Daily Pfennig : Employment, TARP

A Turn Around Tuesday!

Chuck Butler — Wed, 10 Jun 2009 14:27:03 GMT

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In This Issue..

* Another Treasury auction today...
* Goldman says to buy euros!
* Oil fuels Commodity Currencies!
* RBNZ to meet tonight...

And Now... Today's Pfennig!

A Turn Around Tuesday!

Good day... And a Wonderful Wednesday to you! Well... Yesterday was "Turn Around Tuesday"! Add to that, the fact that there were a number of reasons for the euro to lead the charge for currencies VS the dollar yesterday. And... A word from one of the economists that I keep on my list of "to read"... So, let's get to the tape from Turn Around Tuesday!

I heard yesterday someone say "well, we sure turned around today in the currencies"... And I thought, Shoot Rudy, why not name it Turn Around Tuesday? Then I went back to the history page on my trusty Bloomberg, and saw that on 4 of the last 5 Tuesdays, the currencies did in fact "turn around" their performances from the day before! Not that this is something we can hand our hats on, and make trades accordingly on Monday nights / Tuesday mornings... But, it's an interesting fact nonetheless!

So... The currencies, led by the euro, came back strong VS the dollar yesterday... There were quite a few things on the list of reasons for this rally... I could do this David Letterman style... But I don't have 10 reasons... So.. I'll start with Chuck's Top 5 Reasons the currencies rallied yesterday... (imagine me throwing the card away after reading each reason!)
#5 There were rumors that a Big Swinger Fund Manager was interested in some large chunks of Euros, Aussie and Gold...
#4 The supply thing again... $35 Billion in Treasury Notes had to be auctioned off...
#3 The Risk Traders were out in force, with the news that 10 Financial Institutions were going to be allowed to pay back their TARP funds.
#2 Goldman Sachs issued a "buy euro" recommendation to their clients...
And the number 1 reason the currencies rallied yesterday...

#1 The markets are celebrating the 345,000 job loss as reported by the BLS, last Friday, as proof the recession is coming to an end, and therefore there's no further reason to own the safe haven dollar!

To that... I have to say HOGWASH! Not that I'm going to say the markets are wrong, because that's something I learned many moons ago, that the markets are never wrong... Stupid... But never wrong! What I'm saying is that #1 I've proved that the BLS number was a farce, printed to make us feel good, and what a job it's doing, eh? And #2 Even if we accepted that the number was -345,000, why would that be a good thing?

On my list of economists that I often read, is Paul Kasriel of Northern Trust... Let's hear what he had to say about this... "The last thing Fed Chairman and Great Depression scholar Ben Bernanke wants to do is "abort the recovery by premature tightening," which is what his predecessors did in 1936 and 1937, says Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago. "At what other time has a 345,000 job loss been a reason to celebrate?"

OK... Let's not look a gift horse in the mouth, eh? The euro rallied all the way to 1.41 and change... Right now, as I type it's 1.4090... As I left you yesterday morning, the euro was trading, according to the currency round-up, at 1.3890... I had my head down doing some reading before trading, and looked up to see the euro had skipped right through the 1.39 handle... I never saw it trade with a 1.39 handle! It was that quick!

You know, the number 2 reason for the currencies to rally yesterday was quite interesting... Goldman Sachs Group Inc. advised buying the euro versus the dollar as risk aversion eases, prices of commodities rebound and talk of alternative reserve currencies undermine confidence in the greenback.

And the number 3 reason for the currencies to rally yesterday has more "air time" today, as the U.S. will have to auction $19 Billion of 10-year Treasuries... Yesterday's 3-year auction was well bid... But think about this for a minute... The Chinese have shortened up their Treasury holdings to average 3-years... So, a 3-year note probably wasn't going to have that much trouble getting sold... But 10-years? Ahhhh grasshopper, this could be the cheese that binds... We'll have to see if this auction is as "well bid"...

