in a hand basket, and now job losses for 6 consecutive months... This all sounds like the late 70's early 80's to me... The only thing missing are interest rates as high as the sky!

But, the "boys" have successfully diverted the markets attention away from all of this rotten stuff for now... And they got their brother-in-arms, Trichet to play along with them for now too...

The latest G-8 meeting kicked off overnight... I wonder what they'll talk about? Could it be, spiraling oil and food prices? Could it be global inflation? Could it be the fate of the dollar? Recall that at the last G-8 meeting, the ministers decided that there had been enough dollar selling... But what did they do to change that besides talk about it? Nothing... No action... Words, and no action usually lead to no one paying attention to you in the future... Ask the boy who cried wolf! HA! And so it just might be for G-8 this time around...

Gold didn't fare any better than the currencies on Thursday and Friday, as it has lost about $15 since Thursday morning before the "memo"... Even our recent "belle of the ball" Brazilian reals saw some selling. UGH!

And Aussie dollars also saw a ton of selling. Of course this, in my opinion, does nothing but give investors that are just now figuring out that the dollar has lost a ton of purchasing power, and need to diversify to hedge this loss of purchasing power, an opportunity to buy at cheaper levels.

This week will be quite the let-down from last week, shoot Rudy, we don't even have any data to deal with today! And the data prints this week won't have the "star power" of last week's Jobs Jamboree... We will see the color of the May Trade Deficit, which will probably get worst... And the first week's reading of the U. of Michigan's Consumer Confidence report... But that's all later in the week.

I just checked the data calendar for the G-7 countries and there's not much there this week either... On Wednesday we'll see the Trade Balance in Germany, and that's the highlight of the week as far as I could see...

So... I'll just head to the Big Finish, watching the euro with its tail between its legs... The un-dynamic duo of Bernanke and Paulson won this round... But what kind of damage will they do going forward? We'll have to wait-n-see...

Currencies today 7/7/08: A$ .9580, kiwi .7540, C$ .98, euro 1.5660, sterling 1.9690, Swiss .97, ISK 76.90, rand 7.7580, krone 5.0870, SEK 6, forint 148.65, zloty 2.1150, koruna 15.05, yen 107.50, baht 33.65, sing 1.3640, HKD 7.80, INR 43.30, China 6.8666, pesos 10.34, BRL 1.61, dollar index 72.96, Oil $143.80, Silver $17.84, and Gold... $919.82

That's it for today... OK... Not such a good weekend for my beloved Cardinals as they lost 2 of 3 to the Cubs... It sure would be nice to play them with a full arsenal of pitchers, like former Cy Young winner Chris Carpenter, and current ace Adam Wainwright, who are currently injured... But you play with what you've got, and they beat us... Summer has finally arrived in St. Louis, as the heat index will reach +100 today... It had been so cold and so wet for so long, that at least one of that heat will be welcomed by me! But then, I'm inside all day, not out there working in the heat like some people... Not that much longer till the '08 Olympics, love the track & field, swimming, and basketball events... Looks like we're sending a real "team" for basketball this time... So, stay cool today, and have a Marvelous Monday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Paulson Speaks With A "Double Tongue"

Chuck Butler — Thu, 19 Jun 2008 14:38:00 GMT

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

No other bank is as committed to you and your global portfolio success as EverBank. And we've proven it again with the launch of the NEW currency resource pages at EverBank.com. We encourage you to visit EverBank.com and see for yourself. You'll discover:

- Over 30 new web pages dedicated to foreign economies and currencies, including tips and insights from Chuck Butler, President of EverBank World Markets
- Condensed, relevant and timely economic information from around the globe
- Tools, charts and tables you need to compare and evaluate currencies
This is another groundbreaking step from EverBank. And further proof why we're worlds apart from ordinary banks.

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

In This Issue....

* The U.S. economy in a wreck!
* More problems to come...
* Funky accounting at the Fed...
* SNB leaves rates unchanged...

And Now... Today's Pfennig!

