Daily Pfennig : Fed

Returning The Carter Years...

Chuck Butler — Mon, 08 Apr 2013 18:01:51 GMT

In This Issue.

* Currencies rally on bad jobs data.

* Yen continues to slump.

* Relative calm creeps back into Eurozone.

* Roberts says Fed is manipulating Gold price.

And, Now, Today's Pfennig For Your Thoughts!

Returning The Carter Years...

Good day. And a Marvelous Monday to you! I got back from San Diego and the Global Currency Expo late last night, and then had a bad night, so I kind of slept through the alarm this morning... UGH! So, I'm dragging the line this morning... but, hey! At least I woke up! That's the first battle each day! I love San Diego... I used to think I would retire there, but then the little beach shack I used to eye, rose in price to a million dollars, and I began to look elsewhere! Seemed that a lot of people had that same Idea as me!

Well... the big news on Friday was that the Jobs Jamboree disappointed with less than 100k new jobs (88K)... But the unemployment rate dropped to 7.6%... I've explained how this all happens before so I won't go into it again, but there are a couple of things that I noticed that really tells me, and should you, the real story of labor here in the U.S. 90 million people are not working... that leaves us with a 63.3% participation rate.. That's the lowest level in the participation rate since 1979... the Carter years... At last check, the U.S. had done its best to put those years in the distant memory banks, never to bring them out again... But here we are again...

The labor news really sunk the dollar's bias to be bought that existed for most of last week. And that bias is nowhere to be found, except VS Japanese yen, this morning. The yen has been on the slippery slope ever since they announced their latest round of stimulus last week, that was implemented to ecourage inflation in Japan. The yen fell from 93 very quickly, and overnight yen reached 99 for the first time in a month of Sundays. (remember yen is a European priced currency, so the higher the number the weaker the currency is VS the dollar) Yen has since rallied back to just below 99 at 98.70, but still, it looks like this is going to continue until it doesn't...

I know, you're saying, "Hey Chuck, now that's really going out on a limb... NOT!" Well, like I told the audience in my mainstage presentation the other day... Interest rates in Greece were low for a long time, and then one day they weren't... I said the same thing would happen here in the U.S. So, all I'm saying about yen is that I don't know how weak it will get, recall if you will, that I told you that the well respected anaylst, Dennis Gartman, said that yen would weaken to 150... I find that to be quite aggressive, but then no one knows just how weak the yen will get, so, it will continue to get weak until... it doesn't!

But... the thing to remember here is that I told you yen was overvalued a long time ago, and that it should be weaker, based on fundamentals... So, if you were listening to me then, and at least hearing me later, this yen weakness comes as no surprise to you!

The other thing to think about with yen is what kind of pressure it puts on the crosses outside of dollar / yen. I think that the yen weakness is playing into the euro's ability to gain further. As I' ve explained many times over the years... the dollar / yen cross will play into other crosses that are dollar denominated... so euro / dollar sees some pressure too... So, the euro going past 1.30 and staying there is a good sign that it is stronger than the price indicates.

OK... there's more going on than yen weakness on the crosses... One of my themes in my talks at the Global Currency Expo was that the U.S. economy has become addicted to stimulus... And last week's jobs report is proof enough for me that the Fed Heads will continue their attempt to stimulate the economy by buying $85 Billion of bonds each and every month. I mentioned that I wouldn't be surprised to see a person talking at the GCE in 10 years and discussing QE 20, 21, 22, etc. And can you imagine the number of dollars that would have been printed at that time? Oh My! of course, Big Ben Bernanke and his band of Fed Heads don't really "print dollars" any longer.. .they simply, with the stroke of a hand, print electronically, and on their computer they created $85 Billion per month to pay for those bonds they buy...

I was loving a story I was reading on the Bloomberg, as I was up in the middle of the night unable to sleep soundly... the story was about the Swedish krona, and how the Riksbank (central bank) the Prime Minister, and head of the Sweden's state-owned export leader, all are singing from the same song sheet, and keeping their hands out of the cookie jar, with regards to guiding the krona weaker, as many other countries are doing to their currencies. I really liked what the export leader, Peter Yngwe, had to say about the strength of the krona. Let's listen in... "the Swedish export industry is good at being effective and streamling and in the long term that's the right way to go. In the short term it's, of course, tough, with a strengthening krona, but that the strenghth of the krona will help discipline companies and poses little risk to the Swedish economy."

Now... don't you wish every central banker would take this line of thought? I tell people over and over again, that just because a country has a strong currency that the Central Bank should go into convulsions and work to weaken the currency... That's not the answer! Instead, the country should go about making changes in manufacturing, wages, and delivery... When that happens, you'll end up trading similar to the euro... Look at Germany... they deal with a strong euro all the time, but it doesn't shut down their exports...

The bad press that upset the Eurozone's relative calm applecart, sure has passed... and therefore the relative calm has come back to the Eurozone. And when that happens the main beneficiary is the euro. But on the side bars, the emerging markets also get a lift, because with the euro being the offset currency to the dollar, the euro's strength, pushes the dollar down, and the emerging markes can take advantage of that... Of course not all the emerging markets trade in the same direction all the time, so when I say emerging markets, it's just a generalization term...

One of those emerging markets that are seeing gains is the Mexican peso... The peso has been a real strong perfomer this past year, based on the thought that the U.S. economy was coming out of its "greater depression"... As I've explained before, the peso has caused many-a-owner of the currency much pain in the past... But it's been over 20 years since their last meltdown with the currency, so, I'm somewhat in the camp that thinks it won't happen again. But the peso still isn't paying a "risk premium" for those that still "remember"... But that hasn't held the peso back, so far... I would just say, be careful, and keep a watchful eye on the goings on in Mexico... other than that, the peso is having fun basking in the sun...

I just saw a news flash that former British Prime Minister, Margaret Thatcher, has passed.. She had reached the age of 87... I do believe that Margaret Thatcher did a lot for the British,. as she championed free market economics and individual choice... I used to use a quote by her, that people would chuckle at until they realized what it was saying... Here's the quote... "the problem with socialism is that you eventually run out of other people's money" - Margaret Thatcher

Ok... I really hadn't planned on talking about that, but the news flash caught my eye, and so on... I'm sure someone out there won't take what I said about her kindly, and let me know about it, but that's OK... and it won't change my thoughts on the subject!

Elsewhere in the world... Portugal saw its constitutional court overturn 4 of the 9 austerity measures adopted by the government for its 2013 budget... that's not going to help Portugal meet its goals of in debt cuts which have to be met in order to botain future aid. But the Portuguese Gov't was quck to say that spending on social security, health, education and public enterprises will be cut...

If you ask me, and I know you didn't, but I'm going to tell you anyway... I would bet that the Deputy Reserve Bank of New Zealand (RBNZ) Gov., Spencer, is in for a trip to the woodshed from the RBNZ Gov. Wheeler... Why? I hear you asking... Well, you see, as I've told you before, Wheeler likes to follow his predecessor, Bollard, by dissing kiwi any chance he gets... But when the Deputy Dawg was asked about the housing boom, he sounded quite hawkish... and said, among other things that, " if momentum in the housing market continued, a rate rise was likely." Well, talk like that will push kiwi higher... and so, Mr. Spencer is in for some talking to, by Wheeler... because you don't make statements like that without realizing what it will do to the currency that Mr. Wheeler had worked so long to make look bad...

Well... direct renminbi / yuan and Aussie dollar (A$) trading will begin this week, April 10th... I'm surprised the markets just don't believe this to be a big thing... I do... and I have thought that these curreny swap agreements are very important, ever since I noticed that China signed one with Argentina about 4 years ago. I see it as China removing the dollar's relevance as the financing tool in the terms of trade between countries... One day, the markets will wake up and see this too...

Then There Was This... So, there I was Saturday morning, getting ready to make my grand entrance at the GCE, when I came across this story that Ed Steer had in his daily letter, regarding the manipulation of Gold... Here's a snippet of a report that former Asst. Treasury Sec. Paul Craig Roberts posted on his website... the Gov't has to be shaking a bit from this...

"For Americans, financial and economic Armageddon might be close at hand. The evidence for this conclusion is the concerted effort by the Federal Reserve and its dependent financial institutions to scare people away from gold and silver by driving down their prices.

When gold prices hit $1,917.50 an ounce on August 23, 2011, a gain of more than $500 an ounce in less than 8 months, capping a rise over a decade from $272 at the end of December 2000, the Federal Reserve panicked. With the US dollar losing value so rapidly compared to the world standard for money, the Federal Reserve's policy of printing $1 trillion annually in order to support the impaired balance sheets of banks and to finance the federal deficit was placed in danger. Who could believe the dollar's exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver.

When gold topped $1,900, Washington put out the story that gold was a bubble. The presstitute media fell in line with Washington's propaganda. "Gold looking a bit bubbly" declared CNN Money on August 23, 2011.

The Federal Reserve used its dependent "banks too big to fail" to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Federal Reserve was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3, 2013, drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27."

Chuck again... Yes, this plays well with my explanation of why I thought Gold's price was being manipulated... if it were your job to protect the value of the dollar, and you saw Gold heading toward $2,000, you would panic too...

To recap... the Jobs data from Friday was very disappointing, even with the unemployment rate dropping... We've returned to the "Carter years"... Yen continues to push the envelope of weakness, touching 99 overnight, and the currency crosses are seeing some pressure because of the dollar / yen cross. Sweden's financial leaders are singing from the same song sheet, and Margaret Thatcher has passed.

Currencies today 4/8/13... American Style: A$ $1.0410, kiwi .8450, C$ .9825, euro 1.3020, sterling 1.5310, Swiss $ 1.07,... European Style: rand 9.0405, krone 5.7310, SEK 6.4225, forint 229.05, zloty 3.1735, koruna 19.7730, RUB 31.32. yen 98.70, sing 1.2410, HKD 7.7640, INR 54.57, China 6.2650, pesos 12.14, BRL 1.9820, Dollar Index 82.59, Oil $93.40, 10-year 1.72%, Silver $27.21, and Gold... $1.575.30

That's it for today... Did I tell you that I love San Diego? It's so beautiful there... It was great seeing some EverBankers that I don't normally see all the time, and some of my former writing colleagues at the Sovereign Society at the GCE. Thanks to all the participants that had very kind things to say to me. Cardinals come home from a road trip that started their season 3-3, which isn't too shabby... My dad used to always tell me, play .750 ball at home, and .500 on the road, and you'll find yourself fighting for a pennant! It's Opening Day here in St. Louis... A day where the city should be on holiday... I'll be at the game, that is, if I can find a parking spot! Last year, we had to bribe a guy to get him to allow me to park on his lot.... UGH! The weather people were calling for rain today.. but I see the sun coming up... maybe, as usual they'll be wrong! My first trip to Busch each year is something special for me. It reminds me of when I would go to the game with my dad at Busch stadium I (Sportman's Park). The smells of hot dogs, popcorn. The sounds of the game and in the stands... it's something I cherish... And with that... I'll get out of your hair for today. Again, sorry for the delay and my oversleeping... I hope you have a marvelous Monday!

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

Chairman Bernanke says the Fed will be 'flexible' with bond purchases...

Chuck Butler — Thu, 21 Mar 2013 16:21:58 GMT

In This Issue.

* Bernanke says the Fed will be 'flexible'...

* Markets realize the size of Cyprus...

* Kiwi posts the biggest gains...

* Data today may show US housing recovery continues...

And, Now, Today's Pfennig For Your Thoughts!

Chairman Bernanke says the Fed will be 'flexible' with bond purchases...

Good day... Well CNBC filled the slot with another 'currency expert' so my national television debut is postponed for a while. Probably a good thing as I am scheduled to get four hours of 'media training' today. I guess they are going to try and make sure I won't make a fool of myself, not a small task according to my wife and kids! College basketball's big tournament begins today; well actually there has already been 4 games played, but the majority of the games in the first round of March madness will be played today.

We haven't seen much madness in the currency markets as they are pretty much right where they were 24 hours ago. I typically update the 'Currencies today' section of the Pfennig before I start writing it each morning. This gives me an indication of just how much movement each currency has had over the past day, and makes those with dramatic moves jump off the page and demand some more attention. This morning, I made no change to the price of the euro, and very little changes to most of the others. Those that did require updates show the dollar was trending higher, and the price of the precious metals ticked up a bit also.

The FOMC decision was right in line with expectations yesterday, with no movement in the record low interest rates. The statement which was released yesterday afternoon showed policy makers have lowered their expectations for top end expectations for growth from 3% to 2.8% in 2013. Apparently policy makers felt all of the recent good data releases regarding the US economy weren't enough to offset the negative impact of the spending cuts and tax increases which occurred during the first quarter. The FOMC members also lowered their projections for the unemployment rate at the end of the year to a range of 7.3% to 7.5% from a previous forecast of 7.4% to 7.7%. With the lower end of the range still well above 7%, it is pretty obvious that the QE efforts will continue through 2013. 13 of the 19 FOMC participants estimated that the first increase in the federal funds rate from its current range of zero to .25% won't occur until sometime in 2015.

Chairman Bernanke reiterated their concern regarding the US labor market during his speech following the meeting, agreeing that the recent gains are encouraging, but wanting to make sure this is not just a temporary improvement. As I wrote yesterday, the key indicator the markets are looking for from Chairman Bernanke is exactly when the Fed will start reducing their bond purchases. Bernanke wasn't expected to lay out a specific time table, but he did suggest that the amount of the purchases could be adjusted as needed. "As we make progress toward our objective, we may adjust the flow rate of purchases from month to month to appropriately calibrate the amount of accommodation," Bernanke said. "We think it makes more sense to have our policy variable, which is to say the rate of the flow of purchases will respond in a more continuous or sensitive way to changes in the outlook."

Reading between the lines, I think Bernanke is trying to make the case that even if they start to pull some of the stimulus back out of the markets, it won't be a 'one way street'. He is leaving open the possibility that the Fed could reduce spending one month and then turn around and increase it again the following period. Again, all indications are that the members of the FOMC are ready to continue 'juicing' the US economy with cheap money for the foreseeable future.

And the decision to start reducing the stimulus may not even involve Chairman Bernanke. The current Chairman's term expires next January, and he indicated that he has had discussions with President Obama regarding this but (of course) would not share any details. So the very difficult job of unwinding all of the quantitative easing which Bernanke put into place will likely fall to Vice Chairman Janet Yellen who is the probable replacement for Chairman Bernanke.

The equity markets liked what they heard, and moved a bit higher after the press conference. As I stated earlier, the currency markets were largely unchanged, which was actually pretty impressive given all of the recent turmoil in Europe.

The Cyprus bank crisis is not solved yet, but you wouldn't know that by looking at the currency markets. The euro has stabilized and is actually starting to trend a bit higher in early US trading. I think currency traders have realized that the size of the banking problems in Cyprus are small, and that all of the worries about 'contagion risks' were overblown. Depositors in Spanish, Italian, and Portuguese banks have not made a mad dash to the ATMs, so the impact of the Cyprus banks looks to be contained to the tiny island nation.

The banks were supposed to re-open today, but it looks like they will remain closed for a few more days until a resolution can be negotiated. And when/if the banks are re-opened there will likely be capital controls implemented, limiting the amount of funds depositors can withdrawal. The ECB has said it will cut Cypriot banks off from emergency funding after March 25 unless Cyprus agrees on a bailout with international creditors. I'm still betting a deal is worked out with Russia who will end up taking a stake in the gas field project in exchange for providing additional capital for the Cyprus banks.

A report released this morning showed European services and manufacturing output contracted in March. The composite index of services and manufacturing in the euro-region fell to 46.5 from 47.9 in February. Another report showed German manufacturing contracted this month, surprising economists. Purchasing managers in Germany's manufacturing industry unexpectedly fell to 48.9 this month from 50.3 in February. This is bad news for the Europe, as Germany has been the driving force of the nascent recovery.

UK retail sales rose more than forecast in February, surging 2.1% from the month before when they dropped .7%. This was the biggest increase in almost a year, but the percentage climb was partially due to heavy snowfall which held back consumers in January. The data sent the pound to a 3 week high against the dollar and to the strongest level vs. the euro in five weeks. The UK economy is in danger of slipping back into recession, so the big jump in retail sales was met with enthusiasm by currency traders. But the UK Chancellor of the Exchequer George Osborne isn't necessarily in a 'jolly' mood. Osborne said he will 'hold firm' to the austerity plan with government spending cuts continuing for three more years after the 2015 election. Osborne was addressing Parliament yesterday seeking approval of his budget. He announced tax cuts for low earners, but will finance these cuts with cuts to the departmental budgets and better collections of existing taxes.

Traders over at UBS think the bounce in the pound sterling will be short lived, suggesting the bearish trend still remains. In a note released to clients today, a UBS technical analyst says the $1.5199 reached March 5th will be the high, and that the pound will fall to $1.4850 if it breaches support at $1.5050.

The New Zealand dollar was the top performing currency over the past couple of days, rising over 1% vs. the US$. The kiwi benefitted from a report released last night which showed the nation's economy grew at the fastest pace in three years last quarter. GDP rose 1.5% during the first quarter, exceeding economists projections of a .9% rise. The figure even surprised officials at the Reserve Bank of New Zealand who had expected growth of just .8%. These RBNZ policy makers may have to re-think their interest rate projections as the higher growth will probably ratchet up pressure on them to increase rates.

Both the kiwi and the Australian dollar were also helped by a preliminary reading for Purchasing Managers Index in China which rose to 51.7 in March from 50.4 in February. The figure bested economist's predictions of a 50.8 reading and was another indication that the Chinese economy will continue to expand.

The biggest loser vs. the US$ over the past 24 hours has been the South African rand which was down a little less than 1/2 %. The fall is just another step in the slide which the rand has been on since the beginning of the year, losing a total of 8.8% of its value in 2013. The only currency which has done worse is the Japanese yen which is down 8.91%. The South African economy has been challenged by mining strikes and slower exports, and currency investors moved out of the rand in the recent 'risk off' trading days. A rebound in China, along with an indication that rates will not be cut any further by the Reserve Bank may turn this drop around. But I would urge currency investors to remain cautious when considering adding the South African currency to your portfolios.

The markets will largely trade on the weekly jobs numbers released shortly and the existing home sales and leading indicators which will follow later this morning. Initial jobless claims are predicted to have increased to 340k last week from a surprisingly low 332k the previous week. Sales of previously owned homes are predicted to have risen 1.6% in February, the most since November 2009. This would be another indication that the housing market in the US is continuing to recover. Mortgage rates are being held down by the Feds QE efforts, and are certainly helping the housing market to rebound. The data will end today with the release of the leading indicators which are predicted to have increased .4% in February.

No then there was this today, as I am running a bit late and the Pfennig is already a bit long. I'll promise to have one for you tomorrow!

To recap. Chairman Bernanke kept rates unchanged, and suggested the Fed would be 'flexible' with their bond purchasing in the future. The currency markets largely shrugged off the banking crisis in Cyprus, figuring a solution would be worked out. Data out of Europe showed German manufacturing is slowing, and a broader index also indicated the euro-region recovery could be stalling. Retail sales in the UK surged higher, helping to boost the pound sterling. But UBS technical analysts say the pound is still in for more of a drop. The kiwi was the best performer overnight and both the AUD and NZD could continue to gain after good news out of China.