The Commodity Currencies are watching the price of Oil rise to over $71 a barrel, and loving every minute of it... I'm not of course, as it will affect the price of the gas I put in my vehicle. But... This is the fuel the Commodity Currencies needed to get moving (get it? The fuel, oil? HAHAHAHA) Aussie, kiwi, loonies, real, and rands really got moving yesterday and overnight... Regarding the loonie... I've told you over and over again that the price of Oil could be the harbinger for a better loonie price... And voila!

I was talking to a very good / old friend, one that I've known since we were in the 2nd grade, the other day, and he asked me what was going on with the price of Oil, as he reasoned that with the recession going on, gas consumption was down, and thus the demand would be reduced... I agreed with him, but added... The difference here, I believe, is the fact that investors are looking ahead and believe they already see inflation, and are buying Oil contracts as a hedge VS that inflation they see in our future...

Loonie holders don't care where the move comes from, they are just rejoicing a move to 91-cents!

The "winner" for the day in performance VS the dollar, was... Drum roll please... The New Zealand dollar/ kiwi... I found this strange given the fact that the Reserve Bank of New Zealand (RBNZ) meets tonight to discuss rates... I take it that traders don't believe the RBNZ will cut rates. In the Pfennig on Monday I said that "I was on the fence with this one... I'm leaning toward leaving rates unchanged, but jawboning for further rate cuts... Which is about the same as actually cutting them! So... Just cut the darn things! Quit beating around the bush!"

So... Kiwi was the winner for the day! Now we need to wait-n-see what the RBNZ does tonight!

Kiwi's kissin' cousin across the Tasman, Australia, saw June Consumer Confidence rise sharply by over 12%, the biggest one-month rise since 1974... Ahhh, 1974... Grand Funk's The Loco-Motion was the number 1 song of the year... The Top Ten also included Sweet Home Alabama, Come and Get Your Love, and The Joker... 1974 wasn't a great year for Billboard hits... But the underground FM radio stations were hitting it big then, and the music was awesome! Oh boy, did I digress or what here? Geez Louise, somebody pinch me, I've gone completely off course!

OK... I'm back from 1974 now...

Gold and Silver also enjoyed the day on Tuesday, and overnight, with Gold moving to $960... Recall, yesterday, when Gold had dropped the previous 2 days that... "With Gold hovering around $950 and Silver around $15, it certainly provides an opportunity to buy at cheaper levels than last week's lofty figures, eh? I would use these dips to my advantage... But then that's just me... It doesn't mean that it's the right thing to do!"

As I've been talking about all week, the Trade Deficit and Budget Deficit both print today... The Trade Deficit is expected to grow to $29 Billion from $27.6 Billion because of the steady rise in the price of oil... The Budget Statement which couldn't even post a positive balance in the month April, will probably add $180 Billion to the deficit column... UGH!

This afternoon, the Fed's Beige Book will print, which gives us a glimpse of what the Fed Districts see going on... There's rarely something here to move the markets, so... These are not the droids you're looking for... Move along there's nothing here to see!

And finally... I wonder what's going to happen with this one... I'm talking about the House of Representatives issuing a subpoena to the Fed for the documents related to the Bank of America (BOA) purchase of Merrill Lynch... You may recall that BOA Chairman, Ken Lewis, told the lawmakers that the Fed and U.S. Treasury made him take on Merrill Lynch, and not disclose the losses on Merrill's books... There's more laws broken in that statement than you can shake a stick at... So... This will be interesting, to see if the lawmakers find anything there... I doubt they will, because they are all in cahoots with each other in this financial mess... But, to me... There's smoke here... And I always tell you that where there's smoke there's fire! And I believe that the fire is raging here... I'll tell you what we need here... We don't need no stinkin' lawmakers going through the records... We need old ironsides... Barnaby Jones... Or Mannix! Now, those guys would get to the bottom of this!

I did a 15-minute radio interview on True News yesterday... I got to speak my mind on some things, and the interviewer never interrupted me, told me "he was losing me", or made fun of anything I was talking about... Now... That was a good interview! I got to talk about things on my mind, our products here at Everbank, the website, the phone number and the Pfennig... And the listeners got 15 minutes of "Chuck speak"... I want to thank the people at True News...

