Daily Pfennig : FOMC

Rates To Remain Near Zero...

Chuck Butler — Thu, 05 Nov 2009 15:19:00 GMT

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In This Issue..

* Dollar reverses sell-off...
* BOE & ECB meet today...
* New Zealand is not Australia...
* Funny accounting...

And Now... Today's Pfennig!

Rates To Remain Near Zero...

Good day... And a Tub Thumpin' Thursday to you! It's Tub Thumpin' because it's a Thursday and it's not raining! Yay for us! Well... Not only was I wrong, but the Bloomberg Economic Calendar was wrong too... The FOMC was not a 2-day meeting after all! Just one day, so no time to pull out the board games and cards...

I nailed that FOMC statement yesterday... WOW! You might begin to think that I have some inside info on the Fed Heads, the way I've been able to basically call every move they've made since the beginning of this whole meltdown in August of 2007! But that's not important here... The important thing is that the Fed said that "economic growth is not enough to hike rates, and therefore they will keep interest rates at near zero for an "extended period"...

Hmmm... Where have I heard that before? Any way, I thought that by continuing to use the words "extended period" that the dollar would get pummeled... And momentarily, it looked as though it might, as the offset currency to the dollar, the Big Dog, euro, raced to trade above 1.49... But a funny thing happened on the way to the forum, and the invisible hand reached down and reversed this move in a NY Minute! The work of the PPT? Probably... The Plunge Protection Team, probably stepped in to keep the dollar from a free-fall... That's my take on it any way!

Any way... With interest rates remaining at near zero levels here in the U.S. I thought it to be appropriate to pull out this new nickname for Big Ben... "Zimbabwe Ben"... (Thank's Ty!)

The rate hike decision ball gets thrown over to the "pond" to the Bank of England (BOE) and the European Central Bank (ECB) this morning for their versions of: Leave rates at present levels, but try to sound upbeat... I think you'll have the "tale of two Central Banks" here this morning. While both will keep rates unchanged, I think you'll see the BOE opt for more bond purchases in an attempt to shore up Britain's banking system... The ECB will NOT be making any such announcement.

In fact, I believe we'll hear ECB President, Trichet, announce that the ECB is moving closer to withdrawing stimulus from the economy! So, those of you who have the ability to go long euros VS sterling, this would seem to me to be the "trade o' the day"... What do I know, I'm not a short term "cross trader"!

So... With the FOMC finished... And the two European Central Banks on the docket today, somehow the Risk Aversion has crept back into the markets...

I received an email from a reader the other day, asking me why I prefer Australia to New Zealand, as the kiwi had outperformed its kissin cousin across the Tasman from 2002 to 2008.... Well... New Zealand enjoyed a wider yield differential than Australia during that time period, as it posted the highest interest rates in the industrialized world... Now that's saying something right there, and a good reason kiwi outperformed the A$...

But times have changed... And a very timely talk by Reserve Bank of New Zealand Gov. Bollard yesterday, helps explain why A$'s now over kiwi... Here's Gov. Bollard...

"Both countries have survived the crisis well, due to a mix of strong institutions and stimulative policies. However, their immediate prospects are different. Australia has avoided negative growth, and its prospects are driven by strong terms of trade, vast mineral deposits, the Chinese market, and rapid population growth.

New Zealand has had a recession, and the pick-up is slower and more vulnerable - a difference financial markets do not appear to appreciate.

Australia is a lucky country, but we could be a lucky neighbor.

Australia is entering a new minerals boom, investing heavily and encouraged by new finds, re-opening markets, bottlenecks and strong prices. Strong investment and export growth would mean big challenges for Australian policy. This all means an economy that looks less like New Zealand.

However, Australia's potential raised the prospects for New Zealand's manufacturers and services, which have a bigger share of exports than the same sectors in Australia."

OK... Back to me... So... Australia is a "lucky country" but New Zealand could be the "lucky neighbor"... Makes sense to me!

The Brazilian real rally took a walk on the wild side yesterday, gaining 2.5% VS the dollar in one day! But, that's relatively tame for some of the wild moves we've seen in recent times with the real... As long as you are not watching the currency like a hawk, and sweating out each pip move, this is no biggie... Keep your eyes on the horizon...

I find it somewhat humorous that the Brazilian Gov't officials have tried and tried to throw down road blocks for the real, and the investors just keep coming in droves... The 2% tax on Capital inflows did nothing to slow down the real's move VS the dollar, except for the day it was announced... After that, it was Wayne and Garth playing street hockey once more... "Game On!"

OK... I had a few callers and emails yesterday telling me that I was wrong about the Gold sales to the Reserve Bank of India (RBI), saying that it was done in SDR's... I think the confusion exits in the fact that the Gold sale kept getting reported as $6.7 Billion worth of Gold... But to put these questions to rest... Here is a report from the Economic Times of India (leading financial newspaper)
http://economictimes.indiatimes.com/markets/bullion/RBI-buys-200-mt-gold-from-IMF-to-pump-up-reserves-value/articleshow/5194492.cms
The purchase was in SDR 4.8 Billion worth.

Today in the U.S. we'll see the Weekly Initial Jobless Claims data, which will remain above 500,000 per week... And the ICSC Chain Store sales figures, which if consumer spending has gone back to pre Cash for Clunkers levels, would mean these figures would be soft... But I don't think this data gets much playing time with traders, so we'll just carry on...

And then there was this... OK... So... Some people chastised me yesterday for saying that the Gov't can't prove the 650,000 jobs they claim they "saved"... Well... Here's a ditty for you! Did you know that the Gov't is claiming that by giving a person that already has a job, a raise, it constitutes as "saving" that job? Want more funny accounting? Stay tuned, same bat time, same bat channel!

To recap... The FOMC left rates unchanged and said they would remain there for an "extended period of time" this sent the dollar to the woodshed, but reversed on a dime... PPT at work? The BOE and ECB meet this morning to discuss monetary policy. Expect the BOE to announce more bond purchases, and expect the ECB to announce a move to withdraw stimulus.. We learned that New Zealand is not Australia, but lucky to be Australia's neighbor! And try as they might to keep the real from gaining VS the dollar, the Brazilian Gov't's moves have not worked...

Currencies today 11/5/09: American Style: A$ .9085, kiwi .7190, C$ .94, euro 1.4850, Sterling 1.6530, Swiss .9825, European Style: rand 7.6360, krone 5.6975, SEK 7.0540, forint 186.37, zloty 2.8745, koruna 17.55, RUB 29.15, yen 90.32, sing 1.3955, HKD 7.75, INR 47.02, China 6.8276, pesos 13.28, BRL 1.7255, dollar index 75.81, Oil $79.91, 10-year 3.62%, Silver $17.40, and Gold... $1,088.80

That's it for today... Writing from home again, as I have yet, another appointment with a doctor this morning. When you have a blood clot, they monitor the thinness of your blood, and it has to be checked every 3 days... So, I have that going for me! I'm taking tomorrow off, so Chris will have the conn on the Pfennig tomorrow... So, as our little Christine would say... This is my Friday! YAY FOR ME! So with that on my mind... Good luck to my beloved Missouri Tigers as they take on Baylor this weekend, and my little Buddy Alex has his last game on Saturday. Congratulations to the Yankees on their World Series Championship... So... I'm off to see the Wizard... Talk to you again next Monday, and try to have a Tub Thumpin Thursday!

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

Another New Record Level For Gold!

Chuck Butler — Wed, 04 Nov 2009 15:19:53 GMT

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

* Risk players come back out to play...
* Waiting on the Fed's statement...
* Yield differentials come into focus...
* Lisbon Treaty gets signed / ratified...

And Now... Today's Pfennig!

Another New Record Level For Gold!

Good day... And a Wonderful Wednesday to you! Well... Did you see the strong performance that Gold put in yesterday? And it didn't stop yesterday, overnight Gold is up another $7 on top of the +$20 gain it had yesterday... I've got some info on that, we can talk about later...

Oh Shoot Rudy! Let's talk about it right here, right now! It's not every day that Gold not only goes past its previous all-time record high, but obliterates the previous figure! I know you're wanting to take a peek at the price of Gold in the currency round-up portion of the Big Finish, so go ahead, and then come on back... How'd that $1,090 and change price look to you? Pretty sweet, eh? That is as long as you are a Gold holder!

So... What put the tiger in Gold's tank yesterday and overnight? Well, the weaker dollar helped... The thought became clearer that the cartel, I mean the Fed will keep rates on hold this week helped... But the real beef came from the announcement that the Reserve Bank of India was buying the 200 tons of Gold from the IMF... I know, I know, I told you yesterday that I thought it would be a "wash" for the dollar and the Gold price... But that was before I learned that the Reserve Bank of India paid for their $6.7 Billion dollars worth of Gold with... SDR's!

So... Either, the Reserve Bank of India (RBI) didn't want to get rid of their dollar reserves... (yeah, right!) or... The IMF didn't want anything to do with dollars, and preferred receiving SDR's! (for those of new to class, a SDR is a basket of currencies to make one unit called a Special Drawing Right, of which the IMF uses, and has been rumored to be the replacement for the dollar as the reserve currency of the world... The one government, one currency thing)

I'll pin my colors to the mast of the IMF not wanting anything to do with dollars at this point! Been there, done that, bought the T-shirt!

So... The price of Gold is nearing $1,100... I reminded my beautiful bride last night that just 2 months ago I told a group of close friends that they should seriously be considering buying Gold as it had slipped to $940 an ounce... I wonder what they think when they see Gold at nearly $1,100... I'm sure the V-8 head slap is going on all over my neighborhood!

OK... So what's going on with the currencies, as the dollar has had the hammer for 3 consecutive days now... Well... The dollar is back on the slippery slope this morning, as those same thoughts about the cartel, I mean (crying out loud Chuck, why can't you get that thought about the Fed really being a cartel out of your mind!) the Fed, will keep rates unchanged this week, really emphasizing the fact that Australia has raised rates 50 BPS so far, and Norway has raised them 25 BPS... There are places to go where you can get higher yields...

I get a kick out of some people that call the desk here, and say... "I'm looking for a high yield of around 8-10%, with no risk... Do you have that?" Sure, right here in my back pocket! NOT!

The FOMC meeting will be a 2-day meeting, so get the board games out, find the deck of cards, and make sure you have good batteries for the Battleship Game! When the Fed Heads get tired of the board games, and all, they'll announce tomorrow afternoon that they are going to leave rates unchanged, and that while they see improvement in the economy, sans the 3.5% 3rd QTR GDP, it's too soon to remove the accommodating rates... How do I know that? I don't... But, I'll bet a Krispy Kreme to a dollar that what they say is pretty darn close to that!

The key will be to see if the Fed Heads, led by Big Ben Bernanke, leave the words regarding the how long the low rates will remain, "extended period" for if they do... The dollar will immediately be sent to the woodshed once more, without passing Go, and without collecting $200! So... The statement following the rate announcement is the key tomorrow...

So... The euro is 1-cent higher this morning, the Aussie dollar is about 1-cent higher, and so on... Those that bought at yesterday's blue light special prices will be smiling like a Cheshire Cat this morning!

OK... I have to talk about this... For I've received a ton of emails about it...

Quite a few readers have sent me Nouriel Roubini's interview knowing that Mr. Roubini has long been a fave of mine.
Well... Mr. Roubini talked about the "mother of all Carry Trades" being the dollar, of which I told you had become the new funding currency for the Carry Trade a few months ago...

Mr. Roubini also talked about how this was fueling a huge run-up in the prices of risk assets... I've also told you about that, and how... Should the U.S. do the double dip that a huge sell off of stocks would probably occur, and cause an adverse affect on the risk assets of currencies and commodities....

So... All in all... Nothing new... So I was surprised that readers wanted me to comment on this... Well, the caveat here is that Mr. Roubini is calling for a massive sell off of the risk assets when the correction comes... He doesn't specify when this will happen...

I've also said that the risk assets have gone too far too fast, and that a correction is due... So, let's move on from there...

I see where Marc Faber is saying that the correction will net the dollar 10% VS the euro... Again, he doesn't say when this will happen, but that it will...

But again, as diversification people, with our eyes fixed on the horizon that shows that the only way the U.S. Gov't can repay their debts is with cheaper dollars... We just batten down the hatches for this correction, for we know that on the other side of the correction is another massive move upward...

There was something else that I wanted to talk about... And it's something that I'm sure I'll get a few emails about... Good and bad... But here goes... Did you see that Ford announced a nice profit for the last quarter... CAPITALISM ISN'T DEAD! Three cheers for Capitalism! Maybe that's all I'll say about it, for if I went into how I feel that Capitalism is getting beaten like a rented mule, I might start talking about stuff that doesn't need to be discussed here!

So way to go Ford! Didn't take bailout money... And 1 year later books a profit! Whereas GMAC is in need of additional bailout money, and Chrysler is Fiat now... Great use of taxpayer money wasn't it?

