Daily Pfennig : Home Sales

It's A Risk Off Friday...

Chuck Butler — Fri, 20 Nov 2009 15:22:00 GMT

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                         A Pfennig For Your Thoughts
                               November 20, 2009

In This Issue..

* It's a Risk Off day!
* Commodity Currencies get rocked...
* Audit the Fed Bill moves along...
* Just keep spending money we don't have!

And Now... Today's Pfennig!

It's A Risk Off Friday...

Good day... And a Happy Friday to one and all! A Fantastico Friday in my books, as the people at the Retina Institute told me yesterday that the fluid on my eye was drying up, and almost completely gone. I told them I had not noticed any improvement in vision, and they said, "at least it hasn't gotten worse!" And for that, I am quite thankful! So... With that news, I head into today, and believe it to be a Fantastico Friday!

Well... In my hours on hours of waiting for the next person to look at my eye yesterday, (I think it was "train the eye doctor day" on Chuck's eye) I kept checking the currencies, and noticed that as the day went on, the non-dollar currencies were stronger, led by the Big Dog, euro... But then late last night, and I mean late last night, I checked them, and those gains had been wiped out...

So, when I arrived here this morning, I had one thing on the top of my list of things to do, and that was find out what happened... Come on, I said to myself, it had to be more than the Risk On, Risk Off stuff that's been hanging over the markets like the Sword of Damocles! But, when you get right down to the nitty gritty, that's all it was... For once again, there was some data or story, or rumor, that spooked the markets into believing the global recovery isn't going to happen, and the Risk Off came into play...

Like I said the other day, this happens so much that you start to believe Mr. Myagi is directing the markets... Risk On... Risk Off... (Wax on, Wax off) HA!

So, I bet your asking... So, what was that data, story or rumor that spooked the markets... Well... The only thing I can find was the report yesterday about Housing Starts dropping that Chris told you about... Did you know that about 14% of U.S. homeowners were either delinquent on their mortgage or in some stage of foreclosure. That is the highest rate since the group started collecting the data in 1972!

But there was something else that was announced as the day went on, that I think probably spooked the markets more than anything else... And that is a key House panel approved two amendments to a sweeping financial-overhaul bill that would give federal watchdogs new authority to audit the Federal Reserve, and would establish a fund of as much as $200 billion to help dissolve large, troubled institutions. Rep. Ron Paul (R., Texas) offered the amendment seeking to subject the Fed to audits.

The House Financial Services Committee voted 41-28 to approve the amendments, wrapping up weeks of debate but postponing a final vote on the bill until after Thanksgiving.

OK... More deficit spending for sure, and I'm positive that this was "hung on this bill" to audit the Fed as the only way it would get through the gauntlet...

Why would this Bill "spook the markets?" Ahhh grasshopper... To audit the cartel, is a step toward getting a peek behind the curtain, and that's scary folks... But! It's what's needed! And so I applaud the panel's vote... (too bad they had to hang that $200 Billion deficit spending package onto this, but that's how the dolts in D.C. work...)

So... When things get spooky traders, crawl back into the dollar's corner... Love is kind of spooky with a girl like you, is what I'm reminded of!

And when traders crawl back into the dollar's corner, the currencies that have booked the best performances against the dollar, see their fortunes reversed the most... So... In this case, it's the Aussie dollar, New Zealand dollar, Norwegian krone, and Brazilian real... These three will most likely put a losing week into the books, which hasn't happened very often during this rally that began in March. I say "most likely" because, we've seen swings in these currencies that could easily wipe out these weekly losses in a NY Minute! But with the data cupboard as empty as my stomach feels right now, (not to worry, I have my daily apple ready to consume!) today... I doubt we'll see any "swings" to bring these currencies to the positive side of the ledger this week!

The Weekly Initial Jobless Claims here in the U.S. printed yesterday at 505,000, same as the week before... I heard one air-head TV commentator (if it's a commentator, it must be from Idaho! HAHAHAHA! Get it? Common Tater?) any way... I heard one say that at 505,000, it shows that employment is on the mend... Ahem... Did you do the math? That's over 2 million new jobless people per month! Dolt head!

Yes, I know it doesn't net out the jobs that were created... I'm strictly talking about jobs that are lost on a weekly basis... You can't in your Wildest Dreams, think that we're creating more than 2 million jobs a month during a depression!

So... That data wasn't good for the "recovery campers"...

I was writing some notes for my latest video on Wednesday, and noted that Japanese yen, gets the best of Risk On, Risk Off trading... For some strange reason, and yes, I'm well aware that Japan is the second largest economy in the world, Japanese yen is considered a "safe haven" when the Risk Off is in play... And when the Risk On is in play, spanking the dollar, Japanese yen doesn't sell-off!

Now... I'm not a HUGE fan of Japan, as their Gov't Deficit is tremendous in size, rivaling the doubled in size National Debt of the U.S. And I personally feel that the yen at 88 and change is bumping the ceiling... But, the markets can be irrational, right? And with yen, they are really irrational!

Hey! Did you see that there's pressure on U.S. Treasury Sec. Tim Geithner to resign? Personally, I don't know that he's done any worse than Hank Paulson... But, then, is that what we've come to accept? Bad leadership? I've said this before, and I know it really gets under some people's skin... But, besides the National Deficit, and the Trade Deficit, we have a Leadership Deficit... I'm talking about the lawmakers, The Fed Chairman, and Treasury Sec... I guess the administration should be thrown in there, for it's been that way for the last 9 years!

The European Central Bank's President, Trichet, and the Swiss National Bank's Gov., Roth, both spoke last night, and neither referred to the currencies in any way, but Trichet did add to the Risk Off mood of the markets by saying that, "it is too early, as of today, to declare the crisis is over." The People's Bank of China's Gov., Zhou, said that China was "passive on the direction of the dollar"... Hmmm... I have to wonder if he was truly speaking from the heart there, or... Just stating that to keep the dollar from falling into an abyss...

You know about the stock sell off that I've been warning you about for a couple of months now, that could very well drag the currencies and commodities along for the ride? Well... I know that you all think that I'm playing the boy who cried wolf, here... But, recent trading days have me worried a bit about this taking baby steps right now...

My trader / chartist, friend, sent me a note and told me to watch the A$, for it is very close to its 9-month trend line support of .9093 (it's currently at .9110), for should it close below that number it would signal (according to him!) a correction to 88-cents... Not a huge drop, but it's not like these charts can pin-point a level that a currency will turn-around... Or maybe they can! I'm lost when it comes to charts... I look at them and unless they are as obvious as a man with a hatchet in his head, like the U.S. dollar chart since 1971, then I could make a case for an asset that's being charted to go either way!

That's why charts are not "fundamentals"... Fundamentals are what put an asset into a trend, either weak or strong, and charts tell you what happened in that trend...

And then there was this... According to the Wall Street Journal..."Some of Goldman's largest shareholders have urged the firm to reduce the size of its bonus pool, arguing that it should pass along more of its blockbuster earnings to investors. The investors hold tens of millions of shares in the Wall Street firm, which is on track to make the biggest employee payout in its 140-year history."

Chuck again... Where have these "largest shareholders" been all these years? Why make a big deal about this now? Oh, that's right! The Gov't has made it look "dirty" to give bonuses...