I also had a production meeting for my "other" newsletter, which is always interesting... The editors sit around and ask me... "So, Chuck, what do you want to write about this month?" Hmmm... I always say, because... Since I write something every day, you can only imagine how difficult it is come up with something new for a monthly newsletter! But I always do, somehow! If you're interested in this letter, it does cost... But it's a value at any cost! You can click here... https://www.web-purchases.com/CUC/WCUCJ900/landing

Currencies today 6/10/09: A$ .8110, kiwi .6335, C$ .9080, euro 1.41, sterling 1.6390, Swiss .9290, rand 8.03, krone 6.2810, SEK 7.6425, forint 198.28, zloty 3.1750, koruna 18.99, yen 98, sing 1.4480, HKD 7.7510, INR 47.33, China 6.8332, pesos 13.53, BRL 1.9440, dollar index 79.74, Oil $71.31, 10-year 3.87%, Silver $15.42, and Gold... $961.35

That's it for today... Did you hear about the fisherman who reeled in a missile from an F-15 fighter jet? That's a pretty interesting story, eh? Not much else to talk about this morning, as my beloved Cardinals are in a major June Swoon... UGH! When do the Rams report to training camp? Nah... I can't be that thin skinned with the redbirds, they'll break out of this... Hopefully! So... With nothing more to say, I'll get this out of here, but not before telling you to hopefully have a Wonderful Wednesday!

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

He Said What?

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

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In This Issue..

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

And Now... Today's Pfennig!

He Said What?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

When 8.5% Is Really 15.6%!

Chuck Butler — Mon, 06 Apr 2009 14:30:10 GMT

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In This Issue..

* Job Losses Continue To Mount!
* Currencies rally on the day...
* Shhhhh! The Gov't wants to keep this quiet....
* Richard Russell...

And Now... Today's Pfennig!

When 8.5% Is Really 15.6%!

Good day... And a Marvelous Monday to you! OK, it's Opening Day here in St. Louis, so traditionally I bring this to you on Opening Day... Beat the drum, and hold the phone, the sun came out today, we're born again, there's new grass on the field... A-rounded third, and headed for home, it's a brown eyed handsome man, anyone can understand the way I feel.....

Yes, baseball freaks like me, believe we're born again every spring on Opening Day, for before that first pitch is thrown, everyone is in first place!

OK... Enough of all that... I've got some serious stuff to talk about here... And it all begins with Friday's Jobs Jamboree.... I was heading to the airport when the number was released that showed 663,000 more U.S. jobs lost... March's number of -663K, put the unemployment rate at 8.5%... But seriously folks... I'm not using "new math" when I tell you that the real unemployment rate is around 15.6%! I know, I can hear you saying, "Chuck, where in the world did you get that number?"

Ahhh grasshopper... You get 15.6% when you add in all the people that are laid-off but their unemployment benefits have expired... You may recall me telling you this over and over again in the past... But... The Bureau of Labor Statistics (BLS) does NOT count people that are unemployed and have had their benefits run out, as unemployed.... What do they count them as? Who knows, but they sure don't count them for what they are! And isn't that really questionable? Why not call them for what they are?

Dean Baker, who is the co-director of the Center for Economic and Policy Research in Washington, said this about the report.... "There's just no way we're anywhere near a bottom. We'll be really lucky if we stop losing jobs by the end of the year." He went on to say..."We're clearly looking at a worse downturn than they (the Obama administration) had been anticipating when they planned the stimulus. We're going to need some more."

And finally... The thing that really TICKS ME OFF! Was the revision of the Feb job losses... Stealth like, the BLS slid a revision of 86,000 additional jobs lost in Feb to bring the total to 741,000! My friend Ian Mathias over at the 5-Minute Forecast (which by the way if you don't read it, you should!) had this to say about the revision... "That's actually the biggest monthly drop in 59 years. Such a number would have sent stocks to the woodshed back in early February, but since the revision is now so backward looking, there isn't much traders can do. Clever trick, eh?"

Geez Louise, will the talk of stimulus ever end? More later, but first... Let's see what the currencies did in reaction to this data...

