Daily Pfennig : G7

Jobs Disappoint...

Chuck Butler — Mon, 05 Oct 2009 17:23:26 GMT

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In This Issue..

* September job losses soar to 263,000...
* G-7 does not make statement on currencies...
* RBA meets tonight...
* India & Brazil pull the right strings...

And Now... Today's Pfennig!

Jobs Disappoint...

Good day... And a Marvelous Monday to you! The Regular Season for Baseball is over, except... The Tigers and Twins have to play a one-game playoff today! Talk about exciting! And that's just to see who gets to go the playoffs!

Well... Friday's Jobs Jamboree did disappoint as I had the feeling they would, printing a disappointing -263,000 jobs lost in September. The Unemployment Rate also rose to 9.8%... Now we all know that when all the people that are truly unemployed are counted, that the Unemployment Rate goes to 16%, but the Bureau of Labor Statistics (BLS) will have none of that so-called counting ACTUAL Unemployed people!

On a sidebar, a reader sent me a note and said that I need to remember that the difference between the weekly initial jobless claims, and the Jobs Jamboree is that the Jobs Jamboree "nets" out the jobs created to the ones lost, while the Weekly Claims only counts jobs lost... And that's fair... I truly understand... The point I've tried to make and probably didn't do such a good job at, was to say... The BLS could use the Weekly Claims as their starting point... But they don't... They use a "survey" instead... Dolts all of them!

So, the non-dollar currencies acted a little strangely on Friday after the Jobs report... The trading pattern for 9 months now has been to reward the non-dollar currencies whenever the data was good for the U.S. (one realizes that this is the exact opposite of what currencies trading on fundamentals would do). However, on Friday... When the disappointing jobs report printed, the currencies reacted as they SHOULD! The rallied against the dollar! Holy Cow Batman, are we returning to Fundamentals? I don't know, folks... But we did on Friday...

Then this past weekend the G-7 Finance Ministers met and left... Without a word about the currencies... So, the rumor going 'round on Friday morning that G-7 was going to hand over the currency watchdog duties to G-20, must be true... The thing that a lot of traders are looking at right now, is the fact that G-7 hasn't said that they were handing over their currency watchdog duties, and they ended their meeting with no statement whatsoever that they were concerned with dollar weakness...

So... Traders not willing to believe the rumors, and still thinking that G-7 is the currency watchdog until otherwise stated, believe that G-7 was giving the green light to further dollar weakness... For, if it's not a concern of the G-7 Finance Ministers, then why should it be a concern of those wanting to take the dollar lower?

And take it lower they have... But, not by leaps and bounds mind you... No, this has been a 1/2-cent move... It's as though the traders are "testing the waters" to see if their thoughts on G-7 are correct or not...

The euro also breathed a sigh of relief when the results of the Lisbon Treaty vote in Ireland printed yesterday... In a substantially decided vote (67% to 33%) the Irish voted in favor of the Treaty, which now goes to Poland and Czech Republic, who are the only two left to ratify the Treaty... There are some rumors going around that the Czech Republic (CR) might hold it up, causing a delay, which could deep six the whole thing...

Speaking of the euro... The European Central Bank (ECB) meets this Thursday... Look for rates to remain unchanged.... However, recently, ECB President, Trichet has been propping up the dollar with statements about dollar strength here and there... Remember, he HAS TO DO THIS! He can not be seen banging the drum for a stronger euro... That could deep six the dollar in a heartbeat... So...on Thursday this week, the markets will be listening to Trichet's statement following the rate announcement to see if he "props up the dollar" again...

And speaking of rate announcements... The BIG ONE tonight is the Reserve Bank of Australia's (RBA) While I think that Rocktober is too early for a rate hike, what I'm looking for is any indication that November will be the month we see the first rate hike after the 2 years of rate cuts around the world. I'm going out on the limb here and saying that the RBA will hike rates 25 BPS next month! So... Put that in your calendar to see if I'm bang on or just plain whiffed at the pitch!

Recall, that at one time it looked as though Norway's Norges Bank would be the first to raise rates, but the RBA has edged in front now... But, that's not that bad of thing to be the first loser, or 2nd place as most people call it, as long as the Norges Bank comes through on the rate hike... Right now, it looks as though the Norges Bank will wait until December...

Rate differentials can and should go a very long way toward currency strength... It's not the end-all, as the Japanese yen can attest to... But, for the most part, it carries a lot of weight in currency valuation... And that's the reason I make such a big deal out of the RBA And Norges Bank being the first Central Banks to raise rates... They already enjoy a rate differential to the dollar... And rate hikes will simply widen that differential...

So, when investors around the world want to find yield... They will look for countries that have rate differentials to the base rate in their country... And the wider the better!

Well, that is, as long as we're not talking about a country that is whacked out, corrupt, politically unstable, or unable to attract foreign investment, so they hike rates up to levels that stand out like a man with a hatchet in his head!

So... Back to Australia for a moment... The A$ really recovered nicely after the G-7 "no-statement" I'm sure some traders are taking a flyer that the RBA would spring a surprise rate hike tonight... So, the downside risk for the A$ tomorrow is there, slightly... But today, it's all seashells and balloons for the A$!

Gold remained above $1,000 overnight... It sure looks to me, as though the price of Gold is simply forming a new base at $1,000, before moving on to higher levels... But, that's just me... I don't have a crystal ball, and I don't read tea leaves! Just an opinion on what it looks like to me... Which is why I've changed my line... Remember, 6-9 months ago, when I would say that I thought it to be a good idea to look to buy on the dips below $900? Well, I'm changing that to look to buy on the dips below $1,000...

Not that I want to "jinx" the Indian rupee, but I've noticed the past couple of weeks, how the rupee has been gaining VS the dollar... Inch by inch, the moves aren't anything to shake the earth, but they are positive moves VS the dollar nonetheless! So... Good show rupee!

You know... Over the past couple of years, you've got to have noticed how the once "fringe countries" like India, and Brazil, are the ones doing all the right things and pulling the right strings with their economies, while the U.S. continues to walk the plank of catastrophe!

Well, after last week's data deluge, the data cupboard takes a break today and tomorrow, coming back on Wednesday with the Monthly Budget Statement... The Budget Deficit in the U.S. has become the focal point of dollar bears... The Budget Deficit continues to grow, as the deficit spending continues to go on and on, like the Energizer Bunny! The rest of the week is pretty low-key with regards to data. Friday, we'll see the latest Trade Deficit... So, the "Twin Deficits" on display this week...

So... To recap, the Jobs Jamboree was very disappointing with job losses shooting up to 263,000 in September. G-7 did not make any statement about the currencies, so traders have taken that to mean they don't care about how weak the dollar is... The RBA meets tonight, and I'm looking for them to raise rates next month, not tonight. And Gold is back above $1,000...

Currencies today 10/5/09: A$ .8745, kiwi .7205, C$ .9310, euro 1.4625, sterling 1.5940, Swiss .9675, rand 7.6090, krone 5.7770, SEK 7.04, forint 182.85, zloty 2.8840, koruna 17.3870, RUB 30.08, yen 89.90, sing 1.4105, HKD 7.75, INR 47.55, China 6.8264, pesos 13.60, BRL 1.7815, dollar index 76.86, Oil $69.16, 10-year 3.20%, Silver $16.23, and Gold... $1,004

That's it for today... Well... Chicago was turned down as an Olympic site for the 2016 Summer Olympics... It will be held in South America for the first time, so that's OK... The Cardinals begin their playoffs in Los Angeles on Wednesday night. So that means, I won't be able to watch the games. UGH! The Lambs, I mean the Rams lost again... But our St. Louis Blues started their hockey season with back-to-back wins VS Detroit! WOW! Calm down, Chris Gaffney, it's only 2 games into the season... But still, plenty to be excited about, for sure! Got to spend some time with old neighbors Saturday, and see Madison Ave, and Allison Road again! And Little Delaney Grace was over yesterday, she sang "you are my sunshine" 1st and 2nd verse to me... HOW CUTE! OK... Time to get on the road, I've got a presentation to do today, and it's a Monday! I hope yours is Marvelous!

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

A Jobs Jamboree for Friday 10/02/2009!

Chuck Butler — Fri, 02 Oct 2009 14:14:00 GMT

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In This Issue..

* The dollar remains well bid...
* G-7 to hand currencies off to G-20?
* Car Sales collapse...
* Auditing the Lehman cash movements...

And Now... Today's Pfennig!

A Jobs Jamboree Friday!

Good day... And a Happy Friday to one and all! Yesterday, I welcomed you to October. I had been prepared to tell you about a famous radio station here in St. Louis, that has long called October... Rocktober... But forgot, as usual! But anyway... It's the first Fantastico Friday of Rocktober!

Today is a Jobs Jamboree Friday too! And... I'm not getting a good feeling about today's labor report at the Jobs Jamboree. The forecast is for jobs losses to fall from -216,000 to -175,000, but the unemployment rate to tick up to 9.8% from 9.7%... I got the feeling, baby, baby, I got the feeling... Oops, a little James Brown on Fantastico Friday never hurts! But what I was saying was I'm getting the feeling that there are risks to this forecast... And that the job losses could come in higher, which would really be a BAD thing for the recovery flag wavers and risk takers, I'm sorry to say...

You see, the recovery flag wavers and risk takers are wishing, and hoping, and thinking and praying that the data in the U.S. continues to show some sign of life. Any signs that the U.S. economy could be slipping backwards, would deep six stocks for sure, and if last year's trading tells us anything, it would have an adverse affect on Commodities and Currencies too!

So... This is a BIGGIE, today, folks... So strap yourself in, and make sure you keep your arms and legs inside at all times during the ride!

Yesterday's currency trading left a lot to be desired... There was little movement from the overnight sessions which tomahawked the non-dollar currencies. That's a good thing... But the downside risk today is just too much for me right now... Maybe after 7:30 CT I'll be able to breathe again, for that's when the Jobs Jamboree prints... Again, Japanese yen enjoys the sun from both sides of their house... When the dollar is weak, yen rallies with the other non-dollar currencies... When the dollar is strong, yen rallies alongside the dollar! It's good to be the yen! (that is before the Ministry of Finance in Japan begins to intervene!)

Hey! Remember when I bashed the Cars for Clunkers scheme, I mean program, and exposed it for what it was, and what it would do to future sales of automobiles? Well, as they say... The proof is in the pudding!

Yesterday, it was reported that General Motors had posted a 45% drop in September U.S. light-vehicle sales, while Chrysler's sales fell 42%. Ford saw a much more modest drop of 5.1%. Among Japanese auto makers, Toyota said its September U.S. sales declined 16% from a year earlier, while Nissan saw its results fall 7% and Honda said its sales slid 23%. The auto industry was hurt by the expiration of the U.S. government's "cash-for-clunkers" rebate program.

Yes... I told you this would happen... I also think that any Gov't program to prop up the economy is just falling into the ghost of Japan's hands... I've explained this before, about how when Japan experienced a HUGE market correction after their go-go 80's, they panicked and began throwing money at the problem, instead of just letting the markets run their course... The Japanese introduced stimulus package after stimulus package, and Gov't program after Gov't program, like Quantitative Easing... And look how well that's worked out for them!

So the ghost of Japanese recoveries that never panned out, is haunting the U.S. Gov't now!

Today is also the start of a G-7 meeting in Istanbul... Istanbul was once Constantinople! Or so the song goes... Any way... The rumors coming out of the pre-meeting stuff is that G-7 will no longer make a statement or issue a communiqué' regarding currencies, as they now feel that the only group that should have that responsibility is the G-20, which last week took the world economies watchdog title from G-8...

Currency traders have long used these G-7 communiqué statements as a tool that indicates direction for currencies... And while that has actually come to fruition a handful of times over the years, for the most part, G-7 was nothing but a boondoggle!

One thing that's out there that you won't see a lot of people talking about is the vote going on in Ireland today, on the Lisbon Treaty, which the Irish people voted down last year... This Lisbon Treaty changes the way the European Union works, and would amend the Maastricht Treaty... It was intended that all member European Union states would ratify this before now... So, this vote is like the Sword of Damocles hanging over the euro for Monday morning...

You see, the vote will be taken today, counted tomorrow, and announced Sunday, which will cause a knee-jerk reaction to the euro trading on Monday... Right now, the polls show the Treaty will be accepted this time by the Irish. If passed, it goes to Poland and the Czech Republic, and if they vote yes then it would lead to ratification, which would be a good thing for the euro... A no vote would be bad thing, just like it was in June of 2008, when Ireland voted no the first time around.

Yesterday, the IMF issued a report on Currency Composition of Global FX Reserves... And this is quite telling I believe, for the report showed a continued diversification away from the dollar, in the 2nd QTR of this year... I had to laugh last year, when I was on the FXU Currency Tours, and one of the guys there said that the fall of currency reserves allocation of dollars from over 80% to 64%, was nothing but currency appreciation by the euro... I would point to the these IMF reports, when I talked so that I didn't make a big thing out of it...

Did you see the story in the Wall Street Journal (WSJ) regarding Lehman Brothers? This story has conspiracy stamped all over it, so you know me, I was all over this story like a cheap suit! Here's the gist of the story from the WSJ... "An examiner is looking into how the Federal Reserve was promptly repaid billions of dollars in cash and securities it lent to Lehman Brothers before the bank filed for bankruptcy, while other creditors are still owed money. The court appointed Anton Valukas, chairman of Jenner & Block and a former U.S. attorney, to explore whether the Fed received improper preferential treatment."

Chuck again... Now, you, me and the lamppost all know what went on here, just by that description in the WSJ... But, we'll wait for the report, I guess...

The U.S. stocks really got taken to the woodshed at the close yesterday, and the futures in the overnight markets are weak... So... Guess where the money goes when they sell stocks? That's right, U.S. Treasuries... So, just about the time you think that the mom and pop's of the world that went to Treasuries last year in the so-called Flight to Safety, had taken on enough losses, and were going to get out... Here comes the stock correction that I've been talking about... Or maybe not... Maybe this is just a couple of days of selling... Or maybe it is the correction...

