Daily Pfennig : Norway

Australia To Allocate Reserves To China.

Chuck Butler — Wed, 24 Apr 2013 17:03:28 GMT

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In This Issue.

* Aussie inflation weakens.

* RBNZ leaves rates unchanged.

* Norway has huge bond maturity coming.

* TTWS X 2 Today!..

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

Australia To Allocate Reserves To China.

Good day. And a Wonderful Wednesday! It occurred to me yesterday that we had gone past Earth Day. I bet you were glad that I didn't just recycle an old Pfennig for you! HA! It was a weird day yesterday, as I went home with a stomach problem, and then slept most of the day. You know, the Big Boss Frank Trotter, asked the other day how I was feeling. And I think what I told him holds true most of the time. I feel about as good as someone can that takes chemo twice every day. And so it is.

So. Yesterday, I told you that it was a Risk Off Day. but that didn't last too long, for when I awoke from my daytime slumber, I saw that the U.S. stocks bucked the pattern, and rallied. So, that made me happy only because that meant the stupid Risk Off / On trading pattern had been broken, like I thought it had been before! Stocks, bonds, currencies and commodities all have different pricing mechanisms, and should be traded that way!

OK. the currencies and commodities spent yesterday in a funk, dealing with the poor showings of manufacturing reports from Germany and China. But that was yesterday, and today, the markets have forgotten about those poor showings, or so it seems. The euro is back above 1.30, and the Chinese renminbi / yuan is now trading at the top of its band. So, either the band has to be widened, or the renminbi / yuan is stuck in the mud. Or, I guess it could drop back... But I just don't see that happening. It was last week that the People's Bank of China guy, said that the band would have to be widened soon. I guess he wasn't kidding!

I would think that given the goose the U.S. housing sector has given the prospects for the U.S. economy, that the Chinese would be more than willing to widen the band at this point. That is unless they read the Pfennig, and are aware of the "shadow inventory" that's hanging over the housing recovery like the Sword of Damocles.

Speaking of China. Did you see that Australia announced that they are going to invest 5% of their foreign currency reserves in Chinese bonds. According to the Wall Street Journal (WSJ) Australia currently has an allocation of 45% to the U.S., 45% to Europe, 5% to Japan, and 5% to Canada. it was not announced who would see their allocation cut. And this makes sense to me, given the two countries' new foreign currency swap agreement for trading.

Last night, the Reserve Bank of New Zealand (RBNZ) left rates unchanged as I expected them to do. RBNZ Gov. Wheeler, took his usual shot at kiwi's strength, but the majority of his time was spent talking about how "growth in New Zealand has picked up." He went on to say that, "at this point, we expect to keep the OCR unchanged through the end of the year." The OCR is the Official Cash Rate. Their internal rate, like our Fed Funds Rate.

I find that his statement about keeping the OCR unchanged through the end of the year, to be a little premature. New Zealand is experiencing house price inflation in some regions, and this somewhat small bubble could get large in a hurry. But with inflation well below the RBNZ's 2% target, I guess he was feeling pretty cocky.

Across the Tasman, Australia printed their latest CPI (consumer inflation) and the weaker than expected print, threw more gas on the calls for a rate cut fire. CPI for the 1st QTR rose 2.5% (year on year), and was expected to rise 2.8%... So. the markets are getting all lathered up for a rate cut. But. as I've said many times in the past year, I believe that a Australia doesn't need a rate cut. I believe a rate cut to be counterproductive. The strong Aussie dollar (A$), which gets its strength mainly from its strong, positive rate differential, taken together with the higher interest rate are responsible for the drop in inflation year on year. Take the A$ strength away, by lowering the interest rate, and inflation comes back stronger and probably too fast to catch at the border!

But. The sad thing is that I doubt anyone that makes the tough decisions is reading the Pfennig. But that's OK, I guess. I'll be able to say, "see I told you so!" when this all unwinds in the next year. That is unless the Reserve Bank of Australia, is smarter than the average bear and doesn't' fall for this trick.

Yesterday, I talked to you about Norway's problem with the question of to cut rates or not to cut rates. The argument for cutting rates in Norway always comes back to the strength in the krone. The Norwegian exporters cry, and throw themselves on the floor and kick and scream that they are not getting their way, for to date, the Riksbank (Norway's Central Bank) Gov. Olsen, has yet to given in to these flaming Spock babies!

I saw a story on the Bloomberg this morning about a huge bond redemption that is coming up on May 15th in Norwegian Gov't Bonds. And immediately I thought of an outflow of krone from that maturity, for some holders won't want to keep an allocation in Norway. I mean, when they bought the current bond, it paid 6.5%! And with the estimate at about 60% of the issue being held by offshore investors, even a small portion of the 66.5 Billion kroner issue not remaining in krone, could push the currency down. So, watch for this. it could very well, give us some cheaper levels to buy.

Gold is back on the rally tracks today. The U.S. Mint is reporting sales of Gold coins are heading for the highest levels in almost three years since the price plunge two weeks ago. The Mint also announced that they had run out of 1/10th ounce Gold coins. I told you the other day the physical demand for Gold was soaring. Well, this is just a sample of that statement. And why not? Didn't you think that Gold had gotten too expensive to buy? Well, you're not alone. Apparently those that thought that are now coming out of hiding places and rushing in to buy at the cheaper levels.

I wonder what the price manipulators are thinking watching all this physical demand drive the price of Gold higher and higher. This can't be what they were looking to do, which was to scare the moms and pops and get them to sell their Gold. It worked for a couple of days, and then the physical buying began, and has only stopped for a breather during one trading session since. I love it! I wish I could see the price manipulators squirming in their seats, wiping the sweat off their foreheads, and trying to stop their nervous twitching.

OK. I've got two Then There Was This articles today. The first one came across my screen yesterday from WSJ, titled: Trustee Louis Freeh Sues Corzine Over MF Global Collapse. "MF Global Holdings Ltd. MFGLQ -3.23% needed cash, was being hounded by regulators and had been threatened with possible ratings downgrades.

None of those problems alone killed the brokerage firm in October 2011, according to a bankruptcy trustee's lawsuit filed late Monday. The trustee said it was the leadership of Jon S. Corzine and two of the former chief executive's top lieutenants that proved fatal. In the 61-page lawsuit, former Federal Bureau of Investigation Director Louis Freeh accused Mr. Corzine and his former chief operating officer and finance chief of "acts and omissions" over several months that were "grossly negligent" and a "breach of fiduciary duty" that led to the company's collapse"

And Then There Was This Too!... Again. thanks to my subscription to the WSJ! This is a story that I think will gain traction and one that I will follow closely, for I too want to know how the Fed intends to unwind their portfolio. Inquiring minds need to know!

"Two House Republicans have threatened to subpoena the Federal Reserve for nonpublic documents on how the central bank plans to wind down its more than $3 trillion bond portfolio without harming the nation's economy.

In a letter viewed by The Wall Street Journal, House Oversight Chairman Darrell Issa (R., Calif.) and Rep. Jim Jordan (R., Ohio) told Fed Chairman Ben Bernanke that they were frustrated at the lack of response to a February request demanding more details on the central bank's strategy to unwind assets purchased during years of its easy-money stimulus programs. The lawmakers say Mr. Bernanke continues to "willfully withhold" sensitive documents the committee has requested.

The American people have a right to know the true risks associated with the expansion of the Federal Reserve's balance sheet," the lawmakers wrote in a letter dated April 22. The Fed's obstruction and lack of transparency must stop."

Chuck again. I just shake my head in disgust over the MF Global debacle. and I would tell the two lawmakers looking to get answers from the Fed. Good Luck with that!

To recap. The fears that Chuck had about the Risk Off / On Days returning were put to bed, when U.S. stocks rallied yesterday. The currencies are back on the rally tracks this morning along with Gold. Aussie inflation was weaker than expected, but Chuck gives us his thoughts on why this shouldn't mean a rate cut is coming.

Currencies today 4/24/13. American Style: A$ $1.0275, kiwi .8455, C$ .9750, euro 1.3010, sterling 1.5265, Swiss $1.0570, . European Style: rand 9.1755, krone 5.8950, SEK 6.5975, forint 230.05, zloty 3.18, koruna 19.9055, RUB 31.48, yen 99.50, sing 1.2415, HKD 7.7645, INR 54.38, China 6.2384, pesos 12.24, BRL 2.0210, Dollar Index 82.94, Oil $89.88, 10-year 1.72%, Silver $23, and Gold. $1,422.22

That's it for today. Another good win last night by my beloved Cardinals in Washington D.C. And our Blues won, which put them in the playoffs. Now if they win their remaining 2 games, they can get a better seed. Andrew and Alex won their Water Polo game last night, with Alex scoring two goals (he should have had 3!) Then Alex had to go to an AP Review.. He takes all AP classes, which I'm very impressed with, for I wouldn't have lasted one day in those classes! Little Braden Charles was at the game with his lovely mom, Rachel, and he climbed all over the bleachers. I thought that would end up in tears, but it didn't, he had fun, and that was that! A day game today for the Cardinals, that's usually my nap time, so, I'll record it! I hope you have a Wonderful Wednesday!

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

Check The Docket For What Happens March 1st.

Chuck Butler — Tue, 19 Feb 2013 17:50:00 GMT

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In This Issue.

* ZEW indicates a German turn around.

* IMM futures positions pare back A$ holdings.

* Norway to join the world with rate cuts?

* Gold get a break from its daily beatings.

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

Check The Docket For What Happens March 1st.

Good day. And a Tom Terrific Tuesday to you! With yesterday being a holiday, I hope you were able to enjoy a 3-day weekend. President's Day. Did you go out and buy a new mattress? HA! I think I liked it better when as a kid we celebrated Abe Lincoln's birthday and George Washington's birthday separately. With it now being called "President's Day", we have to assume that knuckleheads like Woodrow Wilson is part of the celebration. Long time readers know of my dislike for Wilson, so knowing he's a part, really is a drag for me!

Well, here in the U.S. we were all out buying new mattresses to celebrate President's Day, and the foreign markets took over. and they didn't like not having their U.S. counterparts in for the day, so they left the currencies and metals in tight ranges for the day. Well, the U.S. traders will return today from their weekends in the Hamptons, and it will be interesting to see where they want to take everything..

The IMM futures positions for currencies had a different look to them last week. The Aussie dollar (A$) long positions were pared way back from nearly 81,000 long contracts to 54,000 long contracts. I think this move was quite evident in the spot price for A$'s last week, which couldn't hold $1.04. The A$ wasn't the only currency to see their long positions cut. The euro saw its long positions cut from 38,000 to 24,000. Japanese yen continued to see short positions added to its total, and pound sterling shorts increased.

Overall, the IMM futures positions report was not a good one for the currencies. The main beneficiary of last week's moves was the U.S. dollar. Strange, don't you think, given the stuff on our docket? Oh, you forgot? Well, March 1st, is fast approaching, and on March 1st, $85 Billion in budget cuts will automatically start taking effect. So, between March 1, and September 30 (the fiscal year end for the U.S. Gov't) reductions of 13% for defense programs and 9% for other programs will take place.

Don't worry, the U.S. troops at war will be protected, the defense cuts would come in fewer Air Force flying hours, and less training for some Army & Navy units. The thing that I think will rile up the U.S. citizenry is $1.6 Billion that will be cut from the National Institutes of Health, and the $600,000 that will affect low-income pregnant women and new mothers would lose food aid and nutrition education. There will be cuts to Education, Transportation, Environment, and a host of other things. The best one I found is a reduction in IRS workers!

These cuts are small chinks in the armor. I'm well aware of that. But, they might begin to cause problems. remember how much the euro suffered when the pictures of Greeks burning their Gov't buildings and banks showed up on TV screens all over the world? What will happen to the dollar, should we experience the same type of stuff here? I know. my fellow Americans as a whole are not going to have a problem with these cuts, for they are just a drop in the bucket of cuts that need to be made. But remember we as a country are growing ever so close to ½ the country receiving some benefit from the Gov't. There's bound to be some bad apples in there, eh?

One of the things that the options positions revealed last week was that the bets on a Eurozone breakup have fallen to a 5-year low. So, the rest of the world is climbing on my bandwagon that noticed the relative calm coming over the Eurozone last year. That kind of news should underpin the euro. Then add in the news that German Investor Confidence as measured by the think tank ZEW, jumped more than forecast this month, to the highest it has been in 3 years! This report by ZEW tries to predict the economic developments 6-months in advance. so it is a forward looking report, which I always like more than the water under the bridge stuff.

Remember, I was the one that told you that I thought the German economy troughed in the last quarter. Things like the ZEW pointing to better times in Germany, really give that call of a trough last quarter, credence! The euro is weaker this morning, which is a surprise given the options news and the ZEW news. But it is what it is.

Well. one of my long time readers and someone that I consider to be "an email friend", sent me a story last night, regarding Norway. UGH! It seems now that Norway's Central Bank, The Norges Bank, and its Gov., Olsen, are throwing in the towel, and joining the rest of the world. With what I hear you asking? Interest rates, that's what! Olsen said last night, that, "if it gets too strong over time, leading to inflation that's too low, we will act." Yes, he was talking about the Norwegian krone, getting too strong.

OK. I've always held the Norges Bank in high regard, but if they are going to start playing games like this, they will get on my you know what list very quickly! For one thing, I think Olsen is barking up the wrong tree. the Norwegian property market is overheated, and lower interest rates would just fed that bear. and we all know that we're not supposed to feed the bears, right Yogi?

I just cracked myself up with the Yogi bear thought. When my darling daughter, Dawn, was a little toddler, I used to call her Boo-Boo Bear. Over time it shortened to Boo. and then Dawnieboo... But, remember Boo-Boo Bear? Yogi's little friend. great memories in those cartoons, folks.

OK Chuck, get back to work! OK. Well, as I said above, the short positions in futures for Japanese yen increased last week. And when I signed off on Friday, the yen has rallied a bit, only to see that rally fade quickly. Japanese Finance Minister, Aso, said last night, that the Gov't has "no intention of buying foreign bonds." Which was interesting, because just earlier in the day, Japanese Prime Minister, Abe, told parliament that "buying foreign bonds exists as one idea". So, these two leaders are not singing from the same song sheet, folks. and when that happens, the currency of that country usually gets hammered.

I just wrote a piece for the World Money Analyst, of which I now contribute to monthly, on Japanese yen. I didn't say anything new that Pfennig Readers haven't read before regarding yen. But. one thing that I pointed out was that just like in Greece, the debt in Japan wasn't a problem, until it was. and then all hell breaks loose. When does that happen in the U.S. ?

Last night, the meeting minutes from the last Reserve Bank of Australia (RBA) meeting were printed. And they weren't as dovish as I would have thought them to be given the statement that followed the meeting. But in the minutes, the RBA said they were in a data-watch mode. Let's listen in on the RBA. "The inflation outlook affords scope to ease policy further if necessary, but that monetary policy was already accommodative and that this stimulus was continuing to work its way through the economy." Hmmm. sounds to me as if they are in a "wait-n-see" moods. While I think the markets are correct to call for another rate cut here in the first half of 2013, I also think that if the previous rate cuts begin to show up in a stronger economy, the markets could end up disappointed.

Across the Tasman in New Zealand, the New Zealand dollar / kiwi, dropped back on the news that China destroyed some imported New Zealand milk powder. It wasn't a huge amount that was destroyed, but still, kiwi got taken to the woodshed. I don't think this is something that will continue, so the beating of kiwi should back off soon.

Well. Gold actually saw some love yesterday. But that was without the NY traders in to apply their daily beating on Gold & Silver. The NY traders are back today, so we'll have to see if they still want to take Gold lower. It makes no sense to me, folks. the daily beatings go right alongside the daily increases in the amount of fiat currencies that get printed by Central Banks all over the world. And with every new paper currency printed, the value of previous printed currencies gets devalued. and should be devalued against Gold & Silver. That is unless something new has taken the place of Gold & Silver. and even platinum for that matter..

The stories about Gold shipments / imports by countries continues to tell a different story on Gold. For instance, India's gold imports in January surged 23% from a year ago! In addition, this was the largest import number for Gold in the past 18 months. 100 tonnes. can you believe that? India imported 860 tonnes in 2012, and they shot up to 100 tonnes in January? So, Central Banks around the world continue to take on Gold.