Currencies enjoyed another day in the sun on Friday (except yen) as the more everyone talks about stimulus, and bailouts, and so on, the more the risk takers expose of their body to the currency waters. One would think it to be the other way around, BUT! Not now... Everyone heard it from G-20 this week, they are going to make it all right on the night for everyone, no worries!

The euro traded up near 1.35 on Friday, and saw the Aussie dollar (A$) push higher to .7155... So.... Remember on Thursday when I told you that the euro had backed off some because of the Eurozone's jobs report, and that I said it won't be as bad as the U.S. report... It all goes back to what I was saying the other day... Other countries might be experiencing their own problems right now, but they don't compare to what's going on here in the U.S!

Last night when I returned home from San Diego (plane was delayed over 3 hours! UGH!) The euro was trading well into the 1.35 handle, at 1.3560! I don't know if you been following the A$ closely since I said before I left on vacation, that it appeared to have turned the corner... But if you have, then seeing A$'s trade close to 72-cents again is not a shocker to you... For those of you not keeping score at home, it probably is a shocker to you... But in a good way, eh?

But... Just as always the prosperity just can't seem to hold serve, and in the overnight markets the profit taking set in, with the euro coming back to 1.35... But hey! It's still 8 figures higher than it was before I went on vacation last month!

I saw this report on the AP newswire Saturday regarding Modified Mortgages...

Remember how Modified Mortgages were going to be the end all of what ails the mortgage meltdown? The first reports of these aren't so rosy.... "Fewer than half of loan modifications made at the end of last year actually reduced borrowers' payments by more than 10%. The report based on an analysis of nearly 35 million loans worth more than $6 Trillion, was published by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) The report helps to explain why many loans are falling back into default after being modified. Many borrowers and consumer groups contend that the modifications offered by the lending industry are very generous, despite public prodding from regulators."

Hmmm... Looks like they need to go back to the drawing board, eh?

And... In another item from Washington that appears to have gone back to the drawing board, at least with the accountants is the story that appeared in the WSJ on Sunday regarding how much the TARP is going to end up costing taxpayers... I'm sure we need to deal with this delicately and quietly... So.... SHHHHHHHHHHHHHHH.... I'll whisper this next part, because the Gov't doesn't want you to realize how much of their spending is going to cost you!

OK... "The Congressional Budget Office has quietly altered its estimate of the ultimate cost to taxpayers of the $700 billion Troubled Asset Relief Program, now figuring the initiative will be much more expensive in the long run than it previously figured. In January, the CBO pegged the ultimate cost to taxpayers of the $700 billion TARP at $189 billion. When the agency issued revised numbers in late March, it revised that to $356 billion, a change that drew little attention."

See... They tried to keep it quiet, so that's why I SHHHHHHHHHHH'd!

Have you heard Neil Young's new song? (it just new words to an old Neil Young song)
There's a bailout coming
And it's not for you....

Old Shaky got pretty tricky with those words...

I have to tell you something about Saturday Night's Richard Russell Tribute Dinner, which by the way was a grand time had by all... First of all... Richard was asked, "if you, Richard Russell, were named president what would you do in these times?" to which Richard answered... "I would do nothing... I would let the bear markets run their course"... Now, I sat there gleaming, because how many times have you all read that from me since the stimulus and bailouts started? Many, would be the answer, so it was good to hear it from the "maestro"...

Then, my eyes lit up even more when my good friend Mary Anne Aden told me that she had met with Richard earlier, and he asked her to list who she knew was coming. When she got around to my name, he stopped her, and told her that he read the Pfennig almost daily on Kitco, and that he really like it, and me.... WOW! Talk about making my day! OK, I don't want to come back down from this cloud, it's taken me all this time to find out what I need.... But I guess I will...