Here I go again... Sorry, didn't mean to go on this tangent about this stuff... It's just that I have no idea why this doesn't just tick off any American that reads about this stuff! But not to worry, the Gov't has more plans to spend money they don't have!

Hey! Earlier I talked about Australia's rate increases... Well, the Reserve Bank of Australia (RBA) is running scared these days... Scared that their rhetoric about rate increases is going to push the A$ to parity with the green/peachback... So guess what the RBA members have decided to do? You've got it! They're going to "tone down" their interest rate hike rhetoric... RBA Gov. Stevens said that the 28% gain in the A$ this year VS the U.S. dollar would be a good inflation fighter, and allow him to slow down the rate increases...

Well... Don't get off the A$ love train just because the RBA Gov. Stevens suggests that he could slow down rate increases... The A$ already enjoys more than 300 BPS of yield differential to the U.S. dollar, Japanese yen, Canadian dollar, and Swiss franc!

And the Lisbon Treaty that was hung up in the Czech Republic, has finally been signed by the Czech Republic's President, thus completing the rounds, and putting the Treaty in place. Now, I'm not a big fan of the Treaty, but... It's what the Eurozone needed to remain viable, and so it it's done... This removes the albatross from around the euro's neck, and will shut those people up that keep talking about a collapse of the European Union, and the euro...

Chris Wood is filling in for good friend David Galland this week on David's daily letter called "Casey's Daily Dispatch"... Anyway, Chris Wood had this to say yesterday, which I believe just about sums it all up regarding the Fed and Treasury here in the U.S....

"A group of federal agencies including the FDIC, Federal Reserve, and Office of Thrift Supervision just released new guidelines for how banks deal with troubled commercial real estate loans. And get this:

Under the guidelines, loans to creditworthy borrowers that have been restructured and are current won't be classified as high risk by regulators solely because the collateral backing them has declined to an amount less than the loan balance.

Yes, you read that correctly. Banks won't have to show losses "solely" because the collateral has fallen in value below the loan. Perhaps most incredible is that this move is being applauded by the business community. The next step will be a federal move to facilitate refinancing that same collateral."

Chuck here again... That's pretty amazing, don't you think? First the financial institutions were allowed to drop the "mark-to-market" on their collateral... And now this... And people still question why foreigners are growing very weary of these things, and becoming quite scared regarding their dollar backed holdings? They shouldn't question any longer, eh?

And then there was this...

Remember how excited I was that Ron Paul's bill to audit the Fed was going to discussion? I thought, surely (hey! Who's Shirley?) this would be it... The Fed would finally get audited, and treated like the Corporation they are! But, then Ty Keough sent me this, and my hopes were dashed...

Representative Ron Paul, the Texas Republican who has called for an end to the Federal Reserve, said legislation he introduced to audit monetary policy has been "gutted" while moving toward a possible vote in the Democratic-controlled House.

The bill, with 308 co-sponsors, has been stripped of provisions that would remove Fed exemptions from audits of transactions with foreign central banks, monetary policy deliberations, transactions made under the direction of the Federal Open Market Committee and communications between the Board, the reserve banks and staff, Paul said today.

"There's nothing left, it's been gutted," he said...

OK... To recap... Gold is soaring! Gold has reached a new record all-time high! The dollar has given back some of its gains the past 4 days as traders begin to realize that the Fed is going to keep rates unchanged tomorrow. The Gov't is up to its usual tricks regarding collateral and the bill to audit the Fed.

Currencies today 11/4/09: American Style: A$ .9080, kiwi .7245, C$ .9425, euro 1.4770, sterling 1.6525, Swiss .9770, European Style: rand 7.7365, krone 5.7150, SEK 7.0580, forint 187.60, zloty 2.89, koruna 17.6650, RUB 29.27, yen 90.80, sing 1.3970, HKD 7.75, INR 47.06, China 6.8270, pesos 13.22, BRL 1.7280, dollar index 76.14, Oil $80.02, 10-year 3.48%, Silver $17.43, and Gold... $1,091.70

That's it for today... I hear that my colleague on the Currency Capitalist newsletter that I do for the Sovereign Society, Ashish, is going to fill in for me at the Conference that I'm missing, and give my presentation on the Treasury Bubble... He'll do a great job! We've had 4 consecutive days of sunshine, and you should see the people, they are smiling again! I began making my plans for Spring Training with the family last night... Whenever I do that, I get all geeked up and ready to leave now! But I have 4 months to go! UGH! First we have our move to the new building next door, then Christmas, then New Year's, Orlando Money Show, and then finally March! Oh, and there's a conversion to a new system thrown in there somewhere! It's a moving target so we don't know for sure, but it will be HUGE! OK... Well, as with every day, it's time to go, so I hope you have a Wonderful Wednesday!

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

Oops, Did I Say That Out Loud?

Chuck Butler — Thu, 24 Sep 2009 14:36:53 GMT

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In This Issue..

* A Wild and Wacky Wednesday...
* FOMC leave stimulus and QE in place...
* Will G-20 try to throw cold water on commodities?
* GATA receives a letter from the Fed...

And Now... Today's Pfennig!

Oops, Did I Say That Out Loud?

Good day... And a Thunderin' Thursday to you! It's Thundering and raining here, so I felt that naming today a "Thunderin' Thursday" was bang on! We had a wild and wacky Wednesday yesterday, with the Fed Heads playing the part of the court jester... And... I want to know, right here, right now, why the media isn't blasting Fed Head Honcho Big Ben Bernanke! I'll tell you why they should be, in a minute...

OK... As I said, we had a wild and wacky Wednesday yesterday, as the non-dollar currencies went for a spin on Mr. Toad's Wild Ride, with Big Ben Bernanke in the role of Mr. Toad! HA! That makes me chuckle! Here's the skinny, and what everyone should be up in arms about...

The FOMC meeting concluded with interest rates remaining at near zero... But what happened next was, well, exactly as I said it would happen, but we'll get back to that in a minute... What I'm talking about here is that the Big Ben's band of merry men announced that the U.S. economy's return to growth was insufficient to withdraw stimulus, and that quantitative easing would remain until March next year... WHAT!

HEY BIG BEN! I read in the Financial Times the other day, yes, the Financial Times, that you said the recession was likely over! I also read in another publication that you said basically the same thing... So! If what you told these fine publications is true... Why then do we need stimulus in place along with Quantitative Easing until next March? You could almost hear Big Ben saying... "Oops, did I say that out loud?" HA!

Doesn't that just tick you off? Big Ben and the President going around telling people that it's all clear and consumers can come out now and resume their spending, only to find out it was nothing but "feel good" stuff... Yes, stuff to make us "feel good"... So we would take our eye off the ball... But not me! You can't fool a wiley old veteran like me, right Jack Milner? I'm not falling for that change-up... And it ticks me off that they thought I was so stupid to fall for that!

Ok... Let's take a trip back to Monday of this week, when I was trying to explain why the dollar had reversed the negativity toward it... I said this in the Pfennig on Monday... "Seriously though, the markets are of the belief that the Fed will keep rates near zero, but will announce that they will begin to remove stimulus, as Head Fed Honcho, Big Ben Bernanke, believes the recession is over...

I think this is wishful thinking on the markets' part, as I really don't see the Fed Heads doing anything, but talking about doing this, that and the other thing. You see, the Fed Heads know all too well that the Commercial Real Estate problems are just beginning and with Unemployment."

I've been more right about what the Fed Heads were going to do, for the last 2 years, than Big Ben!

OK... So, here's where the wild and wacky comes in... The non-dollar currencies were hanging around on a corner trading in a tight range, when the announcement of further stimulus and Quantitative Easing was made... You should have seen the non-dollar currencies begin to run up VS the dollar... It was crazy, I mean in a manner of minutes the euro traded from 1.4765, to 1.4850, and Gold? It was soaring too! But then it was one of those a-ha minutes, and no, I'm not talking about the 80's group singing Take Me On! No, it was one of those head slapping moments when you say... Wow, I could have had a V-8!

Basically, investors figured out that by leaving the stimulus in place longer than originally planned, the Cartel, I mean the Fed, is confirming that the U.S. economic recovery isn't nearly as robust as Big Ben and his compatriots have led everyone to believe. Stock markets fell, and the Treasury rates rose.

With the stocks backing off, the risk assets of currencies and precious metals backed off VS the dollar... And, we ended the day, where we started it... A wild and wacky Wednesday for sure!

The overnight markets were very confused as to what direction they should take... So, as I turn on the screens this morning, the euro is 1.4775, and Gold is $1,014... About the same as yesterday morning... If you weren't around for the spin on Mr. Toad's Wild Ride, then you would think... "How boring these currencies and metals are"... HA!

The thing that keeps haunting me here with yesterday's stock sell off... Could it be the next leg down that I keep warning you about? Could yesterday's sell off be the harbinger of more selling? We'll have to keep an eye on this, folks... If we see 3 or 4 days of consecutive selling, it could very well be the indication that the next leg down is here...

Well... The other day I mentioned that the dollar could very well be the last man standing when it comes to near zero interest rates, and that could lead to the dollar becoming the next funding currency for the Carry Trade...

Ty brought to my attention this fact that plays quite well with that thought... For the 1st time since 1933, 3 month LIBOR rates in the U.S. (.28563) are lower than Japanese Yen 3 month LIBOR rates (.34875)

And one wonders why, the dollar is getting beaten like a rented mule? (no animals were hurt!)

A reader called in yesterday and wanted to know what I thought regarding... how a new SDR would affect the currencies. (Specifically NOK, AUS, BRL, CHF)

Well... That's a tough one! Because if we do end up with a new SDR, no one knows what the makeup of that SDR will be... So, I can't say how it would affect any currency until we begin down that road to a new SDR... If the current makeup of an SDR is used, then euro, yen, sterling and dollars would benefit... But one has to think that if things come to pass and we start down that road of a new SDR (Special Drawing Rights) that the makeup would be quite different, and could possibly even have some Gold as a component!

So... Sorry, I can't really answer the question, because it's an unknown... I hope my beautiful bride reads this part, as she usually only reads the first and last paragraphs, because she always contends that if I don't know the answer to a question that I just make something up... See, dear? I said I couldn't answer the question!

Ok... G-20 begins today... Look for these knuckleheads to take a toughened stance on speculation, with Oil in mind... I think that all they will do is make things tough for the Commodity Currencies of Australia, New Zealand, Brazil, Canada, South Africa, and Norway... There's also an outside chance that these knuckleheads will attempt to do something to limit the rise in currencies VS the dollar... In other words, prop up the dollar... I'm not convinced they could do that, and I am convinced they shouldn't do that!

Speaking of Norway... The Norges Bank (Norway's Central Bank) did as I thought they would with rates, and what I hoped they would do with their statement... Here's the skinny... The Norges Bank left rates unchanged... But... Said after the rate announcement that "they were CONSIDERING a rate hike"... The Norwegian krone went on a moon shot immediately after that statement.

In the race between Norway and Australia as to which will be the first to hike rates, Norway takes the lead, with that announcement yesterday... But, it really doesn't matter, as no one will get the checkered flag or anything... The thing that makes the difference is that the yield differentials to the U.S. will begin to grow wider... And that, my friends, will go a long way toward currency strength for the currency that rewards investors with higher yields!

Speaking of Australia... The Reserve Bank of Australia's (RBA) semi-annual Financial Stability Review gave a generally clean bill of health to the banking system and noted sentiment among households and business had improved considerably in recent months... But... The RBA went on to caution that it was not strong enough yet... Which then puts the Aussie rate hike forecast further behind Norway's...

In New Zealand overnight... It's been a good week o' data for the Kiwis... Last night, it was the latest Consumer Confidence Index which jumped to a 4 - year high of 120.3 (previous reading was 106)! WOW! So... The highest Consumer Confidence in 4 years! This news helped kiwi to remain above 72-cents... Even with the risk assets sell off...

In Germany this morning... The Business Climate Index, as reported by the think tank IFO, disappointed a bit, as it came in (91.3) lower than forecast (92), but... The 91.3 marked the 6th consecutive monthly increase for the data... So, the trend is still in place...

And it's good to be the yen, eh? I mean, recently, we've seen yen rally when the other currencies rally VS the dollar... And before that, we've seen yen rally along with the dollar... Last night, yen rallied alongside the dollar, and is trading with a 90 handle this morning...

And then there was this... The Federal Reserve System has disclosed to the Gold Anti-Trust Action Committee Inc. (GATA) that it has gold swap arrangements with foreign banks that it does not want the public to know about. WOW! This is a BIG DEAL folks, as the Fed as recently as 2001 (Big Al Greenspan) denied that these swap arrangements existed...

GATA believes that this letter suggests that the Fed is indeed very much involved in the surreptitious international central bank manipulation of the gold price particularly and the currency markets generally.

