Daily Pfennig : Eurozone

Silence Is Always Golden...

Chuck Butler — Wed, 18 Nov 2009 20:17:38 GMT

..But First, A Word From Our Sponsor..
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

Don't let market risk get in the way of potentially rewarding exposure to the BRIC currencies. Our 3-year MarketSafe® BRIC CD shields you from any market risk and provides 100% principal protection on deposits held until maturity.

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Dec. 3rd, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808
.

In This Issue..

* It's a Risk On day!
* Commodity Currencies have the "stuff"!
* Gold's one-day window slams shut!
* RBA to not wait 2 months to hike rates!

And Now... Today's Pfennig!

Silence Is Golden...

Good day... And a Wonderful Wednesday to you! We're stuck in the mud with the rain again, but according to the weather people it should end tomorrow... Geez Louise, I guess it could be snow, which would have crippled this city by now!

Well... The currencies gave back all that ground they gained the day before on Mr. Toad's Wild Ride, yesterday... But, have turned around this morning in the European session as Eurozone stocks are up, and whenever equities trade with some zip in their step, it has been good for the Big Dog, euro...

Someone asked me yesterday a question about the euro... He said, "Chuck, I know you like the euro, but couldn't the Aussie dollar be a better choice going forward?" And I answered like this... The euro is the offset currency to the dollar... But that doesn't mean it is the best performer when the dollar moves down. The Aussie dollar (A$) has outperformed the euro since 2002, and will probably continue outperform the euro... But so has the Norwegian krone, and the New Zealand dollar, and the South African rand, and the Canadian dollar... Hmmm... Does that list ring a bell?

Why, yes, Chuck, it does! For these are all "Commodity Currencies"... You've Gotta Love 'Em!

Countries that have "stuff" to sell to other countries, that either don't have the "stuff" or are too lazy to deal with it!

Hey! Did you see my bit on Bernanke that I wrote yesterday made the "5-Minute Forecast"? WOW! My friend Ian Mathias, does such a great job on the "5", and I get a HUGE kick out of him putting stuff I write in his great letter! You should see the two of us standing side by side in Vancouver, where we meet up each year... The old kids song about fat and skinny went to bed, fat rolled over and skinny was dead... HAHAHAHAHAHAHA!

OK... Chuck, quit the back slapping of yourself, and get back to the task at hand!

Yesterday, my fat fingers made an appearance in the Pfennig, as I mis-typed the price of Gold, in the currency round-up... I had just talked about how those people waiting for a pull-back of Gold's price, might still be waiting when the cows come home... And then I type the price of Gold $100 cheaper than it was selling for! What a fat fingered dolt! Oh well, not many people pointed it out to me, as always letting me know that "Chuck made a mistake"...

Speaking of Gold... Well, you had a 1-day window to buy it cheaper, for the overnight sessions has the shiny metal hitting on all 8, and soaring once again to $1,148!!!!! Don't you just hate those 1-day windows? I mean, you wanted to pull the trigger and buy, but thought, what if Gold drops more today, that would mean I could buy it cheaper tomorrow... Don't be fooled! It's like this folks... If you want to buy something, buy it! Trying to time a purchase will leave you sitting the sidelines with a baseball cap turned backward on your head and holding a clipboard!

I used to tell people that if you're standing at the bus stop waiting for the bust to take you downtown, and the bus pulls up, but it's an old bus, and the rumor is going around that a brand spankin' new bus is on the way, you decide to not get on the old bus, but wait for the new bus... Then the new bus arrives, and there's a rumor that an even newer, updated bus is on the way, and you decide to wait for that one... If you never get on the freakin' bus, you'll never get downtown!

OK... So... Remember when I questioned the current administration's claims that instead of "creating jobs" they were "saving jobs"? I pointed out that claiming that jobs were saved, would be difficult to prove... Well, guess what? Proving that the jobs saved don't exist, has been pretty easy... And the people claiming that the stimulus "saved jobs" have egg all over their collective faces...

Speaking of Jobs... One of my fave economists, Nouriel Roubini, had this to say about jobs...

"Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.

Also, remember: The last recession ended in November 2001, but job losses continued for more than a year and half until June of 2003; ditto for the 1990-91 recession.

So we can expect that job losses will continue until the end of 2010 at the earliest. In other words, if you are unemployed and looking for work and just waiting for the economy to turn the corner, you had better hunker down. All the economic numbers suggest this will take a while. The jobs just are not coming back."

Chuck again... And you think the recession / depression is going to end with the unemployment problem in this country? Not when the consumer is needed to generate nearly 70% of the GDP...

And all that tells me that the cartel / Fed (Fartel!) is going to believe that they need to keep rates near zero for some time to come...

So... It's Risk On today! It was Risk Off yesterday! Don't ask me why... Tell me why, you cry, and no wait! Don't go singing songs, Chuck! This is serious stuff!

Yesterday's data cupboard was a mixed bag of economic data for the U.S. PPI wasn't as strong as forecast, Industrial Production slowed in October, but Capacity Utilization bumped higher, and the TIC Flows for September were $40.7 Billion, which was more than the $34.2 Billion in August. The report showed that Japan, China and the U.K. all increased their holdings of Treasuries. September's TIC Flows were probably the best report of the day, and the best report that this series has printed in a long, long time... Does this mean that the all-clear horn is blaring, telling us not to worry any more about whether we finance our deficit or not? Well... It might be, but I'm not listening to it!

Well... The President ended his visit to China, with a call for a more flexible Chinese currency (renminbi)... And... The Chinese said... Nothing! They met the President's words with silence... I used to date a girl that would say to me when I wasn't talking... "Silence is Golden, Chuck" and I would say... "Then shut up and we'll make a million!" HA!

Now, while it would nice if the Chinese played ball with us... I understand their dilemma... The IMF still believes that China's currency is about 25-40% undervalued... China could not deal with a floating currency that went up 40% overnight!

Did you know that America's trade deficit with China widened to a 10-month high in September? Well... It did, thus raising concern that the combination of a recovering U.S. economy and a fixed renminbi exchange rate against the dollar will worsen global imbalances. But... As I've said at least 100 times before this... The Chinese will do what they believe is best for their country, and that's not floating the renminbi at this time, no matter who the U.S. sends to visit them to persuade them to do so!

Moving further south in the Pacific, we land in Australia... I thought about this next Reserve Bank of Australia (RBA) quite a bit the past couple of days... And have come to the conclusion that the Dec 1st meeting of the RBA will net another 25 BPS rate hike... The reason I think this, is the fact that there will be no meeting in January, thus leaving a 2-month gap, which in these economic times could be devastating... So... Look for another rate hike in Australia on December 1st... Which would be their 3rd consecutive meeting rate hike, and could be the harbinger to parity for the A$... Could be... I didn't say it "would be"!

I know that yesterday morning, I talked about how the RBA meeting minutes had been perceived as "dovish", and that spooked the markets into thinking that the RBA would NOT hike rates in December... But upon further review, the meeting minutes were really pretty vague, and while they didn't sound outright hawkish, they also didn't sound "dovish" either... After reading the minutes, I got the feeling that overall, the minutes support the idea of "steady rate hikes"... I don't think the RBA will stop until they reach an internal rate of 4.25% early next year...

I was giving an interview last week with a writer from Business Week... And he asked me when this dollar weakness all started... I told him that, "Over the past nine years congress and two administrations have instituted fiscal policies that have undermined the value of the U.S. dollar, and the deficit spending has gone from $350 Billion Budget Deficits to $2 Trillion (annualized) Budget Deficits in a wink of an eye... So... The dollar made brief comebacks in 2005 and in the financial meltdown of August 2008 through Feb 2009, but other than that, the dollar continues to decline, and I just don't see anything on the horizon that will stop this decline."

Well... As I look across the desk, where the light only comes from the computer screens, yes, I like it dark here while I'm writing, it keeps me focused! HA! Any way, as I look across the desk at the currency screens, I notice that every currency that supposed to lighting up green (going up) is doing so, and every currency that supposed to be lighting up red (going down, but that's what you want in a European style currency) is doing so... We've got it all going on today... One of these days, we'll quit this stupid game of street hockey, you know, Risk On, Risk Off... Or the Mr. Myagi, with the wax on, wax off, bit! But until then we have to deal with this stupid game of street hockey, or karate training!

OK... To recap... The currencies have gained back the ground they lost in yesterday's Risk Off trading sessions. Gold is back to soaring after a 1-day stall... Data yesterday in the U.S. was a mixed bag. Chuck expects the RBA to hike rates in December, and China responds to the U.S. President's request to allow greater flexibility in the renminbi, with... Silence...

Currencies today 11/18/09: American Style: A$ .9325, kiwi .7490, C$ .9550, euro 1.4960, sterling 1.6810, Swiss .99, European Style: rand 7.4290, krone 5.58, SEK 6.8275, forint 177.50, zloty 2.7370, koruna 17.0130, RUB 28.67, yen 89.10, sing 1.3830, HKD 7.75, INR 46.22, China 6.8270, pesos 12.99, BRL 1.7080, dollar index 74.97, Oil $80.03, 10-year 3.34%, Silver $18.75, and Gold... $1,148.30

That's it for today... Chris will have the conn on the Pfennig tomorrow morning, as I report to the retina institute at the Center for Advanced Medicine. God willing, I'll be back on Friday morning! My younger sister, Terri, was just diagnosed with breast cancer. I'm waiting to hear what the game plan is for her... I picked up my son Alex's electric guitar last night, and played it a little... I've played acoustic guitars for so long, that his electric guitar felt very strange.. I played a song, and little Delaney Grace, who had sat still listening to me play, cheered, and then got up and left... Cracked me up! Every day it's something with her! Time to get this out the door, folks... I hope you have a Wonderful Wednesday!

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

Germany & France Post 3rd QTR Growth...

Chuck Butler — Fri, 13 Nov 2009 15:31:01 GMT

..But First, A Word From Our Sponsor..
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Dec. 3rd, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808
.

In This Issue..

* Risk Aversion fuels dollar rally yesterday...
* Eurozone growth may stop the Risk Aversion...
* Budget Deficit is a record $176.4 Billion!
* Euro, Swiss, Aussie, Norway, all cheaper today!

And Now... Today's Pfennig!

Germany & France Post 3rd QTR Growth...

Good day... And a Happy Friday to one and all! Let's try to make this a Fantastico Friday as well! The Risk Aversion that was creeping into the currency markets yesterday really took hold in the U.S. trading session, which meant the dollar was being bought once more, along with Japanese yen...

It just makes me laugh out loud, when I write that the "safe haven currencies" during Risk Aversion trading are the dollar and yen... These two countries have debt up to their eyeballs, pay no interest on their deposits, and have a leadership deficiency... (ok, before every begins to think that I'm ripping the president again, I'm not... I'm talking about the Central Bank, and lawmakers of each country)

There was good news out of the Eurozone this morning... Both Germany and France followed their previous quarter's growth, with stronger growth in the 3rd QTR... The Eurozone's two largest economies continued to recover from recession in the 3rd QTR, as exports boosted both German and French gross domestic products. I say that, and I want to spit out a raspberry to all those that claim the European Union will collapse because of the strong euro! Neener, neener, neener... The largest economies of the Eurozone can grow, with strong exports even with a strong euro!

OK Chuck, no need to be childish here, let's get back to the growth... Germany's GDP rose 0.7% in the three months to Sept. 30. In France, GDP also grew for the second consecutive quarter, rising 0.3%.

So... Of course this data from the Eurozone put a floor under the euro's decline from yesterday... It will be interesting to see how the U.S. guys look at these growth numbers... The European guys liked them... The U.S. traders though can be very fickle...

And more than that though, I think this might be the thing to put the Risk Aversion to bed... Recent history tells me that whenever Risk Aversion has crept into the markets, any sign that Global growth is back on track, and will lead investors to higher yielding assets, the Risk Aversion ends abruptly... Let's hope that's the case today with these two growth reports from the Eurozone!

Yesterday's data in the U.S. showed that the Weekly Initial Jobless Claims remain above 500,000 per week, and that the Budget Deficit was even worse than the forecast $160 Billion! The Budget Deficit for October totaled $176.4 Billion, which annualized puts us over $2.1 TRILLION! OMG! That awful folks! And you should be writing, calling, or making your way to your representative's next meeting and demanding that they STOP SPENDING MONEY THEY DON'T HAVE!

You know that letter that I said I was going to write to my darling granddaughter, Delaney Grace, apologizing for the lack of freedom and tax burdens that were left to her generation to deal with? Well, I started writing it the other night... What this and the previous administration is doing has no morals, when it comes to leaving the debt to be dealt with by future generations...

OK, it's a Friday, I need to try to remain calm here, and be upbeat! Hmmm... Usually, that means that I pull out a story on Gold... But yesterday was not a good day for the shiny metal, after reaching a new all-time record level of $1,118, it fell more than $10 in the aftermath of the Risk Aversion... See how stupid the Risk Aversion people are? I mean, if you wanted to avert risk, wouldn't you buy Gold?

Any way, colleague, Don Ries, sent me a story that he came across regarding Gold that I thought was quite interesting... The Telegraph in the U.K. printed a story about how Barrick Gold believes we may have reached "peak" Gold already... And by that "peak" I'm talking about the mining of the shiny metal!

"Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10% as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run. There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London."

WOW! Did you get the one line that was in there about how this lack of mining implies that the roaring bull market of the last eight years may have further to run? I think that's putting it conservatively for sure! "may have further to run?" I would say it stronger... But I can't... Or I'm not supposed to! ( our legal beagles read the Pfennig each day!)

OK... That put me back on track to be more upbeat for this Fantastico Friday! Today's data cupboard will yield the Monthly Trade Deficit data, and the U. of Michigan Consumer Confidence index... The Trade Deficit overhang continues to be a problem for the U.S., obviously not as bad as a problem as it was during the go-go days for the consumer...

Traders have become "comfortably numb" with the deficit figures in the U.S. which is a bad thing folks... Traders need to make a stand, and not allow this stuff to just slip under the door, thus allowing larger and larger deficits in the future!

I see the President is in China... I bet he thinks his presence will be the thing that will move the Chinese to allow greater currency flexibility... I just don't see the Chinese getting caught up in the "show" to give in and allow flexibility in their currency, just because the President of the U.S. showed up...

The currencies are rallying this morning VS the dollar. Since I came in and began writing, the euro has climbed higher, albeit a small move higher, it's still moving higher, and thus has stopped the bleeding, that began yesterday morning...

I'm surprised the Aussie dollar isn't really hitting on all 8 this morning, considering the growth numbers in the Eurozone... But I think we might have to wait for the U.S. traders to come in to see the rally in the A$ this morning... It is Saturday in Australia!

The Swiss franc got caught up in the Risk Aversion trading yesterday, and has backed off its ascent to parity... The franc is trading around .9855 this morning, which is more than 1-cent lower than yesterday morning... Wink, wink...

And a country / currency that I drop the ball on all the time, when it comes to talking about it in the Pfennig, is the Norwegian krone... Long time readers know that I truly like Norway, for their fiscal and monetary surplus prowess... And most recently, for their absence from the rolls of those countries that got involved in sub-prime and bad lending practices. Earlier this month, Norway's central bank, the Norges Bank, hiked rates 25 BPS, and is expected to raise them again in a month or two... So, now we have a country that has a strong fiscal and monetary position, no bad banks or loans, and a strong positive interest rate differential to the U.S.... Hmmm...

And then there was this... Neil Barofsky, the special inspector general for the $700 Billion TARP bailout said the program will "almost certainly result in a loss to taxpayers"... "We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic." Barofsky also said that he's conducting 65 investigations of possible fraud...

OH MY! You're telling me that with the $700 Billion TARP funds that there could have been some fraud involved? I wouldn't have believed it! .... NOT! I bet you thought I had gone softy on you! The whole TARP was fraud to begin with! So, with all the corruption and scandals that have gone in before, the thought that there could be some fraud, should have been a belief that there "would be fraud for sure" when the TARP was issued!

Currencies today 11/13/09: American Style: A$ .9285, kiwi .7370, C$ .9495, euro 1.4890, sterling 1.6685, Swiss .9860, European Style: rand 7.4410, krone 5.62, SEK 6.8660, forint 180.80, zloty 2.76, koruna 17.10, RUB 28.83, yen 89.70, sing 1.3860, HKD 7.75, INR 46.34, China 6.8263, pesos 13.16, BRL 1.73, dollar index 75.39, Oil $77.45, 10-year 3.44%, Silver $17.36, and Gold... $1,109.30

That's it for today... Yes, today is a Friday the 13th... I don't get into that stuff, but if you do, be careful today! We're supposed to have another nice weekend here in St. Louis, weather wise, so we have that going for us! No football game this weekend though for my little buddy, Alex. I saw Chris Gaffney and his son Brendan on TV at the Blues game last night. The Blues lost the game though. UGH! Another week, and well be talking about Thanksgiving getting here so fast! The radio station that plays Christmas music every year, began broadcasting the Christmas music a couple of weeks ago! They used to at least wait until Thanksgiving came and went! Well... Let's get working on having a Fantastico Friday! And a Wonderful Weekend!