So, if dollars are flowing into Treasuries, the yields of those Treasuries are going down once again... UGH! This just doesn't make any sense to me! Didn't these people that went to the so-called Safety of Treasuries last year, but lost money, learn anything? Or did enough time pass and they've "forgotten the pain"?

Oh Heck! This just feeds more air into the Treasury Bubble... Which means that it grows larger and larger, and also means that when it does POP, the losses will be severe and all across the board... I mean, isn't that what we've learned about what happens when a bubble POPS in the past?

Yesterday, the data cupboard was busy... We had the Weekly Initial Jobless Claims post a higher number than was expected, coming at 551,000, VS last week's 534,000... I always love it when the Jobs Jamboree follows a Weekly Initial Jobless Claims repot... Because... The Weekly report shows that, in this case, that 551,000 jobs were potentially lost last week, and today's monthly report by the BLS will show something far less...

We also saw that the U.S. Consumer continues to spend more than they make, as Personal Spending was up 1.3%, while Personal Income was only up .2%...

And then finally we saw the U.S. ISM Index (manufacturing) come in weaker than expected, but remain above 50, at 52.6... That's a weaker number than the August figure which was 52.9... And I would think that someone would have noticed this... But we had the TV on all day, and I had it one when I got home, and never saw mention of this anywhere!

And then there was this... Colleague, Aaron Stevenson, called me yesterday morning, trying to beat the deadline for stuff to add to the Pfennig... He missed... So I have it for today... Remember yesterday morning, when I announced that BOA CEO Ken Lewis was retiring, and that I thought that to be strange?

Well, Aaron was all over this, telling me that he worked for BOA for a number of years, and sat in on meetings with Ken Lewis, and that Ken Lewis was not the kind of person to take "early retirement"... In fact, Aaron says, "that 4 months ago, I heard an interview with Ken Lewis, and he said I'm 62, I'm not ready to retire." Aaron said that he was a "no surrender, no quit, kind of guy." Hmmm... I wonder what changed in 4 months? Well, Aaron thinks, and I agree, that he was forced out by the Feds, for speaking his mind on the BOA / Merrill Lynch deal that was brokered by the Fed and Treasury...

OK... To recap... Today is a Jobs Jamboree Friday, and I'm getting the feeling that it will be disappointing VS the forecast of 175,000 job losses. G-7 meets this weekend, and there might be a change in the what they say after each meeting. The ghost of Japanese recoveries, is at work in the U.S. Ireland votes on the Lisbon Treaty today, and the dollar remains well bid VS the non-dollar currencies... Except yen!

And this... On Monday next week, I will be doing an educational presentation for the folks at DTI... You can find out more here: http://www.dtitrader.com/trading_education_MMM_everbank.htm

Currencies today 10/2/09: .8630, kiwi .7130, C$ .9175, euro 1.4550, sterling 1.5850, Swiss .9620, rand 7.72, krone 5.8250, SEK 7.0420, forint 186.20, zloty 2.9185, koruna 17.4750, RUB 30.20, yen 89.30, sing 1.4170, HKD 7.75, INR 47.75, China 6.8265, pesos 13.77, BRL 1.7860, dollar index 77.20, Oil $69.69, 10-year 3.15%, Silver $16.25, and Gold... $996.75

That's it for today... A Big Day for investments, so hang on to your hat! That was a much better display of baseball yesterday by the Cardinals. They have 3 games left in the season, to get on a roll before the playoffs! I had a brain drain the other day, when I gave you the link to the Sovereign Society for the Offshore Academy Conference... I'm sure once you all figured that out, you just went to Google and got to the site! UGH! OK, my little buddy, Alex, plays football tomorrow morning against another top rival... He told me it's payback time, as his team lost to the rival last year... I told him, talk is cheap... You have to back it up on the field. OK... Enough! It's a Fantastico Friday, and we're in Rocktober! Time to get working on making this Friday, Fantastico!

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

G-7 To Discuss Currencies?

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

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

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

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

In This Issue..

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

And Now... Today's Pfennig!

G-7 To Discuss Currencies?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

When Will Foreigners say "No Mas"?

Chuck Butler — Tue, 17 Feb 2009 17:40:49 GMT

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

* G-7 kisses up to China...
* The dollar swings a mighty hammer...
* Eastern European loans weigh on the euro...
* Gold kicks tail and takes names later!

And Now... Today's Pfennig!

When Will Foreigners say "No Mas"?

Good day... And a Terrific Tuesday to you! I trust your weekend was grand. I was lucky enough to have a 3-day weekend, and brother did I need one! Rest was the order of the weekend! Of course Saturday was Valentine's Day... Here's a thought for all us men that were standing in line at the flower shop... We need a "Hallmark holiday" where our significant others buy us tickets to baseball games! HAHAHAHAHAHAHA!

OK... Well, Friday ended on a sour note for the currencies, and while yesterday was a holiday here in the U.S. the currencies continued to sell off, with the dollar swinging a mighty hammer. G-7 said very little about currencies, left yen alone, and praised the Chinese for their continued move toward flexibility of the renminbi...

Now, if you think like me, no wait, most people don't want that burden! But... We think in similar circles, you probably chuckled a bit when you heard that G-7 "praised" China for their continued flexibility with the renminbi... Doesn't that almost sound like an Eddie Haskell? "Why, Mrs. Cleaver, you sure look nice today" Is G-7 "kissing up" to China? It sure sounded that way to me, for China hasn't allowed the renminbi to move higher VS the dollar with any kind of consistency for some time now!

So, G-7, Schmee 7! I just don't think they can deal with these things in a macro environment... In other words, each finance minister, Treasury Sec. or other official needs to go home and take care of their own house! There was one thing that came out of the G-7 meeting... Each country "promised" to not resort to protectionism to help their economy... I'm sure that while they promised they had their fingers crossed behind their respective backs!

The shot across the euro's bow this time is coming from the rot on the vine of the Eastern European countries... These Eastern European countries are taking on water from bad loans, or loans gone bad, and you know who the lender of last resort is on these loans don't you? Yes, Eurozone banks... This opens a whole new can of worms folks... The euro has taken hits from Spain, Italy, and Italy in this round, and previously took a major hit from France in 2005, and survived all of them. And it will survive this round... But not until it sees more weakness VS the dollar. I would look for the euro to revisit its previous low of a few months ago in the 1.23 handle... This could get ugly, as this Eastern European bad loans scenario has just popped up, and we've got to work through all the rubble to get to a base, before the euro can come back even stronger.

This will obviously represent some cheaper levels to buy, and diversify... Or average cost in... Or anything other reason you might have for taking advantage of this soon to be cheaper opportunity.

So, with the Big Dog, euro getting taken to the woodshed for its indiscretions with Eastern European loans... BUT REMEMBER I TOLD YOU THIS... The European bank losses are NOTHING compared to those in the U.S. My friend, John Mauldin, said that they "Dwarf those in the U.S." And... Remember, The Eurozone began this meltdown in a position of strength! The U.S. was on its knees begging for foreign investment to finance their IOU's... The rest of the dog pound is getting taken to the woodshed too! Shoot Rudy, even Japanese yen, which didn't get mentioned by G-7 for its strength, is losing ground to the dollar this morning. There's not a currency anywhere on the scorecard that's not going 0-for 4 against the dollar today... UGH!

OK... I take that back! Not a fiat currency that is! But the currency that a lot of people don't consider a currency, but I do, Gold... Is kicking some dollar rear this morning and taking names later! Gold is up $24 this morning to $965! And why do you think Gold is on the rally tracks this morning? Well... Things are uncertain these days aren't they? Then if you answered yes, then you know that the "uncertainty Hedge" is here to save the day! Gold is the "uncertainty Hedge" ... Oh, and Silver is like the Super hero's sidekick... Like Robin to Batman, Silver to Gold... Silver is trading within spittin' distance of $14...

When will traders and risk takers stop and look at all the debt the U.S. is taking on? That's the question I keep asking myself... The massive amount of debt that just keeps going on the books, is crazy stuff folks... It's gotten to be so massive, that I believe it has pushed everyone to become "comfortably numb" That's got to be the answer, because if it isn't, then I think we would see people screaming bloody murder at the Gov't! They are amassing these massive debts and we're paying for it! Don't believe me? Well... Let's listen to former U.S. Treasury Sec. Paul O'Neil, who quit because he didn't believe in the tax cuts without cuts in Government spending... "The federal government doesn't have any money that it doesn't first take away from the people."

But, as long as no one complains to their Senators, and Representatives, then they believe they have Carte Blanche to spend your money, your kids' money, and your grandchildren's money... Sometime in the future, someone will find a year's worth of these Pfennig's, and they'll say... "Hey! Why didn't we listen to this guy?" OK, I've gone too far there... That's crazy imaginary stuff there, and has no place in this "professional letter" HAHAHAHAHA!

Well, we get a look at the how well the foreigners are keeping up with the financing of these debts this morning, as the December TIC Flows will print. Keep in mind that this is a fancy name for simply stating that this is the "net security purchases by foreigners"... Also, keep in mind that we need about $40 Billion per month (yes, it has fallen, but that's long before we calculate the budget deficits that will be mounting this year)... In November the net was a negative of $21 Billion... Whoa! December's total is forecast to be a positive $20 Billion... Which is better than a negative $21 Billion, but still doesn't meet the required amount to finance the deficit... So, we just keep pushing that forward, and forward, and forward, until someone "calls" us on it, much like De Gaul called the U.S. on the debt, back in 1971, and demanded to be paid in Gold for the IOU's he held... So... Now, we wait for the time when foreigners say "no mas"... And you now see why this is not a good idea for a country to be at the mercy of outsiders...

That's when Nixon closed the Gold window... August 1971... And the world that we knew with a Gold standard was to be no more... Sort of like Puff the Magic Dragon when Jackie Paper came no more, and Puff that mighty dragon, he ceased his fearless roar!

Ok... Enough of that! The Japanese Finance Minister Nakagawa, is going to resign after Japan posted an economic report that showed Japan's economy contracted at the its fastest pace in almost 35 years during the 4th QTR of 2008. Of course it didn't help that he was reported to have been under the influence of alcohol during the G-7 meeting... He denied that his behavior was due to "being drunk", and instead blamed a combination of alcohol and cold medicine...

So... Not only did Nagakawa have to deal with the bad economic report upon returning home, he had the press all over him about his behavior... So, he announced that he will resign... In Japan, this is called, falling on a sword...

The economic report has caused some slippage in the Japanese yen. This is the first real slippage we've seen in yen in some time... There are no reports of intervention by the Bank of Japan and the finance ministry, so one has to believe that this is simply profit taking after seeing the rot on the economic performance's vine...

But, as long as the Bank of Japan and finance ministry keeps their finger off the intervention trigger, Yen should not succumb to heavy selling, and losses VS the dollar... Not yet...

The "new and improved" $787 Billion Stimulus Bill is on the President's desk for his signature today... The markets will get all tingly, especially stocks... So, let's hope for at least a day or two, the connection between stocks and currencies remains... But it can drop soon after, and go back to the way things have always been!

I see the time, and realize that I've been typing for far too long this morning, I have a ton of stuff to do, since yesterday was a holiday, so off to the Big Finish we go!

Currencies today 2/17/09: A$ .6405, kiwi .51, C$ .7920, euro 1.2640, sterling 1.4260, Swiss .8550, rand 10.20, krone 6.99, SEK 8.70, forint 242.30, zloty 3.86, koruna 23.38, yen 91.75, sing 1.5260, HKD 7.7540, INR 49.66, China 6.8414, pesos 14.61, BRL 2.3050, dollar index 87.38, Oil $37.06, Silver $13.96, and Gold... $963.80

That's it for today... A BIG Happy Birthday to Mike Meyer and Suzy Q. today! These two colleagues share this day so we'll have lots of food and fun today... Well, not me.. I've got work to do! Pitchers and catchers reported to spring training on Saturday... YAHOO! It's now 3 weeks for me before I report to spring training! And... How about those Missouri Tigers! What a treat to see the basketball team ranked in the TOP TEN once again, after too many years of rebuilding! WOW! Speaking of Mike Meyer, he will be Pfilling in on the Pfennig during the 3rd week of March, as both Chris and I will be on spring vacations with family... My little buddy Alex, is at home sick today, sure hope he keeps it to himself! Hope your Valentine's Day was grand... Time to go now... I hope your Tuesday is Terrific!

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

A Retail Sales Surprise!

Chuck Butler — Fri, 13 Feb 2009 15:13:25 GMT

In This Issue….

* 623K new unemployment claims filed...
* G-7 begins today...
* Dealing from a position of strength...
* Valentine's Day tomorrow!

And Now... Today's Pfennig!

A Retail Sales Surprise!

Good day... And a Happy Friday to one and all! Front and center this morning, a Continental regional plane crashed near the Buffalo airport overnight, and all 48 on the plane were killed, along with 1 person in a home. Not Happy news for a Friday morning, for sure... Our thoughts should be with the familes of these people today...

I want to say thank you to all who responded yesterday to me regarding my hissy fit I had yesterday morning regarding the minority objections to my opinions... The vote is in... It was a landslide in favor of me being me, and not what the few objectors want me to be. So, I will continue writing the Pfennig in the manner the majority expect... I don't want this to sound cold, but those that feel the need to send me nasty emails, could you please just unsubscribe instead?

OK... I had to get that off my chest! Yesterday, Retail Sales surprised quite a few on the upside, halting a multi-month slide on the negative side of Sales. Jen brought it to my attention, that this happens just about every year. The January Retail Sales are spurred by after Christmas sales, gift cards, and other "stuff"... So, let's not get all excited about this one month's data... Remember what I always say... "One swallow does not make a summer"

The Weekly Initial Jobless Claims didn't fail to disappoint us though... 623K new unemployment claims were filed last week, and the previous week's total of 626K was revised up to 631K... That's over 1.2 million unemployment claims filed in the past two weeks! UGH! But, as I said above, the dollar rallied on the day... To me, this data is more important than the trumped up .1% rise in Retail Sales, as these people are going to be unemployed, and what will that do to future Retail Sales? That's right... They circle the bowl...