So guess what I think regarding the Fed now? That Ron Paul's bill to audit the Fed needs to get on a roll! Remember, it comes before a committee tomorrow, I believe, where it will be decided to forward the bill on or kill it... So, call your representative and tell them you believe they should back Ron Paul's bill to audit the Fed! I've got a bag full of names to call these guys at the cartel, I mean Fed... But, those are verbally used only... Nothing in writing... Hey! This is a family safe letter!

OK... So, to recap... The Fed is leaving stimulus in place along with Quantitative Easing until next March. So much for Big Ben, and the President's claim that the recession is over, eh? The currencies rallied at first on the Fed's announcement, but later realized the rot on the economy's vine has been exposed by the Fed, and then the currencies sold off VS the dollar to end the day unchanged...

Currencies today 9/24/09: .8745, kiwi .7235, C$ .93, euro 1.4775, sterling 1.6220, Swiss .9770, rand 7.3850, krone 5.7630, SEK 6.8380, forint 183.15, zloty 2.82, koruna 17.04, RUB 29.99, yen 90.60, sing 1.4110, HKD 7.75, INR 48.03, China 6.8273, pesos 13.37, BRL 1.7980, dollar index 76.25, Oil $68.36, 10-year 3.41%, Silver $16.81, and Gold... $1,014.10

That's it for today... Cardinals missed a chance to clinch last night, but the magic number falls to 1... Today, our colleague, Don Ries, celebrates his birthday... Don and I have worked together, off and on since 1989... He's our "Bond Daddy"! Or, I guess I should say "Bond Granddaddy"! We had a MarketSafe CD mature this week. It was a 3 year CD in the AIG / Dow Jones Commodity Index, and it returned a little less than 2%... Which isn't anything to write home about, but, as I tell people these days, "it's better to have a return of capital than a return on capital! We're going to extend the BRIC MarketSafe to another funding date in November, but that will be the last funding for that CD. The BRIC has been quite popular, I must say... I have 3 hours of Continuing Education on the docket this morning... This is my 3 broker licenses... Oh boy! Talk about brain death! OK... I've got to get this out the door... I hope everyone arrives to work dry, as it's a Thunderin' Thursday!

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

Catching Up With Richard Duncan...

Chuck Butler — Wed, 23 Sep 2009 14:35:09 GMT

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In This Issue..

* Non-dollar currencies give back very little...
* The Unemployed are remaining unemployed...
* FOMC puts away the board games today...
* China invokes a "Public Morals" defense...

And Now... Today's Pfennig!

Catching Up With Richard Duncan...

Good day... And a Wonderful Wednesday to you! Well, the Fed Head put away the board games today, and make an announcement this afternoon... Yawn... Norway's Norges Bank will also make an announcement with theirs coming this morning. I still contend that the Norges Bank will keep rates unchanged and give a hint as to when their rate hike cycle will begin. If that were to happen as I think, then it would be very bullish for the krone...

Well! The non-dollar currencies held ground gained yesterday, giving back, oh-so-little to the profit taking. The euro didn't hold 1.48, but it's so close it could spit in the 1.48's back yard! The negativity toward the dollar, and all that goes with it, like Huge Deficit Spending, low yields, economic depression, inflation fears, and more, just keeps mounting... All these pundits with their "discovery" that the dollar has bad fundamentals, just make me laugh. Welcome to my world! In this world, we don't wear rose colored glasses... We call dolts for what they are... And we fully understand the bad affects of building deficits...

HEY! One of the first books I ever read about the dollar, was written in 1972, by a guy named Gerald Krefetz, called, "The Dying Dollar"... But, the one that really pushed things to the forefront in 2003 was Richard Duncan's "The Dollar Crisis"... For the longest time, when someone would ask me what book they should read to get started, I would give them Richard Duncan's "The Dollar Crisis"...

The Dollar Crisis was followed by two books by Addison Wiggin and Bill Bonner, "Financial Reckoning Day" and "Empire of Debt"... Addison also wrote "The Demise of Dollar", and then Craig Karmin wrote, "The Biography of the Dollar", in which he writes one chapter around my story... All of these have done a wonderful job of explaining things to people that normally wouldn't understand all that's going on, financially...

The reason I brought this up is that Richard Duncan was in the news last night, as he gave an interview in Hong Kong yesterday... Let's listen in to Richard Duncan...

"The bad news is at the end of a 10-year period we're still not going to have fixed the problem. Eventually it will lead to high rates of inflation well down the line and really destabilize things to the point where they may be irreparable damage. A kind of "Fall of Rome" scenario."

Of course Mr. Duncan was talking about the U.S. Budget Deficits, which he feels will continue to pile up in the next decade, eventually reaching an unsustainable level that may result in an economic collapse...

I think it would behoove us to listen to Richard Duncan, for in his book, "The Dollar Crisis" published in 2003, he told us that persistent Current Account Deficits by the U.S. were creating an unsustainable boom in global credit that was destined to break down, resulting in a worldwide recession... Hmmm... Does he have everyone's attention now? Good!

Ok... Enough of the "book tours"! I was listening to the Evening News while icing my knee last night, and something that Brian Williams said struck me as strange... He said..."The poll of more than 1,000 adults, taken within the past week, shows growing optimism that the economy has begun to turn around." Hmmm... I guess they didn't ask one of the 7.4 Million people that have lost their jobs!

I've got two things to talk about here with this... 1. is that people would be listening to Big Ben Bernanke which is where I believe this "optimism on the economy" is coming from... I have a YouTube video at home, that you can find, I'm sure, that's titled "Bernanke" that has shot after shot of him saying something that was so completely wrong, that you have to wonder how the heck he kept his job! Any way... I can't get to it here at work, you know they would never want me "wasting my time looking videos of the Fed Chairman!"

And then 2. is the question that I have regarding those people surveyed... How could they have optimism when 7.4 million Americans have lost their jobs during this depression (what they call a recession)... But that wouldn't be bad if these 7.4 million Americans turned around and found jobs right away, eh? Well... Unfortunately... The average duration of unemployment at 25 weeks is now the longest since the Department of Labor started tracking the data in 1948. By the end of August, nearly five million people had been unemployed for longer than six months...

Whew! Now that was a depressing piece... Hmmm... What can I talk about that brings the smiles back on everyone's faces? I've got it! Gold!

I was telling Jen yesterday that the commercials for Gold on TV are really starting to add up... You've got Gordon Liddy, Jay Johnson, and others telling you how Gold is a store of wealth, and inflation fighter, and more dependable than fiat currencies... And of course you should buy Gold where "they buy their Gold"! I really think we should have our own Gold commercial, and say, "yes, you can buy it from those other guys, but why pay more for your Gold?"! HA! Now that would get 'em!

But seriously... There is a guy, well known guy, out there right now, writing about how the price of Gold is about to collapse... So... At least you know that I give you both sides of the story, eh? I don't agree with this side of the story, but there it is for you!

OK, now we're back on the "happy tracks"! So, let's head to the South Pacific! New Zealand pushed out of their recession in the 2nd QTR, after seeing its economy contract for five consecutive quarters... Now, don't get too lathered up over this initial news... The New Zealand GDP only increased slightly less than 0.1%. But! That technically ends the nation's worst economic downturn in three decades.

This was very bullish for kiwi, as now the markets are beginning to talk about a rate hike in New Zealand... I would say that's a little premature, wouldn't you? I mean, they have barely climbed out of the red, and the talk turns to a rate hike? Yes, definitely... That's premature... But! The talk has kiwi on the rise... Let's hope that traders don't get disappointed too quickly!

And then back in the Eurozone... Germany's Manufacturing PMI came in less than forecast, but! Hit a 13-month high of 49.6! Still not above 50, but the trend is Germany's friend right now in the manufacturing sector! Tomorrow, we'll see the think tank IFO's Business Climate, and I truly believe this will be strong, and these two together, strongly suggest that the euro is trading at a proper level!

I'm still waiting for news from the Norges Bank...

I read some real disheartening news last night regarding foreclosures in the U.S. It seems that they are really backlogged... As of July, mortgage companies had not begun the foreclosure process on 1.2 million loans, according to LPS Applied Analytics. Also, 1.5 million seriously delinquent loans were still caught up in the foreclosure process... Hmmm... You don't think the processing of these foreclosures are being held back by someone do you? I mean, what better way to get people "feeling good again" than to not have them hear "bad news"...

OK, that's just the conspiracy blood in me... Sorry...

Things have been quiet in Japan since the election... And the Japanese yen has range traded... Waiting for a direction from the new Gov't... What will they do? Will they promote growth? Will they continue to authorize intervention to keep the yen weak? Lots of questions here in Japan...

I had a reader send a note that made me chuckle... He asked if the Chinese were going to sell Treasuries to buy the IMF's Gold... He called it... "junk for Gold"... HAHAHAHAHAHA!

Speaking of China... Have you noticed that the renminbi has ever-so-slightly gotten stronger VS the dollar? This is micro-moves... But, "moves" nonetheless! And not weaker!

Further with China... Did you see where China was arguing their position in the World Trade Organization (WTO) regarding not allowing Hollywood Movies, and other Western media into their country? The Chinese invoked a defense of "Public Morals"... We'll have to keep an eye on that to see how that turns out!

I'll come back to North America, before I head to the recap and Big Finish...

Yesterday, I told you that Canadian Retail Sales was the only "real" data to print that day... Well, I might as well, tell you what printed, eh? Canadian Retail Sales backed off the consecutive gains of 1.1% in May and June, and posted a negative -.6% in July... This won't do anything to get the Bank of Canada off their duffs... However, one would have thought that data like this would hurt the currency, in this case the loonie... And it did... But only for a short time... The loonie is back on the rally tracks this morning!

OK... So... The FOMC ends today, we're still waiting for the Norges Bank's announcement, and the dollar is holding on for dear life! The negativity toward the dollar has returned, and Richard Duncan gives us his latest forecast...

Currencies today 9/23/09: A$ .8740, kiwi .7250, C$ .9365, euro 1.4780, sterling 1.6440, Swiss .9775, rand 6.8250, krone 5.8225, SEK 6.83, forint 183.50, zloty 2.8275, koruna 17, RUB 30, yen 91.30, sing 1.4125, HKD 7.7505, INR 48.02, China 6.8261, pesos 13.35, BRL 1.7925, dollar index 76.14, Oil $71.15, 10-year 3.47%, Silver $17.13, and Gold... $1,014.45

That's it for today... Cardinals' magic number is now 2... This will be their 7th trip to the playoffs in since the 2000 season... That is if they win 2 more games! That's a nice run! I forgot to mention above that Addison Wiggin also wrote an update to the Demise of the Dollar book, for which I wrote the foreword! One of these days, when I retire, maybe I'll sit down and write a book.... And then, maybe not! Probably not! We've had a visitor this week to the trading desk, Megan Davis, is here from our Islandia office... We've been on our best behavior for her too! Our little Christine surprised everyone yesterday, and brought in coffee drinks for the coffee drinkers... She brought me a decaf, as I really try to not partake in caffeine drinks any longer, except... When I'm camping! OK... Enough of that, let's get to work, and make this a Wonderful Wednesday!

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

Currencies Hold Their Gains...

Chuck Butler — Wed, 09 Sep 2009 15:08:19 GMT

In This Issue..

* Consumer Borrowing Collapses...
* What's up with sterling?
* Option ARMs get ready to reset...
* Gold falls back to below $1,000...

And Now... Today's Pfennig!

Currencies Hold Their Gains...

Good day... And a Wonderful Wednesday to you! Well... The currencies, for the most part, kept the heat on the dollar throughout the day and in the overnight markets. The euro, did rise to 1.45 and change yesterday, while it is hovering right at that figure this morning, so it did give a little bit back.

There were no big announcements last night like we saw on Monday, so the currencies didn't have anything to push them further. In fact, there may be a "letting the dust settle" period of time, with the Big Dog, euro, before we see any further advancement, given the euro's huge gains yesterday...

We did have "Mr. Yen" Sakakibara, tell a crowd of people that he believed the dollar would remain the world's reserve currency for 20 years... Hmmm... Apparently, the IMF and UN haven't let him in on the news that they desperately want to do something about the dollar! Not to mention the BRIC countries of Brazil, Russia, India and China, of whom, have already stated their case for a change!

Chinese stocks were up again last night, so that could lead the way to further gains by stocks here in the U.S., which would bring even more risk takers out of the walls... That is, of course as long as the trading pattern that has existed for 9 months remains in place!

I did read something last night about a complete collapse of Consumer Borrowing here in the U.S.... Hmmm... Well, on one hand, if that's true, that would mean that Consumer spending is down, and saving has replaced it, and that would be a good thing! On the other hand... Consumer Spending is like 70% of our economy... Or was 70% of our economy I guess I should say! And if we're going to see a further slowing of spending, then you can kiss the thought of a "V" shaped recession good-bye! Bye now... Don't go away mad... Just go away!