Paulson Speaks With A "Double Tongue"

Good day... And a Tub Thumpin' Thursday to you! I was alone last night, and decided to write... Oh Boy! Are you, dear reader, in trouble when I begin writing at night for the next morning! My Cardinals were losing again, so my attention turned to putting down all these thoughts that keep coming into my head... Like Michael Keaton in Night Shift (what a great movie!) I need a recorder to put all these thoughts down... Like... Feed the mayo to the tuna!

OK... Front and Center this morning, the euro's rally that went on all day yesterday and into the early Asian session (all the way to 1.5580) ended this morning... Someone, somewhere decided that the U.S. will be able to squeeze by this slowdown... Unfortunately, I don't agree! I see the U.S. being involved with the multi-car accident on the highway... But as Pfennig readers you already know that... However, instead of just hearing from me all the time about this meltdown of the U.S. economy, let's hear from an organization that tracks these things...

The LEAP/E2020 team has decided to launch an alert on the July-December 2008 period, in their Summer 2008 Special - edition of the Global Europe Anticipation Bulletin, the LEAP/E2020 team paints a pretty ugly picture... Here are some snippets of their thoughts...

"In a few weeks time (after the next G8- and other organizations-meetings have taken place), when it will be confirmed that there is no way to stabilize the US currency (not to mention the eccentric idea of pushing it up) because the US economy is sinking always deeper into the recession and because the world is already filled with US Dollars no one knows what to do with, then the global financial system will burst out in various sub-systems trying to survive as much as they can before a new global financial equilibrium is found. As he is embarking on this road to nowhere, consciously or not, voluntarily or not, Ben Bernanke is signing the end of the current financial system. The return to a "strong Dollar" is a bit like the « liberation of Iraq » : wishful thinking turning into a nightmare."

"A Dollar in distress (EUR 1 = USD 1.75 at the end of 2008): Panic-fear of a US currency and economy collapse eats into the American collective psyche."

OK... To me, things are getting uglier every day, but the media and thus the markets aren't paying attention. A reader in Jacksonville, sent me a note and wanted me to add Big Ben to the list of Pfennig readers. HA! Now that's funny, right there! Big Ben reading the Pfennig? Maybe it would do him some good! Before I go on though... Here are a couple of items on the "bad" side of the ledger that might have slipped by the media and markets yesterday...

Did you see that Fifth Third Bank had to raise about $1 Billion in new capital? I have to say here, right now, front and center, that the bad debt losses are just now beginning to mount... You think we saw some before? I would think we just scratched the surface.

John Paulson, founder of the Hedge Fund Co. Paulson & Co., believes the IMF's forecast for $945 Billion in write downs is too light... He believes the total will be $1.3 Trillion... Here's what he had to say...

"We're only about a third of the way through the write downs. There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing."

Well... What do we have here? Another Central Banker out to make Big Ben look like a yellow belly when it comes to fighting inflation, that's what! OK... So, I guess you want to know what / who I'm talking about, eh? Well, you all know that I've been sky high on the Brazilian real, right? So, this plays well with that feeling...

Brazil's Central Banker, Meirelles, was talking about the difference between the Brazilian Central Bank and the Bank of England... Of course you could insert the Fed and Ben Bernanke in place of the Bank of England very easily! Here's Meirelles....

"We have an inflation problem, we are aware of it and we will use the main tool at our disposal- interest rates- to make sure it doesn't spiral out of control. The UK, on the other hand, acknowledges inflationary concerns but chooses to characterize it as 'temporary' and say that putting the monetary brakes on aggressively now is not an option because of its potential negative impact on growth. In short- they are willing to take a risk with respect to inflation for fear of a hard landing. Not very comforting."

Hey! And speaking of people talking bad about other people (something I would never do! Well, never in my sleep! HA!) I came across someone else that is calling out U.S. Treasury Sec. Paulson and his so-called "strong dollar policy"... Here's what the analysts at Barclays Capital wrote to their clients yesterday... "U.S. Treasury Secretary Henry Paulson is "double-tongued" because he wants the dollar to gain to curb inflation while he lobbies Asian countries to strengthen their currencies, according to Barclays Capital."

