Daily Pfennig : Home Prices

G-7 To Discuss Currencies?

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

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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

U. of Michigan Spoils The Party...

Chuck Butler — Mon, 17 Aug 2009 14:57:26 GMT

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In This Issue..

* Risk Aversion comes back strong!
* Risk assets get sold...
* What games will be played with TIC's?
* 40 years since Woodstock!

And Now... Today's Pfennig!

U. of Michigan Spoils The Party...

Good day... And a Marvelous Monday to you! A great weekend that was filled with watching my little buddy, Alex, play football, hosting a surprise 30th birthday party for my little girl, Dawn, and a sweep of the Padres by the Cardinals! This week gets cut short with me a the helm, as I head to San Francisco on Thursday. Chris will have the conn on the Pfennig Thursday through Monday.

Well... Who'd a thunk it? Yes, who would have thought that the U. of Michigan Consumer Confidence could turn the markets upside down and spoil the party? Well... It happened on Friday! The U. of Michigan Confidence Survey for Aug unexpectedly dropped to 63.2, from the previous month's 66 level. The real drop though was from the forecast for this month which was 69! The drop brought the index to a five-month low.

CPI printed at 0%, Industrial Production rose and so did Capacity Utilization in July... But none of it could get the taste of the U. of Michigan Consumer Confidence out of the markets mouths. It was the Humpty Dumpty economy once again... All the king's men couldn't erase the drop of Consumer Confidence.

And, the return of the risk aversion campers swamped the markets. And all day Friday, we saw losses in value of stocks, commodities and currencies. In the overnight markets, the return of risk aversion got even stronger. From what I understand happened, it seems that China's largest steel makers announced that they were going to se iron ore prices at 35% below the benchmark. This sent shockwaves through the commodities, and that has carried over to further losses in the currencies...

The euro has just fallen through the 1.41 handle, and is taking all the other currencies with it to the woodshed... That is, except of course, Japanese yen. I've gone through this so many times in the past, I think you all know exactly what I'm going to say, before I say it... But, for those of you new to class, when the risk aversion crowds fill the markets, investors head for the hills, thus selling their "risk assets" of which currencies are a part of. However, there are two currencies that the mental giants believe to be "safe havens"... One pick is ridiculous, and the other one is even more ridiculous as "safe havens"... But you can't fight the markets, and they deem Japanese yen and U.S. dollars as "safe havens"... Me? Personally? I deem one to be a currency that should be circling the bowl! And the other? It's iffy for sure... I don't think you need me to tell you which one is which!

Of course, the Japanese yen has its moments... And one of those came last night in the form of their 2nd QTR GDP. The Japanese economy grew 3.7% in the 2nd QTR, thus ending their recession... But just like the Australian economy that we talked about last week, and needing to see if it can maintain this growth after the removal of "fiscal candy", the same is true for Japan. But Hey! 3.7% growth is still pretty impressive, for Japan!

This morning, as I look over the headlines on the Bloomie, I see one story that says the euro will fall to 1.30 VS the dollar, and two other stories that say the opposite, with one saying it will reach 1.45 in the coming days, and the other saying the euro is a "buying opportunity"... Confused? Well, that's the stuff that markets are made of folks... People with differing opinions...

Which brings me to what I will call "Pfennig etiquette" Just because you have a "different opinion" on things that I say, does not give you the right to flood my email box with what you believe is proof that you are correct! Nor does it give you the right to get nasty with me... It's this simple folks... If something is on TV that offends you, what do you do? You change the channel... Carry that over to your FREE subscription to the Pfennig...

OK... Enough of that! Later this morning we'll see German Trade Balance numbers, and... The June TIC Flows data from the U.S. These TIC flows just don't get the attention I believe they should. So, I carry on despite the mental giants in the markets that place importance on data prints! TIC Flows are simply, the net security purchases by foreigners. The U.S. has to sell its Treasuries to finance the ever expanding deficit... And supposedly, these TIC Flows tell us whether that's happening or not. But given the games that people (the Fed and Treasury) play these days, who knows what is real or not? Only the shadow knows!

Don't ask Big Ben Bernanke, he'll tell you he doesn't know, like he did when he was asked by a Senator where $500 Billion that left the Fed's books went... Big Ben said... "I don't know"... Ahem... Big Ben? IF YOU DON'T KNOW... WHO THE )*&(&*)( SHOULD WE ASK?

OK, that was a tangent I didn't plan on going to... But I did... So let's finish the TIC Flows talk, eh Chuck? So... Last month, for instance, the data showed a negative figure, which meant that we did NOT finance our deficit in May! June's data prints today... Let's hope it prints better than the May report!

Speaking of the cartel, I mean the Fed Reserve... I saw this quote by Bill Bonner the other day, and just knew it would fit nicely in with any discussion of the cartel, I mean the Fed, and Big Ben Bernanke... Here's Bill... "And remember, too, the feds don't really have any money to hand out. They can only get money by taking it from its rightful owners - either in taxation or loans. Or, they can print it up themselves. In any case, the money adds nothing real or extra to the economy. It merely distorts the economy...twists it...misleads it...and makes it a bigger mess than it was already."

Yes, that's exactly right, Bill! And something that I've tried to tell my dear readers for some time now... A lot of people don't agree with that... And that's all fine and dandy with me... But I believe that the things that I've researched tells me otherwise... Quite a bit otherwise!

All the good that the Norwegian krone built up last week, has been wiped out by the sell off of Oil prices. And when the Norwegian krone backs off it takes the Swedish version of the crown the krona with it!

The Aussie and kiwi versions of dollars saw their recent lofty levels melt away with the commodities damage from the Chinese steelmakers announcement. These two are still way above their winter of this year's levels, so, it's not all bad...

So... These risk aversion outbreaks have been relatively short in recent months, and not like the risk aversion of last fall and winter... So, we can look to see what might shake the risk aversion campers... As I look over the data calendar for this week, I really don't see anything that "might" scare the risk aversion campers... However, the week is dominated by several reports on Housing & Building... Maybe, just maybe, these reports might show that the Housing market has bottomed, that sales are picking up, and that home prices have stopped falling.... Who knows? Maybe that would be enough to shake up the risk aversion campers!

I was thinking about this while I was typing that previous paragraph... And that is... Even if Home prices show a bottom, how long will it be before they are on the upside of 2 years in the red? Unfortunately, it will be a very long time before that happens! Long Time readers will remember when I used to (what many believed me to be doing, crying wolf), warn about the housing bubble... Shoot, I had people in the mortgage industry that just wouldn't / couldn't come to agree with me... Of course when it all melted down eventually, they admitted to me that they had been drinking the kool-aid, but now see what I had been trying to tell them...

So... When I say that I believe it will be a very long time before that happens, I've got a track record here...

I also was one of the first people to say in 2001 that the dollar was about to go into a secular long term weak trend... You should have seen the emails I got then! Oh, but look at us now... The dollar index has given up over 40% of its value since then! And some individual currencies were doing even better at one point during the trend...

So, with that note... I'll head to the Big Finish!

Currencies today 8/17/09: A$ .8175, kiwi .6665, C$ .90, euro 1.4065, sterling 1.63, Swiss .9250, rand 8.20, krone 6.20, SEK 7.32, forint 194.85, zloty 2.98, koruna 18.33, yen 94.50, sing 1.4520, HKD 7.7505, INR 48.96, China 6.8360, pesos 13.03, BRL 1.8475, dollar index 79.50, Oil $65.80, 10-yr 3.47%, Silver $14.18, and Gold... $936

That's it for today... Well, this past week was the 40th anniversary of Woodstock... From what I understand, the entire music performances of the concert are being put on CD, and will be sold as a box set, as opposed to the original 3 album set, that only included selections of the music... I remember as young man watching this movie, and being blown away by the music. I used to have the movie on VHS, and whenever a new person started working for me, I would give them the tape and tell them to watch it, and report back! HA! So... Getting back to something I said above... We hosted a 30th birthday for my darling daughter, Dawn, on Saturday night. Friends, and family successfully pulled off a surprise for her! Dawn's actual birthday is this Thursday, but I'll be flying to San Francisco, and I wanted to be able to celebrate with her! I'm taking this a little strangely, having a daughter that's 30! WOW! OK... Gotta go... I hope your Monday is Marvelous!

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

House prices move up, but consumers still aren't confident...

Chuck Butler — Wed, 29 Jul 2009 15:01:37 GMT

...But First, A Word From Our Sponsor...
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* 4 BRIC currencies: Brazilian real, Russian ruble, Indian rupee, Chinese renminbi
* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

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

* House prices move up...
* US consumers are worried...
* Japanese retail sales drag...
* Australian rates to rise...

And Now... Today's Pfennig!

House prices move up, but consumers still aren't confident...

Good day... We finally had a bit of volatility in the currency markets yesterday, as conflicting data released in two separate reports moved the markets in opposite directions. The dollar started off the day drifting lower, as has been the pattern over the past 2 weeks. But during the late morning the dollar started gaining strength, and has barely paused its ascent overnight.

Many of you probably heard the news reports that home prices finally rose during the month of May, and this is what had the dollar on the ropes yesterday morning. The S&P/CaseShiller Home Price Index reported that home prices in the US rose ever so slightly in May compared to April. But if we look at the annual figures, home prices are still down just over 17% across the country. Media outlets trumpeted this 'feel good' story with many economists declaring that housing has now turned a corner. This is a good sign, as prices have to stabilize before the housing sector can recover, but it is hard to get overly excited about a 17% drop YOY. The monthly figure rose just .5%, reflecting the first monthly gain since July 2006. Another report showed the share of homes sold as foreclosures or otherwise distressed properties fell to about 31% in June, down from a high of 50% seen earlier this year. With unemployment still creeping up, and the US consumer continuing to save instead of spend, I am going to need to see a couple of months of stabilized prices before I am convinced housing is turning the corner here in the US.

Just an hour after the surprisingly good news on the housing front was received, consumer confidence numbers for July were released, and spoiled the party. Higher unemployment is being blamed for dropping just under three points from the Conference Board's consumer confidence index. This was the second consecutive decline, and shocked economists who had predicted no change. Our economy is still consumer driven, so this number resonates with investors who had started moving money back into riskier assets believing the economic recovery was well under way. But US consumers are concerned about the job markets, and will likely continue to keep tighter control of their spending. Despite the rhetoric coming out of the Chinese/US talks (more on this later), the administration is counting on consumers to help pull us out of this recession/depression.

But consumers have a right to be worried, and will likely continue to keep a tight hold on their wallets. After all, the economy has lost 6.5 million jobs since the recession began in December 2007; the biggest employment slump in over 80 years. Official estimates predict double digit unemployment by the end of this year, and our unofficial estimates have pegged the number in the double digits since the first quarter of 2009. Without good prospects for employment, US consumers are finally realizing the intelligence of being frugal. Savings rates in the US continue to climb, but while that is good in the long run (and exactly what I believe they should be doing) it doesn't help fuel a quick turn around for the economy.

Investors and the administration worry that the higher savings rate and slower economic growth will lead to deflation, and have been hoping instead to see some signs of inflation. But a bit of deflation is really not that bad, and can actually be healthy for the economy. While he was in Vancouver last week, Chuck sent me the following quote from our friend Doug Casey regarding deflation...
"Deflation is actually a good thing, because in a deflation prices drop and money becomes more valuable, so deflation encourages people to save money. Deflation rewards the prudent saver and punishes the profligate borrower. The way a society, like an individual, becomes wealthy is by producing more than it consumes. In other words, by saving, not borrowing. And during a deflation, when money becomes more valuable, everybody wants money. They want to save. Whereas during an inflation, you want to get rid of the money. You want to consume. You want to spend. But you don't become wealthy by spending and consuming; you become wealthy by producing and saving.