Gold was unable to hold $1,000 yesterday and last night... I was talking to my Publisher for the Currency Capitalist letter yesterday, and I was telling her, that while I'm a firm believer that this stock market rally is going to crash and burn, bringing all risk assets along to the fire, which would adversely affect the prices of currencies, and commodities, including Gold... There's no mistaking the appearance of a rush to Gold in the past week... And why did the rush occur? Well, to me, as I explained yesterday, it's simply an understanding that inflation is on the other side of what we are now experiencing, and if you can pick Gold up now at those levels that existed last week (sub $1,000), why not, before it takes off?

So... I was assigned to write a piece on Gold... See how that works in the Publishing biz? You mouth off with your thoughts, and the next thing you know, you're doing research for a piece that has to be done in 3 days or so! UGH! But... The thing I thought of was simply this... We may, and I'm not sure yet, but we may be getting to a new level, where I used to say I thought it was good to buy Gold when it dipped below $900... That might have to be changed to $1,000... That is, if we don't have the crash and burn...

Getting back to the crash and burn thing... I know, I know, I've been talking about this for a couple of months now... And no sign of crashing or burning... Yet! But, then maybe there won't be any crashing and burning as long as the markets are manipulated... I was doing some research the other day, and came across something that plays well with my manipulated theory... The stocks of Fannie, Freddie, AIG, and... Oh shoot! I've forgotten the 4th one... It's a Gov't owned company... SHOOT! Oh well, it doesn't matter, these 4 stocks were accounting for over 40% of the volume each day in the stock market... Usually these 4 account for about .3%... What's going on here folks? I've got a boat load of conspiracy theories about what's going on... But I'll leave that up to your imagination!

The Commodity currencies, that were so strong yesterday, have given some ground back VS the dollar overnight. The only thing that makes sense to me here, is that it is profit taking... For, these Commodity Currencies, (except Canadian loonies) have yield advantage over the dollar... Shoot Rudy, they have yield advantage over all the major currencies... Euro, yen, sterling and dollars! And for the most part, interest rates in these countries will be the first to rise beginning later this year... So, it had to be profit taking!

But, what do I always say, when there's profit taking? That's right! It gives us a chance to buy at cheaper levels!

One currency that continues to baffle me and probably many others with its rise from the ashes, is pound sterling... (cable, as currency traders call it) I've had quite a few readers send me notes asking me about sterling's strength, given the fact that the U.K. is probably in more dookie than the U.S.... There are two things I can think of that probably explain it... But even these don't do that good of a job explaining this rise in sterling...

1. the talk of using SDR's... SDR's currently consist of: euro, yen, sterling and dollars. So, if SDR's get wider use, then more sterling will have to be bought by the IMF (who issues the SDR's)
2. The crosses... Because most of the currencies are rallying and have been rallying against the dollar since March, sterling gets dragged higher in the crosses...

I've explained these crosses many times in the past, so I'll just touch on it here... Whenever you buy a currency, you have to sell a currency... So the two currencies that make up that trade are called a "pair"... These are also called "crosses"... Here in the U.S. we only think of dollar VS a currency... But all over the world, people are crossing euros for yen, and vice versa, Swiss francs for Aussie dollars, etc. A lot of those crosses, have sterling in them, and therefore, sterling gets dragged higher... Not a fundamental thing...

But we've seen this over the years, especially with yen... And the dollar of course!

Well... You might have missed this news yesterday... But the U.S. Senate is going to have to raise the federal debt limit beyond $12.1 Trillion by mid-October! Hmmm... Anyone have a guess as to who blocked the raising of the debt ceiling in 2006 and said... "Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren"? It's the same person that is now that same person is asking Congress to raise the debt ceiling to $13 Trillion...

But, the reality of this is that our Budget Deficit this year will be $1.6 Trillion, by Gov't accounting standards... By Chuck standards, it will be $2.5 Trillion when it's all said and done... And we just keep finding more ways to spend money we don't have, don't we? I'm going to stop here, because this all just ticks me off, and I don't want to say something that will fill my email box with name calling emails...

Did you see the story in the Washington Post regarding the resetting of ARM's? and I'm not talking about the arms that get broken on the playground and have to be reset... I'm talking about Adjustable Rate Mortgages... Here's the skinny from the Washington Post story...

"Between now and 2011, roughly 70% of option ARMs, with a total value of about $189 billion, will reset." The rating agency, Fitch, put together the numbers and did the research... And none of spells good times for home owners that are already stretched to make mortgage payments.

Here's how I believe they work... Option ARMs, also called pick-a-pay loans, allow borrowers to choose how much to pay each month. Nearly all the borrowers who took out this type of loan from 2004 to 2007 chose to pay less than the interest due. Sometimes they paid as little as 1 percent interest. But the loans eventually require the borrowers to start paying the principal and full interest rate, so the payments shoot up.

So... This mortgage meltdown will continue to remain in the news, eh? $134 Billion of these ARMs will reset in the next two years, and the monthly payments are expected to jump 63% on average, or $1,053 per month, for loans adjusting this year and next... Can you imagine getting that letter in the mail? Dear Homeowner, your next mortgage payment will be xxxxxx...

That's a really sad thing... Very sad...
But... Another reason why I say this is a depression and not a recession! It's going to carry on, and on, and on...

There was more Happy Days (NOT!) news in the Washington Post yesterday... "There is little chance U.S. taxpayers will recover all of the billion spent on rescuing Chrysler and General Motors, according to a report by the Congressional Oversight Panel."

Great! But in reality, we didn't expect to recover it did we? I know I didn't! The Gov't doesn't have a good track record of preventing losses much less recovering them.. And I'm not just talking about the current brand of Gov't... It goes back many years...

My friend, David Galland, gave a quick history lesson in his letter this past weekend... While this may be depressing, it does give what I said above, credence...

A Quick History Lesson

The U.S. Post Service was established in 1775. So they've had 234 years to make it work. It is broke.

Social Security was established in 1935. They've had 74 years to make it work. It is broke.

Fannie Mae was established in 1938. They've had 71 years to make it work. It is broke.

Freddie Mac was established in 1970. They've had 39 years to make it work. It is broke.

The War on Poverty started in 1964. They've had 45 years to make it work. About $1 trillion of taxpayer money is confiscated each year and transferred to "the poor." It hasn't worked.

Medicare and Medicaid were established in 1965. They've had 44 years to make it work. They are both broke.

AMTRAK was established in 1970. They've had 39 years to make it work. Last year it had to be bailed out and today continues running at a loss.

$700 billion bailout of 2008. It has yet to create a single new private-sector job.
Cash for Clunkers in 2009 went broke after 80% of the cars purchased turned out to be produced by foreign companies.

Now that it's put like that in black and white, it sure doesn't look good does it?

I really got on a roll today regarding the goings on in the U.S. and didn't pay much attention to the currencies... But, that's because they are trading in yesterday's clothes this morning... With no data to talk about yesterday, and so on...

The data cupboard only yields the Fed's Beige Book for us this afternoon... For those of you who don't know what this entails... The Fed's Beige Book is a summary of Commentary on Current Economic Conditions by each Federal Reserve District. It's printed 8 times per year, and usually about two weeks before a FOMC meeting. (Federal Open Market Committee) It was once believed that the Fed Heads would use the findings in the Beige Book to help them make their decisions on monetary and fiscal policies...

I say, "It was once believed" because... After reading Bill Fleckenstein's great book about Ignorance at the Fed Reserve, Greenspan's Bubbles, I was scratching my head asking, but I thought the Beige Book was used to help make those decisions that Big Al Greenspan made?

So... Again, no real data today... So the currencies will get their direction once again from stocks... And like I said above, the Chinese stock markets was good to go overnight...

OK... So... Before I go to the Big Finish, let me recap today... The currencies held onto gains, albeit giving back small amounts in what appears to be profit taking. The Senate needs to raise the $12.1 Trillion debt ceiling. $189 Billion in Option ARMs are coming due in the next three years, and no data today should leave currencies to be directed by stocks, that is if the trading pattern holds.

Currencies today 9/9/09: A$ .8615, kiwi .6969, C$ .9245, euro 1.45, sterling 1.6505, Swiss .9560, rand 7.5525, krone 5.9375, SEK 7.0575, forint 186.70, zloty 2.84, koruna 17.60, RUB 31.18, yen 92.40, sing 1.4260, HKD 7.75, INR 48.50, China 6.8285, pesos 13.35, BRL 1.8290, dollar index 77.29, Oil $70.90, 10-year 3.48%, Silver $16.36, and Gold... $996.35

That's it for today... So... It's 9-9-09... Pretty cool, eh? Speaking of pretty cool... I got up this morning, and watched the 9th inning of the Cardinals / Brewers game last night, as I can rarely stay up for an entire game during the week. The Brewers closer, a future Hall of Famer on the hill, and Matt Holiday hits a 2-run homer to win the game! WOW! I was clapping, and hootin' and hollerin' and it was 4 in the morning! Well... I had to back out of my trip to Williamsburg VA this weekend, to speak at the To The Point News Rendezvous. I was pretty excited about this opportunity. But the steroids they put in my knee have not worked, and the pain in my knee is too much for me to travel with. If you've never heard of To The Point News, it's put together by a man that used to be Ronald Reagan's right hand man, Dr. Jack Wheeler...

OK... I'm bummed about not getting to go to speak to these great people... But the knee is just too much... Time for Plan B... And time for me to get going on this Terrific Tuesday, how about you? Make it Terrific!

Chuck Butler
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

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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

On The Soapbox!

Chuck Butler — Wed, 12 Aug 2009 14:46:00 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 trade in a tight range...
* Soapbox talk...
* QE talk...
* FOMC Day
And Now... Today's Pfennig!

On The Soapbox Again!

Good day... And a Wonderful Wednesday to you! I've got an interesting thought for you all this morning... I think you'll want to read what I have to tell you this morning and not just skip to the Big Finish! HA! But first, a review of what happened yesterday and in the overnight markets. Are you ready? Then let's go!

Well... Yesterday did NOT turn out to be a Turn-Around Tuesday after all... The small rally I saw right before signing off on the Pfennig yesterday, went "poof" and it was gone. The currencies then traded in a tight range the rest of the day. The High Yielders and Commodities have really taken on some water in the past two days.

In the overnight markets, Japanese yen was the only currency other than the dollar to gain. We've seen this before... In fact from Sept of '08 through Feb of '09, we saw the Japanese yen and dollar move higher together... You may recall that I would question the mental capacity of a trader that thought that Japanese yen was a "safe haven" but at the same time decided that discretion would be better than valor, and not stand in front of that yen bus!

That leads me to what I really wanted to talk about today, and that is... What happens if this great run that stocks have been on since March, suddenly ends? What happens if smart people begin to take profits, and that leads to more selling, and before you know it, things are looking bleak for stocks again? Well... I doubt anyone knows... But... We can look back to last fall's huge reversal of stocks for an indication... And I don't like that indication!

As you know, I've chronicled over and over again, how stocks and currencies have been connected at the hip for some time now... This is contrary to the historical trading pattern of these two risk assets. Currencies have different pricing mechanisms than stocks, and have a low correlation to stocks... But... The markets have put stocks and currencies and even commodities in a bucket labeled "risk assets"... And all that historical trading has been shoved under the bed for now...

With that in mind, and no apparent break in the link of these asset classes in sight, although last Friday's Jobs Jamboree gave us a glimpse of a break, but no follow up occurred, we have to believe that a stock sell off will adversely affect the nice gains the currencies have made this year since March. And with that is my chance to step up on the soap box...

Ahem... Hello? Can you hear me now? Is this microphone turned on? OK... Here we go... I long have told people that the most important thing they can do in their investment portfolios is to diversify, and to add the asset classes of currencies and metals to their portfolios. I ask them... You wouldn't own just one stock would you? Then why own just one currency? Diversification, gives you a hedge against the potential drop in the dollar, which most people truly believe will happen eventually, but with short periods of dollar strength mixed in.

So, if one is "truly diversified" they don't panic when the short periods of dollar strength occur... In fact, over the years, I've seen, what I consider to be really intelligent investors, use the short periods of dollar strength as an opportunity to add to their positions at cheaper prices...

I told the crowd in Vancouver... Markets always do what their supposed to do -- just not when.

So, the dollar may have second winds here and there, and for sometimes up to 5 months, but the idea to diversifying now is to take away the risk of the markets doing what their supposed to do. now! And the idea is that eventually, the Gov't will get what they want (a cheaper dollar to use to pay back their debts), and you will be diversified! And you'll be singing: Jimmy crack corn and I don't care!

Ok... I'll get down from the soap box now... Be careful, Chuck, the balky knee might give out on you!

I had to chuckle this morning, but then the chuckles turned to crying, as I read this story on the Bloomie... "The dollar may weaken should the Federal Reserve unexpectedly say it will keep buying assets", UBS AG, said...

What UBS is referring to here is the Quantitative Easing (QE)... And they feel that the dollar would be taken to the woodshed if the Fed decides to implement more QE...