Not much in the way of data in the U.S. data cupboard today. Last Friday, we saw some weak data in the form of Industrial Production, which contracted in the month of January -.1% . Just another U.S. report that doesn't come shining through.

Then There Was This. I saw this story on MarketWatch this weekend, and it plays well with my thought on currency printing and how that should benefit Gold. "Talk of a so-called currency war has been heating up, and it might finally light a fire under gold, too.

Efforts by countries such as Japan to boost growth with massive stimulus programs - which in turn have devalued their currencies, an aid to exports - can benefit prices for gold. These have started to alter the precious metal's relationship with the foreign-exchange market and expand its role as a safe-haven asset.

"We are now moving irrevocably to a time when gold will measure currencies, not currencies measure gold," said Julian Phillips, a South Africa-based contributor and founder at GoldForecaster.com.

Chuck again. Enough said about all that. unless the NY traders get caught shorting the metals, or until this all catches up with them, these fundamentals for why Gold & Silver should be higher in price, will take a back seat.

To recap. Currencies and metals trade in tight ranges yesterday, without the NY Traders around to dictate direction. This morning we're seeing some weakness in the currencies for the most part, with the Aussie dollar (A$) being the exception. The Reserve Bank of Australia's meeting minutes boosted the A$ overnight. And Japanese yen is back on the selling blocks this morning.

Currencies today 2/19/13. American Style: A$ $1.0340, kiwi .8445, C$ $.9880, euro 1.3340, sterling 1.5465, Swiss $1.0820, . European Style: rand 8.9025, krone 5.5550, SEK 6.3320, forint 218.10, zloty 3.1325, koruna 19.0335, RUB 30.12, yen 93.50, sing 1.2390, HKD 7.7545, INR 54.19, China 6.2437, pesos 12.68, BRL 1.96, Dollar Index 80.62, Oil $95.44, 10-year 1.99%, Silver $30.06, and Gold. $1,613.25

That's it for today. Well, I made it through my 5-days at home alone. I know the ladies on the desk here, didn't think that was going to be possible! HA! Our Blues came home from a 3-game winning streak on the road. Looks like they turned things around, and not too soon! Pitchers, catchers and position players are in camp now, and spring training is full-on. All is right in the world again, the stars are in alignment, and the karma is flowing once again. I have three more weeks before I leave to join my beloved Cardinals in Jupiter, Florida. These will be the three longest weeks for me! I love spring training so much. And with that. thanks for reading the Pfennig, and I hope you have a Tom Terrific Tuesday!

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

The Dollar Rides The White Horse.

Chuck Butler — Fri, 15 Feb 2013 17:23:29 GMT

In This Issue.

* ECB & Bundesbank talk supports the euro.

* Yen rallies.

* Norway, Canada and others in a bind .

* Gold on a losing streak.

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

The Dollar Rides The White Horse.

Good day. And a Happy Friday to one and all! Well after 5 days adrift, the passengers of the crippled cruise ship are back on terra firma. I bet they are very thankful for that! That must have been pretty bad. And I'm thankful I wasn't on that cruise! See. it's the little things, eh? I'm running a bit late this morning, as I slept right through the alarm clock. So, I need to get to what you all open this letter up to read. My conspiracy stories! HAHAHAHAHA!

Well, the dollar is riding on the white horse this morning, and all the currencies (except yen) and metals are bowing down to pay homage to the dollar. The euro attempted to break out with a move higher overnight, but was quickly knocked back down. The euro jumped to near 1.34 when Bundesbank (Germany's Central Bank) President, Weidmann, said that "one cannot say euro is seriously overvalued." European Central Bank (ECB) President, Draghi, chimed in and said that, "real euro exchange rates are around their long-term averages." So, all-in-all, some verbal support for the euro's current level.

OK. well, I said that the currencies were down VS the dollar except yen. And it took me by surprise too! There wasn't much in the way of information that would indicate why yen is rallying this morning. There was some talk about yen's appropriate range would be 95-100, but other than that, it's position squaring or profit taking, because there's no "real reason" to be buying yen, folks.

We do have the G-20 meeting going on, and I would think that some traders that were short yen, decided to cover the short ahead of the G-20 meeting, just in case there's talk about stopping Japan from pushing for currency weakness. I think all we'll get out of this G-20 meeting is nothing more than a statement that they want members to: refrain from competitive devaluation. Then get on their private jets and head home.

The British pound sterling is much weaker this morning, on the news that January Retail Sales fell for a second consecutive month. Retail Sales fell -.6% from December when they dropped -.3%... The spin doctors in the U.K. jumped on this drop right away, and blamed it on the cold and snowy weather conditions in the U.K. during January. So much for Bank of England outgoing Gov. Mervyn King, who earlier this week said that he thought inflation would accelerate in the coming months. I would think that given the size of the retracement in Retail Sales that he had better worry more about the economy contracting than inflation accelerating!

Last week I mentioned the Brazilian real and how it had rallied to a level below the 2 figure, and remained below 2 for the whole week, which was surprising, given the Brazilian Gov't's penchant for weakening the real. Yesterday, when I was doing the currency round-up, I noticed that real was even stronger than it was last week. And I said to myself, "self. I bet the Brazilian Gov't has something to say about this soon". and lo and behold, the Brazilian Finance Minister, Mantega, was out last night, letting everyone know that, "we will not allow for an over appreciation of the real, and we won't tolerate abnormal fluctuations".

This is what I feared last week when I mentioned that real was rallying. While I don't believe the Brazilian Gov't is going to pull out all stops to weaken the real again, for they need a stronger real to combat inflation that is running above their target level and has for the past two years. But, they will fight the appreciation every step of the way, in order to keep the appreciation orderly and under control. I still say to be careful here, and only use the speculative portion of your portfolio if you feel compelled to own real.

The Canadian dollar / loonie touched parity again yesterday, albeit briefly. the currency continues to remain near parity, which to me is a good level for loonies right now, given some of the things going on that we've talked about here. The Bank of Canada (BOC) would love to raise rates to squash the housing bubble in Toronto, but the rest of Canada still needs the accommodative rates. So, the loonie sits here, without any reason to move stronger and without any reason to move weaker.

Another country keeping their eyes on the currency and its appreciation is Norway. The Norges Bank would love to hike rates, but they don't want the krone to take off for the moon. These central banks from Canada, Norway, Sweden, Brazil, and others are all in the same boat. They would love to hike rates, but they don't want their currency going on a flight to the moon. I feel for them. but, if I were the captain of any of these ships, I would just stop the worrying, and do what's best for their economy, and having housing bubbles, and rising inflation are not good things for the economy!

And the good times for the Indian rupee didn't last one month! Remember a month ago, I told you how the rupee was on a good run, but wondered how long that would last. well, it lasted about a month. Too many questions hang over the rupee, right now, and until they are answered the rupee will be held accountable.

The price of Gold continues to weaken, much to my surprise, and I'm beginning to worry about the shiny metal's price. I see where billionaire, George Soros, cut his Gold ETF holdings last quarter. and now I see where Dennis Gartman has put a short on Gold. But guys like John Paulson are maintaining their holdings, and I see where Peter Shiff is still calling for Gold to climb to $5,000 an ounce. So, there's two way trading, which is always a good thing. I saw one analyst, call for Gold to fall to $1,550 and then take off to the moon. I would think that if Gold begins to head toward $1,550, a lot of people will be bailing, thinking the bull market is over. But not me. I'll be looking to buy more at the much cheaper price!

Today, the U.S. Data cupboard has some juicy tidbits for us. Two of my fave Industrial Production and Capacity Utilization, will print their January outcomes.. U of Michigan Confidence for the first part of this month, and the Net TIC Flows. you know, the Net Foreign Purchases. which used to rule the data roost, but has been reduced to picking up the pieces, is always an interesting print anyway.

Then There Was This. This is a real treat for you all today. The Big Boss, Frank Trotter, sent me some notes from his travels, and I have them here for you. Frank is an excellent writer, when he can find time to write! So. here's the Big Boss!

"On Wednesday night here in Aspen we hosted a reception to welcome and introduce EverBank's mortgage team in the mountains to the community. It turns out that it was EverBank that was being introduced since each team member is well known as a true all-star in the market. It is clear that this solidifies EverBank as the premier jumbo mortgage lender in and near Aspen, Vail, Glenwood Springs and Telluride with more to come. It was great to meet all the clients and soon to be clients who attended and I enjoyed telling people about all the ways that EverBank can help with all the banking basics done right and provide opportunities for global diversification.

As we look how various things impact the global marketplace we forget sometimes Burke's reminder that "Those who don't know history are destined to repeat it." Along those lines I was walking our dog here in Aspen along an abandoned railway line now turned into a pathway. The snow was about knee deep and when I scraped a layer off what appeared to be a historical marker (now you know who reads those things). It said that the railroad had ceased to exist when President Wilson nationalized all railroads in 1917 due to "too much competition".

I do vaguely recall this chapter of American history, but hold on there partner - nationalization of all US railroads for too much competition has legal precedent? Humm . . . We have an example within the week of what happens to currencies when the government goes on a nationalization plan as in Venezuela (with Argentina seemly attempting to follow on as an acolyte). As Chris noted the other day this is not a political blog but political actions do impact the global markets. We remain vigilant when we hear "government can fix it" out of the mouths of politicians worldwide."

Chuck again. Thanks Frank! When Frank writes or talks, he makes us think.

To recap. the dollar is riding the white horse today, with all the currencies except yen, bowing down to the dollar. Yen is stronger due to what Chuck thinks is the closing of short positions ahead of the G-20 meeting, just in case something is said about Japan's pushing for currency weakness.A handful of countries and their Central Banks would love to raise rates to squash housing problems, but don't do it, in order to keep their currencies from taking off for the moon.

Currencies today 2/15/13. American Style: A$ $1.0335, kiwi .8485, C$ .9975, euro 1.3315, sterling 1.5480, Swiss $1.0825, . European Style: rand 8.8190, krone 5.5560, SEK 6.3475, forint 219.55, zloty 3.1415, koruna 19.0650, RUB 30.14, yen 92.70, sing 1.2370, HKD 7.7545, INR 54.22, China 6.2362, pesos 12.70, BRL 1.9590, Dollar Index 80.55, Oil $96.72, 10-year 1.99%, Silver $30.31, and Gold. $1,628.10 and, it's Friday, so here's the link to the U.S. Debt Clock. click here: http://www.usdebtclock.org/index.html

That's it for today. Well, did you have a nice Valentine's Day? I was visited by two of my sweethearts, darling daughter Dawn, and granddaughter, Delaney Grace (along with grandson Everett) yesterday. They brought me a cupcake and a handmade valentine card. We're all getting together tonight and getting fish dinners from the VFW hall. a staple for us during lent. I totally missed talking about my very good friend, and spring training buddy's birthday the other day. Happy Birthday, Duane! And Sunday is Mike Meyer's birthday, so Happy Birthday, Mike! He's a youngster, that thinks he's getting old. I told him, "don't rush it"! and with that. it's time to get this out the door. Thanks for reading the Pfennig, and I hope you have a Fantastico Friday!

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

Currencies Feel The Freezing Rain.

Chuck Butler — Fri, 28 Dec 2012 18:12:27 GMT

In This Issue.

* Tight ranges for the currencies.

* Except for yen.

* Fiscal Cliff talks resume?.

* Norway back on the rally tracks.

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

Currencies Feel The Freezing Rain.

Good day. And a Happy Friday to one and all! Yes. I'm back! Chris let the cat out of the bag yesterday, so here I am, back in the saddle once again! I hope you all had a great Christmas or holiday that you observe. I sure did! My vacation was interrupted for 2.5 days to travel to South Florida for a meeting, but at least it was to S. Florida and not anywhere North! The cold weather has set in, and I already am tired of it! Like today, we are expecting some freezing rain. YUCK!

Well. from the looks of what Chris was reporting while I was away, the currencies look as though they've been hit by freezing rain, as they haven't really gone anywhere to speak of. Except that is.. Japanese yen. I kept warning you all that the debt and flailing economy was going to get to yen eventually. And eventually has finally come around for the yen. So, in case you've been on vacation, like me, and hadn't seen the rot on yen's vine, you've still got time to react, as yen is still below 90, but at the rate it has fallen from 79 to 86 (I know the numbers went higher, but since it's a European priced currency, as the numbers rise, the value of yen falls)

Sooner or later, love it gonna getcha. No wait! Sooner or later, the debt was going to catch up with Japan. For the longest time, the markets believed that Japan's debt could be self-financed by the Japanese population. But, as I pointed out some time ago when talking about this, the Japanese population is growing older, and the youngsters have no interest in bailing out the Gov't's debt. So. here we go! Yen has taken its seat on the slippery slope, I wonder where it will get off.

The other "thing" that's weighing on the yen these days is the simple matter of it no longer being the "king pin" of the region. The other Asian currencies are taking liberties with yen these days, and the central banks of those Asian countries like S. Korea, are not doing anything to stop these gains. That's because these central banks believe in the Chinese recovery story. And all have pinned their colors to the Chinese renminbi/ yuan mast. yen is no longer the lead dog in Asian.

The other currencies taking on water are Gold and Silver. It's been a nasty December to remember for these two. You would have to think that the price manipulators are smiling like Cheshire Cats these days. They believe they are beyond the law, and can't be touched. They may be right. But then, here in the U.S. people or organizations in the past that have thought that, usually trip up, and get what's coming to them. That's the hope I have, and I'm sure as Gold & Silver holders you hope so too!

The euro is down this morning, about ½-cent. As we head into the end of the quarter & year, we could very well see some interesting currency moves, especially since we still have the "Fiscal Cliff" talks continuing. I heard a couple of people talking on TV yesterday, saying that they didn't know what everyone was referring to, when they say "Fiscal Cliff". Are you kidding me? As many times as it has been mentioned in the past couple of months, wouldn't you think that they would have stopped and just Googled it? Oh well. personally, I don't think that the Fiscal Cliff will be that Big a deal. I think that the increases in taxes that are coming from other things that I can't mention here, will be enough to bring the economy to its knees once again, but then, that's just my opinion, and I could be wrong.

Apparently the "talks" are going to resume today. Oh boy! On a side bar. I saw a cartoon yesterday that if it weren't so true it would be funny. An old, opened, used and bent up can of soup 1,000 times its size, representing our debt, is in the road, and the Democrats and Republicans are attempting to kick it down the road, and say, "This is going to be more difficult than we thought".

I know, I kept saying all along that I believed that our leaders would find a way to kick the can down the road further, and avert the so-called "Fiscal Cliff". And unless an 11th hour deal can be put together and agreed on, it looks like I'll have racked up another "wrong thought". UGH! But, remember, if our leaders don't reach a deal to kick the can further down the road, that the markets will most likely see this taking global growth to 2008 levels, and we could very well see a return to the so-called flight to safety of dollars and Treasuries. Now, there's one thought I wish I were wrong about!

OK. Well. the Aussie dollar (A$) remains well bid around $1.04 (it's actually a shade below that figure this morning, but still "around" it!) I would have to think that given the rot on the yen's vine that Japanese investors will have even more reason to get out of the low yielding yen and invest in a "higher yielding" (well it is when compared to yen!) currency like the A$.

The Canadian dollar / loonie, is a bit weaker this morning, as the Fiscal Cliff non-talks, are dragging the loonie lower. As it appears that the loonie will be the first to feel the heat of a "non-agreement on the Fiscal Cliff". of course all these currencies (except yen) that have been held down by the U.S. impasse could really bounce should an agreement get ironed out.

I read a story this morning, that highlighted the fact that the Norwegian krone will book its first gain VS the dollar since 2009, this year. I was shocked to read that! I know that 2008 was not good to any currency other than the dollar, but I don't recall 2010, and 2011 being that "bad" to the krone. But if Bloomberg says it was, then it was! I think that the markets had it all wrong to paint the krone with the same brush used on the euro.

Let's do a quick run-through on Norway, OK? First of all Norway is Western Europe's largest crude exporter. the country is backed with a $680 Billion sovereign wealth fund and boasts the largest surplus of any AAA rated nation. and now it's considered to be the world's safest credit. It costs less to insure against a default in Norway that it does to insure against a default in the U.S.

So, that certainly doesn't sound like the Eurozone, does it? So, maybe, just maybe, because you never know, the markets will begin to see Norway and krone for what it truly is. the world's safest credit! (hey! I didn't say that. the markets did!)