Inflation encourages people to borrow, because they expect to pay the debt off with cheaper dollars. It encourages people to mortgage their future.

The basic economic fallacy in this is that a high level of consumption is good. Well, consumption is neither good or bad. The problem is the emphasis on consumption financed by debt -- which leads to the national bankruptcy we're facing. It's much healthier to have an emphasis on production, financed by savings."

I think Doug hit the nail on the head, but as he points out, most economists fear deflation and have convinced the administration that the only way out of our current recession/depression is to borrow and spend. Hopefully US consumers will continue to fight the urge to re-leverage, even if it does extend the downturn. A bit of pain now can and will avert a whole lot of pain in the future.

But the markets don't like the thought of frugal US consumers so the stock market sold off, and investors ran for the cover of US treasuries sending the dollar higher. Asian markets continued the sell off overnight causing a reversal of the carry trades which had just started to be popular again. Risk aversion is back in vogue, so the high yielding currencies which had been benefitting got sold off. The biggest drop was in the Australian dollar which fell nearly 1% vs. the US. As you would expect, the South African rand and Mexican peso also sold off, but surprisingly so did the Japanese yen.

Japanese retail sales fell for a 10th month in June, extending the longest losing streak since 2003. Deflation is still gripping the Japanese economy, and a report released earlier this week showed Corporate prices dropped 3.2% from a year earlier. As I stated earlier, a bit of deflation isn't necessarily a bad thing, but it certainly stalls out any sort of economic recovery. The problem with deflation is that once it takes hold, it is very hard to combat. Japanese consumers have traditionally had one of the highest savings rates, and their economy has been treading water for a number of years. The Japanese are relying on the global economic rebound to help stimulate exports which will drive their economy back up.

The ideal situation is some happy medium between the two extremes. A slow growth/ low inflation environment is what we should strive for. Not high growth fueled by high leverage, or no growth with very high savings rates. So the current swing by US consumers toward a higher savings rate is a good thing, as long as we eventually start spending these savings and keep leverage to a minimum.

Numbers to be released later today will continue to call into question the recovery of the US economy. Orders for Durable Goods in the US probably fell in June for the first time in three months. The major automobile factories shuts down for part of the month, causing a drop in the overall number. Ex autos, the number will likely be unchanged from the May figure. Mortgage applications were already reported this morning, and showed another dramatic drop. The 'refinancing boom' which the government created earlier this year has petered out, and unless additional stimulus money is thrown at home buyers, the housing recovery will be a long drawn out process. And finally, the Fed's Beige book will be released later today. This report details how the economy is performing in each of the Fed's districts, and is expected to confirm the US economy is starting to bottom out, but no rapid recovery is in sight.

An economy which seems to be starting to recover more rapidly is Australia where central bank Governor Glenn Stevens signaled rates may rising sooner rather than later. "I've never seen written down or heard in discussion some rule that says we wait until unemployment is peaking before we lift the cash rate," Stevens said in Sydney yesterday. Stevens also said the economy may rebound faster than the central bank forecast six months ago as consumer and business confidence surges. The AUD$ touched its high for 2009 yesterday at .8338 before retreating back below .82 on the carry trade reversal. I would think any pull back by this currency is an excellent opportunity for investors to jump into this currency which we predict will end up one of the best performers of the year.

Whenever I talk about the Aussie dollar, I naturally move to its kissin cousin across the Tasman, the New Zealand dollar. New Zealand central bank Governor Alan Bollard will probably match Governor Steven's moves and keep rates unchanged at their meeting tomorrow. The recent reversal of carry trades has caused this currency to turn around, but as with the AUD$, a move lower should be seen as a buying opportunity.

India left rates unchanged overnight, signaling an end to its deepest round of interest rate cuts. The central bank is concerned that inflation will creep up as the Asian economies recover. Interest rate expectations have turned the currency around as the Indian rupee has increased about 1.5% vs. the US$ during the last two weeks.

I'm filling in for Chuck this morning on a conference call with the Big Boss, Frank Trotter, so I'll have to end it here and move to the currency wrap-up:

Currencies today 7/29/09: A$ .8204, kiwi .6574, C$ .9212, euro 1.4136, sterling 1.6379, Swiss .9274, rand 7.9065, krone 6.2205, SEK 7.4936, forint 190.64, zloty 2.9671, koruna 18.0674, yen 94.91, sing 1.4418, HKD 7.7500, INR 48.4262, China 6.8324, pesos 13.2659, BRL 1.8809, dollar index 79.092, Oil $65.84, 10-year 3.65%, Silver $13.6125, and Gold... $935.79

That's it for today... My wife qualified for combat pay as she took my 10 year old daughter, Lauren and three of her friends to the Jonas Brothers concert last night. I love my daughter, but I'm not sure I would have been able to stand 3 hours of 20,000 screaming tweens. Finally got some summer thunderstorms last night, and it continues to rain today. I hope Chuck and his family are staying dry camping down in southern Missouri. The Cardinals looked great last night, as the new offense which they have picked up in their recent moves seems to be starting to click. Hope everyone has a Wonderful Wednesday!!
Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

A broken record...

Chuck Butler — Thu, 23 Jul 2009 15:11:08 GMT

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In This Issue..

* Mixed bag of housing numbers...
* Foundation work...
* High yielders...
* Commodity currencies again ...

And Now... Today's Pfennig!

A broken record...

Good day...and a Terrific Thursday to you. As Chris mentioned yesterday, I'll be steering the ship for the next couple of days while both he and Chuck are out so I look forward to being your relief captain. The fall like weather in the middle of summer has continued yet for another day in St. Louis, not that I'm complaining, but that out of the ordinary trend certainly hasn't carried over to the currency markets. In fact, I could probably cut and paste yesterday's Pfennig and you wouldn't miss a thing as the currencies traded in a very tight range, so there wasn't much exciting to report on...Oh well, instead of wasting space, I'll get right to it...

As Chris reported, its been a relatively quiet week in the economic report department here in the US but we did have some housing data as the MBA mortgage application and May's home price index figures were released yesterday. Both measures were positive but obviously far from what would be considered knights in shining armor. Mortgage applications did rise for a third consecutive week, 2.8% over the previous, but was lower than last week's figure of 4.3%. Falling prices are making properties more affordable, but record foreclosures and surging unemployment are impacting more and more Americans as the uncertain future is forcing those who can, refinance, instead of testing the real estate market. Economists expect prices will continue to keep falling as sales of distressed properties, which more than 1.5 million properties received a default/auction notice or were seized by the bank so far this year, act as an anchor preventing much in the way of improvement.

Speaking of home prices, May's number showed the smallest annual drop in 10 months as prices declined 5.6% year over year and actually rose by 0.9% from April, but every region of the US still saw declines in May from a year earlier. Former Fannie Mae economist, Thomas Lawler, was quoted as saying "The distress in the housing market was not caused by unemployment, but now we are seeing a wave of delinquencies and foreclosures by people who, if they had kept their jobs, would be unlikely to default." It appears that he shares our view in that as unemployment continues to rise, pressure on a sustained recovery will continue to mount. I agree with those that say the real estate market is improving...the numbers are not as bad as what we've seen in the past, but the bottom line is that prices are still falling...not exactly what I would consider a recovery just yet. Until we see unemployment fall to a sustainable number and the fear of layoffs along with job cuts subside, I just don't see enough consumers rushing out and putting themselves on the line for their most expensive purchase...a home.

I guess this leads me to the reports due out today as we see the weekly jobless numbers and existing home sales for June. Although the initial jobless claims and the continuing claims are both expected to come in worse than last week, the existing home sales are estimated to show a bit of an increase. The trading pattern that has been in place for a while now, that being good news for the US causes dollar selling and bad new leads to buying of the dollar, shouldn't see any deviation as risk aversion remains in control. Assuming my crystal ball is plugged in, any improvement in these numbers would send the dollar down today if investors get that warm and fuzzy but according to most economists, not much in the way of surprises one way or the other would be in the cards.

Chuck forwarded some comments made by Stephen Englander, chief currency strategist at Barclays, emphasizing that the dollar is expected to weaken as considerable skepticism about US monetary policy mounts from foreign investors. Without further ado, here's Chuck...

"Here's something I came across that plays well with what I've been telling you all for years now... Let's listen in first, and then review what I've said over and over again...

"He (Bernanke) provided a very clear discussion as to what the mechanics of pulling out would be, but I don't think that's the question the market is asking," Englander said. "Until there's a clear path to withdrawing from the quantitative easing, we're going to see foreign investors demanding a risk premium, if not on U.S. interest rates, then on a weaker dollar to equalize expected returns between U.S. assets and foreign assets."

Sound familiar? Of course it does! I've said over and over again through the years that when a country has a financing problem it has two choices... It can raise interest rates on the bonds they sell, risking the awful affect on their economy... OR... They can devalue the currency, thus making it cheaper to buy the bonds used to finance the deficit... In this case... It's the dollar... And any government would always choose the devaluation of the currency over wrecking the economy... Wrecking the economy doesn't get them re-elected!"

Obviously, the broad expansion of the deficit has become a huge topic for not only foreign investors, but also those of us right here in the US. Here's another note Chuck sent last night for me to share with you all:

"I have a friend who has been the leading doctor in the attempt to discredit the National Health Care Plan... I heard last night that the President said that if we didn't implement National Health Care we wouldn't be able to deal with our deficits...

That's a bunch of malarkey! Here's my good friend, Doc. Dave...

"The underlying method of cutting costs throughout the plan is based on rationing and denying care NOT PREVENTING health care need. The plan's method is the most inhumane and unethical approach in cutting costs. The rationing of care is implemented through The National Health Care Board, according to the plan. This illustrious Board "will approve or reject treatment for patients based on the cost per treatment divided by the number of years the patient will benefit from the treatment." Translation.....if you are over 65 or have been recently diagnosed as having an advanced form of cardiac disease or aggressive cancer.....dream on if you think you will get treated.....pick out your box. Oh you say...this could never happen......sorry....this is the same model they use in Britain."

So... You can side with the President, speaker Pelosi, and others when they try to jam this down the throats of Americans... Or you can side with a doctor that has fought against this from the beginning because of the inhumane way it treats American citizens in need of health care!

I'm not one to make this letter political... But trust me on this, the gauntlet has been put before us, and we can decide if we want additional spending or not... Because no matter what the President says, once Congress gets a hold of a bill, the costs multiply by tens! If not hundreds! And we are in no position, as a country, to take on additional deficits!"

The foundation for a longer term weak dollar has been in construction for quite some time and the current fundamentals and now policies appear to be opening the eyes of many worldwide. The currency market seems to have taken notice as we have established a fairly strong base in many currencies. For instance, the euro has been comfortably trading close to the 1.40 handle, give or take a couple cents on either side, for a couple of months now. I look back to the end of 2004 when the euro was setting record highs at 1.35-1.36 and thinking then that prices at 1.40 would be a moon shot. Fast forward to today and 1.40 is kind of seen as ho-hum. I guess the point I'm trying to make here is even though we saw considerable dollar strength in the second half of last year, we have settled in a spot where if we do see another considerable selling run of the dollar, look out.

As I touched on earlier, the currency market was a non-event yesterday as most currencies traded within a range of .25% to the dollar but the rand was again the winner of the day. The rand gained another 1.25% as money is still flowing into the South African market from investors seeking higher yield. This is one of the more volatile currencies so extreme caution and an iron stomach are needed. There is not any middle ground for the currency so extreme movements up and down are the norm.

Speaking of another high yielder, Brazil's central bank slowed the pace of rate cuts by only dropping .50% to a record low of 8.75%. They had cut rates by at least one full point following the four policy meetings so far this year and cited these reductions have had enough impact to warrant a smaller cut. This outcome has economists thinking rates may be at the bottom and some even see rates at 10.5% by next July if inflation begins to creep higher. Lower borrowing costs and taxes as well as increased government spending has supported domestic demand so far, causing the OECD to call for a 4% gain in GDP next year.