OK, apparently, the strategist at UBS that wrote the note to Bloomberg, doesn't read the Pfennig! For had he read it, he would have known that the Fed has taken to what I call, "stealth QE"... Recall that on Monday, I told you about a story by Chris Martenson (yes, my fat fingers on Monday typed Mortenson, UGH!) that revealed the plan that the Primary Dealers and the Fed put in place for the last auction of 7-year Treasuries. The Primary Dealers bought the bonds that nobody else wanted, and then a couple of days later, the Fed bought 47% of the purchased bonds by the Primary Dealers!

So... I guess, in the end, if most traders don't read the Pfennig (boy, they don't know what they're missing! HA!), then I guess this thought about more QE might hold some water... But, here's the rub... If the Fed can affectively buy back from the Primary Dealers what the rest of the world didn't want, without announcing it to the world, why then, would they announce it? It's all a shell game folks... With the cartel, I mean, the Fed Reserve in control...

Speaking of the cartel, I mean the Fed Reserve... Their FOMC meets today... And wouldn't it be nice if we could wake up in the morning when the day was new, and see that the FOMC came clean and told everyone that they bought 47% of the Primary Dealers 7-year Treasuries after the last auction? Yeah, right, if you believe that will happen then I'm sure the Gov't has some land it would like to sell you...

I read where 71% of economists surveyed want the FOMC to announce in their statement today following the meeting, that the recession is over... WOW! Now, that would be right up the Fed's alley wouldn't it? I mean how wrong have the Fed and Treasury been about this financial crisis and resulting depression since the get-go? VERY WRONG! So... Go ahead FOMC, say the recession is over... It's my opinion, that they'll be eating those words in the future...

Ok enough! Norway's Central Bank, Norges Bank, is meeting this morning, and I don't expect any movement in their internal interest rate of 1.25%... I would like to see something in writing from the Norges Bank that hints at rate hikes this year... Otherwise, the risk is for krone weakness on the announcement.

I have to think that for now, all the recent good news in Australia has been priced into the currency. The reason I say that is simply because the last couple of data reports showing positive signs for the economy have not moved the A$ one iota... Last night it was Consumer Confidence printing a nice gain of 3.7%, moving the data to the highest level since 2007... But no movement in the A$, except to follow the other High Yielders to softer ground... UGH!

Today... The data cupboard will get a workout here in the U.S. We'll see the color of the Trade Deficit and the Budget Deficits... Of course the color will be RED! For the deficits in these two will be larger than the previous print / month, and there's no dreaming of a turn-around any time in the near or far future!

This Budget Deficit is something that every citizen should be banging on their representatives about every day! And it's getting worse, folks! I've told you about how tax receipts are near the levels of the great depression, which means the revenue to the Gov't is falling, while the Gov't spending continues to grow! But don't let that get in the way of Gov't officials telling us how everything is on the mend, and soon it will all be seashells and balloons...

Remember a couple of months ago or so, I explained to you how when we get to the other side of this deflationary asset price scenario, that we would begin to see inflation pressures? I said that those pressures would be fanned by the fact that people will have money to spend, but retailers won't have inventory to sell them, thus, money chasing too few goods... A few people scoffed at that thought and told me I would be wrong...

Well... It was reported yesterday that wholesale inventory has shrunk for 10 consecutive months! Businesses continued to draw down wholesale inventory in June for the 10th consecutive month, with a fall of -1.7%... Oh! By the way... The 10th consecutive month is a record for continuous inventory decline, according to the U.S. Commerce Department.

So, we've got that to look forward to!

OK... Before I go to the Big Finish... I've got an interesting story to share with you!

Before I talk about the story, I want to tell you that a friend of mine just returned from Greece and Italy, and he reports that for the first time that he can recall, people there preferred euros to dollars... Hmmm...

OK, now the story... Well, it seems that it's not just foreigners that are growing tired of choking on dollars... The LA Times reported that Communities in North Carolina, Massachusetts, Arizona and elsewhere are printing their own money to encourage shoppers to patronize local businesses. Local money was last popular during the Great Depression.

Last popularized during the Great Depression, scrip, or locally created stand-ins for U.S. currency, is making a comeback. Pittsboro N.C., population 2,500, is one of a handful of communities that launched its own money in recent months. It reports an avalanche of calls from other communities that have lost faith in the global financial system.

Pittsboro calls their own currency, the Plenty... "The Plenty is not going to get siphoned off to Wall Street, or Washington, or make a stop in Bentonville on its way to China," said B.J. Lawson, a software entrepreneur who is president of the board of the Plenty cooperative. "It gives us self-reliance."

Here's a link to the complete story in the LA Times... Very interesting indeed!
http://www.latimes.com/news/nationworld/nation/la-na-scrip-money11-2009aug11,0,1371794,full.story

And... No... I'm not going to add the "Plenty" to the Currency round-up! HAHAHAHAHAHAHA!

Currencies today 8/12/09: A$ .8235, kiwi .6650, C$ .9070, euro 1.4165, sterling 1.6455, Swiss .9280, rand 8.1440, krone 6.2225, SEK 7.2715, forint 193.45, zloty 2.96, koruna 18.21, yen 95.80, sing 1.4475, HKD 7.7505, INR 48.31, China 6.8350, pesos 13.07, BRL 1.8484, dollar index 79.08, Oil $69.69, 10-yr 3.66%, Silver $14.33, and Gold... $945.70

That's it for today... My little buddy, Alex, comes home from 13-days at camp today. The house has been very quiet without his guitar playing, and drum banging! He comes back and goes directly to football practice tonight. Welcome back bud! It's fun seeing the videos and reading about football training camps in the NFL and College. My beloved Missouri Tigers will have to reload this year, as their core offense went to the NFL! I'm excited to see them play the first game of the new season at the Ed Jones Dome VS Illinois, Labor Day weekend... Cardinals lose but maintain their 3 game lead in the division... Come on boys, this is not the time to begin to coast! OK... Gotta go... I hope you have a Wonderful Wednesday!

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

Desperately Seeking Yield...

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

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

And Now... Today's Pfennig!

Desperately Seeking Yield...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Increasing SDR Issuance...

Chuck Butler — Thu, 25 Jun 2009 15:17:40 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..

* Fed confuses markets, risk assets get sold...
* SNB intervenes to stop franc's rise
* ECB issues 12-month liquidity...
* Bernanke to get grilled?

And Now... Today's Pfennig!

Increasing SDR Issuance...

Good day... And a Tub Thumpin' Thursday to you! Yes, I know the currencies and commodities got whipsawed yesterday, and my Cardinals got spanked, but that's no reason for us to not enjoy a Tub Thumpin' Thursday! Every day is a gift, and it has nothing to do with stocks, bonds, currencies, and commodities!

OK... Not that I try to be philosophical, sometimes it just comes out that way! Besides, you don't want to think that I'm just a smart *** all the time! HAHAHAHAHAHA!

Well, as I said in the open, the currencies and commodities got whipsawed yesterday, and the culprit was the FOMC minutes... You see, the Fed Reserve met to discuss rates, and other items. And what they said just blew away the bond vigilantes, and really ticked off the Hawks, but in the end, what they said, was really that things will remain status quo...

Their announcement of bond buying didn't measure up to what the bond folks wanted to see, and their announcement that interest rates won't be going up for some time, didn't measure up to the inflation Hawks, who wanted a comment about fighting inflation. Instead, what they received was more Alfred E. Newman on inflation... "What, me worry?" That's how ridiculous their statement was folks... The Fed still looks for inflation to "remain subdued for some time"... Although... Their outlook for the economy was slightly upbeat...

So... If your confused about what the Fed is thinking... Then join the rest of us! The markets spent the day trying to sort it out, and when it was all said and done, they couldn't, so they sold risk assets... So... The 1.41 level the euro enjoyed yesterday morning when I signed off, is now 1.3945...

On top of all this, the Swiss National Bank (SNB) has issued a communiqué' that talks about their "new aggressiveness" toward Swiss franc strength. Now, isn't that just one of the most ridiculous things for a Central Bank to say about it's currency! Would someone over there at the SNB, please think about what you're saying!

Oh well... This is all I'll say about the SNB... It's hard to soar with the eagles when you have to work with a bunch of turkeys! OH! And it's also reported that this "aggressiveness" showed up as intervention by the SNB yesterday... They sold francs in the markets... UGH!

OK, let's get back to the Fed, and their bond purchase program / Quantitative Easing / monetizing the debt / money printing... It's all the same... Oh, one more thing, it's the road to ruins, but don't let that get in the way of the Fed Party! You see, the Fed didn't announce anything this time, because all the world was watching and waiting for them to announce a "mega-buying program"... I told you earlier in the week to NOT expect the Fed to announce any changes to their road to ruins at this meeting, but instead the August meeting, when during the dog days of summer, when almost every #1 trader on earth is on vacation...

So... The bond vigilantes who want bond yields low realize, with the amount of supply that the Treasury is issuing these days, that the only way to get those lower yields is to have the Gov't buying bonds!

I came across something yesterday, that I yelled across the desk to make certain everyone knew... Recall at least a month or so ago, I told you how China had called for a new reserve currency, replacing the dollar with SDR's (special drawing rights), which would be a basket of currencies. This news received a ton of publicity... But one thing that didn't receive a ton of publicity was the fact that President Obama agreed at an economic summit in London that SDR's should now be used to help stabilize the balance sheets of nations struggling to combat the current crisis.

Now... On the outside that looks harmless right? Just helping these struggling nations... But! Could this also be a baby step toward a global currency? Could this be a baby step toward a further devaluation of the dollar, and it's signed off on by the President?

OK, now here's the thing that really caught my eye... The IMF is going to issued $300 Billion worth of SDR's. That's 10 Times... That's right, I said 10 Times the amount of SDR's that CURRENTLY EXIST!

Could this be the facility for China to quietly exchange dollar reserves for SDR's? Come on! Somebody has got to see this the same way I do!

I mean, it was just LAST WEEK, that the countries of Brazil, Russia, India and China (BRIC's) called for a "more diversified international monetary system?" Why, yes, Chuck, it was... Just last week! And then this week, the IMF "just happens" to be issuing 10-TIMES the amount of SDR's that CURRENTLY EXIST! Hmmmm...

I probably should stop there... I'll be accusing people of all sorts of things if I continue on this path... But there's some food for thought, eh? You won't see this on TV... They have more important things to show you and talk about, like... The President killing a fly! That's a really sad thing, to think that our news has come to that!

OK... New Home Sales for May dipped lower, but the inventory of homes for sales also dipped... And, we got the surprise of year when Durable Orders for May showed an unexpected and very strong gain of 1.8%... While I think this is wonderful news, I have to question it... I mean, with the automobile industry basically shut-down, one would think this number to be quite lower... However, I'm told... That non-defense aircraft orders more than offset the auto losses. OK, so, this is NOT a green-shoot folks... This is a One-and-done!

OH! And to follow up on yesterday report regarding Existing Home Sales... I totally forgot to mention that Foreclosure Sales are soaring, and thus a big part of the rise in Existing Home Sales... So, no green-shoot here either!

Today, we'll see the Weekly Initial Jobless Claims, and... The Final print of 1st QTR GDP, which will remain at -5.7%...

So, once again, not much on the data watch for today.

Before I go to the Big Finish... I want to follow up on the news I wrote about yesterday regarding the European Central Bank's (ECB) EUR 300 Billion injection of liquidity out 12-months... The total came in at a higher figure than that, at EUR 442 Billion... Still, much lower than the forecasts, which had seen some call for a number as high as EUR 1 Trillion! And... This morning, the Eurozone announced that Industrial Orders fell 1% in April... So that data isn't helping the euro any either!

And then there was this from the NY Times this morning... "The U.S. House Oversight and Government Reform Committee will question Federal Reserve Chairman Ben Bernanke about his role in Bank of America's acquisition of Merrill Lynch. While Republican lawmakers are launching an attack on Bernanke, who is Republican, Democrats are defending him."

Man, is that all mixed up! But... A week ago or so, we were getting reports about the Bank of America (BOA) purchase of Merrill Lynch... And now, nothing, absolutely nothing, say it again! Any wonder why? Well, maybe it will come out in the U.S. House Oversight and Government Reform Committee questioning, although I doubt it...

And the State of California... The largest economy in the U.S. and in the top 7 economies of the world (used to be 7th, but with their recession, who knows?), announced that they were going to pay their bills with IOU's... The state's controller said. "Next Wednesday, we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression."

And... The Fed believes the recession is easing? Hmmm... Maybe they are too far away from the California books and records!

I'm on a roll here, somebody stop me! OK, I'm stopped!

The Treasury will auction $27 Billion of 7-year Treasuries today... Just keep the supply spigot open must be the Treasury's motto these days!