Oh... And I heard that the Senate's version of the Health Care Bill will cost $849 Billion... Just keep spending money we don't have, Congress... I'm reminded of a saying by Voltaire... "Common Sense is not so Common"...

To recap... The Risk Off wax is being applied by Mr. Myagi again this morning, as the non-dollar currencies, other than yen, have given back recent gains VS the dollar. The "Audit The Fed" Bill has been pushed through the gauntlet for a vote after Thanksgiving. The Aussie dollar is near its 9-month trend level, and shareholders want "some of the action"!

Currencies today 11/20/09: American Style: A$ .9110, kiwi .7225, C$ .9360, euro 1.4850, sterling 1.6490, Swiss .9820, European Style: rand 7.5880, krone 5.68, SEK 6.97, forint 182.25, zloty 2.80, koruna 17.4340, RUB 28.95, yen 88.90, sing 1.39, HKD 7.75, INR 46.63, China 6.8278, peso 13.09, BRL 1.75, dollar index 75.64, Oil $76.91, 10-year 3.33%, Silver $18.17, and Gold... $1,137.20

That's it for today... I've been doing some "educational" presentations for the people over at DTI... I've done 2 on currencies, and 1 on Gold... Next Monday, I'll be doing one on "other ways" to diversify, using foreign stocks and bonds... You can listen to it if you want by clicking here at 1:30 CT on Monday... http://www.dtitrader.com/trading_education_MMM_Everbank_Nov23.htm

I'll be heading down the road to Columbia Missouri tomorrow, to watch my beloved Missouri Tigers on Senior Day... My little buddy Alex, had his football team banquet last night... His team went 20-5-1 in three years... That's pretty impressive! Now they move on to High School, where's it's a whole different animal! I have 4 videos to do today! YIKES! But I've got my "blue shirt" on... So, I should be good to go! Let's get working on today, and make it the best Fantastico Friday ever!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-984-0892
www.everbank.com
* Early withdrawal penalties apply. Fees may reduce earnings.

More Baby Steps For A German Economic Recovery...

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

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

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

And Now... Today's Pfennig!

More Baby Steps For A German Economic Recovery...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

European orders support the Euro...

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

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In This Issue..

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

And Now... Today's Pfennig!

European orders support the Euro...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Good news for housing is bad news for the dollar...

Chuck Butler — Tue, 28 Jul 2009 15:10:28 GMT

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In This Issue..

* Home sales increase most in eight years...
* Euro boosted by confidence...
* Geitner sells the Chinese...
* Carry trades back in vogue...

And Now... Today's Pfennig!

Good news for housing is bad news for the dollar...

The dollar lost more ground on Monday, but the reasons were different than those that caused last week's slow decline. Currency traders sold the dollar after a report showed sales of new homes rose the most in eight years. New-home sales in the US climbed 11% last month to a 384,000 annual pace. This was substantially higher than economists had forecast, and the most since November. The report also showed the number of houses on the market dropped to the lowest level in more than a decade. The housing numbers seem to confirm that the housing market may be approaching a bottom, but housing prices continue to fall, and more data is needed before I'm convinced the worst is over. Many of these homes have been sold to first time homebuyers taking advantage of government programs; and if unemployment continues to climb, housing sales are not likely to rise quickly.

But the housing news was music to the ears of investors, and those who had parked money in the dollar for 'safe haven' purposes began looking for other places to invest. Many feel the worst of the global recession is over, as global data seems to be turning positive. Adding to the good feeling on Wall Street, analysts raised their profit estimates for US companies for the first time in two years. The new optimism has many investors searching for higher yields and accepting higher risks. During the mid morning trading, the dollar index touched the lowest level this year, dropping to 78.315 before gaining back some of its losses late in the day as US stocks retreated from eight month highs.

A report from UBS, the worlds second largest currency trader predicts the dollar will continue to drop during the next month amid a revival in risk appetite. "Our near term bias is for further US dollar weakness," a UBS analyst wrote. Everyone seems to be jumping on the carry trade again, which should give a lot of strength to the higher yielding currencies of AUD, NZD, and Brazil. This will likely be the 'popular' trade for investors over the next few months.

The Euro was helped by earlier by a report which on German consumer confidence which unexpectedly increased to a 14 month high. German business confidence rose also rose more than expected this month. Lower inflation in Germany has put more money into the pockets of German consumers, and private consumption has continued to remain a significant support for the economy.

The positive news for the global economy couldn't come at a better time for US Treasury Secretary Timothy Geitner who began talks with China. Geitner and Secretary of State Hillary Clinton will host two days of meetings which many predict will focus on the state of the US economy. Secretary Geitner will have his bond salesman hat on as he tries to convince the Chinese to keep buying Treasury bills, notes, and bonds. This week the US Treasury will attempt to unload $235 Billion in Treasuries, so Geitner will certainly have his work cut out for him. The US debt sales will include $130 Billion of T-bills, $42 Billion 2 year notes, $39 Billion 5 year notes, $28 Billion 7 year notes, and $6 Billion of TIPS.

I find it odd that the US government isn't trying to sell more bonds out in the longer term durations with rates being held down at these incredibly low levels. Does anyone expect US interest rates to remain at these low levels for an extended period of time? Why wouldn't the Treasury department take advantage and try to sell more longer term debt now, instead of loading up the majority of the issuance at the short end of the curve? I guess Geitner realizes that his job of selling all of this debt is already difficult, and trying to get the foreigners to agree to purchase longer term maturities would be next to impossible.

Let's hope Geitner is a first class salesman, as our economy is dependent on the Chinese continuing to buy our debt. Unfortunately his boss isn't making his job any easier, as the deficits continue to rise. The nonpartisan Congressional Budget Office estimates the annual deficits under the administration's spending plans will never drop below $633 billion over the next decade. And it forecasts an additional $9.1 trillion added to the debt held by the public - the amount that Geitner has to finance with bond sales. Publicly traded US debt - which excludes deficits the government owes to itself in Social Security and other trust funds - stood at 41 percent of the total economy in 2008. It is projected to climb to 82 percent of the entire economy by 2019.

The official line after the first day of meetings stuck to the pre-arranged script. Geitner pledged to rein in the US deficit to a more 'sustainable' level by 2013, and China agreed to try and stimulate more internal consumption. Speaking of Chinese consumption, I heard a story driving home on NPR last night which spoke about how China is spending their stimulus money. While the big infrastructure projects have grabbed most of the headlines, they have also used a large amount of their stimulus spending to stimulate consumer buying. They have issued vouchers to many of the lower income rural areas which can be turned in for consumer durables, including cars, appliances, and TVs. The increase in demand by the emerging Chinese middle class has actually caused a price jump for the panels used to make flat screen TVs. You may recall that many critics of what we write in the Pfennig regarding future growth in China stated that the Chinese economy couldn't grow without a strong US consumer. We pointed out that even a small increase in personal wealth spread across the millions of Chinese consumers could offset some of loss of demand by the US. What we predicted seems to be coming true, as the Chinese automobile market has become the largest in the world, and markets for other consumer products like flat screen TVs seem to be following suit.

This also plays into our theory that inflation will likely spike up after the global economy starts to recover. Inventories are extremely low, and once demand starts heating up in the western markets of Europe and the US, orders will again start flowing back into Asia. But demand in Asia will be competing with these new orders from the West, so prices will likely jump. And commodity prices have already started rebounding, including industrial metals and crude oil. Inflation is definitely lurking, and investors need to protect their holdings against a possible spike. The precious metals, or commodity based currencies are a good way to protect your holdings.