Currencies today 4/6/09: A$ .7135, kiwi .5895, C$ .8115, euro 1.3510, sterling 1.4950, Swiss .8860, rand 8.9930, krone 6.52, SEK 7.9620, forint 218.27, zloty 3.2890, koruna 19.6925, yen 100.80, sing 1.5050, HKD 7.7510, INR 50.05, China 6.8330, pesos 13.50, BRL 2.1470, dollar index 84.04, Oil $52.63, Silver $12.45, and Gold... $882.80

That's it for today... The weather people are saying it's going to be a winter wonderland at Busch stadium today for the home opener... Hmmmm... Those job losses keep mounting don't they? I'll tell you something though, the restaurants are still pretty busy... The airplanes I've been on recently are still full... Makes you shudder in fear that these mounting job losses could go on for some time before it shows up in the economy... The good news is that the losses to date haven't clamped down the entire economy... OK... It was great to see a lot of old friends at the Richard Russell Tribute on Saturday... As I said, Mary Anne Aden was there along with sister Pam, Bonnie and Rick Rule, Steve Sjuggerud, Bill Bonner, Addison Wiggin, John Mauldin, and the list goes on!

Addison Wiggin said in the bar afterward that he looked around the room and saw about 400 people that would for the most part agree with the things we try to tell people about the deficits, etc. but that the media would think we were all kooks... That's OK I said... We think the media are all kooks! It goes both ways! I've carried on enough... Hope you have a Marvelous Monday... And Opening Day... Why isn't Opending Day a National Holiday?

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

It's Not My Fault, It Must Be Yours!

Chuck Butler — Thu, 12 Feb 2009 14:40:46 GMT

In This Issue..

* What's $78 Billion among friends?
* Currencies fade with bias to buy Gold...
* Could the Carry Trade Unwind be done?
* U.S. soccer beats Mexico...

And Now... Today's Pfennig!

It's Not My Fault, It Must Be Yours!

Good day... And a Thunderin' Thursday to you! Well... Front and center this morning, I'm going to tell you something that will surprise a few and make a few happy. I've had my say on the Bailouts, TARP, Stimulus, and spending. I've beaten them to a pulp, and some readers have expressed their contempt with me carrying on with this beating. So... Unless something cracks, I'll just leave it all as it stands, and go on with life. This all has been too much for my blood pressure to take! I'll report the facts on this stuff, and leave the commentary for people that think they "know better"...

For instance, it was reported the other day that the Treasury Dept. has overpaid for stock received from TARP recipients by $78 Billion. You see, for every $100 given in TARP, the Treasury was to receive $100 in stock / assets, but when all the beans are counted, the Treasury is $78 Billion short on stock /assets... But, what the heck, what's $78 Billion among friends?

I was totally amused at the lawmakers grilling of Bank CEO's yesterday. In going along with the general practice that exists today... "It's always someone else's fault for it can't be my own fault" The lawmakers pointed fingers and blasted these CEO's for "earning a living"... This is dangerous ground folks, as it speaks of doing away with the way businesses have been run for eons, and shakes the very foundation of Capitalism... If the lawmakers had stopped and thought about their TARP money before they began to hand it out with no accountability, and lending requirements, maybe things would be moving in the right direction by now... And I know... This is getting to opinionated and I'm not going there anymore.

Oh! And one more thing... Please no more emails blasting me for taking the new administration to the woodshed so early in their rein... It's NOT A POLITICAL THING! For any reader that was around in 2001 when the then new administration had just taken over, and their first order of business was to place tariffs on Steel imports, I came out with both guns a blazin' that this was protectionism and had no place in free markets and Capitalism... I ranted and railed on this new president for this move. Funny, I don't recall receiving the nasty emails I get now for doing the same thing to this new president back then.. Hmmm...

OK... The dollar was in the driver's seat yesterday, as the risk takers have all gone home... A heading on Bloomberg this morning tells it all... "Stocks fall worldwide on concern stimulus plans may fail" The Stimulus they are talking about is the "new and improved" Stimulus package that the Senate approved yesterday, which came in lower than the previous package. This version's total comes in at $789 Billion.

Yesterday's potential market moving data didn't materialize, as the Trade Deficit did not narrow as much as forecast, and last month's number was revised upward. For the record and for those of you keeping score at home, the Trade Deficit for December printed at $39.9 Billion, and November's Deficit was revised from $40.4 Billion to $41.6 Billion. Exports have fallen off the cliff as 1. Global demand is waning, and 2. the dollar is overvalued and too strong to allow U.S. exports to be competitive.