I've been pointing out the ridiculousness of Paulson's "strong dollar policy" for years now... Nice to see someone else has finally figured it out!

Oh, and remember yesterday when I called the Fed the new "junk bond house"? Well... Now they are not only the new "junk bond house" they are also the new "ENRON accounting firm"... Here's the story, by Jonathan Weil on Bloomberg...

"The Federal Reserve is just days away from completing the financing for its bailout of Bear Stearns Cos., after which the central bank will have another big decision to make: how to account for it.

Flip through the footnotes to the Fed's latest annual report, and you'll come across an open secret. The Fed doesn't follow normal accounting rules, as promulgated by any of the major standard-setting boards. Rather, the Fed writes its own, in a document called the Financial Accounting Manual for Federal Reserve Banks.

If you ever wanted to design an accounting regime to help a bank cook its books, the Fed's would be perfect. This doesn't exactly inspire faith in the U.S. financial system, at a time when a good example might help a lot."

Foreigners that buy U.S. assets and finance the Current Account Deficit need to have faith in the U.S. Financial System to continue buying... The Fed's not exactly giving foreigners a reason to buy U.S. assets are they now?

So folks... The Fed's FOMC meets next week on Wednesday... Just what do you think will happen once the Fed leaves rates unchanged and doesn't remove their downside risks to growth? Well, if the last meeting is any indication, then the dollar will get sold like funnel cakes at a State Fair! The economy hasn't shown one sign of recovery or strength... But inflation keeps rising as does the unemployment numbers, so the Fed's hands are tied... And the dollar will suffer...

While I'm being gloom and doomish... All the warnings about Iceland are coming to roost, as the country experiences a problem with their banking system. This is all played out in the Icelandic krona, along with the lack of liquidity.... The once high interest rates available are no longer there when trying to buy, as dealers slice a fat slice of this currency as their payment for dealing in it... Even the euro rally yesterday didn't help the krona...

OK... Enough of that dark side stuff!

The Swiss National Bank (SNB) left rates unchanged this morning, as expected, and the non-action has left the franc holding the bag. I said earlier this week that I hoped that the SNB would put an end to the franc being used as a financing currency for the Carry Trade, by raising interest rates, thus making the borrowing costs too expensive... But NOOOOOOO! The SNB wouldn't throw me a bone on that one...

In the U.K. this morning, the rumors of the U.K. consumer being dead have been greatly exaggerated! U.K. Retail Sales printed at a record pace in May, jumping by a remarkable 3.5% (the highest such print since the series began (1986) and a far cry from the -0.1% print expected.) Once again, the Bank of England (BOE) has to be kicking themselves for cutting interest rates ahead data like this... Inflation here is the highest it's been in a while... And Retail Sales are soaring... I think it's time for the BOE to come back to the table and reverse their last rate cut with a hike... I would expect this news to give a nice push to the pound...

The Norwegian and Swedish currencies have really backed off recently... But I have to continue to think that these are just buying opportunities not crying opportunities... Positive Balance of Payment countries like these two don't come around that often!

Currencies today 6/19/08: A$ .9470, kiwi .7575, C$ .9835, euro 1.5495, sterling 1.9690, Swiss .9585, ISK 82, rand 8.0280, krone 5.1850, SEK 6.07, forint 156.30, zloty 2.1750, koruna 15.55, yen 107.60, baht 33.42, sing 1.3690, HKD 7.8080, INR 42.97, China 6.8770, pesos 10.31, BRL 1.6075, dollar index 73.52, Oil $136.50, Silver $17.28, and Gold... $888.35

That's it for today... Finally! Some chamber of commerce type weather here in St. Louis! Spring is finally here, but wait! Next week we begin Summer! Another day of meetings for yours truly today... UGH! Well... Did you know... That June 19th, 1954, the Tasmanian Devil was introduced in the Bugs Bunny animated short Devil May Hare? We call our little Christine "Taz" on Fridays, as she comes in like the Tasmanian Devil. HAHAHAHA! Kristin will be speaking at the Freedom Fest in Las Vegas next month, along with an additional trip to Las Vegas later in the month to speak at the Wealth Masters Conference... She's taking a load of speaking engagements off my calendar, thus allowing me to not have to travel... Of course, after hearing her speak, I'm sure the organizers will probably drop me like a bad habit! Time to go to work, before the meetings begin... I hope your Thursday is Tub Thumpin'!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837
www.everbank.com

FOMC Minutes Point To Problems...