At my S. Florida meeting last week, I was asked what I wanted to happen. I said that while I still believed an agreement would be found, that my fiscal prudence tattoo would lead me to say that I hoped we went cliff diving. We have to start to stop our deficit spending at some time, right?

Did you see that U.S. Consumer Confidence fell out of bed this month? Yes, the Consumer Confidence index number, fell from 71.5 to 65.1 the first two weeks of December. OUCH! But this is all about the fear of increased taxes. Well, you know me, I always say that this number is too high, given all the "bad things" going on here in the U.S. so, for once, I believe, by Joe, they've got it right!

Hey. did you also see that stormin' Norman Schwarzkopf died yesterday. Remember him? He was our military leader during the successful "desert storm" war in the Gulf. He was someone we could all rally around. That was sad news to me to hear of his death at the age of 78.

OK. back to other stuff. I saw that the "dim sum" bonds that we've talked about several times in the past year, were the best performing bonds in Asia this past year, rising over 6%, which was greater than any local currency bond issued in any other Asian country. For those of you new to class, a "dim sum bond" or DSB, is a bond issued by a corporation denominated in renminbi/ yuan. These bonds are issued outside of China, at first in Hong Kong only, but now in Australia too. Eventually, mom & pops here in the U.S. will find a way to invest in these bonds, but for now, it's mostly local and institution owners.

But, the point here is that we'll continue to see things like this spread, as China continues to open up its markets, and spread the use of its currency. Long time readers of the Pfennig know all too well that I've been preaching about China's desire to remove the U.S. dollar as the standard (reserve currency), and this is just another step in achieving that desire.

Then There Was This. from Reuters. "The 2012 holiday season may have been the worst for retailers since the 2008 financial crisis, with sales growth far below expectations, forcing many to offer massive post-Christmas discounts in hopes of shedding excess inventory.

While chains like Wal-Mart Stores Inc and Gap Inc are thought to have done well, analysts expect much less from the likes of book seller Barnes & Noble Inc and department store chain J. C. Penney Co Inc.

Shares of retailers dropped sharply on Wednesday, helping drag broader indexes lower, as investors realized they were likely to be disappointed when companies start to report results in a few weeks' time."

Chuck again. it's already happening folks. the economic slowdown. are you ready?

To recap. The currencies continue to move is small ranges, but are susceptible to quarter / year end moves that could really be violent. Yen continues its slide, and is no longer the king-pin of currencies in Asia. Fiscal Cliff talks or non-talks are really holding the currencies down, should something get done to avert the cliff we could see a strong bounce.

Currencies today 12/28/12: American Style: A$ $1.0385, kiwi .8210, C$ $1.0050, euro 1.3190, sterling 1.6145, Swiss $1.0920, . European Style: rand 8.4950, krone 5.5830, SEK 6.50, forint 2220.50, zloty 3.0925, koruna 19.0520, RUB 30.48, yen 86.05, sing 1.2225, HKD 7.7515, INR 54.77, China 6.2315, pesos 12.99, BRL 2.0415, Dollar Index 79.75, Oil $91.04, 10-year 1.71%, Silver $30.50, and Gold. $1,660. and it's Friday. so here's your chance to take a peek at the U.S. debt clock, click here: http://www.usdebtclock.org/index.html

That's it for today. That was not as easy as it appeared, putting this together today, coming in stone cold, and trying to figure out what to talk about! But, like the true professional that I am, I pulled it together in time! HA! I got to go to the Missouri - Illinois Braggin' Rights game last Saturday, that was a blast! (Thanks Rick!) The 3 grandkids were really special at Christmas, a real joy for me. the whole family, grandkids and all, celebrated my wife's birthday the day after Christmas. They restaurant put us in a private room, they must have known about my grandsons! But a great meal and a good time was had by all. our Antione just emailed me and told me that they got to take their new baby home on Wednesday, and she's doing great. (she was born early) So, they are now getting to enjoy their new bundle of joy at home. Now, that's some great news to end with! I hope you have a Fantastico Friday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Chinese Economy Turns On to Recovery Street!

Chuck Butler — Mon, 03 Dec 2012 18:44:31 GMT

In This Issue.

* Currencies trade in a tight range on Friday.

* Currencies & metals rally overnight.

* Norway, and others lead way this morning.

* Central Bank meetings galore this week.

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

Chinese Economy Turns On to Recovery Street!

Good day. And a Marvelous Monday to you! And Welcome to December! The last month of 2012! This year, this December has 5 Mondays, 5 Saturdays, and 5 Sundays! Apparently this only happens once every 823 years! Or so I'm told. So, this isn't just any old December! It's a very special December! And that's even before we begin to talk about Debt Ceiling limits and Fiscal Cliffs! So, make this December one to remember!

Friday saw the currencies bounce around but in a tight trading range most of the day. The euro went back and forth through the 1.30 figure so many times, that I was beginning to get dizzy watching it! We had U.S. economic data that normally I get all lathered up about, Personal Income and Spending. But with the effects on spending from Sandy, holding down the number, the data wasn't of much use. one thing though to point out was that Personal Income was flat for the month. So, if there had been a real month of spending data, we would have once again spent more than we made. you can take that to the bank!

This morning, the currencies, for the most part, are rallying VS the U.S. dollar. The BIG movers VS the dollar include: Norway, Czech koruna, and S. African rand. The euro fell below 1.30 overnight, only to turn around and climb back above the figure, after some comments from a Eurozone leader (Noyer). Something about Central Banks needing to discuss exit strategies. The markets, I believe, took that as a subtle hint to Greece. You know, I said this a year or so ago about Greece. While the initial shock of them leaving the euro would be harsh, the euro would eventually be better off without having to deal with Greece's problems. It's the slowest buffalo theory.

Well, Gold tried to move higher on Friday, but guess what happened? You are correct! The price manipulators made sure Gold's aspirations of moving higher were squashed! One of these days, Alice! They'll get what's coming to them. This "game" can't go on forever.

We have a boat-load of Central Bank meetings this week, that lead us into the Jobs Jamboree on Friday. The roll call for Central Bank meetings include: Canada, Australia, New Zealand, the U.K. and the Eurozone. On a lesser scale or a roll call from the back of the room, would also see Central Bank meetings this week in Russia, Poland and Peru. Recall, that last Friday I told you that just about everyone had jumped on the Aussie rate cut bandwagon, except me. I know in my heart of hearts that it's not good to go against the crowd, but I just don't see the need for a rate cut in Australia, not with China's economy sparking growth.

But then, that's me. I'm always against debasing one's currency just to satisfy the markets. I got my start with foreign markets studying the Bundesbank (Germany's Central Bank) and the head of the bank Hans Tietmeyer. This was a man and an institution that NEVER allowed their monetary decisions to be influenced by the markets. So, me being new to all of this, then, I thought that this held true for all Central Banks. Boy, was that thought brought down, like thinking there's a pot of gold at the end of a rainbow!

Speaking of economic growth in China. The Chinese manufacturing index (PMI) printed above 50 for the second consecutive month (at 50.6) and the report had some very good details to it, and confirms, to me anyway, that China's economy has turned the corner and is now on recovery street. Of course I said that before, and of course I meant it. But this new data really puts a feather in the cap of the Chinese economy, and that's a good thing.

The Aussie dollar (A$) is flat today, and has been in the red most of the morning, after Australia printed a flat Retail Sales report which was weaker than the forecast of +.4%, however, the weak actual sales report was offset somewhat by stronger inventories. I expect the A$ to be in a funk this week, as the pricing in of a rate cut gets entrenched in the A$'s ability to rise. But, at $1.0425, where it sits right now as I write, the A$ is about where I've said all along that it's true value resides. But then that's just my opinion.

Across the Tasman, New Zealand printed low 3rd QTR inflation data last night, which isn't going to do the New Zealand dollar / kiwi any favors. I told you last week about the new Reserve Bank of New Zealand (RBNZ) Gov. and how he had picked up the "diss kiwi any chance you get" ball from the previous RBNZ Gov. (Bollard) . So, as I told you above, the RBNZ is meeting this week, and this inflation report, while good in my eye, but bad in the eyes of the markets, could throw a spanner in the works of a no-rate cut meeting. I don't believe the RBNZ and its new Gov have an appetite to cut rates at this meeting. So, just move along.

Last Friday, Canada printed their 3rd QTR GDP. And Annualized GDP slowed to .6% from the 2nd QTR print of 1.7%. The slowdown was expected, but still it's just not what the Canadian dollar / loonie needs to see. And only goes to prove that outgoing Bank of Canada (BOC) Gov. Carney, was correct in keeping interest rates at current levels. You know how much I dislike having to admit that a Central Banker was correct, folks. So, this was not easy for me to do!

But the loonie didn't seem to get all caught up in the slower 3rd QTR Growth. As the consumer spending component of the report was very strong at +3.8%... With BOC Gov. Carney leaving to take the conn at the Bank of England (BOE) there will be much disruption going on in the BOC, so don't expect this weaker GDP report to bring about a rate move at this time.

Did you see the story going around that talks about how Turkey is breaching the U.S. led sanctions against Iran by buying Iranian natural gas? As if that wasn't bad enough, guess what Turkey uses to pay the Iranians? Gold. So, when we see the huge imports of Gold into Turkey, we now know the reason why. I loved this line from the Turkish economy minister. "The U.S. sanctions stand for the U.S., we have multilateral international agreements. These deals we are a party to and are binding for us, and measures taken by the EU are also not binding since we are not a member." So, in other words. he told the U.S. and European Union, eh?

The important thing I take out of this, is the use of Gold as a payment facilitator. Good stuff!

Speaking of Gold. did you see the Sunday Pfennig & Pfriends edition where our metals trader, Tim Smith, talks about popular Gold coins? Good stuff! Well, timing is very important in our business, and our timing in printing that edition was very good, considering, that this past week, the U.S. mint announced that the November sales of American Eagle Gold coins were set to be the strongest in 14 years. WOW!

You don't think that all this sawdust being left on the floor in the discussions about the upcoming Fiscal Cliff, and the huge price swings where bargain basement prices could be locked in, had anything to do with this HUGE surge in demand for American Eagle Gold Coins do you? Yes siree Bob! You bet your sweet bippie it did!

I belong to the Citizens Against Government Waste (CAGW) organization, and once a month they send me the "porker of the month" email. which details a Gov't official that has decided that spending is the way to prosperity. This month, it's a U.S. lawmaker, that was spreading the myth that spending cuts triggered by the Fiscal Cliff would be devastating and that they would really compromise our domestic security and our capacity to respond to emergencies and disasters like the hurricane we just had.

OK. this is in the category of "don't get me started here". so I'll just touch on these things. first of all if you lawmakers hadn't thought that deficit spending was the road of prosperity, we wouldn't have to deal with these spending cuts now. Second, Defense spending as doubled since 2001, the Federal Emergency Management Agency saw its funding rise to $7.1 Billion in 2012, which was a 22% increase since 2008, and the $1.7 Billion Homeland Security Grant Program is full of wasteful spending, folks. So, all his arguments against spending cuts are void of good reasons to not cut!

On a final thought about the currencies before I head to the Big Finish, the Japanese yen is stronger this morning. Last Friday it looked like it was ready to really slide down the slippery slope, but then it stopped short. it's just a matter of time folks. you can do all the window dressing you want, you can add curb appeal, you can put lipstick on a pig. all these things help you hide the ugliness. but eventually, you get up close and see it for yourself. that's the yen all rolled up neatly for you. far away it may appear to be a good value. but up close, you see the problems for the yen.

Then There Was This. from the U.K. Telegraph.. "In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50% top rate of income tax shortly before the last general election. It is believed that Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes."

Chuck again. I would think this to be the case here in the U.S. should the higher taxes burdens be placed on high earners here in the U.S. So, before you count your chickens before they're hatched, be careful. you could budget for "x" amount of revenue from a source, and then find out that the source left town. Uh-oh.

To recap. Friday saw the currencies trade in a tight range, with the euro going back and forth through the 1.30 level all day. Gold tried to rally throughout the day, only to see a takedown late in the day. This morning, the currencies for the most part are rallying, with the Norwegian krone leading the pack.. The euro looks strong this morning, and the A$ is flat after a weak Retail Sales figure. Canada saw weaker 3rd QTR GDP, and New Zealand printed slower inflation, which probably won't influence the new RBNZ Gov. right away to cut rates.

Currencies today 12/3/12. American Style: A$ $1.0445, kiwi .8220, C$ $1.0080, euro 1.3060, sterling 1.6080, Swiss $1.0805, . European Style: rand 8.8270, krone 5.6350, SEK 6.6365, forint 215.50, zloty 3.1455, koruna 19.3310, RUB 30.90, yen 82.20, sing 1.2185, HKD 7.75, INR 54.76, China 6.2283, pesos 12.88, BRL 2.1115, Dollar Index 79.92, Oil $89.25, 10-year 1.64%, Silver $33.67, and Gold. $1,719.15

That's it for today. a great win by our Rams yesterday VS the 49ers! I didn't see the end of the game, as we left to go cut down our tree for Christmas. Alex and I worked on getting it ready for the stand last night, and it's now standing in our great room! The whole family went, and it was so good to see the three grandkids running around the tree farm, they were so darn cute! The big party was fun Saturday night, and it was so warm outside! In fact, the whole weekend was unseasonably warm, which is just fine with me! Happy Birthday to all the December Birthdays here in the office. I'll be on vacation for most of them. Well. hope your weekend was grand, for mine was. now let's go out and have a Marvelous Monday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Ben leaves us guessing; Will he or won't he?

Chuck Butler — Tue, 04 Sep 2012 14:24:12 GMT

In This Issue.

* Chuck interprets Bernanke's words

* US data helps send the $ lower

* Norway's fundamentals are second to none

* RBA keeps Aussie rates high

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

Ben leaves us guessing; Will he or won't he?

Good day. How was everyone's Labor Day weekend? Ours was a bit of a washout, but we really needed the rain so I can't complain. The storm clouds moved back over the dollar on Friday after Fed Chairman Ben Bernanke said he wouldn't rule out another round of QE. As Chuck let everyone know on Friday, he will be out for an extended period continuing his battle but as usual he left me with plenty of ammunition for today's Pfennig, so take it away Chuck!

Well. I told you all last week that Big Ben Bernanke wasn't going to repeat his 2010 Jackson Hole speech, and announce another round of stimulus for the economy. I also told you that the event risk was downward, if Big Ben left a sour taste in the mouths of those that thought he would announce more stimulus here. And soon after his speech, the euro, which had traded up to 1.2625, plunged, and Gold & Silver saw unwinding of trades that were made in hopes that the stimulus would be announced.

But. then they read what he had to say. and soon, the currencies and metals were getting bought up again a turn-around in less than an hour! Here's my take on what he said. and no, he didn't follow my script! I think Big Ben left little doubt that his is looking to the next policy meeting in September (9/12), to announce more stimulus. I had told you that is what I thought would happen, and so far, I was bang on. I guess all that remains to be seen is what happens on 9/12!

So, we get to play this game for the next 8 days. will he, or won't he? I say he will. The Fed Heads only have the same arrows previously used in their quiver, folks. Bullwinkle would say. "nothing up my sleeve". and so the same with Big Ben. he has nothing up his sleeve that 's not been tried, so he'll go back to the well. At least he knows that QE underpins the stock market, and keeps rates low. It doesn't do anything else, no wait! It does weaken the dollar. but as I've told you for years now, we need a cheaper dollar to pay down debt servicing with cheaper dollars.

Well. I completely forgot last week to mention a couple of things. My mind must have been in another place I guess. But on Thursday, it was my good friend, and former latte' buddy, Michelle's birthday! I can't believe I forgot! UGH!... And then on Friday, it was a the perfect trifecta, as our office coordinator called it. Pay Day. 3-day weekend ahead, and the Review & Focus arrived!

I hope the markets don't get all ahead of themselves the next 8 days. but knowing the markets, I know in my heart of hearts that they will. UGH! That means it will be a "buy the rumor (stimulus) and sell the fact" scenario. Just so you know. And one more thing before I turn it back over to Chris.

At one point on Friday afternoon, I walked out to the desk and asked everyone if there was anything that was going to stop Gold? The price of Gold started moving higher once the markets too Big Ben to say that more stimulus would be announced at the Sept meeting. But in the afternoon, it was a rubber band shot higher! At one point, I looked down and it was up $25. then 5 minutes later it was up $30. then 5 minutes later it was $32. crazy! But there's a lot of pent up buyers here folks. They've been waiting for Gold to break out of its summer slumber. and apparently, Friday was that day!