With not much else currency wise, I came across yet another story promoting the commodity currencies. As China's demand for raw materials continues to feed infrastructure growth, currencies such as Australia and Canada would stand to be direct benefactors. The biggest provider of pension plans in Australia has called for the loonie to once again hit parity and the Aussie to float up to the 90 handle. I don't disagree with that assessment as commodity rich countries and those with sound fundamentals will be in a much better starting position than most, but only time will tell. Interest rate differential should also come back into play, especially if the US keeps rates where they are for an extended period of time. Guess which countries are the ones discussing rates hikes for next year...yep, it's several of the commodity currencies.

Before I head to the big finish, I'll leave you with the second installment from our big boss, Frank Trotter. Let's see what Frank has to say:

"It is still beautiful here in Vancouver. In the vertical downtown, with steel and concrete building, architects have gone to extreme lengths to add water follies - waterfalls, streams, pools and trickles to tie the outdoors into the bustling downtown. Fifteen minutes away by ferry and bus we entered the forest at the salmon hatchery and walked down along the stream, across the Lions Gate bridge and back to reality. While we walked the US dollar continued to trickle downhill as Mike surely will report. While the crystal ball is a bit clouded it's hard for me to see anything but decline for the next 3 -5 years."

Sounds like everyone is on the same page to me...

Currencies today 7/23/09: A$ .8182, kiwi .6598, C$ .9098, euro 1.4217, sterling 1.6507, Swiss .9350, rand 7.6961, krone 6.2728, SEK 7.5695, forint 190.73, zloty 2.9858, koruna 18.0164, yen 94.44, sing 1.4413, HKD 7.7500, INR 48.4637, China 6.8309, pesos 13.2362, BRL 1.9038, dollar index 78.80, Oil $65.25, Silver $13.7775, and Gold... 952.70

That's it for today...It was another busy day yesterday as the MarketSafe BRIC CD continues to gain traction and today doesn't look to be any different. We're going to be a bit short on the desk today and I already have a stack of stuff to do, so I should probably be hitting the send button right about now. Thursdays have become breakfast sandwich day on the desk so I can't wait for that bag of goodness to arrive in a little while. Anyway...have a great day and a Terrific Thursday...

Mike Meyer
Assistant Vice President

EverBank World Markets
8328 Eager Rd, Ste 300
St. Louis, MO 63144
Phone: 800-926-4922
Fax: 888-882-0073
Mike Meyer
Assistant Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

The U.S. Treasury Moves The Goal Posts...

Chuck Butler — Wed, 01 Jul 2009 14:33:01 GMT

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

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

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

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

In This Issue..

* A 4-day rally gets stopped at the border...
* Home Prices fall at a -18.12% pace...
* Alice Rivlin gives her 2-cents...
* Kiwi bond maturities galore next month...

And Now... Today's Pfennig!

The U.S. Treasury Moves The Goal Posts...

Good day... And a Wonderful Wednesday to you! As tradition with the Pfennig would have it, here's my introduction to July... There I was... On a July morning... Looking for love... With the strength of a new day dawning, and... The beautiful sun...

Yes, for those "old rockers" from the 70's like me... That's Uriah Heep, at their best!

OK... So, welcome to July! The last day of June was quite the volatile one to say the least! There we were waiting for the S&P/CaseShiller Home Price Index to print, and show that home prices were still down by quite a bit, when it did, it did, it printed at -18.12%... But! The media was all over that like a cheap suit, clamoring that the spiral down in Home Prices had come to and end! Which, may be true... But wouldn't you want to wait to see if next month's report confirms it? And... By the way... Since when does -18.12% fall in home prices beckon a rally? Yesterday, would be that answer!

So... The currency rally that was going on for a 4th day, was quickly wiped out, Ventures style... What? Don't know who the Ventures are? Boy, you really missed a lot of great instrumentals! Any way, the euro sunk like the Titanic from a level of 1.4130 to 1.40... The iceberg that caused this mess was simply the fact that traders, etc. believe the U.S. is on its way out of this mess... Of course, they must not be Pfennig readers, because... They would have read yesterday how I detailed the monthly numbers and showed how even with the spiral down in Home Prices ending, it would take until 2011 before the Home Prices got back to zero!

But NOOOOOOO!!!! They couldn't read it until late yesterday afternoon, because... Houston, we had a problem, with the Pfennig's delivery yesterday... See, how I've mellowed? I'm not even going to rant about this... Instead, I'll just remind everyone that whenever the Pfennig doesn't show up in your email box, you can most likely find it to read on the Pfennig's website, where you can view that "glamour shot" of me, and archives of the Pfennig! You can find it here: www.dailypfennig.com ---- Hope that helps!

OK... Well... After the thrill is gone, and the dust settled on all that yesterday, the euro is leading the other currencies higher once again... Here are a few things that have caused a sell-off of the dollar overnight once again...

Not that I'm a fan of his... In fact, I don't really care at all... But George Soros, normally has some interesting things to say, that end up being bang on... So here are a few one liners from a speech by George Soros yesterday... I believe this sounds very much like the things I tell you, have told you, and will continue to tell you...

SOROS SAYS SEES A "STOP-GO" ECONOMY GOING FORWARD
SOROS SAYS SELF-CORRECTING MARKETS IS A MISCONCEPTION
SOROS SAYS INFLATION FEARS WILL DRIVE UP RATES AS MARKETS REVIVE, CHOKING OFF GROWTH
SOROS SAYS CURRENT SUPER BUBBLE MADE POSSIBLE BY PAST INTERVENTION, EFFORT TO RESOLVE PREVIOUS BUBBLES
SOROS SAYS FORMER FED CHAIRMAN GREENSPAN REFUSED TO ACCEPT RESPONSIBILITY FOR STOPPING BUBBLES

And then there was Alice Rivlin, she of former Budget Director, and former Fed Reserve member, fame, had a few things to say to the House Budget Committee... Good stuff, but you have to wonder if anyone was paying attention! Here's Alice!

"The long term budget outlook: impending catastrophe"

"No one needs to remind this Committee that the outlook for the federal budget is worrisome indeed, scary. Long before the financial crisis and the current deep recession, this Committee was anxiously pointing out that current federal spending and revenue policies are on a risky, unsustainable course. Promises made under the major entitlement programs (especially Medicare and Medicaid) will increase federal spending rapidly over the next couple of decades, as the population ages and medical spending continues to rise faster than other spending. Federal expenditures are projected to grow substantially faster than revenues, opening widening deficit gaps that cannot not be financed."

Hmmm... Sounds like me too! Is this "sound like Chuck day?" HA!

OK... Enough of all that, I don't want anyone to get hurt, and I should have told everyone to put away the sharp objects before reading!

In other data yesterday, Consumer Confidence took a step backward, and fell in June to 49.3 from May's figure of 54.8... Maybe those that were surveyed has just read Alive Rivlin's talk to the House Budget Committee! Seriously though, this was a surprise, given the fat that the DOW gained 838 points in the 2nd QTR! At least, that's what the Wall Street Journal said!

Today, we get a truckload of data starting with Challenger Job Cuts, and the ADP Employment Change. Those are followed by the ISM Manufacturing Index, Construction Spending, Pending Home Sales and Vehicle Sales... Not a lot of "major" data prints, but still stuff to check the pulse of the economy.

I was talking to my good friend, and an economics professor at a prestigious University, yesterday, and she mentioned that "this piece of data is questionable as to the inputs"... I said to her... "What piece of data isn't questionable these days?"

OK... The "demand for high yield" was put on hold yesterday... But it will return, or at least I should say I think it will return... I don't know for sure to say "it will", so had better make the legal beagles happy... That's funny! To say that they would be "happy" with me... They cringe, and get very uncomfortable every day when they read the Pfennig! HA!

But you know me... I'm just trying to provide Market Commentary, and other things that I think are important, well, important to me that is!

Like... A long time reader sent me a note yesterday, and said, "hey Chuck, did you see the story in the Wall Street Journal (WSJ) on Foreign Demand for Treasuries?" Well, I hadn't and went immediately to the WSJ, and there it was... Tucked away in a corner so that no one would see it, if they weren't looking for it... A story, by Min Zeng, titled, "Is Foreign Demand As Solid As It Looks?

These are the things that really TICK ME OFF folks, so stay with me on this... Basically, as we all know the U.S. Treasury Auctions have been getting "covered" easily recently... And foreign demand was listed as the reason... Which would have been the exact opposite of what I was saying about foreigners shying away from Treasuries...

Here's the skinny... But I'll let Min Zeng tell it, since he did the research and brought this to the public, even though it was tucked away so no one would notice!

"But in a little-noticed switch on June 1, the Treasury changed the way it accounts for indirect bids, putting more buyers under that umbrella and boosting the portion of recent Treasury sales that the market perceived were being bought by foreigners.

The new definitions are deep in the arcane world of Treasury auctions. The change involves buyers who place orders through primary dealers. Those had been counted as direct buyers, but as of June 1 they were classified as indirect buyers, making that group larger than before. Because investors view that group as being dominated by foreign buyers, they assumed foreign demand was higher."

>>>> OK, back to me... Ahhh, so that's what's going on... The Treasury "moved the goal posts on us"... As Sylvester would say... That's despicable! Why isn't someone in Washington D.C. shouting from the roof tops about this? Oh, that's right, they're all in cahoots!

This is HUGE folks... So... When the markets were thinking that foreign demand was increasing, it was actually, as I had said, shying away from Treasuries! Which, if the market participants are thinking that as long as foreigners are "buying into our deficit spending" then the dollar will be on terra firma, but instead are getting "duped" by the U.S. Treasury, you would think that someone would have some xplainin to do... Right Lucy?

And here's another thing that just ticked me off when I read it this morning... Recall, last week I told you about how someone in China was dissing the talk that China's stimulus was working, and that China would not be recovering, which sent the Aussie dollar to the woodshed until this news had passed? Well... Talk about egg on their face! Here's the skinny...

China's manufacturing expanded for a fourth month in June... The official Purchasing Managers' Index rose to a seasonally adjusted 53.2 in June from 53.1 in May... And just like here in the U.S. any reading above 50 is thought to show manufacturing is expanding... The manufacturing index in the U.S. is around 44, so... We DO have the tale of two economies...

In one corner, we have the Chinese who have spent about $585 Billion worth of renminbi in stimulus, and are seeing the results... Whereas in the other corner we have the U.S. who have spent... More money than you can shake a stick at, and are not seeing green shoots like they "think they are", instead they see dandelions, and weeds!

And the currencies of Australia and New Zealand have responded positively to this news from China...

And since I'm talking about China, might as well check on the other members of the BRIC's (Brazil, Russia, India and China) Brazil's real just posted its best quarterly performance on record, and India was Asia's 3rd best performing currency, and if you throw out the two currencies above India that are illiquid, South Korea, and Indonesia, India was the best performing currency in Asia in the second QTR...

And the people over at the Royal Bank of Scotland (RBS) believe that the rupee won't stop here... RBS issued a research report calling for a record 11% gain by the rupee in the 3rd QTR... I bet this news is music to the ears of my colleague on the "other" newsletter that I write... The Currency Capitalist... (to find out more: https://www.web-purchases.com/CUC/WCUCJ900/landing) My colleague, Ashish Advani, at the Sovereign Society, has been saying the rupee would be a strong performer for months now!

Here's something you might want to be aware of, regarding the New Zealand dollar / kiwi... About $4.5 Billion in kiwi Uridashi and euro kiwi bonds denominated in kiwi will expire next month... I'm told that this is more than 4 times the size of a usual monthly expiration of bonds. This could very well be the hoola hoop the Reserve Bank of New Zealand (RBNZ) is looking for, given their wish that kiwi would weaken...