Currencies today 6/25/09: A$ .7955, kiwi .6360, C$ .8605, euro 1.3940, sterling 1.6280, Swiss .9095, rand 8.0775, krone 6.5170, SEK 7.9350, forint 199, zloty 3.24, koruna 18.72, yen 96.40, sing 1.4575, HKD 7.75, INR 48.65, China 6.8345, pesos 13.27, BRL 1.9705, dollar index 80.78, Oil $69.05, 10-year 3.69%, Silver $13.86, and Gold... $934.20

That's it for today... Draggin' the line today, late night with my little buddy Alex's baseball game. A ringing double and single with two RBI for Alex last night, in his last game of the year. HEY! How about the U.S. National Team, beating Spain in soccer / football? WOW! It's been a while since the U.S. beat a ranked national team. So good for them! No breakfast sandwiches today for the boys and girls, as out little Christine is on holiday... Yay for her! She normally picks them up and I buy, but I forgot to do both this morning! UGH! 11-0 spanking by the Mets last night, leaves the Cardinals only 1 game in front in their division... Well... I'm going to attempt to have a Tub Thumpin' Thursday, I hope you do too!

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

More Stimulus On The Way?

Chuck Butler — Wed, 24 Jun 2009 14:53:55 GMT

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In This Issue..

* Euro leads currencies higher...
* Commodities rally back on FOMC thoughts...
* FOMC meeting today...
* NZ Consumer Confidence on the rise...

And Now... Today's Pfennig!

More Stimulus On The Way?

Good day... And a Wonderful Wednesday to you! Well... Yesterday, the title of The Pfennig was: So Far... It's A Turn Around Tuesday! And... That theme played well throughout the day, and by day's end, it had been quite the Turn Around Tuesday! Now, we have to see what's in store for us today, as the last couple of weeks have seen the Wednesday trading quite the opposite of Tuesday's trading! Strange trading pattern don't you agree?

Overnight, the euro climbed as high as 1.4140, only to sit at the cusp of 1.41 as I begin to write this morning. Of course 1.41 certainly looks a lot different from the 1.35-1.40 range we've seen in recent days. But then, we've seen these probes above 1.40 before only end with the euro falling back to the 1.35-1.40 range again...

I would imagine that the thing weighing heavily on the euro to bring it back to 1.41 and now a little below that figure is the news that the European Central Bank (ECB) had allocated EURO 300 Billion in 12 month funds for liquidity... I think any sell off from this announcement is strictly a knee-jerk reaction to the announcement. But when the dust settles and the traders / investors realize that EU 300 Billion is far less than the numbers that were rumored (some as high as 1 Trillion euros), this knee-jerk reaction will slow...

One of these times it will shake the cobwebs off, and proceed to either move higher, or lower than the established range... For now, I would have to think that given the sentiment in the market that's growing toward anger with the U.S. deficit spending tactics, the move would look to go higher... But, who knows? I can only look at things from a fundamentals viewpoint and from 17 years experience trading currencies...

Once the euro got going, or the Big Dog got off the porch, the other currencies (little dogs) were also on the rise VS the dollar... And Commodities, after spending Monday circling the bowl, came back with a vengeance! And we all know that when the Commodities rally, so do the Commodity currencies of Aussie, kiwi, Canada, Brazil, and South Africa!

Speaking of Brazil... Recall when I told you that this currency can give you whiplash? The volatile, wild swings in the currency are enough to make someone request oxygen! So, after a day (Monday) that saw the Brazilian real move back above "2", it was posted the best performance of any currency on earth, on Tuesday!

Brazil's real had its biggest gain in more than a month, as Commodities rallied, and... The currency also bounced back after investors "overreacted" yesterday to speculation the Central Bank will intervene to keep the real at "2"... The real gained 2.7 percent, the best performer in the world and its biggest gain since May 4, to 1.9794 per U.S. dollar.

The real has gained 17 percent this year, the best performance among the 16 most-traded currencies, as commodities rallied.

One thing that helped the Commodities rally yesterday was the fact that it finally "occurred" to traders and investors that the Fed's FOMC meets today, and will probably signal that interest rates will be held to near zero in the U.S. for the rest of the year.

Now... Why would that be a feather in Commodities' hat? Ahhh, grasshopper... You have to remember that the underlying fear in the markets is that the Fed will NOT be pro-active in removing their stimulus when inflation begins to knock at the door... And making a statement that interest rates will remain near zero for the rest of the year, simply makes those fears even stronger... And what will people flock to when inflation is racing toward double digits?... Commodities...

Of course, tomorrow will be a different story should the Fed not make an interest statement like that!

I listening to the radio, while I write... And the song that's playing is Elton John's "Friends", which was the theme song of my senior prom! Now, that's a really old song!

OK, I'm back now... See how my fat fingers decide to start typing things that pop into my mind?

So, the Fed's FOMC is today... I just can't see them doing anything but trying to calm the markets' fears about inflation, while keeping rates Steady Eddie. You all know that I'm not a fan of the Fed... I just don't see how a entity, who's main job is to protect the value of our currency, could keep their job, given the fact that the dollar has lost over 90% of its value since they took over! I mean, the Fed is NOT a Gov't Agency, folks... It's supposed to be an independent entity... But now, it's got it's hands in all kinds of things that aren't on their job description, and they are in cahoots with the U.S. Treasury, and before we know it they will be regulating all the banks and financial institutions... All, from doing such a good job at protecting the value of the dollar! I shake my head in disgust... And I should NOT be the only one doing so!

So... While I'm on my soapbox, and ranting at the Fed, and the people making the decisions... Big Ben Bernanke is up for reappointment... I think the thing I would like to see from Big Ben before I would reappoint him is for Big Ben to come out and say... "I'm in favor of Ron Paul's Bill to audit the Fed" Now, that would cause me to fall out of my chair from the shock of disbelief!

Speaking of the bill to "audit the Fed" I believe every voting citizen should contact their representative and let them know you support the bill to "audit the Fed"...

And... While I'm up here on the soapbox, I might as well get this rant off my chest too... Well folks... I think we're in for yet another stimulus package... yesterday, during a press conference the president was asked about that very thing, and his reply was not a resounding "NO"... it was a "not yet"...

Now you know me... I said after the first $150 Billion in the spring of 2008, that there would be more... and I said after the $787 Billion this past winter, that there would be more... and does a "not yet" from the Gov't that loves to spend money, give you a warm and fuzzy that there won't be another one? I didn't think so!

Yesterday, the data cupboard gave us Existing Home Sales data... For the second consecutive month, sales of previously owned homes in the U.S. increased, but the improvement was less than expected, further fueling fears of a slow, weak recovery for the economy as a whole... And the most important thing from the report is that the Home Sales were driven by two things... A drop in home prices... The median price for an existing home last month was $173,000, down 16.8% from $207,900 in May 2008. And... The low mortgage rates that existed up until about 3 weeks ago... Mortgage rates have climbed back above 5% (remember when we thought that was a low rate?) and the message that I'm getting is that mortgage lending is drying up once again... Most of the lending had centered on re-fi's any way, not Home Sales...

Hey! Remember earlier this month when the Jobs Jamboree number printed and everyone (except those that knew better because of the BLS) was celebrating? Well... I saw a piece on Reuters last night that caught my attention... Mass layoffs -- at least 50 job losses by a single employer -- grew to 2,933 last month, from April's 2,712, the U.S. Labor Department reported. That is practically a tie with March's figure, which set a record. Hmmm... That certainly paints a different picture of the labor market than the BLS Jobs Jamboree now doesn't it?

The Data cupboard will also give us the latest readings on Durable Goods (don't expect miracles here!) New Home Sales (no miracles here either!) and then the FOMC... The U.S. Treasury will also be auctioning $37 Billion of 5-year Notes today... Good luck!

Down in New Zealand... Consumer Confidence surprised to the upside, and is helping to boost the kiwi performance this morning... These are "index" numbers so they probably don't make much sense on the outside... Just look at them as "better"... New Zealand Consumer Confidence rose to an 18 month high in 2nd QTR from 96.0 to 106. Optimism about near term prospects improved from -57 to -28.

And finally... Gold and Silver have taken some tough shots to their respective mid-sections this week... I even said to Chris Gaffney yesterday... "Silver sure is tempting below $14, isn't it?" I'm reminded of an old saying we use to have on the Margin Desk in my early years in the brokerage business... Just input the asset and price to make this saying work... For instance, we'll use Silver... "Hey! If you liked Silver enough to buy it at $15, you'll Love it at $13.98!"

Of course, I personally don't expect Gold and Silver to remain at these bargain basement prices too long, but then that's just my opinion, and according to the Legal Beagles, I have to say that I could be wrong!

Currencies today 6/24/09: A$ .8010, kiwi .6435, C$ .8740, euro 1.4085, sterling 1.6585, Swiss .9320, rand 8.0830, krone 6.4120, SEK 7.85, forint 197.30, zloty 3.2180, koruna 18.56, yen 95, sing 1.4525, HKD 7.75, INR 48.52, China 6.8330, pesos 13.28, BRL 1.9790, dollar index 78.75, Oil $68.77, 10-year 3.64%, Silver $13.92, and Gold... $928.40

That's it for today... The Heat Wave continues here... But, like I told someone yesterday... Hey! It's summer, it's supposed to be hot! When I was a young man playing my guitar around the country out of VW micro-bus, I built in-ground swimming pools as a day job. In Oklahoma! Now talk about a HOT job! YIKES! I know there are hotter jobs, but that was the worst for me! Nice game last night for my beloved Cardinals... And, my little buddy, Alex, has his last baseball game of the year tonight. At least it is an 8:15 game! Well, the doctor visit yesterday was interesting... He's happy that I've done so well... But the honeymoon on the weight is over according to him! Of course, I have no idea what's he's talking about! HAHAHAHAHA! Let's get this going... I hope you have a Wonderful Wednesday!

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

Fundamentals Return...

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

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In This Issue..

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

And Now... Today's Pfennig!

Fundamentals Return...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A shrinking US economy puts pressure on the US$...

Chuck Butler — Thu, 30 Apr 2009 14:54:18 GMT

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In This Issue..

* US GDP falls more than expected...
* FOMC holds course...
* Canadian dollar has a great week...
* Oil helps commodity currencies...

And Now... Today's Pfennig!

A shrinking US economy puts pressure on the US$...

Good day... Yesterday was a big day in St. Louis as President Obama came to visit on his 100th day in office. I can't believe it has been 100 days since the inauguration. Time sure does fly! I'm sure Obama and the rest of his administration would like the calendar to move even faster as this recession will likely last through the end of 2009. While the government has thrown trillions of dollars at the markets in an attempt to turn them around, the key ingredient for recessionary cycles to reverse is time. There is now 'quick fix' for the problems we are in, and the policies the administration has begun will take time to have an impact on our shrinking economy. Obama said as much in his nationally televised press conference last night.

Speaking of shrinking economies, US GDP showed an even steeper contraction in the first quarter than that predicted by economists. US GDP fell 6.1% compared to the 6.3% fall during the last quarter of 2008. This drop confirms that we are now in the worst recession since the Great Depression. There report showed a record slump in inventories and further declines in housing. But another report released by the Commerce Department showed a surprising 2.2% gain in consumer spending in the first quarter, the most in two years. So we have consumers who increased their spending and confidence, while the US economy was contracting at near record pace.

Another report which didn't get much press was the GDP Price Index and the Core PCE which are measures of price inflation. These numbers rose more than expected, with the GDP price index rising 2.9%, nearly doubling economists predictions of a 1.8% increase, and substantially higher than last quarters .5% rise. This sets up the possibility that we could see what many consider the worst case scenario, falling GDP with rising inflation (STAGFLATION). With inventories at very low levels, a slight increase in consumption can lead to a very quick rise in prices. But the Fed doesn't seem to be bothered too much by that scenario, as they continue to focus on efforts to get the economy growing, with no apparent concern about inflation.

The Fed's Open Market Committee voted unanimously yesterday to leave its target interest rate unchanged at between 0 and .25% (they really can't go much lower!!). They also voted to continue to their purchases of long-term Treasuries and housing debt which they began last month. The FOMC statement said the contraction has slowed and the outlook "improved modestly" but the economy may "remain weak". Job losses and a very tight credit market will likely inhibit consumer spending in the coming quarters.

As I said earlier, there was no mention whatsoever of an exit strategy on how the Fed plans to pull in the record amount of money supply it has unleashed on the economy. The Fed said they will continue to monetize the debt at an unbelievable pace: as much as $1.25 trillion of mortgage-backed securities, $200 billion of federal agency debt, and $300 billion of Treasuries. They are making these purchases in an attempt to keep interest rates at below market levels to fabricate a refinancing boom. While they have been somewhat successful in keeping rates lower than they would be under normal market conditions, these purchases are extremely inflationary and won't be easily reversed. But the FOMC believes they will have plenty of time to worry about inflation and have decided to basically ignore it for now. Problem is, inflation can spike pretty quickly, and the FOMC will be hard pressed to raise interest rates just as the economy is starting to pull out of recession. I just don't believe they will have the guts to be proactive with inflation, and will probably see a major spike in prices on the other side of this recession.