Chris again. I got to spend some time with Chuck and his family on Saturday, watching the Cardinals game out on his pool deck while he smoked some pork butts and bacon wrapped turkey breasts. Chuck always hosts a big labor day party and from the amount of meat he was cooking this was going to be one big party!

As Chuck mentioned, the currencies and gold certainly got the party started early on Friday afternoon as investors are again convinced we will see some sort of stimulus later this month. The data released on Friday morning didn't help the dollar as reports showed demand for US capital goods dropped in July and business activity in the US expanded at a slower pace in August. The Institute for Supply Management reported its business barometer fell to 53 from 53.7 in July. Economists had predicted a reading of 53.2, so the number was a bit disappointing, but a reading above 50 still indicates expansion. The Commerce department's durable goods report showed a 4% decrease in spending on non-military capital goods. Again the number was disappointing as economists were predicting a smaller 3.4% decline.

This week, the markets will be anxiously awaiting Friday's US payrolls number for August. Bernanke and the rest of the members of the FOMC will certainly be keying on this number during their meeting next week. Economists have forecast 125,000 jobs were added in August following an increase of 163,000 in July. Chairman Ben pointed out the damage 8+% unemployment is having on the US economic recovery, and even with the projected increase in jobs the unemployment rate will stay above 8%. So there is a good chance we will see additional action by the Fed no matter if jobs number comes in strong on Friday.

And we will get plenty of data here in the US prior to Friday. We start out the week with the ISM Manufacturing and Prices paid data, both of which are expected to have increased in August. And later today we will see the vehicle sales information for last month which are expected to be flat when compared to July. Tomorrow is a pretty dead data day, with just the MBA mortgage app number. Thursday will bring the weekly jobs numbers which are expected to reflect another 370k workers filed first time jobless claims last week. The ADP employment change report will also be released on Thursday, giving traders an indication on what to expect on Friday. The ADP number was identical to Payroll number last month, and Thursday's ADP report is expected to show a drop in the number of jobs added during August. Both Chuck and I think additional stimulus is a 'done deal' but Friday's numbers could solidify the rest of the market's opinion.

Looking at a currency scorecard for August shows the Norwegian krone was the biggest gainer vs. the US$ in August with a rise of over 4%. I spoke at the San Francisco money show a couple of weeks ago and pointed out the rock solid fundamentals of Norway's economy. Norway's 2nd quarter GDP came in at an emerging markets like 5.0 annualized increase vs. the previous quarter. Their Current account balance as a % of GDP is an impressive 13.9%, second only to Singapore which boasts a 22.1% surplus. (By the way, Switzerland rounds out the top three when it comes to current account balance vs. GDP at 13.4%). And last but not least, Norway has the best budget balance as a % of GDP of any of the currencies we track with a budget surplus of 15.4%. This is the largest budget surplus of any AAA rated nation, and the country has no net debt.

These stellar economic fundamentals form a very strong base for the Norwegian krone, and perhaps the move we saw during the month of August is a sign the markets are beginning to shift back toward trading on the fundamentals. But with the Euro debt crisis, the US elections, and the possibility of another round of stimulus; macro events will probably remain in the driver's seat for the remainder of 2012. Also, the Norwegian government announced Friday that it would be increasing foreign currency purchases next month as higher oil prices have them in the enviable position of holding too much krone. The increase in krone sales should help keep a lid on the Norwegian currency. for now.

The worst performer vs. the US$ in August? It was the Australian dollar which was down 1.72% on a combination of technical factors and increased worries over China's slowdown. As Chuck pointed out last week, the Aussie dollar has been slipping, and the technicals are pointing toward lower prices. It breached a key support level last week, slipping below its 200 day moving average; and some charts are now showing it will continue to drop to parity.

The RBA helped the Aussie dollar out a bit over the weekend after they decided to leave interest rates unchanged. Many investors worried that the Reserve Bank would look to cut the benchmark interest rate which is currently among the highest in the developed world.

Direction for the Aussie dollar will continue to be dominated by news regarding the Chinese economy, so investors were eagerly awaiting the release of the Chinese PMI (purchasing managers index) over the weekend. The PMI data was mixed, with the HSBC Manufacturing PMI falling to 47.6 from last month's reading of 49.3 while the non-manufacturing PMI number remained strong at a reading of 56.3 vs. last month's 55.6. I for one don't buy the 'hard landing' for the Chinese economy, and I think we will continue to see a commodity bull market in the longer term. That along with some of the developed world's highest interest rates should provide support for the Aussie dollar, but I am also smart enough to not stand in front of a moving train. A drop to parity would certainly present what some would consider a good value for this commodity based currency.

Another commodity based currency which traded higher last week was the Canadian dollar. Chuck pointed to the Canadian currency as one of the three he thinks investors should consider, and data released on Friday supports his view. Canada's GDP grew at a 1.8% annualized rate during the second quarter, matching the 1st quarter's revised figure. Economists had predicted growth to slow to 1.6% during the second quarter, so the loonie rallied on the better than expected figure. The recent gains in oil prices have also contributed to the loonie's recent rebound.

I got through a majority of today's Pfennig without writing about the Euro, a sure sign that things are settling down across the pond. The euro continues to cling to the $1.26 level as investors increase expectations the ECB will be joining the US with another round of stimulus this month. The resilience of the euro is a bit surprising, as most analysts had predicted the euro would be at much weaker levels. The median year end estimate of more than 50 analysts conducted by Bloomberg predicted the euro would be trading at $1.22, well below the current level. But traders and the analysts don't seem to be singing from the same song sheet, and the traders are the ones with the money so the euro remains well bid.

The rating agencies seem to be siding with the analysts, as Moody's cut the EU's rating outlook to negative over the weekend. Moody's lowered the outlook on EU's Aaa long-term bond rating from stable to negative, citing what it sees as risks to Germany, France, the UK and the Netherlands. These four countries make up 45 percent of the EU's budget revenue, and Moody's feels their exposure to the euro-area debt crisis will continue to weigh on their economies.

In other European news, the Swiss economy unexpectedly contracted in the second quarter. GDP in Switzerland declined .1% from the first quarter when it had a small .5% rise. Switzerland is heavily dependent on exports into Europe, and the SNB has pegged the Swiss franc to the euro in order to try and keep their goods competitively priced. But the peg couldn't make up for the European slowdown which is driving Swiss exports lower. Indicators for the second half of the year are currently mixed, and SNB leaders have vowed to keep the Swiss/Euro peg in place.

Then There Was This. I was searching for a 'then there was this' story this morning and asked Mike Meyer for some help. He suggested something on the Jackson Hole economic conference which I searched on and came across this interesting article. Just how did the Jackson Hole summit become such a big deal every year? According to an AP story written by Paul Wiseman, Former Fed Chairman Paul Volcker was the reason. Apparently Volcker was (and probably still is) an avid trout fisherman. The KC Fed wanted to try and attract Volcker to their annual economic summit and fly fishing in Jackson Hole was what they dangled in front of the former Fed head.

According to the story, "The event now draws 140 people every year, including some of the biggest names in economic and finance. They come to enjoy breathtaking views of the Grand Teton mountain range and Jackson Lake, to hike and fish and to engage in intellectual combat in the halls of the Jackson Lake Lodge. 'Jackson Hole provides a nice opportunity for central bankers to let down their hair a bit - only figuratively speaking, of course - and mingle with other members of their tribe and a few academics in an informal setting,' says Eswar Prasad, a Cornell University professor who will speak on a Jackson Hole panel this year. One annual tradition is the Friday night barbecue. There, some of the world's most high-powered economists don cowboy hats, string ties and other Western gear and sometimes join in a line dance.

My next question is exactly who pays for this boondoggle?? You can read the entire story at the following:

http://abcnews.go.com/Business/wireStory/world-markets-focus-tiny-jackson-hole-wyo-17116032

To recap. Chuck shares his thoughts on Ben's Friday speech, the markets are still questioning whether we will see another round of QE, but we think yes. Gold moved higher on Friday on uncertainty regarding future stimulus. Investors will be looking toward Friday's payroll numbers to give them a clearer picture. Norway continues to have some outstanding fundamentals which drove the krone to the #1 performer vs. the US$ during the month of August. The Aussie dollar was the worst performer, and technicals point to further weakness but the RBA seems to have put a floor under it by leaving rates unchanged. Moody's cut the EU's rating outlook to negative and the Swiss economy unexpectedly contracted during the second quarter.

Currencies today 9/4/12. American Style: A$ $1.0249, kiwi .7946, C$ $1.0155, euro 1.2571, sterling 1.5876, Swiss $1.0464. European Style: rand 8.3744, krone 5.7943, SEK 6.6901, forint 226.45, zloty 3.3383, koruna 19.7876, RUB 32.1683, yen 78.39, sing 1.2465, HKD 7.7564, INR 55.6612, China 6.3473, pesos 13.1483, BRL 2.0294, Dollar Index 81.296, Oil $96.93, 10-year 1.57%, Silver $32.08, Gold.. $1,691.50, and Platinum $1,555.25

That's it for today. Chuck sent me a note yesterday morning to let me know he had hit a bit of a snag and had to check into the hospital on Labor day. The surgery which was set for Wednesday is being postponed a bit. I will make sure to keep you all informed of his condition. Please keep him and his family in your prayers! I joined the rest of the folks in the 21st century over the weekend by upgrading my cell phone to a 'smart phone'. My daughter accompanied me to the store and convinced me to get the latest Samsumg. Now I just have to try and figure out how this thing works! I hope everyone has a fantastic start to this holiday shortened week, and thanks for reading the Pfennig!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Another day for the dollar.

Chuck Butler — Mon, 23 Jul 2012 17:39:52 GMT

In This Issue.

* Euro takes a spill

* Economic data rundown

* Spain cuts growth outlook

* Norway defies gravity

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

Another day for the dollar.

Good day.and welcome to the last full week of July. As Chuck mentioned on Friday, Chris and I will be running split shifts while he attends a conference in Vancouver and then followed by his summer vacation, so let's see if the old Chuck's away currency rally can mount a comeback at some point over the next couple of weeks. In the pre-crisis days, it was always a running joke on the trade desk that once Chuck left for vacation or any extended period, we would invariably see a rally in the currency market but times have definitely changed over the past several years.

When Chuck signed off on Friday morning, he mentioned the rally in the risk assets was treading water but the fatigue set in soon after and everything began to sink as the morning wore on. Most of the currencies were able to end the week in positive territory but the euro took a couple steps back and kept things from really taking off. Chuck did a good job of setting the stage as nothing in the data department here in the US on Friday allowed the markets to shift focus back to the euroland. The comfort zone for all of the financial markets remains a very small circle and you can bet its either the US or Europe in the driver's seat on a daily basis.

Every so often we'll see the bus driver that we don't recognize, but the European concerns made the stops and took us home on Friday. It didn't take long for the markets to make up their mind and before I had a chance to look up and see how things were progressing on Friday morning, the euro had already hit the low of the day at 1.2144. I guess it was around 9:00 when I flipped to the currency screens and saw everything in the red, including both gold and silver. I thought to myself it was going to be another one of those days so all I could do was tighten the seat belt and hope we stayed between the lines.

It actually turned out to be a mixed day, so things got a little better after lunch time. I'll dig deeper in the currency market in a bit, but first let's see what we have on tap for this week. It's shaping up to be a fairly light week in the economic data department for the US, but all eyes will be focused on Friday when we get the first peek of second quarter GDP. There's not much today, only a secondary economic activity report via the Chicago Fed National Activity Index, but we'll see a few reports each day heading into the weekend.

The rest of the week will be dominated by June housing numbers, which kicks off tomorrow with the May home price index. This report is nearly two months old and is expected to show a slight rise, but the experts are calling for a lower figure compared to the last report. In other words, it's looking to be a non-event. I don't know what to think about this report. I went out to one of those home value websites and it did show the value of my house has increased, but what's that really based on. Sure, I could ask the price it came up with, but I seriously question whether a potential buyer would actually pull the trigger when there still remains a glut of homes with depressed prices.

It's just like anything else, in that, it's only worth what somebody will pay for it. With consumer sentiment shaky at best, things should remain capped for quite some time. This presents a nice segue into Wednesday as we see the results of new home sales in June. The nominal sales figure is expected to hold steady, but the month over month comparison is expected to show a significant slowdown compared to May. We're quickly approaching the end of housing's late spring to midsummer butter zone as the school bells will be ringing all too soon. Once the kids are back in school and the leaves start to fall, the pool of potential buyers receives a significant cut.

Thursday will give us the most reports to review as the June durable goods report is expected to continue moving in the wrong direction. Pending home sales are shaping up to give us the same results as new home sales and the weekly jobs numbers should keep the Fed members on the edge of their collective seats. As I mentioned earlier, Friday should hold the cards this week as second quarter GDP is forecast to fall even further to 1.4%. I went back through some old headlines about the first quarter results and one really grabbed my attention. US economy grew 1.9% in the first quarter on consumer spending.talk about some spin.

Speaking of spending, we also get a first glance at personal consumption in the second quarter and to no surprise is expected to show further deterioration. In fact, economists are calling for over a 50% drop off in spending so it's not shaping up to be a lollipop and gumdrop kind of week on the home front. The battle between the US and European concerns kind of reminds me of the board game Risk, in that momentum constantly shifts from one player to the other and can last for a very, very long time.

I've gone on way too long about that stuff, so let's switch gears and talk about the market. As I mentioned earlier, the dollar reclaimed its spot at the head of the table and gained against every currency, except for the yen but barely. I was in the office sporadically over the weekend and pulled a chart of the dollar index while I was killing some time. Let me back up for a minute, since some of you might be new to all of this. When you hear the dollar is up or down, this usually refers to the dollar index which measures the dollar compared to a handful of currencies with a majority of the weighting toward the euro.

From a practical standpoint, the relative strength or weakness of the dollar is really referring to its relationship to the euro. With that being said, it's no wonder why the dollar index is hovering near its one year high since the euro is trading at a two year low in the mid 1.21 handle. It's sort of a misleading statement to say the dollar is at a one year high because not all of the currencies have gone the way of the euro, but the dollar has firmly been in the driver's seat since mid April, with most of its rising taking place in May.

As a result of the quiet day in the US, the markets were looking for something to grasp and it didn't take long as Spain lowered its growth outlook heading into next year. Spanish officials said they expect GDP to shrink 0.5% in 2013 instead of squeezing an ever so slight gain as previously forecast. With recession expected well in to the future, traders were in a full court press in calling for a sovereign bailout at some point down the road, so a Greece like result was paving the way as the weekend quickly approached. The direction of the euro is a testament to the market's loss of confidence that European officials will have the ability to keep things contained for the time being.

I know Chuck just mentioned the Australian dollar, but this currency is a perfect example of the divergence among the currencies. While the euro has fallen by the hands of its own sword, the Aussie is still trading in a historically high range. It has seen its fair share of volatility over the past several months but its domestic economy and positive yield differential has been enough to keep it above parity for the most part and among the top performers so far this year.

Talk of rate cuts from the central bank will still remain its Achilles heel, so traders will probably put a lot of stock into the inflation report due out Wednesday. This report is expected to show a sharp decline for inflation, so if this does ring true, we could see the rate cut talk fire up again.

The Canadian dollar has somewhat been in the same boat as it has managed to stay in a relatively comfortable trading range around parity. The similarity continues as we saw June inflation increase less than forecast at a 1.5% annual rate compared to the market expectation of 1.7%. The thought of a rate hike has lofted in the air now and then over the past couple of months, which I haven't put any faith into given the state of the US economy, but lower inflation pours water all over the coals of that talk. The Canadian economy has been able to hold its own in this up and down environment, so the latest rise in wholesale sales is just another feather for its cap.

Moving south of the border and one of the worst performing currencies on Friday, the Mexican peso made headlines as the central bank kept rates on hold and voiced a fair amount of concern for the potential of continued weakness in the global economy. Risk aversion appears to have gotten the best of the peso on Friday, but the less than optimistic outlook voiced from policy makers didn't help the situation. While the peso if far from one of those core currencies, it was at least worth mentioning since inflation has been above their target and policy makers didn't seem concerned one bit.