Royal Bank of Canada's Currency guru, Sue Trinh, says that kiwi weakness could be beneficial to Aussie dollars, as the Japanese are leaning toward Aussie over kiwi these days...

Sounds about right to me!

And then there was this... OK, you all saw that Bernie Madoff was given 150 years in prison... Did you see that his wife, Ruth, reached an agreement with the authorities to return all of her wealth except $2.5 million that she got to keep? The thing that I still don't get is how there aren't more people going down with the ship on this one... I've been in the back office of brokerage firms, ran a margin dept, etc. and know this wasn't just Bernie and his accountant... There was a lot of wool pulled over many eyes... And this will be the next step in the investigation by the U.S. officials... To see, who else knew what... If a whole stable full of people aren't found to have known, then I'll be surprised...

Currencies today 7/1/09: A$ .8045, kiwi .6410, C$ .8640, euro 1.4050, sterling 1.6430, Swiss .9220, rand 7.7675, krone 6.39, SEK 7.6337, forint 192.50, zloty 3.1390, koruna 18.3315, yen 96.90, sing 1.4475, HKD 7.75, INR 47.90, China 6.8330, pesos 13.18, BRL 1.9515, dollar index 80.11, Oil $71.27, 10-year 3.54%, Silver $13.67, and Gold... $931.20

That's it for today... So sorry about the tardiness of the Pfennig yesterday, but I can't do anything about it when we have technical difficulties... You know that I get up before the milkman, and the paper man, to get here to write it... It wasn't like I was dilly-dallying around and didn't get it done until 5 in the evening! HA! I see that my little buddy, Alex, got a 2nd and 3rd in backstroke and freestyle respectively at his latest swim meet. Really long time readers might recall when Alex's older brother, Andrew was a highly decorated swimmer, and I would write about his swimming records... And their sister Dawn, also was a medal winner as a young girl! So... It's now up to granddaughter, Delaney Grace to carry on the swimming tradition! HA! Cards lose again... UGH! OK... Time to try to get this out the door, hopefully it will go without a hitch... But whether it does or doesn't it won't stop me from having a Wonderful Wednesday... How about you?

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

Throwing A Cat Among The Pigeons Again!

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

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

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

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

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

In This Issue..

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

And Now... Today's Pfennig!

Throwing A Cat Among The Pigeons!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Maybe, Just Maybe A Break In The Link?

Chuck Butler — Wed, 27 May 2009 12:57:53 GMT

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

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

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

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

* Currencies consolidate...
* Brazil posts a surplus!
* Dr. Marc Faber speaks...
* High yielders rule!

And Now... Today's Pfennig!

Maybe, Just Maybe A Break In The Link?

Good day... And a Wonderful Wednesday to you! A very tight trading range day was in place yesterday for the currencies... In yet another sign that maybe, just maybe, because you never know, the currencies could be breaking their link to stocks... U.S. stocks jumped 196 points yesterday, and the currencies range traded... Hmmm....

Not that this will become a "stock jockey journal"... Stocks jumped on the news that Consumer Confidence surged this month... Talk about looking at things through rose colored glasses! Any way, Consumer Confidence surged... Better to have blips in Confidence than to be all negative all the time I guess! I also guess the stock jockeys took what was behind door number 1 (consumer confidence) and not was what behind door number 2, which was the Case-Shiller House Price Index...

For the first quarter, the S&P/Case-Shiller U.S. National Home Price Index posted a 19.1% drop from a year earlier, the biggest quarterly decline for the reading's 21-year history. So much for those (insert name to call them) that thought we would see Home Prices level off! Not that there's anything wrong with "wanting" to see Home prices level stop falling, but come on... Where was the proof of that happening? So... Any way... Obviously, Home Prices continue their multi-year tumble... And, the most important thing about the report is that it gives no signs... Get that? NO SIGNS, of abating Home Price declines...

Alrighty then... We've got those two under our belt! Let's get on with the news! So... Now, I read where N. Korea is threatening a strike against S. Korea... Not that we follow the S. Korean Won, but that can't be a good thing for the S. Korea's currency... Of course there are a lot worse things that could happen and people wouldn't be worrying about the currency! But for now, it's just words...

The good news this morning is that Brazil has posted their first Current Account Surplus in 19 months! $146 Million in April was the figure... And any Current Account figure that's written in black is good for a country and their currency! And the real is no exception to this rule. The real is trading this morning at 2.0060, spittin' distance from losing that "2" handle! (real is a European Style priced currency, so the lower the price, the more value it returns VS the dollar) The real hasn't seen the underbelly of a "2" handle since October of last year!

You may recall last fall, I wrote about how the real was holding serve, but eventually it had to give up ground, with the euro losing value and commodity prices circling the bowl. But now that the Big Dog, euro, and commodity prices are on the rise, once again... The real is back in the driver's seat... Ooh, ooh, ooh, driver's seat... A free Pfennig to the first person that knows the name of the band that sings that song. No Googling it!

Don't know if you look at these things or not... But Treasury yields continue to inch higher and higher... It's almost as if they are looking for the pressure point that will cause the U.S. / Fed and Treasury too much pain... In the meantime... Holders of Treasuries are losing value... Of course if they hold them to maturity they get their principal back, so no loss of principal there... But how many of the Treasuries that were purchased last year in the "flight to safety" were made with the thought in mind to hold them to maturity? My guess, is very few... And so it goes for those that thought they were making a flight to safety!

And of course, the dollars they bought to make those Treasury purchases has lost quite a bit of ground since March, which means the Treasury holders get a double whammy / hit... Bond price, and currency price... Fun times at the old Treasury ranch, eh?

And while I'm on that subject... Recall that I've gone out on the limb (no worries, I picked a big strong limb!), and said that I believe that on the other side of this current deflationary asset price scenario we are in, we'll see inflation that rivals the inflation we saw in the late 70's, early 80's... Inflation like that will absolutely kill the price of bonds...

And to that... We have a quote or two from Dr. Marc Faber. I sat on a panel with Dr. Faber at the New Orleans Investment Conference in 2007. A truly intelligent man with the ability to look ahead and see things that others don't see... Well... Any way... What I'm trying to get at is an interview that Dr. Faber gave on Bloomberg TV... Here's the good Dr.

"The U.S. economy will enter "hyperinflation" approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates." He went on to say... "I am 100 percent sure that the U.S. will go into hyperinflation. The problem with government debt growing so much is that when the time will come and the Fed should increase interest rates, they will be very reluctant to do so and so inflation will start to accelerate."

OK, back to me... Now, I think Dr. Faber mentioned Zimbabwe to illustrate his "hyperinflation" call... Myself? I think that just what I said above that inflation will rival that seen in the late 70's, early 80's... Dr. Faber has a point, that I've tried to make before, so let's see if I can get it across now... When a Central Bank raises interest rates, the new Treasury supply they issue has a higher yield, than previous ones issued... That makes the previous ones issued, less valuable. So, what will the Fed do, when the first signs of run-away inflation show up? Do they bite the bullet and raise rates causing all their previous issues to lose value (hello, China, I've got bad news for you), or do they do what Dr. Faber suggests they will do... Nothing, absolutely nothing, say it again!

And what's this all got to with currencies? Ahhhh grasshopper... Everything has to do with currencies! Those dollar denominated Treasuries when reversed and sold, will have the dollar purchases reversed and sold too!

And then throw in what I've been talking about lately with China already signing 6 currency swap agreements with countries that allows them to take dollars out of their trade equation with these countries, and put renminbi into wider use, and you've got the "Perfect Storm" forming for the dollar, folks... I know this is all what I see, and now "fact" per se... But, it's staring us right in the face! I don't know why more people aren't talking about this!

OK... Let's go somewhere else, all this talk is starting to give me a rash!

How about.... Asia? Yes, let's see... There were rumors yesterday that Asian countries like Singapore, India, and Japan had to intervene in the markets because of the dollar's decline. It's likely that Asian Central Banks had to sell their currency and buy dollars to keep the fall in the dollar to a minimum. I really, truly don't like when Central Banks get into the markets... It's manipulation... And as long as they can do that, and... Print money... There really is no such thing as "free markets", right? If, Alan Greenspan can manipulate interest rates to allow the stock market to run higher for years, was it the stocks that was the "root" of the rally, or was it the Fed Reserve manipulation? Yes, I'm sure you know the answer...

Well.. Gold continues to consolidate after last week's huge run-up. I think that when you see assets stop to take a breather, it's a good thing. 1. it allows those that were looking to buy a chance to buy without chasing a rising asset... And 2. Trading trends are not one-way streets, so as long as the asset doesn't have a HUGE sell off, then the price action is good... It allows the asset to form a new base from which to spring higher!

I see the pound sterling trading this morning with a 1.60 handle... That's the first times since November last year... Only this time the currency is rising instead of sliding down the slippery slope! I really don't see the value in pound sterling, but apparently others do! This rise does give owners who wanted to get out of the currency an opportunity to do so at higher levels!

I heard one of the salespeople yesterday tell a customer that the South African rand had been the best performing currency this year... But that was before the Brazilian real posted its Current Account Surplus and rallied! Any way, I was going to talk about the rand... Now, I've always said that I wasn't a huge fan of the rand, because it was volatile, and the corruption in the country just didn't give me a warm and fuzzy... But, what's going on right now is simply a case of the rand being 1. a high yielder, and 2. a commodity currency...

The need for higher yields is quickly becoming a growing concern for investors... They are difficult to find, and when you do find them, they're mostly the property of Emerging market countries, or Commodity countries... Not your run-of-the mill "major" currency like euro, yen, or sterling! So... What I'm telling you, is simply be careful out there in high yield land!

The price of Oil spiked up yesterday to over $63!

And finally... The first test of the 2-year auction of Treasuries, passed... But getting investors to go short probably isn't the real problem... The real test will be the 10-year and out... I told you earlier that yields were rising... Well... How does this sound? 10-year yields are up 129 Basis points so far this year and 103 Basis points since the March 18th quantitative easing announcement.

OK... The email server is down and out this morning, so I have no idea when this will actually get to you today... I've got some things to get done this morning, so I'll just go ahead and go to the Big Finish, and hope it goes out!

Currencies today 5/27/09: A$ .7845, kiwi .6190, C$ .8980, euro 1.3930, sterling 1.60, Swiss .9190, rand 8.2870, krone 6.3830, SEK 7.6570, forint 203.50, zloty 3.1950, koruna 19.23, yen 95.30, sing 1.4515, HKD 7.7525, INR 47.70, China 6.8284, pesos 13.18, BRL 2.0067, Dollar Index 80.50, Oil $63.11, Silver $14.53, and Gold... $950.60

That's it for today... Today is a very special day... It's the first ever World MS Day... 100 nations around the globe are joining together to build awareness for multiple sclerosis. My mom had MS, so that's why I point this out today. I see currencies selling off a bit since I did the currency round-up... The monsoons continue here in the Mid-West... The river that runs through my little town is swelling once again, with all this rain-fall I have to believe it will spill over its banks soon... And that makes getting to and leaving from my little town a bit difficult! Well... Mike's here, that means I'm running late! Time to get on with this Hump Day... I hope your Wednesday is Wonderful!

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

Dollar falls as US consumer confidence increases...

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

.........But First, A Word From Our Sponsor..........
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•Record net income of $46.0 million, a 52% increase from 2007
•Assets grew by 28% during the year to over $7.0 billion
•Bank deposits grew by 29% during the year, an increase of $1.1 billion and the largest annual deposit growth in company history to over $5.0 billion

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In This Issue..

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

And Now... Today's Pfennig!

Dollar falls as US consumer confidence increases...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Currencies Continue to Rally...