Chuck Butler — Thu, 22 May 2008 16:45:00 GMT

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

No other bank is as committed to you and your global portfolio success as EverBank. And we’ve proven it again with the launch of the NEW currency resource pages at EverBank.com. We encourage you to visit EverBank.com and see for yourself. You’ll discover:

- Over 30 new web pages dedicated to foreign economies and currencies, including tips and insights from Chuck Butler, President of EverBank World Markets
- Condensed, relevant and timely economic information from around the globe
- Tools, charts and tables you need to compare and evaluate currencies
This is another groundbreaking step from EverBank. And further proof why we’re worlds apart from ordinary banks.

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

In This Issue….

* Questioning the Fed's moves...
* Euros slow down...
* Aussie hits 25-year high...
* Oil hits $135!

And Now... Today's Pfennig!

FOMC Minutes Point To Problems...

Good day... And a Tremendous Thursday to you! Well... Don't look now, but oil has reached $135 overnight... UGH! I recently told an interviewer on radio that I believed that 20% of the price of oil was speculation. That was when oil was around $122... I would have to think that the speculation percentage has gone higher...

OK... The Fed's FOMC meeting minutes caused quite a stir in the currencies yesterday, so let's go to the tape. The Fed noted that prior easing had provided a better balance to the risks to inflation and growth, although the risks were still towards downside growth. In addition, the Fed downgraded their outlook for growth and pointed toward higher inflation... In addition, the Fed noted that "much weaker 2008 growth, inflation to remain elevated in 2008, jobless rate to rise significantly." Ooooh, now that doesn't give me a warm and fuzzy, and it shouldn't give you one either!

So... If that's what they "really" talked about, then why on earth did they go ahead and cut interest rates? They put in print that they believe inflation is going higher, and they went ahead and cut interest rates! OMG! These guys (and gals) are something... They are really something.. What? I don't believe I can say what they are in this letter, as this is a family letter! But, I'm sure my friend, the Mogambo Guru will have something to say about this, in his special Mogambo way... Can't wait to read his letter next Monday!

The Fed notes sent a message to currency traders and the message said... "with low growth forecast, and higher inflation forecast, the Fed doesn't have a clue what to do" Which means there isn't a strong feeling about an interest rate hike now either.

Last night, after getting home from my little buddy Alex's baseball game, I checked what was going on in the Asian markets... I did this because the Fed FOMC minutes printed after Asia and London had gone home for the day, and I wanted to see how the Asians took the FOMC minutes... At that time the euro was close to 1.58 again...

But something funny happened on the way to the forum for the euro this morning... So, let me explain what happened... It's called jawboning. The dollar was falling too far too fast again, and something had to be done to slow down the fall, a governor if you will on weakness! And that something came in the form of a report showing that futures traders are adding to bets that the Fed will raise interest rates before year-end...

Well... With inflation (in my terms) at 11%, I would think they would be raising interest rates well before then... But, then, that's just me... And if the Fed does raise rates, what good will it do if they wait till year-end? By then, inflation will probably be around 14-15% (in my terms) and the price of oil will be... Oh, who knows how high it will be by year-end?

So... The euro has lost about 1/2 cent overnight on this news... Still, the euro has made a nice recovery this week, and all those banging on the drum for and end to the weak dollar trend have crawled into the back seat and shut their traps this week...