The rand actually came in last place on Friday by falling about 1.5% on two fronts, which includes both risk aversion and speculation of rate cuts. The central bank unexpectedly cut rates last week by 0.5% and many are expecting that trend to continue in an attempt to keep the economy afloat. Since the rand is considered to be more in the emerging market bucket than anything, interest rates are the key driver for this currency. The lack of economic stability in this country more than offsets any influence by gold in this type of economic environment.

If we take a look at the best performing currencies, or should I say the ones that managed to not lose as much, we see the Norwegian krone at the top of that list. In fact, both the krone and the Singapore dollar were within a fraction of a percent from jumping into the black but it was nice to see the krone breaking away from the gravitational pull of the euro.

The Norwegian economy is a polar opposite when compared to most of Europe so from a fundamental standpoint, it only makes sense. Speaking of fundamentals, gold and silver were able to end the day in a positive note, albeit slightly, but returns from last week clearly separates those currencies that have good to decent fundamentals from those that are on the wrong side of the tracks.

As I came in this morning, the dollar strength from Friday has carried over and has even intensified as both gold and silver have taken quite a hit this morning as they are trading down around 1%. A pickup in the European concerns is again at the center of it all as Greece and Spain continue to dominate headlines. This morning, its rising yields on Spanish debt and some tough talk from the IMF regarding the uncertain future of additional rescue funds to Greece that has the risk aversion/flight to liquidity crowd back into the streets. A very light data day in the US won't do much to steal the spotlight today so it's shaping up to be another day for the dollar.

Then there was this.The Associated Press surveyed more than a dozen economists, think tanks and academics, both nonpartisan and those with known liberal or conservative leanings, and found a broad consensus: The official poverty rate will rise from 15.1 percent in 2010, climbing as high as 15.7 percent. Several predicted a more modest gain, but even a 0.1 percentage point increase would put poverty at the highest level since 1965. Poverty is spreading at record levels across many groups, from underemployed workers and suburban families to the poorest poor. More discouraged workers are giving up on the job market, leaving them vulnerable as unemployment aid begins to run out.

To recap.Chuck's clairvoyance rang true as the lack of economic data in the US on Friday gave way to a rise in European concerns. It didn't take long for the dollar to make its mark on Friday as we saw the low of the day right out of the gate. The lower growth outlook in Spain going into next year was enough to rock the boat and drag the euro down to the mid 1.21 handle. There aren't too many data reports this week, but we'll see housing and durable goods for June. Friday looks to be the focal point as we have second quarter GDP and consumption results. The Australian dollar has remained fairly resilient but its latest inflation report due later in the week could throw a road block. The Norwegian krone was able to escape the euro's gravitational pull on Friday.

Currencies today 7/23/12. American Style: A$ $1.0285, kiwi .7918, C$ .9838, euro 1.2122, sterling 1.5537, Swiss $1.0094, . European Style: rand 8.4116, krone 6.0813, SEK 6.9703, forint 237.07, zloty 3.4477, koruna 21.1014, RUB 32.5751, yen 78.17, sing 1.2585, HKD 7.7571, INR 55.95, China 6.3860, pesos 13.4775, BRL 2.0242, Dollar Index 83.69, Oil $89.10, 10-year 1.40%, Silver $26.9550, and Gold. $1,571.48. and for a look at the U.S. Debt Clock, click here: http://www.usdebtclock.org/index.html

That's it for today.I had fairly uneventful weekend that was packed with more work than usual, but I still found time to recharge the batteries. I was able to watch the smack down the Cards gave the Cubs on Saturday night, which reminded me that I haven't made it down to Busch Stadium so far this year, and was then capped by a weekend sweep on Sunday afternoon. It looks like a return to the oppressive heat this week after a tolerable weekend here in St. Louis, so try to stay cool out there. With that said, Mondays are probably the busiest day of the week so I need to get a bunch of stuff done before the phones start ringing. Until tomorrow.Have a Great Day!!

Mike Meyer

Assistant Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Now, That Wasn't So Bad!

Chuck Butler — Fri, 13 Jul 2012 15:48:06 GMT

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

There's no smarter way to buy gold or silver

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

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

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

In This Issue.

* Currencies & metals lick their wounds.

* Aussie Treasurer in talks with China.

* China 2nd QTR GDP prints @ +7.6%...

* Are the markets wrong on Norway?

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

Now, That Wasn't So Bad!

Good day. And a Happy Friday to one and all! I'm thinking this will be a Fantastico Friday, because. Baseball takes up again tonight! Yes, these last two nights without baseball has been quiet and boring, which is fine sometimes, but I miss my baseball! Leon Russell is playing the piano on the iPod, so the day is starting out on a good foot!

The currencies and metals traded in tight ranges yesterday, as they licked their wounds from the previous day's bloodletting. We watched Gold lose $10, then gain $10 (a $20 swing) and then lose $5 and so it went back and forth all day. I would yell out to our metals trader, Tim Smith, to look at the swings. Tim is a believer of the price manipulation going on and he always makes mention of it when we talk of Gold & Silver. It's nice to have someone else believe these things, I hate to be the only boy crying wolf!

Yesterday, Australian Treasurer, Wayne Swan, was in Beijing for talks with the Chinese about the Aussie dollar (A$) becoming the third currency directly convertible to the renminbi / yuan. Folks. that removes U.S. dollars from the middle of the terms of trade between these two countries, and even with China slowing down, and probably bottoming out in 2nd QTR, that represents some very large numbers that will no longer require the use of U.S. dollars!

The last couple of years I've said over and over again that China, having suffered from the financial meltdown of 2008, was attempting to convert their export led economy to a domestic demand led economy, with exports providing the gravy. It will be important as we go along this year, with both the Eurozone, and the U.S. melting down again, to see just how far along the Chinese have come with this switch. One of the keys could be the fact that personal income in China has increased over 13% in the last two years. So, the Chinese have far more disposable income than they've ever had before, and that bodes well for a country that wants domestic demand to be the driver of their economy.

While we're talking about China. The Big News out of China overnight was the printing of their 2nd QTR GDP. The 2nd QTR GDP printed at +7.6%... as my mom used to say when she would make me take some awful medicine, "Now, that wasn't so bad". I'll even go back to my customer that had a business in China for years, and tells me that you can only believe 1/2 of what the Chinese report. So. 1/2 of 7.6% is 3.8%, now.. show me another country that grew 3.8% in the 2nd QTR! And. as I've said repeatedly. it is thought to be the bottom.

Aussie dollar (A$) traders and investors liked the color of the Chinese GDP and the A$ is attempting to gain back the over 1-cent loss it took yesterday. And the euro is pretty much flat on the day, as it bounces back and forth around the 1.22 handle.

Earlier this week I talked briefly about the LIBOR scandal. Well, the Wall Street Journal (WSJ) is reporting that U.S. Treasury Sec. Geithner, sent a private email to the Bank of England (BOE) Gov. King, calling for six changes that were meant to improve the credibility and integrity of LIBOR. Hmmm. not that I'm going to point any fingers here, I'll let the WSJ do that, but, the Treasury Sec. is doing to have to do his best impression of Lucy, because he's got a lot of 'xplainin' to do!

On a side bar here. a long time reader sent me a note the other day, and told me that I needed to get a personal twitter account. You know, one where I could tweet the Butler patio talks without legal beagles. What an excellent idea! The problem is I don't know where I would find the time do that stuff. Maybe when I retire, eh? But could you imagine me "raw" without the filters? That would be some good stuff! Well. I guess as long as you agree with me it would be good! HA!

OK. sorry about that. a thought slipped into my head and the next thing I knew, my fat fingers were typing it out. Gotta do something about those rogue fingers!

Hey. I'm seeing where traders are forecasting a rate cut in Norway this fall. You know I always say that I learned many years ago, that the markets are never wrong, and there are times I believe they are wrong, but to go against them at that time would be bad. Well, this is one of those times. Have the traders completely forgotten or tuned their hearing aids down when Norges Bank (Norway's Central Bank) Gov. Olsen signaled a rate hike as early as December? Or when the Finance Minister proposed tougher mortgage rules last week? Norway has a housing bubble going on and we all know from experience, the longer you pump air into that bubble, the worse things are when it pops.

Well, Norwegian property values have soared 30% since 2008. And here's why. Very low borrowing costs, rising wages, and the lowest unemployment rate in Europe. A lot can happen between now and December to change the outlook but, if we skipped ahead to December right now, knowing what we now know, I would bet that the Norges Bank would be hiking rates and not cutting them.

Norway has always been at the top of the class of countries when it comes to balance sheet, and I cringe when traders use the same brush they use on the euro when it comes to the krone. and I find that to be completely wrong! I've said it dozens of times before, and I'll say it again, one day, traders will realize that Norway is not Greece, or Spain, or Italy or even the Eurozone for that matter! As, I have always said to my kids when they would wonder why I wouldn't allow them to do something when, "everybody else is doing it, or going". I would simply say, "but don't you want to be better than everybody else? " That's Norway. better than everybody else, but traders just don't see it. yet.

You know. earlier this week, the Fed's FOMC meeting minutes revealed that a few members were for implementing additional stimulus IF the economy slows down.. . The more I think about that statement the more I think that the Fed Heads wouldn't know if the economy was slow or not. They are only, in my opinion, interested in asset prices. So, the statement should say that they are for implementing additional stimulus if the stock market continues to lose value. And when they do get around to realizing that they need to implement additional stimulus, it will be too late. They are always late to the party.

I have to be careful there to not sound so harsh on the Fed Heads. I'm sure they have the economy's best interests in mind. Like I said, the previous paragraph is just my opinion, and I could be wrong, right?

Did you all see the media fawning over the Initial Jobless Claims from last week yesterday? The number of claims for the week was 350,000, the lowest weekly number in 4 years. But didn't they forget something? Wasn't the week one day short last week? And for that matter, not much got done on Thursday and Friday following the Wednesday holiday to celebrate our Independence Day. Media people get me, folks. they really do. are they just "readers"? Didn't someone besides little old Chuck in St. Louis, Mo, home of the 11 time World Champion Cardinals, remember that the work week was cut short last week, and that could be the reason the number of claims was so low? I shake my head in disgust. rub my bald forehead, and carry on.

Moodys downgraded Italy by two notches overnight. But then Italy went out and auctioned 5.25 Billion euros worth of bonds and had strong demand for the bonds! And as Gomer Pyle used to say to Sergeant Carter. (come on do it with your best Gomer voice) Surprise, Surprise, Surprise! Guess what, Sergeant Carter? Greece is failing to meet 210 of 300 austerity targets. Now isn't that surprising? And then you can hear Sergeant Carter yelling at Gomer. PYLE, No this isn't surprising, it was going to take a hell-of-a good effort for them to meet those targets! Now go peel some potatoes!

Come on, folks.. you've got to have a little fun with this stuff or it begins to wear you down!

I have two Then There Were This stories today. first, is a story that comes to us from CNBC, and it's the incredibly intelligent and respected James Grant of the Grant's Interest Rate Observer, talking about the LIBOR scandal of banks fixing rates. This is good., folks. Here's James Grant. "The Fed is in the business of trying to manipulate markets, the macro economy, interest rates, unemployment and inflation through various monetary means, including the twisting around of yield curves and interest rates," Grant said.

Commenting on the growing London Interbank Offered Rate fixing scandal, Grant said "the idea that the banks are in charge of manipulating interest rates is absurd. The central banks do it all the time and they do it massively."

The Libor scandal might get bigger, Grant conceded, but outrage should be directed at the world's central banks, he said."

Chuck again. yes. I've always contended that the markets should set rates and not arbitrarily set by Central Bankers. but it goes deeper than that!

And then this one that really had me screaming at the walls this morning. Thanks to good friend Brad, for sending to me, and was pulled from CNSNews.com. "This year, Americans have to work until July 15 to pay for the burden of government, more than six months.

In a new report, Americans for Tax Reform (ATR) has calculated that Americans will spend a total of 197 days toiling to pay for the cost of government.

"Cost of Government Day is the date of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of the spending and regulatory burden imposed by government at the federal, state and local levels," reads the report. "

Chuck again. when will the all the people in the U.S. rise up and tell their representatives to stop spending money we don't have, or they will get thrown out of office? Because that's what it's going to take, folks.

To recap. The currencies and metals wrapped a tourniquet around the wounds they suffered the previous day, on Thursday, and that has carried through the night. The Chinese 2nd QTR GDP report which was to be the Big proof that China's economy has collapsed, came in better than expected at +7.6%! This news helped the A$ regain some of the over 1-cent loss it had the previous day, and Gold swung back and forth all day yesterday, but is up a few bucks this morning.

Currencies today 7/13/12. American Style: A$ $1.10175, kiwi .7920, C$ .9840, euro 1.2195, sterling 1.5445, Swiss $1.0155, . European Style: rand 8.3225, krone 6.1025, SEK 7.0350, forint 237.55, zloty 3.4515, koruna 20.8035, RUB 32.70, yen 79.30, HKD 7.7565, INR 55.18, China 6.38, pesos 13.41, BRL 2.0370, Dollar Index 83.56, Oil $86.85, 10-year 1.48%, Silver $27.46, and Gold. $1,584.00

That's it for today. Friday the 13th! I don't get into that stuff, but some people do, so if that's you, be careful today! Medicine has arrived. I'll begin taking my next round of a drug that targets renal cell carcinoma, which is what I have, tomorrow. I'm not supposed to drive a car until I see how the medicine will affect me. So going forward, if there's a day where the Pfennig is late and then it comes from Mike or Chris, you'll know that I just wasn't up to it that day. But I don't expect that to happen often. Good luck to my beloved Cardinals who begin the 2nd half of the season tonight. It's been great this week having our little Christine back. In two weeks, I'll be in Vancouver B.C. to speak at the Agora Investment Symposium. Many of you will be there too, so please stop by our table to say hi!

And. Our friends over at the 5 Minute Forecast, apologized for the perceived faux pas the previous day, regarding the bank that used customer gold holding for trading. Of course it wasn't EverBank, and to be clear, they never said it was. and now that is crystal clear. Thanks to good friend Addison Wiggin, for getting that all straightened out. I'll see Addison in Vancouver, and maybe we can have a chuckle over all of this! BTW. the 5-Minute Forecast is a must read for me every day, and should be for you too!

OK.. this gets longer to put together, time wise, every day it seems. so, let go out and have a Fantastico Friday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Terra Firma Turns Out To Be False Footing.

Chuck Butler — Wed, 11 Jul 2012 16:37:41 GMT

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

There's no smarter way to buy gold or silver

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

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

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

In This Issue.

* Currencies lose ground yesterday.

* A$ rallies overnight.

* But what about kiwi?

* Norway strike averted!

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

Terra Firma Turns Out To Be False Footing.

Good day. And a Wonderful Wednesday to you! What a day yesterday! After hitting send on the Pfennig, I began to do all that "stuff" I needed to get done so I could get out of here and to the hospital for my scans. Well, a funny thing happened on the way to the forum. The "system", you know that brand spanking new "system", doesn't let me in to it that early in the morning! So, I was scrambling around all morning, all my plans up in smoke! But thanks to Keith Rigdon for getting that all fixed.

Well, I left you yesterday with the thought that the currencies and metals had found some terra firma. But as the morning went along, that terra firma proved to be false footing and soon, the currencies were heading lower. At first, Gold held its gains. but in the afternoon, another criminal takedown of Gold occurred. OK. that's a pretty harsh word to describe the losses Gold took. but to me, it is criminal, the way these takedowns happen. Demand is strong, from everybody else, investors, hedge funds, Central Banks around the world, and then we have the short positions that the bullion banks have. That's all I can say about that. but I'm sure guys that really do the detective work on this stuff like: Ted Butler, Eric Sprott, and the guys over at GATA, will probably have more for you to read on this.

But that was yesterday, but today life goes on, no more hiding in yesterday, 'Cause yesterday's gone. I've been telling you the songs and bands, etc. on these lyrics lately, but good friend, Rick, gave me trouble about that, as he likes to play, guess who. So, there you go Rick! Good luck!

But, the point I was getting to before I went off on that tangent, was that Gold was back on the rally tracks this morning, up $9. But it has a long way to go before gaining back the $25 takedown yesterday. Silver is also gaining this morning, so. it would be nice to see these two metals hold on and even add to these gains today.