The Australian dollar has long been a favorite of the desk, and is turning in another stellar year. The Aussie dollar rose to its highest level this year after central bank Governor Glenn Stevens said the nation's economic downturn may not be "one of the more serious" of the post World War II era. Most economists now believe interest rates in Australia will start to rise prior to the end of 2009. The New Zealand dollar also had a gain yesterday, and headed for its fifth monthly gain in a row.

Finally, I read a story in our local paper over the weekend which pointed out that the administration has delayed the release its annual mid summer budget update. No doubt the update will show higher deficits and unemployment along with slower growth than projected in President Obama's budget in February and the update in May. Typically the budget estimates are updated in Mid-July, but the administration had postponed them until the middle of next month. It is not surprising that President Obama wants congress to act on his $1 trillion dollar health care initiative before he releases the bad news of the updated budget numbers. The administration predicted unemployment would peak at 8%, and growth next year would reach 3.2%; both overly optimistic predictions. Downward revisions to these numbers, which are inevitable, will mean that budget deficits will be much higher than the administration is now predicting. Chuck's earlier predictions of a $2 trillion deficit this fiscal year is looking more likely with each passing day.

Currencies today 7/28/09: A$ .8299, kiwi .6603, C$ .9255, euro 1.4227, sterling 1.6489, Swiss .9345, rand 7.8098, krone 6.1748, SEK 7.4390, forint 188.95, zloty 2.9424, koruna 17.9397, yen 94.54, sing 1.4404, HKD 7.7500, INR 48.2075, China 6.8309, pesos 13.2884, BRL 1.8779, dollar index 78.610, Oil $67.82, 10-year 3.68%, Silver $13.985, and Gold... $949.50

That's it for today... My son Brendan had his last regular season hockey game of the summer season. The coach let me know last night that he will be out of town for the playoffs next week, so I have the helm. We ended up the season in 4th place, so the boys will have their work cut out for them in the tourney. I plan on stressing team play, as summer hockey is played on a shortened rink with only 3 outskaters. Passing and teamwork are the key! Looks like another beautiful morning here in St. Louis, but I hear there may be Thunderstorms on the horizon. Someone on the desk said this month will go down as the third coolest July on record. No complaints here!! Got to try to get this out, so hope everyone has a Terrific Tuesday!!!

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

Home sales improve...

Chuck Butler — Fri, 24 Jul 2009 14:29:00 GMT

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In This Issue..

* Home sales improve...
* Are we there yet...
* Intervention talks...
* Buying on dips...

And Now... Today's Pfennig!

Good day...and a Fabulous Friday to you. As I was sitting here this morning collecting my thoughts, it just hit me like a ton of bricks that we're already towards the end of July and next weekend brings us into August...where's the pause button when you need it. Anyway, yesterday started out like any other quiet morning so far this week but we did see a nice little run in the currencies only to see profit taking as we moved into the late afternoon. As I turned the computer screens on this morning, I see where the overnight markets brought us right back up to the levels we began with this time yesterday. The big story that moved the markets was the better than expected housing numbers that, again, gave investors that warm and fuzzy feeling that I touched on yesterday. Since I already let the cat out of the bag, I'll jump right in...

Sales of existing homes rose for a third consecutive month in June to an annual rate of 4.89 million, which was better than the forecast of 4.84 million that most economists were expecting. May's figure was actually revised down to 4.72 million from the original posting of 4.77, so the month on month rise came in much higher at 3.6% than the expected 1.5% increase. June is traditionally seen as one of the busiest months in the real estate market as families try to make the adjustment in between school years so it wasn't exactly a surprise to see better than expected numbers.

Lower borrowing costs, foreclosure driven price declines, and tax incentives also contributed to these higher numbers. This is certainly good news to hear and I hope the bottom has already passed us by or is near, but as I mentioned yesterday, I won't get too excited until unemployment gets back to a supportive level and the full backing of the consumer underpins this move. If anything, this may end up being a protracted bottom and a slow road to normalized levels.

We also had the weekly initial jobless and continuing claims released yesterday but was overshadowed by the positive housing numbers that came out. The initial jobless figure came in 30,000 higher than last week to 554k but continuing claims backed off a bit to 6.23 million from last week's revision up to 6.31 million. Bernanke said earlier this week that job insecurity, together with declines in home values and tight credit, is likely to limit gains in consumer spending. With that being said, it still looks like we have plenty of breakers to get through before we reach the safety of calmer waters.

Today doesn't bring us much in the way of reporting as the only data due out is the final printing of the U. of Michigan consumer confidence number for July. The preliminary figure was released a couple of weeks ago and fell more than forecast to 64.6 from June's 70.8 reading. This generally isn't a big market mover but its expected to settle in a tad higher at 65. This one is a tough call as the stock market has risen quite a bit in that time period but we'll see if job and income concerns keep this month's number grounded. Since this is all we get today, it will be interesting to see how much attention the markets give this report.

Just as we saw the Dow hit the 9000 mark for the first time since January and the euphoria of the housing market has gained momentum, well respected economist Nouriel Roubini, had a different take on things. In a report released today, concern was expressed that a perfect storm of fiscal deficits, rising bond yields, soaring oil prices, weak profits, and a stagnant labor market could blow the recovering world economy back into a double dip recession. He went on the to say that its getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented. I guess the moral of the story here is to proceed with caution and buckle your seat belt because the ride could get bumpy.

Moving on to currencies, the Swedish krona and the Canadian dollar both posted 1% gains yesterday while the Japanese yen, New Zealand dollar, and Swiss franc rounded out the bottom. The two currencies at the top of the list had much different reasons for ending the day where they did as the krona traded higher primarily on the back of risk appetite. As investors feel more comfortable with buying riskier assets, the thinner traded currencies like the krona, benefit even though Sweden's unemployment rate rose for a second month in June to 9.8%.

The Canadian dollar, on the other hand, rose to a 7 week high as the central bank said the recession is nearing an end brought on by higher commodity prices and consumer confidence. The central bank kept rates at the record low of .25% a couple of days ago and reiterated they will stay there for a while unless inflation becomes a problem. Since Chuck is across the border in Canada right now, it's a perfect time to get our daily dose:

"I was reading the local paper the other day, and the business section had a big story on the Bank of Canada's (BOC) Gov. Carney and how he vows he will intervene to keep the loonie from going higher... In the last two days since that story appeared, the loonie has done nothing but gain vs. the green/peachback... 91-cents it traded through yesterday! I can't help but think that traders are beginning to believe that Central Bankers are imitating the boy who cried wolf... We had the Brazilian Central Bank, the Swiss National Bank, and now the BOC... They all are giving verbal warnings about traders taking their currencies higher...