OK... Enough on the Fed and their ineptness! Under the category of: "It's about time they agree with Chuck"... Banks including Royal Bank of Canada, and ABN AMRO Holding NV. Believe that the Aussie dollar is going to parity with the green/peachback. So, the "parity watch" is on... With champagne bottles chilling and party hats all ready to be worn... The "parity party" is being planned... Too bad these Big Banks with their Big Research Departments don’t read the Pfennig...

Just kidding... These guys are great at what they do! But, how about that Aussie dollar? I've spent most of this week talking glowingly about the Aussie dollar... Yesterday, it hit a 25-year high!

The New Zealand dollar / kiwi, finally got off its duff and moved higher last night... Kiwi had lagged the Aussie dollar lately, but finally saw some love when a more expansionary than expected budget for 2008 was printed... I still like Aussie more than kiwi, as New Zealand's debt situation is just too much for me to try to sweep under the rug!

U.S. stocks lost another 200 points yesterday... And we all know what that means... So a quick look at Japanese yen and Swiss francs shows some nice gains this week. This all plays well with what I've been talking about... (stocks to fall, and Carry Trades unwind) It's too early to tell if this will continue, but for now, it sure looks like another "plan" has come together!

A couple of weeks ago I talked about the Indian rupee, and how it had weakened for no apparent reason, therefore laying the blame on the Indian Central Bank... It now appears that a credit market slump has led to this weakness... Corporate Treasurers in India believe this credit market slump has passed and the currency will rebound 8% in the next year.

Yesterday, Reuters reported that Warren Buffett has this to say about the dollar... "BUFFETT SAYS DOLLAR WILL CONTINUE TO DEVALUE, POLICIES NEEDED TO CORRECT SLIDE HAVE NOT CHANGED"

Sounds like Warren Buffett has been reading the Pfennig! Doesn't that all sound familiar? Of course it does... Because that's what I keep saying over and over again! The fundamentals remain awful!

OK... Today, we'll see the Weekly Initial Jobless Claims, which are forecast to have jumped to 373K, which would be equal to the level at the start of the 2001 recession... We'll also see the OFHEO House Price Index for the 1st Qtr, which is expected to show a 1.3% decline, which if that number prints it would equal a record low since the data began in 1975... UGH!

Fed Head Kroszner is going to talk today about the recovery and "repair" of the mortgage markets... What recovery? What repair? This ought to be interesting!

Bank of Canada's Gov. Carney will speak today, but after Canada prints March Retail Sales, which are forecast to show a rebound from the Feb. report. The Canadian loonie continues to move higher VS the green/peachback, so expect some "jawboning" from Carney to slow the loonie's rise...

Gold has seen some profit taking overnight... The bit stronger dollar VS the euro has helped with Gold's move lower... But, with Oil hitting $135, Gold has a champion in its corner... I would expect Gold to gain back this move lower overnight...

OK... Onto the Big Finish!

Currencies today 5/22/08: A$ .9605, kiwi .7855, C$ 1.0170, euro 1.5750, sterling 1.9810, Swiss .9725, ISK 73, rand 7.7075, krone 4.99, SEK 5.9115, forint 155.55, zloty 2.17, koruna 15.94, yen 103.35, baht 31.85, sing 1.3580, HKD 7.80, INR 42.95, China 6.9420, pesos 10.37, BRL 1.6570, dollar index 72, Oil $134.21, Silver $17.76, and Gold ... $921.88

That's it for today... The end of my 4 weeks on my cancer meds... You gotta love it! By next Wednesday, I will have regained my taste for food, and the rest of my body will begin working normal again... So enough of that! I had a brain drain yesterday when I told people to call John Kaupisch regarding bonds... I knew that John wasn't going to be in yesterday and plum forgot! UGH! Looking forward to the 3-day Memorial Day Holiday weekend for sure! Got home in time to see my little granddaughter, Delaney, yesterday... She's pulling up on everything and crawling around now... Such a cutie! She loves to wave and hi and bye, which is what I need to do right now... Say Good bye Chuck... Good bye Chuck, and I hope you have a Tremendous Thursday!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837
www.everbank.com

Cinco de Mayo!