The euro fell from 1.2325 to 1.2250 yesterday afternoon. In my best Andy Rooney voice, Have you ever wondered why. Currency traders flip flop from day to day? Shoot Rudy, they flip flop minute to minute! But ever wonder what goes into their minds to push, for example, the euro down by 3/4 of a cent, on Tuesday, only to say on Wednesday, "we had better sell the dollar today ahead of the FOMC meeting minutes, which could give signs of more stimulus"? I mean they knew the FOMC meeting minutes were going to print this afternoon, Shoot Rudy, I told you they would print this afternoon, on Monday! It just doesn't make sense. but that's Mr. Market. try and figure him out!

The Aussie dollar (A$) saw a very nice gain overnight, after it was reported that Aussie Consumer Confidence had gained 3.7% to a 5-month high! Apparently the economists there, think that this gain in Consumer Confidence has something to do with the 1.25% in rate cuts that the Reserve Bank of Australia (RBA) has implemented in the past 8 months. You may recall me telling you recently that Australia had seen a greater than expected Retail Sales report, and that the building approvals had a record month, and that 123,000 new jobs had been created so far this year in Australia. That to me, would indicate the need to hike rates, but in this environment, with most Central Banks cutting rates, I doubt that we see the RBA opt for a rate hike right now.

This afternoon, Australia will print their latest jobs data report. Right now, the "experts" are forecasting zero gains in jobs for June. You may recall that last month, these same "experts" were also down in the forecasts for Aussie jobs and were made to look as though they had egg all over their collective faces, when the 38,900 job gains were reported. In fact, I read somewhere that the forecasters have been wrong with their too bearish forecasts quite often lately. So. we could see that happen again, and if it would, it could be the catalyst for a move to $1.03 for the A$...

I had someone send me a note yesterday telling me to be careful talking so glowingly about the A$, for it was overvalued. and that I should instead look to the A$'s kissin' cousin across the Tasman, New Zealand's dollar. Hmm. Hey! I used to love the N.Z. dollar / kiwi. but, they have a very nasty Trade Deficit. being an island nation, they have to import a ton of stuff, and when the N.Z.$ / kiwi gets too strong, it usually gets whacked by the Reserve Bank of New Zealand (RBNZ) Gov. Bollard. But Bollard will exit the RBNZ in September, so maybe, just maybe the new Gov. won't have a vendetta against a strong kiwi like Bollard did.

Yesterday morning, Ty Keough, yelled over to me that the strike in Norway's Oil and Gas Production had been averted. So, that was good news. Recently, I've mentioned how the Norges Bank (Norway's Central Bank) had been mentioning the need to hike rates to combat the housing bubble going on in Norway. But, just like the RBA, to hike rates now in this rate cutting environment going around the world, would stick out like a sore thumb. Instead, the Central Bank has put pressure on banks to do the right thing.

Really. I'm telling you the truth. Norway's Finance Minister, Johnsen, said that, "banks have an obligation to say to people I think that by taking a loan this size you might get water over your head." Yes, that's all nice and such, but will it really happen that way? Well. Norway's banking sector is strong, so maybe, just maybe, you never know!

Spain's Prime Minister, Mariano Rajoy, announced this morning, that he had increased taxes and found other spending cuts that would reduce Spain's deficit. This is the 4th austerity package that Rajoy has announced in the past 7 months. So, just about every-other month a new austerity package.

So.. it's not just here that the taxes are going to be going higher, folks. You'll have to find a country that doesn't have debt coming out their ears to escape higher taxation. That leaves out, the Big 3. U.S., U.K., and Eurozone.

The U.S. data cupboard today will have the color of May's Trade Deficit for us to look at today. Look for a modest narrowing, given the reduced Oil price. But the real meat comes this afternoon with the minutes of the last FOMC meeting, although given last Friday's weaker than weak jobs report here in the U.S., one would think that these meeting minutes would be stale. But you-never-know, there could be a goodie in these minutes for the markets.

Then There Was This. from the Wall Street Journal this morning. "The Commodity Futures Trading Commission voted Tuesday to finalize definitions and exemptions that set in motion parts of the new regulatory regime for complex derivatives called "swaps."

The commission's vote triggers other rules, such as reporting requirements and swap-dealer rules, marking a major step in the regulatory overhaul of the derivatives market that Congress set in motion with the 2010 Dodd-Frank law.

The vote also triggers new limits on speculation in derivatives markets that were passed by the commission last fall and have been the target of a lawsuit filed by trade groups late last year. "

Chuck again. yes, that's all good. but. what's it do to the outrageously large short positions that the bullion banks have? As Edwin Starr said. nothing, absolutely nothing!

To recap. the attempt by the currencies and metals to get on terra firma yesterday proved to be nothing more than false footing. The takedown of Gold in the afternoon was harsh, and came when demand from all sectors is strong. only the Bullion Banks own short positions. Hmmm. The A$ rallied overnight after a stronger than expected gain in Consumer Confidence, and the strike in the Oil & Gas production sector of Norway was averted yesterday.

Currencies today 7/11/12. American Style: A$ $1.0275, kiwi .7995, C$ .9825, euro 1.2290, sterling 1.5565, Swiss $1.0230, . European Style: rand 8.17, krone 6.0860, SEK 6.9580, forint 234.20, zloty 3.3930, koruna 20.5950, yen 79.25, sing 1.2640, HKD 7.7545, INR 55.40, China 6.3682, pesos 13.29, BRL 2.0330, Dollar Index 83.15, Oil $84.82, 10-year 1.51%, Silver $27.16, and Gold. $1,578.15

That's it for today. A nice win for the National League last night in the All-Star Game, according to Chipper Jones, "2 wins are nice, but 3 is a streak" and so, the NL now has a winning streak! All the "experts" before the game forecast a win for the AL. The people at St. Anthony's Hospital yesterday were great! The great song, How Much I Feel, by Ambrosia is playing right now, pardon me as I stop to sing along. OK. I'm back! It was just the boys at home last night, and Alex was playing his guitar most of the night. He chose his 12-string last night, instead of one of his electric guitars, so I got to watch the game and listen to him play. good stuff! He's so darn good! Well. I'm beat! And it's only Wednesday! UGH! Oh well, pull up the bootstraps and get to work, is what my dad would have told me. and so I will! I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

FOMC Meeting Minutes Deep Six The Risk Assets.

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

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In This Issue.

* Risk assets have a deep slide .

* Fed gives parameters for additional stimulus.

* Australia prints a Trade Deficit!

* Norway considers a cap for euro cross.

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

FOMC Meeting Minutes Deep Six The Risk Assets.

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

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

1. If the economic recovery stalls

2. If inflation remains low in the medium term

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Dollar drops after US inflation slows slightly . . .

Chuck Butler — Mon, 19 Mar 2012 18:48:39 GMT

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In This Issue.

* Dollar drops on inflation data . . .

* Norway's rate cut to inflate a housing bubble?

* IMF agrees with the Pfennig . . .

* A belated St. Patrick's Day story . . .

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

Dollar drops after US inflation slows slightly . . .

Good day... So how is everyone's NCAA bracket doing? Mine was ruined by the losses of MIZZOU and Duke this weekend. I was traveling last Friday and wasn't able to catch the MIZZOU game, but was told of the loss as soon as I landed in St. Louis. The Missouri loss was especially heartbreaking, as I really thought this was the year they were going to be able to break their long final four drought. I did catch a few of the games this weekend, but my interest has definitely waned now that both MU and St. Louis University are out of the tourney. But I'm pretty sure most of you don't read the Pfennig for sports highlights, so I will get back to reporting on the currencies.

Friday morning saw the dollar giving back more of the gains it had booked early last week and the greenback ended the week a bit weaker than it started. The CPI numbers were what sparked Friday's selling, as the CPI came in a bit lower than forecasts. Consumer prices rose .4% in February, with just a .1% increase in the 'core' number (Ex Food & Energy). The YOY gain was identical to the January reading at 2.9%, and the Core YOY figure was a bit lower at 2.2%. Apparently some of the currency traders felt these numbers may force the Fed to rethink their stimulus plans. Fed Chairman Ben Bernanke had indicated there would not be a need for another round of Quantitative Easing during the past few weeks, but the benign inflation data may indicate our economic recovery is in need of some additional fuel.

Another report released Friday showed consumer confidence in the US dropped slightly with the U of Mich. Confidence number falling to 74.3 vs. last month's reading of 75.3. Economists had predicted a rise in the confidence number to 76, so the fall held a bit more significance. Other data released Friday showed Industrial Production was flat last month, and one of Chuck's favorite pieces of data, Capacity Utilization, moved down just slightly at 78.7%. All of this data would seem to support our feeling that the US economy is on the path of recovery, but is definitely taking the long 'scenic' route. With this being an election year, the administration is going to want to try and steer the recovery into the express lanes. I'm sure there is going to be mounting pressure on the boys & girls at the Fed to come up with another round of stimulus.

This week's US economic calendar is pretty light with a definite slant toward the housing market. Today we will see the NAHB Housing Market Index which is expected to have risen slightly to 30. Tomorrow will bring Housing starts and Building permits for the month of February, both of which are expected to by just slightly higher than the previous month. Wednesday will bring the Exisiting Home sales data which again is expected to have risen by .7% MOM. Thursday will bring the House Price Index and the Leading Indicators along with the regular weekly jobs numbers. And appropriately we will close out the week on Friday with another piece of housing data, the New Home Sales figures. The importance of housing on the US economy is well documented after the bursting of the housing bubble a few years ago, so while there isn't a big volume of data this week, any surprises would definitely shake the markets.

I read a report over the weekend on what some say is a growing housing bubble in Norway. The fundamentals of Norway's economy remain solid, and many investors have turned to the Norwegian krone as an alternative to the euro. This has helped the krone rise over 4% vs. the US$ since the beginning of the year. But the recent rise in the NOK isn't what the countries leaders want to see. As Mike reported in the Pfennig last week, Norway's central bank surprised the markets with a .25% cut in rates. By the way, Mike did a terrific job Pfilling in didn't he? THANKS MIKE! Norges Bank Governor Oeystein Olsen said he wants to keep the krone from appreciating too quickly, and would use the bank's main interest rate to try to stem the recent appreciation of the krone vs. the euro. But the Norges bank officials seem to be fighting against a strong current with oil prices rising and the European debt problems pushing Norway's currency higher. The cut in Norway's interest rate could inflate what some say is a growing bubble in the housing market. I question why the Norges bank leaders would risk inflating a housing bubble in an attempt to keep the currency from appreciating. Apparently they feel a 4% increase in the value of the krone was too much, as their largest export (oil) is priced in US$ so any increase in the value of the krone/$ is amplified in the Norwegian economy. I don't think a .25% cut should cause investors to turn away from the NOK, but you may not need to look far if you do want an alternative.

Norway's Nordic neighbor doesn't share their concern regarding currency appreciation. Sweden's Deputy Governor of the Riksbank, Per Jansson, said they wouldn't react to the 'mild' appreciation they expect to see in the Swedish krona, and sees no threat to the economy stemming from the exchange rate. "We expect a rather mild strengthening from the current level, and that shouldn't be any problem whatsoever for the Swedish economy," Jansson said in an interview last Friday. "I do not expect any big drama surrounding the krona." Good news for US investors looking for a place to diversify out of the US$.

An IMF official said China will avoid an economic 'hard landing', agreeing with what we have been saying all along. "China is heading for a soft-landing" according to Zhu Min, a deputy managing director at the IMF. Zhu said he expects the slowdown in emerging-market economies to stabilize over the next few months. Recent data coming out of China show the property bubble is deflating, with prices falling in most of the nation's major cities. Concerns with the slowing Chinese economy continue to dominate the commodity markets. I constantly read pieces predicting the Chinese economy is going to collapse, bringing commodity prices crashing down with it. But the data continue to show the Chinese economy is not collapsing, but is slowing in a more controlled fashion. This controlled slowdown was needed to offset property bubbles which have been growing, and the recent drop in prices is certainly encouraging.

The news helped propel the Australian dollar back above $1.06 for a while this morning. Reserve Bank Governor Glenn Stevens expressed confidence in China's economic growth. Stevens predicted China will 'grow pretty strongly' in a speech today. "The slowdown in Chinese growth from 10% to a mere 8% is a major talking point, and some see it as portending a major crash," Stevens said. "But some slowing was required to reduce inflation and, therefore, put growth on a more sustainable path." Wow, not only the IMF but AUD Governor Glenn Stevens is also agreeing with the Pfennig! A good day!

Gold also benefitted from the positive news in China. As Mike reported last week, buyers are continuing to take advantage of any price drops, and gold bounced back from its weakest level in two months. Gold had fallen over 3% last week, its second biggest weekly decline this year, but is moving back up this morning. India, the world's largest consumer of the precious metal, announced an increase in customs duty on gold and platinum Friday which sparked a bit of panic buying by consumers before the increase took effect. Both gold and silver is trading very close to Friday's levels, with gold down $2.64 and silver flat.

To recap... The dollar dropped on Friday, giving back all of the gains it had booked at the beginning of the week as inflation cooled slightly. Housing is the main focus of this week's economic data in the US. A possible housing bubble didn't keep the Norges bank from cutting rates, and China seems to have deflated a bubble of their own. Officials at the IMF agree with the Pfennig that China will have a 'soft landing' and the news helped the commodity currencies which rely on Chinese growth. Gold bounced back after another weekly loss and is trading a bit higher this morning.

Currencies today 3/19/2012. American Style: A$ $1.0585, kiwi .8250, C$ $1.0077, euro 1.3155, sterling 1.5841, Swiss $1.0906, . European Style: rand 7.5672, krone 5.7452, SEK 6.7547, forint 219.87, zloty 3.1315, koruna 18.6118, RUB 29.23, yen 83.15, sing 1.2579, HKD 7.7627, INR 50.2225, China 6.3226, pesos 12.6684, BRL 1.7998, Dollar Index 79.814, Oil $106.56, 10-year 2.27%, Silver $32.3875, and Gold. $1,653.80

That's it for today... I enjoyed St. Patrick's Day on Saturday, heading over to my mom's house to enjoy a wonderful dinner of corned beef and cabbage. As most of you know, my father passed away just over a year ago and we celebrated him at dinner. 5 of my father's brothers and his only sister stayed in St. Louis to raise their families, so St. Patrick's Day has always been a big party for the Gaffney family. Long time readers can probably recite the story of my Grandfather's journey to the US verbatim, but hopefully you won't mind if I take this opportunity to share it with all of the new Pfennig readers. My father is a first generation American; his father left his home in County Roscommon at the young age of 11 and rode his bike across Ireland to Dublin where he went to work at the Guinness factory in order to earn enough money to come to America. After a few years, he sailed away from England on a sister ship to the Titanic bound for New York. As the luck of the Irish would have it, a young Irish lass who would eventually become my grandmother was also on her way to America. Both ended up coming to St. Louis where they settled down and raised 6 boys and a girl. So each St. Patrick's day I raise a glass of Guinness, who financed my Grandpa's trip to this great land of opportunity. I know I am a bit late, but I still want to wish A Happy St. Patrick's Day to all of you!

Have a great start to your week, and thanks for reading the Pfennig!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Fed spillover effect.

Chuck Butler — Thu, 15 Mar 2012 16:29:49 GMT

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In This Issue.

* The dollar was king for another day

* South African sales disappoint

* Norway reduces rates

* Gold and silver took another hit

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

Fed spillover effect.

Good day...and welcome to another Thursday. We saw another summer like day here in the Midwest that lends itself to throwing the winter coat toward the back of the closet and forgetting about it until next winter. While it's still way too early to take such drastic action, investors have seemingly thrown the debt problems and other fundamental concerns about the US economy to the back of the closet, hidden under that shirt you got as a birthday gift years ago that was never returned.

Saying goodbye to my winter attire isn't the wisest decision, but it's definitely tempting. It appears the markets were looking for any type of excuse to jump on the US bandwagon and see how far it would take them. We didn't see any remnants of the choppy trading pattern from Tuesday, so it was an all out rout by the dollar from the time we fired up the currency screens in the morning until we left for the evening. Did we have any reports that would have sent the dollar into orbit yesterday? No, not really. The party that began yesterday after the Fed meeting was still going full force and was still celebrating their upbeat outlook.