Today, we'll see Retail Sales for January. The BHI (Butler Household Index) tells me that we should look for a very disappointing number from January. We'll also see the Weekly Initial Jobless Claims that continue to show more rot on labor's vine. Last week, the Initial Claims showed a record of 626K filed. This week, the "experts" are looking for 610K... I'll go out on the limb and say it will be even more disappointing. UGH!

Well... As I told the interviewer the other day... I believe what we're seeing right now is a general increased concern regarding fiat currencies, which has Gold on the rally tracks once again. Yesterday, Gold soared upward and onward by $23... And it has already added $3 since the London Morning Fixing earlier... As my friend, the Mogambo Guru, tells his readers... Everyone should own Gold... "see how easy this investing stuff is? Whee!" And let me repeat something I said before. My friend, Bill Bonner of the Daily Reckoning, www.dailyreckoning.com coined this saying for his "trade of the decade" at the turn of the century... "The trade of the decade is to sell the DOW and buy Gold on the dips"... WOW...

And now that Central Banks all over the world are having a race to zero... Deposit rates no longer hold the hammer over Gold's non interest bearing status. So... When Gold is on one scale, and cash (like dollars!) is on the other side of the scale... Guess what happens! I was surprised that I didn't get any comments yesterday from the media or readers about what I said Gold was... "An Uncertainty Hedge"... Are you uncertain as to what all this that's going on is going to bring us?

An ECB minister, Papademos, was speaking overnight about how "a further easing of the Eurozone monetary policy may be appropriate as risks to growth and inflation are to the downside." Then another ECB minister, Liikanen, said that "at the next meeting it is possible we could move." No dookie Sherlock! Your leader, Mr. Trichet, has all but told us to look for lower rates at the March 5 meeting...

Lower interest rates in the Eurozone won't necessarily hurt the euro, as they sure haven't hurt the dollar! There's a whole trading pattern that deals with a currency not losing value even after a debasing rate cut... I'll put that all together, and bring it to you probably next week, as we've got time before March 5 comes around any way!

Instead, the market movers for euros this morning has been 1. risk aversion in play 2. more flight to the safety of Treasuries, and 3. recession type data, like this morning's December print of Industrial Production for the Eurozone, which fell -2.6% for the month, and moved the annual year-o-year figure at -12% OUCH! Now, that's recession type data! And something that really brings that thought I've made a few times now, about the move to Gold...

Pound sterling has gone back on the slippery slide downward, after a brief rally last week. I was getting a little hot under the collar with the sterling strength last week, but, as with all things, patience is a virtue... Sterling is showing its true colors again, and the folks over at BNP Paribas say that the "downside risks for pound sterling VS dollars have increased"... Hmmm... That's big time research dept there... I could of, and in fact I already did all by my lonesome, tell you that!

The Aussie dollar (A$) just won't go away quietly... Yes, I fully understand that it has fallen from the lofty level 98-cents to present day levels of around 65-cents... But since it got to this mid-65 cent range, it has held steady Eddie. Now, of course I realize that I just gave it the kiss of death, but really this is worth pointing out. And with yen now stalled out around 90, it kind of makes you wonder if the Carry Trade unwind is over... Makes you stop to think doesn't it? Australia keeps cutting interest rates, and it remains in the mid-65 cent range... Yen has had every opportunity under the sun to go further to 85, and can't seem to find any terra firma below 90... Therefore, I'm pronouncing the unwinding of the Carry Trade as a done deal... This is where the munchkin coroner comes out and proclaims the Carry Trade as truly dead... As Coroner , I thoroughly examined her And she's not only merely dead She's really most sincerely dead...

Well... At least we can hope so! This would be a good indication that risk aversion is dying out... Although I'm truly aware that this risk aversion has a ways to go, we have to get to this place before we can begin to make plans to send risk aversion to a state run home...

On a sidebar here... Whenever I used to sit around late into the night with my friends, they would invariably get me to do my imitation of the Lollipop Guild... HAHAHAHAHA! Of course this is when they also would have me play my guitar, which I now haven't picked up in some time...

OK... Enough of that silliness! Your Pfennig writer has really gone out on a limb this morning with the Carry Trade thingy, eh?