Chuck Butler — Fri, 24 Apr 2009 16:08:07 GMT

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

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

.Record net income of $46.0 million, a 52% increase from 2007
.Assets grew by 28% during the year to over $7.0 billion
.Bank deposits grew by 29% during the year, an increase of $1.1 billion and the largest annual deposit growth in company history to over $5.0 billion

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

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

In This Issue..

* An auction announcement...
* Euro soars!
* Gold back to $900...
* Who's telling the truth?

And Now... Today's Pfennig!

Currencies Rally...

Good day... And a Happy Friday to you! A Fantastico Friday to boot! I leave for Bermuda very early tomorrow morning, so no late night shenanigans for me tonight! HA! I'm still trying to make sure I've beaten that pneumonia, and being a "good boy"!

Well... Front and center this morning, we have a Big currency rally going on... Recall yesterday, I told you of the beginning of the rally... Well, it really got legs as the day went on, and once again, it was not sold off overnight, but added to! Here's what I believe, and you won't see this anywhere else, my friends, is moving these currencies so violently higher VS the dollar...

First, let me set the stage... I've been carrying on about how the Deficit Spending here in the U.S. was going to require a TON of Treasuries to be sold to finance that Deficit Spending... I even told you the other day that the U.K. Gilts were getting clobbered because of the largest Budget Deficit in the U.K. since World War II, and that what happened in the U.K. had been carrying over to the U.S.... OK... Got the picture, right?

Well... Yesterday morning the U.S. announced that they would sell Treasuries in these amounts, and tenors... $40 Billion 2-year, $35 Billion 5-year and $26 Billion 7-year next Monday, Tuesday, and Wednesday respectively... OMG! That's over $100 Billion in new Treasury issuance that the markets are going to have to digest... Is it the straw that breaks the proverbial camel's back? Are the markets saying, "we don't believe you will be able to successfully auction that amount without aggressively raising the yield?" I think so... Now, see if CNBC, MSNBC, FBN, CNN or any of the other media stations run this story!

There's nothing else THAT BIG that could have moved the euro like this... Oh! I haven't even told you where the single unit is trading this morning! My Bad! 1.3230! That's right... It skipped to my Lou right through the 1.31 handle, like a hot knife goes through margarine! The euro did get an additional boost this morning when it was announced that German Business Confidence, as measured by the think tank IFO, rebounded from a 26-year low this month...

So... Let's slow down, those beginning paragraphs have me out of breath! OK, I'm calmed down now... So, let's look around the horn to see what the other currencies are doing, now that the BIG DOG, euro has left the porch to chase the dollar down the street. Well, the usual suspects like the euro-alternative currencies like Norway, Sweden, Switzerland are all much stronger VS the dollar this morning... And a look to the High Yielders, shows that they too have moved in step with the Big Dog.. Aussie, kiwi, rand, and real are all taking liberties VS the dollar.

There's another high yielder that I don't talk about all the time, and the last time I did, I gave it the kiss of death, watching it fall a couple percent after I mentioned it... The Indian rupee... Well... The rupee is on the rally tracks again, and this time, someone other than me is noticing... The folks over at Reliance Equities International have noticed that the Indian stock market has risen for 7 straight weeks, and believe that they will see additional flow into this market... Therefore they believe the rupee may be in store to gain 6.7% in the coming weeks... Now, for you big swingers out there... 6.7% probably doesn't even show up on your radar... But for all the rest of us, worried more about the "Return of Capital, rather than the Return on Capital" these days... That doesn't sound too shabby!

On the data front yesterday we had the Initial Weekly Jobless Claims, which came in as expected, which doesn't make it any better! The total of unemployed people filing claims last week totaled 640,000! Something that most people don't look at, but I've trained the folks here to do, as Chris Gaffney yelled out yesterday morning... "Continuing Claims are awful, they have risen to 6,137,000!"

Existing Home Sales continued to show the housing markets is still in search of a bottom... Existing Home Sales fell 3%, and the home prices continue to fall with the median price down 12% from a year ago... The other day, I made a statement that I should have been taken to the woodshed for... I said that with interest rates this low, people should be taking advantage of them and buying those houses now... But... As I keep saying, home prices will continue to fall... So why buy now if you can get it cheaper tomorrow? Sorry... What I should have said was to refinance now is a very good idea!

In Canada yesterday... The Bank of Canada (BOC) explained the details of Quantitative Easing "should they need it"... That was HUGE for the loonie, as the BOC hasn't implemented this monetary policy yet... They just have it ready and on the shelf should they need it... Good plan!

Another item that has helped to boost the loonie (Canadian dollar) was a report yesterday that showed Retail Sales unexpectedly rose .2% in February... Geez Louise, can't they get this data on a more timely basis? February seems like a month of Sundays ago to me! Any way, the Canadian economy does have a pulse... And that's a good thing!

Gold didn't like the color of the Treasury Auction announcement yesterday either, and the shiny metal pushed back over $900 once again. Oh... And here's a story that just hit the news wires this morning... It is reported that China has increased their Gold holdings 76% to the 5th Biggest Country (of Gold holdings). China increased their holdings from 454 Tons to 1,054 Tons... For those of you keeping score at home that's $31 Billion dollars worth of Gold!

OK... Before we head to the Big Finish today... Have you heard or seen the story going around about Bank of America's (BOA) purchase of Merrill Lynch (Merrill)? OMG! This is HUGE! BOA's CEO, Ken Lewis testified this week and said that Fed Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America to not discuss its increasingly troubled plan to buy Merrill Lynch -- a deal that later triggered a government bailout of BOA... Now, all my licenses in the brokerage business tell me that that's a HUGE NO-NO! A Company is supposed to alert their shareholders of any materially significant financial hits... If I were a shareholder of BOA, I would be steaming mad right now! As a market participant it still ticks me off!

Now... Here's the latest from the Wall Street Journal this morning... "The Federal Reserve didn't advise Bank of America or CEO Ken Lewis "on any questions of disclosure," a spokeswoman for Fed Chairman Ben Bernanke said."

Oh Great! Now we have a "he said - no he didn't" scenario! That's their plan folks... Attempt to confuse the masses, throw up smoke screens, and maybe it all goes away... Not on my watch! We need to know who's telling the truth!

And one of the things they will use to direct everyone's attention away from this awful thing, is... Drum roll please.............. The Stress Tests! That's right! They are supposed to be talked about today... I still hold to my beliefs that we won't really be told the truth about these 19 largest banks... I can only hope to be wrong!

Oh, and one more thing... A reader asked me why I never talked about Silver, always choosing to talk about Gold... Hmmm... I guess it's sort of like the Paris Hilton thing... Or let's see what else could I compare it to.... Any way, I don't mean to short change Silver, when I talk about Gold you can believe that it includes Silver... Imagine my poor fat fingers if I had to type Gold and Silver every time I talked about Gold and Silver...

And... On that note... Time to go to the Big Finish!

Currencies today 4/24/09: A$ .7185, kiwi .5680, C$ .8225, euro 1.3250, sterling 1.4625, Swiss .8775, rand 8.8550, krone 6.5650, SEK 8.20, forint 223.40, zloty 3.4150, koruna 20.1950, yen 96.88, sing 1.49, HKD 7.75, INR 49.88, China 6.8272, pesos 13.12, BRL 2.2050, dollar index 84.78, Oil $49.91, Silver $12.82, and Gold... $911

That's it for today... And for me for the next week! Chris Gaffney will have the conn on the Pfennig next week. I'm very excited about going to Bermuda, although it looks like the good folks at the Sovereign Society are going to keep me busy! Cardinals sweep the Mets! Wow! That has a great sound to it... The Cubs come to town tonight, it sure would be sweet to sweep them too! But that's getting greedy, I would be giddy with 2 of 3! Tomorrow is the draft for the NFL, the Rams have the second pick... Memo to the Rams... Don't blow it! An absolutely beautiful day here yesterday... My dad used to say to me when it would be blue skies, sunny, warm days... He would say... "Chuck, they don't have days like this in the Soviet Union"... I use that saying with my kids, and they look at me like I should be wrapped in a white suit! OK... Time to go... Hope all's well with everyone, and you have a Fantastico Friday!

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

The waiting game...

Chuck Butler — Wed, 01 Apr 2009 15:15:52 GMT

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......................................................
In This Issue..

* Waiting on G20 and the ECB...
* US home prices plunge...
* What will come from G20...
* ECB to cut rates, but no quantitative easing...

And Now... Today's Pfennig!

The waiting game...

Good day... The markets will play a waiting game today, and I expect the currencies to trade in a pretty flat range. The focus will be on the G20 which starts tomorrow, and the ECB announcement which will also be released tomorrow. So today I will share my views on both of these topics, but first I will report on what occurred yesterday and overnight in the currency markets.

The dollar climbed yesterday morning as data released showed US home prices plunged at a record pace and consumer confidence continues to bottom. US home prices fell nearly 19% in January according to the S&P Case Shiller index. This was even worse than economists had predicted, and December's numbers were revised down.

With housing continuing down, and employment prospects dim, it is no surprise that the US consumer confidence numbers remained near record lows in March. The Obama administration has been making an all out effort to try and cheerlead US consumers back into the old 'borrow and spend' mentality, but the bad economic data are making his efforts futile. US consumers continue to be hit with bad news, and are going to need much more convincing before they start to rush out and spend again. I know this probably won't be popular with many, but is it really so bad for US consumers to be tightening their belts? Yes, I know it may extend the recession, but I feel the US consumer will come out of this much healthier if we can permanently break the borrow and spend mentality.

The global imbalances, which contributed greatly to the situation we now find ourselves in need to be reversed. The Chinese need to increase their consumption, and the US needs to increase our savings. This is the only way the world economy can move back toward equilibrium. So a depressed and scared US consumer may be just what we need to correct these problems in the long run. I think it is foolish and shortsighted to try and encourage the US consumers to start their old borrow and spend habits; that is what helped get us into this in the first place! (I doubt if you will see that spin on things anywhere else!!)

Recent economic reports in the US had shown an indication of a pickup in consumer spending, and a rebound in durable goods orders, causing a selloff in the dollar and a nice rally on Wall Street. But yesterday's Chicago purchasing managers index threw cold water on these nascent signs of recovery. Today I expect to see additional indications the economic slowdown will continue as we get the ISM manufacturing index, construction spending, pending home sales, and US vehicle sales numbers.

We will also see our first indication of the monthly employment picture with the release of the Challenger job cuts number and the ADP employment change report for March. The Challenger number has already been released, and showed the number of job cuts jumped 180% in March YoY. The ADP number is expected to show another 663k jobs were lost in March, slightly lower than February's 697k but still bad news for the economy.

But employment is falling everywhere. The European unemployment rate increased to 8.5% in February according to a report released this morning. This is the highest since May 2006, and was above expectations. Japan also announced their unemployment rate yesterday, which rose to 4.4% in February compared to 4.1% the month before. The WorldBank and OECD released a report yesterday which warned surging unemployment will cause the current economic downturn to deepen and extend. The Organization for Economic Cooperation and Development (this is why they just go by OECD!) predicted that global GDP will contract by 4.3% this year as unemployment continues to grow. The WorldBank lowered its growth forecasts for developing countries this year by more than half to just 2.1%. In this environment, countries such as China, India, Brazil and Australia, which are predicted to beat these growth projections will continue to be attractive targets for investment.

The deteriorating world economy adds to the urgency surrounding tomorrow's G20 meeting in London. The news media has set expectations unreasonably high, with looking for a solution to the global economic slowdown to emerge.

Unfortunately I don't believe we will see much come out of this meeting. The main focus of the meetings will be the establishment of new regulations for the global financial system. Treasury Secretary Geithner laid out his design plans over the past few days, which include greater regulation of hedge funds and the extension of federal regulations into the currently unregulated world of exotic financial instruments such as credit default swaps. It would also impose tougher standards on financial institutions judged to be so big that their failure would represent a risk to the entire system.