The Central Bankers do this under the disguise of "we don't want deflation in our economy" opting for the weaker currency to introduce inflation... I think this is all a smokescreen! I think this is a coordinated effort to keep their currencies from going hog-wild VS the dollar... The Central Bankers all know that the dollar is teetering, and without speed bumps we could see a mad exit for the door for dollar holders... Just what I think... Nothing more, nothing less... Just my thoughts... "

Thanks again Chuck, its always great to get your insight. Since we're already talking about central bank intervention, I saw a report today that has some looking for the Swiss National Bank getting back into the game. According to the Big Mac index, which is a purchasing power parity figure using the cost of a Big Mac as the measure, the Swiss franc is the second most expensive in Europe. Its just a fun little tid bit I thought would be good to break the monotony. Anyway, the Swiss franc is largely influenced by the euro and risk appetite so while the SNB may step in, there's really no way to stop the moving train. As Chuck has said many times before, the markets have much deeper pockets than a central bank.

As I got to the office yesterday, the euro was hovering around 1.42 and climbed just shy of 1.43 to 1.4291 before we saw the profit taking drag it down to 1.4150 on my out the door. I saw a report where the euro had established a base at 1.4050 and calls to buy on dips, which is certainly a strategy that would be consistent with our views. As I touched on above, the Asian and overnight markets have run things right back to the levels from yesterday but as the European traders hand the books to those in New York before heading out for the weekend, the dollar is still getting sold. Don't look now, but I see the euro at 1.4250...hopefully we can hold on to this and finish the week on a positive note. It looks like the euro is also getting some help from within as reports showed the contraction in European manufacturing and services slowed more than expected and German business confidence improved.

While I'm talking about Europe, we had some positive new come out of the UK as retail sales quadrupled the estimate and surprised the markets with a June gain of 1.2%. Year over year sales are actually up 2.9% and has economists looking for a near zero GDP figure in the second quarter. HSBC actually raised their forecast for the pound from 1.60 to 1.75 by year end 2010 and justified the call by saying the likelihood of an interruption in the asset buying program from the BOE could be as soon as next month. They also feel rates will rise before the Fed but this is a long way off and a lot can happen. Just like the US, I don't see enough at this point to be comfortable buying this currency, but hey, we've been early on some calls too.

One of our newest multi-currency CDs, the Global Power Shift CD, has also been keeping the phones busy lately. With commodities and commodity based currencies leading the charge, it seems like we talk about at least one of them everyday, so I thought I would give it a mention. This CD combines the Australian dollar, the Brazilian real, the Canadian dollar, and the Norwegian krone into one instrument and just provides you with a little bit of everything...not a bad way to provide that hedge against a weakening dollar and gain exposure to commodities at the same time. Well, its about that time and I need to wrap it up so on to the big finish...

Currencies today 7/24/2009: A$ .8170, kiwi .6573, C$ .9214, euro 1.4230, sterling 1.6462, Swiss .9353, rand 7.7236, krone 6.2308, SEK 7.4710, forint 188.04, zloty 2.9538, koruna 17.9280, yen 94.86, sing 1.4407, HKD 7.7500, INR 48.2750, China 6.8316, pesos 13.1903, BRL 1.8991, dollar index 78.686, Oil $67.25, Silver $13.7850, and Gold... 952.86

That's it for today...its your Friday!! I just wanted to send congrats toward St. Louis native Mark Buehrle, pitcher for the Chicago White Sox, as he became the 18th player to throw a perfect game...truly a remarkable feat. Our office has a team in a local kickball league so I wonder if our pitcher, Tim Smith, was able to match that performance...lol. It was a rough go this morning as the words just didn't come all that easy for me but hopefully I was able to make some sense of it all. Alright, its really getting late so I need to get going here. Have a great Friday and a wonderful weekend...Until next time
Mike Meyer
Assistant Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

Increasing SDR Issuance...

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

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In This Issue..

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

And Now... Today's Pfennig!

Increasing SDR Issuance...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

More Stimulus On The Way?

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

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

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

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

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

In This Issue..

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

And Now... Today's Pfennig!

More Stimulus On The Way?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

German Investor Confidence Is On The Rise...

Chuck Butler — Tue, 16 Jun 2009 15:24:59 GMT

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

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

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

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

In This Issue..

* Currencies stop the dollar's run...
* BRIC meeting could get ugly for the dollar...
* RBA meeting notes good for Aussie dollars...
* Depressing data / forecasts for housing...

And Now... Today's Pfennig!

German Investor Confidence Is On The Rise...

Good day... And a Terrific Tuesday to you! Thundering storms moved through here this morning, as I was preparing to leave home and drive to the office. As slow as I am with getting around these days, I got pretty wet from my car to the office building. But, I didn't melt, as most would have thought! HA! And, I'll dry out soon enough... Well before anyone else comes in!

OK... Well... When I left you yesterday, the dollar was on a rampage, from the comments by the Russian Finance Minister, Kudrin... Was it an overreaction, I asked? A resounding YES was my answer... I think the proof is in the pudding on that this morning, as the dollar buying has hit a roadblock, and reversed overnight, with the euro gaining back about 1%...

The euro also got a needed boost this morning, as German Investor Confidence jumped to a three-year high. Seems most investors believe the economic slump in Germany, the Eurozone's largest economy, is easing... Of course, we know that while Investors believe the economic slump may be easing, it may, in reality, not be easing... It's all about perception, right? Any old way, the currencies have rebounded from yesterday's bloodbath... And now the currencies have a bid tone, and not the dollar!

And now a news flash just came across that these countries are "considering buying each other's bonds, and swap currencies" to eliminate the dollar from those transactions... OK... Skip back to yesterday... Here's what I said... Pfennig 6/15/09: "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!"

The BRIC (Brazil, Russia, India, China) meeting I told you about yesterday, actually happens today. Sorry for the mix-up, as I thought it would happen later this week. There were already comments hitting the news wires that Russian President Medvedev, wants to talk about issue of the dollar as the reserve currency... Now, if he does, and I'm not saying that he will, but if he does talk about that, doesn't that wipe out the Finance Minister, Kudrin's, comments about Russia's belief in the dollar? And... If he does, and again, I'm not saying that he will, but if he does, my thoughts yesterday, that this would happen at the BRIC meeting, would come to fruition...

There's always been a clamoring for a basket of currencies consisting of the BRIC countries... The problem is that the Russian ruble just isn't liquid enough to get this done, like EverBank World Markets does their other CD's... So... How about dropping the "R" and doing a BIC? Well... Again, even though EverBank does offer these currencies of Brazil, India and China individually, it's not easy... In fact it's quite the ordeal to get them done... But, eventually, we'll think of something!

OK... Now back to the goings on in the markets... This BRIC meeting today seems to have quite a hold on the markets' attention today... And it is a BIG thing, IF they do discuss the alternative reserve currency talk... Talk the talk, and walk the walk... These countries can't keep complaining about the need for a new reserve currency, and not do anything about it...

Looks like all the stimulus and money supply in the U.K. is beginning to show up in the inflation data... U.K. May CPI jumped .6%, thus pushing the year-on-year (YOY) figure to 2.2%! Now, this is important for a couple of reasons, folks... 1. it could signal an end of the easy money in the U.K. IF they are prudent in removing the stimulus, as they and their friends over at the Fed claim they will be... And 2. and more importantly... Is... The U.S. has actually been behind the events surrounding the financial meltdown in the U.K.... So... If the U.K. is beginning to see inflation rise, it stands to reason that it won't be long before we see it happening here too...