I'm out of ideas for today, so with no further ado...

Currencies today 2/12/09: A$ .65, kiwi .5195, C$ .8045, euro 1.2855, sterling 1.4230, Swiss .8610, rand 10.0950, krone 6.8735, SEK 8.4050, forint 232, zloty 3.58, koruna 22.29, yen 90, sing 1.51, HKD 7.7515, INR 48.84, China 6.8340, pesos 14.59, BRL 2.2870, dollar index 86.14, Oil $35.53 (the price of oil just keeps falling!), Silver $13.45, and Gold... $944.44

That's it for today... What a nice win, in awful conditions, for the U.S. men's soccer team VS Mexico last night. My little buddy, Alex, and I watched the game together. Soccer was never "his" sport, but when I was a youngster, growing up in South St. Louis, where everyone and their brother was Catholic, German, Irish, Italian, French, and any other European background, soccer was played all the time, well, when we weren't playing baseball, basketball, football, and hockey! We have two, count'em... Two, soccer greats, and members of the St. Louis Soccer Hall of Fame on this trading desk... Don Ries, and Ty Keough... Both grew up on the South side of St. Louis, where so many athletes came from. Today, would have been my oldest sister Brenda's birthday. We lost her to cancer 20 years ago, she would have been 58 today... OK... It's also Charles Darwin's 200th birthday! Suzy Q just arrived... I need to get this sent, so... I hope you have a Thunderin' Thursday!

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

Passing Out The Dollars...

Chuck Butler — Fri, 16 Jan 2009 14:59:12 GMT

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In This Issue..

* Risk Takers return...
* Bank of America gets more cash!
* 30-year mortgages below 5%!
* Looking for direction...

And Now... Today's Pfennig!

Passing Out The Dollars...

Good day... And a Happy Friday to one and all! A Fantastico Friday so far, let's keep it going, eh? It is downright cold here. I'm reminded of that one looooonnnnngggg winter I spent in Des Moines, Iowa... This artic cold was the "norm" for that winter there... I didn't need any other reason to move back to St. Louis, once the spring thaw came around!

Well... Right out of the starters blocks this morning, we have a change in sentiment going on... The Risk Takers are back in the driver's seat this morning, as the markets are feeling better about things given that the remaining TARP money has been given to the Obama campers to dole out, and Bank of America came away with an emergency lifeline from the Gov't that totals about $138 Billion... $20 Billion in cash, right here, right now, with the rest spread out between liquidity access and guarantees... And... The TARP money... Given the fact that the Obama people have been itching like they just rolled around in poison ivy, to get their hands on that money... You've got to wonder... Are these guys going to do their best to out do the previous administration when it comes to piling up debts?

You know where I stand on all this bail out money, and the Gov't sinking their teeth into banks more and more... Besides the fact that the Gov't shouldn't have their hands in the cookie jars that belong to banks, imagine if you will, just how well run these banks will be with the Gov't pulling the strings... YIKES!

OK, I could go on and on there like the Energizer Bunny, but that would be wasting my time, because the people that make these decisions don't read the Pfennig! But you do, dear reader, so... It's onto currencies...

The currencies, led by the euro, are trading much better this morning, than yesterday morning, when the euro took a blow to the mid-section from the European Central Bank (ECB) after the ECB decided to cut rates 50 BPS to 2%.

The euro has gained this morning even in the face of the news that their Trade Balance, which turned negative in October, widened to 4.9 Billion euros... German export declines led the way to this widening... But shoot Rudy, we're only talking about $6.5 Billion dollars worth of deficit... The U.S. chalks that up almost daily!

OK, so we've got a mini-currency rally going the day before a 3-day weekend here in the U.S. You know what that means today, right? Yes, the New York trading desks will be left to the junior boys and girls after lunch, and the volume will basically dry up this afternoon.

Chris reported yesterday about the awful / disappointing Retail Sales for December number (-2.7%) and I just wanted to add my two cents worth. I just wanted to say that I think you can use the ISM (manufacturing) Index, and Retail Sales reports to judge just how deep this recession is going to be... And if we have a negative -2.7% Retail Sales in DECEMBER! Then I think we're in for a long protracted and deep recession... But then I've been saying that for a year now!