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

RBA Raises Rates Again!

Chuck Butler — Tue, 03 Nov 2009 15:44:43 GMT

..But First, A Word From Our Sponsor..
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Dec. 3rd, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808
.

In This Issue..

* Risk Aversion boosts dollar...
* U.S. manufacturing is strong...
* More stimulus? Please say it ain't so Joe!
* Thoughts from the Big Boss!

And Now... Today's Pfennig!

RBA Raises Rates Again!

Good day... And a Terrific Tuesday to you! Well, I'm here! Just when you thought I would be gone for the week, and you would get away from my rants, and get the calm Chris Gaffney, the rug gets pulled out from you! I am so bummed! I was told that I could not travel to Cabo for the Sovereign Society's Offshore Advantage Conference, and I was to remain at home, with my leg up, blah, blah, blah... What a crock!

OK, now that we've got that out of the way... Front and Center this morning, we have a very strong dollar rally going on... It began yesterday mid-morning, when things turned on one thin dime. First, we had the U.S. Manufacturing Index rise in September and the Trading Theme kicked in with the dollar getting sold on the good news for the economy... But then a strange thing happened on the way to the forum. Everyone began to fear what's been going on in Banking... Friday, the 115th bank failed this year, and suddenly, traders, investors, hedge fund dudes, and everyone else, got a case of the flu... Not the "pandemic" H1N1 flu... This is the "chicken flu"... Chicken to continue to takes risks in the face of a banking problems... Well, to think of it, maybe, just maybe, it's not the "chicken flu" but the "prudent flu"!

So... The dollar's losses were reversed by mid-day, and the non-dollar currencies were taken to the woodshed... Shoot Rudy, even a rate hike by the Reserve Bank of Australia (RBA) couldn't reverse the Risk Aversion trading... I'll get back to the rate hike by the RBA in just a minute... But first I need to talk about this shift to Risk Aversion once again... We saw this briefly last week, and it faded into the wind... I hope this shift to Risk Aversion is soon a small item in our rear view mirrors!

Now... The ISM Manufacturing Index rose to 55.7 from the prior month's 52.6 reading. This marks the strongest reading for the index since the April 2006 reading of 56.0. Let me explain something to you, that I've explained before, but this really illustrates what I'm talking about... And that is... This Manufacturing renaissance here in the U.S. comes as a benefit of the weak dollar that's been in place for over 6 months now. It's that simple folks... You want Manufacturing in the U.S. to be robust? Then you need a discounted clearing mechanism... And that is the dollar...

For, the Asians are learning to trade among themselves without the U.S., and the Eurozone already has 80% of their trade among themselves, with out the U.S. that doesn't bode well for U.S. exports unless... Unless there is a discount... And that discount comes in the price they have to pay / convert their currency for the dollars that are needed to buy the export... So... Why shoot the goose that lays the golden eggs?

OK... As I mentioned above... The RBA raised rates 25 BPS (1/4%) last night, as I expected them to, and had told you they would! The A$ got sold though after rallying briefly... Traders go spooked when the RBA Gov said that "it was prudent to lessen gradually" the stimulus to the economy provided by lower borrowing costs... OK... Folks, that's Central Bank parlance for: The interest rate hikes are going to slow down from here on out... So don't expect a rate hike at every subsequent meeting!

Oh come on A$ Traders! The A$ yield differential to the U.S. is now staggering! As it is to Japan, Europe, and Canada! Only New Zealand and Brazil can play on the same team as Australia when it comes to significant yield differentials! But NOOOOOOOOO OOOO! You get spooked! Have you no intestinal fortitude? HEY! The good news is that it gives late comers a chance to buy at cheaper levels, or... Those that already own, a chance to pick up more at a cheaper level! Courtesy of the Chicken Little A$ traders!

Well... I guess I can't blame them too much, with the Risk Aversion campers taking over the campground... Here's another thing that I saw last night that has the Risk Aversion campers spreading like wildfire... A long time reader of the Pfennig and Bloomberg TV personality, Pimm Fox reported last night that: President Barack Obama's advisers are "seriously" considering proposing a second stimulus measure to boost the economy, Commerce Secretary Gary Locke said in an interview. Locke said another stimulus would be "very targeted and specific and we need to be mindful of the deficit as well."

Hmmm... OK... How many times have I said in the past 8 months that the Gov't was going to see the need for more stimulus? The answer? MANY! I've got a question... If the GDP was "so robust" as the Gov't officials claimed it to be, then why are they discussing more stimulus? BECAUSE THE GDP WAS A FRAUD! We all know that... I explained it all to you yesterday! But the announcement that more stimulus is being "seriously considered" is what we used to call as kids as "cheaters proof"!

What does "very targeted and specific" mean? It means the Gov't is going to get deeper and deeper into the private sector... That's what it means!

I have a question for the Gov't... You told us the $787 Billion stimulus package last February was going to keep unemployment from reaching 10%... Guess what? That didn't work! So, what makes you think whatever taxpayer money you spend now is going to work? Oh, and don't give me that barrel of baloney that you've "saved" 650,000 jobs... Saved Jobs CAN NOT BE PROVED! So why not say you saved 1 Million or 2 Million jobs? I mean, what difference does it make... It's not true, and can't be proved!

Whoa, there big boy... You had better stop before the Pfennig gets sent to the White House to shut me down! Yeah, like it hasn't been sent there before now!

OK... Did you hear about the IMF Gold Sale? The IMF sold 200 tons of Gold... Not to worry though, the Reserve Bank of India stepped to the plate and bought the Gold... Gold revisited $1,060 after this announcement, but in reality it should have been a wash, and the price of Gold has backed off a few dollars overnight... But still pretty well bid, given the Risk Aversion going on in the currencies.

And why not? Gold is a store of value... Of wealth... Whey wouldn't it buck the trend?

Speaking of which... The Big Boss, Frank Trotter, and I were talking last week about Gold, and we kicked around this thought of sharing a lesson of money with kids... And he sent me this...

The weather turned around here in about three weeks. Great fall, then 10 days of deluge, now the chill of late fall. And instead of Thanksgiving displays, the march of catalogues imploring us to turn away from savings and save the world through spending have begun to hit the door. In the past few years as our children have become young adults we have started to turn away from the quest for unneeded presents and zombie-like consumption and have started to implement a contribution concept: research and choose a cause that will appeal to the recipient, ensure that the cause is not acting like your average NGO running around in white land cruisers or and staying at five star hotels in the third world, and make a modest contribution. It isn't working perfectly and we certainly backslide enough but it's underway. We may turn it into a gift of a few shares of a good company but enough of this.

Something else that meets the need of a physical gift, but one with a message has been on my mind lately. It isn't easy to start a conversation with a young person, especially quite young about global economics and the transient value of money. In fact it's hard to start a conversation with almost anyone on the topic. So what's a better way to provide a gift box and a message? Readers of "A Pfennig for your Thoughts" will certainly be ahead of me ( the gift of real money of course ) gold coins.

With the gift of a coin, or a set of coins you can tell so many stories or impart values in a variety of ways. Coins are struck around the world providing a geography lesson and of course an insightful and cogent discussion of central bank attention to their country's money supply (well okay, you might want to skip that one). You can tell the story of gold in the history of the world, and if you are brave and the audience attentive, how gold has held its value over the centuries and will probably do so for centuries to come. Bringing things up to date you can cover the astounding fiscal and monetary policy that has become our new national pastime over the current and past administrations (but be sure to take your blood pressure medicine). Tell 'em "you are worth an ounce a year" (or more).

If you are buying for one or two friends or children or grandchildren head down to the local coin store and grab a couple bullion coins. If you have a good size list or have the capacity to do something substantial then give the team here at EverBank a call. In any event lets all be sure to teach our kids, grand-kids and generally people around us about the monetary value of gold.

WOW! That was great Frank! I love it when the Big Boss puts down his thoughts in writing and shares them with the rest of us!

OK... To recap... The dollar is enjoying a strong rally thanks to the Risk Aversion crowd, that is getting spooked about the banks, after the 115th U.S. Bank this year failed... The Reserve Bank of Australia raised rates again by 25 BPS, and the Reserve Bank of India bought 200 tons of Gold that the IMF felt it needed to sell, so a wash if you will. And then Chuck went on a rant about stimulus...

Currencies today 11/3/09: American style: A$ .8935, kiwi .7115, C$ .9235, euro 1.46540, sterling 1.6285, Swiss .9685, European style: rand 7.9210, krone 5.8325, SEK 7.1625, forint 191, zloty 2.94, koruna 18.03, RUB 29.42, yen 90.10, sing 1.4030, HKD 7.75, INR 47.41, China 6.8279, pesos 13.35, BRL 1.7725, Dollar Index 76.73, Oil $77.19, 10-year 3.38% (see the Risk Aversion with the drop in the 10-year yield fall from 3.62% yesterday!) Silver $16.36, and Gold... $1,057.70

That's it for today... A little long today with the Big Boss's thoughts, but well worth them I must say! For all of you that are heading out to Cabo to the Sovereign Society's Conference, specifically to see me, I apologize for not being there! HA! Yeah, like someone was going just to see me! HAHAHAHAHAHA! Seriously though... I feel real bad that I had to remain at home... UGH! OH well, this way I won't miss my little buddy Alex's last game this Saturday, or son Andrew's girlfriend Rachel's birthday on Sunday! Gotta go... I hope your Tuesday is Terrific!

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

Consumer Spending Drives GDP?

Chuck Butler — Mon, 02 Nov 2009 15:44:08 GMT

..But First, A Word From Our Sponsor..
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Dec. 3rd, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808
.

In This Issue..

* Dollar rebounds after spending fades...
* Chinese Manufacturing rises...
* Eurozone Manufacturing rises...
* Australia as the proxy for global growth...

And Now... Today's Pfennig!

Consumer Spending Drives GDP?

Good day... And a Marvelous Monday to you! And Welcome to November! My least liked month! But that's a story for another time! I hope your Halloween was fun! The rain stopped here, there was a near full moon shining in the sky, and the little kids had a blast! And Hey! The Rams won a football game! WOW!

OK... Well... Friday was a blur to me, as I went to the doctor's office for a test, and then on my way to work, they called my cell and asked me to turn around and go to a lab for more tests... UGH! So, by the time I got to work, Jennifer had set everything up and begun trading for me... Then it was time to go home! So, I'm sitting here this morning, scratching my bald head trying to recall the currency prices on Friday... And Oh yeah! Now I remember! Do you recall the Thursday action after the GDP report showed such strength (whether you believe it or not) and the dollar got sold like pet rocks?

Well the Gov't had made such a big deal out of the fact that a good portion of the GDP report was consumer spending during the quarter... In fact 1.6% of the 3.5% increase was the Cash for Clunkers program! Well... That was a bad thing to do, for on Friday, Personal Spending and Income printed, and the Spending piece had fallen in September... So much for the euphoria of Consumer Spending bringing the economy out of the recession! Oh, and like I said last week, this plays right into my thoughts from long ago, that we would see some growth near the end of this year, but would slip right back into recession, thus a double-dip... So, the first two parts are in the books...

So... The currencies slid VS the dollar on Friday, and haven't really rebounded overnight from what I can see here at home, as I write the Pfennig at my kitchen table! The Aussie dollar (A$) seems to be champing at the bit to move higher VS the U.S. dollar, but just can't get the Big Dog, euro, to get off the porch this morning!

The reason the A$ is champing at the bit to move higher, is the news from China this past weekend that their Manufacturing data from October showed the fastest gain in 18 months! So, in keeping the Manufacturing Index here in the U.S. in mind, the Chinese Manufacturing Index moved to 55.4 in October, from the 55 in September, and the Chinese say that exports were strong... Ok... We have to apply the "believe 1/2 of what the Chinese tell us about their economy... If that's so, then the Manufacturing Index still is above the expansion line of 50... And that's a good thing for the global economies!

I would think that news like this from China would be a springboard for Commodities, and the Commodity Currencies of Australia, Brazil, Norway, New Zealand, and Canada...

Speaking of strong manufacturing... The Eurozone printed a strong Manufacturing Index report this morning too! Manufacturing in Europe expanded for the first time in 17 months, in October, increasing to 50.7 VS 49.3 in September!

The dollar index is beginning to show some weakness as I write this morning... And one would certainly think that news like this from China and the Eurozone, would push the dollar down... But, there's that stinkin' Trading Theme hanging over us like the Sword of Damocles! And with the news this past weekend that CIT Group was going to have to file bankruptcy, if things hold true, it would be good for the dollar... The flight to safety, and all that!

Hey! Doesn't this news about CIT Group tick you off a bit? It does me... And I'll tell you why! CIT Group had received $2.33 Billion of taxpayer money in an attempt to bail them out last year, but they failed any way! Again! Wouldn't it have been far better to just let them fail when they first showed signs of not being able to compete, and survive? I know that in the whole scheme of things $2.33 Billion doesn't sound like that much... Considering the Trillions that have been spend, allocated or guaranteed! But... $2.33 Billion here, and $2.33 Billion there, and pretty soon you're talking about a nice sized pile of cash, that would not have been wasted!

The Business Section of our local paper had an article this past weekend on what I was referring to last week regarding GMAC and Ally Bank... Here's David Nicklaus saying what I wanted to last week... "That clever Ally Bank ad, the one where a boy is denied a toy truck because of a "limited-time offer," omits a fact that would interest most viewers.

You, the taxpayer, are propping up Ally, the bank that's so good at making fun of other banks. And it looks like Ally's parent, GMAC Financial Services, will ask for more money soon."

So... The Gov't is in competition with private sector banks... And they can pay interest rates that are higher than other banks, because... If they lose money, they can just go back to the well and get more bailout money!

This is all just becoming one Big Mess folks... You've got to see what's going on here! It's called Big Gov't... And when you have Big Gov't, you have Big Deficits! The Gov't does not have any money to spend unless they steal it, I mean take it from taxpayers first! And they're spending what they don't have! Tax receipts are falling, and the Gov't's expenditures are rising! That's a bad formula folks...

And one that makes you so aware of the need to be diversified with a portion of your investments out of the dollar!

OK... I've got to stop there, I have to go to the doctor's office this morning, and I don't need my blood pressure boiling!

Hey! I was reading an article on Friday about Australia in which the Australian Treasurer, Wayne Swan, told reporters that he truly believes that the Australian economy is going to outpace most of the world in 2010... This plays well with my thought that I've held for so long, and have told you dear readers about for some time now, and that is... That Australia is the proxy for global growth... And if the "insiders" in Australia think their economy will outpace most of the world, that's a good sign for the global growth! And one that I think traders should be taking notice of!

I think that Brazil has a long way to go to catch up with Australia but, Brazil has made great leaps in the past 5 years, and has really taken the steps to be in the same conversation when talking about Australia... The country is still an Emerging Market though, and with that, you get wild swings in the currency... Just so you know!

I want to get back to the GDP report in the U.S. from last week... Recall that above, I told you that the Gov't made a Big Deal out of the fact that a large portion of the rise in GDP was consumer spending... But you have to ask yourself this question... "how are consumers propping up GDP with spending in the face of over 16% unemployment? Personal Consumption climbed while Personal Income fell in the quarter, as documented in the Pfennig each time they printed... So, the only way that works is if, you don't think, nah, we've had to have learned our lesson, right? Oh well, I'll throw it out there... The only way that works is if the money is borrowed... Credit cards, etc. OH NO! Tell me we're not going down this road again! Ahhh grasshopper, but Christmas is just around the corner... With 16% unemployment going on, this should be a very "plastic" Christmas shopping season!

Ok... The week ahead is chock-full-o-data and events... Like... The FOMC meeting tomorrow, that carries over to Wednesday... You know what I say about those two-day FOMC meetings! Got any Aces? Go Fish!

We'll see our own version of Manufacturing Index the ISM as it prints this morning... We'll also see Pending Home Sales. Tomorrow is the Auto Sales, and Factory Orders. Wednesday we'll get the Treasury Refunding Announcement, and Thursday is weekly initial Jobless Claims, and the stupid Productivity reports, and then Friday is the Jobs Jamboree!

So... We've got a lot to talk about his week... I'm supposed to be leaving for Cabo tomorrow, but I doubt the doctor is going to let me travel, so I'll probably be here all week. So, Chris gets off the hook this week most likely...

To recap... The euphoria that was all over the markets after the GDP report was wiped out by a very weak Consumer Spending report for September. The dollar rebounded on the "bad news for the economy" thus confirming that the "trading theme" is still in place. CIT Group filed for bankruptcy this weekend, thus wasting the $2.33 Billion, that was given to them by the Gov't from taxpayers! And both China and the Eurozone's manufacturing indexes were strong last month, which should be a good thing for the global economies, commodities, and so on...