Today, the data cupboard only yields one piece of data... The U. of Michigan Consumer Confidence Index, which is expected to remain very low... In fact, I'm surprised it remains as high (at 61) as it does!

Well... The G-7 meeting started this morning... The markets are holding their collective breath waiting to see what G-7 says... But why? This is nothing more than a boondoggle! And now it's even more so, as G-7's power, has been handed over to individual governments to deal with their problems... Bloomberg had this to say... "The shift in influence to the group, whose membership ranges from the U.S. to China to Saudi Arabia, reflects the fact that industrial nations lack the resources to fix the world’s economic woes alone. That curbs the G-7’s scope to deliver new initiatives this week, say economists and former officials."

Any way, the markets do pay attention, so I have to! They have plenty they could talk about... Dollar strength when it shouldn't be getting any love... The strong Japanese yen in the face of Japan's problems... And the rise in Gold...

I think Gold traders are running scared of what G-7 might say, and Gold has sold off for the first time this week, losing $8 this morning. As Arnold would say about these Gold traders... "what a bunch of weak men!" (Ok, you have to do it Arnold voice)

In October 2008, G-7 said they were concerned with the Japanese yen's strength... Well, actually it was the Japanese that were concerned... And until yesterday, yen had remained quite strong... But the close we got to the start of the G-7 meeting, yen began to weaken... I bet some yen traders got scared of what G-7 might say, and unloaded their positions ahead of the meeting... Scaredy cats!

OK, enough with the G-7, Schmee 7 today! The dollar held the hammer yesterday, and has received permission to continue holding it this morning as Eurozone economic data has really weighed heavily on the euro. Here's the skinny on the Eurozone economy as reported by the Wall Street Journal... "The euro-zone economy contracted by a record amount in the last three months of 2008 as industrial output was hit hard by the sharp slowdown in global demand. The decline was led by the biggest quarterly fall in German gross domestic product for more than two decades. Data from the European Union's Eurostat statistics agency showed euro-zone GDP contracted 1.5% on a quarter-to-quarter basis and was 1.2% weaker on an annual basis, the biggest falls by both measures on record."

I know that there are those people out there that are pointing a finger at European Central Bank (ECB) President, Trichet, and blaming him for this recession in the Eurozone, for it was Trichet who kept rates from falling as fast as they did in the U.S. Look, the Eurozone was going to have a recession any old way, whether Trichet cut rates to zero like his counter part Big Ben Bernanke, or not! To me, it was the better part of discretion than valor... He squashed inflation, which is the most important thing to the ECB, and he still has some rate cut arrows in his quiver to use, where Big Ben is out of rate cut arrows.

Now, I've read where some pundits believe that the euro will lag the U.S. in a recovery, as the U.S. cut rates faster than the ECB... Well, the U.S. isn't going to see a recovery as long as over 600K workers are filing unemployment claims each and every week! The banks in Europe are not in as good of shape as we were led to believe a few months ago... But, always, always, I tell you, be yourself, Help Mr. Wizard! No wait! That's not what I say... I always say that at least the ECB / Eurozone is dealing with their problems from a position of strength...

On this side of the "pond" I heard that the new administration was working on a new plan for mortgages... There are reports suggesting the Obama administration is hammering out a program to subsidize mortgages. In a major break from existing aid programs, the plan under consideration would seek to help homeowners before they fall into arrears on their loans.

That's nice... You know, years ago, when my beautiful bride and I didn't have two nickels to rub together, we paid our mortgage no matter what, and at no time, EVER, did I think someone, would bail me out! And I know I'm not unlike the majority of people in this country... So, you have to wonder what happened here? The Gov't is stepping in to "help" you... I've told you before that Ronald Regan used to say that the scariest thing you can hear is "Hello, I'm from the Government, and I'm here to help"

OK... The Canadian Trade Surplus is no more... Canada's Trade Balance turned negative last month... The Trade Deficit is small at this time, so nothing to get all up in arms about... We'll have to keep an eye (that's easy for me these days!), on Canada's Trade Balance to see if more harm is done here...

You know, I was talking to someone the other day, and don't recall who, but I was talking about how Norway has come Ollie, Ollie Oxen free on all this "bad bank", "large write downs" and bailout stuff... I always talk about how a large surplus allows a country to deal with problems in an orderly manner, and not have to be at the mercy of the foreigners that finance a country's debt... Norway has been the poster child for this... Canada comes in second... You just don't hear about Canadian Banks in trouble, which is pretty strange, considering their relationship to the U.S. market...

Coming in third is China... China with all their trillions of dollars sitting around losing their value, and set to lose their value even more in the future, looks to have possibly turned around their recession in a heartbeat... You may recall that China put into place a 4 Trillion renminbi Stimulus Package a few months ago... And when you deal from a position of strength, you can do these things quickly and with force. So, according to an economist at Merrill Lynch, "China looks set to be the first major economy to recover from the current global meltdown. China is the only economy in the world to see significant growth in credit to corporate and household sectors since September 2008, when the financial crisis worsened to a near collapse."

Australia is doing better all the time with regard to their problems, and I think once we get past the credit crisis in the U.S. and the inflation wolf returns, that Australia will be positioned to take off! Australia just approved a A$ 42 Billion Stimulus package of their own... Of course, the credit crisis in the U.S. isn't going to end next week, or next month, and maybe not for a few months...

I told one of the crowds in Orlando last week at the Money Show, that I have a track record of calling things that don't happen for 6-12 months... But "usually, the markets come around to seeing things the way I see them!"

Did you hear about this? Goldman Sachs held an emergency meeting of hedge fund executives...

Here's the skinny as reported on Bloomberg...

"By Dan Hart
Feb. 12 (Bloomberg) -- Goldman Sachs Group hosted an emergency meeting of hedge fund executives and financial executives shortly after U.S. Treasury Secretary Timothy Geithner’s presentation on Feb. 10, CNBC’s Charlie Gasparino reported.
Gasparino said the meeting was co-hosted by Goldman’s Gary Cohn and Jon Winkelreid and included Kenneth Griffin of Citadel Investment Group LLC. Griffin said that the mortgages underlying the so-called toxic assets held by banks and other institutions need to be dealt with, Gasparino said, citing unidentified people familiar with the meeting."

Hmmm... That's scary, eh? I'm sure that Goldman didn't have the Hedge Fund executives in for tea and scones! And... Any time the word "emergency" is used, a sense of urgency follows it...

Here's something to take us to the Big Finish... Not good news... But, at least these guys are beginning to see things "the way I seem them"! This was reported in the Wall Street Journal...

"Economists in the latest Wall Street Journal forecasting survey, while still mostly projecting growth in U.S. gross domestic product by the third quarter, largely agree that a second-half recovery is looking much less likely now than it did a few months ago. Recent data showing just how sharply growth in the U.S. and abroad has declined in the final months of 2008 have cast a deepening shadow over 2009."

Currencies today 2/13/09: A$ .6610, kiwi .5265, C$ .8105, euro 1.2875, sterling 1.4525, Swiss .8620, rand 9.9610, krone 6.8070, SEK 8.3675, forint 232, zloty 3.6170, koruna 22.27, yen 91.50, sing 1.5060, HKD 7.7525, INR 48.68, China 6.8335, pesos 14.41, BRL 2.2730, dollar index 85.94, Oil $33.96, Silver $13.40, and Gold... $938.80

That's it for today... When you travel as much as I do, or even like the Big Boss, Frank Trotter who travels 3 times what I travel, the news of a plane crash hits you a little harder... OK... Quite a few of you brought it to my attention yesterday that it was Lincoln's birthday... Well... I had mentioned that the day before, that Thursday would be his 200th birthday, didn't think I needed to say it again... Well... Tomorrow is Valentine's Day, are you ready? I stopped this morning and got heart doughnuts from Krispy Kreme for all the ladies in the office, they are on their respective desks, waiting for their arrival... See? I'm a real sweetheart, right? HAHAHAHAHAHAHAHA! My little buddy, Alex, was all dressed up with a tie on (I had to tie it for him of course!) last night, as he goes once a week to cotillion. We're trying to help society! Alex has two basketball games this weekend, so I have that going for me! He wears a plastic mask to protect his nose these days... Looks weird, but he gets to play, and that's all he cares about! Well, it's a three day weekend, as we all celebrate mattress sales, no wait! We celebrate President's Day... I sure hope your weekend is grand, and your Friday is fabulous!

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

Jobs Jamboree / Horror Show!

Chuck Butler — Mon, 09 Feb 2009 16:33:37 GMT

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

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

Get your copy today: http://www.amazon.com/dp/0470222778?tag=dailyreckonin-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=0470222778&adid=03WYRVDX49DN6K6GRQ4G

In This Issue..

* 598K jobs lost in January...
* Currencies rally with stocks...
* G-7 this weekend...
* More thoughts on Gold...

And Now... Today's Pfennig!

Jobs Jamboree / Horror Show!

Good day... And a Marvelous Monday to you! Well, Chris and I returned Saturday night and it was warmer in St. Louis than it was in Orlando Florida! Un-Be-Live-able! I know that it stayed warm there however, as opposed to here! The Money Show was good, not the best one or even close to the best one I've attended, but as I told Chris, I believe it was simply "a sign of the times"... Bad economic times that is!

OK... Let's get this ball rolling, eh? The currencies had a nice rally on Friday, as the Jobs Jamboree turned out to be a horror show... But I don't think it was the Jobs Jamboree horror show that pushed the euro and other currencies higher. I think it was the stock market rally. Recall, last week, when I told you that the stocks and currencies had been trading side by side, which wasn't something we normally see, as they have different pricing mechanisms, and a low correlation to each other. But they were trading in tandem, and that carried through on Friday...

So... The currencies, other than yen, rallied on Friday... Euro, Swiss, Norway, Aussie, kiwi, Brazil, they all had it going for them... And of course when stocks do well, the risk takers are back on the board, and that spells yen selling... It's one big circle folks...

Then someone has to ask why then would stocks rally when 598K jobs were lost in January? Ahhh, grasshopper, you'll want to sit down for this one... You see, the stock jockeys were all about the 598K jobs lost in January, because they were "sure" the lawmakers would get off their duffs and get to pushing the "new and improved" stimulus package through... And... The lawmakers rewarded them, announcing later Friday that they had reached an agreement on the package.

So... Let's skip back to Friday morning, and revisit the Jobs Jamboree Horror Show... Brought to you by the Bureau of Labor Statistics (BLS). The BLS printed one horrible Jobs number on Friday, thus showing that the U.S. continues to shed jobs in January posting jobs losses of 598K, and revising the previous month's number from -524K to -577K... And the unemployment rate jumped from 7.2% to 7.6%... Recall on Friday, I said that the report would be more disappointing than forecast and that the unemployment rate would jump to 7.5%... So, I was "dialed in" on that one, eh? That's too bad though, because no one, and I mean no one, wants to see this kind of blood in the streets. Of all the sectors that lost jobs (service, construction, etc.) one sector eked out a gain of +6,000 for the month... Yes, you got it! I'm talking about Government jobs!

This was the worst month of job losses since 1974! I was telling Chris at breakfast the other day, that I was working at Stifel Nicolaus in 1974 in the margin dept, and I just don't remember it being that bad... But, as a qualifier, I was still living at home with my mom and dad, and I wasn't married yet! Wait, that didn't sound right! Oh well, I think you know what I mean...

So... This has really gotten out of hand folks. I'm going to have to go back to the drawing board, and revise my time table for when the U.S. begins to dig itself out of this mess... Previously, I thought it would be this year, by the end of summer... But, as I said, this monthly bloodletting in jobs is making me re-think this... More later...

When the Jobs losses were announced the lawmakers got "busy" on their "new and improved" Stimulus Package. I see where they announced that they had (my words not theirs) cut some of the fat out of the package, and it would be around $780 Billion... Well... In my opinion, they need to go back to the cutting room and cut some more! That is... Unless this is all targeted for job creation... And then, I want to see a plan for how it will be paid back!

I checked the stock futures this morning to see if there will be follow through today, and it doesn't look like that will happen, as stock futures are pointing toward a soft open... The fact that the lawmakers didn't send the "new and Improved" Stimulus Package to the President to sign yet, has probably caused some consternation in the stock jockeys... Don't worry boys and girls in the stock jockey pits, the President can't wait to get his signature on this spending bill, no matter how much pork and craziness besides job creation is in it!

Well... The G-7 ministers will meet this coming weekend... I guess they told their sweethearts that they'll make it up having missed Valentine's Day! I was reading a story at home yesterday, that discussed what the G-7 ministers might be talking about this weekend... The writer believed that foreign exchange would be high on the G-7 agenda... The dollar's rise in the past 6 months, the U.S.'s position on China's renminbi, the pound sterling's fall from grace, and Japanese yen strength... Everyone will have their own agenda on these items, so it ought to make for a lively meeting, instead of the boring boondoggles G-7 normally holds...

But then, I wouldn't put too much stock into anything you think might come out of G-7, for they have been known to disappoint!

My friend, and wonderful writer, David Galland, wrote a great weekly letter "The Room" this past week... And since I was getting all riled up about the "Buy American" and protectionist stuff in the "new and Improved" Stimulus Package, I thought his letter hit a home run! Here are a few snippets. (David's letter, is a subscriber letter, so if you want to know more about this great letter, click here: www.caseyresearch.com )

"If you have read this weekly missive for any length of time, it might surprise you to learn that even my skepticism about the intelligence of the political class has limits.

That's because even I can get to the point where, wondering at how the politicians will react to this or that challenge, say to myself, "Nah, they can't be that stupid! They wouldn't dream of doing something so obviously misguided and potentially disastrous!"

But invariably, as they have done again this week, they prove me wrong.

I am referring, of course, to the pending passage of Smoot-Hawley II. otherwise known as the "Buy American" provision interjected by members of the Senate into the new stimulus bill.