Currencies today 3/21/13. American Style: A$ $1.041, kiwi .8316, C$ $.97805, euro 1.2921, sterling 1.5193, Swiss $1.058. European Style: rand 9.2895, krone 5.8425, SEK 6.4857, forint 236.15, zloty 3.234, koruna 19.955, RUB 30.896, yen 95.42, sing 1.2505, HKD 7.7629, INR 54.288, China 6.2140, pesos 12.3303, BRL 1.9899, Dollar Index 82.773, Oil $93.12, 10-year 1.96%, Silver $28.9113, Gold $1,608.20, and Platinum $1,581.00.

That's it for today. Good luck to the St Louis Billikens and Missouri Tigers who begin their quests for the NCAA tournament title today. We will have basketball on one of the monitors most of the day, giving us something other to watch than the constant coverage of the Cyprus bank crisis! I am going to be packing my bags tonight in preparation for a week of college vists on the east coast. We fly into Philadelphia tomorrow evening and then will make our way north over the next week ending our trip next Friday up in Maine. We plan on attending 3 different NHL games in three different cities which will help add some fun to the trip. Hope everyone has a great Thursday, and thanks a bunch for reading the Pfennig!

Chris Gaffney, CFA

SVP & Director of Sales

T. 314-951-1619

EverBank World Markets

8300 Eager Road, Ste. 700, St. Louis, MO. 63144

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Markets wait for direction from the Fed...

Chuck Butler — Wed, 30 Jan 2013 20:10:03 GMT

In This Issue.

* Waiting on the Fed...

* Consumer confidence falls in the US...

* Euro area looks to be emerging from recession...

* Chinese incomes rise...

And, Now, Today's Pfennig For Your Thoughts!

Markets wait for direction from the Fed...

Good day. And welcome to what will certainly be a wonderful Wednesday as we celebrate Christine's birthday today. You have probably surmised that Christine and I like to make a big deal about our 'birthday week' so today will be another celebration here on the desk. Chuck is jumping on a plane to head down to the Money Show in Orlando this morning, so I get to share my thoughts on the markets with all of you Pfennig readers for the rest of the week (lucky you!).

I had a reporter from Reuters call and ask me to share my thoughts with her readers yesterday. She wanted to know why the dollar was trading off vs. the euro while the equity markets were rallying. I let her know that the reason the dollar was moving lower was that the markets were expecting Ben Bernanke to sound a dovish tone in his press statement later today. The US economy may be recovering, but the data don't support an early end to the bond buying which the FOMC has committed to. As Chuck mentioned yesterday, Bernanke had worried some in the markets with talk of possibly ending the bond buying in 2013, but I believe today's statement will clear up any confusion caused by last month's FOMC minutes. December's meeting minutes showed the FOMC members were 'approximately evenly divided' between those who said it would be appropriate to end QE3 in 2013 and those who thought the bond buying would need to continue beyond that.

Fed officials do have a brighter outlook for the US economy than they did at this time last year, but yesterday's drop in confidence due to the payroll increase (more on that in a bit) is just the latest indication the US economy isn't on a strong recovery path. Adding to the worries, Congress faces another deadline of March 1st on the $1.2 trillion in spending cuts which they conveniently kicked down the road at the beginning of the year (bet they wish they had booted that deadline a bit further!). The spending cuts, known as the sequester, will hit the military particularly hard but it doesn't look like anyone in congress wants to deal with figuring out the best place to cut, so these across the board cuts look like they will be implemented. While I agree that we need to reduce the overall size of our government, I also believe these spending cuts will be another drag on the recovery.

The Fed Chairman has pledged to continue his asset buying policy until we see 'substantial' gains in employment. I just don't see where we will get a boost in employment with consumer confidence dropping, payroll taxes rising, and less government spending. No, I think the Fed will ease the markets concern regarding the end of QE3, and will again suggest the $85 billion per month of Treasury and mortgage bond buying will continue through the end of 2013.

The Consumer confidence numbers released yesterday morning caused quite a stir on the trading desk, as we had all agreed with Chuck who was expecting an increase. But instead we saw quite a drop in the mood of consumers here in the US. Both Chuck and Mike Meyer sent me something on the data yesterday afternoon and since I couldn't decide which one to print I will just share both of their comments with readers. First from Chuck:

"Yesterday, I took a peek at the Economic data calendar to see what that day's data looked like, and what do my surprised eye did I see? Consumer Confidence for January plunging from 66.7 to 58.6! Recall, I had said that I thought the data would show an increase due to the stock market's performance. But what I failed to recognize was that the fiscal cliff deal that was struck at the beginning of this month, was going to be more of a game changer than I would have thought.

The weakness in Consumer Confidence falling to a 14-month low of 58.6, reflected a significant (falling from 66.7 to 58.6 qualifies for significant) deterioration in consumer's outlook now that the fiscal cliff deal has added an increase in the payroll tax. It's going to take a while for Consumer Confidence to rebound based on the tax increase reaction, and that's going to be a drag on the U.S. economy folks. the back side of that storm that I talked about last year, looks to be getting closer to landfall."

And now I'll share Mike Meyer's comments on yesterday's confidence data:

"Chuck yelled over to me when the consumer confidence numbers were released and wondered if I had a chance to check them out. I then rolled over to the Bloomie screen and saw that it wasn't a pretty picture as the measure fell to just over a one year low. What caused such a drop? I mean, stocks are trading within shouting distance of their all time highs set before the walls came crashing down during the financial crisis. The consumer confidence numbers are usually just a barometer of the equities market, so this type of decline wasn't expected by many.

It looks as though the expiration of the payroll tax holiday was much more than enough to offset any warm and fuzzies pertaining to a brighter monthly brokerage statement. It makes perfect sense to me, since this is real money that we're dealing with. I guess we'll see if this is just a knee jerk reaction to the first couple of paychecks of the year, but the 2% reduction in take home pay compared to the past couple of years will have an impact on the masses. I think a fair comparison would be getting a raise today with the understanding the boss will take it away at some point in the future. Well, that day has come and we've seen the initial reaction.

Chuck mentioned this isn't a good indicator of things to come with our fragile economic recovery, but the equity markets brushed these concerns to the wayside. The successful earnings season so far and the continued rise in home prices kept stocks on an upward trajectory. But, the $64,000 question will be how the average consumer will react to less disposable income."

Thanks to both Mike and Chuck for sharing their insights. Readers will recall the payroll tax holiday expiration was just one small part of the end of year budget negotiations, and as I mentioned earlier the next shoe will drop shortly as the 'across the board spending cuts' are scheduled to go into effect on March 1st.

While prospects for the US economy are darkening, the Euro area economy seems to be continuing to climb out of its recession. Economic confidence in the euro area rose more than economists forecast in January with the index rising to 89.2 from a revised 87.8 in December. That is the highest reading since June and well above the 88.2 reading predicted by a Bloomberg survey. The Euro area recovery continues to be led by Germany which is predicted to rebound from the contraction which it went through at the end of 2012. Many were reporting that this latest data is proof that the 'worst is over' for Europe; but as Chuck has been warning we believe the euro debt crisis is not over. We would expect the markets to re-focus on the weak peripheral countries of Europe at some time during 2013. But for now the US budget problems have caught the attention of the markets.

The euro has certainly been the benefactor of this shift of attention away from the European debt crisis. The euro strengthened above $1.35 for the first time in over a year yesterday and tested a 'resistance' level which could lead to a further move higher. Some technical analysts are now predicting the euro could move as high as $1.37 by the end of March, much higher than the median of analyst predictions which pegs the euro at $1.31 at the end of the first quarter. I guess that is what makes markets right? Some think the euro will rise while others are expecting it to trade lower.

The pound sterling rose for the first time in four days against the US$ after a report showed UK mortgage approvals rose. Lenders in the UK granted 55,785 mortgages in December, compared with 54,011 in November. Bank of England Governor Mervyn King has been easing credit conditions in an attempt to boost the lagging housing market in the UK. But while mortgage approvals are increasing, the numbers are still only half of what their were prior to the financial crisis.

Both the Swedish and Norwegian currencies rose nicely vs. the US$ over the past 24 hours. Sweden's krona rose after a report showed Swedish consumer confidence improved from an almost 4 year low. Sweden's central bank, the Riksbank, lowered rates last month in an effort to stimulate growth in their manufacturing driven economy. The 6% increase in the krona over the past 12 months has impacted exports, a majority of which are headed into the Euro zone.

The kiwi reversed gains yesterday amid speculation the Reserve Bank will attempt to 'jawbone' the currency lower after their meeting tomorrow. Officials of the RBNZ are expected to leave rates unchanged but will probably comment on the recent gains of the NZ$. Recent data show inflation pressures are easing in New Zealand so there is less need for the RBNZ to push rates higher.

Inflation is also easing in Brazil, but the official measure fell less than analysts had expected. Prices in Brazil, measured by the IGP-M price index, rose .34 percent in January, down from a .68 percent jump in December. The gain compares with a median estimate of .32 percent increase. Central bank president Alexandre Tombini said "Inflation remains under control" during a speech last week. Interest rates in Brazil are still among the highest of all the currencies offered in our WorldCurrency® Certificates of Deposit, so the currency should remain a favorite of investors looking for higher yield.

Both Gold and Silver moved higher overnight as investors predict the FOMC will continue their QE3 bond buying. The purchases by the Fed pump billions per month into the markets which helps boost the equity markets but also increases the risks of long term inflation. The precious metals are moving higher as investors purchase gold and silver as a way to hedge against this risk of inflation. I read a report this morning released by the US Mint which stated they had sold a record amount of American Silver coins so far this month, and this after sales were suspended for a week because of a lack of inventory! It certainly seems investors are looking at physical metals as a good hedge against both inflation and the uncertainty which faces all of us in 2013.

And I will close today's Pfennig with a story I found on Bloomberg this morning regarding a shift which is occurring in China. Rural incomes in China actually rose at a faster pace than in the cities for a third straight year in 2012. Rural per capita income advanced 10.7% compared with a 9.6% increase for urban dwellers according to a report from the National Bureau of Statistics. This illustrates a shift which the Chinese government has been trying to make, spreading some of the benefits and income out to the countryside in order to try and level out income gains. I have highlighted the emergence of a 'middle class' in China, and its impact on the global economy. This latest report is good news for the global economy as gains in income are starting to reach the very poor rural areas where a vast majority of China's population still live. Spread this increase in income across the massive population in the rural areas and we should see a pickup in Chinese consumption which will benefit those countries which supply China with goods and materials. This should be good news for the commodity based currencies and those Asian neighbors which are supplying these new Chinese consumers.

To recap. The Fed will probably announce 'no change' in their bond buying program, and will counter the thoughts that they would end QE3 in 2013. Chuck and Mike both share their thoughts on US consumer confidence which took a hit this month. The Euro moved higher after numbers showed a pickup in confidence across the pond. The pound rose as UK mortgage approvals rose, and both the Swedish and Norwegian currencies also booked gains vs. the US$. Gold and Silver moved higher as investors worry about further bond purchases by the Fed. And a report showed Chinese incomes continue to rise, and the biggest increases are occurring in the rural areas of China which should be good news for the global economic recovery.

Currencies today 1/30/13: American Style: A$ $1.0428, kiwi .8329, C$ .9973, euro 1.3550, sterling 1.5768, Swiss $1.0910. European Style: rand 9.052, krone 5.4894, SEK 6.3577, forint 218.33, zloty 3.0943, koruna 18.915, RUB 30.02, yen 91.27, sing 1.2359, HKD 7.7587, INR 53.305, China 6.2204, pesos 12.696, BRL 1.9845, Dollar Index 79.398, Oil $97.91, 10-year 2.03%, Silver $31.355, and Gold. $1,664.51

That's it for today. Happy, Happy, Happy Birthday to Christine!! She is always a ray of sunshine on the desk, and we absolutely love the energy she brings with her to work every day! Antione and his wife Brooke got some great news yesterday as their new daughter Taylor had a great checkup and is gaining weight at a good rate. Storms rolled through the area yesterday, which were expected as we had temps rise up into the low 70s. Some crazy weather for the end of January! With that I will say Happy Birthday to Christine one more time and I hope everyone has a Wonderful Wednesday. Thanks for reading the Pfennig!

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

More Strong Data For China.

Chuck Butler — Fri, 14 Dec 2012 18:28:43 GMT

In This Issue.

* Currencies drift back and forth .

* Chuck's thoughts on Fed bond buying.

* Bill Gross's thoughts on Fed bond buying.

* Merry Christmas!

And, Now, Today's Pfennig For Your Thoughts!

More Strong Data For China.

Good day. And a Happy Friday to one and all! Already a Fantastico Friday in my book, as this is the last time I have to wake up before the farmers for nearly two weeks! YAHOO! I had a gift waiting for me on my desk when I arrived, and as I open it, it's Chocolates! Yum! But not too many for me, I have to keep my girlish figure! HAHAHAHAHAHAHAHA! See? I'm a happy camper this morning. and it has nothing to do with what the currencies and metals did in the overnight markets!

Well. nothing new to talk about regarding the Fiscal Cliff drama. And to think, today, the lawmakers were supposed to be cleaning out their in-boxes and heading out the door for their Christmas holiday. Don't you feel sorry for them, having to stay and continue working on ways to kick the can down the road? Actually, they created this mess, and as my mom used to say. "you've made your bed, now lay in it" The unfortunate part is that the bed the lawmakers made, hurts us, in many ways, that most Americans have no clue about. (because they don't read the Pfennig! HA!)

So. with nothing new from the lawmakers, the currencies and metals continue to drift about, with some gaining and some losing VS the dollar. Yesterday, I told you that the currencies, for the most part, were drifting lower. That drifting lower actually turned to drifting higher as the day went on, and there's a slight tone of risk in the markets this morning, but not much of one. The bleeding in the Gold price (& Silver!) has stopped for now. I'm well aware that the NY market boys and girls could very well take this down very quickly, so I'm writing on egg shells this morning.

As we get closer to Christmas, we'll begin to see volume slow down, and hopefully the volatility slow down too, as traders head out the doors to begin their holidays. But today, I believe we're "full-on", so let's get to the news, eh?

The euro is knocking on the door to 1.31 this morning, having touched it briefly yesterday afternoon. We saw last week that 1.31 was a tough row to hoe for the traders that wanted to keep the euro above 1.31. And so it appears to be so again now. The best performing currency overnight was the Chinese renminbi /yuan, and the worst was the New Zealand dollar, but in reality these ranges are very tight, so the movements have been small either way.

Spain's Prime Minister, Rajoy, had some interesting things to say this morning about the Eurozone, and they play very well with my thought that the euro is the biggest surprise for 2012, given it didn't collapse in price like SO MANY economists and pundits said it would for the past two years! Rajoy said that , "a year ago, the European Union was only talking about austerity, but today the European Union is now talking about growth and EU architecture."

The reaction by the markets to the Fed's announcement on Wednesday was as I thought it would be. muted. We've all become Comfortably Numb to the numbers, folks. Shoot, I even fell into that trap yesterday morning, not making a big deal out of the fact that the Fed will begin in January to buy $85 Billion per month in mortgage backed and Treasury bonds. I wonder what the "bond guys" really think of all this "buying" by the Fed. The Primary bond dealers are smiling like Cheshire Cats, for the Treasury issues the bonds, and the Primary bond dealers are required to take up the bonds that aren't sold in the auction, but in this case, they'll probably line up at the door to buy as many bonds as they can, because, they'll just turn around and sell them to the Fed. and, yes, there's a shekel or two to be made there by the Primary Dealers. like Goldman Sachs, and others. It's a sweet deal, folks. but for the rest of us. not so sweet!

But $85 Billion per month. You know, my question, if they ever allowed me to ask a question of a Fed Head (remember in 2011, when I had my chance at a meeting with St. Louis Fed Head, James Bullard, but was unable to talk, because it was when I was receiving radiation on my mouth? ) I would ask them to show me where the previous 3 rounds of bond buying did anything to eliminate the jobless problem. For that's what the Fed Heads are hoping all this bond buying does. At least in Public that's what they want us to believe.

For someone like me that is always looking under the hood, and in the wheel wells and the undercarriage for clues to why the car/ economy is not riding smoothly, I believe that this bond buying is nothing more than the Fed keeping interest rates low so that all the debt issues (Treasuries) that the Treasury issues have low interest rates, which keeps the debt servicing costs low (relatively compared to what they would be if rates were normal, say 5%) And as long as foreigners don't balk at the bond buying, and the U.S. public just shrugs their shoulders and says play that funky music white boy. No wait! That's not right! How could I inject a Wild Cherry song in a serious discussion? Why not? But as long as the U.S. public doesn't question our leaders as to what the unintended consequences could be from all this bond buying, the Fed Heads will just keep playing that funky music, right. lay down the boogie and play that funky music till you die!

Well. I've said this so often lately, I sound like a broken record, or for you youngsters, a scratched CD, or damaged MP3. But, Gold seems to be the bellwether regarding how the Fiscal Cliff talks are going. I find it pretty stupid to trade this way, but it is what it is. and so we carry on. at least knowing the reason Gold either booked a profit or loss that day.

The other day, I told you about the good results of the Canadian Trade Deficit report. And yesterday it was reported that Canadian household net worth rose by $70 Billion in the 3rd QTR to a new record high of $6.92 Trillion! Now, that's pretty impressive folks! The aggregate wealth of Canadian households has reached its highest level on record! Add to that, the fact that the annual rate of increase in household debt has shown considerable moderation in 2012, and credit growth is around a decade low.

The Canadian dollar / loonie is flat on the day, but did rally a bit when this report printed yesterday morning. I talked with an old colleague (more on old colleagues in the Big Finish) last night, and he was telling me about his Canadian bank account, and how he really believes that Canada will be the place to be when the U.S. economy collapses. Quite an uplifting conversation, eh? Well, the important thing of the whole conversation is that he's diversifying his U.S. dollar holdings, and with a good fundamentals currency.

Have you ever seen those temporary tattoos? You know you press them on with a wet cloth. I was given one yesterday that's a classic design and says "Fiscal Prudence". pretty good, eh? Speaking of Fiscal Prudence. I see that Goldman Sachs is claiming that the Norwegian krone is its first "Top Trade for 2013". Remember what I always say about these Financial Institutions making calls on currencies and metals. You have to think that they could be long, and want everyone else to buy too, to drive up the price of what they own. But Norway is the poster child for Fiscal Prudence, and I think that we could very well see a rate hike in Norway in the 1st QTR of 2013. put those two things together, and G.S. could be right. but that's just their opinion folks, they could be wrong, and wouldn't mean a hill of beans to them to be wrong, whereas when I'm wrong, I feel so bad, that I shy away from giving my opinion again.

China posted a stronger than expected HSBC manufacturing index last night. Recall that I've explained that China posts two reports on their manufacturing. One is by HSBC (Hong Kong Shanghai Bank) and the other is by the Gov't. The HSBC report always prints first, and last night it printed with an increase in the index number to 50.9 (from 50.5). And Chinese power consumption showed that November's consumption growth of 7.6% was the highest growth rate since February. So, again, all signs point to China turning on to recovery street, as I've told you for a couple of months now.