I'm going to try something different this morning... I still get emails from people that question why I quote currencies in two different ways... Well, there are two pricing conventions in currencies, and so I try to keep currencies in the form they are quoted... But to make things easier... We'll break out the American Style, and the European Style...

Currencies today 11/2/09: American Style: A$ .9045, kiwi .72, C$ .9255, euro 1.4780, sterling 1.6360, Swiss .9790, European Style: rand 7.9175, krone 5.70, SEK 7.0315, forint 186.05, zloty 2.8740, koruna 17.88, RUB 29.20, yen 89.90, sing 1.3990, HKD 7.75, INR 46.97, China 6.8279, pesos 13.22, BRL 1.7635, dollar index 76.15, Oil $78.17, 10-year 3.62%, Silver $16.62, and Gold... $1,054.30

That's it for today... Well.. For once, it was a good football weekend here in St. Louis, as our Rams stopped a 17-game losing streak, and my beloved Missouri Tigers posted a Big 12 win. Little Buddy Alex's team remained undefeated, but tied. Two absolutely glorious sunny, blue sky days here after the what seemed to be 40 days of rain finally ended! November is off to a good start weather wise, but I know all too well what it has in store for us! Well, I'm off to see the Wizard! Speaking of which, my little granddaughter, Delaney Grace was the cutest Dorothy you've ever seen! She came by the office on Friday to show every here just how darn cute she is! OK... Time to go, this time for real... I hope you have a Marvelous Monday, and a good start to the week and month!

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

Will History Repeat Itself?

Chuck Butler — Tue, 20 Oct 2009 15:07:39 GMT

..But First, A Word From Our Sponsor..
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Dec. 3rd, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808
.

In This Issue..

* Non-dollar currencies rally...
* A$'s and C$'s to parity?
* Reaching 40% of expenditures...
* Gold & Oil on the rise once again...

And Now... Today's Pfennig!

Will History Repeat Itself?

Good day... And a Terrific Tuesday to you! A long day on the desk for me yesterday, left me draggin' the line... But I'm rested and refreshed again this morning, so let's get to the Pfennig for today! The Finance Ministers of the Eurozone met yesterday, as I told you, and they've tried to stem the euro's rise... But, they'll need more than words to get the job done! And so, we begin a new day...

Front and Center this morning, the currencies, which had given back ground overnight to the dollar, are back in rally mode, and are taking liberties with the dollar once more. For most of the night that was not the case, though. The dollar had rallied back and sent the euro, for instance, to the 1.48 handle, after the single unit spent yesterday at 1.49 and change... There seemed to be a move to the dollar, but that didn't last long, and the currencies are once again rallying VS the dollar this morning, and the euro has pushed to 1.4970 as I write...

Daily noise, eh? Yes, you have to wade through this daily noise most days, and keep your eyes fixed on the horizon...

OK, I mentioned above that the Finance Ministers of the Eurozone met yesterday, and tried to stem the dollar's decline by backing the U.S. administration's stated preference for a strong dollar... Of course we all know that the U.S. administration's stated preference for a strong dollar is a bunch of horse dookie! So... What was it that the Eurozone F.M.'s were backing? A false statement by the U.S.? Now, that's something to hang your hat on, eh? The dolts just continue to mount daily don't they?

But, you can't be too hard on the beaver (Eurozone F.M.'s) for they have to sound like they don't want their euro to get too strong, for if they really said what they wanted to say, the euro would be back to 1.60 with a bullet in a heartbeat! So... In the end, I don't think currency traders were swayed by the Eurozone F.M.'s, at least not for too long!

Yesterday, I talked about Canada and the Bank of Canada (BOC) and how I thought that the BOC would remove their statement about interest rates remaining on hold until the 2nd half of 2010... I had a few readers question me on this, saying that Canada's economy is in no shape to withstand a rate hike... OK... Hear me out on this... I'm not saying that the BOC will hike rates now, or even in 2009... But, if Canadian energy prices of Oil, natural gas, and coal continue to get stronger, I'm afraid the BOC will have to entertain thoughts of raising rates to fight inflation... But not now... So... I hope you get what I'm saying here...

So... The U.S. fiscal deficit for 2009 was $1.42 Trillion... Remember how I used to take the previous administration to the woodshed for posting $450 Billion fiscal deficits? How did we go from $450 Billion to $1.42 Trillion, that is if that's really the number??? Well... That's not a question to really answer, folks, we all know how we got here... But now that we're here, what happens next?

I came across this when putting the two monthly newsletter together on Sunday, I think it would be appropriate to share it with you here...

Peter Bernholz (Professor Economics in Basel) studied the world's 12 most important periods of hyperinflation and discovered that the tipping point occurs when deficits amounted to 40% of the expenditures.

For the United States we have arrived at exactly that point. The deficit of $1.5 trillion amounts to 41.7% of the $3.6 trillion in expenses.

You see, that Peter Bernholz, rounds some numbers, but for those of you keeping score at home, the real point is that the U.S. deficits are greater than 40% of expenditures... And you know me, I truly believe in this history repeating itself, or as Mark Twain put it, it may not repeat itself but it rhymes... Mark Twain also wrote: "It's not worthwhile to try to keep history from repeating itself"...

So, the point I'm trying to make here is that according to Mr. Bernholz, we can soon expect a bout of hyperinflation! OH BOY! Where do I sign up for that? Not only do we have a falling dollar causing us to lose purchasing power, but what purchasing power we have left is going to be eaten away with inflation! Like I said, OH BOY! Gee Willikers, that sounds like the cat's meow! NOT!

So... Here we go again, with me getting on the soapbox and telling you the only way to protect yourself from a falling dollar and hyperinflation is to diversify with non-dollar currencies and precious metals...

OK... I get emails all the time from readers that say, "OK Chuck, you tell us to diversify, but you don't tell us what to buy"... Well... To the untrained eye, that would be true... But to long time readers they know better... So, keep reading, and it will hit you right between the eyes one day, and you'll slap your forehead and say, "I could have had a V-8"!

The boys and girls over at Citigroup have written a letter to their clients telling them that "the dollar is weakening because foreign central banks are diversifying their reserves and U.S. investors are buying high-yielding emerging market assets." The went on to say that, "The Australian and Canadian dollars are likely to rise to parity against the U.S. currency."

So, there's one more on the roster that believe Aussie dollars (A$) and loonies will go to parity against the dollar... The loonie isn't exactly the same stretch of a forecast as the A$, as loonies are almost 97-cents right now, with A$'s trading near 93-cents...

Doesn't that make sense given the talk we just had about hyperinflation? What currencies are going to help protect you against hyperinflation? The Commodity Currencies! Aussie, kiwi, Canada, Norway, Brazil and you can even throw in the S. African rand, for those that like rides on Mr. Toad's wild ride!

The folks at Citigroup also had this to say about the euro, which I found to be quite interesting... "The euro will extend gains against the U.S. dollar and the British pound, and may reach parity against the U.K. currency in 6 to 12 months."

I would think that for the euro to reach parity with the pound, it would involve the pound falling quite a bit from current levels... And that makes sense to me... Did you see the report the other day from the U.K. where they reported bank bad debt to be twice the forecast amount? YIKES!

You know... The Asian currencies which never really participated in the first bout of dollar weakness, are still stuck in the mud... Well, they are being manipulated to be stuck in the mud, for the most part... But, something's got to give here sooner or later. Why do I say that? Well, as I've told you for months now, the Chinese economy was the first to exit their slowdown / recession... Shoot Rudy, even Japan is showing signs of economic growth! And then we have India going strong too... And of course you have the "kind of Asian countries" of Australia and New Zealand... Where we already know that Australia has raise rates and New Zealand would love to raise rates... So, this region is leading the world out of the recession... Hmmm... I thought only the U.S. economy was allowed to do that! Uh-Oh, looks like we have a shift in how the world works!

Hey! Even Big Ben Bernanke sees the Asian countries as leading the world out of the global recession! Big Ben said... "Asia appears to be leading the global economic recovery." Hmmm... See, even a blind squirrel can find an acorn! HA!

I had to laugh when I read this headline this morning... "yen rises as Fujii repeats reluctance to stem currency's rise"... I laugh because the last time Japan's new Finance Minister talked about not intervening to stop the yen's rise, he back-pedaled and said that traders mis-took him to say that he was not going to intervene... So, this on again, off again love affair with Fujii and intervention, just makes me laugh! I would think that after getting burned on Fujii comments a couple of weeks ago, that Traders would not get too lathered up when he talks about not intervening...

Ok... Here in the U.S. while we are still a sovereign nation, the cartel, I mean the Fed Reserve, is doing some testing of reverse repos as a means of drawing the excess liquidity / stimulus out of the markets... I don't think we have to put too much into these tests right now... But it will be a method that the cartel uses at some point in the future... The IMF is against removing any stimulus now... So, that may carry some weight with the cartel, I don't know...

Gold prices rose yesterday for the first time in a couple of days, pushing back above $1,060... I would think that until we know for sure that the cartel is removing stimulus, that Gold would remain well bid... When we do know that stimulus is being removed... Gold might take a step or two back... But then we'll have to wait-n-see what happens with inflation...

I read where ETF holdings of Gold are sluggish... Well, that certainly makes sense to me! With what we're seeing these days from our Gov't pushing us toward who knows what (I know, but I get blasted by people whenever I say it out loud), physical Gold is the thing people want right now... And you can't get physical Gold out of an ETF! So... All those people that have long said that the ETF was just as good as holding Gold either in your buried coffee cans in the back yard, or in pooled accounts, are wrong, when it comes to physical Gold demands...

And, don't know about you, but I filled my gas tank the other day, and the price of gas has really shot up recently, eh? And a quick look at Oil prices and that tells it all... Oil prices have risen to $79, while trading at $69 just a month ago! Is Oil the proxy for rising inflation?

OK... To recap... The dollar rebounded a bit overnight, but has given back to a currency rally this morning. Citigroup believes Aussie and Canadian dollars will reach parity to the U.S. dollar. The Bank of Canada meets today. Our fiscal deficit reached 40% of our expenditures, which historically is a harbinger to hyperinflation, and Gold is back above $1,060 this morning...

Currencies today 10/20/09: A$ .9280, kiwi .7545, C$ .9690, euro 1.4975, sterling 1.6435, Swiss .99, rand 7.32, krone 5.56, SEK 6.9350, forint 176.50, zloty 2.7735, koruna 17.1470, RUB 29.15, yen 90.40, sing 1.3890, HKD 7.75, INR 46.11, China 6.8266, pesos 12.85, BRL 1.7360, dollar index 75.27, Oil $79.31, 10-year 3.37%, Silver $17.80, and Gold... $1,065.50

That's it for today... My good, dear friend, Mary Anne Aden, sent me a note last night, that really lit up my day... Mary Anne told me that Richard Russell recently mentioned me and the Pfennig... WOW! When a man as well respected as Richard Russell mentions me and my humble little Pfennig newsletter, then that's a great day! Mike Meyer just came in, returning from a trip to Jacksonville to watch the Rams / Jaguars game on Sunday... He travels once a year to watch the Rams... It actually was a nice day here yesterday with the sun out, and a hint of warmth in the air! The weather forecasters say El Nino is going to keep our winter warmer than usual and dryer than usual... That's fine with me! Well, I've got to go... I hope your Tuesday is Terrific!

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

G-7 To Discuss Currencies?

Chuck Butler — Thu, 01 Oct 2009 18:23:00 GMT

...But First, A Word From Our Sponsor...
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Oct. 13, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808

In This Issue..

* The ball is in the dollar's court today...
* Aussie is unable to hold 14-month high...
* China and Eurozone print stronger PMI's
* Chock-full-o-data today...

And Now... Today's Pfennig!

G-7 To Discuss Currencies?

Good day... Welcome to October! And a Tub Thumpin' Thursday to you! No real reason to get Tub Thumpin', but I thought why not? The non-dollar currencies have given back their gains made yesterday to the dollar, in a game of what seems to be, give and take... A tennis match with the dollar, one day the ball is in the dollar's court, and the next day it's not! Really, kind of giving me a rash, watching this... I want some direction here!

So... When I turned on all my screens this morning, and then waited about 20 minutes for the new programs to be installed on them that the IT people left for the next time the computer started up... Hmmm, where was I? Oh! I was talking about when I first saw the currencies this morning... I saw that the euro had fallen back to 1.4560... And of course wanted to find out why...

Well, it seems that the G-7 Finance Ministers are going to meet this week, and there is already some discussion that the euro's rise will be discussed... OK... Currencies traders took this to mean that these mental giants in the G-7 will do something to stem the rise of the euro... Of course, the G-7 Fin Mins might just be discussing how impressive the euro's gains have been VS the dollar this year! HA!

This plays well with the thought I had and shared with you the other day, regarding Central Bankers from Japan and the Eurozone propping up the dollar... Trust me folks, these guys are smart puppies, and can see the writing on the wall for the dollar, just like you, me and the guy down the street that cuts his grass early in the morning... The last thing they want to happen is for everyone to get the idea that these Central Bankers won't prop up the dollar, for if that were to happen, it would spring open Pandora's Box of currency disasters for the dollar!

The Eurozone did receive some strong data this morning.... The latest Eurozone PMI printed. Eurozone PMI is just like here in the U.S. it's a measurement of the manufacturing activity. But only in the Eurozone it takes in all 16 member countries. This activity is then put into an index so that it can be easily monitored. And just like here in the U.S. the line in the sand of whether manufacturing is contracting or expanding is 50...

Eurozone PMI rose for the 5 straight month, but remained under 50, posting a 49.3 in September... But the trend is manufacturing's friend here, I would think, as it has risen steadily for the past 5 months.

Let's talk about something other than the Eurozone... The other day, I was interviewed by Reuters about dollar / yen. I told them that the Japanese yen did not have the fundamentals to support an 88 figure, which it had hit on two occasions in the past week. Well... The Japanese Tankan report, which takes the pulse of the economic activity in Japan, backed up what I had said earlier, when it reported that "Japanese companies plan to deepen investment cuts as profits slump, inhibiting the recovery from the nation's worst postwar recession."

Speaking of interviews... I did a quick one in a chat room at DTI, which is an investment education company. This quick interview was just a "teaser" for a full fledged 30 minutes of "Chuck speak" that will happen next Monday at 1:30 CT... It will be a power point presentation that comes across on your computer, with me talking over it... Sounds like it will be tre' cool... If you want to find out more click here... http://www.dtitrader.com/trading_education_MMM_everbank.htm

With the euro backing off this morning, the rest of the non-dollar currencies are doing the same. Aussie and kiwi have not been able to hold onto gains they made yesterday, and the rest of the currencies just fall in line. You know what I always say when this happens don't you? That's right... It gives everyone an opportunity to buy at cheaper levels than yesterday!

The other day, after the S&P/CaseShiller Home Price Index number printed and showed a month-to-month rise in home prices, I thought to myself, is this really something that can catch hold and continue to rise? I then began to put together a list of the "risks" to continued Home Price increases... The list as I have it:

1. 1.5 million homes on the dockets for foreclosure
2. 10% unemployment, with 39% unemployed for more than 6 months...
3. The potential stock market correction
4. The end of the 8% tax credit for first time home buyers, (that son, Andrew took advantage of this summer!)

Long Time Friend... Ed Bonawitz, agreed the list and added that if we just look at how the auto industry fell back into an abyss after the cash for clunkers program ended, imagine what the end of the 8% tax credit program will do...

I was talking with a customer yesterday that has traveled quite a bit over the years, and had businesses in China and Indonesia, etc. I asked him the question that everyone asks me all the time, regarding China's data... When I'm asked whether this is good data or not, I usually reply that I don't live there, so I have no other choice but to take it as printed... But, my customer, told me that he believed that, for instance, if China printed a 10% GDP, that it's probably inflated by 50%! YIKES!

So, with that in mind, China printed their PMI for September last night, and, according to the Chinese, it rose .3% to 54.3%... Again, a number for a PMI above 50 indicates expansion... So... Even if the Chinese inflated the data, their manufacturing sector would still be performing in an expansion mode...

And... What's good for the goose (China) is good for the gander (Australia)! I told you earlier that the Aussie dollar (A$) was not able to hold it's gains made yesterday that brought the A$ to .8859, a 14-month high for the currency. China is now on holiday for the next week, so the A$ will have to find some traction from other areas... So, it's not out of the realm of possibilities that the A$ drifts in the next week...

I see where Big Ben Bernanke will be giving some prepared remarks to lawmakers this morning about the need for strong consumer protection of financial services... Hmmm... This makes me laugh, and laugh hard! Isn't this kind of like the fox telling the farmer the need to secure the hen house after it's been raided?