I'm always up for a good party, but when you see that guy who over-indulged on punch running around with a lampshade on his head, you know it won't be long before things start to wind down. When that guy comes out of the woodwork is anyone's guess, but it's usually just a matter of time. I think the same can be said with this dollar strength. The markets have such a short term memory these days that going from one extreme to the other isn't outside the norm and investors have no problem bailing mid stream. It's just something to keep in the back or your mind while dealing with this market volatility.

We only saw a handful of economic reports yesterday, which included weekly mortgage applications, the import price index, and the 4th quarter current account balance. The mortgage app figures are considered secondary and very volatile, but nonetheless, it did fall 2.4%. I don't know if you've paid much attention to the bond yields, but they have really shot up recently so that doesn't spell good news for those looking to refinance or buy a home. Bond yields have been all over the place as well, with the 10 year sitting on a four month high, but it wouldn't surprise me to see them turn on a dime. I'm sure the Fed isn't exactly thrilled to see them jump over 27% since the end of January.

Finally, we had the 4th quarter current account deficit grow to $124.1 billion and marked the biggest shortfall in three years. The balance for 2011 widened to $473.4 billion, or 3.1% of GDP, and came in much higher than the estimated $115 billion figure. If we do see the type of increased expansion that investors have been hanging their hat on over the past few days, then I would expect to see this number continue to rise.

We have a full day in the data department today as there are a couple of regional manufacturing reports, wholesale inflation, and the TIC flows from January. I don't think the market will pay much attention to those, but the only wild card that I can see would be the weekly jobs numbers. If we see a better than expected result, investors may feel vindicated on their rosier outlook and continue to party on with the dollar. I haven't seen much that would indicate a sharp rise, but if the report disappoints, we could see things settle down a bit.

Speaking of jobs, Chuck sent this tidbit while he was sitting in the airport yesterday morning.

"I saw this in today's post...Talk about the book cookers coming clean! The BLS originally said that St Louis had created 2,500 jobs in 2011...

And the civic leaders were gushing, slapping each other on the back for the "job well done"

Well... A funny thing happened on the way to the forum...The BLS now has revised the numbers to show that St. Louis actually lost 3,900 jobs instead!!!!

Ok I've heard of revisions but by this wide of a percentage margin? Oh... And this was reported on the back pages of the paper, hidden away in a corner hoping that no one would see it!

But I did!"

Thanks again for the info, Chuck. Seeing a report like that is so frustrating. Investors use this type of information to make important decisions not only in real time but also in regard to the future, so it's no wonder we see market volatility on the rise.

Anyway, let's move on the currency market before my blood pressure begins to rise. While the dollar rose against every single major currency, except for the Indian rupee, a good portion of them took a sizable fall. The worst of the worst, which included both the Norwegian krone and South African rand, got caught with a stiff right jab as they were sitting on 2%+ losses for most of the day. The general optimism surrounding the US economy set the wheels in motion, but economic reports released in each country sent them over the edge and battling for last place throughout the day.

Beginning with South Africa, retail sales growth rose at the slowest pace in six months as it fell to 3.9% in January from the previous reading of 8.7%. The rise in January inflation to a two year high was blamed for a majority of the slowdown as rising food, fuel, and utility prices kept a lid on consumer spending. This goes along with what I was talking about yesterday regarding fuel prices in the US and potentially impacting future retail sales figures if consumers are forced to pay more at the pump.

The domestic retail industry has played a major role in the economy over the past year so it's much larger than expected fall led some investors to believe a rate cut might be needed at some point. Interest rates have remained near record lows since November 2010, when they cut to the current 5.5%, but any rate cuts would send investors packing as the interest rate differential has been the primary motivation to own rand. The $40 drop in gold prices didn't help out either, but there was also speculation the South African central bank has been in the market buying dollars at an increased rate.

The Norwegian krone fell to a 5 week low against the dollar and fell by the most in six months against the euro as Norges Bank, their central bank, unexpectedly cut interest rates by .25% to 1.5%. The krone was already in the hole to start the day as economists were just expecting to see a downward revision to their rate forecast, but the decision to actually move took many by surprise. The currency fell nearly 1.5% in a couple of hours and ended the day with over a 2% loss. Coupled with the .5% cut in December and continued government concern of a strong currency, the market took this cut to heart.

Policy makers are in a tough spot. The higher krone has been spurred by the economy's relatively solid fundamentals. If it wasn't an escape from the eurozone to a neighboring AAA rated country, it was economic resilience underpinned by the oil industry attracting investors from all over the world. We have recently seen improvement in both manufacturing and consumer confidence reports, so it's not like a poorly performing economy justified the cut. In fact, the already low internal interest rate environment has given rise to the housing and domestic credit markets, so this move will just feed the fire.

The Norwegian government has long been critical of its disproportionate currency appreciation compared to the euro as most of their trade is with the eurozone. The stronger krone has kept inflation in the background, so the central bank would rather give manufacturers some breathing room by cutting rates and lessening the appeal to investors seeking yield than worry about the impact of easy money. It's a delicate balancing act as the krone was trading at a nine year high versus the euro, but I have confidence policy makers have the ability to remain on the tight rope without falling.

Well, it wasn't a pretty picture on the currency screens as I was on my way home last night. The only currency that went against the grain, interestingly enough, was the Indian rupee. From what I could find, it looked as though investors were pleased with the lower than expected report of manufacturing inflation. This report fueled speculation the central bank would have some scope to cut interest rates in order to help bolster economic growth. Also, real returns for foreign investors were being eaten up by the higher inflation so thoughts of higher capital inflows were on the table. The reasons for rate cuts were obviously different, but the market reaction to the cut in Norway certainly wasn't positive.

Both gold and silver took another hit as speculation for QE3 hopped in the back seat after the Fed meeting. Gold fell another 1.5% to $1645 and silver was trying to hold onto the $32 handle when all was said and done. Even though both metals have seen a reduction in buying, silver is still up 15% so far this year and gold has seen a rise of about 5%. If the Fed doesn't end up taking additional measures, the damage has already been done as far as the previous influx of capital into the market in the form of QE1 and QE2.

The same rationale was being applied to the market perceptions of most currencies, in that, if the Fed doesn't pump more dollars into circulation then a systemic reason for a weak dollar has been removed. I think most rational investors can look past this as being a motivation for buying the dollar. The fundamentals that have applied constant pressure on the dollar over the past several years are still present, if not worse, so looking long term paints a different picture than what has been portrayed this week.

As I came in this morning, the dollar buying frenzy has finally subsided as the only currency in negative territory is the pound sterling. The currency is only sitting on a fractional loss at the moment, but Fitch ratings was at it again by changing Britain's outlook to negative from stable and threatening its AAA status. They went on to say the decision reflects the very limited fiscal space to absorb further economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery.

Then there was this.Goldman Sachs shares plummeted 3.4% on Wednesday, cutting its market value by $2.15 billion, after The New York Times published an article by a Goldman executive criticizing the firm's treatment of its clients and a "decline in the firm's moral fiber." London-based executive Greg Smith said he was resigning after 12 years with the firm.

To recap...It was another day in the sun for the US dollar as a spillover effect from Tuesday's Fed meeting was in full force. The question then becomes how long with this last. There wasn't much data yesterday, of which the current account deficit widened, but we'll see our fair share today. The South African rand and Norwegian krone both fell by over 2%, but all of the currencies ended the day in negative territory except for the rupee. Diminished thoughts of QE3 spurred a selloff in metals as well.

Currencies today. American Style: A$ $1.0489, kiwi .8136, C$ $1.0066, euro 1.3046, sterling 1.5661, Swiss $1.0773, . European Style: rand 7.6612, krone 5.8007, SEK 6.8290, forint 223.73, zloty 3.1759, koruna 18.8555, RUB 29.49, yen 83.43, sing 1.2653, HKD 7.7626, INR 50.4350, China 6.3290, pesos 12.6874, BRL 1.8044, Dollar Index 80.41, Oil $105.48, 10-year 2.30%, Silver $32.31, and Gold. $1,646.88

That's it for today...I happened to look down at the calendar and noticed the end of the first quarter is nearly upon us. Didn't we just celebrate New Year's? I'm still amazed how time flies when you're having fun. I strained a tendon or something in my left elbow and forearm a few months ago, which is slowly getting better, so I'm hoping to get back into the gym next week. I saw a headline on the ticker that companies stand to lose $175 million in lost productivity today and tomorrow as March Madness kicks into full throttle. I'm running a little behind today, so I'll cut this short and catch up with you tomorrow. Until then, Have a Great Day.

Mike Meyer

Assistant Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Fear Factor Backs Off.

Chuck Butler — Wed, 07 Mar 2012 19:00:00 GMT

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A Pfennig For Your Thoughts

March 7, 2012

In This Issue.

* Greek Bond Swap acceptance.

* German Factory Orders drop.

* RBNZ has some explaining to do.

* Norway again.

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

Fear Factor Backs Off.

Good day. And a Wonderful Wednesday to you! Last week, while in South Florida, I went to a function that was titled "a reception" with the Cardinals. I had no idea it was going to be an outdoors function with a lot of standing in the sun. Which is great, when I have a baseball cap on to protect my balding head! But I didn't, so now I have this "glow" about me. Not exactly what I'm looking for, but. at least it was just a little more sun than needed, and not a whole lot of sun that was needed! But from now on, I'll have my baseball cap with me, no matter where I go in S. Florida. The fear factor taught me that lessons learned are like bridges burned, you only need to cross them once!

Speaking of the fear factor. it has been reduced in the Eurozone, as it appears that private investors are accepting their medicine, and taking their dose of the Greek bond swap. Soc. Gen, France's second largest bank, and UniCredit have announced that they will accept the terms of the bond swap, along with a long list of other companies that too have announced acceptance of the terms. This flood of private investors announcing that they would accept the terms, has lifted the fear factor for the euro this morning. But by all means that doesn't mean the euro is out of the woods, folks.

All it takes is for a big company to diss the bond swap and the fear factor will rise again, which won't be good for the euro. OK.. I explained the terms of the bond swap the other day to you, so I won't go through that again, but like I said then. the holders of current Greek bonds don't have much choice other than to accept the terms of the swap, for it is better to get "something" rather than "nothing". on an investment!

German factory orders disappointed this morning, falling -2.7% in January, but the euro hardly noticed!

OK. with all the talk yesterday about Gold and the manipulation, etc. I mentioned Warren Buffett. So, here's where I was going to go with that, but ran out of time and money. In the Berkshire Hathaway annual report, Warren Buffet provided us with some great quotes. "In the U.S., where the wish for a stable currency is strong, the dollar has fallen a staggering 86% in value since 1965, when I took over management of Berkshire. It takes no less than $7 today to buy what $1 did at that time.

In God We Trust may be imprinted on our currency, but the hand that activates our Government's printing press has been all too human. High interest rates, of course, can compensate purchasers for the inflation risk they face with currency (dollar) based investments, and indeed rates in the early 1980's did that job nicely. Current rates, however, do not come close to offsetting the purchasing power risk that investor's assume. In other words, the interest rates in today's money market accounts are not enough to offset inflation. You can't see it, but due to inflation, if you leave cash in the bank, you will lose money every year. Investing in domestic money market accounts these days is like keeping your money under the mattress. It's financial suicide. You don't have to settle for that."

Chuck again. OK, Mr Sage of Omaha, you're either telling us to get dollars out of money market accounts and investment them in either stocks or currencies. but since you don't own any currencies, you must mean stocks. But, unless you go to another country's stock market, your U.S. stock market investments are still dollar denominated. And didn't he talk about the loss of purchasing power holding dollars? I find this letter to be very confusing.

Of course most currencies these days are in the "no interest rate paid" camp too. That is all the ones that aren't Commodity Currencies! But interest on a currency deposit is not the only reason you look to buy a currency. You want to always view a currency as the "stock of a country". So. you've examined stocks before, and you look for: balance sheet, leadership, ability to attract investors, yield, something to sell that others want, and other things. now do that for currencies, and you'll find that you end up with a handful of currencies. That's right, with all the gin-joints in the world, and all the currencies in the world, we only end up with a handful that meet that criteria? WOW!

Take Norway for example. Their balance sheet is impeccable. Their leadership, top-notch, their ability to attract investment is good at times, their yield is nascent at best, but they do have something to sell that other countries need. Oil. Chris gave you an update on the recent data prints in Norway last week, and I've said several times now that if we were truly trading on fundamentals, Norway would provide a nice alternative to the euro. As it did prior to 2008.

When Switzerland devalued the franc last fall, tons of franc holders swapped their francs for Norwegian krone, and both currencies have done well, after the franc's initial drop. I think that swapping to the krone was a good idea at that time, as they would represent a "true safe haven" as far as I'm concerned. However, the Norges Bank (Norway's Central Bank) blew a gasket at the size of the flow into the krone, and we saw an immediate jump in the krone's value. And with everyone and the their brother very touchy about currency strength these days, that didn't sit well with the Norges Bank, and so they began to talk rate cuts to scare investors away.

Yesterday, I typed something in error regarding the Reserve Bank of Australia (RBA). I didn't put the n't at the end of did when talking about what the RBA did with rates. I said the RBA did move rates, but that was in error, they didn't move rates. Hey! I did get the part about them keeping their easing bias correct!

The Aussie dollar (A$) really took one to the chin this week, after the RBA meeting, and then to pour salt in the A$'s wound, it appears as though the Aussie economy is slowing, which would allow the RBA to move on that easing bias. However, the data is so old, I'm not sure anyone could get a picture of the economy, reviewing 4th QTR GDP when we're close to ending the 1st QTR! Oh well. 4th QTR GDP for Australia grew .4%, which was about ½ of what the economists forecast. This put the annualized GDP for Australia at 2.3%... not bad for a country that had a drought and a cyclone the size of the whole country devastate the economy in 2011.

With China announcing a lower target for their GDP this will affect the economic growth for Australia. But here's the catch as I see it. I think that China will grow at a faster clip than they have targeted, which will surprise the Aussie economy in a good way! Therefore all the Chicken Littles are crying for no reason. on a sidebar, my dad used to say, "what are you crying about? Come here and I'll give you something to cry about!" That would shut us up with the crying and whining! So, China needs to tell the markets the same thing!

So. with the Greek bond swap going well, so far, a tourniquet has been wrapped around the risk assets this morning. Gold is up $7, which seems like a good thing, but after all the selling through manipulation, $7 seems like a drop in a bucket! I was all ready to have something worthy of a Pulitzer prize to say here, but then I saw a blurb on one of the screens here that the Colts are set to release Peyton Manning, so they don't have to pay him $28 million that's due to him.

I know, it's business. so I won't get all into that here. Just wanted to mention it.

I did notice yesterday that stocks all around the world, not just here in the U.S. have been getting hammered, so the tourniquet is welcome today for the stock jockeys. But, as I asked the other day. stocks are getting sold, currencies and metals are getting sold, and Treasuries are not getting bought, as the yield stays steady Eddie at 1.97%... Where's the money going?

Under the mattress? In coffee cans to bury in the backyard? For new riding boots? New cars? Oh, I know! Campaign contributions! That's it, that's the ticket! HA!

The Canadian dollar / loonie slipped just below parity yesterday, and remains there. The price of Oil slipped $2 yesterday, but remains well above $100, thus underpinning the petrol currencies of Canada, Norway, Brazil, Russia, Mexico and U.K.

The Reserve Bank of New Zealand (RBNZ) meets tonight (tomorrow for them) and I expect no rate movements to come from this meeting. in New Zealand they their Fed Funds Rate, the Official Cash Rate or OCR. So, the OCR is expected to remain steady, so all the focus will be on the RBNZ Gov. Bollard to explain why he isn't reversing the emergency rate cuts that were made last year, after the two earthquakes hit New Zealand. This should be interesting.

And in China. the renminbi slipped for a 3rd consecutive day. But this slipping is very small, folks, nothing to get panicked about. What we should be panicked about though, is the news that the U.S. Congress had passed a bill imposing trade tariffs on China. (Congress added Vietnam too) The president is expected to sign the bill right away. This could be more than a tempest in a teacup folks. we'll have to watch this carefully.

And in the category of "this is difficult to believe". Brazil has passed the U.K. as the world's 6th largest economy. Just 10 years ago, you would have thought that Brazil was about to circle the bowl. But I read where in the past 20 years they have amassed the largest commercial cattle herd, and lead in the production of coffee, sugarcane and tropical fruits. (See, they have things to sell that other want!)