Inflationary concerns are at the forefront of the ECB as they prepare for next weeks policy meeting. ECB President Jean-Claude Trichet has imposed a gag order on council members as they argue over what to do next to rescue the European economy. Some members had been taking their cases to the media recently in an attempt to push the ECB into following the UK, US, and Japan down the quantitative easing path. But more conservative members don't believe the ECB should use these untested methods, and are worried about the eventual inflationary impact of them. The ECB cut rates less than expected in April, and pushed a decision to use other methods off to next week's meeting. Germany's Axel Weber wants to make 1% the floor for the benchmark rates, and is against buying debt to pump additional money into the economy, while other council members want to begin asset purchases to force rates lower.

Data released this morning show Europe's unemployment rate rose to the highest in more than three years, and inflation held at a record low, which will increase pressure for the ECB to continue to cut rates. The March unemployment rate jumped to 8.9% in the Euro area, and inflation held steady at .6% in April. Other reports released this week suggested confidence in Europe is stabilizing which could counter some of the pressure to take additional measures. Chuck will bring you the details of the ECB meeting, which will occur a week from today.

The dollar sold off on safe haven reversals, but then moved back up in European trading. So after a bit of a roller coaster ride, we are pretty much right where we started yesterday morning. But the overall market sentiment seems to be shifting back to dollar negative. Two separate reports released by currency trading desks yesterday revised their currency forecasts down for the US$. Bank of America - Merrill Lynch revised their forecasts for the dollar, yen, euro, and pound on the 'rising probability' the global recession has passed its lowest point. Their report stated the euro would recover faster than previously predicted as the global economy turns. A separate report by Citigroup said the dollar would fall if/when the 10 year Treasury note yields rise above 3.06%. Technical analysts at Citigroup wrote that past trading patterns look like they are repeating. "Buying the dollar and US Treasuries was the trade of choice toward the end of 2008 and is now unraveling," they said.

Global deleveraging pushed investors back into US$, but as the global economy recovers (led by an increase in consumption in China), investors will move these funds out of this safe haven. Yield differentials will again determine investment direction, and growing economies will be able to attract more speculative capital. The US$, which has benefitted from the global downturn, will be sold. In order to protect your portfolio, investors should have some exposure to the currencies and metals.

One currency which has turned in one of the best performances vs. the US$ this week has been the Canadian dollar. The loonie touched the strongest level in two weeks on a move up in the price of oil. Equity markets are up, as investors have become much more confident regarding a global turn around. This confidence has carried over to the commodity markets, where oil and some of the industrial metals have been rising again. Canada relies on shipments of raw materials including oil, natural gas, copper, and lumber for more than half of its export revenues.

A report released by TD Securities, a large Canadian trading desk, predicted the Canadian dollar would appreciate by as much as 14 percent by November if it breaks through a key technical level. If the US dollar breaks below 1.1764 CAD$/$ (or above .85 UScents/CAD$) the upside opens up hugely over the next few months. The report puts a target of 1.04 CAD$/US$ (or .9615 US$/CAD$) for the loonie, a 14% increase from today's levels.

As I touched on above, the commodity currencies turned in one of their best performances in weeks as the price of oil shot back above $50. Both Norway's krone and the Australian dollar rallied along with the Canadian dollar. The AUD$ actually rose to the highest level in more than six months against the US$. The Norwegian krone, Australian dollar, and Canadian dollar are three of the best four currencies vs. the US$ on a YTD basis. The top performer vs. the US$ in 2009 has been the South African Rand, but recent rate cuts there may start eating into its recent strength.

South Africa cut its benchmark rate a full percentage point, the fourth reduction since December to help spur their economy. New Zealand's central bank also cut rates to a record low yesterday. Reserve Bank Governor Alan Bollard reduced the overnight rate by 50 basis points to counter the nation's worst recession in more than three decades. He indicated that rates may go lower, and will stay down for the foreseeable future. The kiwi sold off after the announcement.

Good economic news out of Japan has been rare, so yesterdays report that Japan's factory output rose for the first time in six months was a surprise. And even more surprising was the fact that the pace of the output rise was nearly double that predicted by economists. Factory production climbed 1.6% in March from February, when it dropped 9.4%. In a separate report, the Bank of Japan said the world's second largest economy will resume growth in 2010 after shrinking 3.1% this fiscal year. But I still caution investors regarding investments into the yen. The Japanese yen benefitted from the reversal of the carry trade, but global markets seem to be substantially less leveraged than before. The Japanese yen is not going to be able to benefit from another large push by additional deleveraging.

Got to go now, as we have our quarterly officers meeting in a few minutes. Sounds like it will be all good news, as EverBank continues to hit on all cylinders. It really is another Great Day at EverBank!!

Currencies today 4/30/09: A$ .7289, kiwi .5666, C$ .8383, euro 1.3263, sterling 1.4812, Swiss .8790, rand 8.4585, krone 6.5931, SEK 8.0664, forint 218.38, zloty 3.323, koruna 20.125, yen 98.15, sing 1.4775, HKD 7.75, INR 50.035, China 6.8210, pesos 13.74, BRL 2.1796, dollar index 84.49, Oil $51.81, Silver $12.62, and Gold... $889.20

That's it for today... more rain is predicted for today, and the rain is expected to continue all the way through the weekend. Typical spring weather here in St. Louis. The big positive on the rain is that it washes away most of the pollen, and provides some relief for my allergies. Had a great run through a local park with my wife last night, its kind of nice having company on my runs (I can never get her to wake up as early as I do during the week!). Hope everyone has a great day today, as it is Tub Thumpin Thursday!!

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

Dollar falls as US consumer confidence increases...

Chuck Butler — Wed, 29 Apr 2009 14:08:07 GMT

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In This Issue..

* Dollar falls as US consumers become more positive...
* GDP to be reported this morning...
* European confidence increases...
* Mexican peso recovers...

And Now... Today's Pfennig!

Dollar falls as US consumer confidence increases...

Good day... Hopefully this will reach everyone today. We have been having some computer problems causing some major delays in the delivery of your Pfennig. As Chuck always says, if you need your Pfennig, just go to www.dailypfennig.com where it is posted each morning as soon as I hit the send button. For those of you who feel the need, the website also has an archive, so you can all read what I had to say yesterday. But enough about our email problems, you all want to know what is happening in the markets.

The dollar began the day trading in a fairly tight range, but a fairly large jump in US consumer confidence sent the US$ tumbling. Yes, the old 'opposite' trading pattern has begun again. When we have good news regarding the US and global economies, the US$ gets sold. But when the data is bad, the dollar is purchased as a safe haven. Yesterday both pieces of data released in the US were more positive than most economists expected, so the dollar gave back some of its recent 'safe haven' gains.

The currencies ended up with their best day in a week vs. the US$, as the commodity currencies of New Zealand, Australia, Norway, South Africa, and Canada led the way higher. Even the Mexican peso, which has been beat down as of late was able to claw back a 1% gain vs. the US$. Only the Japanese yen moved lower, (I wrote a few paragraphs on the my feeling regarding the yen in yesterday's Pfennig which most of you probably missed).

A positive consumer confidence number has convinced traders that the US consumer is becoming optimistic again. It is believed that these higher confidence numbers will carry over to increased retail sales and a bottoming of the global recession. Yesterday's consumer confidence numbers surprised even the most optimistic economists, coming in at a five month high of 39.2. The report paralleled figures from public opinion polls which have been indicating US consumers are feeling better about the economy, and the prospect of new jobs. A drop in mortgage rates and the bounce in equity markets during the month of March certainly helped to boost consumers feelings. But many (including myself) think the equity market bounce is probably a 'suckers rally', and unemployment is nowhere near bottoming in the US. Not that I want to throw water on the US consumers new found confidence, but I think we will likely see reality set back in and confidence move back down in mid summer.

The other piece of data released yesterday showed housing prices declined at a slower rate in February than in the first month of 2009. The decline slowed to 18.63% from an adjusted 19% in January. The headlines mostly reported that the decline in home price slowed in February for the first time since 2007. Yes, we did see slowdown in the decline, but should we really be celebrating an 18.63% drop in housing prices? I think the optimists are being a bit too optimistic, as unemployment will continue to climb, keeping buyers from qualifying for new home loans. Unlike many in the popular media, I don't see where we have hit a bottom in the housing market yet, and don't expect us to find that bottom until late this year. Until then, the US economy will continue to struggle.

Kristin Kuchem, who made my day by bringing me a latte yesterday morning (THANKS KRISTIN!!), sent me the following quote regarding the housing data: "The number of vacant homes -- including foreclosures, properties for sale and vacation properties -- jumped to a record 19.1 million in the first quarter as the recession sapped demand for real estate, the U.S. Census Bureau said in a report Monday. The number of homes that stood unoccupied rose from 18.6 million a year earlier. The U.S. financial crisis and falling prices have shattered the confidence of homebuyers. The percentage of people who said they plan to buy a home in the next six months dropped to a 26-year low in March, according to the Conference Board in New York, Bloomberg reported." Hardly a sign that the housing market has bottomed!

Data released later today will give us a picture of how the US economy did over the first quarter. 1st quarter US GDP is scheduled to be released later this morning, and is expected to show the economy plunged close to 5%. This would be better than the 6.3% contraction in the last three months of 2008, so I expect the media to spin it just like they did with the housing data yesterday. We will hear all about how the US economic slowdown is turning, and we will undoubtedly hear several predictions of a rebound by the end of 2009. But with another negative GDP number in the 1st quarter, the recession which began in December 2007 will be the longest since the Great Depression. And not to sound overly negative (which I seem today) but the employment data scheduled for release tomorrow morning will likely show further deterioration in the US job market - not a good sign for the near term future of the US economy.

One piece of data which would lend support to these predictions of a rebound is the personal consumption figure which will also be released this morning. Consumption is predicted to show a slight rebound during the first quarter, after dropping at an average of 4.1% in the last half of 2008. Consumption probably ticked up as mortgage rates and gasoline prices fell. US consumers were obviously in a positive mood during the first quarter, but will their optimism continue?

Later today the FOMC will be releasing their rate decision. Economists expect the US central bank to announce a move down of just .125% in the benchmark rate. But the Fed will have to walk a fine line with the accompanying announcement. They will want to try and relay confidence in the rebound of the US economy, but if they sound too positive, they could push up longer term inflation expectations. Bond traders are still nervous (as they should be) about all of the money supply the Fed has pushed out into the markets. If the Fed makes a case that the economy is starting to recover, bond yields will likely jump up as investors increase inflation expectations. This increase in rates is exactly what the FOMC wants to avoid, as they have been buying US Treasuries in an attempt to keep rates down.

The Fed surprised the markets in March by stating that it would buy longer-term Treasuries as part of their 'quantitative easing'. The Fed's purchase of mortgage backed securities has been credited with helping to manufacture another mortgage refinance boom, and hopefully beginning a rebound in the US housing market. But I don't expect the Fed to drop any additional bombshells with today's announcement. In fact, they will likely be happy to just have their announcement be a non event, as the markets seem to be moving in their desired direction.

The Euro bounced up a full 2 cents vs the US$ overnight, benefitting from the general sell off of the US$ and a bounce in European confidence. The stimulus spending by European governments, along with slowing inflation, have boosted the mood of Europeans. An index of executive and consumer sentiment rose for the first time in nearly a year, the EC reported this morning. Another report showed European retail sales declined the least in 11 months in April. European consumer spending has been resilient in the first quarter and is definitely being helped by government stimulus.

Finally, a report released by the German Economy Ministry predicted the German economy will return to growth in 2010, helped by fiscal stimulus spending. The report also predicted the German economy would contract by 6% this year, much more than the previous estimates. The Ministry is predicting a global recovery beginning at the end of 2009, which they say will help propel the Eurozone back out of recession in 2010.

The Mexican Peso gained slightly as the concerns over a global swine flu pandemic eased. Many now believe the swine flu will be contained in the next few weeks as governments across the globes have aggressively moved to stop the spread. But health officials in the US say the swine flu is likely to rear its head again this fall/winter which is the traditional flu season. Tourism to Mexico isn't likely to recover quickly, as many vacationers have canceled plans and aren't likely to change them again. I wouldn't look for a sustained rally for the Mexican pesos, and wouldn't suggest speculation in this currency.

As I stated in the opening section, both the Australian and New Zealand dollars rose overnight, ending two days of losses. Both currencies have moved back up fairly close to the levels they were trading at prior to the swine flu scare. While I would expect the Aussie dollar to hold on to these recent gains, the New Zealand dollar could be subject to additional selling pressures. New Zealand central bank Governor Alan Bollard will probably decide to cut rates by 50 basis points on Thursday, narrowing the interest rate differential of the kiwi vs. the US$ and euro.

Gold has moved back up along with all of the currencies, approaching the $900 level again. As I stated yesterday, these moves lower by the precious metals are, in my opinion, nothing more than excellent buying opportunities. Once the global recovery begins, inflation will spike and the price of these metals will likely spike up with it.

Running a bit long today, so I'll end it there.