I mean, the Fed had the control, the supervisory power, to protect consumers from the lending practices that went on but did they? NO! They turned their heads and looked the other way, while the mortgage mess grew and grew... Just like a child... If you look the other way when they misbehave, then the misbehaving will get worse, and worse...

Seems Big Ben was a little upset a couple of months ago, when it was proposed that there would be a new Consumer Protection Agency... He felt like the Fed was being knocked down a notch, and he criticized the proposal... I doubt he'll go down that road again, as I'm certain, he received a "memo" from the powers to be, which told him to shut his trap and go with the President's plan...

The data cupboard today yields the U.S. version of PMI, which we changed to ISM a few years ago... The ISM in the U.S. went back above 50 in August, and is expected to have gained a bit in September. This is good news for the economy... But one has to wonder about what happens after the all the build up for the cars for clunkers program filters through... But, with the dollar much weaker than 6 months ago, manufacturing certainly gets a lift.

We'll also see Personal Income and Spending, which unfortunately has shifted back to the days of us spending more than we make... Didn't we learn anything? It's Thursday, so the Weekly Initial Jobless Claims will print... And then rounding out the data today are reports on Vehicle Sales, and Pending Home Sales... So a very busy day at the data cupboard!

OK... Before I go to the recap and the currency round-up, I just had a thought about today's actions in the currencies VS the dollar. The Asian and European sessions sold the currencies and bought dollars... When the NY guys and girls arrive and see what has happened overnight, I suspect we'll see more selling, as they will have orders to fill... So... The cheaper levels could be still to come today...

Then there was this... Bank of America's CEO Ken Lewis announced his retirement... I find this to be somewhat strange... Very strange indeed...

To recap... The ball is back in the dollar's court today, as G-7 gets set to meet this weekend and maybe discuss the euro's rise... Japan's Tankan supports my belief that there are no fundamentals that support a yen at 88, and the Eurozone posts its 5th consecutive gain in manufacturing...

Currencies today 10/1/09: A$ .8790, kiwi .7210, C$ .9315, euro 1.4555, sterling 1.5990, Swiss .9590, rand 7.6645, krone 5.80, SEK 6.99, forint 185.65, zloty 2.9050, koruna 17.45, RUB 30.09, yen 90, sing 1.4125, HKD 7.75, INR 47.76, China 6.8265, pesos 13.55, BRL 1.7665, dollar index 77.10, Oil $70.10, 10-year 3.30%, Silver $16.61, and Gold... $1,005.25

That's it for today... Got my car back last night, glad for that! It's Thursday, so it must be raining! I'm still waiting for the real Cardinals to start playing baseball again! So, the 3rd QTR just ended... That means colder weather is ahead of us, and not that I'm going to begin complaining about cold weather now, but I will remind everyone that I've gotta go where it's warm! I bet your NFL team is better than ours! The lambs, I mean the Rams, are really bad... But, they are our team, and having a bad team is better than having no team, which we all experienced when the Big Red (football Cardinals) left for Arizona in 1989... OK... I woke up 15 minutes before my alarm was to go off this morning, as if, I needed to wake up any earlier! UGH! I'm going to hit send, and hope you have a Tub Thumpin' Thursday!

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

More Baby Steps For A German Economic Recovery...

Chuck Butler — Tue, 01 Sep 2009 12:28:00 GMT

...But First, A Word From Our Sponsor...
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Oct. 13, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808

In This Issue..

* German unemployment falls!
* RBA disappoints the markets...
* China to buy Canadian company...
* ISM to print positive?

And Now... Today's Pfennig!

More Baby Steps For A German Economic Recovery...

Good day... And a Terrific Tuesday to you! And Welcome to September! Well... Here's a thought to get our engines started this morning... Bill Bonner of the Daily Reckoning ( www.dailyreckoning.com )had this to add to my ranting about our National Debt going to over $20 Trillion in the next 10 years, due to deficit spending...

"The Obama administration, for example, expects to run $9 trillion in deficits over the next 10 years - and that number is based on a recovery! Imagine what will happen if the economy doesn't recover?"

Now, that's a nice comforting thought to start our day right? NOT! WAKE UP! Morning has broken, and the coffee is on... If you are still of the thought that this is all going to end up seashells and balloons, then you need to stop and smell that coffee!

Oh brother! Looks like I'm full of you know what and vinegar this morning! Let's try to calm down, Chuck, you've only just begun to write, you don't want to peak so soon!

OK... Yesterday, I told you that the Asian stocks had sold off and that risk assets were being taken off the table. But that didn't last long, and by mid-morning, I witnessed a nice currency rally, that wiped out the overnight selling. At one point during the morning a customer called to buy some euros, and when the sales person asked me for a price, I said, "you know, they may want to come back tomorrow morning, after the overnight markets beat the euro up, like we've so many times lately."

But wait! That did not happen last night! So, I was wrong! The euro is getting some real love this morning after German unemployment fell in August, which was totally unsuspected. Euros and Swiss francs are the only currencies I see that have gained on the news this morning. So the Big Dog, euro, must have told the other little dogs to "stay on the porch"... Stay Rex!

German unemployment fell by 1,000... OK, now I know that this has the same feeling as removing a bucket of sand from a beach, when unemployment in Germany is 3.46 million! But, I never said that Germany's economic recovery was a tidal wave! It's smoking embers, that are in need of stirring, some small twigs, and leaves... My beautiful bride is an "expert" and getting a fire started like that, I should send her over to Germany, that would really kick the domestic demand to another level! HA!

Baby steps... That's the way we're going here... So, we've had IFO and ZEW think tank reports on Confidence all print stronger... We had the GDP surprise on the upside... And there was something else last week, but it slips my mind right now. The point here is that the Eurozone's largest economy is waking up... We just have to hope it doesn't hit the "snooze" button, now!

A reader sent me a note yesterday asking if I thought there would be a collapse of the Eurozone and thus the euro... If I had $5 for each time these stories have hit the streets, I would be sipping on a multi-colored drink in a tall glass with one of those tiny umbrellas, in a tropical setting... The point I'm making here is that on the outside Spain and Italy have problems... But what's changed? These two had problems before they joined the Eurozone, and have had problems since joining the Eurozone... Me? I totally believe that these two get down on their knees each night and give thanks for being allowed to join the Eurozone!

So... In case you missed my answer in there... I don't see that happening, at least not in the near future...

OK... Enough of that! The Reserve Bank of Australia ( RBA )met last night, and left rates unchanged, as suspected they would, and the following statement regarding their thoughts on the economy was relatively upbeat... However, the markets were looking for an indication of "when" the RBA would hike rates, and that didn't happen... So... The markets were disappointed, and when they are disappointed with a Central Bank, they take it out on the currency! So the A$ got pounded overnight.

Now... Aussie GDP for the 2nd QTR is going to print tonight, I would have to think that the RBA maybe had a peek at the report, and thus their gearing down the interest rate hike talk... So... We could be looking at even weaker A$ prices tomorrow morning... Unless, that is, 2nd QTR GDP is as strong as it was once believed it would be!

Did you see where Canada printed a HUGE Deficit last week? Not a good thing... But, the Canadian balance position has teetered back and forth between Surplus and Deficit, but recently has remained in the red... You know me and deficits, so, I put a red mark next to the Canadian dollar / loonie... But then, you hear news like last night... Get this! PetroChina has agreed to pay C$ 1.9 Billion for a stake in a Canadian oil sands project. PetroChina will buy 60% of Athabasca Oil Sands Corp.'s MacKay River and Dover oil-sands projects.

That's 1.9 Billion Canadian dollars / loonies that will have to be purchased... And You would have to think that China will be spending the "few loose dollars" they have in their pockets, which would put pressure on the green/peachback!

Canada is still in a recession, here folks... But... Could these be cheaper levels given the merger and acquisition activity? Only the shadow knows!

OK... So, here I am, 1 hour from when I began writing this morning, and all that glossy and shiny talk about the euro's rally is fading... The Big Dog has lost 1/4 euro in the past hour... So... I wasn't wrong after all!

OK, you'll love this, or maybe you won't, but I do, and since I'm writing this letter, I get to talk about it! HA!

Here's the title of the story that flashed across the screen, and of course, caught my attention... "Goldman Sachs Wrong on Economic Recover, Macro Hedge Funds Say"

You've got me on this one! I've got to read on... "Paul Tudor Jones, the billionaire hedge-fund manager, who outperformed peers last year, is wagering that Goldman Sachs Group, Inc. and Morgan Stanley to it wrong in declaring the start of an economic recovery."

"If we have a recovery at all, it isn't sustainable." One Hedge Fund Manager said... Calling this a "ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later."

WOW! These guys must be reading the Pfennig! OK, I kid, because these guys would never bet caught with the Pfennig in their hands... They probably put it between the pages of the "Economist" so that others think they're reading the Economist! HAHAHAHAHAHAHA!

Speaking of "must be reading the Pfennig"... I saw a thing that came across my desk yesterday that 57% of Americans would vote out every politician if the vote were taken right now! WOW! I didn't know the Pfennig was read by so many people! Recall, I said weeks ago, to "fire them all"... Well, let's hope that 57% grows to 95%, and Americans really do go through with their threat to vote them all out, if they continue to take us down the road to socialism / fascism / collectivism...

OK... You may recall a couple of weeks ago, I started asking you questions about the stock market rally, and it's ability to continue on... I truly believed that the stocks were overbought, and the P/E ratios were out of control... Now, I see quite a few jumping on that bandwagon, and calling for a stock market reversal.

Do we really think the Gov't will allow that to happen? Didn't the President himself, say that he thought it to be a good time to buy stocks... Isn't that sort of like a wink and a nod from the President that everything will be OK?

Beyond those conspiracy thoughts, let's just say the markets get to go where the participants take them ( I know, it's not reality, but let's just play along ), and stocks begin to reverse their gains from March... I would think it to take an adverse affect on the currencies and their gains since March too... Throw Commodities in there too!

Now, in the old days, I would look at a stock sell off and say, currencies will rise... "Honey, put on the red dress tonight, we're going out on the town!" but... These aren't the old days... This is the new improved way of throwing all risk assets into the same barrel! And I don't like it at all!

Ok... The Norwegian krone, traded with a 5 handle yesterday for the first time in a month of Sundays! It has traded back over 6 overnight... But, it was a good strong move from the krone yesterday nonetheless!

Well, today, we'll see the ISM Index (Manufacturing) from August, and for the first time in 19 months, it is expected to be above 50! New readers might wonder what I'm talking about here... But it's simple... 50 is a line in the sand that says any number below it represents contraction of manufacturing, and any number above it represents expansion of manufacturing... So, if it prints above 50 as expected one would say that manufacturing must be recovering...

Let's look at that closer... Come on, closer, closer, closer! We're experiencing a global recession, and global trade has been sketchy at best... But here's U.S. manufacturing showing expansion... And... The rise has been quite steady since March... With March printing at 36.3, April 40.1, May 42.8, June 44.8, and July 48.9... See the steady rise?

What else has happened since March? That's right, thank you for paying attention there in the back of the class! Yes, the currencies have been rallying VS the dollar... So, the dollar is much weaker than it was in March... The dollar index was 89.05 on March 5th, and today it is around 78... So... How did manufacturing / exports rise during this period of time? Because the dollar was weaker!

Let's keep that in mind, eh? For if we get an adverse affect on the currencies from a stock sell off, this recovery in manufacturing could go kaput!

We'll also see Pending Home Sales for July, and Vehicle Sales for August... Cash for Clunkers will push up the Vehicle Sales... But what happens next month?

Gold has backed off by about $8 in the past two days... It's a dip... Therefore it must be an opportunity to buy at a cheaper price! I was reminding all my friends that we spent the weekend together at a lake, that I had told them to buy Gold $400 dollars in price ago... I was booed out of the room at that point, because you see, they didn't buy it $400 dollars in price ago!

And on that note... I'll head to the Big Finish!

Currencies today 9/1/09: A$ .8355, kiwi .6820, C$ .9125, euro 1.4295, sterling 1.6220, Swiss .9440, rand 7.7975, krone 6.0275, SEK 7.15, forint 192, zloty 2.8780, koruna 17.9110, RUB 31.8325, yen 93.10, sing 1.4430, HKD 7.75, INR 49, China 6.8303, pesos 13.44, BRL 1.88, dollar index 78.35, Oil $69.69, 10-year 3.38%, Silver $14.75, and Gold... $949.50

That's it for today... Well, it's been an unusually cool summer here in St. Louis... We had two separate weeks of hot weather, and that was it! It normally is much hotter, with very high humidity... I wonder what that means for this coming winter! UGH! Just found out yesterday that I won't be going to Marco Island this December to speak like I had the previous two years... UGH! September is the last full month of baseball, and with the Cardinals in first place in their division, this should be a good month! There are two middle of the week day games in September, and I always enjoy those! So... Summer may be coming to an end, as along as September takes a long time to work through, I'll be OK! All righty then, let's get going on this Terrific Tuesday, the first day of September!

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

A Currency Rally Takes Shape...

Chuck Butler — Fri, 28 Aug 2009 14:38:14 GMT

.........But First, A Word From Our Sponsor..........
The Ultra Resource Index CD: 6 foreign currencies, 1 unique opportunity

With our latest multi-currency Index CD, we've united the currencies of 6 nations rich in resources, finances, innovation and cash. The idea being that when global growth resumes, these countries may benefit more than most.

The Ultra Resource currencies (each is equally represented in the CD):

*Australian dollar
*Canadian dollar
*Hong Kong dollar
*New Zealand dollar
*Norwegian krone
*Singapore dollar

Are you ready for the return of global growth? Ultra Resource is. 3- and 6-month terms available. Apply today or learn more at http://www.everbank.com/001CurrencyCDIndexUltraResource.aspx?referid=11808.

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

In This Issue..

* Currencies rally overnight...
* A$'s rally for 7th consecutive month!
* Will the ECB be vindicated?
* Sweden tries negative deposit rates...

And Now... Today's Pfennig!

A Currency Rally Takes Shape...

Good day... And a happy Friday to one and all! So, yesterday didn't turn out the way I thought it would go, but that's OK... I think my body is trying to tell me something, as I overslept again this morning! I'm heading out the door this morning to go "fishing"... Should be a ton of fun, with neighbor friends this weekend...

Well, front and center this morning, we are smack dab in the middle of a currency rally VS the dollar. It has all the makings of such, as the Japanese yen is getting sold, along with the green/peachback. The improved economic data this week, finally caught up with the dollar, as risk assets are back on the table.

The euro is back above 1.43, and the Aussie dollar is back above 84-cents... These two have become the two indicators of a currency rally... With euros being the offset currency to the dollar, and Aussie dollars being the proxy for global growth. The Aussie dollar is not part of the dollar index, so... If you just watch the dollar index, you won't catch the global growth proxy in that figure... In fact, I've tried to tell people for years that the dollar index is not the "end all" to currency watching.

Let's go through the dollar index, while we're on the subject... Today's lesson if you will! The dollar index is made up of 6 currencies, Euros, sterling, yen, francs, Swedish krona, and Canadian dollars... It is heavily weighted toward euros, which took over from 5 currencies that used to be a part of this index... You know, the "legacy" currencies from the Eurozone that became euros.

So... If you just watch the dollar index, you'll miss the moves of Aussie, kiwi, Brazil, South Africa, and Norway... 5 of the 6 resource countries with Canadian dollars being the 6th.

OK... Class is over... Time to get back to work on what's going on to end this last full week of August 2009.

Speaking of Aussie dollars, as we were above, it appears to me as though the A$ will put in a monthly gain for August, which, by my calculations would be the 7th month of gains for A$'s... Even in the go-go days of A$'s when it was amassing a 75% gain VS the U.S. dollar, circa 2002- July 2008, it didn't put together 7 consecutive months of gains! It's been 20 years since the A$ put together a string of monthly gains like that!

That reminds me of my trip to St. Petersburg last past March to speak at the Investment University Conference... I told people then that the dollar's run since the previous July looked as though it was ending, as investors were growing tired of taking a beating with the "safe haven" trades they went into the previous fall. Boy... That sure was "bang on", eh?

Oh... I also said it in the Pfennig, but you have to remember, I was officially "on vacation" when I went to St. Pete, and therefore didn't come back to the office to write the Pfennig for 10 more days!

A "new" reader sent me a note the other day, and said that the stock market was looking quite overbought, and asked me if a sell off in the stocks would promote the "flight to safety" (Treasuries and dollar buying) once again... I told him that I had talked about this a couple of weeks ago... But, realized there are handfuls of new readers all the time... So... Just in case you missed class that day... I asked the question about whether or not everyone else was seeing this stock move and not believing it had legs... I then said that should stocks sell off and go into the dumpster like they did after the Lehman Brothers collapse, that a return to Treasuries just might be in the cards, and would adversely affect the gains the currencies have booked since March.