Back in 1930, when Smoot-Hawley was passed, it wasn't as if the potential blow-back effect of the bill weren't understood: over 1,000 economists signed a petition begging Congress not to pass the bill that layered tariffs on over 20,000 foreign-produced goods.

But, following tradition, they passed it anyway.

The record on the consequences of that action is unequivocal: between 1929 and 1934 - when trade was again liberalized - world trade declined by 66%.

I've got a better idea, though you might disagree. Just call the whole stimulus plan off; regardless of what it allocates spending to is made in America or by a foreign trading partner, we can't afford it."

David is a great writer, and you should subscribe to his letter, as he talks about all things related to the economy, and resources...

OK... This is getting a bit long today, but I still have some thoughts on Gold to share with you this morning. As I explained about a month ago, Gold continues to probe higher, and then sell off, but each time it sells off the low is higher than the previous sell off low. This trading pattern has long been know as an indication that an asset was forming a strong base and preparing to move higher... Recall, when I told you about this a month ago, Gold was about $860 or so, and I said then that I thought it looked as though Gold would move back to $900, based on this trading pattern.

Well, the pattern still exists, as Gold sold off of last week's high of $927, and is just above $900 this morning... The sell off low is higher than the previous sell off low... I think you have to credit this strong performance in Gold to a change in investors' feelings about hard assets VS fiat currencies, and a hedge VS the eventual deep slide in the dollar...

Currencies today 2/9/09: A$ .6745, kiwi .5340, C$ .8150, euro 1.2960, sterling 1.49, Swiss .8610, rand 9.6275, krone 6.6930, SEK 8.0650, forint 223.40, zloty 3.4970, koruna 21.4610, yen 91.60, sing 1.4950, HKD 7.7535, INR 48.57, China 6.8335, pesos 14.08, BRL 2.2450, dollar index 85.15, Oil $40.37, Silver $13.03, and Gold... $902.14

That's it for today... This coming Saturday is Valentine's Day... You have been alerted! My granddaughter, Delaney Grace, (and her parents of course), stopped by to see me yesterday, after their trip to the zoo... She is beginning to really say words, and react to things you say to her, it is amazing to watch, and she's so darn cute! Well, the cards were flowing to Chris on the return flight home, and he beat me worse than I beat him on the way down! (he bet me that I wouldn't put that in the Pfennig! He lost the bet!) After 4 hours of playing gin, the score difference was 100 points... My vision in my left eye still hasn't improved... Patience, they tell me... Patience... OK, Mike's here, I'm running late! Time to go, hit send, and all those other sayings... I hope your Monday is Marvelous!

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

Talking Stimulus Deux

Chuck Butler — Wed, 04 Feb 2009 15:10:29 GMT

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In This Issue..

* Pending Home Sales surprise!
* Eurozone Retail Sales slump!
* Tax cuts don't create jobs...
* Failure to follow through for the A$

And Now... Today's Pfennig!

Talking Stimulus Deux

Good day... And a Wonderful Wednesday to you! Well... I'm here! The Orlando Money Show... And guess what? Looks like I brought that artic cold front that had hit St. Louis, all the way down to Orlando! It's cold here! UGH! Well, not "cold" like at home, but "cold" for here!

OK... Front and center this morning, we had a stock rally yesterday after the Pending Home Sales data printed a surprise number. And since stocks and currencies have been trading together the past few days, (we talked at length about this yesterday) that meant a currency rally as well! But! Neither stocks or currencies could break on through to the other side, break on through, yeah! So... That left them vulnerable to profit taking, and that's exactly what we've seen with the currencies overnight. We'll have to wait a couple of hours to see how stocks open up...

So... I guess a review of the Pending Home Sales data is in order, eh? U.S. December pending home sales rose 6.3%, which as far better than the forecast (0%)! Let's look further into the data release to get an overall feeling of what's up here...

According to the report, Pending Home Sales are now up 2.1% year-on-year, but down by a cumulative 31% since the peak in April 2005. Hmmm... Does this mean we've turned the corner with housing? Well... I'm from Missouri, and I'm going to have to be shown more than just this one report. Pending Home Sales has been barely keeping its head above water for 1 1/2 years now... So, I'll hold out judgment until I see some follow up data... But... Maybe, just maybe, you never know... This could be good...

Another item weighing on the euro this morning is the printing of Eurozone Retail Sales for December, which fell more than forecast. Sales in the Eurozone fell -1.6% in December (-1.4% forecast), and shows that Consumers are saving... This fall in domestic demand, has helped with the inflation front in the Eurozone. But that's about the only good thing going on in the Eurozone's economy. Consumer Confidence, Investor Confidence, and high unemployment are making things difficult for the euro to rise.

But... It's not that it can't rise given this scenario. It happened back about 5 years ago, when Germany (the Eurozone's largest economy and key to overall Eurozone health) was trying to kick start their economy, and things look very similar to this overall outlook for the economy... And... We had the euro moving higher VS the dollar.

It was simply a case of traders and market participants focusing on fundamentals, and seeing the debt creation in the U.S. the dollar was sold... And... As luck would have it, the euro was the offset to the dollar, and voila... Dollar sold, means euro rally!

I can't stress enough about the need for the traders and market participants to once again focus on the fundamentals of debt creation, and money supply... Unfortunately, this isn't the case and hasn't been for some months now, as the Credit Crisis has everyone's focus.

Well, there's some news this morning that's interesting... Looks like there's a chance that G-7 nations might be laying the lumber to China... A former Japanese Finance Ministry official said that the "Group of Seven nations may reinstate their call for China to increase the flexibility of its currency." G-7 meets next week in Rome.

So... Let's take a look at this lineup... First, "the cheater" Geithner, called out China... The IMF's Strauss-Kahn, said the renminbi remained "undervalued", and now, supposedly G-7 will take their best shot at China and the renminbi...

I have to repeat something I've said for years now... They are wasting their time! China will do what it wants to do, in the best interest of their economy... Now, having said that, I too believe the renminbi is undervalued, but me saying that isn't the same as U.S. and IMF officials! I'm just a little old Pfennig writer from South St. Louis!

One of my fave countries, for their strong fiscal position, Norway, will see their Central Bank (Norges Bank) cut interest rates this morning... I'm looking for a 50 BPS rate cut to an internal rate of 2.5%...

So... When I turned on my laptop this morning, the euro was trading at 1.2955... The Retail Sales data is really pushing the euro further down, as it is now trading 1.2860!

Someone took exception with my problems with the new and improved Stimulus Package, saying I wasn't giving the new President a chance... Hmmm... I was simply talking about how much "pork" there was in what to me is simply another "Spending Package"... For instance... There are tax cuts in the package... That's fine, probably worthy... But... Do tax cuts put cash in Joe six-pack's pocket today? Do they create jobs? And when do these get to the tax payer? Probably not for a year! Again... Worthy... But, I'm not seeing what benefit it does for the economy NOW!

The "Risk Takers" saw a reason to crawl behind the rock even further this morning, as Kazakhstan devalued their currency by 18% overnight. Now, this is not a big deal in the overall scheme of currencies, as Kazakhstan's currency wasn't even liquid... But it did put the kyboshes on the other "Emerging Markets" currencies and any rally attempts they might have up their sleeves.

With no Risk Takers, the Japanese yen is back on the rally tracks... I saw a report yesterday, before I left, that one Japanese bank is calling for yen to reach a level of 80 VS the dollar, according to their charts. That's pretty aggressive, as most, including me, believe that at 85, the Bank of Japan comes in with both barrels smoking, intervening, and selling yen to keep it from getting stronger... I picked 85, because that's where the line in the sand was drawn back in the late 90's when yen was this strong...

We get the ADP Jobs data today... Recall that last month, I held out hope that the ADP report would be a good indicator to the Jobs Jamboree, as ADP had changed their methodology to be closer to the Bureau of Labor Statistics (BLS), without the Birth / Death Model! But that didn't hold true the first month... We'll have to wait-n-see if this month's data does a better job of indicating what to expect in the Jobs Jamboree...

Yesterday, I told you about the rate cut and stimulus announcement in Australia... And the Aussie dollar (A$) really took off with the news... But as I said yesterday, I doubted that the rally would last long... And so, it did not... The A$ got as high as .6450 before I left yesterday, and was on an upward move... But this morning, it's back to below 64-cents...

And then finally... Here's what the Wall Street Journal had to say about the Vehicle Sales data that printed yesterday... "Auto makers posted sharply lower U.S. sales for January, putting more pressure on struggling Detroit companies. GM's light-vehicle sales dropped 49%, while Ford was down 40%. Toyota fared slightly better, with light-vehicle sales down 32%."

That's a ton of pressure for the automakers, I just don't see how they're going to get past this... GM, Chrysler, and Ford...

Gold is on the rise again... As it's stay below $900 didn't last long!

Currencies today 2/4/09: A$ .64, kiwi .5055, C$ .8075, euro 1.2865, sterling 1.4380, Swiss .8625, rand 10.10, krone 6.9770, SEK 8.3245, forint 234.45, zloty 3.3620, koruna 22.20, yen 89, sing 1.5090, HKD 7.7540, INR 48.82, China 6.8340, pesos 14.57, BRL 2.3150, dollar index 85.73, Oil $41.44, Silver $12.37, and Gold... $900

That's it for today... This sure takes much longer to get done on the road than it does back home in the saddle! The trip down here was uneventful, and much better than last year, when I had that guy drop his luggage on my head, and then find out we didn't have Hotel reservations! Everything went smoothly... Chris and I played Gin on the plane, like we always do. They are marathon games that usually go back and forth, but yesterday, the cards were flowing my way! My little buddy, Alex, heads back to school today. Let's hope no one takes a swipe at his nose! I have my first talk this morning... I haven't seen the Big Boss, Frank Trotter, yet, and we have to get together before that talk... So, I guess I had better get this sent, and go looking for him! I hope you have a Wonderful Wednesday!

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

The Trading Theme Remains In Place...

Chuck Butler — Mon, 27 Oct 2008 14:50:18 GMT

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In This Issue..

* Heeee's Baaaaaacccckkkkk...

* Carry Trade Depth...

* RBA intervenes...

* Oil weighs on the loonie...

And Now... Today's Pfennig!

The Trading Theme Remains In Place...

Good day... And a Marvelous Monday to you! It's been a long time, now I'm coming back home, I've been away now, oh how, I've been alone... Two weeks gone by the wayside! This Friday is Halloween! WOW! Where did the month go? Airports, hotels, and taxi cabs, that's where! But, I did it... The Currency Tour is finished... Time well spent I might add, but very taxing on me... Of course, my beautiful bride tells me if I were in better shape, it wouldn't be so taxing!

Well... As I look at the currency screens this morning, I see that nothing has changed... The Trading theme I left you with is still in place, as the more deeper, darker, dangerous outlook for the U.S. becomes, the more the dollar gets bought... Things look better, and the dollar will get sold... The dollar has become the new Japanese yen!

So, keeping the trading theme in mind... Stocks around the world are getting sold in the overnight markets, and that has the U.S. stock market on the teeter totter again this morning... Things are looking darker, LIBOR is inching back up, and the Carry Trade gets unwound... That means the dollar is rallying once again, and the Japanese yen is too.

G-7 made an unscheduled statement after a request from Japan's Finance Minister, regarding the yen... Apparently, the strength of the yen is bothering Japanese officials. G-7 tried to stem the move higher by yen, but the strength of unwinding Carry Trades is just too much for such a watered down communiqué' that simply said that G-7 was concerned with the "excessive volatility" ...

So, one has to sit down and attempt to figure out the depth of the Carry Trades... In other words, How many more of those buggers are there?! Well... I asked around on Friday (yes, I was at home, but still working, with two interviews, one radio and one Wall Street Journal, a long conference call, and this work on the Carry Trade!) and found that most traders that follow Japan seem to believe that this unwinding has much more to go, which means the yen should have more to go, right?

Well... Who knows these days? But in keeping with the trading theme, I would say that one should look to additional yen strength if Carry Trades have more unwinding to go. You have to think further into this too... It's not just plain old vanilla Carry Trades unwinding, it's years and years of Uridashi Bonds getting sold. For the new kids to class... The Uridashi Bonds are Japanese Corp bonds that are issued in New Zealand dollars, which gives them a huge yield advantage over Japanese denominated bonds... And Uridashi Bonds have been issued for years, which was a huge reason for the gains in New Zealand dollars. (this was chronicled in this letter several times over the years, going back to the 90's!)

There was a report by the Minister of Finance in Japan last week that showed the Japanese investors was unloading the Uridashi Bonds for the first time in years! And all this risk in the markets that has the Carry Trades unwinding is causing Japanese investors to stop their constant looking elsewhere but home to invest... So, no selling of yen, etc. Tutor Turtle learned there's no place like home... Dorothy learned there was no place like home... And Scarlet O'Hara did too! So, it's about time the Japanese did! So... Unless the Bank of Japan (BOJ) is willing to intervene, and trust me it's not beyond them to do so, and you should also believe me that they have a war chest the size of Rhode Island of yen reserves to sell, then we should continue to see yen strength... But there's always that BOJ with their war chest of yen reserves hanging out that should put a governor on yen.... In other words... Yen can gain, but if the gain becomes too excessive, we could see the BOJ intervene...

With the Uridashi Bonds getting sold... The weakness in New Zealand dollars is magnified... I know that I didn't see the current Trading Theme coming, causing weakness in euros, etc. but I know that I must have sounded like the Boy Who Cried Wolf over the years, warning about an unwinding of Carry Trades and what it might do to the high yielders...

Just what should one do here with the U.S. economy sinking further and further into the abyss, causing dollar strength... Hold tight and believe that the fundamentals will come back to the front of the class on the other side of all this bad stuff going on in the markets? Sell into this weakness? I heard from Jen last week that she had a record number of CD breaks for one day... Apparently, selling into the weakness was in vogue that day! I have to say that selling now is a lot like try to catch a falling knife... But... I truly understand, as this has gotten completely out of hand. Me? I'm a fundamentals guy, with my investments too... So, I'll hold, and wait to see what happens on the other side of all this... Take me to the other side... Please, and soon!