I had a reader doubt what I was saying about the Chinese recovery, and ask me how the Chinese would recover if the U.S. economy & Eurozone economy were going nowhere. Ahhh, that's a good one, and is predicated on the thought that China's economy only grows by exporting to the West. But what about the rest of Asia, where the only "real economic growth" is occurring outside of the Emerging Markets? And what about China's move 4 years ago to begin to wean themselves from the cocaine of exports and create domestic demand? There's your answers. And don't forget that even if the U.S. economy goes nowhere, U.S. consumers will still be spending money, obviously not as much, but still spending it even if they don't have it in the bank!

Looks like the Fed's buying of Treasuries needs to start right now instead of in over 2 weeks. I don't know if you chart these things or not, so I'll just tell you that the yield on the 10-year Treasury has risen from 1.60% on Monday to 1.73% this morning. Hmmm. seems very interesting don't you think? Every time we've seen the yields rise in Treasuries the past few years, the Fed steps in and buys, bringing those yields back down. And that will be the case here too, in two weeks!

Before I go to the Big Finish, here's a funny. a good friend, and former colleague (thanks Ann!) sent me the Oinion's steps to dealing with the Fiscal Cliff. and one of the steps is "raise the cost of fishing licenses to $140,000". funny stuff!

And a great time last night at a party that's put together by Frank Trotter, John Dubinsky, and Chris Lissner, that gathers ex-Mark Twain Bank people. I got to see one of my fave people from back in the day, Janet Young. I hadn't seen here in over a decade! The two of us used to do a duet whistling anchors away, talk about bringing down the house! But a great time seeing the wiley old veteran Jack Milner, and Mizzou buddy Dean Shilitto among many others. thanks to Frank, Chris and John for the invite!

Then There Was This. From Bloomberg. Bill Gross of PIMCO the world's largest bond fund was talking about the Fed's new bond buying program. let's listen in. "What really happens, and this is critically important, is that the Treasury issues bonds and the Fed buys them and then it remits interest to the Treasury. It means the Treasury is issuing debt for free. There are complications. Inflation is one of the complications. Inflation, so far, has been held in check and "we are well below 2 percent and the Fed is comforted by that," Gross said. "But ultimately, if you write checks for free and if it's costless to finance a fiscal policy that is well into a deficit figure, yes, that's an inflationary moment to the extent that the private sector gets some animal spirits and takes that bait."

Chuck again. yes. but. if we all put on our memory caps we'll remember that Big Ben Bernanke said that he wants inflation (not a lot of it, but some). So, maybe this is "part of the plan". He obviously knows something that the rest of us don't, right? OK, I almost said that with a straight face! HA!

To recap. the drifting lower by the currencies yesterday morning turned to drifting higher in the afternoon, but the ranges are so small it's hardly noticeable. China printed more proof that their economy has turned the corner, and the housing problem in Norway, is going to push the Norges Bank into a rate hike early next year. or at least that's what Chuck things will happen!

Currencies today 12/14/12. American Style: A$ $1.0525, kiwi .84, C$ $1.0160, euro 1.3085, sterling 1.6115, Swiss $1.0820, . European Style: rand 8.66, krone 5.6380, SEK 6.70, forint 216.90, zloty 3.1220, koruna 19.2810, RUB 30.76, yen 83.70, sing 1.2215, HKD 7.75, INR 54.48, China 6.2453, pesos 12.80, BRL 2.0835, Dollar Index 79.95, Oil $86.80, 10-year 1.73%, Silver $32.55, and Gold. $1,697.17. and the U.S. Debt Clock click here: http://www.usdebtclock.org/index.html

That's it for today. and for the next two weeks. Chris and Mike will have the conn through Christmas, and I'll be back in two weeks. Tomorrow is my sister Terri's birthday, and the 15th was always the day, as a kid, that we used to go pick out our Christmas Tree, so good memories for the 15th. Next week will be Jennifer's and Ty's birthdays. So happy birthday to you two! I've been working with Jen for so long now, that I think she doesn't count birthdays any longer! I'm the one that looks much older though not her! You know, I know that I speak to many religions in the Pfennig, but for me, I celebrate Christmas, so I say Merry Christmas. And it's since it's time to get this out the door, I'll leave you with my fave saying at Christmas. May the light of faith, the warm of heart, and the love of family be your gifts this year. I get as excited as a kid around Christmas, for it brings back so many great memories. I used to be the Santa for the kids' school, and our neighborhood, stuff like that is always fun to think about. So, I hope those of you who celebrate Christmas, have a Merry Christmas. I'm outta here!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

China's Economy Turns The Corner.

Chuck Butler — Thu, 25 Oct 2012 16:21:00 GMT

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

There's no smarter way to buy gold or silver

Ready to buy some gold? Or maybe even silver? You'd be wise to consider the NON FDIC-INSURED1 Metals Select SM Account from EverBank. It delivers everything you've been searching for-lower costs, ultimate convenience, and flexible options.

-Choose from coins, bars or unallocated metal -No storage or annual fees on Unallocated Accounts -Low account minimums of $5,000 for Unallocated Accounts and $7,500 for Allocated Accounts

To learn more and view important disclosures go to: https://www.everbank.com/personal/precious-metals.aspx?referid=11808

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

In This Issue.

* Risk assets rebound on Fed statement.

* RBNZ leaves rates unchanged.

* As too does the Riksbank.

* Gold rebounds, before NY Open.

And, Now, Today's Pfennig For Your Thoughts!

China's Economy Turns The Corner.

Good day. and Tub Thumpin' Thursday to you! Things are looking a bit better for the risk assets this morning, so we've got that going for us! Joe Bielicke just stopped by, to alert me to the delay in bringing our stuff up to date this morning. But should be good-to-go by the time everyone gets here. So, we've got that going for us today too! And I'm coming to grips with the idea that the Cardinals will not win "12 in 12". (Their 12th World Series Championship in 2012). I have to admit I never really thought that was possible, as it's just not that easy! And if they did, wouldn't everyone be on board for 13 in 13? And so on. So, I'm good now with their loss.

So. Like I said above the risk assets have turned around and have a bias to buy them and sell dollars this morning. The big things from yesterday saw 1. ECB President Draghi in the German Parliament, in an attempt to win the over to the idea of bond buying by the ECB. Those meetings were in private, and I haven't found anything that tells me how it went, but with the euro rallying this morning, that might indicate that things went well. The other big thing yesterday saw 2. The Fed Reserve end their two-day FOMC meeting, and decided it best to not announce an increase in their latest round of Quantitative Easing (QE), but don't worry it's coming, my spider sense is tingling!

The Fed did make this statement, "exceptionally low levels for the Federal Funds rate are likely to be warranted at least through 2015". So, let's step back and see what the Fed has going on right now. They are still trading the Operation Twist (& Shout!), which has them selling the short end and buying long term bonds. They just announced QE3. and they pretty much told us that the near zirp (zero interest rate policy) will continue for 3 more years. Can you say, pedal to the metal? Or how about, opening the spigot all the way? The Fed Heads have basically said, "the economy had better rebound with all this accommodation." I have a friend, who sent me a note and said to further my call from almost 2 years ago, that there would be QE3, and more up to QE24. He said to call the next round, QE4-ever!

Ok. I really don't want to go any further with the Fed, for they are not high on my hit parade, and when I begin to discuss them my blood pressure rises. So, let's keep Chuck from dealing with hypertension and move along.

Well. earlier this week, I told you that the Canadian dollar / loonie had gotten taken to the woodshed on the dovish comments of Mark Carney, the Bank of Canada's (BOC) Gov. Well. since that time, Canada printed a strong Retail sales report for August, with Retail Sales rising .3% VS the .7% in July. Can you say strong domestic economy? I knew you could! And the other day, the BOC left rates unchanged, which I thought they would, but. maintained their tightening bias! Recall, I said that I was afraid that the BOC would change their bias to neutral? Well. the BOC came to their senses, and realized that the economy is too strong, (not soaring, just too strong) for rate cuts, and that a rate hike could very easily be implemented, should the economy continue at this pace.

Not only does the BOC see the strong domestic economy, but also the recovery going on in China. They are not fooled or allowing the wool to be pulled over their eyes, by the calls of a stronger U.S. economy, knowing all too well, the problems that exist there.

The Reserve Bank of New Zealand (RBNZ) left rates unchanged last night. The new RBNZ Gov. Graeme Wheeler appears to be an inflation hawk, and that's a good thing for the New Zealand dollar / kiwi. The markets had priced in a rate cut for January, 2013, and now they have to re-think that move, as Wheeler said that "inflation is expected to accelerate."

So, in the past two days, the interest rate cut campers in both Australia and New Zealand have had to back away from rate cut gun. And both currencies have rallied because of the rate cut campers having to back away. Now, things could change between now and early next year for these two countries, and they might have to go back to the rate cut table. But, my thought is that, China is coming out of its self-inflicted slowdown, and that's the green-light that these two countries are looking for.

And speaking of China. The Chinese renminbi/ yuan reached a 19-year high last night (VS the dollar), and basically reached the end of the "allowed trading range" for the first time! So, apparently other traders and investors are seeing what I've pointed out, and that is a recovering Chinese economy. Stronger manufacturing and Trade Surplus data has really lifted the black cloud that hung over the Chinese economy. So. more and more traders and investors are seeing what I saw, finally!

There are a couple of things going on China and with its currency that is traded offshore now in Hong Kong. the renminbi/ yuan in Hong Kong is even stronger than the price for the currency on the mainland. So, the flow into renminbi/ yuan is back! And apparently, the Chinese Gov't isn't getting all itchy about it.

Another Central Bank, Sweden's Riksbank, met this morning, and left rates unchanged. but. said that, "further easing has become more probable as growth slows." The Riksbank cut rates 3 times earlier this year, so it probably wasn't prudent to cut them again at this time. The Riksbank believes that the "Swedish economy has so far shown resilience to the debt crisis in Europe, but now Swedish exports are being clearly damped by the weak activity in the euro area. However, the consequences for the economy as a whole are alleviated by households having relatively good purchasing power."

So. the Riksbank sees a need to cut rates in an effort to weaken the krona to help exports, but. they also understand maintaining purchasing power of a strong currency. Geez Louise, don't you wish our central bank understood the reasons to maintain the purchasing power of a strong dollar?

Speaking of the U.S. dollar and our loss of purchasing power (The Big Boss, Frank Trotter, talks about it in the TTWT piece today).. I saw this last night. from the WSJ. "Chief executives of more than 80 big-name U.S. corporations, from Aetna to Weyerhaeuser, are banding together to pressure Congress to reduce the federal deficit with tax-revenue increases as well as spending cuts.

The CEOs, in a statement to be released on Thursday, say any fiscal plan "that can succeed both financially and politically" has to limit the growth of health-care spending, make Social Security solvent and "include comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues and reduces the deficit."

Where have these guys been before now? Sure, it's better to be late than never, but. this is very late!

Gold has rebounded this morning with the risk assets, and is up $13, but that's now, before "the pm's arrive in NY". Here's my thought on the take down of the price of Gold (&Silver). You would think that China would be stomping and screaming. But, they take the high road, as we should too. They use the price manipulation as an opportunity to buy at cheaper levels. I can't even think what it would be like if China got upset with the price manipulation. But they haven't, yet, and instead buy at cheaper levels. I've told you all why they hoard Gold. so I won't go there again.

I saw a story on the Bloomberg this morning that caught my eye. "North American companies have announced plans to eliminate 62,600 positions at home and abroad since Sept. 1. According to data compiled by Bloomberg, Firings total 158,100 so far this year, more than the 129,000 jobs cut in the same period of 2011. The companies are forced to do this because of a persisting slump in sales.

But, I thought the unemployment problem was going away? NOT! On a sidebar here, a reader asked me if the U.S. broke out full-time and part-time workers in the labor reports like the foreign countries do? Well, not for the report that everyone follows. But there's data on this. An additional criticism of the unemployment rate is that weak labor markets often force workers who would prefer to be working full-time to work at part-time jobs but the unemployment rate counts full and part-time employees equally. The broadest alternative unemployment rate, so-called U-6, includes all marginally attached workers as well as those working at part-time jobs when they would prefer full-time work in its measure of 'unemployment'. The level of U-6 remains significantly elevated, reflecting the sharp deterioration in labor markets during the recession; however, since December 2010, the measure has declined by 1.9 percentage points, falling from 16.6% to a level of 14.7% in September.

Those "Gov't figures" so take them with as many grains of salt that you wish.

Then There Was This. from the Big Boss. "I don't really watch the debates since to my way of thinking they are just staged promotions exclusively for the two major parties. One line about Iran from the reality show on Monday that did catch my attention, but for another reason was, "it is crippling their economy. Their currency has dropped 80%" as it is under attack by global sanctions.

Lets step quickly away from middle east policy and note that in the past ten years over two administrations our very own US dollar has lost 32% of its value versus the euro, 50% versus the Australian dollar, 42% versus the Japanese yen, and even 24% against China who is a forthright currency manipulator. Apparently it didn't take international sanctions to accomplish this. If it's a victory for Iran to have a currency under attack wouldn't someone think to bring up that it's a bad thing for the US dollar to be under attack from within?

Our long held view is that currency values are impacted primarily by four factors: relative fiscal policy - the budget and debt situation, relative monetary policy, trade and balance situation, and the core capacity of a country - see http://www.dailypfennig.com/2012/09/02/evaluating-currencies-to-diversify-your-cash/. It seems to me that a long term objective of the US should be to stabilize and then improve the value of the US currency by paying attention to all four of the factors mentioned. Since congress with presidential leadership controls the first one and the Fed the second we'll assume that the defining silence on the matter clearly outlines the approach over the next four years no matter who holds the Great Seal." - Frank Trotter

Chuck again. Frank and I have worked together a long time, and we used to do presentations together. We believe that there's no political will to do what needs to be done to correct this mess we're in. and, to end this, I used to tell people that Frank and I have worked together so long that when we began to work together the Dead Seas wasn't even sick yet!

To recap. The risk assets have rebounded in the overnight markets, mostly on the Fed's statement yesterday that the low fed funds rate is warranted through 2015.. Hey, Don't they just keep moving the goal posts on this? The risk assets are also getting help this morning from the recent trading in the Chinese renminbi/ yuan, which shows funds flowing back into China as it appears that China's economy has turned the corner. The RBNZ and Riksbank left rates unchanged, with kiwi rising on the non-move and the krona losing a bit of ground on the non-move.

Currencies today 10/25/12. American Style: A$ $1.0390, kiwi .8240, C$ $1.0095, euro 1.3005, sterling 1.6145, Swiss $ $1.0755, . European Style: rand 8.6955, krone 5.7305, SEK 6.6815, forint 215, zloty 3.1850, koruna 19.1780, RUB 31.21, yen 80.15, sing 1.2195, HKD 7.7505, INR 53.58, China 6.2416, pesos 12.93, BRL 2.0240, Dollar Index 79.79, Oil $86.45, 10-year 1.83%, Silver $32.17 and Gold. $1,716.75

That's it for today. and for me this week. I have to do Continuing Education on my securities licenses tomorrow, bright and early. So, hopefully Chris won't mind picking up the conn on the Pfennig tomorrow. Every 3 years, I have to do this Continuing Ed. I guess that's better than sitting for those tests again! Congrats to the S.F Giants for their Game 1 win, as they beat the Cy Young winner from the Tigers. When I woke from my nap yesterday afternoon, little Braden Charles was there, and we went outside to play in the leaves. He loves to make noise, and those crunchy leaves were pretty good noise makers! Next week is Halloween, can you believe that it's here? I love to sit outside and hand out the candy, and to see the little kids in their costumes, always so cute! And, now it's time to get this on the conveyer belt to be delivered to you! I hope you have a Tub Thumpin' Thursday!

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

Waiting on the Fed.

Chuck Butler — Wed, 01 Aug 2012 16:34:17 GMT

In This Issue.

* ECB and Fed to show their hands

* Global data shows a wider slowdown

* UK data continue to disappoint

* Aussie dollar touches 4 month high

And, Now, Today's Pfennig For Your Thoughts!

Waiting on the Fed.

Good day, and welcome to August. As Mike mentioned, July will go down as the hottest month ever here in St. Louis and we aren't alone in our battle against the heat as the entire country will probably set a record for the average temperature in July. At least our power hasn't shut off and we can enjoy some AC, unlike the folks in India where there was a massive power outage over the past few days.

The dollar rally seemed to lose power yesterday as currency investors were afraid to take positions ahead of the ECB and Fed announcements. The world's two top central banks continue their meetings today and the markets will look to the post meeting announcements for some direction. The Fed head, Ben Bernanke, will be the first up to the podium this afternoon and then he will be followed by the ECB President Mario Draghi who will hold his press conference tomorrow. I don't think we will see any dramatic action taken by our Fed this meeting, as they chose instead to 'kick the can' for another month. But things are different for the ECB who will be forced to come up with something.

The global economy continues to slow, which has put increased pressure on both central banks to come up with some sort of stimulus. Data released yesterday here in the US showed consumer spending stagnated in June after dropping a revised .1% the month before. Personal income was up slightly both months, which indicates US consumers continue to tighten their belts. This data, along with the stagnant employment picture here in the US shows the problem Bernanke and the rest of the FOMC members face. They need to try and stimulate the US economy, but their only tools are their ability to control interest rates. Typically the Fed only has a direct impact on the short end of the curve, and the only way for them to control longer rates was by 'jawboning' them up or down by adjusting the markets inflation expectations. But during the credit crisis, the Fed felt rates were still too high on the long end so they took a lead from the UK and Japan and instituted a couple of 'quantitative easing' plans to try and drive them down. The Fed became big buyers of longer dated bonds which helped drive the 10 year yields to record low levels (I question just how much of this drop in rates was due to the Fed as the Euro crisis has probably done more to reduce rates here in the US than 'operation twist'!). But have these lower rates had any kind of stimulative impact on the US economy?

Yes, every time the Fed announces another easing program the stock market has rallied a bit, but the last time I checked the Fed's dual mandate did not include keeping equity markets in the black. The purpose of lower rates are to try and get consumers and businesses to make the decision to borrow and spend, stimulating the economy. But as I just mentioned, US consumer spending has stagnated, and companies don't seem to be confident enough to begin hiring workers. Lower mortgage rates are great for those of us who are working, but I have to believe most homeowners who have the ability to re-finance have already done so. So just how much stimulus will lower rates bring? Not much if you ask me. Both consumers and businesses will continue to be worried about the outcome of the elections, and what that will mean for tax policy here in the US. There is also that nagging 'fiscal cliff' which is lurking out there at the end of 2012. I certainly don't envy the position our boys and girls over at the Fed have put themselves into, and I think they will take the 'safer' option today and simply tell the markets they will continue to monitor the situation and stand ready to 'take action' if needed (what exactly that action is will remain a mystery).

As Mike wrote yesterday, the ECB President has painted himself into an even more difficult position with his assurance that the ECB will do 'whatever is necessary' to support the euro. The currency markets have certainly priced in some action by the ECB. Nobody expects either central bank to take action on rates, as they are just about as low as they can go. Instead, the markets have been pricing in some other type of stimulus program, either an extension of their current quantitative easing programs or new ones designed to pump more liquidity into the markets. I think currency traders will probably give Bernanke some room, but now is the time for Mr. Draghi to put up or shut up. But the problems in Europe won't be solved with one dramatic announcement. Draghi can only hope to convince the markets that the ECB has a long term plan to deal with the crisis, but I think the risk is that the markets won't be convinced by his words and the euro will give back all of the appreciation we have seen over the past week.