We've seen glimpses of such the past couple of weeks, when "risk assets" are shunned.... But, each of those times, the selling didn't last long.

Now that we're beginning to see some countries like Australia and Norway, begin to talk about raising interest rates early next year, and some countries like Germany, France, and Japan, all pulling themselves out of recession, there's a new feeling going around, that countries around the world, will be ahead of the U.S. with regards to economic growth, and a return to higher yields... So... As a currency and precious metals holder, we all have to hope that this would be enough to offset a U.S. stock sell off...

We would then, be back to fundamentals... And oh what happy day it would be! Oh happy day... Oh happy day! Something we could all hang our hats on, and each day say... Well, fundamentally speaking, this should do this, and that should do that! Not all this crisis, investing, hodge podge bundling of risk assets that have little or no correlation to each other, and different pricing mechanisms, and looking over our shoulders for the next shoe to drop...

There was a story in the Financial Times this morning, and it reminded me of something that Chris said last week, when I was in San Francisco. Chris had talked about how the Eurozone economy was pulling itself up from the ashes, and how he thought it probably reflected on how the European Central Bank (ECB) had dealt with their recession, which was quite a bit different than here in the U.S.... The story in the Financial Times said about the same thing this morning!

Let's see what the FT had to say... "As the European Central Bank prepares for its meeting next week, the 16-country Eurozone appears to be recovering, deflationary risks have subsided and an effort to bolster bank lending is in place. The Economy appears to be vindicating the ECB's strategy."

Yesterday, the 1st revision to 2nd QTR GDP here in the U.S. printed and while I thought it would show a revision to -1.5% from -1%, it did not... It printed as unchanged at -1.%... I don't see the economy that strong, do you? I mean -1% is still a negative growth number, but it just feels like to me that it's weaker than that... You have to recall back to the months in the 2nd QTR, we were still booking some HUGE unemployment numbers each month, and the ISM Manufacturing Index was below 45, which you may recall 50 being the line in the sand to indicate expansion or contraction... But, I guess that's what the Gov't says GDP was, and you know me, whatever the Gov't says I go right along with all the time.... NOT! Geez Louise, that, in my mind, would be a crime to do that!

The weekly Initial Jobless Claims hit 570,000 last week, with the previous week revised up to 580,000... So... The Bureau of Labor Statistics (BLS) may tell us next Friday that job losses continue to fall... They lie! Just do the calculations of the Weekly Initial Jobless Claims...

OK, today, to end the week, we get two of my fave reports... Personal Income, and Spending... I saw a report that was calling for stronger personal spending, because of the "cash for clunkers" program. Well, let's hope that's the only reason Spending is forecast to be higher than Income once again! You may recall that in July, we saw Personal Income fall -1.3%, while Spending rose .4%... That's not good folks, and part of the reason we're in this mess today!

Before I head to the Big Finish... I wanted to share this story with you... In the last month, Sweden introduced negative interest rates on deposits, to spur banks to lend more... I wonder how that's working for them? Apparently, other Central Bankers are watching this to see how it works out. You see, they would follow this lead by Sweden, in a heartbeat if it meant they had a "tool" to remove the monetary medicine that Central Banks have given to the patients for a year now...

Currencies today 8/28/09: A$ .8460, kiwi .6880, C$ .9265, euro 1.4375, sterling 1.6375, Swiss .9475, rand 7.7525, krone 6, SEK 7.06, forint 188.10, zloty 2.8425, koruna 17.70, RUB 31.55, yen 93.75, sing 1.4380, HKD 7.7510, INR 48.66, China 6.83, pesos 13.22, BRL 1.8660, dollar index 77.98, Oil $73.19, 10-yr 3.49%, Silver $14.55, and Gold... $953.15

That's it for today... I want to wish Mike Meyer good luck today, as he will go to have Lasik done to his eyes this afternoon... Like I said above, I'm heading out this morning, but first I have some trading to do. Yesterday, I was reading the revision to Financial Reckoning Day, called Financial Reckoning Day Fallout, by Bill Bonner and Addison Wiggin. They've also done a revision of Empire of Debt... If you never read the first editions, I suggest you pick up the "updated" versions, you won't be disappointed! I believe you can get them on Amazon or Barnes and Noble websites... It's very easy to do this! My little buddy, Alex, has his "football Jamboree" tomorrow. These teams all get together and rotate scrimmaging with each other. It's a great way for the coaches to see what they need to work on before the first game. So... Good luck to Alex and the Lindbergh Flyers 8th grade team on a good and safe season! OK... Time to get this show on the road, I have a nice calming lake waiting for me this afternoon! I sure hope your Friday is Fantastico, and you have a wonderful weekend!

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

European orders support the Euro...

Chuck Butler — Mon, 24 Aug 2009 15:06:22 GMT

.........But First, A Word From Our Sponsor..........
The Ultra Resource Index CD: 6 foreign currencies, 1 unique opportunity

The Ultra Resource currencies (each is equally represented in the CD):

*Australian dollar
*Canadian dollar
*Hong Kong dollar
*New Zealand dollar
*Norwegian krone
*Singapore dollar

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

In This Issue..

* European orders increase more than expected...
* Was Cash for Clunkers necessary?...
* Roubini sees a 'W' not a 'V'...
* Lessons from Mary Poppins...

And Now... Today's Pfennig!

European orders support the Euro...

Good day... And welcome to another week, the last one in August! The weather here in St. Louis has shifted toward fall, which is my favorite season. Chuck is flying back home from San Francisco today and will be back in the saddle tomorrow. Both he and the big boss, Frank Trotter, sent me some great Pfennig pfodder over the weekend so lets get right to it.

The dollar continued to drift lower throughout the trading day on Friday, with the commodity currencies of Australia, South Africa, and New Zealand leading the way. Confidence is returning to the markets, and investors are once again moving out of the 'safe havens' of the Japanese yen and US dollar. The reports coming out of Jackson Hole indicate that central bankers believe chances for near-term growth appear good and recent data seem to support this conclusion.

European industrial orders increased more than economists forecast in June rising 3.1% from May. This was the largest gain in over a year and a half, and is the latest sign that the European economy is starting to climb back out of recession. But many economists question the strength of the recovery, saying the pick up in economic growth was mainly due to government programs. ECB President Jean-Claude Trichet sounded cautious after the report. "We see some signs confirming that the real economy is starting to get out of the period of freefall," Trichet said in Jackson Hole. But this "does not mean at all that we do not have a very bumpy road ahead of us."

The home sales data released in the US on Friday were surprisingly strong, with existing home sales increasing 7.2% month on month. We get a bit of a break in the data releases today with just the Chicago Fed index; but the rest of the week will give us plenty of data to digest. Tomorrow we see the S&P/CaseShiller housing data, US consumer confidence, and ABC consumer confidence numbers. Wednesday will bring Durable Goods orders along with New Home sales. Thursday will give us another look at the estimate for 2nd Quarter GDP here in the US along with the weekly jobless claims. And we will close out the week on Friday with the release of Personal income and spending for July.

Should be a busy week ahead, and I would expect for most of the data out of the US to continue to confirm a government led recovery is underway here in the US. In particular, the consumer spending and durable goods orders should show a nice uptick on the back of the cash for clunker program. But Chuck sent me a note over the weekend which questions the 'success' of this program. Is it really what the US economy needed? Here are Chuck's thoughts from San Francisco:

"I was sitting here thinking about something that had flashed across the TV screen here in my room, and that is the "Cash for Clunkers" program... I blasted this program two weeks ago, and now that it's finally done with and $3 Billion was spent to artificially boost auto sales, I will put my final thought on this... Of course I already talked about the obvious things wrong with this program. But here's my final thought, and that is... I believe the program is going to end up hurting the most vulnerable consumers in the U.S. Middle Class buyers, traded in their "paid for" cars, and leveraged up to buy a new car, when they probably shouldn't have done so, given the rot on the economy's vine.

So... Once again, I'm reminded of the words that President Reagan said were the scariest words that could be spoken... "I'm from the government, and I'm here to help"...

The reason I'm all over this program today like a cheap suit, is that this weekend, I heard that Big Ben Bernanke made a claim at the Jackson Hole boondoggle, that "we saved the world"... Oh, Come on Big Ben, isn't that just a bit dramatic? Does this statement have anything to do with the fact that you are up for re-appointment in January, and you would love to have that thought of you "saving the world" on the minds of the administration?

So... In the end, we'll see if "he saved the world"..."

I'm with Chuck on this one. It seems the US government is intent on getting consumers to go back to their borrow and spend habits. This is what created the bubbles, and the administration seems intent on creating another bubble economy. US consumers have made some historic cut backs on the amount of debt they are amassing (whether or not these cutbacks are by choice). The US government should not be encouraging these consumers to go back to their previous ways, but should instead be trying to use the funds to educate and train consumers and to encourage new and innovative companies. Use this downturn to correct some of the bad habits which we had gotten into. Yes, it will be painful, but breaking an addiction is always hard and painful. US consumers need to break our addiction to easy credit and massive debt. This recession/depression has given consumers a much needed wake up call, hopefully the administration won't be able to push consumers back into their old habits.

I went running with my wife and her friends over the weekend (trying to take it easy on the back) and got into a discussion about the US economy. One of my wife's friends had heard an interview on MSNBC in which an economist stated we were in a classic V shaped recovery. I let her know that I think the economist was one letter off, and that instead we will see the recovery shaped more like a W. The green shoots and recovery we are seeing right now will die out as government stimulus slows. High unemployment, a long slow housing recovery, commercial real estate woes, and rising personal bankruptcies will force the economy into another dramatic downturn. Central banks who have 'juiced' their economies with unlimited credit will have to decide whether to continue juicing, or pull back from the table.

Nouriel Roubini wrote a commentary in today's Financial Times which agrees with my thoughts. Roubini said the chance of a double dip recession is increasing because of risks related to ending global monetary and fiscal stimulus. He believes the global economy still has further to fall, and will bottom out sometime during the second half of 2009. While some economies such as China, Germany, Australia, and France will likely recover; others such as the US and UK will double dip with another leg down. "There are risks associated with exit strategies from the massive monetary and fiscal easing," Roubini wrote. "Policy makers are damned if they do and damned if they don't."

Oil traded up to a 10 month high over the weekend, and carried the commodity based currencies of Canada, Mexico, Norway, and Australia with it. Oil will continue to run up as confidence in a global recovery strengthens. Another factor which has helped boost demand for Australian dollar investments was a move by the Aussie govt. which removed interest withholding tax on federal government securities. This made these investments more attractive and spurred additional demand for the currency.

The Hungarian central bank will meet today and is expected to cut their benchmark interest rate. Rates in Hungary are the highest in the European Union, and lower growth combined with low inflation will spur the cut. The Hungarian forint weakened from the strongest level in a week on the interest cut speculation.

The dollar's role as the world's reserve currency has been a continued topic among scholars and was undoubtedly discussed out in Jackson hole last week. China and Russia have both been adamant about discussing the possibility of moving toward a new reserve system to replace the greenback. Since no single currency is strong enough to replace the dollar in today's global economy, most discussion has centered around the idea of creating a 'reserve currency' which is comprised of a basket of the world's largest currencies. This idea is supported by Joseph Stiglitz, a Nobel Prize winning economist and Columbia University economics professor. "The dollar's role as a good store of value is questionable and the currency has a high degree of risk," Stiglitz said at a conference last Friday. "There is a need for a global reserve system. The currency reserve system is in the process of fraying," Stiglitz said. "The dollar is not a good store of value."

Frank Trotter was thinking about the same thing as he sat and watched a musical over the weekend. Frank is a real thinker, and I really enjoy it when I get a chance to have a good economic discussion with him. Luckily for all of you Pfennig readers, he decided to send me a note on his thoughts during the performance. So here they are:

"Went to the touring musical Mary Poppins Saturday night; it's always great to see a play about a run on a bank. While the books were written in the 1930's and beyond most of you will remember the Disney film set in 1910 - before the Great War when England ruled the waves and empire was returning untold dividends to the mother country. At that time of course there was no questioning the power, status and earning capacity of the British Empire. As George Banks replies to Admiral Boom in the movie, "Credit rates are moving up, up, up. And the British pound is the admiration of the world."
Well that was then and this is now. Soon after, in 1914 England suspended the conversion of Bank of England notes to gold for the period surrounding World War I, and the on again off again slide into today's fiat currency world began. Over the next 100 years England has leaned the lesson of empires that came before. That extending the resources of a country in non-producing capacity leads to the decline of the currency and a fall in the economic power of the country and the economic wellbeing of it's population. In 1910 it took 4.25 pounds to buy an ounce of gold, and 0.2056 pounds to buy a US dollar. Today of course the price of gold has risen 13,447% for British buyers, while the price of a greenback is only up 195%. We are uncomfortably comfortable in feeling that the carabineers have given way for the good old USA in a parallel fashion.
We'll freely admit that there has been a slow motion slide going on in the US dollar since establishment, and especially since the removal from the gold standard and the Bretton Woods Agreement in 1971. But we feel even more strongly that the fiscal and monetary policies put in place starting in 2001, accelerating through the 2000's, and now amplified since January 20th have left us with no legs for our stool. Fiscal policy has been and continues to be out of control. The Federal Reserve policy of the 2000's created the credit bubble and now stands to create the largest monetary inflation experienced in a first world nation. Both political parties have determined that no one can be an adult in government by slashing spending or raising taxes to cover our exploding gap (mathematically the only two options), and instead are hiding behind the invisible tax of currency depreciation. For a country we conclude that a strong currency is essential to long term well being, and by extension that our government has given up on the dream in exchange for election and reelection.
So what's to be done? If you are a believer that the political process can sort things out and return our wonderful nation to fiscal prudence and steady governance go ahead and stay the course. For the rest of us who like Margaret Thatcher believe that "the problem with socialism is that eventually you run our of other people's money", we'll be letting our "tuppance safely invested in the bank" seek diversification across the globe in countries and markets with more opportunity and prudence. We couldn't agree more with the Mary Poppins conclusion, re-written for modern times that "Where stands the banks of [the USA], America stand. Oh, oh, oh, oh! When falls the banks of [the USA], America falls!"

Leave it to Frank to use Mary Poppins to give an economics lesson! And with that, I will close this out and head to the currency roundup.

Currencies today 8/24/09: A$ .8400, kiwi .6845, C$ .9251, euro 1.4308, sterling 1.6492, Swiss .9424, rand 7.7805, krone 6.045, SEK 7.0496, forint 187.60, zloty 2.8755, koruna 17.775, yen 94.86, sing 1.4396, HKD 7.7505, INR 48.5575, China 6.8314, pesos 12.7805, BRL 1.8299, dollar index 78.17, Oil $73.98, 10-year 3.56%, Silver $14.42, and Gold... $953.85

That's it for today... Thanks to both Chuck and Frank for giving me so much good stuff to include in today's Pfennig! Kristin Kuchem sent me a note and told me she got stranded in the Chicago airport on her way back from San Fran last night. It is her son Jack's first day of Kindergarten so she was pretty bummed out that she couldn't get home to send him off. Flying just isn't much fun anymore, as the airlines overbook most flights and any kind of weather can royally screw up your best laid plans. Hopefully Kristin can make it back down from Chicago in time to pick Jack up from school. John Smoltz had an impressive first outing for the Cardinals yesterday, setting a club record with 7 strikeouts in a row! Sure looks like this is going to be a fun October here in St. Louis. Hope everyone has a Marvelous Monday and a great start to your week!

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

Germany & France Exit The Recession...

Chuck Butler — Thu, 13 Aug 2009 14:59:59 GMT

.........But First, A Word From Our Sponsor..........
The Ultra Resource Index CD: 6 foreign currencies, 1 unique opportunity

The Ultra Resource currencies (each is equally represented in the CD):

*Australian dollar
*Canadian dollar
*Hong Kong dollar
*New Zealand dollar
*Norwegian krone
*Singapore dollar

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

In This Issue..

* Currencies rally...
* Eurozone growth unexpectedly stronger!
* FOMC extends QE...
* Norges is the first!

And Now... Today's Pfennig!

Germany & France Exit The Recession...

Good day... And a Tub Thumpin' Thursday to you! Well... Turn-around Tuesday came 24 hours later this week! HA! Yes, the currencies came back yesterday, but not with a lot of conviction... You see... Stocks rallied, but that doesn't mean what I talked about yesterday still won't happen... Be careful there!

The euro has received some additional love this morning, as the Eurozone's economic growth printed better than expected, albeit still negative... But... Germany and France showed growth, which I must say is very unexpected! That means that both Germany and France have exited the recession... Well, that is at least for now! For those of you keeping score at home, Eurozone GDP fell -.1%, which is far better than the -.5% that was expected... Oh! And this is for the 2nd QTR... You would have to think that data like this would be very good for the euro, and from the looks of it, that's exactly what's happening!