I don't wish for us to get to the other side of all this just because of the currencies... I want to see the U.S. get through this credit crunch before we begin to spiral down into a deep dark recession, that could become a depression... I don't want to see that... But, as you all know, these are the things I've written about that could happen should we not correct the course we were, as a country, headed down.

And it all starts with the deficits... But I'm not going to go through all of the history and what's brought us to this edge of the cliff... Someone sent me a note and told me that I wasn't worth a damn because all I did was point out things that didn't work or wouldn't work, and not submit a solution... Well... I take exception to that, because I have submitted solutions, but does any one in the Government listen to my solutions? Crazy... Absolutely Crazy!

OK... Crude Oil continues to weigh heavily on the Canadian dollar / loonie... I have to admit that I did not see Oil prices collapsing like they have done... Weakening from $145, yes... Weakening to the current level of $62.66? Never! Shoot Rudy, we didn't even see Oil prices rise after our friends (NOT!) over at OPEC announced a daily production cut of 1.5 Million barrels of Oil! Now, that makes no sense whatsoever! But that's the markets these days... Gas for our cars is now an average of less than $2.80 per gallon! WOW! I have to say that I love the sound of that! But... As I said above, oil's plunge has been a shot to the heart, and Oil's to blame for the loonie...

I see where it has been reported that the Reserve Bank of Australia (RBA) intervened on Friday, buying A$'s to stem the slide in the currency... Of course had they done this when it was in the 90-cent range it might have stopped some of the selling then... I would have to put this down as too little, too late... But they did buy A$'s on Friday, and that did keep the A$ above 60-cents in the overnight markets.

Gold staged a nice rally on Friday, only to see that fade into selling this morning... No adding on to the one day rally for Gold! I got asked at every stop on the Currency Tour about why Gold wasn't higher in price? Well... 2 things... 1. Gold has gotten caught up in the "sell everything to come back to dollars" mentality that's going on in the markets these days... And 2. there's an invisible hand manipulating this metal... But then, as I got home and began to think about that, I have to say it's 90% #1... And just a small piece of #2... You know.... That with the dollar's rally and the currencies' decline, that Gold is really high when priced in Aussie, kiwi, euros, etc. Hmmm...

The Emerging markets have seen all this melting down in the currencies and have not been able to avoid melting themselves. In fact, the Emerging Markets are usually at the head of the class when it comes to selling. I tell you this, because we could very well be seeing something in Hungary that would remind many of what happened to the British pound sterling in 1992. And once again, I'll mention something that I said to everyone a good time ago, that has come to fruition... It just took a couple of years, and that is, that once the Euro Wanna Be countries of Hungary, Poland and Czech Republic got closer to the ERM (exchange rate mechanism), the precursor to converting to the euro, they would face speculation... Well... Speculators have gone after Hungarian forints, and smell blood...

And finally... The Wall Street Journal reported on Friday that: "The Treasury Department has decided to let banks individually announce that the government will invest in each firm, scrapping an earlier plan to release the names of multiple banks receiving federal money all at once. The decision came after concerns that banks left off any group list would appear too weak for government assistance, spooking investors and depositors and potentially making troubled banks' situations more dire."

And... The Treasury's funds that are being placed into the Big Banks, are already being used to purchase the smaller banks... PNC announced that they would purchase National City Bank.

OH... And one more thing... U.S. Existing Home Sales rose in September... Is that a sign of good things to come? Unfortunately, remember that I previously researched that these sales include foreclosures... And then there also this... The median home price has fallen 9% from a year ago, and is now the lowest prices since April 2004...

Currencies today 10/27/08: A$ .6075, kiwi .5415, C$ .7785, euro 1.2465, sterling 1.5444, Swiss .8650, ISK (no quote), rand 11.12, krone 7.0825, SEK 8.0920, forint 217.68, zloty 3.0620, koruna 19.6850, yen 92.80, baht 34.75, sing 1.51, HKD 7.7505, INR 49.87, China 6.8520, pesos 13.33, BRL 2.2975, dollar index 87.28, Oil $62.66, Silver $9.03, and Gold... $729.45

That's it for today... Good to be back home... It was Homecoming weekend at Mizzou (U of Missouri) this past weekend, so both my older kids were in Columbia for that celebration. My little buddy, Alex had a good football game Saturday, and the Tigers got back on the winning side of the ledger with a win VS Colorado... It was great to see the people in Jacksonville again, I had not seen many of them since I had gotten sick. Well... I have a stack of "stuff" on my desk this morning, and we have people coming in to give us media training... Thanks to Jen for doing a stand up job trading and managing risk these past two weeks... She'll have to deal with it two more days, as I will be busy with other things this morning... It's a Marvelous Monday folks... Hope yours is Marvelous!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

It Was Central Bank Intervention!

Chuck Butler — Thu, 28 Aug 2008 14:13:04 GMT

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In This Issue..

* Currencies add to their gains...

* Industrial Production soars!

* 2nd QTR GDP to be a one and done!

* The Aden Sisters on Gold!

And Now... Today's Pfennig!

It Was Central Bank Intervention!

Good day... And a Tub Thumpin' Thursday to you! While I'm not out of the woods, I'm feeling more human this morning, and that's a good thing, considering where I've been earlier this week! So, I'm going to go out on a limb, and proclaim this will be a Tub Thumpin' Thursday! I've got my banana, and bottle of Gatorade at my side, so.... Let's get to the Pfennig!

Front and Center this morning I have to talk about the blip that we're going to see that happened in the 2nd QTR due to the stimulus checks. It all goes back to the stimulus checks and the first sign of this came (besides Retail Sales) yesterday in the form of Industrial Production. Remember yesterday when I told you that Industrial Production is a second tier piece of data that gets ignored by the markets, but I think it's important so I talk about it? Well... Just like last week, when I described the bratty spoiled child throwing a tantrum on the floor of the grocery store as being something you can't avoid paying attention to... The growth in Industrial Production was the same...

Industrial Production for July came in strong, and rose 1.3% in the month and compared to expectations of a no change. The June increase was revised up to 1.3% from an initially estimated gain of 0.8%. And... The good news about this data is that the growth was led by non-defense spending! WOW! When was the last time that happened? Anyway.... The stimulus checks have their fingerprints all over this report...

And so too will they have their fingerprints all over the 2nd QTR print of GDP today. I told you Monday that to expect a blip up in GDP, which will stir the interest rate hike pot once again, and probably give the dollar some love. One thing to think about here, because the dolts in the media won't even think about it, they'll just drool all over the size of the GDP growth, is that I expect exports to have contributed to the 2nd QTR GDP by a sizeable margin, for what was happening to the dollar in the 2nd QTR? It was getting sold like funnel cakes at a State Fair, and getting weaker, and weaker, which just made exports look cheaper and cheaper, thus giving them a huge boost.

But what's happened since the end of the 2nd QTR? The dollar has rallied, so don't look for that boost to GDP in the 3rd QTR... And don't look for the boost to GDP in the 3rd QTR from the stimulus checks... Those have already been spent! So... The 2nd QTR is going to end up being a blip on the recession chart when the historians look back on this period of time. But... That means, dollar strength, folks... Because, even though the markets normally are "forward looking" they will get so caught up in this 2nd QTR GDP growth that they will lose their focus.

OK... When the dollar made huge strides at the end of July and beginning of August, my colleague, and long time friend, Chris Gaffney, Pfilled in for me with the Pfennig, and wrote that he believed the dollar's reversal to be Central Bank Intervention... We received a few emails from people asking us to follow up on that thought, but we couldn't... Until now!

The Bloomie is reporting this morning that "finance officials form the U.S., Japan and Europe, in mid-march drew up plans to strengthen the dollar following troubles at Bear Stearns." The story which originally appeared in Nikkei English News went on to report that: "the intervention designed by the U.S. Treasury Dept. Japan's Finance Ministry and the European Central Bank, called for the central banks to purchase dollars and sell euros and yen, with Japan providing the yen needed for the currency swap if the greenback's value dropped significantly.

The three groups, which considered making an emergency statement through G-7, did not stipulate a specific exchange rate for the potential intervention, nor did they detail the amount of money to be used.

So... Now we know! There was no way the dollar turned on a dime like that without something like this happening... The fundamentals are so anti-dollar strength, and yet the dollar was gaining strength... Well, we know that the Bank of Japan has a treasure chest of yen that they have collected over the years... And they have an even bigger treasure chest of dollars (most of it held in dollar denominated Treasuries), but now they have even more dollars! I bet they are just happy as pigs in slop to own all these dollars!

OK... What's going on today with the currencies? Oh! That is, what this is all about, eh? The currencies, led by the euro, have rebounded nicely the past two days, with only a brief sell off yesterday morning after the Industrial Production number printed. I think the markets got that out of the system and went back to the speech by ECB member, Weber, yesterday. Recall, that Weber said that there was "no scope for interest rate cuts"... Keeping that in mind, the distinct interest rate differential between the euro and the dollar came back into play, and thus a euro rally began, and continued overnight and through the early part of the European session.

You know... There have been 3 currencies that have done quite well holding up and in a couple of cases have actually gained VS the dollar, during this dollar strength... The Mexican peso, the Canadian dollar / loonie, and the Brazilian real... The real has lost ground, but not the degree of the losses in the South Pacific and Europe. The Loonie is the one that makes me scratch my balding head. But then, as I stated last week, it looks like the Bank of Canada is finished with rate cuts, and the recent data there certainly points to a potential rate hike...

During the last strong dollar trend, the Mexican pesos was one of the best performing currencies, but remember... At that time the peso enjoyed interest rates above 10%! While interest rates are grinding higher in Mexico, they still have a ways to go to reach that lofty rate again. I've long said that the peso needed a "risk premium" to attract investment, given their sketchy history with foreign investments in their country. When the "risk premium" went away, as Mexico cut rates down to 5%, the attraction went away... But they are rising again, up to 8% internally, once you can get something higher than that on a retail basis, then you'll be talking about something... Not until then though, not in my opinion!

Gold enjoyed a good day yesterday gaining about $8... And Oil is gaining in price once again, trading at $119.00 this morning... My good friends, the Aden Sisters (Pam and Mary Anne) sent out their weekly update to their readers, and since Pam gave me the green light to put their stuff in my Pfennig, I'm going to grab a piece on Gold that was in their latest update... So, with no further adieu, here are the Aden Sisters!

"As each day passes, the markets continue to consolidate and it looks like an intermediate bottom is forming in gold and silver, as well as their shares, the base metals and the euro.

Gold is at an extreme. Since reaching a low on August 15, it's bounced back above its 65 week moving average and gold (basis December) is now firm above it at $824. Once gold rises and stays above $845, the D low will be over and an A rise will begin. Keep in mind, A rises tend to be moderate. Gold, for example, could have a good sized rise from here but not necessarily surpass the July 15 high near $989.

So... If they're right, and I see no reason to believe otherwise, Gold has the potential to get back on the rally tracks... And if that happens, that means the dollar will be getting weaker... It's one great big circle folks... Which reminds me of Billy Preston's Will it go round in circles... Will it fly high like a bird up in the sky...

A reader sent me a note about a new "risk event" and that is the proposed bail out of the Big Three automakers... Geez Louise, let's hope that's not in the plans... 2008, is going to be known as the "year of the bail out"... That is of course unless this all continues to go sour, and it carries over into 2009, by then the bail outs could be coming fast and furious!

So, it's Thursday, which means we will see the Weekly Initial Jobless Claims today, which continue to be above 400K each week. We'll also see the aforementioned 2nd QTR GDP (first print). That's it! Those two pieces of data. But, as I said, I fully expect the GDP report to prop up the dollar today... Do you smell what I'm cooking? A Potential buying opportunity... I'll have that, along with the lyonaise potatoes, some broccoli and some fresh berries for dessert!

Currencies today 8/28/08: A$ .8665, kiwi .7045, C$ .9565, euro 1.4775, sterling 1.8360, Swiss .9150, ISK 82.45, rand 7.7160, krone 5.3650, SEK 6.3880, forint 161.08, zloty 2.2625, koruna 16.69, yen 109.30, baht 34.08, sing 1.4150, HKD 7.8070, INR 43.77, China 6.8285, pesos 10.14, BRL 1.6215, dollar index 76.79, Oil $119, Silver $13.80, and Gold... $838.40

That's it for today... A great win for my beloved Cardinals last night... Maybe the Brewers and all their macho chest pounding woke up a sleeping giant! I'm old school with baseball, and I don't like staring at home runs, and I don't like fraternizing players, and I really don't like showing up the other team... Like my old coach used to say... "Act like you've been there before", and "stop walking around like a 20-game winner, you haven't won anything yet!" OK, so the Brewers had our number this year and beat us like a rented mule, that's no reason to show up the Cardinals. I'm being visited by one of my fave legal beagles today... Alicia will be here to slap my wrists, I'm sure... But then, if I didn't get my wrists slapped I wouldn't be pushing the envelope, right? And if I wasn't pushing the envelope with what I say, who would want to read this stuff? Anyway, that's what I tell her, sure hope she keeps buying it! HA! (she reads this each day, so I'm just having some fun here)... Well, my Gatorade is almost gone, so it must be time to hit the send button! I hope your Thursday is Tub Thumpin'!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

2005 Revisited?

Chuck Butler — Mon, 12 May 2008 13:11:00 GMT

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

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In This Issue....

* Buying dollars...
* Trade Deficit narrows...
* Risk creeps back into stocks...
* Recession explanation...

And Now... Today's Pfennig!

2005 Revisited?

Good day... And a Marvelous Monday to you! I hope all you mothers and mothers to be enjoyed a wonderful Mother's Day! It was a very ugly weather day here in St. Louis, so the outside activities had to be moved inside... UGH!

I'm going to come front and center with something this morning that will probably scare a lot of euro holders... That's not my mission with this talk... But it's something I have to talk about.