Chuck Butler — Mon, 05 May 2008 15:02:00 GMT

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

The currencies. The free expert insights. The latest global economic information—all in one place. And only in the new Foreign Currency Resource section on EverBank.com. Visit today for a detailed and timely look at over 20 major and emerging currencies. There's a page devoted to every currency we offer. And inside each page, read what Chuck Butler has to say about the currency. Everything you'll find, including Chuck's insights, is updated regularly so you can diversify with confidence.
Come see the products mentioned in "The Wall Street Journal" and "New York Times". Go to EverBank.com, click Research & Planning, then Foreign Currency Resources.

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

In This Issue....

* Jobs fall -20K...
* But dollar bulls celebrate!
* Carry Trades hurting yen and francs again...
* ECB to leave rates unchanged...

And Now... Today's Pfennig!

Cinco de Mayo!

Good day... And a Happy Cinco de Mayo to one and all! We celebrated Quattro de Mayo yesterday at the Butler House... We finally got a chance to celebrate my good medical news, and just did the Cinco de Mayo one day early!

Well... The Jobs Jamboree on Friday was interesting in that it wasn't as bad as forecast, losing only 20K jobs in April... Folks... That's still negative job growth, but that mattered none to the dollar bulls, who claimed that the storm clouds have been lifted and everyone back into the dollar pool!

But for everyone that still thinks this is a recession that we're going through, and we can add former Fed Chairman, Big Al Greenspan to that list, there were some disturbing pieces to the Jobs Jamboree that the media failed to mention... Long time readers of this letter know that I've always tried to shy away from the media hype of the total jobs created drama... Instead I've always focused more on the Avg Hours worked, and Avg Hourly Earnings for clues to the economy... And here is where the dollar bulls should have taken note...

Weakness in Manufacturing is still quite evident as this sector lost -46K jobs, but more importantly, the hours in their workweek fell from 41.2 hours in March to 40.9 hours in April... The overall economy lost some time in their workweek too... And even more alarming is the fact that Hourly gained only .1%, not the .3% forecast, and not even close to inflation...

Ok... So... The idea here is that we still had a Negative jobs growth number and the other pieces looked weak too... I would hope the markets would take a step back and see it for what it really was.

I think though, that with the unemployment rate falling to 5% (even though we all know that number is trumped up) the Fed is probably going to be on hold next month... But, that's 6 weeks away, there's a lot that could come up in that time... So more on that thought as we go along...

The European Central Bank (ECB) will meet this week, and once the markets turned the calendar and saw the ECB meeting they began to focus their attention to the fact that Eurozone interest rates have a wide positive interest rate differential to the dollar and, more importantly, will most likely remain that way, as the ECB will keep rates steady as she goes this Thursday.

Warren Buffett was in the news this weekend, and with all the stuff he had to say, I pulled out the stuff that means something to us... Let's listen in...

Warren Buffett had this to say... "If I landed from Mars today with a billion of Mars dollars, or whatever they call them on Mars, and I was thinking about where to put my money, I wouldn't put it all in the U.S. currency." He went on to say, "The U.S. is going to continue to follow policies that make the dollar weaker."

OK... Now you've got some BIG NAMES, Jimmy Rogers and Warren Buffett on the Marquee lights, with the "also starring" list of names with include yours truly all singing from the same song sheet.

Someone sent me a note this weekend, and asked a good question... With the Carry Trade back on the books and the low yielders getting sold again, the high yielders don't seem to be getting the same love this time around. Does that mean the Carry Trade is buying something else these days?

Ahhh Grasshopper... Yes, it does... It means that the funds are going toward U.S. stocks... So, stock jockeys have that going for them... But as quickly as the Carry Trade was put on and pushed stocks higher, it can turn around like we saw in March, when the High yielders got sold... As I've gone on record as saying many times... I believe that a trade considered to be as "risky" as the Carry Trade is setting stocks are whatever assets is being bought at the time, for big losses... There are just too many "unknowns" in risk events out there to get too fat and sassy about the fortunes of U.S. assets...