Whenever the Big Dog, (euro) gets off the porch to chase the dollar down the street, all the little dogs get to chase too... And so, the usual suspects have posted gains since yesterday morning, like Norway, Switzerland, Aussie and so on...

The BIG news yesterday was from the FOMC meeting, where the Fed Heads left rates at near zero, but were kind enough to tell us that their Quantitative Easing would remain in place through October... That's all nice and sweet, eh? So... What, are they going to do here, Buy some Treasuries out in the open and say see we told you we were going to do this, and then go back to the dark, smokey room and buy some more from the Primary Dealers just for GP? That just ticks me off! But there's not a darn thing I can do to stop them!

What I would like to do is to start a movement to abolish the Fed... OK, who's with me? I just had a chuckle, because that reminded me of the Will Ferrell Old School movie when he's trying to get people to streak to the commons... Come on now, if you've seen that movie, you know you're laughing right now!

I had a guy one time tell me, I know of no one that can talk serious one minute and go right into some funny thought, sing a song, or whatever the opposite reaction would be to the serious thought, like you do, Chuck... I thanked him!

But getting back to the thought of abolishing the Fed... Think about this for a minute... What good are they? Have we not had dozens of recession and one Great Depression since they were created? Have we not seen a 95% loss of purchasing power for the dollar since they were created? Let me tell you something else, folks... If the markets set the interest rates based on activity, we would never experience inflation or deflation...

OK, I'll stop there, I know that I've ticked off a few people that think the Fed walks on water, and is here to protect us financially...

Well... In news you won't hear on radio or TV... The U.S. Budget Deficit swelled to $180.7 Billion in July, from $102.8 Billion in June... Hmmm... Think about that for a minute folks... In June, when quarterly tax receipts should be enough to cover the expenditures, they not only were not enough, but they fell short by $180.7 Billion dollars! This is a combination of slower tax receipts because of the depression were in, and... The unsustainable deficit spending by the Gov't. Oh! And the Budget Deficit year to date is now $1.27 Trillion... But you don't see the knuckleheads in Washington D.C. doing anything about it, except for coming up with new things to spend more money on... I say fire them all!

Speaking of tax receipts... My friend, and writer & Marketing genius extraordinaire, David Galland, had this to say recently in one of his most excellent news letters... Here's David...

"I like the idea of also forcing the government to stop automatically withdrawing taxes from paychecks. Instead, wage earners would be responsible for sending out their tax payments on a monthly basis. By my back-of-the-envelope calculations, it would take about two months of writing out the big checks to Uncle Sam before people came to grips with just what government (or, in this case, one slice of government) is actually costing them. and out would come the pitchforks. We cannot afford our current level of government, and the sooner we get around to cutting it back, the better. Period." -- Thanks David... As always you think on a different level than the rest of us!

The Trade Deficit also grew larger in July as Oil prices rose... The Trade Deficit moved to $27 Billion from $26 Billion... Now, the Trade Deficit is much smaller than it used to be thanks to the depression, but, the fact remains that it is still nipping at the heals of the dollar like one of those small dogs, and whenever it is that the U.S. comes out of this depression, this figure will balloon once again...

Today's data will be dominated by Retail Sales for July, which because of the CARS program, will be stronger than usual, probably getting quite close to a positive 1% for the month... Less Autos, the data would be quite disappointing at just .1%, but, you know me... I don't like that taking this, that and the other thing out just so things look the way you want them to look!

It's also a Thursday, so the Weekly Initial Jobless Claims will also print. Recall that on Monday of this week I told you the data would get going again this week? Well, we've got it going on today for sure!

Yesterday, Norway's Norges Bank met, and while they left rates unchanged, they became the first Central Bank to move to a tightening bias! YAHOO! And the krone was the best performing currency yesterday and overnight on that news, as it should! Long time readers know my affection for the krone due to a number of reasons, but none so important than the fact that Norway has a financial surplus, has had one, has one, and will have one for as long as I can see... Norway didn't get involved in the sub-prime bond buying game... And they have a very strong Central Bank in the Norges Bank... Last spring, the NY Times, which I don't read for a number of reasons, but had this sent to me, called the Norwegian krone the safest currency in the world. Now... I like it when someone other than me climbs out on that limb, especially if your going to climb that far out!

Tonight, the Gov. of the Reserve Bank of Australia (RBA), Stevens will provide a testimony to the Parliament regarding the economy, etc. I think that the A$ traders are holding their breath until he speaks, as this could be a real market moving speech! But then it could also be as dull as watching paint dry...

The A$ is back above 84-cents after spending a couple of days down in the 82-cent handle...

OK... So... We had good news from Germany, France and Norway this morning... Not so good news from the U.S. though...

Realty Trac Inc. is reporting this morning that a total of 360,149 properties received a default or auction notice or were seized last month. UGH! Foreclosure filings in the U.S. climbed to a record for the third time in five months in July. All those jobs that were cut and still being cut, are having a real negative affect on this, and personally, I don't see this getting any better any time soon! UGH!

There's been a lot of talk about the news the other day that China's loan growth had seen a huge fall last month... A lot of people think that this is the end of China's growth... I see it differently... I see it as China just taking some air out of the balloon... They saw their economy moving ahead of the rest of the world at a very fast pace, and didn't want it to: 1. overheat, and 2. Have nowhere to go with everyone else in recession... Now, I'm sure a lot of you will say, Chuck... Doesn't China risk the chance of popping their economic bubble altogether? Well... Yes, they do... But, they knew how to administer stimulus to make the economy click, I assume they know how to pull some if back when they need to...

And... I just think about the fact that since 2003, I've seen story after story by writers that thought they knew what was happening in China, say the economic growth was going to slow down... And they were WRONG!

And with that thought... No wait! I've got another thing from David Galland... He said that Dan Ferris sent this to him... "Members of Congress should be compelled to wear uniforms just like NASCAR drivers, so we can identify their corporate sponsors." yeah, right on! Now that's change that's really change!

Currencies today 8/13/09: A$ .8440, kiwi .6795, C$ .9245, euro 1.4275, sterling 1.6625, Swiss .9315, rand 7.9675, krone 6.0220, SEK 7.1475, forint 188, zloty 2.88, koruna 18, yen 96.20, sing 1.4415, HKD 7.7515, INR 48.10, China 6.8337, pesos 12.84, BRL 1.8385, dollar index 78.50, Oil $71.64, 10-yr 3.73%, Silver $15, and Gold... $957.15

That's it for today... I had a long time reader send me a note yesterday and tell me that I have enough to worry about with the Fed, Treasury, deficits, etc. and shouldn't get worked up when the Cardinals lose a game they should have won... HA! Yes, that's correct! It is just a game... And yes, I'm talking about baseball, not the Fed, Treasury and deficits! HA! Well... I go to the knee doctor today, I'm afraid of what he's going to find... All I know, is that the pain, swelling and stiffness is much worse in this knee than it was in the right knee that I had scoped in 2003! UGH! My little buddy, Alex is home. He seemed to have grown 6 inches while at camp! OK... I must really be running late, as Mike, Suzy Q, and Mary are all here! So... Get that Tub Thumpin' Thursday going!

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

GDP Does Not Compute, Will Robinson!

Chuck Butler — Wed, 05 Aug 2009 14:49:35 GMT

...But First, A Word From Our Sponsor...
Gain exposure to currencies of emerging BRIC countries-and don't lose a dime on market risk

* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

Some experts believe these 4 countries may become economic powerhouses in coming years. Now could be the right time to add these currencies to your portfolio. And you can do so-safely-with the U.S. denominated MarketSafe BRIC CD.
Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is August 18, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referid=11808
.........

In This Issue..

* Currencies trade in a tight range
* Pound Sterling, the star performer?
* Something smells fishy...
* Do you see trend with Gov. Reports?

And Now... Today's Pfennig!

GDP Does Not Compute, Will Robinson!

Good day... And a Wonderful Wednesday to you! We had a very tight range trading day yesterday in the currencies, which have left them trading in about the same clothes they were wearing when I signed off yesterday! We've got that to talk about, and... Another $2 Billion for the CARS program has been allocated... What a crock! OK, Chuck, slow down, you don't need to get your blood boiling this quickly, this morning!

I'm writing from home this morning, as I have a meeting close to our old office, which means its not far from where I live, which is completely different from our current office location, which is, I'll say... Quite a distance... But, hey! I'm not complaining, just giving you the details...

OK... Well, as I stated in the opening, the currencies have traded in a very tight range for the past 24-hours, with little in the way of data to push them in either direction. That could change this morning when we see the color of the ADP Employment report, and Challenger job cut report. The ADP/Challenger reports are usually a very bad indicator of what the Bureau of Labor Statistics (BLS) print in the Jobs Jamboree (which will print on Friday this week)... But a few months ago, the people at ADP/Challenger decided to change their methodology to mirror that used by the BLS... In other words... They will lie, cheat, and cook their books too! HA! But that hasn't helped them...

I think it to be a better indicator to use the employment component of the ISM Index that printed the other day... The employment component showed that the job losses will be around 350,000 for July... That's close enough for government work regarding the forecast of 325,000 jobs lost by the surveyed economists.

However, the ADP/Challenger report will print, and the markets will make an initial reaction to the report. So, watch for that... If the ADP/Challenger report shows a greater number of jobs lost, it could push the risk appetite to the back of the class once more... At least temporarily!

OK... I was all prepared to talk about this in today's Pfennig, when I saw a note from my friend, John Mauldin, talking about it last night! He beat me to the punch! Oh well, I'm going to continue on with my plans...

What I'm talking about is the GDP report last week... Something smells of yesterday's fish here folks... I'll put it out here very simply... The Gov't tells us that Consumer Spending is only down -2.5%. Which when plugged into the GDP report tells us why GDP was reportedly stronger than expected in the 2nd QTR... Consumer Spending represents about 70% of GDP! But here's where I have a problem with the report... Corporate Earnings are down 15%... Corporate Earnings are down 15% because there's no Consumer Spending! -2.5% doesn't compute when Corporate Earnings are down 15%!

And here's where the cheese begins to bind folks... I believe the Corporate Earnings numbers are true... They are regulated to be so! While the Consumer Spending data is Gov't produced... As the robot in the Lost in Space TV program used to say... "This does not compute, Will Robinson"!

But hey! What do we expect from Gov. reports? Look at the games that people play at the BLS for example! Any old way, I just wanted to throw that out there as food for thought about the U.S. economy / recovery data...

Ty Keough and I had a quick conversation yesterday about Bank Earnings that have been reported... I discussed how disgusted I was with all this yesterday, but left it at that. Ty decided to try and get me talking about this... I know I shouldn't, but I must! These Big Banks that borrowed funds from the Gov't, got to stop marking to market the securities/bonds that had gone bust, which means they then got to sell them to the Gov't at inflated prices, then take the money they Gov't gave them for the inflated securities/bonds and pay back the Gov't! The funds also allowed the Big Banks to post those earnings that the markets got so wound up about! Now... How's that for getting your cake and eating it too!

I shake my head in disgust, folks... But hey! We've got the cartel folks over at the Fed taking care of all of this for us... Isn't that nice? NOT! We had all better be careful or before we know it, the Fed Heads will be doing an Oliver North on us!

Ok, enough of that! The British pound sterling was the star performer again yesterday and last night... The U.K. has seen a plethora of better data recently, and it didn't stop yesterday or this morning... The U.K. manufacturing index unexpectedly rose, and U.K. services expanded the most in 1.5 years in June. Factory output was up .4%, and home values shot up almost double what was forecast for them!

This recent run of better than expected data reports in the U.K. tells me that the Bank of England's (BOE) Gov., Mervyn King has come to an end of his bond purchases... For now... That means Quantitative Easing in the U.K. has ended... Again, for now... And that news , along with the better than expected data has allowed the pound sterling to rally and rally it has!

In the Eurozone, things aren't looking so rosy... Eurozone Manufacturing and services contracted at the slowest pace in the past year, and Retail Sales for June showed a 2.4% drop, year-on-year. However, these things only place a drag on the euro temporarily, as the euro will shine, with every mark down of the dollar...

And then there was this... A long time reader sent me a note yesterday, and said that it just didn't make sense that U.S. Manufacturing was healing while Capacity Utilization was wallowing in the mud (OK she didn't put it like that, I did!)... So... I put on my Sherlock Holmes hat, grabbed my pipe and looked into it, because... Now that she said that, it didn't make any sense to me either!

So, I went to the components of the ISM Index, and found that 9 of the 10 showed improvement... But none so much as the Government Construction Spending component that showed a 3% increase! So... There you have it... Manufacturing, per se, was better, but not as advertised!

So... GDP was not as good as advertised. Manufacturing was not as good as advertised. Jobs data has not been as good as advertised... Do you see a trend here? If not, you might want to go for an eye check up! HA!

OK, I've got to get this and me out the door soon, so I had better head to the Big Finish!

Currencies today 8/5/09: .8440, kiwi .6745, C% .9295, euro 1.44, sterling 1.70, Swiss .9420, rand 7.91, krone 6.03, SEK 7.1415, forint 185.49, zloty 2.85, koruna 18.05, yen 95.30, sing 1.4340, HKD 7.75, INR 47.62, China 6.8310, pesos 13.13, BRL 1.8160, dollar index 77.27, Oil $71.70, 10-yr 3.72%, Silver $14.70, and Gold... $966.70

That's it for today... A better day for yours truly on the trading desk yesterday, not so long! I'll get a late start today though, with this meeting I'm going to right out of the starter blocks. Little Delaney's Birthday pool party was wiped out by the rain yesterday, but not to worry, the family gets to celebrate her turning 2 this weekend! Our new BRIC MarketSafe CD has really caught on with the newsletter writer community, and with investors! Our phones are ringing off the hook once again, which is a very good thing! The BRIC MarketSafe is explained in the "ad section" above, if you haven't already, you should check it out! Ok... Day light is burning, I've got to get moving! Hey! I just realized that I didn't rant about the CARS program... I bet that makes your day!... I hope your Wednesday is Wonderful!

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

Currencies and Commodities Sell Off...

Chuck Butler — Mon, 22 Jun 2009 15:15:09 GMT

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

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

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

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

Get your copy today: http://www.amazon.com/exec/obidos/ASIN/B001P9G3HE/investorsinsi-20

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

In This Issue..

* Overnight markets ambush risk assets...
* Germany's IFO Business Confidence gains again...
* A$'s get pounded by opposite thought story...
* More supply to auction off for the U.S....

And Now... Today's Pfennig!

Currencies and Commodities Sell Off...

Good day... And a Marvelous Monday to you! I hope your Father's Day weekend was grand... Mine sure was! I'm feeling the affects of the "grand" weekend this morning too! And... It was the first day of Summer! So we had all that going for us, eh?

Front and center this morning, I'm as proud as a peacock this morning. I just read an email from good friend, and excellent market analyst, Mary Anne Aden... Mary Anne sent me a note letting me know that the one and only Richard Russell had quoted me in his letter June 10th... She said it went something like..."this is from Chuck Butler's always terrific column..." WOW! Being quoted in Richard Russell's letter is like the top of the list for me!

OK, Chuck, you have to come down from cloud 9... Hey You, get off of my cloud! Even the fact that the currencies and commodities have sold off in the overnight markets can't stop me from this seashells and balloons feeling...

Yes... The currencies and commodities have sold off in the overnight markets... Even a good print by Germany's think tank IFO on Business Confidence, hasn't wrapped a tourniquet around this sell off... This wasn't a "one and done" for Business Confidence in Germany either! This happens to be the third consecutive month of positive gains for this data. Now... One would think that this should signal something, right? I mean, if I walked up to you on the street and said, "Germany's Business Confidence has posted positive gains for 3 consecutive months"... You would probably, no wait, definitely think (because I know you are very astute, and pay attention in class each day), that Germany's economy must be coming out of their recession... Hmmm... Yes, that's what I would think too! But... The euro isn't showing any thoughts by traders like that!

I think that in the next print of GDP in Germany (the Eurozone's largest economy), we'll see a nice improvement from the previous quarter's negative -6.7% decline! I'm not thinking that GDP will go to a positive print... But if it knocks out half of that decline, that would show that things are improving... And if things are improving in Germany, the rest of the Eurozone will grad on to the coat tails!

The U.S. Fed meets this week, in an otherwise quiet week data, and talks, and we'll have to see what's up Big Ben's sleeve now... I would suspect that this week will be a non-event... But in August, the Fed will most likely be setting off some late fireworks, with an increase in their bond buying program... Quantitative Easing... UGH! And that thought leads me talk about the amount of supply hitting the markets in the near future... But I wont' bore you with my description of the supply... Here are my friends, Addison Wiggin and Ian Mathias...

My friends, Ian Mathias and Addison Wiggin over at the 5-Minute Forecast, never cease to amaze me the way they describe things! Here's a piece of their letter from Friday, June 19th...