But leaders from Germany and France don't believe these plans go far enough. In fact, President Sarkozy threatened to walk out of the meetings if the G20 doesn't put more teeth in the regulations proposed by the US and the UK.

But US financial firms still dominate the global system, and the job of regulating these firms falls to Geithner and the US. So while the rest of G20 may want to try and demand tougher regulations, the political landscape in the US won't allow it, and Geithner's plan will probably end up

Meanwhile President Obama will join the host of the event, Prime Minister Gordon Brown to try and convince others in Europe to follow their lead and put together sizable economic stimulus programs to jump-start global growth. The US has taken the lead on deficit spending (no surprise there!) with the administration spending $12.8 trillion in their stimulus efforts, close to the total GDP of the US for 2008.

But leaders from Europe worry about the inflationary consequences of these huge stimulus projects, and are hesitant to load up more debt onto the backs of their citizens. They don't want to risk the long term health of their economies for a quick path out of the current economic quagmire. Can you blame them? I know Obama is an excellent orator, but he is going to have to be at his all time smoothest to convince these other leaders to follow his lead. The UK and US economies aren't a picture of health right now, and the quantitative easing measures they are pushing others to emulate are mostly untested.

While global financial regulation will certainly be a topic addressed during the summit, I can tell you a topic which won't get any traction: a move toward a global currency to replace the dollar. For all of the press China and Russia have garnered with their proposals the past few days, the US will block any serious attempts to discuss an alternative to the US$. Much of the damage to the credibility of US$ as a reserve currency has already occurred. And regardless of whether an official alternative to the US$ is found, foreign countries will continue to diversify their reserves out of the dollar. Data from the IMF released yesterday showed the dollar's share of official foreign exchange reserves fell last year, while the yen and euro gained. The dollar accounted for 64% of the reserves, down slightly from the month prior. As with financial regulation, each country has its own agenda with regard to its reserves, and the trend away from US$ will likely continue, no matter what is or is not decided over the next few days in London.

Basically, each leader to the G20 summit is showing up with their own set of problems, and the US and UK's problems are some of the worst. To think these leaders will be able to unveil a solution to all of these diverse problems in just 8 days is ludicrous. While the meeting will hopefully start us on the path toward global financial reforms, I am expecting the global markets to be disappointed with the lack of progress after G20.

The ECB will be announcing their rate decision tomorrow, and are expected to make a 50 basis point cut in their main lending rate. The main topic of discussion on the currency trade desks is the question of quantitative easing and whether the ECB will look to follow the US, UK, and Japanese central banks.

The media's inflation/deflation pendulum has started to swing back toward inflation again benefiting commodities. Gold gained almost $10 overnight as investors moved back into this inflation hedge. While the US and UK are encouraging others to ignore the future consequences of pumping huge amounts of liquidity into their financial systems. Commodities prices benefit in two different ways from this quantitative easing. First, some of the huge amounts of stimulus will be spent on infrastructure projects which will increase demand for commodities. Also, if the stimulus works as planned, the economies will start growing again which will cause demand for commodities to increase. Finally, the liquidity which is being pumped into the system will likely spur inflation, with commodity prices again moving higher. So commodities, and those countries which produce/export them will likely be some of the best performers going forward.

Went a little long today, so I'll end it here.

Currencies today 4/1/2009: A$ .6946, kiwi .5628, C$ .7913, euro 1.3269, sterling 1.4416, Swiss .8777, rand 9.418, krone 6.7161, SEK 8.2415, forint 230.01, zloty 3.4397, koruna 20.4272, yen 98.85, sing 1.5215, HKD 7.7504, INR 50.73, China 6.8343, pesos 14.0859, BRL 2.3228, dollar index 85.43, Oil $48.52, Silver $13.025, and Gold... 926.80

That's it for today... Shaping up to be a beautiful spring day here in St. Louis. We have several visitors from out of town here this week, as we are hosting the Women's Final Four so I hope the weather holds out for them. Short handed here on the desk today as Tim Smith headed out to vacation today. It is Tim's birthday today, so I guess I can't blame him for taking it off! Hope everyone has a Wonderful Wednesday!!
Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

The Treasury Secretary rides to the rescue...

Chuck Butler — Tue, 24 Mar 2009 14:58:15 GMT

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In This Issue..

* Geithner rescues the stock market...
* Commercial real estate, the next big drag...
* Norway: the new safe haven...
* China pushes for a new reserve currency...

And Now... Today's Pfennig!

The Treasury Secretary rides to the rescue...

Good day...

It was a dramatic day on Wall Street yesterday, with the major stock indexes surging as much as 6 percent, including the Dow Jones which jumped more than 400 points. The reason for all of this euphoria on Wall Street? A combination of Geithner's plan to rescue the banks from the toxic debt in which many are mired, and a surprisingly large uptick in existing home sales. I touched briefly on the Giethner plan in yesterday's Pfennig and readers know I am more than a little skeptical about its possible success.

But the housing numbers really caught me off guard. Existing home sales jumped a tremendous 5.1% in February, clearly above all expectations. But Chuck pointed out that the almost 1/2 of the sales were either foreclosures or short sales, hardly what you would call a "rebound" in home sales! And these additional existing home sales came at deep discounts. The median price for an existing home fell 15.5% in February 2009 to $165,400 as compared to $195,800 in February of 2008.

Investors are desperate for any sign the housing crisis may be coming to an end, so the housing report was greeted with enthusiasm in the markets. This is the second positive report for housing in the past two weeks, as Mike reported housing starts for February came in much better than expected last week. I don't mean to rain on everybody's parade, but this is looking a lot like a sucker's rally to me. Traders had become overly pessimistic, and traders who don't want to miss out on the next big rally jump back into the market on the smallest kernel of good news. Unfortunately, I don't think the good news will continue.

I don't expect today's housing data to surprise the markets, as we will see the House price Index which is expected to have fallen by almost 1% MoM. We will also get the ABC Consumer Confidence number which will likely show a another drop. Tomorrow will bring more negative data with the release of Durable goods orders here in the US which is expected to show a drop of 2.5% in February after a 5.2% fall in January. More housing numbers will be released on Wednesday which could confirm yesterdays surprise uptick in the housing market. Thursday will bring us the big kahuna for the week, with the release of 4th quarter GDP along with the weekly jobless claims.

I got a call mid morning from another WSJ reporter by the name of David Gaffen who wanted to know what the new Tarp plan meant for the dollar. In particular, he wanted to know why the dollar was rallying at the same time we were seeing a major rally in stocks and a sell off in bonds. I explained to him that today's movements just didn't fit the 'normal' trading pattern which we had established for the dollar. The equity markets looked like investors were confident that the Geithner plan would finally thaw the credit markets. But if investors confidence was returning, why was the dollar strong? Well the explanation was pretty simple: investors were taking profits from last week's dollar weakness, and moving these profits back into the stock market. I explained that this move wouldn't have legs, and the dollar will likely see more selling over the next few days. You can read the entire article by David Gaffen at http://blogs.wsj.com/marketbeat/2009/03/23/the-new-tarp-good-or-bad-for-the-dollar/.

Yesterday afternoon I spoke to a gentleman who is a 'workout' expert for commercial real estate. Banks seek out his expertise in turning around failed or near failing commercial properties. Needless to say, business is booming, and in his opinion it will only get better. He says banks have been knocking down his door to try and help them 'work out' of some major commercial projects. He predicts that during the next several months we will begin to hear about some major commercial projects going belly up. I know commercial real estate is already starting down in the St. Louis area, but he claims this is only the beginning. Many of these projects have been just hanging on, hoping consumers will return with Obama's second stimulus. But the newest stimulus doesn't put money in consumers hands, so these commercial projects will have to fold.

While the housing market is showing some indications that a bottom could be near (not in my opinion, but some data does look positive), the commercial real estate market is just beginning its dive. Banks who are finally ridding themselves of toxic home mortgages will now have to deal with even more toxic commercial loans.

So what did all of this new found excitement on Wall Street do to the currency markets? As I mentioned earlier, the dollar began the day weaker; probably due to profit taking. As the day wore on, investors started to return to the higher yielding currencies, with Australia topping the return charts again. This was the 10th day in a row for gains in the AUD$ vs. the US$, its longest winning streak since October 2007. The relatively high yields available in Australia combined with improved commodity markets are the major reasons for the continued strength of the Aussie dollar.

Both the New Zealand dollar and Swedish Krona were also stronger, rising over 2% in the past 24 hours. The Canadian dollar extended its two week advance vs. the US$ jumping up an additional 1.5%. Even the Brazilian real, which had been slipping lately enjoyed a day in the sun. Much of this recent strength is related to the beginning of a commodity rebound. Precious metals and oil have both rebounded recently with the prospect that global demand will begin to pick up later this year. Continued investment into infrastructure improvements should help revive demand, as the US and China have announced plans to spend $1.4 trillion on roads, bridges, schools, and hospitals. Crude oil has rose to the highest level in almost four months, another good sign for commodity based currencies.

But commodity prices are the only thing stoking this latest commodity currency rally. With the Fed turning toward additional stimulus in the form of quantitative easing, currency traders are looking toward countries who are maintaining current interest rate levels. With deflation seemingly taking a back seat, and inflation coming back into the picture, countries which have resisted dropping rates to near zero have much better prospects. These include some of our favorites including the Australian dollar, Swedish Krona, and Norwegian krone.

An associate of mine, Keith Rigdon, sent me an article which appeared in the online version of Time magazine yesterday. The article's title says it all: "Why the Norwegian Krone is the World's Safest Currency". The article, written by Adam Smith, draws heavily on research done by HSBC. The main reasons given by HSBC are well known to Pfennig readers. "Norway's budget and current-account surpluses are the biggest among nations with the 10 most traded currencies. Factor in the country's $350 billion sovereign wealth fund pumped full of the country's oil revenues, and the cost of insuring against government default in Norway - a key measure of a currency's safety - is the lowest of those countries" writes Smith.

According to the article, the series of interest rate cuts over the past several months have started to work. This "makes it unlikely Norway's central bank will need to revert to quantitative easing, the modern day equivalent of printing money that's currently in fashion from the US to the UK." According to HSBC, "the Norwegian krone is probably the best currency in the world."

You can read the full article at the following URL: Http://www.time.com/time/business/article/0,8599,1887090,00.html

China's central bank Governor Zhou Xiaochuan was in the news again yesterday. He suggested the IMF should look to create a 'super sovereign reserve currency' that is not connected to any individual nation. Sounds like China is continuing to look for alternatives for their $1.95 trillion of reserves. They will present their proposals to reform the IMF at next month's Gorup of 20 meeting. While a super sovereign reserve currency is probably a ways away, it is obvious that China is wanting to find alternatives to their huge investments in the US$. Not a good sign for the green/peachback.

Going a little long this morning, so I'll get to the currency wrap up now:

Currencies today 3/23/2009: A$ .6994, kiwi .5654, C$ .8160, euro 1.3535, sterling 1.4666, Swiss .8878, rand 9.4611, krone 6.3442, SEK 8.0223, forint 222.38, zloty 3.3544, koruna 19.8690, yen 98.07, sing 1.5097, HKD 7.75, INR 50.66, China 6.8295, pesos 14.247, BRL 2.2449, dollar index 83.84, Oil $53.40, Silver $13.51, and Gold... 930.43

That's it for today... We had another beautiful spring day here yesterday. Got home and actually had to cut the grass for the first time. I also began my annual battle with the moles which seem to multiply each winter! Those little guys can sure tear up a lawn in a hurry. Today we are supposed to get a batch of spring thunderstorms, and the weatherman is actually saying we may see a light dusting of snow by the weekend. Crazy spring weather! Hope everyone has a Terrific Tuesday!!

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

High yeilders continue to rally...