Currencies today 4/29/09: A$ .7196, kiwi .5703, C$ .8308, euro 1.3263, sterling 1.4751, Swiss .8798, rand 8.5424, krone 6.5851, SEK 8.1015, forint 218.14, zloty 3.3336, koruna 20.14, yen 96.88, sing 1.4856, HKD 7.7504, INR 50.09, China 6.8245, pesos 13.71, BRL 2.1846, dollar index 84.528, Oil $50.74, Silver $12.62, and Gold... $899.22

That's it for today... the summerlike weather we have enjoyed the last few days was replaced with spring like showers and fog this morning. Thunderstorms are apparently on the way for this afternoon. Our email problems seem to be fixed, but it is still early and there is still plenty of time for the gremlins to show up! Hopefully all of you will be able to read this before dinner! Hope everyone has a wonderful Wednesday!!

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

US$ benefits from the swine flu...

Chuck Butler — Mon, 27 Apr 2009 15:00:05 GMT

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

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

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

In This Issue..

* Swine flu causes rush to US$...
* The US$ wins no matter what??
* US Treasury starts a busy week...
* Chinese Renminbi moves back up..

And Now... Today's Pfennig!

US$ benefits from the swine flu...

Good day... And welcome to another week. Chuck headed off to Bermuda on Saturday, so you are all stuck with me for the whole week. Both he and Frank will be giving presentations at the Sovereign Society's Total Wealth Symposium; Frank representing EverBank and Chuck representing his paid newsletter, Currency Capitalist (www.worldcurrencywatch.com). Frank and Chuck probably log more miles than anyone else in the company, and while it may sound like fun to travel to all of the exotic locals, travel is tough. And with the big news over the weekend, airplanes and airports are the last place I would want to be right now.

The story which is dominating the trading screens this morning is the outbreak of swine flu in Mexico, and the fear of it spreading into a pandemic. The flu has jumped off of the North American Continent and is now a global concern, with cases being reported as far away as New Zealand. President Obama's administration has declared a public health emergency, with cases now being reported in several US states. Hopefully health officials will be able to keep the virus somewhat contained, and this won't become as predominate as the SARS outbreak.

As most would predict, the Mexican Peso has dropped significantly moving down almost 3% vs. the US$ overnight. Fears of a global pandemic have driven investors out of the high yielding currencies of New Zealand, Australia, and Brazil. Risk aversion seems to be back in vogue, with investors moving funds back into US Treasuries and the Japanese yen. I read a story over the weekend which suggested the US$ will continue to strengthen no matter what happens in the global economy. The story suggested that the US$ would increase if the administration's efforts to stimulate our economy work, and we lead the rest of the globe into the recovery phase. On the other hand, the US$ will also strengthen if the global economy continues to weaken, as investors will purchase US treasuries as a safe haven.

While that is what has been happening lately, I don't agree that the US$ will win no matter what happens. China and Europe both seem to be on the path toward recovery, with China leading the way. Countries, such as the UK and US, which have participated in 'quantitative easing' have thrown an incredible amount of money supply into the markets in an attempt to stimulate their economies. Eventually, this flood of money will be inflationary, as these administrations will not be able to pull all of this new money back out of the markets. As inflation increases, the value of the US$, Japanese yen, and UK pound will fall. On the other hand, those countries which are able to pull through the global slowdown with limited generation of money supply will be able to return to growth without an inflationary spike.

The Euro has been able to hold onto the $1.31 level over the weekend, as German consumer confidence held steady. The reports out of Germany gave us the first indications that the European economy was beginning to pull out of the recession. ECB ministers are split over the need to follow the UK, US, and Japan down the 'quantitative easing' path, and the leveling off of consumer confidence may keep the ECB from heading down this dangerous path. I think the ECB will probably cut interest rates one more time in May, but hopefully they will be able to avoid monetizing their debt as we have seen the US and UK do recently. If they can avoid 'quantitative easing', the Euro should be able to hold above $1.30 and perhaps start a move back up toward $1.40.

I had been prepared to talk about the tremendous amount of US Treasury issuance this week, and what impact it would have on the dollar. It was going to be interesting to see if all of the new supply would finally outstrip demand. But the outbreak of the swine flu has probably saved the US Treasury for now. Investor demand for the US $ has increased with the pandemic fears, and the timing of this increase couldn't be better for the US. It will still be interesting to see what the new supply does to interest rates, but the US has probably dodged a bullet for now.

It will be a light day of data here in the US today, with only the Dallas Fed Manufacturing activity scheduled for release. Tomorrow we will see a couple measures of consumer confidence, along with the S&P/CaseShiller Home price index. Wednesday will be the big day with the release of 1st quarter GDP and personal consumption along with the FOMC rate decision. Thursday will be another big day of reports with Personal income and spending for March along with the weekly jobless claims and the Chicago Purchasing Manager report. Finally, we will close out the week on Friday with data which will give us a better picture of the state of US manufacturing, with the release of March Factory orders, ISM manufacturing index, and the vehicle sales numbers.

None of the data scheduled to be released this week is expected to show much improvement for the US. Wednesday will be the interesting one, as GDP will probably show a 4.7% drop for the first quarter of 2009. This is bit of an improvement from the 6.3% drop in the 4th quarter of 2008, but still equates to a dramatic slowdown in the US economy. Following the release of the GDP figure, the FOMC will make their rate announcement. They obviously can't cut rates, so the markets will concentrate on the accompanying statement, looking for information on additional 'quantitative easing' which is being planned.

The Chinese Renminbi moved back up to trade near its 2009 high amid signs of a recovery in the Chinese economy. Vice Premier Wang Qishan said the Chinese economy is performing 'better-than-expected'. The news came as China is readying to release a second wave of stimulus funds aimed at infrastructure improvements. This news should bolster the price of raw materials, and help offset some of the recent selling of the commodity currencies.

Currencies today 4/27/09: A$ .7143, kiwi .5655, C$ .8223, euro 1.3140, sterling 1.4558, Swiss .8721, rand 8.8275, krone 6.6758, SEK 8.167, forint 225.29, zloty 3.4781, koruna 20.285, yen 96.58, sing 1.4966, HKD 7.75, INR 50.24, China 6.8272, pesos 13.74, BRL 2.1838, dollar index 85.206, Oil $48.86, Silver $13.02, and Gold... $912.90

That's it for today... Had an absolutely beautiful weekend here in St. Louis, albeit a bit warmer than some would like. It seemed we skipped right through spring and moved on to summer, with temperatures reaching near 90 degrees. The Cards took two out of three from the Cubbys this weekend, with Albert Pujols hitting a monster grand slam on Saturday which nearly left the ballpark. I wasn't able to make it down to any of the Cards games, as Brendan's hockey team had two games and a practice this weekend. Having some computer/phone problems this morning, with a few of the folks on the desk not able to log into the phones (not a good way to start the week). I had better get this out so I can log in and help out! Hope everyone has a Marvelous Monday!!

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

Another FOMC Day....

Chuck Butler — Thu, 29 Jan 2009 03:19:34 GMT

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This CD is FDIC insured against bank insolvency, but please keep in mind that you could lose principal as a result of currency fluctuation.

EverBank is a Member FDIC and Equal Housing Lender.
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In This Issue..

* Currencies rally...
* Davos begins...
* A new and improved stimulus plan!
* Happy Birthday, Chris!

And Now... Today's Pfennig!

FOMC Day....

Good day... And a Wonderful Wednesday to you! A very cold and snowy Wednesday here in St. Louis. I got caught behind the line of snow plows this morning, and it too me what seemed like for-ev-er to get here! Oh well, I'm here, so let's get going, eh?

Well... The currencies saw some profit taking yesterday, only rebound overnight, which seems to be the recent pattern... The overnight markets participants drive the euro and other currencies higher, and the U.S. market participants sell the euro and other currencies... Makes you want to side with the overnight markets participants, eh? Oh well, the euro is trading with a 1.3255 look to it this morning, as I turn on the screens...

The World Economic Forum, in Davos Switzerland, began today... This is usually a huge economist boondoggle, but this year, it has a different look to it. You see, the U.S. boys and girls that normally attend, are missing this year, as they don't want it to look silly after they took bailout, TARP, and any other kind of government handout. Sort of like the story yesterday that Citigroup was going ahead with their plans to purchase a $50 million jet plane, after taking TARP money... Once the media got wind of that story, Citigroup backed off and announced that they would NOT go through with their plans to buy the jet plane!

If anything, maybe all this will cause a "corporate conscience" probably not, but maybe!

Right out of the starters blocks this morning, we have the economists that did show up in Davos, ripping U.S. Treasury Sec. Geithner, a.k.a. "the cheater"... The "ripping" centers around "the cheater's" statement that China was "manipulating" their currency and that they should seek to allow the currency to appreciate... Let's listen in on some of the comments regarding this first call of "the cheater's"

"Allowing the yuan to strengthen would be "economic suicide" amid an economic slump, Stephen Roach, Morgan Stanley's Asia Chairman, told a panel in Davos, Switzerland, today. "I've never seen an economy in recession voluntarily raise their currency. It's horrible advice." (remember, that the renminbi is the official name of the Chinese currency and the yuan is the slang name... It's easier to say, and spell, so the media uses the slang name! HAHAHAHAHAHA!

"Shouting from Washington to Beijing is not going to make a difference," said South Africa's Finance Minister Trevor Manuel on the same panel."

So, the boys over in Davos have Geithner's back.... NOT!

Oh... And just for the record, ever since Geithner (I got tired of typing "the cheater") made his call on Monday, the Chinese have basically told him what to do with his thoughts! The Chinese officials have allowed the renminbi to weaken VS the dollar the last 3 nights! Those Chinese, they are wild and crazy guys! But seriously... This is what happens when you have a house in disarray and you begin pointing the blame finger at other houses that have done everything they need to do to rise up from the sleep they've been in for eons... The house that gets blamed bites back! Of course, I prefer the Chinese pushing the renminbi softer, than the alternative of selling their Treasuries!

You know what gets my goat about what Geithner said? (it's important to remember that I believe it was Obama's words that Geithner spoke) It's why point the finger at China and not every other country in the world that "fixes", "pegs", and manipulates their currencies? There's a whole laundry list starting with Hong Kong, and ending with Saudi Arabia, with the likes of Japan, Singapore, and the other oil states in between...

OK... Well, the FOMC will end today... I received two calls yesterday from writers that wanted interview me regarding what the Fed was going to do... First, and old contact at the Wall Street Journal, and then Reuters... I told them both the same thing... Wouldn't it be nice if we could wake up in the morning when the day was new... NO! WAIT! That's not what I said... Come on Chuck, stick with the program!

Here's what I said... Wouldn't it be nice if Big Ben Bernanke came true on his promise to make the Fed more "transparent" when he was sworn in? In doing so, it would be nice if the Fed made a statement that said, what it was they were going to do... For how long... How much... And how they would monitor it? Of course it would! But you can expect more cloak and dagger from them!

So... Did you see the S&P/CaseShiller House Price Index yesterday? I told you it would probably show an 18% fall in home prices year-on-year... And the figure was -18.2%, and in November the fall was -19.1%... The annual figure of -18.2% is a record low for a year...

In addition to the House Price Index yesterday, we also saw Consumer Confidence, which I had thought would give us a head fake improvement... Unfortunately, Consumer Confidence fell to a HISTORIC LOW of 37.7, falling from 38.6 the previous month. I wonder, wonder, wonder, wonder, who... No when, we'll get the Obama bounce... It's beginning to look as though it's not going to come... And that's not a good thing for a new administration.

Speaking of the new administration... They're waiting on the next stimulus package... And the House will vote on the "new and improved" stimulus package that totals $816 Billion today... Again... And I won't beat the proverbial dead horse on this, but we don't have the money to do this, and we're only getting deeper into debt!

Gold backed off $15 last night, and is back below $900... Wink, wink...

I'm rushed this morning because it took me so long to get to work, so I'll head to the Big Finish and get to radiation...

Currencies today 1/28/09: A$.6695, kiwi .5297, C$ .8190, euro 1.3260, sterling 1.4305, Swiss .8770, rand 9.9150, krone 6.7150, SEK 8, forint 215.10, zloty 3.2825, koruna 20.66, yen 89.20, sing 1.4980, HKD 7.7585, INR 48.93, China 6.8450, pesos 14.11, BRL 2.31, dollar index 84, Oil $41.25, Silver $12, Gold... $887.34

That's it for today... A great big HAPPY BIRTHDAY to my long time friend, colleague, and Pfennig Pfill in... Chris Gaffney! I have known Chris for a long time now, and the guy looks the same now as he did 20 years ago! He has been a great support for me during these past two years of trials and tribulations for me... So... Happy Birthday! Hey! I was quoted in the Chinese Wall Street Journal yesterday! That was tre' cool! I have a customer conference call this afternoon... This ought to be interesting... OK, time to get on the road again... I hope your Wednesday is Wonderful!

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