"The U.S. government announced yesterday it will auction a record $104 billion in debt next week. Despite obvious warning signs that the world has had its fill of American paper, the Treasury will forge ahead: $40 billion in 2-years Tuesday, $37 billion in 5-year notes Wednesday and $27 billion in 7-year garbage on Thursday.

They must "get it." Last week's sharp rise in 10-year yields was as sure a sign as any that investors everywhere are getting cold feet. A prudent government would take a break. let things cool off. But there's no rest for Uncle Sam, or his Treasury. They've got the mother of all Ponzi schemes to run:"

I'll get to meet up with Ian and Addison next month in Vancouver... I'm looking forward to that!

So... Like I said, the data is pretty weak this week... So, we'll be scratching and clawing for the markets to throw us bone.

Down Under... The Aussie dollar (A$) has taken on some water overnight after a story printed and quoted the Morning Herald's economic editor... The quote went something like this... "the market was wrong in discounting little to no chance of another RBA cut this year, and a high chance of a hike in the first few months of next year" ...

You might recall last week I told you that the market in Australia had basically decided that the Reserve Bank of Australia (RBA) had come to an end of their rate cut cycle... I then threw in my own 2-cents and said that the first rate hike would come in the 1st QTR next year... Well, the Economics Editor at the Morning Herald doesn't agree... And the A$ has sold off big time since the paper hit the news stands! Come on! That's just one person's opinion, isn't it? Last week, the market players were all about the end of rate cuts... And they are now going to be swayed by one opinion? Where's the intestinal fortitude?

And then there was this... Not happy with having their heavy hand in just about everything these days... The Fed is reviewing the Repo market... Apparently, the poor old Repo market is getting blamed for exacerbating the financial turmoil that followed the collapse of Lehman Brothers last fall. For those of you not familiar with this market... It's a utility for overnight funding... (some go longer than overnight, but the overnight repo and rev repo market is what is being reviewed) So... Look for more Gov't. reforms in a market that has existed for many years just fine and dandy...

I'm going to stop there this morning, as I forgot to print a "Corporate feel good story" on Friday, I will do so today... So, look for that after the "that's it for today" segment...

But... First, speaking of feel good stories... I saw this flash across the screens this morning... New York Times reporter David Rohde, who disappeared in Afghanistan in November 2008, has escaped from his Taliban kidnappers and is under U.S. military protection.... Cool, eh?

Currencies today 6/22/09: A$ .7960, kiwi .6350, C$ .8745, euro 1.3845, sterling 1.6440, Swiss .9190, rand 8.1575, krone 6.4950, SEK 8.00, forint 201.65, zloty 3.2575, koruna 18.80, yen 96, sing 1.4580, HKD 7.7503, INR 48.59, China 6.8355, pesos 13.42, BRL 1.9750, dollar index 80.75, Oil $68.30 (this has really backed off the past couple of days!), 10-year 3.73, Silver $13.88, and Gold... $925.35

That's it for today... My little buddy, Alex, and I were on our own for part of the weekend, and we did just fine! Last week, I bought a used Bass Guitar, and now I can add some bass to Alex's guitar playing... It's fun! The two of us, "jamming" in the basement! All we need is drummer, so people can feel a beat, yeah..... HA! It's alive! It's alive! My beloved Cardinals actually had their offense come alive this past week... A nice weekend sweep of the cross state Royals, was sweet! I just heard on the radio that the "heat index" could hit 110 today here in St. Louis! My mind immediately flashes back to when I was a kid, and we didn't have air conditioning! Then we got one that cooled one room... I had 6 siblings so the 9 of us would all sleep in that one room! We were NOT allowed to go in that room during the day! And look! We survived! HA! OK, thanks for going with me on the trip down memory lane... Time to go to the Corporate Feel Good Story... I hope you have a Marvelous Monday!

*********************************************************************
I have my own business, working out of my home, representing a small agency called Markle & Associates here in the Pacific Northwest. We represent six wool carpeting mills and a bamboo and hardwood importer. And because our products are "green", environmentally friendly, we do have an edge over the synthetic products and anything tied to petroleum. But nevertheless, we have still been affected by the economic downturn. What I've found to keep the business coming is a simple tool we all know about: networking. Years ago I heard a statement about the success of networking that said it was the single most powerful way to increase business. Faster results than advertising, and cheaper than any other marketing attempt.

So, I've made that my thrust over the years and make sure I stay involved in my industry organizations, participate in meetings on the chapter and national levels and volunteer for positions to help these organizations grow. In my industry, it meant remaining connected over the years with design organizations like NKBA (National Kitchen & Bath Association), NWSID, (Northwest Society of Interior Designers), American Society of Interior Designers (ASID) and International Interior Design Association (IIDA). The reason networking works is because people buy from people, rather than simply from businesses. Learning that key has helped my business to keep going in diverse economic climates, including this one.
*********************************************************************************

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

Throwing A Cat Among The Pigeons Again!

Chuck Butler — Mon, 15 Jun 2009 16:20:40 GMT

.........But First, A Word From Our Sponsor..........
The Ultra Resource Index CD: 6 foreign currencies, 1 unique opportunity

The Ultra Resource currencies (each is equally represented in the CD):

*Australian dollar
*Canadian dollar
*Hong Kong dollar
*New Zealand dollar
*Norwegian krone
*Singapore dollar

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

In This Issue..

* Russia's Fin Min talks up the dollar!
* Currencies, commodities, stocks all lose ground...
* Who's car is uglier
* Gold hit a 3-week low...

And Now... Today's Pfennig!

Throwing A Cat Among The Pigeons!

Good day... And a Marvelous Monday to you! How about that weekend? I actually didn't get a chance to experience much of it outside, but it sure looked great! We have new champions in basketball and hockey, so congrats to the Lakers and Penguins on their Championships! Now, the housecleaning is out of the way... It's time to get to the meat... Where's the beef? HA!

OK... Well, the Russian Finance Minister, Kudrin, threw a cat among the pigeons yesterday, when he stated that Russia has confidence in the U.S. currency. The markets have reacted violently to this statement, sending the dollar much higher, and the currencies led by the euro, much lower. An overreaction? I think so! But... These are the types of things you watch happen, and be glad you're not a currency "trader"! For, you would have either experienced a huge loss or gain, or... Been stopped out, and not allowed to participate in the large move... I'm not the "trading" type... I'm all about diversification... So that, when things like this happen, you realize that it's just "noise" in the markets, and the only thing it creates for you is an opportunity to buy at cheaper levels!

It sure sounds like, looks like, and smells like, a coordinated effort by those that have the most to lose should the dollar continue on it's downward path of the last 3 months, to get put a lid on their losses... Makes sense... But you have to wonder about what they are really thinking and doing... I'm talking about China, Russia, and Japan, who have ALL stated in the past weeks that "the dollar is fine, and there's no substitute reserve currency"... These statements all give dollar bulls a boost, and tell them that these countries are not going to back away from dollars and dollar denominated assets.

Now... There's a BRIC meeting coming up soon... Brazil, Russia, India and China... And while the Finance Ministers of these countries are at the meeting, I doubt seriously that they will hold the same amount of "love" for the dollar... But that sentiment will be kept to themselves, as they don't want to send the dollar spiraling downward. These BRIC nations had it all going for them until July of last year. They were sent spiraling downward like most assets until March of this year. I would have to think that the Finance Ministers of these countries would be interested in knowing how they can avoid another downward spiral caused by dollar buying... And... This... Would be the key, folks... I don't know what it would be, but if they did something like a currency swap / foreign exchange line between each other for trade, that would be colossal! Which is bigger than HUGE!

Well... The G-8 meeting this past weekend was centered on an "exit strategy" for the countries that have implemented the various forms of stimulus. I did see one comment on currency that came out of the meeting... German Finance Minister Steinbrück said he had "no problem with the level of the euro" Now that comment alone should have underpinned the euro coming into Monday's trading... But again, the cat thrown among the pigeons, but Kudrin, has really taken control of the markets' mindset today.

We will see central bank meetings from Japan, Norway, and Switzerland this week... Don't expect much from any of them, as interest rates are near to the bone for all... Norway's Norges Bank has an internal rate of 1.50%, which does give them some leeway for a cut, but again, I just don't expect anything from any of these Central Banks this week...

In that old comparison thing, when you say this car is uglier than that car... The Eurozone has lost 1.22 million jobs in the first QTR of 2009. Unemployment here is near a 10-year high, and not looking as though it will stop the bleeding any time soon... However, we are all aware of the rot in the U.S. employment picture... In the same period (1st QTR 2009) the U.S. lost 1.912 million jobs... And... We all know the "games people play now, every night and every day now" at the BLS! So... Which car is uglier?

So... As we lead off the this 3rd week of June, we have not only the currencies but, commodities and stocks all in the red from the Kudrin words... (see above, in case you skipped over that, which I can't imagine any one would do! HA!)

Speaking of commodities... Gold has hit a 3-week low. The shiny metal has had to endure 3 weeks of battering by China, Japan, and now Russia regarding the reduced need for an alternative to the dollar... I wouldn't think too much of this move... Again, it's "noise", and soon the Kudrin words will be a thing of the past, and we'll get back to the underlying fundamentals of a weak dollar trend eventually... But! It does give those that were thinking they wanted to buy Gold, but it was too expensive, the opportunity to grab some now!

As I turned the computers on this morning, the currencies have lost even more ground, so they haven't found a stop level yet.

Today, we'll see the color of the TIC's data... You know, the Net Security Purchases... This data will be from the month of April...

We'll also see National Home Builders House price index for this month. I know that quite a few economists believe that the housing markets meltdown has bottomed... But I think this data will prove otherwise.

Wednesday, Big Ben Bernanke and FDIC Chair Sheila Blair speak... You never know what will come out of the mouths of these two! So... We had better keep an eye out, and our ears to the ground, for you never know when you might get another quote from Big Ben like the helicopter speech of a few years ago! Don't recall that one? Ahhh...

When asked how he would deal with deflation as the Head of the Fed (obviously before he was the Fed Head!) Big Ben reminded everyone that the Gov't had this technology called a printing press... (he's talking about printing money here ) and that he would throw dollars from a helicopter to keep deflation from happening...

Well... Minus the helicopter, he's kept his word, eh? The Printing Press is working overtime and he sure is passing out the dollars to keep deflation from hitting us hard... (personally, I think he failed miserably, but that's just me!)

So... I see that the President is going ahead with his plans to give the Fed sweeping regulatory powers... Not that I don't want to see some changes... But again, I ask... The Fed? They've done such a masterful job of protecting the value of the dollar since they were created, eh? NOT! 94% loss in value since the Fed took over! Nice job! UGH!

Time to get this out the door, so on to the Big Finish!

Currencies today 6/15/09: A$ .8015, kiwi .6325, C$ .8840, euro 1.3855, sterling 1.6450, Swiss .9170, rand 8.0610, krone 6.4240, SEK 7.8280, forint 202, zloty 3.25, koruna 19.37, yen 98.20, sing 1.4570, HKD 7.7505, INR 48.15, China 6.8363, pesos 13.51, BRL 1.9260, dollar index 80.95, Oil 70.95, 10-year 3.76, Silver $14.33, and Gold $934

That's it for today... Thanks to all that sent along notes regarding my continuing battle with cancer... Yes, it's been two years... Seems like a lot longer! This coming weekend will be Father's Day weekend... Always a good time at my house! The kids will all be here, little Delaney Grace, and others... So... I'm looking forward to that. Two years ago, I spend Father's Day in the hospital with my kids, so this time around it should be in our beautiful back yard! OK... I'm very late! I hope you have a Marvelous Monday!

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

More Wild Swings!

Chuck Butler — Wed, 03 Jun 2009 14:30:02 GMT

.........But First, A Word From Our Sponsor..........
The Ultra Resource Index CD: 6 foreign currencies, 1 unique opportunity

The Ultra Resource currencies (each is equally represented in the CD):

*Australian dollar
*Canadian dollar
*Hong Kong dollar
*New Zealand dollar
*Norwegian krone
*Singapore dollar

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

In This Issue..

* Euro goes back and forth over 1.43...
* Eurozone unemployment rises to 9.2%
* Australia's GDP surprises!
* Is it protectionism?

And Now... Today's Pfennig!

Wild Swings!

Good day... And a Wonderful Wednesday to you! I'm draggin' the line today, as I was helping my oldest son, Andrew, with things in his brand, spankin' new house, last night. Congrats to Andrew, for finding a great bargain, with a low, fixed, interest rate!

OK... Whew! What a day in the currencies yesterday! Another day, and another day of wild swings.. Volatility is the name of the game these days... Watching, for instance, the euro trade down to 1.4220, and then up to 1.4320 and not just on a one-way ticket! Oh No! this is a bounce here a bounce there... But just like it was going from 1.41 to 1.42, it took a few times over the 1.42 figure before it finally stuck, and headed to 1.43... All the other currencies followed in the swings, as usual...

In a change of things that have been going on, which was simply watching the Asians sell dollars, and watching the U.S. counterparts buy them... The Asians actually reversed that course last night taking the euro from 1.4320 to 1.4220 as I walked in this morning, which was later than usual... Had to go a scavenger hunt at home... No worries... But, as I was saying... The S. Korean monetary officials said that they "see absolutely no alternative to the dollar as the main reserve currency of the world." Hmmm... Of course what else would you say if you were a small country connected to another country that likes to show its military power, and shoot off missiles, and Oh, by the by, they are believed to have nuclear bomb capabilities... You would be kissing up to the U.S. like an intern to their boss, as they attempt to get full time employment!

However, the S. Koreans weren't the only Asian monetary officials to speak... The Indian Central Bank, which is dying a death of 1,000 daggers watching their currency gain 11% in the past 3 months! And... Then the Big Kahuna... Japan... But, we all know that the Japanese are the biggest currency manipulators on this earth, and they would do anything to get the yen weaker... Speaking of currency manipulating... (doing an Andy Rooney here) Ever wonder why the U.S. Treasury Sec. and lawmakers all point to China for currency manipulation and don't mention Japan?

Japan was the whipping boy of the U.S. in the 80's... Remember? It was all "their fault"... Skip ahead 20 years and it's now switched to China... Ask Schumer, ask Graham, and any of the other dolts that signed the bill to assign tariffs to Chinese exports, that hangs out on the shelves in D.C. just waiting for the "right time", who's at fault here, China or Japan... They'll tell you China... And never mention Japan...

Speaking of currency manipulation, the Big Boss, Frank Trotter, and I were talking the other day, and we came to a thought about manipulation... The U.S. is quick to find fault with currency manipulation, but isn't the U.S. in the manipulation business too? Aren't they buying Treasuries in their quantitative easing, to keep interest rates down? By buying the treasuries they are manipulating the price of the bond... But, does any one hear the media calling them out here? Bawk, Bawk, Bawk... Son! I think I see a chicken hawk!

OK.. On to other things... Did you hear Germany's Chancellor Angela Merkel talking about Quantitative Easing? This is like one of those MasterCard commercials... Bundesbank President Axel Weber talking down Quantitative Easing... very worthy... But Germany's Chancellor Angela Merkel talking about it... Priceless!

Why priceless? Because it is a long standing tradition in Germany that the leader of the country never comments on monetary policy... But with the European Central Bank (ECB) looking at ways of doing Quantitative Easing, she took her shot... And the shot was not just aimed at the ECB... She got three birds with one stone! Throw the Fed and Bank of England in here too... Here's the Chancellor... "Unconventional monetary policies being pursued by the world's main central banks could aggravate rather than ease the economic crisis."

She went on to mention the Fed and Bank of England... Let's listen in... "I view with great skepticism the powers of the Fed, for example, and also how, within Europe, the Bank of England has carved out its own small line," Merkel said. "We must return together to an independent central bank policy and to a policy of reason, otherwise we will be in exactly the same situation in 10 years' time."

You know... Another female leader of a county from time past is responsible for another quote that I use in my presentations... I'll go dig it up, and come right back... Just hum the Jeopardy song for the final question, and I'll be back! ... ... ... ...

OK! I'm back! Here it is... "The problem with socialism is that you eventually run out of other people's money." ---- Margaret Thatcher...

The Eurozone did get some damaging employment data overnight... The Eurozone unemployment rate hit 9.2% in April, after sitting at 8.9% in March. I know, that sounds bad... But just like I tell you all the time about comparing the dollar and euro's data... The U.S. car is uglier than the euro car... Here's the reason I say there in this case... I know of NO games that are played with Eurozone employment data, like the games the Bureau of Labor Statistics (BLS) plays here in the U.S. So... If the Eurozone say unemployment is 9.2%, it's 9.2%! Whereas here in the U.S. when the BLS says that unemployment this Friday is 9.2%, it won't really be 9.2%, instead it will most likely be closer to 20%!!!!!!