There is no 'silver bullet' which will kill the debt crisis in Europe. The collapse of the Greek economy is well underway, and the ECB can only hope a similar situation does not occur in Spain or Italy. The labor markets are bad here in the US, but are even worse in Europe with the jobless rate reaching a record level. According to a report released today, unemployment in the eurozone reached a revised 11.2% in May and held at that record level in June. And the ECB won't be able to depend on a global economic rally as data indicates the globe will continue to be stuck in a 'slow growth' mode for the next few years. Euro-are manufacturing contracted for a 12th month in July according to a report released today; falling to a 37 month low of 44 from 45.1 in June.

A report released in Canada this morning showed GDP in our neighbor to the north rose just .1% in May, less than economists forecast. Another report showed China manufacturing, which most believe will be the force driving the global economic recovery, stalled out in July and is teetering on the edge of contraction. The Purchasing Managers' index in China unexpectedly fell to 50.1 in July, the weakest in eight months from 50.2 in June. Another piece of data due out today is predicted to show manufacturing in the US also stagnated in July. The ISM factory index is due out this morning, and is expected to show a slight increase from last month's reading of 49.7, but the index isn't expected to rise much above 50 which is the dividing line between contraction and expansion. Regional reports in the US released yesterday confirmed that manufacturing is sputtering with manufacturing gauges in Wisconsin and Ohio declining.

The pound sterling dropped a bit overnight after a report showed UK manufacturing shrank the most in more than three years in July. The gauge fell to 45.4 from a revised 48.4 in June, weaker than any of the 30 forecasts on Bloomberg. The Bank of England is meeting today and tomorrow, and is expected to announce no change in their policies. The BOE was the first to institute a bond buying program designed to stimulate their economy, a model followed by the US and Europe. Unfortunately, the results of this QE program have not lasted. This is worrisome for the US and the ECB, as our stimulus programs were instituted after those of the BOE. While the economies are definitely different, it is not good to see a QE program which has been in place longer than our own seemingly having little lasting impact on the UK economy. The pound barely even got a lift from hosting the Olympics.

There was one bright spot in all of the manufacturing data released yesterday. Sweden's manufacturing unexpectedly expanded in July, with a purchasing managers' index rising to 50.6 in July from 48.4 the previous month. The Swedish economy expanded 1.4% in the second quarter as consumer spending rose and an increase in exports of services offset a decline in exports of goods. The news sent the Swedish krona higher as currency traders lowered bets that the Riksbsank would lower rates in September. The Swedish krona was the second best performing currency during the month of July, rising 2.45% vs. the US$.

The top performer during last month? It was the Australian dollar which rose 2.77% vs. the US$. The aussie dollar touched the highest level in more than four months moving solidly through $1.05. The currency was helped by a report which showed house prices unexpectedly rose in the three months through June as lower rates helped stimulate the housing market. Another report showed building approvals decreased by less than economists had expected, which was another good piece of news for the important housing sector in Australia. There was a pickup in the number of first time homebuyers, increasing the amount of liquidity in the housing market.

Then there was this. As I mentioned in the opening paragraph, people in India faced a massive power outage over the past few days. I was actually made aware of the outage well before anything was reported about it here in the states, as I continue to work with programmers based out of India. I was scheduled to be on a call with a programmer early yesterday morning, and was a bit upset when he never called in as we were waiting on some code improvements which we wanted to get in place prior to the month end. We were finally able to reach an associate of his in London who told us about the power outage. India has gone through some tremendous growth, but their infrastructure hasn't been able to keep up with the changes in the population. Throw in a drought and high temps similar to what we have been experiencing here in the Midwest, and you end up with a power system which just couldn't handle the demand. Apparently over 620 million were without power across India, that equates to almost two times the entire population of the US.

While the power is expected to come back on sometime today, the drought is continuing and Goldman Sachs announced yesterday that they were lowering their GDP growth forecasts for India because of the lack of rain. Goldman reduced India's FY2013 GDP forecast to 5.7% from 6.6% due to the weak monsoon season. They also reduced their rate cut forecast to 25 bps in 2012 which will probably occur in the 4th quarter. Goldman maintained their view that the RBI will cut an additional 50 bps in 2013. None of this is good news for the Indian rupee.

To recap. The ECB and FED begin their meetings today, and Bernanke should make an announcement this afternoon. I don't expect our Fed to take any new action, but the markets are expecting something big from the ECB. The currencies remained in a tight range waiting for any news. Manufacturing data released across the globe verified a global slowdown is underway. UK manufacturing data weighed on the pound and Sweden was the sole bright spot, posting a positive manufacturing number. The Australian dollar was the top performer in July, and added to its gains moving up above $1.0530. And finally, there was a massive power outage in India, with over twice the population of the US losing power.

Currencies today 8/1/12. American Style: A$ $1.0531, kiwi .8129, C$ .9989, euro 1.2310, sterling 1.5630, Swiss $1.0248. European Style: rand 8.2568, krone 6.0121, SEK 6.7564, forint 227.72, zloty 3.3377, koruna 20.5835, RUB 32.3128, yen 78.15, sing 1.2446, HKD 7.7539, INR 55.5175, China 6.3687, pesos 13.2847, BRL 2.0569, Dollar Index 82.582, Oil $88.27, 10-year 1.48%, Silver $27.93, Gold $1,614.90, and Platinum $1,410.25

That's it for today. Thanks to all the readers who sent me notes regarding Lucy. I am happy to report that she pulled through last Friday's operation with no complications and is almost back to her sweet self. I enjoyed watching the US girls grab the gold in gymnastics last night, and enjoyed watching Phelps set the record as the most decorated Olympian ever. The crew is coming in and the phones are about to turn on, so I better end this and get it out the door. Hope everyone has a Wonderful Wednesday, and thanks for reading the Pfennig!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

What's Greece going to do...

Chuck Butler — Fri, 15 Jun 2012 15:55:32 GMT

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

There's no smarter way to buy gold or silver

-Choose from coins, bars or unallocated metal -No storage or annual fees on Unallocated Accounts -Low account minimums of $5,000 for Unallocated Accounts and $7,500 for Allocated Accounts

To learn more and view important disclosures go to: https://www.everbank.com/personal/precious-metals.aspx?referid=11600

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

In This Issue...

* Jobs disappointed, again

* We're told inflation fell

* Fed has the ball

* Brazil back paddles

And, Now, Today's Pfennig For Your Thoughts!

What's Greece going to do...

Good day...and welcome to another fabulous Friday. I'm back with you again today as Chris and I pull the double switch while Chuck takes some time off. I was on my back porch again last night reading through some stuff and thinking about what to write, so it felt like déjà vu. The focus and headlines haven't changed much from the beginning of the week, but there's still plenty to talk about. The markets have landed on the idea of more stimulus from the Fed, so the Greek election has surprisingly taken a back seat as we have progressed through the week.

It's definitely been a turn of events for the financial markets as just last week everybody was bracing for Greece to leave the euro, which prompted the flight of liquidity into the dollar. As the drum for more action from the Fed has beat louder and louder, the allure has been fading away. Unless we see something catastrophic from Greece this weekend, it looks as though the Fed meeting next week will keep a captive audience. The moment of truth is finally upon us, so when Monday morning rolls around, it could be a much different story.

Nonetheless, the economic data here in the US didn't do anything to dismiss additional action from the Fed, but instead it just gave them more opportunity to loosen the belt a couple notches. While the weekly jobless numbers usually behave as the opening act, this week they were thrown up on the main stage. These numbers can be volatile, but the trend has been moving in the wrong direction, so this was the last measure of employment before the Fed makes their decision on Wednesday. Since the labor market has become such an influential piece, the disappointing rise for initial jobless claims to 386k and the past few monthly jobs reports would certainly be the fall guy for those wanting more Fed action.

While the jobs figures may have fueled the fire, the inflation reports this week have given the scope to take action. According to these reports, we have no rise in inflation. Let me take that back, the reports say that inflation is actually falling. I saw a headline on Bloomberg that said the cost of living in the US fell in May by the most in more than three years. Maybe I'm doing something wrong, but there's no way that my basic cost of living has gone down, not to mention by the biggest margin in three years. I'll bite on the whole it costs less to fill up the gas tank thing, but that's as far as I go.

I know it's much more complicated than this, but I'm not a complicated kind of guy. I'm a sucker for potato chips so I've been buying a bag of chips every week to go with lunch for years now. Up until a year or two ago, I was paying about $3 a bag and could maybe find them on sale from time to time for $2.50, but now I have to spend just under $4 for the same thing. If I'm lucky, there will be a two for $6 deal, but that's hit and miss. Even though this is small scale, these are the type of things that make me scratch my head when I see these inflation reports.

Anyway, the headline inflation figure fell by 0.3% in May and was the biggest monthly drop since December 2008, which was mostly due to a 4.3% drop in energy costs. Core inflation, which takes food and energy out of the picture, did rise 0.2% and the year over year figure remained at 2.3%. If things in Europe stabilize somewhat and the Fed does implement some type of stimulus, it's certainly possible we could see the price of oil get back on the rally tracks. What's the Fed going to do if employment remains stagnant and commodities, namely oil, rise as a result of new found euphoria?

We also saw a revision to the first quarter current account deficit widen to $137.3 billion from $118.7 billion, which is a three year high. Again, revisions to many reports as of late haven't been very friendly. We did see one of the various consumer confidence gauges increase a bit last week, but it still remains historically low. The drop in gas prices looked to be responsible once again but you would think the shaky jobs situation would have more than offset that optimism. They don't ask me, so who knows.

The reports due this morning should be interesting. We get to see one of Chuck's favorite bits with industrial production and capacity utilization. Production is expected to fall from April but remain on the positive side with a 0.1% gain and then the latter is forecast to remain on hold at 79.2%. We also get a regional manufacturing report, the Empire manufacturing index, and is expected to disappoint as well but these results can be all over the board. Other than that, the June U of Michigan confidence report is supposed to fall and then we see the TIC flows for April. Remember when people actually looked at that report?

Next week looks to be a big one with the Fed meeting scheduled on Wednesday acting as the elephant in the room, so look for volatility and position squaring leading up to the decision. Other than that, it's going to be dominated with the May housing numbers as we get housing starts/permits along with existing home sales and the house price index. Just looking at the projections, it looks to be a mixed bag with starts expected to rise and then both sales along with prices expected to fall short from the previous month. You would think with mortgage rates at basement levels that homes would be selling left and right, but I guess the fragile state of consumers and questions whether the market has actually bottomed keep things moored.

Moving into the currency market, the dollar got hit again yesterday. We didn't see any haymakers, which I wouldn't expect to see until the Fed makes a decision, but it did take a couple jabs. The table was already set by the time I got to work yesterday morning as all currencies, except for the rand, were in positive territory. The leader, which Chris explained yesterday, was the New Zealand dollar and didn't look back for the rest of the day. When it was all said and done, every major currency was in the black but silver just didn't have the juice to keep up as it finished with a loss.

The euro has defied the odds lately, but still remains on fragile ground. The currency traded in a very tight range in the European session and was around 1.2560 when I fired up the computer yesterday morning. After the US data was released and had enough time to sink in, it didn't take long to shoot up into the 1.26 handle by mid morning. In fact, it stayed above 1.26 for the rest of the day and finally settled in at 1.2630 as I was packing up for the ride home last night. Most of that move resulted from the inverse relationship with the dollar and was able to shake off Moody's credit rating downgrade of Spain to one level above junk.

As investors focused on the future growth prospects if the Fed does take action, risk assets got another shot in the arm. Even though it goes without saying, the higher yielding currencies all topped the leader board and most of the majors had at least 0.50% returns. The peso and Australian dollar ended in a tie for second place, both of which finishing the day up 1%, and both reaped the benefits of lower risk aversion. All in all, I could probably copy and paste what I wrote Wednesday and it would still be relevant.

One of the more interesting stories came out of Brazil, which did end the day within earshot of a 1% gain. It seems as though the self imposed curbs on foreign capital did too good of a job and the government is sitting with their tail between the legs. For the better part of the past two years, taxes and other measures have been taken to discourage the flow of hot money from abroad in an attempt to prevent the real appreciating quickly. In other words, the higher interest rates in Brazil acted as a beacon for investors seeking yield in an otherwise barren landscape.

All of the jawboning and rate cuts have sent investors running for the hills and taking their money with them, so the currency has fallen like a rock so far this year. They got what they wanted, which was a weaker currency, but it's all about the unintended consequences that come back to bit. Since the real dropped so quickly in such a short period of time, the government is now worried that inflation pressures from imports could have serious effects and limit the scope for future rate cuts. This is the kind of stuff we warn about when dealing with the real and other similar currencies.

Anyway, the government announced yesterday they will exempt foreign loans with a duration of more than two years from the 6% tax but hasn't commented if other similar measures will follow suit. The Brazilian economy has been suffering like many others and they have already cut interest rates to record lows, lowered domestic taxes, and increased subsidies to businesses in an attempt to keep things moving along. This announcement later in the day overshadowed a disappointing retail sales report, but it will be interesting to see how investors react in the weeks ahead.

Moving on, We don't talk much too much about the Singapore dollar since there usually isn't much going on, but I thought a brief update would be in order. Those of you not familiar with this currency, the central bank uses the exchange rate instead of interest rates to control monetary policy so they guide it against a basket of currencies within an undisclosed band and adjusts the pace of appreciation or depreciation by changing the slope, width, and center of the band. The central bank usually meets twice a year, in April and October, to set the policy for the upcoming period and they did decide in April to allow more currency gains to keep inflation under control.

Inflation is the primary focus when government officials make the evaluations, so a recent upward revision from 3.5% back in March to 4.2% would look to keep the appreciation bias on track. A June survey of economic expansion also showed a rise while the government said momentum had picked up even though global risks remain elevated. The domestic employment picture has been so bright that restrictions had to be placed on foreign labor as an influx of workers from overseas have flooded the market. The dynamic environment, solid fundamentals, and a proxy for Asian growth have all given credence to the Singapore dollar as the best performing currency so far this year with over a 1.25% gain.

Since oil moved up about $1.75, both the Canadian dollar and the Norwegian krone were given the green light. While there hasn't been many foreign data reports to review, we did see the first quarter capacity utilization rate in Canada tick higher. Canadian industrial companies ran at 80.7% of their production capacity and beat forecasts by turning in the highest figure since the end of 2007 as demand for vehicles and machinery increased. The price of gold got as high as $1,628 yesterday, so just another kicker for the commodity currencies.

Rounding out the currencies for today, the pound sterling finished in positive territory by the skin of its teeth as the pro-foreign currency movement carried it along. It looks as though government officials are kicking around the idea of adding more stimulus into their economy to counter slowness and any fallout from the euro crisis. The plan calls for an injection of 5 billion pounds a month into the financial system along with a funding for lending program designed to encourage bank lending specifically to the non-financial sector.

As I came in this morning, things are right where I left them last night, but the weaker dollar bias has carried over so far as the euro holds above 1.26 and the Australian dollar breaks on through to the other side of parity. Most currencies have remained in a tight range but the Japanese yen has jumped out to an early lead. The yen is getting some love this morning after the central bank left rates unchanged and refrained from expanding monetary stimulus. There was speculation leading up to the meeting that we would see some type of expansionary move but the no action was a pleasant surprise.

Then there was this. Major central banks are standing by to inject liquidity into the global economy to stabilize markets if the Greek election triggers financial shock, Group of 20 officials said. The central banks also have plans to ensure enough capital is flowing through the financial system if other key elections, including those in Egypt and France, trigger severe volatility, the officials said.

To recap...The Greek election took another ride in the back seat as speculation of further Fed action gathers steam. The increase in jobless claims and the decrease in CPI just fueled the fire since jobs and inflation are at the top of the Fed's list. The current account deficit widened to the biggest in three years, but that didn't seem to bother anyone. Unless Greece drops the ball, the markets look to focus squarely on the Fed meeting next week. All of the major currencies finished in positive territory, but Brazil threw investors a bone by repealing a tax on foreign lending.

Currencies today 6/15/12. American Style: A$ 1.0035, kiwi .7850, C$ .9772, euro 1.2615, sterling 1.5544, Swiss $1.05, . European Style: rand 8.3755, krone 5.9520, SEK 7.0015, forint 234.70, zloty 3.4088, koruna 20.2831, RUB 32.5075, yen 79.66, sing 1.2736, HKD 7.7595, INR 55.68, China 6.3653, pesos 13.8860, BRL 2.0556, Dollar Index 81.83, Oil $84.39, 10-year 1.60%, Silver $28.7325, and Gold $1624.25

That's it for today...I just had an error message pop up on my screen and then the computer just shut down, so needless to say my heart almost pounded right out of my chest. It's all good though. The power cord apparently wasn't plugged in all the way so the battery ran too low but luckily everything was saved. I had one of those weeks and I'm just glad the weekend is here so that I can relax and recharge. The Cards won last night, which meant they finally won a series so that was good news. My eyes lit up when I saw a burger place on the lunch menu today. I try to eat somewhat healthy during the week, but Fridays are a different story so I already know what I'm eating for lunch and its only 6:30. This weekend is Father's Day, so there's your warning. With that said, it's time to get this out the door. So until next time, Have a Great Day!!

Mike Meyer

Assistant Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

The Wolf Is Always At The Door.

Chuck Butler — Tue, 12 Jun 2012 15:10:34 GMT

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

Foreign exchange for business - the way it should be

Is your business among the many small-to-midsized businesses looking for a better alternative for sending or receiving international payments? Well, solution found. With EverBank, a proven global market leader, your business will benefit from:

*A wide selection of FDIC insured (2) foreign currency accounts

*Multiple currencies available to help minimize foreign exchange conversions

*Expert support from a dedicated World Markets team backed by over 30 years in the field

Learn why we're the better solution for your business.

Call 855.417.4843. Or visit https://www.EverBank.com/business/foreign-exchange.aspx FOR MORE INFORMATION AND IMPORTANT DISCLOSURES.

In This Issue.

* Spain good news wears off.

* Focus shifts back to Greece!

* Fed quintuples their Treasury holdings!

* A$'s and kiwi back on rally tracks.

And, Now, Today's Pfennig For Your Thoughts!

The Wolf Is Always At The Door.

Good day. And a Tom Terrific Tuesday to you! A crazy day in the markets yesterday, but a very peaceful evening for me. With everyone gone, I treated myself to eating out, and had a steak dinner. I reduced my intake of red meat after the cancer discovery 5 years ago, so, believe me, this was a treat! While I'm thinking of that. It was 5 years ago that I found out I had cancer, it had progressed to stage 3 cancer, but I never told anyone that. I told them I would beat it, and every time I think I'm on the road to remission, I'm reminded that the wolf is always at the door...

The same is true for the euro. Just when it looks like the green lights are synchronized for the drive home, someone reminds everyone of Greece. Ireland and Portugal, got their bailouts and went about correcting things in their respective countries. But Greece. it's the gift that keeps giving for the euro. And there we were yesterday morning, watching the euro enjoy a day in the sun, after announcing a fiscal aid package to Spanish banks, when someone said, "Hey don't forget about the elections in Greece in a week".

And away went the sunshine for the euro, and the wolf was at the door once again! Soon, the euro was trading below 1.25 again, and being a drag on the other currencies. For instance, the Aussie dollar (A$), as I told you yesterday was sniffing at parity to the U.S. dollar again, but by the time the wolf was finished, the A$ was barely holding on to the 99-cent handle. And all the green on the currency screen, which tells you that the currency is positive on the day, turned to red.