Down Under... The currencies of Australia (A$) and New Zealand (kiwi) both fell flat on their respective faces with the dollar on the rampage yesterday... But were able to rebound a bit overnight. They were moved higher, when the minutes of the last Reserve Bank of Australia (RBA) hinted that the RBA was going to maintain their easing bias, but move to the sidelines for the foreseeable future... Folks... That's Central Bank parlance for... This is it! Unless the sky falls! This is the bottom as far as rate cuts go! But... It will be awhile until they move up...

Well, that's how I read their statement! And I've been reading Central Bank statement for 17 years now... I think the traders that cover A$'s think the same thing... And kiwi, just grabbed on to the coat tails of the A$...

Did you see the color of the TICs data yesterday? WOW! Or should I say, UGH? The net security purchases by foreigners for April showed a HUGE drop! The total net purchases were $11.2 Billion... VS $55 Billion in March! And... The ongoing holdings of Treasuries feel a net of $2.6 Billion... Now... Here's where I get all ticked off folks... We've had Japan, China and Russia all say publicly that they have full faith in U.S. dollar denominated assets (read Treasuries)... But when it came to backing up the talk with the walk... They failed to show that they have full faith in these assets, didn't they!

These countries and their Finance Ministers caused investors HUGE losses with their statements, but when it comes down to the cheese that binds, these Finance Ministers didn't have the intestinal fortitude to back up the statements... Well, at least in April they didn't!

And $11.2 Billion a month is not going to be enough to finance the Current Account Deficit... Which will print tomorrow, how convenient! But that's for April, and we won't get all that data for months! However...

Right now, the "experts" believe the Current Account Deficit, which consists of the Trade Deficit, and the Federal Direct Investment, will be a deficit of $85 Billion (recall that the Trade Deficit had come down in the 1st QTR) for the 1st QTR... And going back, which is exactly what the Gov. doesn't want anyone to do, I see that the total purchases in the 1st QTR were a mere $40.63 Billion... There's a $46 Billion gap there folks...

I've gone over this financing thing so many times in the past that it make my head spin (yes, you should see it spinning right now!) just thinking about explaining it again... But, for those new to class... When a country has a financing problem (like it looks we had one in the 1st QTR) the gap gets pushed to the next quarter and so on, until... The chickens come home to roost... And then, a country has only two choices... They can raise interest rates aggressively to make the assets more attractive to the foreigners, or... They can allow a general debasement / weakening of their currency, to make purchases of the assets cheaper by discounting the clearing mechanism... The dollar, in this case... So... Which one do you think a Gov., especially one like ours, will choose to use? Yeah, right, like they would choose number 1!

Ok... Some more depressing news about the housing sector came through yesterday in the National Association of Home Builders Home Price Index (NAHB) printed worse than expected yesterday... The "experts" forecast the NAHB would be a 17... And it printed at 15... Soon afterward, economist Robert Shiller, said that the housing downturn "was not over yet"... Economist Nouriel Roubini, said that "house prices will fall another 15-20%" and... Banking analyst Meredith Whitney said that "she is even more bearish than either Shiller or Roubini on housing."

That's not good news folks... Nouriel Roubini as been dubbed as a gloom and doomer by the media (I don't think so... He just tells it like it is, he can't help it that it's not all seashells and balloons for the economy, like the media would have you believe!) and when another analyst, as prominent as Meredith Whitney says she's even more bearish than Roubini, you've got to sit up and take notice!

I just can't end the day's letter with those two depressing stories back-to-back... Oh! Here's an interesting story... The Japanese Finance Minister, believes the recession in Japan is nearing an end... Yeah, right... If I had a 1-oz Gold American Eagle Coin for each time a Japanese Finance Minister has said those words since 1990, I would be quite the "rich man"! But, the markets swallowed his statement hook, line and sinker, which is good for the yen! Japanese yen outperformed all the currencies overnight, and is trading with a 96 handle once again!

Speaking of Gold... It has rebounded by $8 this morning, as the sentiment to buy dollars has faded...

Currencies today 6/16/09: A$ .8020, kiwi .64, C$ .89, euro 1.39, sterling 1.6440, Swiss .9220, rand 8.00, krone 6.42, SEK 7.8070, forint 201.50, zloty 3.2550, koruna 19.2780, yen 96.83, sing 1.4575, HKD 7.75, INR 47.75, China 6.8335, pesos 13.36, BRL 1.95, dollar index 80.55, Oil $72, 10-year 3.72%, Silver $14.35, and Gold... $937

That's it for today... The rain that came through this morning was very a "hard rain"... And no, I'm not going to go into Bob Dylan here... We've had our share of "hard rain" lately, and the low lying areas are seeing flooding. The river that runs through my little river town, is on the rise again... I thought I had a doctor's appt today, but my calendar tells me it's next Tuesday! Yahoo! OK... Not too much else to talk about this morning, so, I'll just end it here, and send you on your way to a Hopefully Terrific Tuesday!

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

Game On!

Chuck Butler — Wed, 20 May 2009 14:36:31 GMT

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In This Issue..

* Risk Assets soar!
* What's behind this stock rally?
* Charts and fundamentals...
* Aussie Consumer Confidence drops...

And Now... Today's Pfennig!

Game On!

Good day... And a Wonderful Wednesday to you! A total reversal of Friday's risk assets sell off was the soup du jour for Tuesday... This is beginning to remind me of a Wayne and Garth street hockey game... Here comes a car... Game off... Game on...

So, as I just said, Tuesday saw the currencies trade right back to the levels they enjoyed VS the dollar last Thursday, before risk assets began to sell off on Friday. These are the types of trading patterns you normally see when the assets involved are getting ready for a break out... A jail break... Tonight there's going to be a jail break!

OK, I'm not saying that the jail break takes place tonight, I just broke out in a song from the 70's... That's all... Seriously though, I hope we're seeing a return to fundamentals.

Speaking of fundamentals... I guess yesterday just shows me that I shouldn't (and neither should you!) pay attention to the cable news, eh? OK, remember yesterday, I said this: "I saw a news story on the TV yesterday that said "Home Builders were seeing a pick-up of new homes being built"... Well... That should be our indication that Housing Starts for April will be stronger! See how easy this stuff is? HAHAHAHAHA!"

And what happened? The government reported that construction on new housing projects slowed to a record-low pace in April. Don't expect Housing to lead us out of this recession / depression folks!

Stocks rebounded too along with currencies yesterday... Long time readers will recall that I've pointed my finger at the PPT a few times in the past... Well, I'm pointing it again! Don't know what I'm talking about here? Well, you see the PPT (Plunge Protection Team) was created by President Reagan after the stock market crash of 1987. It consists of major players (financial institutions) and their job, when called on, is to provide support for a falling stock market. And, what's the reason for me thinking this has happened now? Well, Friday you would have thought the stock rally was over, but an "Indian election result pulls U.S. stocks out of the fire?" I'm not buying it! This rally has somebody's finger prints all over it...

A news story at the top of the screen this morning says, "U.S. said to consider stripping SEC of power, shifting duties to the Fed." Hmmm... Doesn't that bother you? We had this independent regulator (yes they dropped the ball with Madoff, among other gaffes), and the Gov't is thinking about shifting it to the Fed? Yes, I know the Fed is not a Government division... But... I don't like a regulator being directed by the institutions that own the Fed... It's like giving the fox the keys to the hen house!