While the Eurozone deals with rising unemployment... Australia posted a better than expected rise in GDP for the last quarter! The last three months showed a rise in GDP of .4%, after shrinking .6% in the previous quarter! Now... The members of the Reserve Bank of Australia, can all breathe a sigh of relief after they left rates unchanged on Monday night! They can walk about like 20-game winners, with their chests sticking out, and their chins in the air! They are dragon slayers!

The news pushed the A$ to .8260, but profit taking has pushed the A$ back below 82-cents... But this news will live in the minds of traders for some time, and after the profit taking is over, they will once again take a run at higher levels for the A$. Could 85-cents be in the cards for the A$ in the near future? Could be... But, just as easy as it could go to 85-cents and maybe beyond, it could go the other way... What I'm saying here is that this run from March 1st, is going so fast! It certainly could see it break off, take a breather, go back and fill in the gaps, whatever you want to call it...

I was reading a report yesterday where a trade expert was interviewed regarding the massive bailout of Government Motors (GM)... Claude Barfield, a trade expert at the American Enterprise Institute, believes that the massive bailout of GM: "raises the question of whether the subsidies violate President Barack Obama's pledge not to embrace protectionist measures. The intervention "will come back to haunt us in terms of the competitiveness of U.S. corporations and in terms of furthering U.S. public-policy goals."

Well, slowly but surely (Hey, who's Shirley?), more and more people who understand the ramifications of Gov't bailouts, are starting to agree with me and speak out against them... Don't you think that over half of the Financial Institutions that took TARP money are wishing they hadn't ever hear of TARP right now? It's a bad thing... Ronald Reagan used to say that the scariest words spoken are..."Hi, I'm from the Government, and I'm here to help."

But, these were "not normal times" and they called for "not normal measures" right? Isn't that the gobble-de-gook the Gov't tells us, as they jam one measure after another down our throats that takes away free markets, and more importantly our republic... We The People, are soon to be, We The Government...

OK, I know, I'll get a ton of emails telling me to shut my trap, and stick to currencies... But this all has something to do with currencies folks... Protectionism to a country's currency, the dollar in this case, is like kryptonite to Superman... So, if you want to see your country's currency on the slippery slope to nowheresville, just keep those protectionism measures floating... Because you can't have both... You can't have protectionism and a strong currency (dollar)... One floats, while the other sinks...

In a related story about having one but not both... A reader sent me two charts yesterday... One showed the fall in the U.S. dollar index in the past 3 months... And.. The other showed the rise in the stock markets in the same 3 months... The reader said that it looked to him that someone was saying, "you can either have a weak dollar and strong stock market or vice versa, but you can't have both!" Yes... Just like the protectionism, and a strong dollar... You can't have both!

In a "sign of the times"... The Vehicle Sales for May printed yesterday, and while all the car makers reported double digit declines of sales, the U.S. automakers outperformed the Japanese automakers!

And then... I know I go to the well quite often when I reprint something from the Daily Reckoning, but it goes both ways, so I don't feel too bad! But, when Bill Bonner, the Mogambo, or someone else says something that I think you need to read, I go for it! So... Yesterday, Bill was talking about U.S. Treasury Sec. Geithner's visit to China... Let's listen in: "it will be helpful if Mr. Geithner can show us some arithmetic," said
Yu Yongding, a former advisor to the Chinese central bank.

Yes, we'd like to see that arithmetic too. How do you add $1.75 trillion in deficits...pay for it with funny money from the Fed...and still come out even on the value of the dollar? There's no arithmetic we know of that works in the Chinese favor. Right now, the numbers...and the logic of the situation...are telling us that feds aim to create inflation. Instead of trying to keep prices under control...they're trying to get them to go up. That's yet another thing we didn't expect to see!

The US government is less concerned with protecting foreign lenders than it is with getting the US economy back to its old E-Z money ways. Cheap money is what people want. Cheap money is what the feds are trying to give them." Bill Bonner, The Daily Reckoning (www.dailyreckoning.com)

I'll head to the Big Finish in just a minute... But before I go there, I was looking at some graphs yesterday of the major currencies... Dollar, euro, yen, sterling, and even Canadian loonies... I've told you over and over again that this dance is gonna be a drag, no wait, I've told you over and over again that the currencies have all posted gains VS the dollar since March 1st... Well.. Euro, sterling and loonies have all outperformed yen... You would have to think that if China is pulling Asia out of the economic meltdown, that Japan would also benefit... So... Maybe, we'll see yen catch up with it's major currency counterparts...

Speaking of sterling... Chris Gaffney and I were discussing the other day about sterling's rise... I talked about this a couple of weeks ago, and said I was impressed with the performance but wasn't sold on its ability to remain strong... But there it is with a 1.65 handle on it, after hitting a low of 1.35 in Feb... I still don't "get it" as the U.K. has the same problems as the U.S., but... As I told Chris... Sterling is probably a beneficiary of the "crosses" with all the currencies that are going up VS the dollar... Explains it a bit, but sterling has put in a very good performance the past three months!

But... The sterling's performance is not even on the same page as the performance of the South African rand... And the Brazilian real... Of course past performance doesn't mean that future performance will repeat itself... And on that note... Here's the Big Finish!

Currencies today 6/3/09: A$ .8160, kiwi .6450, C$ .92, euro 1.4220, sterling 1.65, Swiss .9370, rand 8.0250, krone 6.2820, SEK 7.5650, forint 198, zloty 3.1575, koruna 18.8675, yen 95.90, sing 1.44, HKD 7.7510, INR 47.05, China 6.8309, pesos 13.21, BRL 1.9230, dollar index 78.98, Oil $68.10, Silver $15.87, and Gold... $976.80

That's it for today... Strong storms ripped through our area yesterday afternoon and night... When the day turns black as night in the middle of the day, you know you had better take cover! They found the debris from the airplane that disappeared over the Atlantic, and now the Brazilians are saying there were bomb threats before the plane took off... That makes an already sad story more sad... Cards get back in the win column last night. I caught most of the game on the radio, which actually is my preferred way to follow a baseball game, but with every game on TV these days, most nights I watch it... On the weekends though, I'm outside with my radio on the game... It's how I relax! OK... Geez Louise, I'm late today! Gotta go! I hope your Wednesday is Wonderful!

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

A Currency Rally For The Ages!

Chuck Butler — Fri, 29 May 2009 15:11:00 GMT

........A note from our sponsor.......
EverBank continues to grow stronger. Announcing a 65% increase in earnings.

We keep doing it. We keep growing stronger despite a weak economy. In 2008 we experienced record bank growth. Now through the first quarter of 2009, that pattern continues.

*Earnings climbed 65% over Q1 2008
*Assets grew by 28% (year-over-year) to $7.6 billion
*Deposits grew by 42% (year-over-year) to $5.6 billion

The numbers-they say it all. We've solidified our place as one of the nation's strongest and most stable banks. And there's no mystery to our success. We're well-diversified, we've never engaged in subprime lending and we've got smart, dedicated folks working for us. Take advantage of our strength and stability. Visit http://www.everbank.com/?referid=11808.

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

In This Issue..

* Negative momentum towards the dollar grows...
* Treasury yields continue to rise...
* Fundamentals and Charts coincide!
* Silver has best week in 22 years!

And Now... Today's Pfennig!

A Currency Rally For The Ages!

Good day... And a Happy Friday to one and all! I'm going to make the call and say this is going to be a Fantastico Friday! The sun is supposed to come out today after a week of rain, it's Friday, it's pay-day, and... The currencies have put on a rally that's the stuff that movies are made from! And... Once again, there were signs yesterday that the break of the link to stocks was in place! Take all that, and the fact that we woke up this morning for a brand new day... And you have a Fantastico Friday!

OK... So front and center this morning let me tell you about the currency rally that began yesterday morning... Let's look back at what I said as I was getting ready to hit the send button yesterday morning... "So... As I get ready to head to the Big Finish, I see that the currencies, led by the Big Dog, euro, are getting off the porch once again to chase the dollar."

And... The Big Dog, euro, did get off the porch, which allowed all the little dogs to get off the porch to all chase the dollar... Now, before I go on... I wanted to make certain everyone understands what I'm talking about here, when I say "chasing the dollar down the street"... Imagine, if you will, a Big ole dog sitting on a porch, and a rabbit (the dollar) comes hopping by. The Big Dog will spring from the porch to chase the rabbit... If the he catches the poor little rabbit, the rabbit will be cease to be... So, now replace the Big Dog with the euro... And the rabbit with the dollar... And when the euro is chasing the dollar down the street, it's not a good thing for the dollar... For what if the euro catches the dollar?

OK... Sorry for the explanation but it occurred to me that I talk so much about the "Big Dog" euro, and all that, I had better do some 'xplainin'!

For most of the day the currencies rallied VS the dollar, and stocks were going nowhere, which was another good sign that the link between these two asset classes had broken... Stocks did end the day on a high note... But, for the most part were down or flat on the day before rally in the afternoon.

I've been telling you that the "negativity" toward the dollar has been building pressure, and just like any pressure cooker, if the heat stays on, the pressure cooker will finally give in... And it sure looks as though the dollar bulls finally gave in yesterday... Let's just look at this move... Yesterday morning, when I arrived here, the euro was trading at 1.3830... By the time I hit the send button it was 1.3895... And this morning when I arrived, it has a completely different look to it... Trading at 1.4080!

Were you sitting on the sidelines and feel that you missed this move? Well... I have a governor on my writing, folks... But, still I pointed out emphatically a couple of weeks ago that the dollar index had traded through the downside of its 200-day moving average, and that the euro had traded through the upside of its 200-day moving average...

The boys and girls over at Morgan Stanley see a 10% Trade Weighted dollar drop... The believe this will happen through the end of the year... Hmmm... The dollar index (recall I explained this a few weeks ago) has lost 5% since May 8th when it traded through its 200-day moving average... And... The technical / charts people are beginning to jump on this bandwagon, and say their charts are telling them that this is a strong indicator that we're heading for another leg down in the dollar... So... You've got the fundamentals rounding back into shape, and the charts confirming it...

So... Let's sit back and look at the currency landscape for a minute... What's causing this run on the dollar, you might be asking... Ahhh grasshopper... I kept telling you and telling you, that the debts were going to come home to roost, and when the markets got tired of having to choke down the debt issuance, the reversal of the "flight to safety" treasury buying that boosted the dollar from July 2008 - Feb 2009, would rule... And the selling of the dollar would be just as swift as the buying of the dollar was back in July and August of last summer!

I know, I know, you basically wrote that off and said I was akin to the "boy who cried wolf"... But... I did it so that you would have that V-8 moment, when it all began to happen! I've tried to tell you that Treasury yields were rising, which meant there was Treasury selling going on... And it's come to this... What I put down before you months ago.

I'm not trying to blow my horn here, I'm simply trying to show you the sequence of events!

OK... Enough of that! This morning, there's news from the South Korean Pension Fund that is shaking the foundations of the Treasury market... The Fund has announced that they will reduce the amount of its exposure to U.S. Treasuries, and diversify into other assets... This fund is about $200 Billion in size... So, not the likes of China and Japan, but still... Just another outlet for Treasuries to be apparently closed...

In other news that's helping drive up the currencies, as it's not all just "dollar selling"... Retail Sales in Germany showed a nice rise, the first one in 4 months! And in some news that you might not find anywhere else... Eurozone M3 (Money Supply) printed at +4.9%... Hmmm... U.S Money Supply, the last time I looked, was running in the double digits... So... Which economy is going to suffer from higher inflation pressures? Money Supply is inflation folks...

And in some not so bright news for the U.S. economy and housing... The New York Times ran an article from the Mortgage Bankers Association (MBA), that shows 12.07% -- about 5.4 million -- of all U.S. home mortgages were delinquent or going through foreclosure during the first quarter. That compares with 11.93% at the end of last year. UGH! That's awful news... And U.S. Consumer Confidence was higher this month? Really?

Well, folks... I just glanced at the currency screen while typing, and yes, I can do that, with very little in the way of errors, to see the euro cross the 1.41 level... So, now the move looks even stronger, because the euro has gone through two levels of resistance at 1.40 and 1.41...

Looks to me like the only thing that can stop this run-away bus is a bout of profit taking, or the invisible hand of the markets... Dare I say government intervention? I don't want the folks at CNBC to tell me to take this idea to "Hollywood" like they did last week with my PPT thought!

I'm seeing quite a few articles these days on how "unhappy" Big Ben Bernanke is with these rising interest rates... It sure this let's his cow out of the barn, eh? His cow being artificially low interest rates on mortgages... Government intervention in this whole mess continues to muddy up the process, and Big Ben has had his hands right there in the mud! At least my son, Andrew, got his home loan rate locked in, before this latest rise in mortgage rates!

The data cupboard spills out all over the floor today with more data than the cupboard can hold! But before we begin the data round-up, let's look at a couple of other currencies besides the Big Dog, euro... The Aussie dollar (A$) is within spittin' distance of 80-cents! The loonie is within spittin' distance of 91-cents! OK, I'm outta spit now, so I'll just tell you that every currency I see on the board is moving higher VS the dollar.

And the precious metals of Gold and Silver are taking liberties with the dollar too! Last week I told you about the Gold and Silver ratio, and how the Silver ratio was out of line, which could mean a good "buying opportunity" for Silver... Well, in the past week, Silver has put in its best 1-week performance in 22 years! WOW! That's right, 1987, was the last time Silver had a performance like it had this past week! And to move it out further, Silver has gained 25% this month! Double WOW!

OK... Time to settle down... Let's take a look at the mess on the floor from the data cupboard! First off, a revision to 1st QTR GDP will print this morning, expect a revision to show GDP performance was worse than first reported. Look for GDP to revised down to -6.1% from the original -5.5%... Personal Consumption for the 1st QTR will also print, and is also expected to be worse than originally thought. Then the Chicago Purchasing Managers Index (manufacturing for the region) will print... And finally, the U. of Michigan consumer confidence index is expected to show confidence is rising... In what? I guess simply stocks... But given the soaring unemployment, the recession / depression, and rising savings rate, where are corporations going to make money to support these stock prices? I think I've said this already, but if I haven't it simply means that I wrote it somewhere else, but I truly believe that we are going to see negative price to earnings (P/E) ratios later this year... Now, that REALLY gets my stock buying juices going!... NOT!

I don't like going to the Big Finish on a Friday on a sour note like that... But, what's a poor Pfennig writer to do? At least currency and precious metals holders are happy this morning! Oh! And it's Friday, so we must have a "feel good Corporate story" today at the end of the Big Finish!

Currencies today 5/29/09: A$ .7995, kiwi .6380, C$ .9085, euro 1.4120, sterling 1.6165, Swiss .9335, rand 7.9470, krone 6.3130, SEK 7.5650, forint 199.58, zloty 3.1610, koruna 19.0385, yen 95.80, sing 1.4420, HKD 7.7510, INR 47.12, China 6.8281, pesos 13.11, BRL 2.0025, dollar index 79.52, Oil $66.17, Silver $15.54, and Gold... $975.45

That's it for today... The momentum in the currencies right now is incredible! My beloved Cardinals, back in first place where they belong, are on the West Coast this weekend, which means I miss most of their games, as I can't stay up that late! The sun is supposed to remain out for the weekend here, so we've got that going for us! It's that time of the year, with all the graduation parties. Congrats to all the graduates! Good luck! I just love these 4 day work weeks! Time to go to the "feel good" Corporate story of the week! I hope your Friday is Fantastico!

********************************
Pat here in Jacksonville with the Fitness Industry "feel good" story.
Although we're not insulated from economic downturns, we are somewhat more resilient than other discretionary money takers. Nonetheless, the industry as a whole shares a relative bruise on the shoulder - bad dept is up, new business is down, etc. The good news is that people don't have to get a loan to join a health club. So in these dark, gloomy economic days our clubs have actually seen increases in year to year revenue three straight months. How is it that health clubs can realize growth in this environment?
In the good ole days it was all about margins. Today it's all about market share. Hands are folding everyday and if you want to see the next card you better have chips on the table. Understanding this, we have eliminated any reason not to do business with us; long term contracts - gone - exorbitant initiation fees - gone. Conceding to the consumers' ultimate terms has redefined our modus operandi - we no longer establish the terms and conditions for how we conduct business. The consumer does. They want ease of entry? We give it to them. They want no long term commitment? Fine. This is how we not only are surviving but thriving (relatively typing) in a recession. It's the microcosmic adjustment I fully expect to see manifest to the macro stage in the very near future. My fav quote from John Kimsey..."Do something; even if it's wrong - do something!" Going against the grain of generally accepted rules can sometimes forge new generally accepted rules.

Patrick Meinert
President
Fitness Management and Consulting
841 Prudential Drive Suite 120
Jacksonville Florida, 32207
www.fmcjax.com
Office (904) 396-6122
*************************************************

I hope you liked Pat's story!

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