So. let's talk about the elephant in the room. I bet you thought I was going to talk about Greece. but I'm not. the elephant in the room, as far as I'm concerned is this using the events in the Eurozone as if they are as important as the U.S. Fed quintupling their holdings of U.S. Treasuries. Or, that the reason they've had to quintuple their holdings is that the Treasury has to issue so much, because of the massive Budget Deficits, that are booked each year.

OK. here's the skinny on the quintupling of the Fed's holdings of Treasuries. (thanks Scott!) On Jan 28, 2009, the Fed owned $302 Billion in U.S. Treasuries. On April 25, 2012, the Fed owned $1.668 Trillion. Folks that's 5 and ½ times the amount in 2009, or for those that love percentages. 452%! Oh, and during this time, the Fed has become the single largest owner of Treasuries. Remember when China moved ahead of Japan for that pole position a couple of years ago? And people thought that to be a bad thing? Well. having your central bank, become your sugar daddy is worse! I went through that yesterday, so I won't go there again, but come on markets! Get your heads screwed on right, and quit being swayed by the media, who is directed by the Gov't!

The sentiment, which I've told you many times is the thing moving currencies these days, is very negative euros right now. the IMM weekly positions showed a record number of euro short positions this past week. So. the euro has that going for it. NOT! This morning, things seems to have quieted down a bit. most of the currencies are in the green, but not by much. For now, at least, the selling has stepped aside.

The recent price action in Gold has been strange in that we'll see days where Gold gains $20, $30, and even $66, and then those days are followed by consecutive days of selling. You know, I've told you over and over again that I do believe that we are about to witness the back side of the storm that began in 2008. I doubt seriously that we'll see the major problems before the election this year, but they will begin to fester when the debt ceiling discussions begin at the end of summer. This back side of the storm will be worse than the front side that came through in 2008. I know all too well that Gold did not perform well in that period. and I truly dislike the saying that "this time will be different", so I won't say that. But I think that with this back side of the storm, it will be so bad, that investors will feel that they need to have Gold. (and Silver of course!) And these prices we're seeing in Gold, will look like blue light specials. OK. I know I've gone too far, here. so I'll just add that this is my opinion, it's not a solicitation, and I could be dead wrong about all of this!

OK.. there was more good news for the global growth/ Emerging Nations from China last night. Lending by Chinese banks increased at a faster pace than was forecast for May. May's total loans were $124 Billion, VS April's $107 Billion. So, once could very easily say that the Gov't's policies are working. As you all know, I do believe that China knows how to do this stuff. but then they get to cheat. They have a treasure chest of reserves from which to pull from. Here in the U.S. or Europe, or England, they have zip, zilch, zero from which to pull from.

I see that the IMF agrees with me. I have to wonder what took them so long to see what I've seen for some time now. But, who cares, I guess. the IMF says yen is overvalued. Of course the IMF can't do anything about it, so their comment carries but a grain of salt. but what it probably will do, is give the Bank of Japan (BOJ) some starch in their shorts to go about their plan to make the yen weaker with intervention. (selling yen). But, truth be told. I think the BOJ would be making a HUGE mistake doing that now, while the irons are hot in Europe.

Of course, you know all too well that I don't believe in Central Bank manipulation of a currency, but it has become so prevalent in the currencies that it's almost accepted by many. But not me! I refuse to believe that "fee markets" can have Central Bank interference. Which is why I get so darn blown away by the markets letting the Fed go Ollie, Ollie, Oxen Free. for the U.S. is the biggest currency manipulator there is. think about that , and why I would say that.

OK. back to the Eurozone. I need to make you aware that the focus there, which had been on Spanish banks, is switching to Greece's elections, and once those are completed, I would bet a dollar to a Krispy Kreme that the focus shifts to Italy. Might as well, right? I mean all the other "Club Med" countries have been attacked by the "focus". Shoot Rudy, we could even see this shift before the Greek elections. which would really be difficult for the euro to fight.

The New Zealand dollar / kiwi has really recovered nicely overnight after yesterday's sell-off. Kiwi has been following the A$ around ever since the 2008 financial meltdown. And Australia gets all the press regarding exports to China and their raw materials, but New Zealand needs to get some love too. And it received some last night, when the Real Estate Institute of N.Z. printed their index of home prices and the index showed that home prices in May climbed 1.7% in May from April. But, remember this folks. the fortunes of the A$ and kiwi has been so "Eurozone driven" lately. So, the good days, can be wiped out in a heartbeat.

There's an interesting story making the rounds this morning regarding Hong Kong. The man that helped introduce the Hong Kong dollar's (honkers) peg to the U.S. dollar in 1983, now believes that there is a need to address the question of whether the peg serves the public interest of Hong Kong.

Long time readers my recall me saying years ago that I believed that eventually honkers would drop the peg, and China would use this drop of the more mature currency as a way to get their feet wet in the floating currency world, as a precursor to floating the renminbi. Well, that may still happen, but I see the Chinese first simply changing the peg from the dollar to the renminbi.

We'll see the color of the May U.S. Budget Statement today. We already know to expect a deficit, but by how wide? The tax season is over, so the deficit should widen out to about $125 Billion for May. this deficit spending has got to stop, folks! But, oh my. lions and tigers and bears, oh my! The lawmakers are going to be as disappointing as the Wizard was to Dorothy.

Speaking of U.S. data. tomorrow, we'll see Retail Sales for May. Right now the experts have forecast a negative .2% result. I have to say that I agree with the experts this time. As the BHI (Butler Household Index) indicates that there has been little spending going on. (but then my beautiful bride has been gone for so long that I have no idea!) A negative Retail Sales print would just be added to the roster of the recent negative data reports on the economy.

Then There Was This. (again thanks Scott!) from CNN Money. "The average American family's net worth dropped almost 40% between 2007 and 2010, according to a triennial study released Monday by the Federal Reserve.

The stunning drop in median net worth -- from $126,400 in 2007 to $77,300 in 2010 -- indicates that the recession wiped away 18 years of savings and investment by families.

The results, though more than a year old, highlight the marked deterioration in household finances brought on by the financial crisis and ensuing recession.

Much of the drop off in net worth -- to levels not seen since 1992 -- was attributable to a sharp decline in housing values, the Fed said.

In 2007, the median homeowner had a net worth of $246,000. Three years later that number had fallen to $174,500, a loss of more than $70,000 on average."

Chuck again. Yes, that's the net worth number. Frank does a slide in his presentations that shows the median investable amount. It's less than $10,000!

To recap. The currency rally that was in place yesterday morning, faded as the day went along, as the media began to remind everyone that they shouldn't forget Greece. Most of the currencies are back on the rally tracks this morning, but the wolf is always at the door, and the currencies seem to be looking over their shoulder for the next bad thing to come along. Chuck goes ballistic on the markets and media for not having their eyes on the ball, as the Fed's holding of Treasuries has quintupled in the past 4 years!

Currencies today 6/12/12. American Style: A$ .9915, kiwi .7755, C$ .9730, euro 1.2515, sterling 1.5545, Swiss $1.0420, . European Style: rand 8.4120, krone 6.03, SEK 7.0755, forint 237. 10, zloty 3.4560, koruna 20.4940, RUB 32.95, yen 79.60, sing 1.2830, HKD 7.7585, INR 55.74, China 6.3705, pesos 14.04, BRL 2.0630, Dollar Index 82.41, Oil $82.42, 10-year 1.62%, Silver $28.55, and Gold. $1,591.50

That's it for today. Well.. 36 years ago today, I married my beautiful bride. otherwise known as Kathy. She is the love of my life, and always has been. I first saw her as I was running on the track at Roosevelt High School, and she was practicing with her fellow cheerleaders. She dislikes that I refer to her as my beautiful bride in the Pfennig, but I tell her too bad! That's what she has always been to me. And when I was in the hospital for what seemed to be an eternity 5 years ago, she never left my side. That meant more to me than you can imagine. So, Happy Anniversary, Kathy. and with that ( I bet you didn't think I could be that sappy!) I'll get this out the door.Mike will have the conn on the Pfennig tomorrow, and I almost forgot to acknowledge and congratulate the L.A. Kings the new Stanley Cup Champions! Thank you for reading the Pfennig, and have a Tom Terrific Tuesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

The Tax Man Cometh.

Chuck Butler — Tue, 17 Apr 2012 16:10:23 GMT

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

Announcing EverBank Wealth Management, Inc.

It's another great day for the EverBank family of services. We're delighted to announce the launch of a new wealth management company offering global investment advice through a personalized approach.

Led by you. Guided by experience.(sm)

EverBank Wealth Management brings together a team highly experienced in the global marketplace that will listen, evaluate and then advise you to create a plan to meet your goals. Our team uniquely understands how you view the marketplace. We offer comprehensive and unbiased institutional grade investment advice based on what you have and what you want to accomplish.

It all starts with a conversation...877-613-EVER (3837)

http://www.EverBankWealthManagement.com

EverBank Wealth Management is an investment adviser registered with the Securities and Exchange Commission. It is not a bank. Investment solutions offered through EverBank Wealth Management are: NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE.

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

In This Issue.

* China's wider band and

* U.S. Retail Sales send risk assets higher.

* Intervention for kiwi?

* What's with the Fed editing tapes?

And, Now, Today's Pfennig For Your Thoughts!

The Tax Man Cometh.

Good day. And a Tom Terrific Tuesday to you! And in keeping with the tradition I set many years ago on Tax Day.

If you drive a car, I'll tax the street, If you try to sit, I'll tax your seat.

If you get too cold, I'll tax the heat, If you take a walk, I'll tax your feet. 'Cause I'm the taxman, yeah, I'm the taxman.

Yes, we did receive a couple extra days this year to file our taxes, given that April the 15th was a Sunday. But, the day is here. I personally totally dislike taxes. but, they are what they are, I guess.

Well. a very nice rebound in the currencies yesterday (the metals slogged along), which was first fueled by the news from China that they had widened their trading band for the renminbi, and then second by the news that U.S. Retail Sales, while not meeting the previous month's downward revised increase of 1%, did surprise to the upside reaching out to .8%...

Some really smart people decided to look at Retail Sales differently, and put a lasso around what they called "control" Retail Sales, which includes sales of gasoline, motor vehicles, and building materials. and then see what Retail Sales look like without these big ticket items. And Retail Sales without the control items still rose .5% in March.

Of course, we won't know that the Consumer Credit numbers are for March until May (ridiculous, I agree!) I like to look at that data in conjunction with Retail Sales, to see if we as a country of consumers continue to spend more than we have, just like our Gov't.!

But the killer to me on all this activity yesterday was that apparently the risk assets are still all tied together. Stocks, currencies and metals. all my wishin' and hopin' and prayin' that these would go back to previous 2008 trading norms, have been put on hold.

Yesterday, we also saw the TIC Flows jump much higher ($107.7 Billion) than forecast ($30 Billion). So, what gives there? OK, first of all for all you newbies to class, the TIC Flows are the net of securities (read Treasuries) purchased by foreigners. This number needs to remain strong, for this is how we finance our debts and deficits. OK. here's what I could find.

Recall that a couple of months ago, I told you that China was slowly backing away from the Treasury auction window, which was scary? Well. for February, they came back.. I reporter from CNNMoney called and asked me my opinion on this news. I told him that "There is a give and take. The U.S. wants the dollar to be weaker, but not for it to fall a cliff. It's the same for China. They will continue to show up and participate in bond auctions occasionally to keep everybody happy."

So. the ding dongs that continue to shout from the rooftops that the foreigners don't care about what kind of deficits we add to our debt, and that's proven by the fact that they keep showing up at the auction window. are going to be proven so wrong, they'll almost be right.

OK. back to the currencies. The euro was the Big Dog once again, leading all the little dogs off the porch to chase the dollar down the street. The euro nearly had a 2-cent gain on the day, given where it fell briefly the previous night!

This morning in the Eurozone, Consumer Inflation was revised upward to 2.7% in March. Remember that the European Central Bank (ECB) has a ceiling target for consumer inflation of 2%... But also remember, that ECB President, Draghi, crossed streams by cutting interest rates, in the face of inflation raging much higher than the ceiling target. So, apparently, this ceiling target is merely a "suggestion", and not a rule.

Dr. Egon Spengler told the Ghost Buster "Don't cross the steams" Dr. Peter Venkman asked why? Dr. Spengler said, "it would be bad. Try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light." I guess Draghi was like Dr. Venkman who said, "I'm fuzzy on the whole good/ bad thing."

Ok.. a little fun this morning. I filed my taxes yesterday. I need something to help me smile! I told you all years ago, that this is a stream of consciousness at 5 a.m. So, when I said that Draghi had crossed the streams, I immediately slipped into 1984 and the first Ghostbusters movie.

But I'm back now. but did you see how I tied the Ghostbusters thing to Draghi? I'm pretty proud of myself right now. so I'm going to step away and be back in a minute.

OK. I'm back! Did you miss me? HA! And back to the Eurozone. where this morning we saw the color of the latest index of German Investor Confidence as measured by the think tank folks at ZEW, increased to 23.4 from 22.3 in March. And there was also good news from Spain, where the pain has been mainly on the plain. Spain was able to auction more than their target amount of 3 Billion euros of bills, with the total hitting 3.18 Billion euros, and while the yield on the 12-month bills was higher than it was last month, it didn't get completely out of line.

And. the important thing to think about here is that when you need to attract buyers to your debt, even in rough times like Spain has seen lately, you need to raise the yield. Curb appeal, you might call it. but it works. Something we'll have to deal with here in the U.S. soon enough.

Speaking of what we have to deal with here in the U.S., Treasury yields have fallen again, and you have to wonder who would want to own U.S. debt at less than 2%? And with yields falling again (recall that just last month they had risen to 2.38%) you look around for other investments that might pay more than 2% (much less for the investors once the broker takes his pound of flesh from the trade)

I read something last night that was interesting in that the researcher tied the movements of Treasuries and Japanese yen together. As Treasury yields, in the 10-yr Treasury, fall, yen gains VS the dollar, and vice versa. Pretty interesting

Remember yesterday when I mentioned that Reserve Bank of New Zealand (RBNZ) Gov. Bollard, was never a fan of a strong kiwi? Well, Bollard is retiring this year, so I immediately think that maybe there's another Don Brash for New Zealand (Brash was RBNZ Gov in the 90's). But then I see where the Prime Minister (PM) has picked up the slack for Bollard. PM Key, stated last night that the New Zealand dollar (NZD) or kiwi, was "overvalued" and that "the government is considering what can be done to resist a rising exchange rate."

Geez Louise, I dislike these guys! Do they not see that a strong kiwi is what is helping to keep inflation below their 2% target rate (currently 1.8%) ?

Remember. the RBNZ is autonomous from the Gov't. So the PM can spout off all he wants, the RBNZ sets the monetary policy, and has strict guidelines it has to follow should it want to intervene, ala Japan, Brazil, and all the others that intervene. Here's the criteria:

1. The exchange rate must be exceptionally high or low

2. The exchange rate must be unjustified by economic fundamentals

3. Intervention must be consistent with the Policy Targets Agreement.

4. Conditions in markets must be opportune and allow intervention a reasonable chance of success.

So. given all that, I don't see the RBNZ joining the ranks of Japan, et. al. However, we can expect to continue to hear the likes of PM Key, and RBNZ Gov. Bollard talking the currency lower.

I have to stop for a couple of minutes to sing along with the Spinners, singing I'll Be Around.

OK. back again. what a great song!

The Bank of Canada meets today. and even though Bank of Canada (BOC) Gov. Carney last talked about how rates would rise sooner than later, it's not "sooner" yet. So, the markets will be looking for signs in the press conference that follows the rate announcement of any hawkish statements. If the conference is deemed to be just "less dovish", I don't think the Canadian dollar / loonie will be able to hold onto the gains it made the last two days.

Sweden's Central Bank, The Riksbank, meets tomorrow on rates. With Sweden's latest downgrade for economic growth, I can't see the Riksbank hiking rates, nor do I see them doing a knee-jerk rate cut. The Swedish krona has suffered through the gyrations of most of the currencies these days. I recently told a crowd of people that one day, sons and daughters, the markets will realize that countries like Norway and Sweden are NOT the euro. and have completely different fundamentals.

Next week is a BIG DAY for the Aussie dollar (A$), and Aussie rates. The Reserve Bank of Australia has said that a rate cut in May is dependent on the first QTR CPI (consumer inflation) report, that prints on April 24th. I know I'm going out on a big fat limb here, but I've said this before, that I don't agree with the markets' call that interest rates in Australia need to be cut. and I continue to believe that the markets have put too much into a rate cut by the RBA in May.

Therefore, if I'm correct. all those trades / shorts, put on to take advantage of a weaker A$ from the May rate cut, might have to be reversed, and that could be a big lift to the A$... But remember, that's just my opinion on these things. I could be wrong!

The U.S. data cupboard will yield two of my fave pieces of data this morning, as March reports for Capacity Utilization and Industrial Production get printed. Some Housing reports will also print, but those have been so skewered lately toward multi-family units that it's difficult to decipher if housing is rebounding or not.

Then There Was This. From the WSJ this morning. "The Federal Reserve has pledged to be more transparent, but it is only willing to go so far.

The central bank normally releases comprehensive transcripts of its policy-making meetings five years after the sessions. But when news organizations requested transcripts of the meetings around the 2008 financial crisis, the Fed released redacted documents that revealed only pleasantries from the sessions and no substantive discussions. "

Chuck again. The transcripts during the 2008 meetings were so heavily edited that discussions of all substantive issues were withheld. Now, doesn't that just tick you off? It does me! Especially on a day that I filed my taxes! Someone should file a request for the information unedited, and fight until they get it! But not me. I can't do that in my kinder, gentler Chuck persona.

To recap. the euro led a very nice currency rally yesterday, with all the risk assets once again, being thrown together for trading. The TIC Flows were huge in favor of the U.S. debt, which is really questionable, eh? U.S. Retail Sales were stronger than expected. N.Z. PM Key disses his currency, and Chuck goes all Roman Polak on him. (only Blues fans know what I'm talking about there!) And what's with the Fed editing the tapes of their 2008 discussions?

Currencies today 4/17/12. American Style: A$ $1.0375, kiwi .82, C$ $1.0035, euro 1.3135, sterling 1.5955, Swiss $1.0930, . European Style: rand 7.8165, krone 5.7445, SEK 6.7550, forint 226.10, zloty 3.1860, koruna 18.8630, RUB 29.58, yen 80.70, sing 1.25, HKD 7.76, INR 51.48, China 6.3015, pesos 13.14, BRL 1.8470, Dollar Index 79.50, Oil $103.57, 10-year 2%, Silver $31.72, and Gold. $1,656.25

That's it for today. A Huge win late last night for our Blues, who got back their home ice advantage with a win in San Jose. I didn't see the game for I was in bed before the pre-game show came on. But I taped it. Go Blues! The little restaurant around the corner from my house, that we visited at least once a week for dinner, had to stop serving dinner for lack of business. Just last week I had a jambalaya pot pie! Too sad. Well they didn't have to stop because of me! It's getting to that time of year, where I'll be outside grilling, smoking, and barbequing, so maybe that will make up some of the difference. I did some great pork steaks on Sunday. 2 ½ hours in the Weber using indirect heat. Yummy! OK. enough! I've really carried on today, tax day 2012. I hope you have a Tom Terrific Tax Tuesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Not Enough Fuel In The Tank.