The Futures Traders are beginning to go long the dollar again... We haven't seen this since 2005... But, here it is, staring us in the face... The question from me would be simply... What is driving them to go long the dollar?

Ever since the Bail out of Bear Stearns, the markets have looked at the awful U.S. fundamentals in a new light, and clearly just don't care about what's ailing the U.S. economy any longer. They believe they have seen the bottom... (I wonder if they've seen the stock market sell off late last week?)... So, here we are, circa January 2005... When the sentiment toward the dollar changed and the dollar gained back a chunk of ground until late that year.

This all comes back to the Bear Stearns bailout... And now what the markets believe is a sign by the Fed that rate cuts are over... The markets believe that since the Fed is no longer cutting rates, that they're sounding the "all clear horn"... They also believe that the European Central Bank (ECB) will begin to cut rates in September of this year... So... The futures traders have pinned their colors to the dollar's mast.

You may recall about a month ago, I said how I agreed with my chartist friend that pointed out a dollar rally on his charts... He also said that the long term trend would remain in place. So... There you have it...

Now some people seem to believe that this has all taken place with the G-7 meeting, in which you may recall they uttered some words about the dollar... I won't say that G-7 hasn't had anything to do with this dollar rally, but I wouldn't go as far as to say it is the end all of the rally...

So... If you're in currencies to diversify and hedge your portfolio, then this might be somewhat trying times... If you're simply in currencies to jump on the weak dollar bandwagon, then this is certainly a tough row to hoe for you...

But it is what it is... We have to deal with what I used to call "sex-lies and videotape" when discussing the lies and book cooking that goes on in the U.S. We have to deal with markets that change their views on a dime... And we have to deal with something that's trying to fundamentals believers like me... The fundamentals all point to a weak dollar... And yet... We see a dollar rally...

We can only hope that this change in view by the markets is something that burns out like the 2005 rally, which had props to help the dollar along... There are no props this time, at least none that I can see, so... Who knows how long this will go on... But, I felt that it was important to tell you what I'm seeing and hearing these days.

And before we get our pants all bunched up, we need to keep in mind what 40 strategists recently polled by Bloomberg had to say, and that is... That the dollar will strengthen to 1.50 by year end...

Folks... It's trading at 1.5480... That's not a huge move... Obviously, things could get out of hand... But if all we're talking about is to 1.50... That's just about what I kept telling you all might happen back at the beginning of the year, when the euro was 1.45 and I said it could go to 1.40, before moving higher again... So, I'm off by 10 cents!

Did you all see the story in the NY Times Magazine in Sunday's edition? I appreciate the writer, Rob Walker, spending time talking to me and printing some of what I had to say...

OK... This week we'll see data from the U.S. that will remind us of the awful fundamentals in the U.S.... The data includes April Retail Sales... A quick check at the Butler Household Index (BHI) says that Retail Sales will print soft... On Thursday, we'll see the TIC's data (net foreign purchases), Industrial Production, Capacity Utilization, and the Philly Fed Survey (manufacturing). We end the week with Housing Starts, and Consumer Sentiment...

There's not one piece of data this week that will print as a strong fundamental for the dollar... The Trade Deficit on Friday came in at a much smaller number than forecast... The Trade Deficit "narrowed" from $62.3 Billion to $58.2 Billion in March... Now... Isn't that a "good thing"? How did we do this? Ahhh grasshopper, the U.S. consumer is spent... But beyond that, exports were off a bit, but after posting 12 straight monthly gains... How did that happen? A WEAK DOLLAR!

And what will happen to this Deficit if the dollar rallies? It will get worse again! But hey! Don't let that bit of information get in the way of a dollar rally!

We have two non-voting Fed Heads speaking today... Evans and Lockhart... Evans will speak about the economic outlook, which ought to be interesting... You never know what these Fed Heads will say, and what their hidden agenda is...

On Friday, I spoke to you about the HUGE loss AIG printed... Well, that news sent stocks down... And also put "risk" back into the stock market... Just that little bit of risk back in the stock market, helped Japanese yen to its best trading day in weeks...

I've explained this relationship so many times, I could do it in my sleep... But for the new readers, let me explain... Japanese yen is a low yielding currency (along with Swiss francs), and in a "Carry Trade" the low yielding currencies get sold short (because the borrowing costs are so low), and the proceeds are used to buy higher yielding assets... For a while it was high yielding currencies, but most recently U.S. stocks were bought with Carry Trade funds...

The Carry Trade is considered a "risky trade"... So whenever "risk" creeps into the markets, the Carry Trade is unwound, which means one asset is sold, and the low yielding currency that was sold short, gets bought to cover the short, thus "unwinding" the trade.

I'm a believer, and I wouldn't leave her if I tried.... No Wait! No monkeying around here! (get it?) But I believe that we'll see more "risk events" this year, and that Bear Stearns wasn't the only one... That would be good for Japanese yen and Swiss francs... And not so good for the markets...

So... Have you received your $600 check yet? Of course there are millions that won't get a check (I for one!), but there's some bad news for the Gov't that thinks these checks will stimulate the economy... In a recent survey by Bloomberg, the tax rebates are not expected to prevent the U.S. economy from stagnating in the 2nd QTR.

Many of you know that I went on record saying that we were in a recession two months ago... Here's some interesting tidbits regarding a recession that was sent to me by a trader friend at RBC...

"The "R" word has been increasingly suggested as an appropriate characterization of the current situation. Some argue that without two consecutive quarters of negative GDP growth there simply cannot be a recession, while others castigate policymakers who demur from using the term as being dishonest. As is usual, the truth lies somewhere between these polar positions. As to the two consecutive quarters of negative GDP growth requirement, it simply does not exist. Perhaps the reason for this "urban legend" is that recessions generally involve two negative quarters of growth, but note that while the 2001 recession lasted from Mar – Sep'01, there were not two consecutive quarters of decline (GDP fell 0.5% in Q1, rose 1.2% in Q2, and then fell 1.4% in Q3). While the National Bureau of Economic Research does consider GDP as a comprehensive measure of activity, it also looks at a variety of other indicators, with the major ones being real personal income less transfer payments, employment, industrial production, and volume of sale of the manufacturing and wholesale-retail sectors. As to policymakers being disingenuous, calling a recession is very simply not their call; the NBER is tasked with dating recessions and can do so only after establishing that a trough in diminished economic activity has been established. Even assuming the economy has entered a recession, data only exists to suggest a cyclical top, and so publicly declaring a recession would be premature."

OK... So maybe I was premature with my call... But I believe that the history books will show that I was bang on!

Currencies today 5/12/08: A$ .9445, kiwi .7690, C$ .9955, euro 1.5450, sterling 1.9580, Swiss .9530, ISK 79.62, rand 7.6666, krone 5.0720, SEK 6.0060, forint 162.35, zloty 2.1970, koruna 16.1575, yen 104, baht 32.50, sing 1.37, HKD 7.7955, INR 42, China 6.9880, pesos 10.5450, BRL 1.6850, dollar index 73.20, Oil $125.44, Silver $16.82, and Gold... $884.10

That's it for today... I'm writing from home this morning, as I did a real bonehead thing on Saturday... I was out driving around running errands and forgot to pick up my cleaning! So... This morning, when the cleaners opens, I get it, pack it, and get on a plane to Las Vegas! What a brain drain! I was interviewed by NPR on Friday... I hesitated in taking the call, thinking that they could be baiting me... But no.. It went fine. They wanted 15 minutes, they got 25 minutes of "Chuck speak"... So, I'm leaving on a jet plane... I do know when I'll be back again! Not till Friday! I have a very early flight on Friday out of Vegas, which means I have to be at the airport to go through security, at least two hours before... So... I'm going to have to see if Chris can get the Pfennig out on Friday from Panama... Otherwise, I'll be up all night writing, while most people go to Vegas to be up all night partying! I hope you have a Marvelous Monday!

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

IFO Pushes The Euro Lower...

Chuck Butler — Thu, 24 Apr 2008 15:38:00 GMT

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

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

In This Issue....

* Dollar rallies!
* Technically speaking...
* Rice surges to record prices!
* Norges Bank hikes rates...

And Now... Today's Pfennig!

IFO Pushes The Euro Lower...

Good day... And a Tremendous Thursday to you! Well... Euro 1.60 didn't last long, more on that in a minute, but first we need to address the question of whether or not the euro 1.60 was a flash in the pan... I certainly don't think so, but it sure looks as though that could be the case given how the single unit has tumbled since reaching that level on Tuesday...

So... There were lots of reasons for the euro's decline yesterday... But the infamous straw for the euro seemed to be the German Business Confidence report as measured by the think tank, IFO, this morning... German Business Confidence which had surprised on the upside the past 3 months came out softer than expected in April, falling from 104.8 in March to 102.4... That was quite a tumble in Business Confidence and apparently wipes out the previous 3 months of stronger Confidence... It's a "what have you done for me lately" world out there folks...

So, is this the mini-sell off I've been talking about since January? Could be... I had a sneaky feeling yesterday, so I asked my charts friend what he was seeing... Here's what he had to say... "As far as the Euro, I'm not seeing anything too exciting. There are some signs that it may be overbought in the short term. The weekly chart is absolutely beautiful( movement from lower left to upper right), but it is also showing that we may be due for a slight pullback (buying opportunity.)"

Risk appetite is really taking flight again in the markets... And to me I just can't get my arms around this willingness to take on risk... There are just too many "risk events" out there (like Bear Stearns) but, that's just me, apparently, the markets don't think this way.. And with the risk appetite on the rise, the fortunes of Japanese yen and Swiss francs are on the opposite side of that rise.

Here we go again... Investors taking on risk like there's no tomorrow... I sure hope, for them, it doesn't end up in smoke... But I have to think that it will... My charts friend also had this to say about Risk right now...

"What I am more excited to share with you is what is going on in the whole Risk vs. Risk Aversion Arena. As you have pointed out many times, the stock market and the high yielding currencies represent Risk. The Yen and Franc represent Risk Aversion. So, what does that mean?

If you look at the stock market (S&P 500), there is major overhead resistance in the 1380-1400 area. We are currently in our fourth retest of this 1380-1400 area and we appear to be failing yet again. Each failure drains the confidence levels of investors, so we could be setting up for some dramatic downside movement. If this happens, then Risk will be on the run, which will mean Risk Aversion (Yen and Francs) could see some much needed love. Both of these low yielders look to be primed for strong moves upward."

The "swoop.net" had this to say about what's going on with The Fed, their collateral for loans, and everything else that I've yelled at the walls about recently... "The issue here is uncertainty. Despite some signs that the worst of the banking crisis may be past, officials from the Treasury and Federal Reserve concede in private that, with regard to certain complex financial products and relationships, their knowledge is imperfect. "The truth is," one Treasury official told us, "we don't have a clue."

OMG! Did shivers just go down your spine when you read that? "we don't have a clue"? The old saying about the inmates have taken over the jailhouse, comes to mind right now...

Are you keeping on top of the news of the rationing of rice? Brazil suspended their rice exports to protect their supply for domestic demand... I saw on the TV yesterday, a news story flash across that Wal-Mart and Sam's Club are rationing rice... Yesterday, Chicago rice futures hit a record price above $25 (per hundredweight). And in Thailand, the world's top exporter of rice, the price surged to $1000 a ton...

Right here, right now, in the U.S. of A. we're rationing rice... Can you believe that? There are underlying stories woven into this that I won't get into, but for now... We have this to think about... We have rationing in the U.S.

So... The dollar is on the rise... The only good thing about that right now is the fact that when the dollar rebounds, the price of oil goes down... But this all looks as though it's a house of cards to me... But, give the dollar it's due... I'll bet a fiddle of gold
Against your soul 'Cause I think I'm better than you! I have no idea where that came from, but Charlie Daniels in the morning ain't too shabby!

You know all this talk lately by G-7 ministers claiming that the markets didn't understand their Forex message? Well... The Bank of Canada's (BOC) Flaherty said yesterday that G-7 did NOT have discussions about currency intervention...

See! I told you so! I told you that the markets wouldn't take G-7's message seriously, unless there was a threat of coordinated intervention... And that, I just didn't see coordinated intervention in the cards, not as long as the U.S. is still banging on China to let their currency gain VS the dollar... And now, we know! There was no discussion of intervention!

That's an "all clear" horn for currency participants... I guess they are now waiting for the bargains to appear...

The Reserve Bank of New Zealand (RBNZ) left rates unchanged last night... I didn't expect any movement, and quite frankly had forgotten all about the meeting... Good thing they didn't spring any surprises on me / us, eh? Here's RBNZ Gov. Bollard...

"Economic activity has weakened more markedly than expected in the Bank's March Monetary Policy Statement. There have been sharp falls in consumer and business sentiment, exacerbated by tighter credit conditions, a further decline in the housing market and weaker prospects for world growth. Financial market turbulence around the world continues to add to an uncertain economic environment. Further, the very dry summer is also weakening short-term growth prospects.

However, the labor market is still strong and New Zealand's key international commodity prices remain high. Government spending plans and the possibility of personal tax cuts can also be expected to limit the economic slowdown."

That's Central Bank parlance for "rates will remain unchanged at these high levels for some time to come so we can get inflation back to the 1-3% range it is required to be"

So... Kiwi will remain a high yielder... And as long as risk appetite is strong, the high yielders like kiwi, Iceland, and South Africa all get to bask in the warm glow of risk takers... But... As I've explained above, I don't think this is anything to hang your strong currency hat on...

Norway's Norges Bank did indeed hike rates 25 BPS, as I expected them to do, yesterday... But, this move didn't help the krone hold off the dollar's move. But, when the dollar's move gets turned around (that's my opinion, and I certainly could be wrong), the higher interest rates, and wider interest rate differential in favor of the krone, will help propel it higher...

Today's level in Norwegian krone certainly represents a much cheaper buying price than just two days ago... Wink and a nod...