Chuck Butler — Mon, 23 Mar 2009 13:47:52 GMT

In This Issue..

* High yeilders continue to rally...
* Quantitative easing drives the markets...
* Inventories to drive inflation...
* Happy Birthday Chuck...

And Now... Today's Pfennig!

High yeilders continue to rally...

Good day... I'm back from a long vacation with the family down in Florida, I had a great time but it actually feels good to get back to work. But before I get started this morning, I want to compliment Mike on what a fantastic job he did on the Pfennigs while Chuck and I were in Florida. Mike jumped right in and cranked out some great information, setting the bar rather high for me. We have a busy week ahead of us, so better get right to it.

Currency investors continued to pull out of the dollar and move funds back into higher yielding currencies on Friday. The best performing currencies on Friday were the higher yielding commodity based currencies of Australia, New Zealand, and South Africa. Investors were eager to move money back into the higher interest rates available in these currencies as markets began to stabilize. With the Feds announcement last week that it will buy $300 billion of US government bonds, deflation is now a thing of the past. This purchase by the Fed monetizes the debt, basically pumping the cash directly into the markets. It is the most inflationary action the Fed can take, Bernanke has now put the printing presses in high gear. With deflation no longer a worry, commodity currencies have begun to look attractive again.

The Norwegian Krone was one of the top performers last week with investors looking to move funds back into this country which should benefit from the rising inflation. With oil moving back up, investors began to move back into the Norwegian Krone. But the Norwegian Krone has more than just oil going for it. Norway has solid economic fundamentals and a fully funded pension system, two of the main reasons it continues to be a currency which should be in everyone's portfolio.

Quantitative easing is what drove the currency markets at the end of last week, as Federal Reserve Chairman Ben Bernanke continues to try and drive down interest rates here in the US. As Mike wrote last week, Bernanke continues to do everything he can to drive interest rates down.

Today US Treasury Secretary Timothy Geithner will announce details of his plan to buy up to $1 trillion dollars worth of toxic assets from the banks who own them. His plan is to form a private/public joint venture to bid on these toxic mortgage assets, creating a 'market' for them and getting them off of bank's balance sheets. His hope is that with these assets removed, the banks will be able to start lending again. "By providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets," Geithner said in an op-ed piece published in today's Wall Street Journal. "The ability to sell assets to this fund will make it easier for banks to raise private capital."

But I still question just how effective his plan will be. After all, many of the same guys who decided to buy these toxic assets are still running these banks. Will private capital rush back into these banks whose management made these incredibly bad investment decisions? And removing the toxic assets from bank's balance sheets won't help the housing market, so homeowners who are upside down in their home loans still aren't going to qualify for new loans.

But Bernanke is going to try his best to 'manufacture' a refinance boom; hoping to help homeowners pull any equity left in their homes back out and get them to start spending again. But with home prices falling in the double digits across most of the nation, homeowners who are refinancing don't have much equity left in their homes. The ATM which was the American Home has run out of cash. And doesn't Bernanke realize that this is exactly what put us into this mess? Trying to hold down interest rates at abnormally low levels sure doesn't sound like an intelligent way to get us back out of this mess.

I spoke to a reporter from the WSJ last week regarding what both Chuck and Mike wrote about the decline in inventories and the inflationary impact these declines could have. I guess my quotes hit the edit room floor, as nothing ever showed up in print, but I read another story over the weekend regarding these inventories. The story said the news about global manufacturing was so bad, it might actually be good. You see, inventories serve as a cushion between demand and production. The theory is that with inventories down, as the recovery begins, there will be immediate demand on manufacturers to crank up production.

But as I pointed out to the Wall Street Journal reporter, production will undoubtedly lag demand. While many plants are sitting idle, some of the companies who operated them are now out of business. And those manufacturers who were smart enough to weather this economic storm are going to wait to make sure demand is here to stay before ramping up production again. Also, the record unemployment means many of the workers who will be needed to ramp up this production will have to be re-hired. Some will be able to walk right back into their old positions, but many will have to be trained. Also, the supply chain for raw materials and the shipment of finished goods will take time to get back to normal. All of these delays in production meeting demand will be inflationary, as more consumers will be chasing fewer goods on the shelves. So while I agree that the low inventory levels could allow manufacturing to recover more quickly, they also increase the likelihood of a jump in inflation as the recovery begins.

China helped to ease pressure on the US Treasuries after a Top Foreign-Exchange official said they will continue to purchase US Treasuries. "Treasuries form an important element of China's investment strategy for its foreign currency reserves," Hu Xiaolian said at a briefing today. "We will continue this practice". The announcement was undoubtedly aimed at stabilizing the US Treasury market, which faced selling pressure after Premier Wen Jiabal said he was "worried" about the safety of US Treasuries last week. As we have repeatedly warned our readers, the US is dependent on China's continued purchasing of our Treasuries. Without Chinese buying, rates here in the US would move up, and the currency would drop dramatically. While the pressure may be off for the short term, China will undoubtedly look to continue to reduce their purchases of US assets, and continue to diversify their reserves.

China isn't the only country which will be looking to diversify their currency reserves out of the dollar. Chuck spotted the following story on Reuter's over the weekend, and sent it to me to include in the Pfennig. It calls into question the status of the US$ as the world's reserve currency:

'A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.'

While we don't necessarily believe this move will happen overnight, I agree that countries will be looking to diversify their reserves.

It was Chuck's birthday yesterday, and he asked me to share the following paragraph with all of his readers:

Well, I'm sending this along to Chris on Sunday night. It's my birthday today... And I got to spend my day in the beautiful Florida sun, watching my beloved Cardinals play baseball, with my little buddy Alex, and my beautiful bride. My older kids went home on Saturday. All I'll add is that birthdays didn't used to mean too much to me, except when I was 16, and 21... But after my scare of almost 2 years ago, these birthdays mean so much more to me now, and to get to spend them the way I did today, I can only say, that I have been blessed. I thank you dear reader for another year, and will leave you with some words that my long time friend, Ed Bonawitz sent me today... "Remember, a birthday is Nature's way of telling you to eat more cake."

Currencies today 3/23/2009: A$ .6988, kiwi .5676, C$ .8105, euro 1.3642, sterling 1.4588, Swiss .8882, rand 9.4566, krone 6.3181, SEK 8.0676, forint 222.56, zloty 3.3463, koruna 19.601, yen 96.38, sing 1.5098, HKD 7.7502, INR 50.42, China 6.8332, pesos 14.083, BRL 2.27, dollar index 83.325, Oil $52.50, Silver $13.86, and Gold... 951.63

That's it for today... What a birthday present the Mizzou Tigers gave Chuck yesterday, hanging on to make it to the Sweet 16 for the first time in several years. I also want to congratulate my alma mater's basketball team, the Washington University Bears, as they repeated as NCAA Division 3 Men's basketball champions. The head coach, Mark Edwards, was my fraternity's faculty advisor during my undergraduate years at Wash. U and it is great to see his team so successful. The lady bears also made it to the finals but came up just short. Christine just came in and told me it is Chachi's birthday, so Happy Birthday to you Chachi!! Hope everyone has a Marvelous Monday!!

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

A Eurozone Bond To Compete With Treasuries?

Chuck Butler — Mon, 23 Feb 2009 16:32:58 GMT

In This Issue..

* The euro gets some wind in its sails...
* Citigroup is seeking more bailout funds?
* Gold hits $1,000!
* The ghost of Humphrey-Hawkins...

And Now... Today's Pfennig!

A Eurozone Bond To Compete With Treasuries?

Good day... And a Marvelous Monday to you! Sure seems as though I went from Friday to Monday, as I went out of town this past weekend, and before I knew it, I was driving to work this morning! UGH! There was a rumor on Friday that really sent the euro higher, and there was another rumor this past weekend about the Asian currencies... So... Let's look at those two items and more of course, as we begin the last week of February!

Well... On Friday, the euro finally caught some wind its sails after being pummeled all week by the dollar in response to the St. Valentine's Day massacre that took place the previous weekend. In case you had forgotten what I'm talking about here... I'm talking about the news that the Eastern European loan losses had grown to a point that they were causing major problems for Western European Banks that had extended the loans. There were calls for the "end of the euro" and all that... Yes, it's a very serious thing, but not the cause of a collapse of the euro!

OK... You may recall me saying that as much as I hated saying it, the IMF and Bundesbank needed to come to the rescue... Germany's Chancellor Merkel, was all "show and no go" in her press conference, and that all left the euro without a bid... But then along came John, Tall walking John, slow talking John... Well, no "John" in particular is involved, but I always got a kick out of that song! Any way... There was a story on Friday mid-day, that a "Eurozone bond" could be used to ease the turmoil on the financial institutions... Here's a snippet from Reuters...

"The Chairman of euro zone finance ministers Jean-Claude Juncker has proposed that the common euro zone bond should cover the first 40 percent of the overall euro zone government debt, sources familiar with the work of the Eurogroup said.
   This would be senior debt, guaranteed by the whole euro area, which now has 16 members. Anything above the 40 percent would be junior debt that would be issued by the individual governments.
   The junior debt would most likely be more costly for the government to issue, therefore encouraging a reduction of debt towards the common euro zone level of 40 percent, sources said.
   If agreed on, common euro zone bonds would in a matter of a few years create a highly liquid bond market of some 4 trillion euros which could successfully compete with a similar size U.S.
treasuries market for large investors like China."

That's HUGE folks! However, before we all go out to celebrate... There's opposition to this plan by Germany, who already has about 1 Trillion euros worth of German bonds issued... And if Germany balks, this plan will not get off the floor. But, for now, it has put some wind in the euro's sails...

You have to give the Eurozone ministers some credit for creating something that the likes of China could use as an "alternative" to Treasuries, as Treasuries have long been the only game in town for countries like China and Japan that have tons of cash to invest...

There was another story out this past weekend that I read about last night, that tells of the Asian countries pooling together reserves to back their currencies against speculators. The report called for around $30 Billion to be pooled by the Asian countries...

Now, that may or may not be true, but the point here is that this kind of smoke comes from the fire of protectionism... These are baby steps to a full blown protectionism plan... And you know me, there's no smoke without a fire, there's no heat without a flame...

The BIG news this morning though is the one that's going around about Citigroup... Let's see what the Wall Street Journal has to say about this... "Citigroup is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people familiar with the situation.

While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup's common stock. Bank executives hope the stake will be closer to 25%, these people said.

Any such move would give federal officials far greater influence over one of the world's largest financial institutions. The proposal was made by Citigroup to its regulators."

Oh great, I can the dolts on Capitol Hill all screaming about how this is proof that the U.S. needs to nationalize banks... Well, let's see... If they hadn't already put tens of Billions into this bank, maybe they wouldn't be so ready to try and save it! See? This is what I was talking about months ago, when I said that the Gov. bailing out banks was a very bad thing... But, do you think these guys on Capitol Hill cared to listen then? And they are still not listening... They are dolts! When former Treasury Sec. Paulson, came to them and said he needed $750 Billion to make things right, these lawmakers didn't bat an eye, they didn't question where he got the $750 Billion figure, they didn't ask him how he would account for the spending, or how it would be paid back and when... No, they just followed him like ducklings crossing the road with their mother...

OK... This week... Hmmm... Well, tomorrow and Wednesday we get a double dose of Big Ben Bernanke speaking on Capitol Hill... This is the semi-annual testimony on the economy, which used to be required by the Humphrey-Hawkins bill that expired some time ago, but is still followed by Fed Chairmen. What's going on nowadays makes a joke out of Humphrey-Hawkins... You may recall the Humphrey-Hawkins Full Employment and Balanced Budget Act, which was put in place in 1978... I'd say the Fed has to do a Lucy... They got some 'xplainin' to do!