Chuck Butler — Tue, 10 Apr 2012 18:06:00 GMT

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

Announcing EverBank Wealth Management, Inc.

Led by you. Guided by experience.(sm)

It all starts with a conversation...877-613-EVER (3837)

http://www.EverBankWealthManagement.com

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

In This Issue.

* Risk assets attempt to rally.

* What's the Fed up to?

* MAS to adjust monetary policy?

* Debts & Deficits gone wild.

And, Now, Today's Pfennig For Your Thoughts!

Not Enough Fuel In The Tank.

Good day. And a Tom Terrific Tuesday to you! Mondays have always been the most trying day for my brain cells as it's our largest day of risk management in World Markets. That means I have to be "on top of my game" on Mondays. And then I go home mentally exhausted. Well, I thought those types of days would be over, with our brand spanking new computer system. Not so fast, Tim! Eventually, it will be better, I know it.

And eventually, we'll see what the Fed has been up to for some time now, with their "it's not Quantitative Easing (QE) bond buying" I know this isn't the best way to start a day, with me immediately throwing the Fed under the bus. But, as I say when doctors tell me bad things. "It is what it is". I really would prefer to talk about other things, folks. but something about last week's FOMC meeting minutes has radiated with me, and keeps coming back to remind me that according to Marvin Gaye, you're only supposed to believe half of what you see, Son, and none of what you hear.

About 5 years ago I read a book that I quoted and told you about several times titled: The Age of Ignorance at the Federal Reserve: Greenspan's Bubbles, by Bill Fleckenstein. and it opened my eyes to what went on at the Fed during the Greenspan era. And if you think things have changed much since Big Ben Bernanke took over, I would say you're giving the Fed more credit than they deserve. For some day, sons and daughters, we'll know all about "it's not QE, bond buying".

OK. long time readers know that when I have something radiating on my mind, I'm going to bust loose with it eventually, and the longer I hold it back, the worst the busting loose is! And, as we head into the last 3 months of Operation Twist, let me remind you that the Fed's target here was to lower interest rates. Well, the yield on the 10-year Treasury on the day the Fed announced Operation Twist & Shout, was 1.79%... Today, it is 2.06%, and has been as high as 2.38% in the past couple of weeks. So, once again, a Fed scheme is proven to have little fire power.

So. the currencies & metals yesterday, attempted to put together a rally, but in reality, there just wasn't enough in the tank to fuel a rally. Most of Europe was celebrating Easter Monday, and here in the U.S. trading desks were skeleton crew staffed as the Big Dogs stretched the Holiday weekend. So, the fuel just wasn't in the tank.

But I have to say that the past couple of days, Gold has gained small amounts, and I would prefer to see it move that way and not the wild swings of up $25 and then down $20.

I found the currency mini-rally to be of importance though, because stocks were getting sent to the woodshed. I've said for a long time that we needed to get stocks and currencies trading the way they used to, and not thrown in the barrel with metals and treated as one asset class, called risk assets. We've seen this separation a few times in the past couple of years, but never any real sustained separation. So, maybe, just maybe, this time, 'cause you never know!

Yesterday, I talked a bit about the Singapore Dollar (S$) and its proclivity to trade alongside the Chinese renminbi. But, long time readers know that the Monetary Authority of Singapore (MAS) is the real decision maker here on how the currency will perform.

The MAS uses the S$ to assist them in fighting inflation, the way a "real Central Bank" should. And with inflation in Singapore proving to be difficult to tame, I don't see the MAS changing their policy drastically when they next meet. But with China's economy moderating, I do expect the MAS to allow the S$ to continue to appreciate, but at a slower pace.

Did you see the story (I saw it on Bloomberg) but is being reprinted all over the place, about what the Brazilian President, Dilma Rousseff told the U.S. President? OK, sit down, because this is good stuff. She told the U.S. President that "monetary policies of the wealthiest nations are a drag on global economic growth, especially among rapidly growing emerging economies. " She later told Brazilian reporters that "developed nations' reliance on interest rates close to zero to stimulate growth creates a monetary tsunami that damages Brazil."

And people in the U.S. wonder why the BRICS countries of Brazil, Russia, India, China and South Africa, are looking to start their own version of a World Bank, to assist emerging economies?

The price of Oil has fallen since last Friday when the Jobs Jamboree disappointed everyone. I see this drop in the price of Oil as being short-sighted. The markets took the report as a sign that slow job creation will equal slower demand for Oil. Well, if Oil was only used by the U.S. then maybe that would have some truth to it. But that's just like the markets to have blinders on.

While I like the idea that the prices at the gas pumps will be cheaper, I also realize at the same time that we've seen this so many times in the past couple of years. and it's a false dawn, so go fill up your gas tanks now before these prices go back up! HA!

The petrol currencies of: Canada, Brazil, Russia, Norway, the U.K. and others are on their heels to this morning, as the price of Oil drops. the direction of Oil isn't the only factor in these petrol currencies, but it does play a big role in how they perform.

I have a friend that sends me a note about every two weeks that lists a bunch of items and the numbers around the item. (Thanks Dennis!) and this week's note had this ditty that I think tells us quite a bit about the future of the Housing Sector. 17.3% of subprime mortgages were 60 days or more delinquent at the end of 2011.

And a quick check at the U.S. Debt Clock, shows me that the National Debt this morning is a mere $15,639,709,000,000 in short, that's $15.6 Trillion. Each citizen's piece of that debt is equal to $49,912, nearly $50,000. Just two years ago in Vancouver I told the people that the number then was $45,000. So, up $5,000 in two short years.

But the thing that really scares the bejeebers out of me, is the Unfunded Liabilities, which this morning stands around $118,381,150,000,000. In short $118.3 Trillion. or $1,044,356.00 per taxpayer. So. what's the Big Deal, I hear some of you youngsters asking? Well. the Baby Boomers generation began drawing on these liabilities a couple of years ago, and this Unfunded Liabilities number is just going to get larger and larger, because 7,600 Americans turned 65, EVERY Day in 2011. and that number will grow in 2012, and so on until it reaches an estimated 11,400 Americans will turn 65 each day by the year 2029.

Hey! I don't make these numbers up folks. the Debt Clock can be seen here:

www.usdebtclock.org/index.html

and the number of Americans turning 65 each day comes from the General Accountability Office of the U.S.

We, as a country are in deep dookie, folks. and that's why I continue to believe that the dollar will be held accountable for those debts and deficits, just like it has been since February of 2002. Sure, there have been periods of dollar strength, that comes from what I call "props" to keep the dollar from falling off the cliff. but each time, the dollar has returned to the underlying weak trend.

But we're not alone! And no, I'm not talking about the existence of Aliens. I'm talking about how the U.S. is not alone when it comes to debts and deficits that are unsustainable. We all know about the Eurozone and their problems. and it becomes a contest to see which set of debts and deficits are uglier than the other (U.S. & Eurozone). As long as the euro remains stronger than the dollar, the markets are telling you that the U.S. debts and deficits are uglier.

Then There Was This. Recall me telling you that the CFTC (commodities & futures regulator) had accused Royal Bank of Canada (RBC) of conducting illegal futures trading? I told you that the bank denied any wrongdoing. well, I saw this on the Bloomberg this morning as a follow up.

"RBC decided not to settle with the CFTC regarding allegations that it conducted illegal futures trades. Instead, the bank will challenge the regulator in court. "It was a conscious decision to defend ourselves vigorously, and we made that decision because we believe we didn't do anything wrong, " - RBC attorney.

Chuck again. I have stated before that I would prefer the CFTC to go after the price manipulators in the metals, especially after the whistleblower admitted to such practice going on at his old bank. But. instead the CFTC turns its back and goes after RBC. on something else. Hmmm.

I take that as a pitcher that knows he has little left in the tank, and has to face a batter that's swinging a hot bat. Instead of pitching to the batter, the pitcher steps off the rubber, and throws the ball to first, and repeats, and stalls in hopes to put the batter asleep so he can slip a dark one past him!

To recap. the currencies and metals attempted to rally yesterday, but just didn't have enough fuel in the tank with all the missing traders on Easter Monday. Chuck went off on a tangent about the Fed, and then about the debts and deficits of the U.S. All-in-all, it's more of Chuck just venting this morning.

Currencies today 4/10/12. American Style: A$ $1.0280, kiwi .8165, C$ $1.0015, euro 1.3070, sterling 1.5840, Swiss $1.0870, . European Style: rand 7.9355, krone 5.8060, SEK 6.79, forint 226.40, zloty 3.19, koruna 18.9545, RUB 29.71, yen 81.15, sing 1.2615, HKD 7.7655, INR 51.41, China 6.3105, pesos 13.04, BRL 1.8175, Dollar Index 79.96, Oil $101.89, 10-year 2.06%, Silver $31.58, and Gold. $1,644.00

That's it for today!... Bopping along in my seat this morning to Midnight Oil's Beds are Burning. I was BWW with Alex and Kathy the other night watching the Blues hockey game, and on the other screen was a trivia game, I got the question correct, Lorelei, by Styx . but was shocked by when the song was released. 1976! OMG. I'm getting Old! Nice display of power hitting by the Cardinals last night. I didn't get to watch the game because my cable provider is cheap and won't pay for 20 games this year. ATT's U-Verse is the culprit. but it's not the end of the world, I listened to it on the radio the way all games used to be followed! OK. time to get this out the door, thank you for reading my rants this morning, now let's go make this a Tom Terrific Tuesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

The Dollar Swings A Big Stick!

Chuck Butler — Thu, 05 Apr 2012 16:46:30 GMT

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

Foreign exchange for business - the way it should be

*A wide selection of FDIC insured (2) foreign currency accounts

*Multiple currencies available to help minimize foreign exchange conversions

*Expert support from a dedicated World Markets team backed by over 30 years in the field

Learn why we're the better solution for your business.

Call 855.417.4843. Or visit https://www.EverBank.com/business/foreign-exchange.aspx FOR MORE INFORMATION AND IMPORTANT DISCLOSURES.

In This Issue.

* Risk assets continue their slide.

* Fed buys 61% of Treasury issuance!

* Will Olympics boost sterling?

* Euro / Swiss "floor" is breached.

And, Now, Today's Pfennig For Your Thoughts!

The Dollar Swings A Big Stick!

Good day. And A Tub Thumpin' Thursday to you! It sure was Tub Thumpin' for my beloved Cardinals, as they opened the 2012 season with a win, spoiling the Marlin's party in their new stadium. I got to see some of the game, but had to leave to go watch Alex play Water Polo, but kept tabs on the game on my I-Phone. of course!

The risk assets are still getting taken to the woodshed this morning, and once again, even stocks are getting sold. So, there's nowhere to hide these days from the dollar. Shoot Rudy, even Treasuries aren't seeing a steady flow to them these days. So, David Freese isn't the only one swinging a Big Stick these days. the dollar has one too!

Speaking of Treasuries. I read a story the other day (Thanks Dennis!) from last week, that detailed the Fed's shenanigans in the Treasury auctions. I suggest you sit down for this one. Did you know that the in 2011, The Fed purchased 61% of the total net Treasury obligations that were issued? Prior to 2008, the amounts that the Fed would purchase were negligible at best!

So. remember when people that should know better, would spout off about how the rest of the world doesn't care how much debt the U.S. builds, because they buy all our debt? Shoot, even Fed Vice-Chairman, Blinder said that, "if you look at the markets, they're practically falling over themselves to lend money to the Federal Government."

And don't think for a minute that the Foreign buyers / holders of Treasuries aren't noticing what the Fed is doing. Foreign purchases of U.S. Treasury debt fell to 1.9% of GDP in 2011, from 6% of GDP in 2009. And it's not just foreign purchasers of Treasuries that's taking notice. Here in the U.S. private sector (banks, mutual funds, corporations and individuals) have reduced their purchases of U.S. Treasury debt to .9% of GDP in 2011, plunging from 6% of GDP in 2009.

And that brings me to this conclusion, folks. you know. U.S. Treasury yields have been pretty constant during all this. But so too was Greek debt, for 10 years, while the Greeks failed to get spending under control. and then the Minsky moment came for the Greeks when the markets realized the size of the debt in Greece, and we all know what happened to Greek Government bonds then.

Don't think for a moment that it can't happen here. And, everyone, needs to repeat after me. The market demand for U.S. Treasury Debt is NOT limitless!

That goes for any country too! Which is why Spain had a problem with their auction the other day, and why yields in the peripheral countries are much higher than in Germany.

So. how does Japan get away with their soaring debt? Well. for the most part, the debt issuance in Japan is funded by the Japanese. Not the Japanese Gov't, but the Japanese private-sector (see above for description) . But how much longer can that go on? Remember, that demand for debt issuance is NOT limitless!

And that brings me something I read yesterday, from one of my fave people to read, David Rosenberg. "One should be screening for currencies that are represented by pro-business governments, are backed by responsible central banks, proven and probable reserves in the ground, and have AAA national Balance Sheets"

I don't see that as any different than what I've preached for years. Surplus countries, countries that have "something" that other countries want, responsible central banks, and the ability to attract investors. These are the things I use to value a currency. So, as you can see great minds think alike! HA! Chuck, you don't have the gray matter that David Rosenberg has, so don't even go there! Sorry, self. didn't mean to upset you!

Well. with the weakness in the euro this week, and the relative steadiness of the Swiss franc, the "floor" that the Swiss National Bank (SNB) put in place back in September, where the euro/ franc cross cannot trade through 1.20, is really beginning to see some pressure. In fact, for a minute or two this morning, the cross did trade through the 1.20 level, but sits now within spittin' distance at 1.2025.

What will the SNB do should this cross really, truly breaches the floor level of 1.20? That's a good question, kids. but for all of you at home keeping score, you might want to take a note here, because Chuck thinks that should 1.20 be really, truly breached , the SNB will intervene, and sell francs and buy euros. That is if they have a strong backbone. if they don't have a strong backbone, the markets will drive the franc higher once again.

In the old days of the Pfennig I would have called what the SNB needs something other than a strong backbone. But, with everything I write being scrutinized now, it has squashed a lot of my style in writing. I bet you were wondering what happened to the "old Chuck". the one that would call a dolt a dolt, and not bat an eye. Well. out back on my patio, you'll still hear the "old Chuck", but in writing, it's the new me!

OK. remember the "Olympics factor"? when we first began doing currencies at the old Mark Twain Bank here in St. Louis, we began to notice how currencies from countries would see a bump in value, and sometimes meaningful bumps, whenever a country was about to be the host country for the Olympics.

So. if that were to remain true to form, the British pound sterling should see a bump, as the 2012 Summer Olympics will be held in London. Is that a reason to buy sterling? Probably not, given all the problems in the land of The Beatles. But, it's an interesting thing to keep a watch on, eh?

Don't know if you keep track of this or not, but the Chinese renminbi has really backed off the accelerator this past week. The renminbi has lost some ground to the dollar, and since the currency's value is directed by the Chinese Gov't, you have to think that the Chinese Gov't wanted to take the foot off the accelerator. But why? Ahhh grasshopper, come, sit. and I'll explain. Exports, China's bread & butter for their economy as the domestic demand driven economy builds steam, have really slowed lately. So, to keep exports flying high, the renminbi is pushed lower. This reduces the cost of the goods China exports.

Is this something we should be concerned about as renminbi holders? We've seen this all before, folks. I would think, given the info I gave you yesterday about how China had doubled the amount foreigners can invest in Chinese stocks, bonds and bank deposits, that these moves by the Chinese Gov't would be limited. But then it's the Chinese Gov't. I don't know any more than anyone else about what they are going to do!

China is China and that's still a Communist country that can do whatever they wish. But with that in mind let me remind you that I still, in my heart of hearts, believe that China doesn't not want the dollar standard to be in place in the coming years, and are doing what they can to push their agenda of removing the dollar as the reserve currency of the world, which means opening their economy and markets, gaining a wider distribution of their currency, and then allowing the currency to float.

This morning, it's France's turn to auction some debt. and they too have found things to be a bit difficult, thus causing a rise in yields. Next week, I see that Italy will have a debt auction. Now that should be quite interesting, eh?

But for today. the problems with the French auction has caused further slippage in the euro. and now the single unit has fallen to 1.3075. On Monday of this week, before the FOMC meeting minutes reflected a different light on further stimulus than Big Ben had given us, the euro was trading around 1.3325. So, that's about 2% lost this week.

I didn't talk about Gold & Silver yesterday, because I'm really at a loss for words as to what's happening here. This is beyond price manipulation, folks. But, I was encouraged a bit yesterday when I saw some comments by Jim Rogers.

OK. long time readers know that I hold what my long time friend, Jim Rogers, has to say in high regard. He doesn't beat around the bush, and calls a dolt a dolt. .

Well, in speaking at a conference in Bucharest yesterday, Jim Rogers said that he will buy more Silver & Gold because he expects the prices of the two metals to decline in the near term. so. he's looking for cheaper prices in Gold & Silver in the near term, as buying opportunities. Good thoughts from Jim Rogers.

Moving along. Tomorrow is Good Friday. the markets will be thinned out, and we'll have a Jobs Jamboree to sift through. This could be something that triggers a huge swing in the risk assets, given the lack of participants in the markets. I'll remind you again tomorrow morning, but for now, keep in mind that you may want to batten down the hatches and ride out tomorrow, because it could get wild and crazy. Like those two wild and crazy Americans!

Then There Was This. from Reuters this morning. "Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People (ESOP), a counseling group with 10 offices in Ohio."

Chuck again. yes. this is what I've feared was coming for some time now. the second round of foreclosures now that the "robo signing" stuff has been put to bed, has been hanging over the Housing recovery like the Sword of Damocles.

To recap. the selling of the risk assets continued yesterday and through the overnight sessions, with no risk assets willing to stand up and fight the dollar right now. The Fed has become the home of a majority of Treasury issuance, with not only foreigners but U.S. private sector holding of Treasuries falling off a cliff. The euro/ franc "floor" of 1.20 was breached overnight, and now we wait to see what the SNB is made of.

Currencies today 4/5/12. American Style: A$ $1.0280, kiwi .8145, C$ $1.0020, euro 1.3080, sterling 1.5830, Swiss $1.0880, . European Style: rand 7.8440, krone 5.69, SEK 6.7825, forint 226.33, zloty 3.1880, koruna 18.9135, RUB 29.58, yen 81.90, sing 1.2605, HKD 7.7655, INR 51, China 6.3127, pesos 12.85, BRL 1.8260, Dollar Index 80.02, Oil $101.96, 10-year 2.21%, Silver $31.38, and Gold. $1,623.70

That's it for today. Yes, a nice clean crisp win by my Cardinals to start the season last night, and a very nice comeback win for Alex's Water Polo team, as they came back from a 4-1 deficit to win 5-4, with Alex scoring the tying goal. Next Friday, the Cardinals have their home opener, and I'm planning on going! I overheard Chris talking yesterday and telling someone that he had his tickets for the Blues first round of the playoffs. I sure hope the Blues can go deep into the playoffs this year. Day 3 of the new system, and I think I actually contributed something yesterday! YAHOO~! And with that thought, I hope you have a Tub Thumpin' Thursday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

FOMC Meeting Minutes Deep Six The Risk Assets.