Currencies today 4/24/08: A$ .9460, kiwi .7930, C$ .9850, euro 1.5755, sterling 1.9760, Swiss .9755, ISK 74.20, rand 7.7820, krone 5.0425, SEK 5.9025, forint 160.20, zloty 2.17, koruna 15.98, yen 103.50, baht 31.60, sing 1.3575, HKD 7.7925, INR 40.18, China 6.9875, pesos 10.48, BRL 1.6580, dollar index 72.25, Oil $116.04, Silver $17.01, and Gold... $898.48

That's it for today... Almost didn't make to work today, as I had a bad episode with my "bionic" leg and ankle yesterday... They swelled so much they looked like the Michelin Man's leg... But I kept it up all night and stayed off it, and this morning it's much better. No need to be alarmed, the doctors told me that swelling would be problem for some time... Today is our Linda Lou's birthday... Linda helped me while our little Christine was out last year on maternity leave. I don't always know these birthdays, I just happened to hear "talk" yesterday! Time to go... Hope your Thursday is tremendous!

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

All Shook Up!

Chuck Butler — Fri, 18 Apr 2008 14:04:00 GMT

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

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

In This Issue....

* Juncker points to G-7...
* Fed's Fisher a Lone Ranger...
* A buying opportunity?
* Carry Trades remain in place...

And Now... Today's Pfennig!

All Shook Up!

Good day... And a Happy Friday to one and all! An all Shook Up Friday for us here in the St. Louis region, as we experienced an earth quake this morning registering 5.4 on the Richter Scale. My house started shaking, and kept shaking, which led me to believe it was more than wind... The house was shaking so bad, it woke up my beautiful bride... Which isn't something that's easily done! Especially at 4:30am!

But, it looks as though all is right on the night, the earthquake was centered 127 miles east of St. Louis... As you all probably know, here in St. Louis, we keep the New Madrid Fault in the backs of our minds, and drag it out whenever we feel the earth move under our feet...

Well... European Central Banker, Juncker tried to "shake" up the currency markets yesterday with some comments about G-7. As I've said two times this week, I was afraid the markets didn't understand the G-7's comments about the currencies, and that thought was repeated by Juncker yesterday, as he said, "the markets did not correctly understand the G-7 message on FX".

So, that was what put a bug in the bonnet of the euro yesterday morning as I was signing off. And that carried through to the Asian markets last night. Euro weakness... But, we've seen this before, right? Just a few weeks ago, we experienced euro weakness, but that bad "air" soon dissipated... And I would think this would too...

It all depends on the market participants and their will to push the envelope with G-7... If it were me... I would push the envelope and call their bluff. I truly do not believe a coordinated intervention will take place, for to do so, would require the U.S. to join in... And here's where the oil in this machine gets all sticky. How can the U.S. intervene and buy dollars, when they keep harping that the Chinese renminbi needs to get stronger VS the dollar? They can't... If they did, the markets would take them to the woodshed... And the U.S. Officials know that...

We had Fed Head Fisher our on the speaking circuit yesterday, and his comments also helped the dollar rebound. Fisher was talking "some sense" (believe or not!) that "attempting to inflate away the Financial System's woes" and that, "there's danger of a wing-and-prayer promise to rein in inflation later" and then the fateful, "I maintain a strong reluctance to further interest rate cuts"...

Well... The problem here is that Fed Head Fisher is a Lone Ranger... Big Ben doesn't share his thoughts, and when the Fed meets later this month and cuts rates, Fisher will probably be the lone wolf on dissenting...

So... After all this, the euro still has the dollar by the tail, as it maintains a strong base above 1.58... Of course, now that I've said that, we'll probably see it fall further! UGH! The Chuck Kiss of Death or as in honor of my friend the Mogambo (TCKOD).

Well... The U.S. data yesterday showed more signs of recession, with the Weekly Jobless Claims jumping up to 372K from 355K the previous week. But the piece of data that really barks like a recession was the Philly Fed Index (manufacturing), which collapsed this month and fell from -17.4 to -24.9. This is the lowest level since Jan and Feb 2001, as we entered the last recession. Data back to 1968 shows that declines in the index below current levels has been consistent with recessions.

Of course you, a Pfennig reader, knew we were in a recession months ago, because I told you so! I bet you used that information as "cocktail trivia" to sound smart! Good for you! That's they way more people see the "light"...

Alright, I went off on a tangent there... I'm just kidding you know... It's just my nature to have fun!

So... The fundamentals haven't changed... The U.S. Deficit is soaring higher and higher, requiring us to attract more and more foreign investment... The economy is in a recession... Jobs are hard to find... House prices are falling... And we're still fighting a war! Does this sound like the stuff that a stronger currency is made of? I don't think so! So... If this isn't a trend reversal, what is it? Ahhh grasshopper, it's simply profit taking and the scared Nervous Nellies selling... It sure does give us some cheaper levels to buy euros, eh?

Not just euros... The whole cell block is dancing to this jailhouse rock... So, if you can't find a partner to dance with, grab a wooden chair! In other words... Find your fave currency and most likely it has been dancing to the jailhouse rock, and is now at cheaper levels than even earlier this week!

One currency that sat out the dance overnight was pound sterling. In fact, pound sterling has rallied on comments from the Bank of England (BOE). BOE member, Bean, tried to calm the fears of a huge sell off of pound sterling. Bean commented that the stimulus from GBP's fall from the peak is roughly equivalent to a rate cut of 3% points and that GBP's fall since August was "of the same order" as the fall after the ERM crisis in 1992.

All a bunch of rubbish to me... But it calmed the fears for a day at least!

Man... Did you see the awful earnings report by the brokerage that owns a Bull? In case you missed it... $1.96 Billion net loss, with $9 Billion more of mortgage-related write downs... I'm not picking on Merrill here, just posting what I believe will be more damage to the economy... This morning, Citigroup, posted an even bigger loss... Citigroup Inc. reported a net loss of $5.1 Billion, and more than $10 Billion in write-downs...

And... These reports lead one to believe they should buy dollars? Hmmm... If so, I've got some land...

Stocks were no great shakes yesterday, but at least they didn't sell-off... So, that means the Carry Trade remains in place, and the weakness of Japanese yen and Swiss francs remain in place, while Aussie and kiwi are looking good! And always I tell you that it is better to look good than it is to feel good my friend!

There's no data today in the U.S. so... It would appear that the dollar will end the week on an upbeat note... That's OK... Even a blind squirrel can find an acorn!

Currencies today 4/18/08: A$ .9375, kiwi .7905, C$ .9925, euro 1.5845, sterling 1.9975, Swiss .9835, ISK 75.65, rand 7.76, krone 5.01, SEK 5.9285, forint 159.75, zloty 2.1560, koruna 15.81, yen 103.25, baht 31.44, sing 1.3530, HKD 7.7925, INR 39.93, China 6.9935, pesos 10.46, BRL 1.6540, dollar index 71.80, Oil $114.15, Silver $18.05, and Gold... $934.50

That's it for today... So... Shake me, wake me, when it's over... I thought of that great old Four Tops song, on my way to work this morning... Geez Louise, my poor face got fried yesterday at the ballgame... Good thing I had a ball cap on to protect my bald head! I was hoping last night that the red on my face would fade... But as I looked in the mirror this morning, my face is even more red! OUCH!

HEY! Sunday is the Big Boss, Frank Trotter's birthday! Frank and I have worked together so long, that he was a young man when we started! In fact... The Dead Sea wasn't even sick yet! That's how long we've worked together! His beautiful daughters are all grown up now, I held them as babies! So... Happy Birthday, you youngster! (Frank's 1 year older than me, so as long as I keep calling him young, I'm younger!) I hope you have a Fantastico Friday!

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

Tax Day!

Chuck Butler — Tue, 15 Apr 2008 14:24:00 GMT

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

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

In This Issue....

* Dollar Bears ignore G-7 warning...
* French inflation rises...
* Retail Sales surprise!
* Net TIC Flows data today...

And Now... Today's Pfennig!

Tax Day!

Good day... And a Terrific Tuesday to you! Thanks for the notes regarding my son Andrew... I believe he'll be fine... Shaken, beaten a bit, but fine... Well... It's Tax Day... A day hated by many, including yours truly... I always like to bring out the Beatles on Tax Day...

Should five per cent appear too small,
Be thankful I don't take it all.
'Cause I'm the taxman,
Yeah, I'm the taxman.

(if you drive a car, car;) - I'll tax the street;
(if you try to sit, sit;) - I'll tax your seat;
(if you get too cold, cold;) - I'll tax the heat;
(if you take a walk, walk;) - I'll tax your feet.

OK... Well... I think the currency guys are all spittin' raspberries at the G-7 ministers and saying G-7, Schmee Seven! NEENERNEENERNEENER! What the heck am I talking about? Well... As I left you yesterday (in the middle of the night) the G-7 ministers had issued a communiqué that for all intent and purpose, warned the dollar bears... And those that were scaredy cats ran for the hills, with the dollar rallying...

But, the last thought I had before signing off was that I believed the G-7 warning would probably need to see some actual intervention by the Fed and the ECB to really scare the dollar bears... And... By the time I made it in to the office yesterday morning, that thought was prevalent in the markets, and the euro was off to the races VS the dollar once again.

So... All the worries about battening down the hatches were ditched on the roadside... I sure hope I don't begin to sound like the boy who cried wolf, always pointing out short-term risks, but I guess that's the chance I take, writing every single work day! But... One thing to keep in mind is this: Have the markets misunderstood G-7's shift in exchange rate thinking? Or, did G-7 simply try to "call it in" with the statement?

And the euro is even higher VS the dollar this morning, as it received two pieces of data, with one outweighing the other... Here's the skinny... First the damaging to the euro data... German Investor Confidence as measured by the think tank, ZEW, printed a negative -40.7 VS -32 in March... That whipsawed the euro a bit... But then France printed an inflation report that showed inflation rising at the fastest pace in at least 12 years! OUCH!

With the European Central Bank (ECB) focused on inflation (as well they should be!), and not growth, this report all but keeps interest rates at their current levels... I say "all but" because, you never know what kind of smokey back room deal the Fed is trying to work with Central Banks around the world to help them in their attempt to drive off a credit meltdown...

Did you see the announcement by Wachovia yesterday? The posted a huge loss, slashed their dividend, and had to raise $7 Billion to make their capital position look better... I'm not picking on Wachovia here... I think we'll see more of this kind of stuff as we move along... And that just weighs on the economy folks...

I just had to take a break from writing, as one of my all time fave songs just played on the radio, and I had to stop and sing along... There's A Kind of Hush... I used to sing it to my little buddy Alex, when I rocked him to sleep at night... OK... I'm sorry, I got really sappy there... Let's get back to the markets!

Even a surprising Retail Sales number yesterday couldn't help the dollar... Retail Sales for March, surprised to the upside at +.2%, and February's negative -.6% was revised to only -.4%... So, the rumors of the U.S. consumer being dead have been greatly exaggerated! But... In my mind, this is just the faint heartbeat of a Consumer driven economy... The breathing is shallow... And it looks like it's on its last legs...

The thing that really kept Retail Sales going though was Gas Sales... Up 1.1%... I can vouch for that! I won't tell you what it cost me 10 days ago to fill my gas tank, but it was roughly twice was it used to cost me when I bought the car two years ago! OUCH! Whoa, I think that's going to leave a mark! Oh... And this little ditty just came across my screen... Our Friends (NOT!) at OPEC have decided to cut production... Interesting...

Swiss francs are back to parity with the dollar, and even beyond! Japanese yen is flirting with a sub-100 figure too! I believe the term, "blue light specials" was used by someone (me!) a couple of weeks ago describing the cheaper levels to buy these currencies... I love it when a plan comes together!

Every once in a while I like to drag out the Euro Wanna Be currencies of Czech, Poland and Hungary to talk about them... These currencies have been stealth like in their ability to fly below the radar while they move higher and higher VS the dollar. The Czech Republic just announced that their February Current Account Surplus more than doubled from January! The February figure was the third-biggest Surplus ever for the Czech Republic...

Looking back over the past 3 months, one would see the Czech koruna gaining 3.2% VS the dollar... I know for the BIG TIME Oil Traders, that figure is small... But... I think it's better than a wedgie!

You know... When I normally talk about the Current Account Surplus, or positive balance of payments countries, I totally draw a blank on the Czech Republic... That will have to change!

And you all know how I feel about Current Account / Positive Balance of Payments countries... They are at the top of my Hit Parade of currencies investors should look to when diversifying into currencies...

Chris mentioned last week the HUGE move by the Singapore dollar... I'm surprised at the size of the move, given the currency is managed by the Monetary Authority of Singapore... I think the Monetary Authority saw the writing on the wall with regards to inflation, and decided to let the currency "go to work!" The move in the Sing dollar has really been impressive, and should go a long way toward helping inflation, along with padding the pocket books of sing dollar holders!

While I'm on currencies that I forget to talk about... The Mexican peso has quietly moved higher VS the dollar... Normally, the peso needs the U.S. dollar to get going first... So... This is interesting, in that even the pesos is beating up on the dollar! The peso rally comes just in time for the Cinco de Mayo celebration!

Today, we'll see the color of the U.S. PPI for March... The Producer Price Index is expected to jump to .6% from .3% in Feb. I don't get caught all up in the PPI and CPI because of all the cooks in the kitchen on these reports... But... Inflation, no matter what PPI and CPI say, is rising faster than you can sell funnel cakes at a State Fair!

The really important piece of data this morning is the TIC Flow... I've explained this before... But, here a refresher course... TIC is Treasury International Capital, and measures the Net flows of foreign investment into the U.S., which is very important, due to the fact that foreign investment is what we used to finance our ever growing deficit...

In my last 4 or 5 presentations I highlight the fact that last year, we only averaged $51 Billion each month in net TIC flows... The problem with that is the fact that we need $80-85 Billion each month to finance the deficit!

For some reason or another, the markets and media sweep this data under a rug each month... And I just don't get it! This is important stuff folks! But then, the media keeps telling us that Deficits Don't Matter... So, why would they get concerned when we can't finance the Deficit? Dolts... The whole lot!