Tomorrow, we will see the S&P/Case-Shiller Home Price Index, which I'm sure will show that the home prices continue to fall here in the U.S. Tuesday also brings us Consumer Confidence. Wednesday will bring us Existing Home Sales followed by New Home Sales on Thursday, and we finish the week and month with a revision to the preliminary 4th QTR GDP, and the Chicago Purchasing Managers Index (manufacturing)...

So, we've got a boat load of data to go through this week, but the Big items are... 1. is the Eurozone going to issue a bond to rival Treasuries? 2. Is Citigroup going to seek additional bailout funds from the Gov.? 3. Big Ben's testimony this week 4. An Asian currency fund? 5. Data...

Gold traded above $1,000 on Friday! I saw it trade there with my own 1 eye! $1,002... But, you may recall me telling you either last week or the week before that I was sure Gold would trade to $1,000, but getting there and staying there would be difficult for the shiny metal, as profit taking would push it back down every time it gained ground to $1,000... And... That's exactly what happened late Friday, and in the overnight markets last night. Gold saw a ton of profit taking, and has been pushed down to $986... But, I look at like this... "it's cheaper today than Friday!"

The Citigroup story has the "risk takers" dipping their toes back into the water... As the "risk takers" aren't really taking risk these days... They only come out when there are stories about how banks being bailed out... But any way, that's what they are called, and when they come out to play, the high-yielders like Aussie, kiwi, Brazil, South Africa, get to join in and play too... And all of these are stronger VS the dollar this morning than they were all last week...

The Swiss franc hung on to the euro's coattails and moved higher even in the face of their banking problems, as they would not be a part of the Eurozone bond idea...

Time to head to the Big Finish... Lots of stuff to deal with this, the final week of February! And Oil is back above $40... Hmmm....

Currencies today 2/23/09: A$ .6495, kiwi .5155, C$ .8040, euro 1.2840, sterling 1.4635, Swiss .8615, rand 9.99, krone 6.7980, SEK 8.6650, forint 232.40, zloty 3.6550, koruna 22.30, yen 94.70, sing 1.5250, HKD 7.7525, INR 49.68, China 6.8390, pesos 14.76, BRL 2.38, dollar index 86.51, Oil $40.52, Silver $14.35, and Gold... $987.50

That's it for today... Yesterday morning, my beautiful bride and I had breakfast outside next to the ocean with a bright sun beaming warmth down on us... 4 hours later we were back in St. Louis, and 20 degrees! UGH! I made the trek to Jacksonville for the memorial service of our colleague John Kimsey, who would have celebrated a birthday today. I met John's wife, who said to me..."you must be Chuck, I read your letter every day"... I was also stopped in the hallway by a fellow that said, "are you Chuck Butler?, I read your newsletter every day", So... John must have converted quite a few people to be Pfennig readers! But really... I must be easy to spot, as how many bald, overweight guys are there walking around with a cane, and a beautiful bride? It was good to see a lot of EverBankers that I don't normally get to see, too bad it was for that reason... And special thanks to Diane Russell, the dinner was magnificent! OK... Mike Meyer's here, time to go! I hope your Monday is Marvelous!

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

Another FOMC Day....

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

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In This Issue..

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

And Now... Today's Pfennig!

FOMC Day....

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

"The Cheater" Speaks...

Chuck Butler — Tue, 27 Jan 2009 14:50:17 GMT

In This Issue..

* Currencies rally...
* IFO unexpectedly rises...
* Norway looks good...
* Gold hits $900 again!

And Now... Today's Pfennig!

"The Cheater" Speaks...

Good day... And a Terrific Tuesday to you! We received the snow and ice they forecast, but the drive in to the office was no biggie, so the street crews did a fair job, I would say... We'll see when I head into the city for my radiation this morning...

Hey! What a day for the currencies yesterday! Geez Louise, it's seems like it's been a month of Sundays since I could say that! And there's been follow up overnight, although, I do believe I'm seeing some profit taking right now... I went to radiation yesterday with the euro trading around 1.2965... I came back 2 hours later, and it was 1.31! And it didn't stop there, trading up to 1.3175, but running into a wall of resistance there... But that was temporary, as the overnight market pushed the single unit higher to 1.3250... It did trade all the way up to 1.33 and change on news that the German Business Confidence, as measured by the think tank IFO, unexpectedly rose for the first time in 8 months. This improvement was a result of the European Central Bank (ECB) cutting interest rates...

Of course, you know me... And I always say that one swallow doesn't make a summer... And that can be used here, as this IFO report is just one sliver of hope for the German economy... There needs to be more, or this will report will be put in the rear view mirror soon. So, I'm not pinning my colors to the mast of a German economic recovery, just yet! But, the data did "goose" the euro higher, and for taking part in that, I give the IFO kudos!

The Big Winner of the day though, was pound sterling... In a case of an asset "falling too far, too fast"... The pound sterling has done a Super Ball Bounce from Friday's price, and has rebounded to 1.4190... Of course, that's a rally from Friday's figure of 1.3570... It certainly STILL shows the rot on the vine in the U.K. from last summer's 2.00 for pound sterling. I would be very careful here, as the U.K. is in the same boat, smaller in size, but the same boat as the U.S....

I had a great lunch yesterday with the Big Boss, Frank Trotter, and we were discussing what we would talk about next week at the Orlando Money Show. I told Frank that I really believe in the prospects of a nice big rally in Norwegian krone... Let me tell you why... First and foremost, it remains a Surplus country... A positive balance of payments... And that surplus has allowed Norway to weather the storm that's hit just about every other country in the world... See, why I believe the Surplus countries should always be considered when buying currencies? Anyway... The main reason it lost ground from last July's levels is the drop in Oil prices... They like the other types of Commodity driven currencies like Aussie, Canada, Brazil, New Zealand, South Africa, just got hammered due to the selling in Commodities... But... You know my outlook for the inflation in this country, and that will be driving Commodity prices higher by year-end... But the leader in the forefront of all this move will, in my opinion, be Oil prices... And IF Oil prices rebound like I suspect they will, that will be a very nice underpin for Norwegian krone...

And Gold traded above $900 yesterday... It has seen some profit taking overnight, and fallen back to $896... But, again, these are stair steps to higher levels for the shiny metal... But then that's just my opinion. You have to make your own investment decision...

OK, the data yesterday was not good, Yes, the Existing Home Sales moved higher, but only at the expense of a falling Home Price... The median home price was $175,400 in December, down 15.3% from $207,000 in December 2007, the National Association of Realtors said Monday. The median price in November this year was $180,300. Here's the real indication that this rise in sales wasn't at good levels... Of all sales in December, about 45% were distress sales at discounted prices. That's foreclosures and auctions on foreclosed homes folks... I don't think we want to get up on the fence and crow about this report...

And then, after all my harping about how the markets should pay closer attention to Leading Indicators data, the report for December showed an unexpected gain of .3%... Again, the one swallow doesn't make a summer, applies here too... I'm from Missouri, and I'll need to be shown more of this to believe it...

Today, we get the color of the S&P/CaseShiller Home Price Index, which will repeat what yesterday's Realtors report showed... Expect more rot on the vine here though, with home prices showing an -18% drop...

And we'll see Consumer Confidence, which I suspect will bump higher in December, although in reality I don't know why... But it most likely will, based on the stock market's head fake rally in December...

I see that "the cheater" a.k.a. Tim Geithner was confirmed as our U.S. Treasury Sec. I really didn't think I would ever have another punching bag Treasury Sec. like I had with King Henry Paulson, but, then along came "the cheater"... I have to tell you that this is scary stuff folks... In his confirmation he said, not once, but twice, that "President Obama, backed by the conclusions of a broad range of economists, believes that China is manipulating its currency. President Obama has pledged as President to use aggressively all the diplomatic avenues open to him to seek change in China's currency practices."

OK folks, this is where the problems begin... If in his confirmation, he's making statements like that, you can expect that Obama will push for legislature to put tariffs on Chinese goods... Protectionism... This is ALL GOING IN THE WRONG DIRECTION!!!!!!! And believe me now and hear me later... "the cheater" didn't just make up this response! This was given to him by Obama, and "the cheater" made certain that everyone hear him, by repeating the answer!

I've told you before, folks, that Protectionism is to a currency, like kryptonite is to Superman... So... Not only is the Gov't on the path to spending even more than the previous administration spent, they look as though they will go down this protectionism path... Add to that, the recession and zero interest rates, and you've got the ingredients for a huge swat at the dollar...

I read a report by Stephen Jen of Morgan Stanley, where he writes that he believes the euro will trade back to 1.20 in the coming months... Well, that may be, and would play well with my Obama bounce thing... But with this all happening so fast in the past couple of days, I might have to rethink that Obama bounce thing... We may get an Obama bounce, but it may be for the euro and other currencies!

Oh... And one more thing on China, before I go on... The IMF's Managing Director, Strauss-Kahn, was talking yesterday, and said, "I have said repeatedly that the renminbi is undervalued" He went on to add, "What we need is for the Chinese to change their policy and shift to more domestic-led growth than to focus on exports. Most Chinese officials are convinced that this is in their own interest."

So... The IMF believes the renminbi is undervalued, and that the Chinese should do something about it, and so does the Obama administration... And you say, "Trade wars"? I bet you can! And not a good time for them either! Not when the whole globe is suffering... Dolts, all of them, they can't see the Big Picture... Shame, Shame, Shame!

OK... I could really get going on all that... But... I'll shift gears and talk about the bailouts... Have you seen the Neil Young, you know THE Neil Young, video on YouTube? He's singing about the bailouts... Here are the lyrics...

There's a bailout coming but it's not for me
It's for all those creeps watching tickers on TV
There's a bailout coming but it's not for me
There's a bailout coming but it's not for you
It's for all those creeps hiding what they do
There's a bailout coming but it's not for you
Bailout coming but it's not for you

So... When guys like Neil Young know that these bailouts aren't working, and they aren't good... It should be very apparent to the likes of Pelosi, and Obama...

Oh... And Home Depot announced 7,000 layoffs yesterday, Sprint announced 8,000 layoffs, while Caterpillar announced 20,000...

I'll get to the Big Finish here in a minute... But first, and finally I wanted to talk briefly about New Zealand... The Reserve Bank of New Zealand (RBNZ) meets this week, and I truly expect them to continue their interest rate cutting. 325 BPS have already been cut from their once highest interest rate in the industrialized world... Finance Minister Bill English was speaking last night and said that the "economic outlook had deteriorated since the government's Dec forecasts, and that the economy now looked to be closer to the Treasury's "worst case scenario"." In that scenario, he suggested that recession would continue through to 2010, the current account deficit would balloon beyond 10% of GDP, and unemployment would rise sharply rising. These aren't "good times" for kiwis... So... Look for the weakness in the kiwi-dollar to remain in place here...

Currencies today 1/27/09: A$ .6625, kiwi .5280, C$ .8160, euro 1.3250, sterling 1.41, Swiss .8790, rand krone 6.7325, SEK 7.9660, forint 215.90, zloty 3.2950, koruna 21, yen 89, sing 1.4990, HKD 7.7690, INR 48.93, China 6.8615, pesos 14.05, BRL 2.3120, dollar index 84.36, Oil $46.27, Silver $12, and Gold... $897.40

That's it for today... Well... Only 6 more weeks until Pitcher and Catchers report for Spring Training... I think I can hold out! HA! The euro has just sold off while I was typing by 1/2 cent... The selling is fast and furious in the past 1/2 hour... My little buddy, Alex, wore his pajamas inside out last night, as a "rally" tool for a "snow day" today... It worked! He'll be sliding down the hills today... (lucky dog!) Well... It's like "old times" in the office this morning, as Suzy-Q, is here! Sue, used to be here in the early morning all the time, so this morning it was a special treat! Well... I guess I had better get going to radiation, as the roads aren't good, and it will take me a bit longer to get there! I hope your Tuesday is Terrific!

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