Another Bear Stearns, and this turns on a dime... And don't tell me that "that won't happen" I'm not saying it will... All I'm saying is the downside risk here should be the driver of this bus.

Unfortunately though... "downside risk" isn't helping the Japanese yen or Swiss franc, as they get sold to finance the stock purchases. It's gotten pretty ugly for these two in the past week.

OK... I've been a little worried about the Indian rupee lately as it slowly lost ground to the dollar in the past month... I'm sure that a lot of that movement was driven by the weaker euro... I'm also thinking that I think there was some intervention involved when the rupee was gaining nicely VS the dollar. That's just a guess on my part, but it sure looks like and smells like intervention.

Bank of America put out a note to investors this weekend, that highlights their affection for the rupee. They point to the soaring inflation rate, which just printed at 7.57%, and believe the Central Bank will have to raise interest rates... Thus, pushing rupees higher VS the dollar. Hmmm... Sounds about right to me!

I have a long time friend in the bond business that sent me a note the other day regarding the Treasury's announcement regarding bond auctions...

"The Treasury will be un-retiring the 3yr Auction and maybe 7 yr as slowing economy requires more Federal borrowing"

Hmmm... You know, the Fed's statement the other day wasn't exactly "sold on the economy"... And this note of needing more borrowing by the Gov't, leads me to believe the Fed is just pulling straws, and that the Treasury is left to do the dirty work...

In other words... The Fed is well aware of the economy cards it holds... It's just bluffing... I wonder when the markets call the Fed's bluff?

So... All the stimulus checks are "in the mail"... Or as I see it the $150 Billion tax... I've gone on record here and in dozens of interviews regarding how I feel about this "stimulus package"... But, Ty Keough sent me a note last week that cracked me up... This is Dave Barry's Take on Government Rebate Checks...

Q. What is an Economic Stimulus Payment?

A. It is money that the federal government will
send to taxpayers.

Q. Where will the government get this money?

A. From taxpayers.

Q. So the government is giving me back my own
money?

A. Only a smidgen.

Q. What is the purpose of this payment?

A. The plan is that you will use the money to
purchase a high-definition TV set, thus
stimulating the economy.

Q. But isn't that stimulating the economy of
China?

A. Shut up.

Currencies today Cinco de Mayo: A$ .9415, kiwi .7835, C$ .9825, euro 1.5480, sterling 1.97, Swiss .9485, ISK 76.50, rand 7.6070, krone 5.1250, SEK 6.0425, forint 163, zloty 2.2250, koruna 16.30, yen 105.10, baht 31.65, sing 1.36, HKD 7.7945, INR 40.60, China 6.9875, pesos 10.46, BRL 1.6490, dollar index 73.33, Oil $116.70, Silver $16.62, and Gold... $866.85

That's it for today... Thanks to everyone for the notes on Friday, yes, it was a great weight taken off my mind... Got to see a great game Friday night with my beloved Cardinals coming out on top... Great company at the game too! 2 of 3 from the Cubs, ain't too shabby! My darling little granddaughter was at the house yesterday, what a CUTIE! I don't think she knows what to think of me at this point, she tries to avoid me at all costs! But then why would she be any different from any other woman that I've ever known? HAHAHAHAHAHAHA...

So... It's Cinco de Mayo today... Celebrate wisely... A few years ago I carried on about Cinco de Mayo, and told a story about when I was in Cancun and so on... One reader was very upset with this... So, every year since, I think about how upset this guy was with me... And say... Have a great Cinco de Mayo today!

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

Back To Work After A Nice Holiday Weekend...

Chuck Butler — Mon, 24 Mar 2008 14:32:00 GMT

........But first a word from our sponsor.......
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...............................................

In This Issue..

* A quiet Good Friday...
* This week's data...
* G7 intervention speculation...
* Asian diversification...

And Now... Today's Pfennig!

Back to work after a nice holiday weekend...