Currencies today 4/15/08: A$ .9245, kiwi .7840, C$ .9795, euro 1.5840, sterling 1.9680, Swiss 1.0009, ISK 74.30, rand 7.90, krone 5.0030, SEK 5.9440, forint 159.10, zloty 2.15, koruna 15.68, yen 100.90, baht 31.55, sing 1.3550, HKD 7.7935, INR 39.97, China 6.9929, pesos 10.45, BRL 1.6855, Oil $112.80, Silver $17.83, and Gold... $934.06

That's it for today... It's the 50th anniversary of the "stealing of Buddy Holly's guitar", which happened right here in St. Louis! The guitar has never surfaced... Can you imagine what it would be worth today if it did surface? It's also Tax Day... UGH! I got home last night, ate dinner, checked email, and went to bed! So... Hopefully, I'll be able to get through today better than I did yesterday! We're finally supposed to get some sun and warmer weather today... I don't know if my little buddy Alex will get a baseball season this year, given all the rain and flooding in our little river town... But the sun's coming out! YAHOO! I hope you have a Terrific Tuesday!

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

G-7 Sends A Message!

Chuck Butler — Mon, 14 Apr 2008 17:54:00 GMT

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

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

In This Issue....

* Dollar rallies hard on G-7 Communiqué
* But will it take intervention too?
* Retail Sales today...
* A bad night...

And Now... Today's Pfennig!

G-7 Sends A Message!

Good day... And a Marvelous Monday to you! St. Pete was gorgeous, and it has been rainy, dreary, and cold here in St. Louis, since I returned.... UGH! Front and center this morning, we've got to get to the G-7 meeting this past weekend, in which, the Finance Ministers expressed a concern with the falling dollar... This has led to some very strong selling in the overnight market of the euro and other currencies.

What was it that G-7 said anyway? Well... I'm glad you asked, because from what I saw of the communiqué, it must have been in some secret language... Here's the communiqué...

"We reaffirm our shared interest in a strong and stable international financial system. Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability."

So... Where did they single out the dollar? Oh! The dollar has lost quite a bit of ground since the last G-7 meeting... But so has pound sterling, South African rand, and Icelandic krona! I guess the emphasis for G-7 was "major currencies"... And... I guess they have forgotten about China, because they fell off the G-7 radar screen!

I would expect dollar shorts to be covered today, which would drive the dollar higher on this news... But, what fundamentally has changed? The Trade Deficit rose to $62 Billion in the last report, instead of falling to $58 Billion! And... The U. of Michigan Confidence report crashed and burned on Friday! The Confidence index fell to its lowest reading since 1982! Which on a side note was a good year, as the Cardinals won the World Series and my oldest son, Andrew was born!

So... The dollar bulls are going to be dancing in the streets today... And most likely tomorrow... That is unless the markets stop and take notice of U.S. Retail Sales, which is to print this morning... The G-7 Communiqué came as a surprise, as these guys normally can't agree on anything... And, I find it interesting that China basically has fallen off the radar screen.

I guess, these knuckleheads finally took notice of the rot on the dollar's vine... OK... This could mean a monumental swing... Or, it could be just a short-term sell off of the currencies... I'm thinking it is the latter of the two, but I could be wrong, eh?

This morning, we'll see the latest Retail Sales data in the U.S., which is expected to be very soft... The "experts" have forecast a "flat" report... In checking with the BHI (Butler Household Index) I have to go back to March, when I was gone most of the month, so the BHI is not sending me a clear signal... I would think, given the rot on the U.S. Chain Stores Sales that we saw on Thursday... Chain store sales (sales of stores open 12 months or more) unexpectedly collapsed in Mar, by -0.5% year on year, with the consensus at .9%. The decline is the 3rd largest on record... That Retail Sales will be weak, and probably on the negative side of the ledger.

That should keep the dollar bulls from celebrating too loudly!

There was another piece of data on Friday that flew under the radar screens of the mass media... Import Prices Soared in March, spiking to +14.8%! This means we're importing other countries' inflation... Great! That's just Great! As if we didn't already have our own! See what the weak dollar will do to your purchasing power? Makes you kind of wonder why any country would seek out a weaker currency, doesn't it?

I mean, no country has ever debased their currency to prosperity... So, why did we think we could do it now? Oh, I know, I know, it must have been that disastrous saying: "This time it will be different."

So... Unfortunately, all the fundamentals will be forgotten today... We need to batten down the hatches, and withstand the prevailing storm caused by G-7... However, in my mind, I'm thinking that the words of G-7 might not carry much weight, and they will need to be backed up with intervention from the U.S. and ECB to really change this weak dollar trend, and even then, if the dollar bears still want to fight, it could be a long difficult battle.

OK... Now this might sound strange to you all... But I'm writing at 1 o'clock in the morning, I just got home from having to drive 100 miles to pick up my son, Andrew, and his friend, Rachel... They had a very unfortunate automobile accident this afternoon, and they were in the hospital, and all that, before I went down to get them to bring them home... So... OH! They're OK, really hurting all over, and Andrew looks like he got into a fight with a bear!

So... As I was saying, the currency prices are as of 1 o'clock a.m. I'm going to bed now... Talk later...

Currencies today 4/14/08: A$ .9215, kiwi .7875, C$ .9760, euro 1.5715, sterling 1.9710, Swiss .9960, ISK 73.50, rand 7.8250, krone 5.0590, SEK 5.9920, forint 160.60, zloty 2.18, koruna 15.85, yen 100.90, baht 31.60, sing 1.36, HKD 7.7915, INR 40, China 6.9960, pesos 10.52, BRL 1.6895, dollar index 72.15, Oil $109.60, Silver $17.34, and Gold... $920.30

That's it for today... Retail Sales the headline data today... Get ready to rumble! I'm back in the saddle this week for the whole week! I have a two day jaunt to Jacksonville next week, and then the Las Vegas Money Show the second week of May! This Las Vegas Money Show is HUGE! It's held at the Mandalay Bay Hotel... You should check it out, if you think it sounds interesting! That's all for me, I'm going to bed! I hope you have a Marvelous Monday! Batten down those hatches today!

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

Dollar bounces, but why?...

Chuck Butler — Fri, 11 Apr 2008 15:06:00 GMT

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

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

In This Issue...

* Dollar bounces, but why?...
* ECB keeps rates unchanged...
* Rand and Real reverse course...
* India still growing...

And Now... Today's Pfennig!

Dollar bounces, but why?...

Good day...When I signed off yesterday, several of the currencies were at or near record levels vs. the US$ and the US data which were going to be released didn't look supportive. Data from the US showed the trade gap unexpectedly widened in February, reflecting a surge in purchases of imported automobiles which overwhelmed record exports. The widening trade deficit indicates the US$ still has further do drop before it begins to have any impact on US consumer's spending habits.

Shortly after the trade data was released, the Labor Department said initial jobless claims came in at 357k and continuing claims rose to 2940k last week. While the initial claims were slightly lower than expected, the numbers still show continued weakness in the employment sector which will bolster the call for lower rates in the US. And to finish the data in the US, we got the ISCS chain store sales which dropped .5% YOY indicating consumers may be starting to tighten their belts.

Again, this data was largely negative for the dollar, so I expected to see a further drop and a move by the Euro back up to $1.60. But the opposite occurred. The dollar suddenly started to strengthen, and continued a slow climb back up until just after noon CST. The dollar index, which had traded all the way down to 71.30 was suddenly back over 72.

So what caused the big turnaround in the dollar? I searched through the news stories and called a few traders to try and figure out what caused the turn around, but no one seemed to have the answer. When I went home last night, I just figured it had to be a 'normal' market correction along with profit taking. But Chuck sent me an email last night with a different idea on the reason for the turn around:

"It sure looks as though the Plunge Protection Team (PPT) was out in force on Thursday, don't you think? I mean, the dollar had fallen to 1.59 and change, and the Trade Deficit came in $4 Billion worse than forecast at $62 Billion... And then the next thing we see was the dollar rallying... And rallying hard... Someone with a better answer than my PPT answer is more than welcome to respond...

As you all know, I was supposed to have dinner last night with my friend, The Mogambo Guru... His wife called me yesterday to cancel... In Mogambo style his wife said to me... "the Mogambo must have gotten too excited to meet up with you, he had a heart attack yesterday." OH MY GOD (OMG)! But, Mrs. Mogambo was quick to assure me that he was OK, had a couple of stints put in, and he was already itching to go home... WOW! What a shock!

So, needless to say, I didn't have dinner with him last night! And... I'm so glad to hear that he's OK..

Don't you all just love the conviction of the European Central Bank (ECB) and its leader, Trichet? I mean... They have a mandate to provide price stability, and come hell or high water, they are going to follow the mandate! The ECB left rates unchanged yesterday, and President Trichet, talked a tough row to hoe against inflation... Don't you wish you had someone to watch out for your pocketbook like that? (OK, you do have me... But I'm just a little ol' Pfennig writer, no some Central Bank President!)

As I said earlier this week, I fully expect the Fed to cut rates 75 BPS in their next to meetings, which will leave rates here in the U.S. at 1.5%... OK... Now, let's have the dollar put the recession and low interest rate pants on and walk down the street!

My time here in St. Pete is up... I'm on my way back home today... The conference was good... There were a lot of new faces in the crowd, and they didn't get a lot of my dry humor jokes, while speaking... But that's OK... "

So the PPT was hard at work yesterday; but as usual, their efforts can only support the dollar in the short term. Overnight the dollar went back to its losing ways and dropped again. As Chuck discussed, the ECB left rates unchanged and President Trichet continued to sound hawkish in his press conference. With the euro-region inflation running at the fastest pace in almost 16 years, the ECB is reluctant to follow the FOMC and BOE's lead. "We believe that the current monetary policy stance will contribute to bringing inflation under control," Trichet said. "The firm anchoring of medium to longer term inflation expectations is of the highest priority." You go to love a central banker that knows his role!

Some of the news stories I searched yesterday credited the upcoming G-7 meeting for the quick turn of the dollar. Finance chiefs from the Group of Seven are meeting today to discuss the growing economic credit crisis. The ministers have said they will discuss stronger regulation of the financial markets, but many of the dollar bulls were hoping for a coordinated action to support the sagging dollar. But reports this morning indicate there will be no intervention by the G-7 members as they have been unable to agree on a plan to pull the dollar up. As Chuck has said in the past, these meetings typically do not produce anything concrete, and are usually just a boondoggle for the central bank big-whigs to sit around and discuss just how bad things are in their respective countries while dining on a gourmet meal.
The Group of Seven hasn't intervened in the currency markets since it supported the euro in 2000. I don't look for anything that dramatic this time around, and apparently the markets don't either.

So the dollar will likely continue to drift down today, as the U of Mich consumer confidence numbers are expected to weaken. Confidence among US consumers probably sank to a 16 year low this month as unemployment continued to rise along with prices for gasoline and food. The drop in sentiment and in the general wealth of the US middle class may finally start to weigh on spending. The resilient US consumer has continued to find ways to borrow and spend, keeping the US economy away from a total collapse; but with home prices falling and banks shutting down the 'free credit' spigot, consumers are going to have to start pulling in their free spending ways.

So I believe there is much more room for dollar weakness in the next few months. One currency which the dollar had gained on this year has finally started to appreciate again. The South African Rand is one of the worst performers this year, falling over 12.5% vs. the US$ since January 1. The rand has been hit by a combination of political instability both internally and among its close neighbors. Mining, which is South Africa's number one industry, had been hit with some strikes and power problems. While these factors are slowly being corrected, South Africa's central bank raised interest rates to the highest level in almost 5 years yesterday which should help bolster the currency. The rand is now headed for a third week of gains vs. the US$ as their interest rate advantage continues to widen. Higher gold prices along with a dramatic interest rate advantage will keep the rand supported, while risk aversion and the accompanying carry trade reversals could put downward pressure on the currency. Which will win out? It will be interesting to see.

Another of the more speculative currencies has had a good couple of trading days as Brazil's real rose for an eighth day on Thursday. The central bank is expected to follow South Africa and increase interest rates next week. The annual inflation rate in Brazil rose to a two year high of 4.7% in February, and the central bank will likely increase rates to make sure they keep a lid on rising prices. Brazil was the top performing currency vs the US$ last year, and should benefit from strong commodity prices and interest rate differentials. But like the South African Rand, some of the real's strength is due to the carry trade, which has proven to be incredibly volatile. Both the real and the rand should be seen as speculative investments, and should make up just a portion of your overall currency portfolio.

And I will close today's Pfennig by talking about a currency which doesn't get much attention, the Indian Ruppee. The rupee has started to move back up vs. the dollar over the past five or six weeks. India's industrial production grew at the fastest pace in four months in February. Production at factories, utilities, and mines grew 8.6% from a year earlier according to the statistics office in New Delhi. This growth rate ranks India as the world's second fastest expanding major economy, second only to China. Continued growth in India will keep them competing with China for the raw materials necessary to fuel this growth. Just another indication that the commodity boom which we have been in for the past few years is not ending. Keep buying the currencies of countries who will supply these fast growing nations with the commodities they crave!

Currencies today 4/11/08: A$ .9294, kiwi .7949, C$ .9826, euro 1.5840, sterling 1.9731, Swiss 1.002, ISK 73.21, rand 7.8497, krone 5.0125, SEK 5.9338, forint 158.92, zloty 2.1621, koruna 15.77, yen 101.18, baht 31.60, sing 1.3588, HKD 7.7892, INR 39.948, China 7.0060, pesos 10.5421, BRL 1.6850, dollar index 71.81, Oil $110.31, Silver $17.975, and Gold... $926.93

That's it for today...That's it for me this week, Chuck is returning home this evening. Hope he is ready for a little flashback to winter, as we are expected to get snow showers tomorrow morning. My prayers are with the Mogambo, it sounds like he came through his heart attack pretty well. I'm looking forward to spending a relaxing weekend at home, as I don't have any major plans (no marathons to run this weekend!) Hope everyone has a Fantastic Friday and an Wonderful Weekend!!

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