OK... A week or so ago I talked to you about the 200-day moving average... Explained it all, and told you how the dollar index had fallen through its 200-day moving average, which would indicate further declines for the dollar index. On May 8th, the euro moved higher through its 200-day moving average and then went on to gain almost 2%... There's another currency that's moving stealth-like up to its 200-day moving average... The pound sterling! Here's the skinny as I see it... Pound sterling's 200-day moving average is 1.5554, the current level of pound sterling is 1.5480... Within spittin' distance!

And while we're following price charts... I see where a new "player" has jumped on the Chuck, Mogambo, Bill Bonner, and others Gold Bandwagon! Gold has gained 6.8% since the last low on April 17th, and an analyst at BNP Paribas believes this is an indication that Gold will trade to $1,096 in the coming months, as long as it does NOT fall below key support at $880...

Charts people are interesting, in that they can come up with things that you can't see with the naked eye!

All I know is that the fundamentals point to a higher Gold price, and fundamentals are what cause trends to happen, and together they are the straw that stirs the drink... Everything else is just an explanation of what happened or what they "believe" will happen. But none of it takes place without the fundamentals creating a trend...

And speaking of Gold and fundamentals... Recall, that I've coined Gold the "uncertainty hedge"... And this morning we have more "uncertainty" in the world... According to the Washington Post, Iran has fired a test missile overnight that has a range of 1,200 miles, enough to reach Israel or Southern Europe...

The data cupboard is empty today, so we'll have to depend on a testimony by Treasury Sec. Geithner to the Senate Banking Committee on TARP... Speaking of TARP, I read a story last night, in between innings of a 3-0 shut-out victory by my Cardinals over the Cubs, that detailed how some Major Banks are discussing the repayment of TARP with the Treasury Dept. I see the Treasury Dept balking at this... Why? Because, the Gov't wants control of these institutions, folks... And they can't have control over them if their tentacles aren't all intertwined in the banks...

I know that this is a touchy subject... But here's another example of the Gov't taking over control... The Senate overwhelmingly passed a bill that would sharply curtail credit card issuers' ability to raise interest rates and charge fees... Yes, these institutions took advantage of people for years... But! They also provided credit to people that "signed the papers agreeing to the terms" I'm NOT talking about whether its right or wrong to raise interest rates on credit cards to "stupid" levels... I AM talking about the Gov't dictating to the bank that issued the credit, and is on the hook for the credit, just how and how much interest rates will be raised...

OK... Let's talk about something else, that stuff gets my blood pressure rising! How about.... Oh, yeah, the Aussie dollar (A$) saw a bit of selling overnight after Australia printed a less than stellar consumer confidence report. I guess all the money the Gov't of Australia had sent out to consumers is gone, spent, put in coffee cans and buried in the back yard, and now the consumers are sad... You give money to people for no reason, and it's like a drug, they want more and more... I like the A$ for the prospects related to China's economic recovery... But beyond that, Australia seems to be struggling, and it will take a Chinese recover to overcome this struggle...

And, in India... The rupee has not been able to add to its gains that followed the election results this weekend... But, I think it's more a case of stopping to catch its breath, and not a road block.

Last week, we heard about how China had passed the U.S. as the number one trade partner of Brazil... Now, I'm hearing about how Brazil and China are in discussions to form a currency swap line, just like the one China signed with Argentina two weeks ago. These currency swap lines are HUGE folks. Because, it allows the two parties doing trade with one another to eliminate the use of dollars, and only use their own respective currencies. That means, China reduces its exposure to the dollars! And if China has less dollars to spend on U.S. Treasuries, that's not a good thing! But, almost important as that, is the thought that China is spreading the use of their currency... This thought plays well with the idea that China proposed last month... That the U.S. dollar be replaced as the world's reserve currency.

China has now signed currency swap agreements with: Indonesia, Malaysia, Hong Kong, South Korea, Belarus, and Argentina, with Brazil waiting in the wings...

And then there was the price of Oil... I filled up the Pfennig-mobile this morning, and noticed gas prices had gone up... Well... When I came in and checked the screens, I saw the price of Oil had reached $60 again! Oil prices have been rising very slowly in recent weeks, and long side of those rising Oil prices, we have rising Canadian loonie prices! I've said this more than once over the years... The Canadian dollar / loonie is so energy driven, and recent moves are a prime example!

Currencies today 5/20/09: A$ .7720, kiwi .6035, C$ .8670, euro 1.3665, sterling 1.5480, Swiss .9040, rand 8.4350, krone 6.45, SEK 7.6775, forint 203.40, zloty 3.20, koruna 19.52, yen 95.70, sing 1.4610, HKD 7.7525, INR 47.48, China 6.8250, pesos 12.95, BRL 2.04, dollar index 81.91, Oil $60.69, Silver $14.34, and Gold... $932.40

That's it for today... I "hit the wall" yesterday... Don't know why it took so long, but I hit it, and hit it good! Went home and slept until "game time"! UGH! I Feel better this morning! My little buddy, Alex, came home from school sick yesterday, I guess he "hit the wall" too! The house was just too quiet without him playing his guitar or baritone horn! As I mentioned above, my beloved Cardinals won a game last night. These wins seem to be far and few in between the losses, but maybe, they can go on a run! I have a 2-hour meeting to start the day, so I had better get going here... I hope your Wednesday is wonderful!

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

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

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

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

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

And Now... Today's Pfennig!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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:

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 Treasury Secretary rides to the rescue...

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

.........But First, A Word From Our Sponsor..........
Our 3rd Quarter numbers are in. And the news-as expected-is quite good.

Thanks to our balanced business model, EverBank® continues to grow and prosper despite challenging market conditions. During the 3rd Quarter of 2008, we solidified our place as one of the nation's strongest and most stable banks. We achieved:
*Record year-to-date deposit growth: $392 million
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EverBank is a Member FDIC and Equal Housing Lender.
......................................................
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

A "Stock Tip From The Top Guy!"

Chuck Butler — Wed, 04 Mar 2009 13:51:47 GMT

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

* Australia's economy contracts....
* Bank of Canada cuts rates to .50%
* Meeting margin calls...
* TALF...

And Now... Today's Pfennig!

A "Stock Tip From The Top Guy!"

Good day... And a Wonderful Wednesday to you! My beautiful bride is getting ready to leave this morning. I'm not used to "talking" to someone when I get up at my usual early hour! She'll be gone in a few, as I write, and then it will be my little buddy, Alex, and your Pfennig writer on their own for 5 days! YAHOO!

Well... After a day of waxing eloquently about the how well the Aussie economy was doing compared to the rest of the world, they go and post a contraction in their economic growth! UGH! That's the way to show me up! The Aussie economy shrank in the 4th QTR by .5% VS the forecast of .2% growth... The news scared the markets into believing the Asian problem will be worse off than previously thought. Oh Come On! Australia is STILL doing better than most countries, especially those that I listed in yesterday's Pfennig!

Hey! It must be "time to buy stocks", as the President made his statement yesterday that "buying stocks may be a "Good Deal". So... There you have it! The Obama endorsement... I wonder if they guy that said he "hated me" because I said I thought there would be an Obama bounce and one didn't occur, will send off a "hate mail" to the Prez, if stocks continue to melt away, as I suspect they will!

The "Obama bounce" never materialized, and in fact this showing in the first two months has been atrocious! On Jan. 2, 2009, the DOW stood at 9034, since that time the Dow has seen an overall decline of 25%! I would say that instead of an Obama bounce, we're getting clear signals that the markets don't like our "new" direction...