Chuck Butler — Wed, 04 Apr 2012 17:21:28 GMT

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

Foreign exchange for business - the way it should be

*A wide selection of FDIC insured (2) foreign currency accounts

*Multiple currencies available to help minimize foreign exchange conversions

*Expert support from a dedicated World Markets team backed by over 30 years in the field

Learn why we're the better solution for your business.

Call 855.417.4843. Or visit https://www.EverBank.com/business/foreign-exchange.aspx FOR MORE INFORMATION AND IMPORTANT DISCLOSURES.

In This Issue.

* Risk assets have a deep slide .

* Fed gives parameters for additional stimulus.

* Australia prints a Trade Deficit!

* Norway considers a cap for euro cross.

And, Now, Today's Pfennig For Your Thoughts!

FOMC Meeting Minutes Deep Six The Risk Assets.

Good day. And a Wonderful Wednesday to you! Boy, did I ever "hit the wall" yesterday! I got home, and collapsed in my recliner, and immediately fell asleep. It had been a whirlwind 3 weeks and then I "hit the wall". It looks like the risk assets have "hit the wall" too yesterday afternoon, which has carried through to the overnight markets..

Yes. yesterday afternoon, the currencies and metals and even stocks began to slip and that has really gained momentum in the overnight markets. It all began, I do believe, with the Fed's FOMC meeting minutes. The minutes indicated that the support for additional stimulus has faded, (However, you wouldn't know it by Big Ben Bernanke's press conference after the meeting). and they laid out the scenario from which they would be steered to additional stimulus. Either of these two scenarios will trigger more stimulus according to the minutes.

1. If the economic recovery stalls

2. If inflation remains low in the medium term

This really allowed the dollar to kick sand in the face of the currencies and metals. and like I said, it has carried over to this morning.

Then to add salt to the euro's wounds from the FOMC minutes. The Spanish bond auction this morning, the first one since their new budget, was not well received. I told you yesterday that everyone is focusing on Spain now, and that was seen in the weak demand for new Spanish debt this morning. Spain sold 2.59 Billion euros of bonds, which is far less than what they wanted to sell. The maximum target was 3.5 Billion euros of bonds.

Because of the Good Friday week, the European Central Bank (ECB) will move their regular Thursday meeting to this morning. But don't expect any real news to come from the meeting, as rates will remain unchanged, and ECB President, Draghi will hold a press conference afterward.

There's some troubling news coming from Norway this morning. Norwegian leaders are contemplating the implementation of a "cap" for the krone VS the euro, much like the Swiss did back in September last year. The Norwegian Gov't is very frustrated with their inability to get the krone weaker in the cross to the euro. They've cut interest rates, they've jawboned in an attempt to get the krone weaker VS the euro, but it's just not happening. And now, they are looking at what the Swiss National Bank (SNB) did, and contemplating using that type of line in the sand for the krone / euro.

I say this is troubling because, as we learned with the Swiss franc / euro cross, when it got weaker, it carried over to the franc's value VS the dollar..

So. I guess it doesn't pay to have the best surplus of any AAA rated nation in the world. no debt, and an economy that will most likely expand 3.25% this year, and a banking sector that's very strong. You know, people/ investors want to own currencies from countries like that, and the country should welcome currency strength, to help fight inflation, which is exactly what the strong krone has done, as Norway's inflation is less than 1/2 of its 2.5% target for inflation!

Wait Chuck! What the heck are you saying? That we can no longer value currencies as the stock of a country, for that country could simply decide to place a "cap" on how strong the currency can be? I sure hope that's not what I'm saying! Maybe calmer heads will prevail here, and the Gov't leaves the currency alone, except for their rate cuts and jawboning in hopes of keeping the currency from the outer atmosphere!

Well. the "new Swiss franc" as I've called it, and others. The Aussie dollars (A$) has really fallen on difficult times recently. The A$ fell overnight to a level it has not seen since last October, at $1.0257. First this week we had the Reserve Bank of Australia (RBA) express a willingness to cut rates going forward, and then last night Australia posted an unexpected Trade Deficit of A$ 480 Million. OK, that seems like chicken feed compared to the size of the Trade Deficits posted in the U.S. but given Australia's size, and the fact that the experts forecast a $1.1 Billion surplus for February, this caught the markets off-guard.

I think that this Trade Deficit for Australia in February, is something that we might see more of in the coming months, given the "moderation" of the Chinese economy.

Speaking of China. well, the Chinese leaders continue to take steps to open up the Chinese economy, which will lead to a greater distribution of the renminbi. Yesterday, The Chinese Premier, Wen Jiabao, said that "China needs to break a banking "monopoly" of a few big lenders that make easy profits." He went onto say that, "some successful recent financial reforms in the city of Wenzhou, in Zhejiang province, would be expanded nationwide."

Then overnight, the Chinese more than doubled the amount foreigners can invest in Chinese stocks, bonds and bank deposits. The amount increased to $80 Billion from $30 Billion. And now there are rumors that China may, even as soon as today, lower either their interest rate or reserve requirement.

I told you all last year, that China was shifting away from the export driven economy to a domestic demand economy, and while the change is nascent at best, it is going on. And soon enough, they're economy will be more diversified. They are already the 2nd largest economy in the world, imagine them as a 50% domestic demand driven economy.

Yesterday in the U.S. the data cupboard yielded February Factory Orders which reversed January's -1.1% decline, with a rebound of 1.3%... So, for the first two months of the year, Factory Orders were basically flat. U.S. Vehicle Sales also printed, and while they are impressive (goes back to that Consumer spending I talked about yesterday, eh?) the Vehicle Sales did not meet the expectations in March.

From here on out to the end of the week, we'll see employment reports that lead us into the April Jobs Jamboree. For instance, today, we'll see the ADP Employment Change, and so on.

Then There Was This. from the Washington Post. "The chief of the General Service Administration resigned, two of her top deputies were fired and four managers were placed on leave Monday amid reports of lavish spending at a conference off the Las Vegas strip that featured a clown, a mind readers and a $31,208 reception.

Administrator Martha N. Johnson, in her resignation letter, acknowledged a "significant misstep" at the agency that manages real estate for the federal government. "Taxpayer dollars were squandered" she wrote."

Chuck again. a couple thoughts here. 1. they all promise change but soon fall into the same spend, spend, spend habit. At the start of Ms. Johnson's tenure in February 2010 she called ethics, "a big issue for me."

And then 2. how can we get this to happen to all the Congressional lawmakers that continue spend what we don't have?

To recap. It's definitely a risk off day, as the risk assets, even including stocks, began to slip yesterday afternoon and carried over the selling in the overnight markets. The selling began when the FOMC meeting minutes printed and were different than what Big Ben had to say a couple of weeks ago about further stimulus. Norway is contemplating using a "cap on the cross to the euro, like the Swiss did. UGH!, and the Aussie dollar gets hit again, when an unexpected Trade Deficit printed.

Currencies today 4/4/12. American Style: A$ $1.0260, kiwi .8145, C$ $1.0060, euro 1.3160, sterling 1.5875, Swiss $1.0935, . European Style: rand 7.8250, krone 5.7530, SEK 6.6935, forint 224.55, zloty 3.1535, koruna 18.6830, RUB 29.43, yen 82.20, sing 1.26, HKD 7.7655, INR 51.05, China 6.2960, pesos 12.85, BRL 1.8240, Dollar Index 79.60, Oil $104.44, 10-year 2.18%, Silver $31.97, and Silver $1,631.70

That's it for today. Day 2 of the new system and I'm still mainly a spectator, feeling like I'm trying to make my way around a room with blinders on. Maybe this is a signal to me to ride off into the sunset. Nah. I've still got a son to get through college! So, I carry on despite all this! I don't really follow women's basketball, I don't have anything against it, just not my fave. But to finish a season at 40-0 like Baylor's women's team did, is pretty impressive. no team, men or women had finished 40-0 before! The spring storms began yesterday in Dallas. These spring storms can be very nasty, and the St. Louis area is in the path of many of these. So, here we go again! I'll be going back to south Florida at the end of the month. I'll be speaking at the Casey Conference in Westin Florida the last weekend of April, and then right back at the KCI Conference the following weekend, the first weekend of May. Google these if they interest you. and with that, I'm going to go attempt to figure out what I'm doing with this new system! I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

A questionable flight to safety...

Chuck Butler — Fri, 23 Mar 2012 15:58:36 GMT

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

Foreign exchange for business - the way it should be

*A wide selection of FDIC insured (2) foreign currency accounts

*Multiple currencies available to help minimize foreign exchange conversions

*Expert support from a dedicated World Markets team backed by over 30 years in the field

Learn why we're the better solution for your business.

Call 855.417.4843. Or visit https://www.EverBank.com/business/foreign-exchange.aspx FOR MORE INFORMATION AND IMPORTANT DISCLOSURES.

In This Issue.

* Flight to safety, but was it necessary???

* STL Fed Head Bullard says we are at a turning point...

* China lets the renminbi rise...

* Australian officials bypass the US$...

And, Now, Today's Pfennig For Your Thoughts!

A questionable flight to safety...

Good day... It was a 'risk-off' day in the currency markets yesterday as traders continued to digest data suggesting manufacturing in both the Chinese and European economies is slowing. Currency investors moved back into the 'safe haven' currencies of the Japanese yen and US$, pushing the yen up over 1% and the dollar index to a weekly high. I mentioned the Chinese report yesterday morning, but failed to give many details. The report was produced by HSBC Holdings PLC and Markit Economics and reported an index of factory output in China dropped to 48.1 in March. As with most of these indexed reports, a number below 50 indicates a contraction. China continues to be the globes economic engine, so any report that shows that engine is slowing causes drama in the markets.

Readers of the Pfennig can probably surmise that I think the markets were over-reacting to this report. The Chinese government stated last year that they were looking to 'tap the brakes' and wanted to see their economies rapid growth slow. They knew there was a serious risk of inflating bubbles in their markets, and a slowdown was needed. To their credit, they were transparent in their intentions to slow growth from the red hot double digits to a more sustainable 7.5%. But 'traders' make money on volatility, and the release of the HSBC/Markit report gave them an opportunity to push the markets around. The commodity based currencies were the worst hit, and the damage continued through most of morning.

Numbers released out of Europe only increased currency traders concern regarding the global recovery. A report from the UK yesterday showed retail sales fell more than expected in February and a report from Ireland showed that countries economy slipped back into recession in the fourth quarter. All of this data had investors running for cover yesterday morning, and the yen and US$ were the two currencies they sought out for shelter.

But a funny thing happened in late trading yesterday as the dollar reversed its earlier gains and started to move lower. I couldn't find anything in particular which drove the dollar down, but it may have been sparked by comments made by St. Louis Fed President James Bullard who was in Hong Kong. Bullard suggested US monetary policy may be at a turning point, suggesting our days of ultra easy money may be coming to an end. With policy currently "on pause, it may be a good time to take stock of whether we may be at a turning point," Bullard said in a speech. "As the US economy continues to rebound and repair," further action "may create an over commitment to ultra-easy monetary policy." Bullards comments sent a warning to the markets that the low interest rates which they have become addicted to are not going to last forever. While some would think higher US rates should push the dollar up (interest rate differentials have been one of the main drivers of currency markets in the past), higher rates could also put our recovery in jeopardy which worries investors.

Data released in the US seemed to support Bullard's thoughts that the US is passing through a turning point. Initial jobless claims were a bit lower than expected, at 348k compared to an adjusted 353k new claims last week. Leading indicators were also positive, moving up .7% compared to economist's expectations of a .6% increase. This morning we will get a report of new home sales for February which are predicted to have increased 1.3% during February after falling .9% last month.

A couple of the 'big boys' announced changes to their currency opinions yesterday. Goldman Sachs recommended investors should sell the US$ vs. the Japanese yen to take advantage of a possible reversal of the recent movement in these two currencies. "There is a substantial risk that the sharp move in the yen will reverse at least partially in the new fiscal year," Goldman Sachs analysts wrote. "Seasonal patterns point in that direction. The surprise improvement in the February trade balance in Japan supports our view and we are now also coming very close to fiscal year end in Japan." So the folks over at Goldman are going against the grain and believe the yen will appreciate. Perhaps this report was one of the reasons the yen jumped over 1% yesterday (The folks over at Goldman certainly still swing the big stick in the markets).

Citigroup adjusted the allocations of the currencies which make up their 'Model Portfolio', increasing the percentage allotted to the Swedish krona and decreasing the weighting of the Canadian dollar. Currency analysts at Citi believe the Swedish currency is relatively cheap compared to its European peers. They also feel the Canadian dollar is near enough to the top of its trading range that it is prudent to take some profits. I guess they wish they would have made the call on the loonie a few days ago, as the Canadian dollar fell to parity with the US$ yesterday for the first time in nearly two weeks. A report showed retail sales grew slower than predicted during the month of January and this combined with another drop in the price of crude oil caused the loonie to fall nearly 1% in the past two days to settle in just above parity.

The Chinese currency surged higher overnight as the PBOC increased the fixing rate by the largest margin this year. The central bank also cut reserve requirements for its rural banking system in order to boost lending. Officials in China believe the economy will bottom in the first or second quarter and that the country has already passed through the tightest credit conditions in this cycle. And Moody's Investor Services helped boost confidence in the Chinese banking system saying Premier Wen Jiabao's policies will limit the increase in bad debt that analysts say will mar profit reports this month. Moody's said Wen's efforts to curb property speculation are "having the desired effect".

Chuck has been detailing the efforts of China to gain acceptance of their Chinese Renminbi for use in global trade. One of the ways they have been pushing their currency into the markets has been through the use of 'swap agreements' with some of their major trading partners. The countries use these swap agreements to bypass the US$ which is typically used for global trade, and instead use the local currencies. China has entered into these swap agreements with several of their trading partners (20 to be exact) the largest of which was Brazil. But they had not entered into a swap agreement with any of the 'major' countries until yesterday when the Reserve Bank of Australia announced they had agreed to a $31 billion currency swap with China. According to a statement from the RBA, "The main purpose of the swap agreements are to support trade and investment between Australia and China, particularly in local currency terms, and to strengthen bilateral financial co-operation." The amount of $31 billion isn't dramatic in the big picture of global trade, but it is quite obvious China is looking to decrease their reliance on US$, and therefore decreasing the globe's dependence on the greenback. The RBA statement went on to say "The agreement reflects the increasing opportunities available to settle trade between the two countries in Chinese renminbi and to make RMB-denominated investments."

The US$ is slowly losing its grip on its 'reserve currency' status. And the impact won't just a hit to our nation's collective ego. Our status as the globe's reserve currency has kept our interest rates down and demand for our currency up. Countries across the globe have to have dollars in order to trade as most of the major commodities are traded in dollars (OIL is a prime example). This forces these countries to hold dollars in reserve, as they will need them to trade, and they purchase our treasury instruments in order to 'park' these dollars. So having the dollar as the reserve currency has allowed the US to continue to issue bonds at lower rates than we would be able to if we weren't home to the world's reserve currency. China doesn't 'have it in' for the dollar, but are obviously looking to give the Renminbi a higher profile in the global economy.

Then there was this. Jack Stapleton, my good friend and the new Director of our EverBank Infinity Banking Program here sent me a story yesterday morning which suggests the stronger CAD$ may be having a positive impact on US auto manufacturing. The story which was written by Peter Wadkins over at ThomsonReuters detailed the data on Canadian and US manufacturing numbers and compared them to automobile sales. Canadian auto sales are up, but wholesale sales (most of which are shipped to the US) were down. At the same time, US manufacturing in the Midwest has rebounded higher over the past few months - mostly due to increased auto and auto parts manufacturing. Wadkins theorizes that the strong CAD$ has the big 3 auto manufacturers beginning to shift production back to the US. If this becomes a trend, we could see Canadian leaders start trying to do something about the strength of the Canadian dollar.

To recap... The US$ rallied yesterday morning as investors moved into the US$ and yen as safe havens. The reason for the big exodus from 'risk' trades was the report I wrote about yesterday which suggested China will be slowing. The US$ reversed course midway through the trading day and continued to fall overnight. Goldman Sachs suggested investors should sell the US$ vs. JPY and Citigroup increased their allocation to Swedish krona while reducing the Canadian dollar. The Chinese currency surged overnight and the RBA and PBOC announced a swap agreement which bypasses the US$. Finally, a story shared by one of my coworkers suggests the big 3 automakers may be moving some of their manufacturing back to the US.

Currencies today 3/23/2012. American Style: A$ $1.0402, kiwi .8128, C$ $1.0045, euro 1.3249, sterling 1.5856, Swiss $1.0992. European Style: rand 7.7253, krone 5.7640, SEK 6.74, forint 222.37, zloty 3.1480, koruna 18.6995, RUB 29.3398, yen 82.66, sing 1.2639, HKD 7.7658, INR 51.2175, China 6.3076, pesos 12.8333, BRL 1.8192, Dollar Index 79.453, Oil $105.93, 10-year 2.26%, Silver $31.6725, and Gold $1,650.91.

That's it for today... And the end of a relatively calm week for the currency and metals markets. It was kind of nice not having to deal with any wild market swings, and the Euro debt problem barely made an appearance in this week's Pfennig. We are marching toward our T24 conversion next weekend, which will mark the successful end of a 4 year project. Looking forward to spending some time with my family this weekend, hopefully the rain which is starting this morning will push through by this evening. Everyone go have a Fantastic Friday, and a wonderful weekend!! Thanks for reading the Pfennig!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Dollar settles into a trading range. . .

Chuck Butler — Fri, 02 Mar 2012 23:14:00 GMT

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

Foreign exchange for business - the way it should be

*A wide selection of FDIC insured2 foreign currency accounts

*Multiple currencies available to help minimize foreign exchange conversions

*Expert support from a dedicated World Markets team backed by over 30 years in the field

Learn why we're the better solution for your business.

Call 855.417.4843. Or visit https://www.EverBank.com/business/foreign-exchange.aspx FOR MORE INFORMATION AND IMPORTANT DISCLOSURES.

In This Issue.

* Dollar settles into a trading range ...

* Fed Head says QE3 is still an option ...

* Brazil tries another attempt to slow real ...

* Gold selloff wasn't due to Bernanke ...

And, Now, Today's Pfennig For Your Thoughts!

Dollar settles into a trading range. . .

Good day. I raced thunderstorms into the office today as another series of spring storms is rolling across the Midwest. The radio said these storms are bringing hail the size of tennis balls and another round of tornados, which should make everyone else's morning commute a bit more interesting. Our office is on the top floor of our building which tends to sway in the wind, so during these big storms it feels a bit like I am riding on a boat.

The currency markets were rode out the rough waters of Wednesday and made it to a bit calmer seas yesterday. The dollar traded in a fairly tight range as reports released in the morning showed Initial jobless claims remained just over 350k and continuing claims also remained steady. Both of these numbers were slightly better than estimates, but neither moved the markets. We also got the Personal Income and Spending numbers for January, which showed a slight drop in both spending and income. Again, these numbers were fairly close to estimates, and didn't cause too much concerns. And a bit later in the morning we got the ISM Manufacturing data which sh9owed a drop from last month's 54.1 to 52.4. This number would indicate the manufacturing sector isn't as strong as some people thought, but the vehicle sales data which was released a bit later in the day offset the bad ISM number with a 900k increase in automobile sales during February. The US automobile sector has been held up by the administration as proof their stimulus efforts worked, but yesterday's numbers indicate the biggest gains in market share during February were the European based automakers who posted a 8.5% gain YOY. Asian based automakers share of the US market fell .8%. Of the big three, GM had the biggest decline, falling 2.7% to a 18.3 percent share of the market.