And what have I been telling you for the past two weeks about the Weekly Initial Jobless Claims? In case you forgot, I said that the reason they had fallen back to below 500K, was that the holidays chopped out days that people could file... Well, on the first full week of work... The Weekly Jobless Claims jumped to 524K.... Not that I want to see that large of a number... It's just that the dollar bulls pointed to those reports, the last 2 weeks, and said that things were getting better... I knew better than that!

I saw a headline news story flash across my screen at home yesterday, saying that 30-year mortgage rates had fallen below 5% for the first time in history! That's great! Now go out and get your interest rate down on your home loan... NOW! Save money... And I mean save it! I was telling my beautiful bride about all this, and said... "you know, what's sad? It's the fact that a lot, and I mean a lot, of homeowners are upside down with their home loans, and won't be able to refinance now." Don't know what I mean by upside down? I mean that their loan balance exceeds the home's value...

If the risk takers came out of the walls yesterday, then that must mean the High Yielders of Australia, New Zealand, and Brazil are rebounding... But how much of this can someone take? Up, down, up, down, back and forth, like watching a tennis match. WE NEED DIRECTION! Why can't the markets make up their collective minds? It's like they're torn between two lovers... Feeling like a fool... One love is the thought that the U.S. will rebound from all this and be stronger for if it doesn't kill you , it makes you stronger... And the other love is the thought that we just keep building up debt... And soon the Fed will begin their quantitative easing, which means more and more debt and dollars, and that just spells bad times for the dollar.

The Wall Street Journal is reporting this morning that: Citigroup reported a net loss of $8.29 billion, and Bank of America swung to a fourth-quarter net loss of $1.79 billion. Bank of America's numbers includes their purchase of Countrywide Mortgage, but not Merrill Lynch...

Deeper, darker, more dangerous... More and more everyday, that's where this economy has hanging over it like the Sword of Damocles!

Well... The euro has inched up one tick at a time since I came in and turned on the screens this morning, so we've got that going for us, eh? We've seen these mini-rallies get wiped out in one day though recently... So, I'm just looking for some direction, and hope the market participants and traders finally get over their first lover, and realize the only lover for them is the second one... (see above, if that confused you!)

And finally... With the risk takers back (for today at least) Gold has pushed higher overnight, adding $11 bringing its price to $828.90... Store of wealth, folks... Look how well Gold has held its store of wealth, while the dollar has continued to lose its purchasing power for years! Something to think about as we head into the weekend...

Currencies today 1/16/09: A$ .68, kiwi .5490, C$ .8110, euro 1.33, sterling 1.4955, Swiss .8950, rand 9.85, krone 6.9425, SEK 8.1050, forint 208, zloty 3.13, koruna 20.3575, yen 90.70, sing 1.4850, HKD 7.7590, INR 48.80, China 6.8375, pesos 13.77, BRL 2.32, dollar index 83.60, Oil $35.40, Silver $10.80, and Gold... $828.90

That's it for today... Well... I started radiation treatments for my eye yesterday. The doctors decided that the shots were no longer working, and the fluid was spreading to my macular, which if it hit would blind me for good in that eye. So, I began 2.5 weeks of daily radiation treatments. I know that quite a few of you were wondering what was going on... So there you have it! Chris is off skiing this 3-day weekend, and will be going again on next month's 3-day weekend. I was working on our monthly newsletter, Review & Focus, which is available to World Markets Clients, and stopped for a minute to reflect, where we've gone with the Review & Focus since I began writing in it July 2000... WOW! 104 issues! ( I think, if my math is correct) Of course I don't think my calculator can figure how many Pfennigs I've written over the years going back to 1992! Double WOW! And now I have my new "paid" subscriber newsletter that is published by the Sovereign Society, called "The Currency Capitalist"... 6 issues so far there too! I'm surprised my fingers aren't thinner from all the work they do! HA! OH MY! Look at the time, I've carried on too long... Time to hit send... And hope you have a Fantastico Friday!

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