This all plays into what my friend Bill Bonner of the Daily Reckoning, www.dailyreckoning.com calls the "meddlers" getting in there and interfering with what should, and let me repeat that so you get the full meaning of this... WHAT SHOULD be a normal process of cleaning out the excesses of the previous boom... A recession... Where some businesses die, and those remain standing are stronger... I have a saying that I use in all kinds of situations... "What doesn't kill you, makes you stronger"...

I'm going to stop there, otherwise I'll get a mail box full of emails telling me that I'm being too "hard on the Beaver" so early in the process... I'm not being "hard on the Beaver" I'm just reporting what's happening!

Well... The dollar is stronger again this morning, with the Japanese yen pushing back toward 100 again. The euro is looking as though it will not hold on to the 1.25 handle, and everything else is just rotten looking. Even Gold got smacked for another $10 loss yesterday! I have this feeling regarding the Gold price in the past week... I have no confirmation of this, but we've seen this before when stocks get hammered like they have in the past week. And that is... Selling the one asset that's making them a profit (read Gold!) and using the proceeds to pay for margin calls... So... That's my story and I'm sticking to it!

I get asked all the time about "how long will this dollar strength last?" Hmmm... You know, I said some time ago that I believed that by late summer, early spring, the credit markets might be showing signs of unlocking, and that could bring the risk takers back out from under their respective rocks, and that a return to the "fundamentals" would bring about an end to the dollar strength... The end of July marks one year of dollar strength, when the you know what hit the fan with subprime loans, and this whole lockdown of credit and liquidity caused a huge deleveraging in the markets...

While I still believe this thought has merit, I also have to figure in the fact that the previous stimulus plans didn't work, the money was wasted on Wall Street buddies, and cronies... And now we need another one, but only this new one is centered on the wrong things... So, I'll be watching for signs... If none appear, then I'll have to go back to the drawing board...

So... In an environment when "bad news" rewards the dollar... And the "bad news" just keeps coming along that's not a good sign for a reversal of dollar strength right now. When what used to be called 100-year events, now happen almost weekly... You get my drift...

The Bank of Canada (BOC) did lower rates yesterday, as expected. The BOC cut 50 BPS down to .50%, just like their neighbors to the south, and talked about "quantitative easing" going forward. Hmmm.. That sounds like their neighbors to the south too! The BOC had to attempt to do something given the fact that the economy contracted by 3.4% in the 4th QTR!

Tomorrow, the European Central Bank (ECB) will meet, and most likely cut rates, after "pausing" at the last meeting. ECB President, Trichet, told us after the last meeting that the rate cut had been shifted to the March meeting. So... Now it's March, so expect the ECB to cut rates tomorrow.

The markets have been quite strange with their reactions to easings since this financial meltdown began, and I don't expect this time to be any different. What I'm talking about here is this environment where markets reward early policy easing with currency strength...

OK... Yesterday's data... Well... Some had thought (not me!) that the ISM Index (manufacturing) slight bump in February offered some hope that the worst for the manufacturing sector may be over. The jury's still out on that one... But, even if it is over, the economy won't improve until this housing meltdown gets corrected... And yesterday's data on Pending Home Sales did little to change someone's mind about the direction of the economy! The Pending Home Sales index fell 7.7% in January. The Pending Home Sales data is a good indicator of housing activity, and given the steep fall in January, you would have to believe that the housing meltdown is still occurring, and doesn't have any sign of correcting any time soon!

And Vehicle Sales for Jan were an awful looking 6.4 million... To give you an idea of just how deep the slide in Vehicle Sales has been... A year ago, the sales data showed 11.6 million Vehicle Sales for Jan 2008! OUCH!

In all the "speeches" that were going on yesterday, with Fed Head Lockhart, Fed Chairman Bernanke, and Treasury Sec. Geithner, one would have though that a good sound bite would have materialized... But NOOOOOOO! The only sound bit on the day was the Obama "stock tip"!

Treasury Sec. Geithner did report on TALF, and say that it would begin March 25th. So... I thought for class today, we would review what the heck TALF is!

TALF stands for Term Asset-Backed Securities Loan Facility... Basically, TALF will expand the Fed's balance sheet, and if the Fed wants to moderate that expansion, the Fed has to withdraw bank reserves from the system. The Fed usually does this by selling Treasury bills.

I guess the question would be... What happens if the Fed runs out of T-Bills to sell? Hmmmm... I guess we'll cross that bridge when we get there, eh?

I received quite a few responses to my call for "feel good stories" in today's environment from businesses doing well... That's a good sign! I hope these businesses will continue to do well! The Big Boss, Frank Trotter, and I will review all the entries, and probably print one each Friday, since I like to have Fantastico Fridays, and finish the week with a smile! So, if your note doesn't appear this Friday, don't despair, we've got quite a few Fridays left in 2009!

Currencies today 3/4/09: A$ .6395, kiwi .4995, C$ .7735, euro 1.2525, sterling 1.4110, Swiss .8470, rand 10.4950, krone 7.1650, SEK 9.2050, forint 247.50, zloty 3.78, koruna 22.18, yen 99.30, sing 1.5490, HKD 7.7590, INR 51.53, China 6.8430, pesos 15.30, BRL 2.4160, dollar index 89.20, Oil $43.30, Silver $12.75, and Gold... $910.50

That's it for today... I have to go upstairs and start some breakfast for my little buddy, Alex, as he'll be getting up soon, and his first words in the morning are, "I'm hungry"... Spoken like a true teenage boy! I was listening to him play his guitar yesterday, and he's getting soooooooo good! Writing from home this morning wasn't that bad, as long time readers know my dislike for writing away from my desk and in the saddle at work... I could get used to this... NOT! Well... It's 28 degrees outside, but by Friday, we're supposed to be getting warmer... I can only hope! Because I've told you many time before, I'm just like Jimmy Buffett in that "I've gotta go where it's warm"! I hope your Wednesday is Wonderful!

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

RBA Surprises The Markets!

Chuck Butler — Tue, 03 Mar 2009 19:59:25 GMT

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

* Everything but Treasuries trades heavily...
* Fundamentally speaking on Australia...
* Bank of Canada to cut rates today...
* Tell me your story...

And Now... Today's Pfennig!

RBA Surprises The Markets!

Good day... And a Terrific Tuesday to you! Well... The BIG NEWS this morning comes to us from down under, where the Reserve Bank of Australia (RBA) surprised the markets and left rates unchanged for the first time in 7 months... Now, that's the horse of a different color! How dare they? How could they? Why everybody is doing it, Where do they get off thinking they didn't have to? Ahhh, grasshopper... The RBA continues to shine in my eyes as the best run Central Bank in the world, and this is one of the reasons why... Yes, they could have gone with the rest of the crowd, and cut rates to the bone, but why stoke inflation?

Now, having said all that... It doesn't mean the RBA won't cut rates again in the future... It just means that they were being prudent, and taking a step back to see what their previous rate cuts had done to the economy, and how the economy would be affected by them. So, the proverbial "pause for the cause"... But, I believe it to be warranted, given the RBA had cut 400 BPS away from their once lofty rate in 7 rate cuts...