Good day...and a happy Monday to all...First off, I would like to thank Chuck for allowing me to fill in while he is on vacation and express what a great honor this is for me. Alright...enough of the sappy stuff, so here you go for today:

As Chris mentioned on Friday, the markets were very thin and the currencies traded in a tight range with a slight bias for selling the dollar. Without any economic reports released on Friday and things fairly quiet, there really wasn't anything moving the markets, so a well needed breather was the result. This weeks appears to be a busy one in the data department as we will see multiple economic reports released and could send the dollar back down as most aren't expected to show a pickup in the economy.

The only data out today will be February's existing home sales. The general consensus among economists is for a drop to 4.85 million, which would be lower than January's record low figure of 4.89 million. Existing home sales account for about 85% of the housing market, so the tighter credit standards and the fact that buyers still anticipate lower prices should continue to feed the fire and cause the market to keep taking on water.

Tuesday will bring us a couple of consumer confidence reports along with the Richmond Fed manufacturing index, both of which are not expected to be positive, and Wednesday will show some durable goods figures, new home sales numbers, and mortgage applications. Again, improvement in the housing market isn't expected but durable goods are estimated to rise a bit spurred by a rebound in commercial aircraft orders. Durable goods excluding transportation are expected to show a negative figure for a second consecutive month.

Both Thursday and Friday should be interesting as we will see the colors of some influential data. Fourth quarter GDP, personal consumption, and core PCE will be released on Thursday along with last week's initial jobless claims. The markets may concentrate on Friday's numbers as we will find out how effective the Fed's moves have been with a gauge of February's inflation via core PCE and consumer spending.

With the holiday on Friday, there really weren't many news stories, but I found this one interesting. There is beginning to be speculation that the G7 may consider a coordinated intervention effort as a result of the dollar's free fall. Deutsche Bank AG in Frankfurt says the dollar is likely to fall to $1.60 against the euro on heightened concerns of a US recession. Royal Bank of Scotland Group Plc said the risk of intervention is increasing and would become severe if the dollar fell below $1.60.

G7 said during its last meeting in February that excess volatility and disorderly movements in exchange rates are undesirable. With the G7's criticism over the past few years on Chinese government intervention of its currency, some feel it would be difficult to for them to change horses in the middle of the stream. The group meets next on April 12-13, so we'll stay on top of this one.

The Financial Times ran a story that cited the Fed is in talks with other central banks such as the BOE and the ECB about using taxpayer money to buy mortgage backed securities instead of financial institutions taking all of the burden and to restore confidence. These reports were quickly denied but they did acknowledge taking part of broader talks about how to ease turmoil in global markets.

Central banks from 16 Asian nations may invest more of their $1 trillion of foreign reserves in the region's debt as the Fed interest rate cuts reduce returns in the US was a headline I saw this morning. This is definitely not good news for the dollar if this actually materialized as Asian investment is US treasuries is what has kept our ship afloat. The looming US recession means the world's biggest economy may no longer be the best place for the region to invest those funds. Makes sense to me...why invest in a money pit.

I guess we'll see if investors use the sell off in both commodities and currencies last week to purchase at cheaper levels and encourage those on the sidelines to jump in.

Currencies today: A$ .9050, kiwi .7937, C$ .9739, euro 1.5440, sterling 1.9845, Swiss .9851, ISK 78.82, rand 8.1592, krone 5.2664, SEK 6.1069, forint 166.80, zloty 2.2878, koruna 16.4850, yen 99.84, baht 31.48, sing 1.3925, HKD 7.7801, INR 40.2825, China 7.0553, pesos 10.7085, BRL 1.7319, dollar index 72.861, Oil $101.14, Silver $17.1550, and Gold... $919.40

That's it for today......Well, the beginning of spring looked more like the beginning of winter here in St. Louis this weekend as we had a pretty good shot of flurries on Easter Sunday. It's hard to believe our Cardinals home opener is only one week away...Game on! It was a tough weekend for me in our college basketball pool as all four of my teams lost, oh well. Anyway, it looks to be a busy day here on the desk, so gotta run. Have a Marvelous Monday.

Mike Meyer
Assistant Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837
EverBank.com