This morning we are seeing a bit more dollar strength with the euro giving back the $1.33 handle and the Swiss franc falling below $1.10. We don't have any data releases here in the US, so the week will likely end on a fairly calm note. The dramatic swings of Wednesday are in the rear-view mirror, and perhaps the markets have adjusted to the reality that the Fed won't be throwing another round of stimulus at them. Or perhaps the markets are hearing some hints that not all of the Fed Heads agree with Bernanke regarding the need for another round of stimulus. Federal Reserve Bank of San Francisco President John Williams said the Fed should maintain an 'extraordinary supportive policy' to reduce an unemployment rate that will probably exceed 7 percent for years. "This is clearly a situation in which we have to keep applying monetary policy stimulus vigorously," Williams said yesterday. "Looking ahead, we may need to do more if the recovery falters or if inflation stays well below 2 percent." Sure sounds to me like QEIII is still an option. Bernanke repeated his market moving testimony yesterday, this time sharing his thoughts with the Senate. He again said elevated unemployment and subdued inflation mean interst rates will stay low, without offering a sign that the economy needs an additional monetary boost. But the markets seem to be keying on the San Fran Fed Head's words, and no matter what Bernanke may have indicated during the past two days, the equity traders are thinking "so you say we've got a chance".

The ISDA ruling which I spoke about yesterday morning came back in support of Wall Street (no real surprise there is it?). The International Swaps & Derivatives Association said the debt swaps by Greece did not trigger the credit-default swap agreements, as these debt restructurings were not considered a default by Greece. A default would have forced the underwriters of these CDS contracts to pay out to those investors who bought them for protection. But the CDS underwriters aren't fully out of trouble, as the ISDA will now be asked to determine if a specific clause being used by Greece to force bond holders to all agree to the restructuring would trigger the CDS payments. We will keep an eye on this, but for now Wall Street has dodged a bullet.

The euro is drifting lower in early trading today as a report showed German retail sales unexpectedly declined in January. Sales, adjusted for inflation, fell 1.6% from December when they increased .1%. Economists had forecast a gain of .5%, so the drop definitely surprised the markets. The sting was deadened a bit by the fact the sales rose 1.6% when compared to the numbers a year ago. Rising oil prices definitely have everyone worried that the slow growth which we have seen in both Europe and the US may get squeezed out. As I reported yesterday, the numbers showed European inflation accelerated in February to 2.7% from 2.6% the month prior.

Right now Europe continues to be in worse shape than the US, and the IMF said in a report released today that the global economy faces 'major downside risks' due to the financial stresses of Europe. But the report goes on to say these risks are fading, and while Europe will enter a 'mild recession' the rest of the global economy should continue to grow. According to the IMF, the world economic expansion will slow to 3.3% this year from 3.8% in 2011. The euro economy is forecast to contract .5% this year, compared with growth of 1.6% in 2011. They agree with us that the engine of global economic growth will continue to be the emerging markets (mainly China and India) where 2012 growth is predicted to be 5.4% compared to 6.2% last year.

The Nordic currencies were hit overnight, giving back some of the gains they had booked during the first two months of 2012. I was reading a report on Sweden's economy last night, and things are not looking good for Scandinavia's largest economy. The report by an economist at Nordea Bank AB in Stockholm predicts unemployment will rise during 2012, and the Swedish economy will fall into a recession. Sweden's economy grew 3.9% in 2011, and the central bank has forecast positive growth of .7% for 2012. But the folks over at Nordea Bank say Sweden's reliance on trade with Europe (70% of exports) and the European debt crisis will cause the Swedish economy to contract. A report by released yesterday showed 4th quarter GDP in Sweden shrank 1.1%, which supports Nordea Bank's predictions.

A report yesterday showed Norwegian manufacturing accelerated at the fastest pace in 9 months, helped by the rising price of oil. Unlike Sweden, Norway has been shielded a bit from the negative impacts of the European debt crisis thanks to their large petroleum industry. Norway is the seventh largest oil exporter, and the rising crude oil prices have helped push the Norwegian economy forward. The Purchasing Managers Index rose to 56.9 in February, from 54.7 the previous month. A reading above 50 signals an expansion. And unlike the Swedish Krona, the NOK has been tracking higher, reaching the highest level in almost 9 years vs. the euro. A strong and growing economy combined with rising oil prices and some of the strongest underlying fundamentals should support the Norwegian currency in the long run.

Things were looking better for investors in the Brazilian real, as interest rates were inching back up, and the currency had returned a healthy 8.55% during the first two months of 2012. But Brazil's leaders aren't happy with the strong moves by the real, and are renewing their efforts to slow the currency gains. Finance Minister Guido Mantega reminded reporters yesterday that 'Brazil has an array of tools to curb gains in its currency'. The government refrained from from taxing direct investments into Brazil, and instead imposed a levy on foreign loans and bonds that mature in three years or less. Previously the tax had only covered foreign borrowings of up to two years. Neither Chuck nor I are big fans of governments trying to use tax policies to adjust the value of their currencies, and investors will have to continue to be cautious when looking at the Brazilian real. The problem is yields in Brazil are still good, and demand for the currency continues to put upward pressure on the value of the real, a good combination for those investors who can accept the risks of government intervention.

The Aussie dollar hit a 9 month high vs. the yen and pushed higher vs. the US$ as the Reserve Bank is predicted to keep rates on hold. The RBA will be meeting next week, and recent global inflation pressures will likely prevent them from lowering rates. While China's growth has slowed, it has not had the 'hard landing' which may have been predicting. China will continue to grow at close to double digit rates, and this growth will continue to support commodity prices and the value of the Australian dollar.

We have had some fairly good news for global economic growth recently, and this news has increased investor confidence. As investors have become more confident, they have been moving back into the 'carry trade' which dominated currency markets over the past several years. Volatile markets are not good for carry trade investors, as they look to benefit from interest rate differentials. Higher yielding currencies are the benefactors of the carry trade, and the South African rand, New Zealand dollar, and Aussie dollar are some of the favorite currencies of carry trade investors. If investors continue to believe that global growth is here to stay, these higher yielding currencies could become some of the best performers.

Then there was this. Several readers pointed out my error in trying to tie the big move in Gold on Wednesday to Bernanke's comments. As many of you pointed out, Bernanke's comments may have been the spark to start the selling in the equity markets, but gold sold off due to a major futures sell order which shocked the markets and pushed them into a freefall. One reader pointed out that Morgan sold 10,000 gold contracts short on Wednesday 'for Asian clients'. I am never a big 'conspiracy theory' guy, but when you have unexplained moves like we had on Wednesday, the old saying 'where there smoke there is fire' comes to mind. A couple of your readers sent me the following link, which gives Jim Sinclair's views of the events on Wednesday: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/1_Sinclair__Today_was_a_Cover-Up_By_the_Fed_&_Mainstream_Media.html .

To recap. The dollar settled into a fairly narrow trading range, but is starting to drift higher today. SF Fed head is keeping the possibility of QEIII alive, and ISDA gave Wall Street some good news concerning the Greek default. The IMF says Europe will slip into recession in 2012, but the global economy will continue to grow. The Swedish economy is in trouble, but NOK is still strong. Brazil leaders are searching for ways to stem the real's appreciation, but they are having trouble swimming against the tide. The commodity currencies have a good day, and readers point out my error in blaming Bernanke for the massive selloff in gold (although most agree he is probably still involved in some way).

Currencies today 3/2/12. American Style: A$ $1.0778, kiwi .8338, C$ $1.0129, euro 1.3236, sterling 1.5909, Swiss $1.0978. European Style: rand 7.4965, krone 5.6072, SEK 6.6677, forint 218.35, zloty 3.1027, koruna 18.6520, RUB 29.3418, Yen 81.53, sing 1.2494, HKD 7.7592, INR 49.50, China 6.2984, pesos 12.7691, BRL 1.7142, Dollar Index 79.137, Oil $108.27, 10-year 2.01%, Silver $35.2325, and Gold $1,716.73.

That's it for today. Congrats to Cardinal Yadier Molina who signed a 5 year contract extension yesterday. The Cards spent some of the money freed up when Yadi's good friend Albert Puljos left town. Chuck sent me a note early this morning that he had made it down to Jupiter and is enjoying the 88 degree weather. He will get a short dose of spring training before returning home on Sunday (if he doesn't miss his plane wink wink). The Blues lost last night, but are still on a great roll and should easily make it into the Playoffs this year. I'll get this out the door now, I hope everyone has a Fantastic Friday and a Wonderful Weekend!! Thanks for reading the Pfennig.

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

ECB Changes Stance.

Chuck Butler — Wed, 08 Feb 2012 15:28:00 GMT

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

Foreign exchange for business - the way it should be

*A wide selection of FDIC insured2 foreign currency accounts

*Multiple currencies available to help minimize foreign exchange conversions

*Expert support from a dedicated World Markets team backed by over 30 years in the field

Learn why we're the better solution for your business.

Call 855.417.4843. Or visit https://www.EverBank.com/business/foreign-exchange.aspx FOR MORE INFORMATION AND IMPORTANT DISCLOSURES.

In This Issue.

* Currencies & metals rally on ECB news.

* Fed to devalue dollar by 33%?

* Japan posts smallest CAD since 1996.

* The Misery Index, deux.

And, Now, Today's Pfennig For Your Thoughts!

ECB Changes Stance.

Good day. And a Wonderful Wednesday to you. I'm going to stop here for a moment of silence for Harry Keough. God rest his soul. Very much sadness on the desk yesterday and today, as we learned that Ty Keough's dad had passed away during the night. Harry Keough, was a soccer legend, as his only son, Ty is. Harry played on the U.S. national team that beat England in the World Cup in 1950, and went on to coach St. Louis University to 5 NCAA Championships. And in a soccer crazy city like St. Louis, that's like being knighted! Harry was a friend to us on the trading desk, I could shake his hand, and he would call me by name. Our thoughts are with Ty, his mom, and the rest of the Keough family.

Not sure, where to take the letter today, as those things that hit home, and the heart, are far more important than what's going on in currencies and markets. That's one thing I have learned in my life, is that things like markets, work, and other things will still be there. Family is more important.

OK. I know that Ty wouldn't want me to not write today, so I'll give it the old College try.

The currencies began to get some wind in their sails yesterday mid-morning, and soon an all-out rally was taking place. The currency rally was led by the euro, just like in the old days, and the euro was getting bought like dealers were giving them away for free! You see, the rumors of some backing off their previous stand, the European Central Bank (ECB) that is, really got the euro on the rally tracks, and then the real strong push higher came when those rumors were proved to be true.

Here's the skinny. The European Central Bank has made key concessions over its holdings of Greek government bonds that will contribute to a reduction of Greece's debt burden. The ECB has agreed to exchange the Greek government bonds it purchased in the secondary market last year at a price below face value, provided the debt restructuring talks under way find a successful outcome.

The ECB won't make a loss on the transaction, but it is not clear whether the bank will exchange the bonds at the below-par price at which it purchased them or whether it will make a profit.

I find this to be very interesting, as the ECB previously didn't want any part of this trade. And once again, I point to the fact that I told you last month that there would some changes to the ECB's stance, and that some semblance of calm would come over the Eurozone. Not that they are out of the woods, by any stretch of the imagination, it's just that calm now, means that all the negativity gets drowned out, temporarily.

So. the euro has stretched all the way to 1.3280, overnight. And the rest of the currencies are following the old Big Dog's lead.

And Gold really took off! The shiny metal gained back all it had lost the previous two days, as the flight to dollars and the so-called "safe haven" was reversed. I would really like to see Gold have some real direction though. It goes up $25, and then goes down $25. But, I did look like the Mighty Oz yesterday when I said that that it could be a good move to buy some Gold at the cheaper price, at that time.

I have a couple of things to go over this morning that just made my blood boil yesterday. I think I'll just give the story an intro, and then give you the link. That way if you're not interested, you can skip ahead.

First. I saw this story and my blood pressure just began to tick higher and higher. here's the story title: Congressional earmarks sometimes used to fund projects near lawmaker's properties. and here's the link: http://www.washingtonpost.com/investigations/2012/01/12/gIQA97HGvQ_story.html?wpisrc=al_comboNP

And another one from the Washington Post. titled: Some legislators send millions to groups connected to their relatives. I know, I know, this stuff can't be made up. you can read it here: http://www.washingtonpost.com/politics/congress/capitol-assets-some-legislators-send-millions-to-groups-connected-to-their-relatives/2012/01/10/gIQAyrzdxQ_story.html?wpisrc=al_comboNP

And now for this one. It's a story on the Forbes.com site, regarding the Federal's Reserve's explicit goal, to devalue the dollar. read it here: http://www.forbes.com/sites/charleskadlec/2012/02/06/the-federal-reserves-explicit-goal-devalue-the-dollar-33/print/

A friend of mine sent this to me, and asked me what I thought. I said. "It's nice to see someone other than the Butlers, Rogers, Caseys, Gallands, Bonners, and Wiggins telling people that this is happening, and what it's going to do the dollar's value, and the purchasing power of the dollar!"

Yesterday, Big Ben Bernanke talked to the Senators, the lawmakers not the hockey team that our St. Louis Blues beat 3-1 last night! Of course, in my opinion, Big Ben would have had about the same understanding of what he was doing if he was talking to the hockey team! And that's a discussion for another day. But what Big Ben did get across to the lawmakers, was that the U.S. Congress should focus for now on economic growth rather than budget deficits. "Abrupt action to reduce the deficit in the next few months could seriously damage the recovery." -Ben Bernanke

Torn between two lovers, is what the lawmakers feel like right now. The have the general public banging on them to cut deficit spending, and they have the Fed Chairman, banging on them to promote growth. I know, it's like a comedy skit, with the bad conscience image on the lawmakers' collective right shoulder, and the good conscience image on the left shoulder. Who will win? I bet you all know which one I would side with if I were a lawmaker, even if it didn't get me reelected, because it's the right thing to do!

Whew, you should have seen how strongly I was banging on the keys for the last part of the previous sentence! Poor keys. They did nothing to deserve getting banged on like that! HA!

I would tell Big Ben. Look buddy, you've cut rates to near zero and held them there for over 2 years, and you tell us they'll stay there for another 2 years. You've implemented two rounds of Quantitative Easing. The Gov't has done cash for clunkers, tax rebates, stimulus, and many other stupid pet tricks to promote growth. But like the two old ladies in the hold hamburger commercial. Where's the beef, Ben?

I would continue to tell him that I've decided to go another direction now. I'm going to find ways to cut the deficit burden, and remove the shackles holding back small business. Now, put that in your pipe and smoke it!

But. I'm not a lawmaker.I don't play one on TV, and I didn't stay at a Holiday Inn Express last night! However, I was once an elected official of my little river town, an Alderman. But then lost a reelection by 1 vote! And then found out that a lot of friends and acquaintances that would have supported my reelection didn't vote, because they thought I would win easily. I decided then that lawmaking, even in a little river town, wasn't my cup-o-tea.

Ok. enough of that! Hey! The Chinese renminbi after seeing weeks of give and take in the value, finally pushed higher VS the dollar last night, reaching an 18-year high! Of course, the news regarding Greece had a lot to do with this move higher, but add to that, the fact that Chinese Vice President, Xi Jinping is on his way to visit the U.S. and when the Shumers and Grahams try to box Xi in a corner and badger him about China's currency policy, Xi can simply point to the fact that the renminbi is at a 18-year high VS the dollar!

I have to mention the move that the Mexican peso has been on for the past month. I'm not a fan of pesos, but they sure have gotten some wind in their sails with all the talk about the U.S. economy recovering. That alone should make you want to back away from pesos, because if the U.S economic recovery is lacking terra firma, like I believe (and the Fed or else they would be keeping rates near zero for two more years, and laying groundwork for more QE), then the peso rally could be short-lived. But for now. it's trading like it's the new pet rock!

Another currency that has been very strong for some time now, but looks to me to be very overvalued, the Japanese yen is seeing some selling this morning on the news that the Ministry of Finance (MOF) reported that Japan's Current Account Surplus for calendar year 2011 was the smallest since 1996. it's still a "Surplus", but it's dwindling away.

And then yesterday, I told you about the Misery Index. and how the U.S. Misery Index had increased in 2011. Well, a very astute reader mentioned to me that since I talk about John Williams and Shadow Stats all the time, that instead of using the Gov't numbers for the Misery Index, I would use the Shadow Stats numbers. Well. very good point!

And so. the U.S. Misery Index goes from 11.30% per the Gov't, to 29% per Shadow Stats. OUCH! Reminds me of the old Hee Haw skit. Gloom, despair, and agony on me. Deep, dark depression, excessive misery.

I just had a flashback to a Saturday night in my mom and dad's kitchen, with their smaller TV showing Hee Haw, and me thinking, I've got to get out of this place! But, now that I think about it, the thought provides me with fond memories.

Then there was this. Remember a couple of weeks ago, I told you about Byron King, and his story about the U.S. becoming energy independent? Well. according to the Wall Street Journal, "the U.S. has reversed a decades-old trend of increasing dependence on foreign energy and is closer to complete energy self-sufficiency than it has been in nearly 20 years. Data from the Energy Dept. show that through the first 10 months of 2011, the U.S. met 81% of its energy requirements from domestic sources."

Chuck again. WOW! That's great news! But, then why is the price of Oil still around $100? Ahhh, grasshopper. The cost to get the oil or natural gas out of the ground remains very high. and until those costs come down, if ever, the price of gas at the pump will remain high. In fact, I saw a story on HLN yesterday morning, saying that gas would reach an average price of $4 a gallon by May! UGH!

To recap. The currencies and metals began to rally yesterday mid-morning on rumors that the ECB was going to ease their stance on holding Greek debt, and when those rumors were proved to be true, the currencies and metals rallied even more strongly. Chinese renminbi reached an 18-year high VS the dollar last night, ahead of a visit to the U.S. by the Chinese Vice President. And the Japanese Current Account Surplus is at the lowest level since 1996.

Currencies today 2/8/12. American Style: A$ $1.0830, kiwi .8385, C$ $1.005, euro 1.3278, sterling 1.5890, Swiss $1.0960, . European Style: rand 7.5375, krone 5.75, SEK 6.65, forint 217.80, zloty 3.1460, koruna 18.69, RUB 29.75, yen 76.95, sing 1.2445, HKD 7.7540, INR 49.14, China 6.2935, pesos 12.66, BRL 1.7205, Dollar Index 78.47, Oil $99.38, 10-year 1.98%, Silver $34.40, and Gold. $1,746.40

That's it for today, and this week for me. Chris will have the conn on the Pfennig until I get back in the saddle next Tuesday. I'll send Chris some views from the Orlando Money Show for his Monday letter, but other than that, it's all Chris! I got to have lunch with one of my fave people in the world yesterday. many of you know her. Kristin Kuchem. She's gone on to do something that makes her very happy, because she's around her kids all day. And she looked great! There will be a memorial service for Harry Keough at St. Francis Xavier this Saturday. I'll be in Orlando, so I'll miss it, but my thoughts will be with Ty and his family. And with that, I'll get to work so I can get out of here and to the airport this afternoon. I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837