Fundamentally speaking, the A$ represents an economy that has fared better than most of its G10 counterparts, with a growth outlook far exceeding that of the G10 nations. Australia's 2009 GDP growth is expected to reach +1.0%, compared to -2.0%, -2.20%, -5.0%, -2.7% and -2.2% in the US, Eurozone, Japan, UK and Canada respectively. (and we all know that the U.S. growth outlook is a big fat joke! Instead of -2% it should be -4 or -5%!) Then, add in the fact that Australia's current account deficit is seen at 4.4% of GDP in 2009, its lowest level since 2002. Recall, I kept telling you that their Current Account Deficit was narrowing? Its Budget SURPLUS is expected to hover at 1.0% of GDP--a far superior display than the deepening deficits of the US, Eurozone, Japan and the UK.

So... Like the spotlight that I directed to Norway last week... Here's another example of a country that could be in the front of the race when this financial turmoil ends...

So... The A$ is stronger this morning, but I wouldn't go racing to the currency kiosk to buy A$'s because you believe this to be a turn / reversal in the A$'s fortunes... There's no end in sight to the financial turmoil that has a grip on the world right now, and knowing that, tells me that the risk takers are not participating in the markets right now, and without the risk takers, any run-up in A$ or any other currency for that matter, is not of the "reversal of trend" kind of run-up... But... There will come a day, when all these fundamentals will matter once again...

The Bank of Canada (BOC) will meet today, and they are expected to cut rates again... Don't look for any RBA-style surprises here... Canada, just fell into a deficit status, and that came as a result of the slowing economy, which fell 3.4% in the 4th QTR... So, you can expect the BOC to cut rates this morning...

Yesterday, we saw everything under the sun trade heavily except U.S. Treasuries... Even Gold has faded in the past 5 days... Sort of like my beloved Missouri Tigers Basketball team did under the bright lights of national TV on Sunday! UGH! But, nonetheless, everything is trading heavy... Stocks, corporate bonds, muni bonds, commodities, and currencies... And I could even go further in that list and say real estate, and housing!

I've gone on record with my feelings about how I believe U.S. Treasuries are the next bubble... And I read a report from one of my fave economists, Brad Setser, yesterday that tells me I'm really on to something with that belief... Here's a snippet... "That implies, if the Pandey/Setser estimates for official purchases are right, that private investors snapped up more Treasuries than the world's central banks. Central bank demand accounted for a far smaller share of total issuance than in the past few years. In 2007, for example, central bank purchases easily exceeded total issuance. The big increase in demand for Treasuries in 2008 came from private investors in the US."

Hmmm... Private investors buying Treasuries... Now that's something I've been telling you for some time now, but Brad has all the facts and figures in his report to prove it, and knowing that Private investors have bought all the Treasuries, that Central Banks didn't want, tells me that a bubble is in the making...

Speaking of Central Bank ownership of Treasuries... I read yesterday that China used to keep 100% of their dollar reserves in U.S. Treasuries. Today they keep only 70% of their reserves in Treasuries, with the difference in gold, euros, and other Asian currencies. Hmmm... What if they would decide to diversify more?

OK... The devastation the manufacturing sector has experienced in the past 14 months, looks like it might have found a bottom... The February ISM Index, which measures the pulse of manufacturing, registered a slight increase! The index rose slightly to 35.8 from a previous level of 35.6... The employment component of the index though continued to slide... Production was the biggest gainer of the report... So, something is producing a heart beat for the economy...

Speaking of producing a heart beat for the economy... I'm going to go in a different direction occasionally here in the Pfennig, and instead of always beating on the dolts in Gov't, and the talking about the rot on the vine in the economy... And... I'm going to ask you dear readers to provide the input!

Here's the skinny... I would like for readers that have businesses that might be doing well in these times, to fire me off an email and tell me of their successes, how they've done better than others, or any kind of information you would want to see printed about your company... One to two paragraphs... And if you don't want to include the name of the company, don't! But... This will be free advertising for you! But, I only want the "feel good stories"...

The other thing to think about with this offer is that the Pfennig gets picked up by news agencies all around the world... It's circulation just keeps growing and growing... So... Come on! Send me your stories! pfennigreplies@everbank.com

I just received some "hate mail"... I opened it up, and the guy said he "hated me" because of my call for an "Obama bounce" after his inauguration, that obviously didn't come to fruition... Yes, I was wrong... How was I to know that Obama would opt for a stimulus package that has more spending in it to produce short term jobs, and start nationalized health care, than shore up financial institutions? He said he was going to "fix the problem"... Unfortunately, his idea of a "fix" is create jobs, when the economists all agree that the banks and financial institutions need to fixed first... Maybe he'll be right... But right now the markets don't think so... Especially stocks...

So, the markets are tanking, with no Obama bounce... No reason to "hate" someone! And... I always say... "I'm not even your last choice as a stock jockey"... But, how could we NOT have an Obama bounce? This guy was so popular! Right?

Speaking of stocks... The DOW lost 300 points yesterday to trade below 7,000 at 6,763... The first time below 7,000 in 12 years! But how can the little guy make money in stocks when the greatest investor of all time lost money in 2008? Here's the skinny as reported by the Wall Street Journal...

"Berkshire Hathaway, the holding company led by famed investor Warren Buffett, reported its worst year ever in 2008, with its net falling to $4.99 billion from $13.21 billion in 2007. Book value per share declined 9.6%, a performance far better than the S&P 500 stock index but only the second negative year suffered by the company since Buffett took over in 1965.

Berkshire predicted the economy "will be in shambles throughout 2009 -- and, for that matter, probably well beyond."

Today, we'll see the color of the Pending Home Sales, and Vehicle Sales... In addition, we'll get some verbiage from Fed Head Lockhart speaking on the economy in Tampa, Fed Chairman, Big Ben Bernanke goes before the Senate Budget Committee, and U.S. Treasury Sec. Geithner, goes before the House Panel on Federal Budget... So... Lots of opportunities for these guys to give us a sound bite that sends the markets one way or the other. So, keep your ears to the ground... Or, just turn on cable news!

Currencies today 3/3/09: A$ .6420, kiwi .4975, C$ .7750, euro 1.2605, sterling 1.4040, Swiss .8510, rand 10.4850, krone 7.1575, SEK 9.1375, forint 243.75, zloty 3.7675, koruna 22.2650, yen 97.80, sing 1.55, HKD 7.7575, INR 51.97, China 6.8410, pesos 15.32, BRL 2.4250, dollar index 88.88, Oil $40.75, Silver $12.72, and Gold... $924

That's it for today... A very busy, long day yesterday, capped by two hours of very intense stuff on 24! My beautiful bride takes off tomorrow morning, with her friends, to Florida, leaving me and my little buddy, Alex, to fend for ourselves... No biggie, we've done this before... Lots of pizza, eating out, and not doing dishes is in our future! Jen takes off for Colorado tomorrow, and some skiing, which means, I'll be flying solo on the currency trading the rest of the week... But, again, no biggie, I've done that for years! And besides, after March 10th, Jen will be flying solo the rest of the month! My trip to the radiologist yesterday yielded very little in the way of new information, except that I, "might need to be patient a little longer." Ok, I'm patient... The time has come for me to hit the send button, so I hope you have a Terrific Tuesday!

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

Talking Stimulus Deux

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

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In This Issue..

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

And Now... Today's Pfennig!

Talking Stimulus Deux

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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