But before you begin to call us up and back up the truck with Brazilian reals, let me remind you that the Brazilian Gov't has been doing everything they can to keep the currency from gaining in value. Most of their efforts are only temporary, but do cause wild swings in the real.

Then There Was This. My friend Dennis sends me a weekly letter that goes through a number of items and I can always find good stuff from. and yesterday's is no different! Here we go. I know the President proposes a lot of things, but this one is very interesting to me, especially given the state and municipalities weakness right now. The president proposed an elimination the tax exemption on municipal bond interest for upper-income Americans above a 28% marginal rate. Therefore a taxpayer in the 35% tax bracket would be paying a 7% tax on their muni-bond income.

Now. does that make sense to do? Not now especially. UGH! Let's hope this proposal gets thrown to the side of the road, eh?

And then this final ditty. the U.S. Gov. paid $454 Billion of interest expense on the outstanding debt / Treasuries during fiscal year 2011. That was a 10% increase over 2010. at that rate of increase, it won't be long, yeah, yeah, yeah, yeah, yeah, yeah, it won't be long before interest expense or debt servicing it's called eats away all our tax receipts.

To recap. The fear factor has been reduced in the Eurozone this morning, as it appears that private investors will opt to accept the Greek bond swap, thus clearing the way for the next tranche of bailout money to Greece. The RBNZ meets tonight and will have to explain why they aren't removing the emergency rate cuts. Strong fundamentals still point to Norway, but breaking the pull that the euro has on it, is proving to be difficult.

Currencies today 3/7/12. American Style: A$ $1.0570, kiwi .8180, C$ .9990, euro 1.3130, sterling 1.5725, Swiss $1.0890, . European Style: rand 7.6525, krone 5.6680, SEK 6.7905, forint 225, zloty 3.1710, koruna 18.92, RUB 29.74, yen 80.75, sing 1.2610, HKD 7.7635, INR 50.28, China 6.3099, pesos 12.97, BRL 1.7620, Dollar Index 79.73, Oil $105.52, 10-year 1.97%, Silver $33.09, and Gold. $1,680.25

That's it for today. The sunrise this morning is very interesting, as there's a mix of clouds, and the sun peeks above the horizon. I like watching sunrises, and sunsets. My beautiful bride tells me that shows that I'm getting old. I would argue with her about it, but, I would lose, so, I just sit back and watch! Jr. Walker and the All-Stars are playing What Does It Take on the I-Pod, what a great song! Alex and Chuck are going to be unsupervised again this weekend and into next week. Lots of Pizza, basketball, and decadence for us! Alex has his first Water Polo game of the year Friday night, which also means that the coach, son, Andrew also has his first game of the year too! Good luck to both of them! And now, Mike is here, so it's time to go. I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

www.everbank.com

Stalemate continues on US debt ceiling.

Chuck Butler — Mon, 25 Jul 2011 17:18:35 GMT

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In This Issue.

* The stalemate continues in the US...

* Swiss Franc hits a record...

* Homegrown terrorist rocks Norway...

* Gold benefits from uncertainty...

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

Stalemate continues on US debt ceiling.

Good day. And welcome to the last week of July. I don't know about the rest of you, but this month has certainly flown by for yours truly. I'm sure the days are moving a bit too fast for President Obama and the Congress, as the deadline for a US default is just 8 days away. No progress was made over the weekend, and from the Sunday morning news show rhetoric; it sounds like the two sides are actually slipping further away from an agreement.

As expected, progress on deficit reduction through spending cuts and tax overhaul was derailed by politics. President Obama and Senator Harry Reid would like to pass a multi-year plan raising the debt ceiling by $2.4 trillion which would be enough to maintain government spending through the 2012 elections. But House Speaker John Boehner and his fellow republicans can smell blood in the water, and are only willing to approve a relatively small $1 trillion dollar increase which would force another round of debate on spending cuts next year.

Boehner says he is done talking with the White House, and will now 'begin conversations with the leaders of the Senate in an effort to find a path forward.' Sounds like this story will continue to dominate the news screens for the rest of the week, with both sides grandstanding to make their points. It will certainly be interesting to see how the markets react. So far they have been 'cautiously optimistic' that an agreement will be reached.

Most analysts are still expecting some sort of agreement prior to August 2nd, and I couldn't find anyone from the major banks/brokers who thought a US default would occur. And I agree. President Obama will not let the US default on its debt (although as Chuck suggested last week we probably have already technically defaulted).

The dollar is drifting down a bit this morning, and will probably be a bit volatile this week as negotiations ebb and flow. From all indications, a shorter term plan is what I think we will end up with, to the detriment of the US$. The dollar will likely rise at the first sign of an agreement, but if the deal is seen as a temporary fix, any dollar rally would likely be quickly reversed. Markets just don't like uncertainty, and would prefer this can be kicked further down the road rather than have it pop back up sometime next year.

One benefactor of the continuing stalemate is the Swiss franc which gained over 2 percent vs. the US$ to hit a record high in European trading. Investors continue to look for a stable place to park cash, and the Swiss franc has long been viewed as a safe haven currency. The possibility of a default in the US, combined with the continuing sovereign debt problems in the Euro-peripheral currencies has the long term stability of the franc looking rather attractive.

The franc is the best performing currency of 2011, appreciating an amazing 16.32% vs. the US$. In the past 3 months the CHF has moved up 9.63% vs. the greenback, just beating the New Zealand dollar which is up 8.26% in the same period. And the long term charts certainly seem to back up these investor's views, as the franc has held its value vs. the US$ better than any other major currency. Since February of 1989 the Swiss franc has risen 93.4% vs. the US$; dramatically better than any other currency. Second place is the Japanese yen which was up 62.2% not even close to the performance of the franc.

As you all know, Chuck is headed out west to Vancouver this week, beginning his three week cris-cross of North America. Before heading out the door, he sent me the following note to share with all of you:

Well, folks. looks I was wrong about Canadian inflation. I won't be wrong about it being the trump card as the determining factor on a rate hike by the Bank of Canada. And all those trades I told you about on Friday that had taken on positions ahead of the report, thinking it would show strong inflation, that would result in a rate hike next month, and a strong Canadian dollar / loonie. Canadian inflation printed weaker at -.7% for June. ending up at 1.3%...

Now. either they've figured out how to keep rising Oil prices from being included in their inflation figures, or they've torn a page out of the U.S.'s book on hedonic adjustments, because this number makes no sense to me whatsoever!

So. if the loonie was rising on the thought of a strong inflation report, I guess I don't have to tell you that with the weak inflation number the loonie got sold. UGH!

But.. having said all that. Canadian Retail Sales also printed on Friday. and. rose .1% in May, VS expectations to have fallen -.3%... So, it wasn't all bad for the loonie on Friday. but, still. the CPI "won the day".

As I make some notes on Friday before I leave, the U.S. debt deadlock is still a deadlock.. .maybe it will have been unlocked this past weekend. But if it hasn't, I still want to make everyone understand that to me, raising the debt ceiling is not an option. Unfortunately, I'm sure that in the end, it will be raised. and those spending cuts? Oh, did I tell you this little ditty? Those $3 Trillion in cuts over 10 years are on "projected spending". So, net, net. there's no change!

Chris again, this is why we never try to predict data, or call short term market moves. The numbers sometimes just don't make sense. I have more to share with you on the Canadian statistics in today's 'Then there was this'.

The Norwegian Krone slumped in early morning trading after the home grown terrorist attacks. Apparently the same sick person was responsible for both the bombing and shooting rampage which rocked the northern European nation. The stories of the survivors of the shooting rampage were chilling, and my thoughts and prayers certainly go out to all of those affected.

The Norwegian krone has long been a favorite of the desk, and I would look at any sell-off as an excellent buying opportunity. These attacks will not have any lasting impact on the government or economy of Norway, both of which are very strong and stable. Norway has excellent fundamentals backing its currency, and should be seen as another 'safe haven' in the volatile global markets.

The precious metals had a very good weekend, and gold shot through the $1,600 level to reach another record high. Chuck has long called gold the 'uncertainty hedge' and uncertainty is definitely one of the best description of the current markets! Debt problems in the US and Europe continue to shed light on the fragility of fiat currencies. Paper money is just that, paper. People are finally starting to question these IOUs as the credibility of the countries who are issuing them continues to slide. Precious metals have always been the alternative for these fiat currencies, and Gold is again becoming one of the top alternatives for those seeking safety from all of the debt problems. Gold is up 14% this year, and is heading for an 11th straight annual gain. And even if the US reaches a debt agreement this week, our AAA rating is certainly going to remain under pressure. Any downgrade of the US would certainly seem to push more investors into 'real' assets, and precious metals should continue to see nice returns.

Then there was this. I saw a story scroll across the Bloomberg screen this morning which raised my temperature (and that is the last thing I needed in this sauna of an office!). KPMG has discovered that Canada's statistics agency made economic data available to distributors before the official publication time for more than six years. "KPMG reported that the early release of up to 59 seconds had been occurring for more than six years," a summary of the report published on a Canadian website today said. The agency stopped the practice in November, after being alerted by Bloomberg News. According to the report, the statistics were disseminated to a handful of distributors who were licensed to publish the data. For some unknown reason, the Stat Can's IT department pushed the data to a couple of distributors 59 seconds early.

Now I'm not really into all of the conspiracy theories which are constantly drifting through the online chat rooms; but government statistics, and their control is one area I have always questioned. The folks who got the data early have said they didn't do anything with it until the official release time, but who's to say someone didn't pick up a cell phone and pass the data along to a friend? Sometimes certain dealers or banks seem to have an 'inside view' of the numbers, and a story like this feeds the fire of conspiracy theories.

And on a final note, a reader sent this to Chuck last Friday, and we all just loved it on the desk. Lending still more money to Greece and raising the US debt ceiling to avoid financial crisis is no different than increasing the blood-alcohol-threshold number in order to eliminate drunk drivers.

Well said!

To recap. The US debt ceiling deadline is fast approaching, and the two parties don't look like they are willing to compromise. The markets aren't too worried yet, but this story will definitely dominated the week's news. The safe haven of Swiss Francs is looking attractive to investors, as the CHF hit a new high. Our prayers go out to the people of Norway after a homegrown terrorist attack. Gold is back at an all time high, as investors are flocking back to what Chuck has labeled the 'uncertainty' hedge.

Currencies today 7/25/11. American Style: A$ $1.0824, kiwi .8645, C$ $1.0549, euro 1.4371, sterling 1.6278, Swiss $1.2451. European Style: rand 6.7894, krone 5.4055, SEK 6.3404, forint 187.51, zloty 2.7896, koruna 16.9810, RUB 27.71, yen 78.20, sing 1.2070, HKD 7.7916, INR 44.405, China 6.4448, pesos 11.67, BRL 1.5519, dollar index 74.09, Oil $98.79, 10-year 2.99%, Silver $40.84, and Gold. $1,617.80

That's it for today. The Cards let one slip away yesterday, but still took 2 of 3 from the Pirates over the weekend. They return home to test out the new 'turf' which was installed following the big U2 concert last week. Hopefully the sod in the stadium looks better than my back yard. The new sod my son and his friends laid down last month is looking pretty rough. I've been throwing plenty of water at it, but this excessive heat which has gripped the Midwest has been hard on my yard. Chuck will be escaping from our triple digit temps this morning as he heads west to Vancouver. He warned about writing the Pfennig from the office on Monday mornings, and I see what he is talking about, as I am breaking a sweat typing this. Time to get the week started, thanks to everyone for reading the Pfennig. Have a Marvelous Monday!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Worried investors rush back into the US$...

Chuck Butler — Thu, 12 May 2011 14:46:13 GMT

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In This Issue.

* Dollar rises as equity markets drop

* Next ECB President gets Merkel's approval

* Norway expected to raise rates

* Commodity currencies get sold

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

Worried investors rush back into the US$...

Good day. We saw the return of some pretty good volatility in the currency and metals markets yesterday with the dollar rising sharply and commodities dropping. It was definitely a 'risk off' kind of day with almost every currency was down vs. the US$ as investors, scared by the ongoing European sovereign debt problems and a slowdown in the Chinese economy, rushed into the US$ which is still seen as a 'safe haven'. Yes, in spite of all of the debt and deficit problems here in the US, the US Treasury market is still seen as a risk free environment and it is where large investors hide during uncertain times. The 10 year bond, which we track in the currency roundup below, was up over 60 basis points dropping the yield back down below 3.2%.

The selloff in both the equity markets and commodities was pretty dramatic and began with worries over Greek debt restructuring and were perpetuated by data which suggested the Asian markets are slowing down. I have reported on the events in Europe all week, so readers know the situation there. But what apparently sent investors running scared was the data released yesterday in Asia which showed industrial production growth in Malaysia and China is slowing as central banks there raise rates to quash inflation.

Asia continues to be the engine pushing global growth, and any sputter or misfire in China or the other Asian economies worries investors. But isn't this exactly what all the economists wanted to see? I read story after story over the past few years about how China was growing too fast, and how they need to let their currency rise in order to step on the brakes. Now we get news that their economies are in fact slowing, and investors get all worried! The key will be how much control the Asian governments can have in this slowdown. As long as it is orderly, the global economic impact will be minimal. The worries are that the measures taken by the Asian central banks will not be a tap on the brake pedal, but an all out mashing of the brakes to the floorboard.

Global investors have definitely tempered their optimism regarding the overall global growth. According to the quarterly Bloomberg Global Poll of investors, 1 in 3 plan on holding more cash over the next six months. That doesn't bode well for the equity markets, but could be good news for the currency markets (depends on which 'cash' these investors plan on holding). But for most of these investors cash mean US Treasuries. With all of the global uncertainty, you would think the precious metals would be another place these investors would be looking to ride out the storm, but 30 percent said they intend to reduce investments in commodities. Chuck gave his last presentation in Las Vegas yesterday, and sent me this note last night regarding the gold and silver markets:

From Chuck:

I gave me 3rd and final presentation on Wednesday, and talked about Gold & Silver. Now many of you know that I truly believe that there was some hanky panky going on last week, and probably again yesterday, with the Silver price, what with the 3 margin requirement increases in a week, and all the afterhours trading in Silver. And I told the audience just that! I did point out that when an asset like Silver has such a quick rise, and the "correction" sets in, that there would be a steep drop in the price, then a short rebound, and then a return to the drop in price. Much like we've seen so far in Silver! That means that Silver could very well drop below $30 on this next go-around in selling. but, as I told the audience, any price below $30, represents a buying opportunity to me! Of course, that's just my opinion, and I could be wrong, but that's my thought.

Another thing came up yesterday regarding something Chris wrote yesterday about the next reserve currency being SDR's (Special Drawing Rights). It was in contrast to what I had just given a presentation on regarding the steps that China was making to place the renminbi as the next reserve currency of the world. the person wanted to know why we differed in our thoughts. Look folks, the key here is not what replaces the dollar as the reserve currency of the world. It's the fact that. THE DOLLAR WOULD NO LONGER BE THE RESERVE CURRENCY OF THE WORLD! Our costs would rise, our interest rate on the loans we get would rise, the price of commodities would rise. (ready for $10 gas, like they have in the U.K. where they no longer have the reserve currency of the world? ) And yours, mine, and the guy 's down the street that washes his car with his shirt off, purchasing power would go to hell in a hand bag. that's. the important thing!

Back to Chris:

Chuck and I almost always agree on the long term trends, and another guy who we both usually agree with is Jim Rogers. I was nodding my head yesterday as I read a story on Bloomberg quoting Rogers who said the US dollar is going to be a 'total disaster' in the long term. Rogers, like Chuck and I, worries the US position as the world's largest debtor and the policies being pursued by Federal Reserve Chairman Ben Bernanke will lead to a dramatic devaluation of the US$. "The situation is getting worse and I expect to see severe problems in the US," Rogers said today. "Dr. Bernanke doesn't understand economics, he doesn't understand finance, he only understands printing money and we can't quadruple the amount of money in the next slowdown." According to Rogers, the Chinese Renminbi should be seen as the 'safe' currency instead of the US$, but he is currently buying dollars because the consensus in the markets is for it to fall. Rogers, who was one of the first to call the commodity bull market, said he couldn't forecast when the current bull market would end. "I expect to see more currency turmoil maybe this fall, and more turmoil by 2013", said Rogers. There is good profit to be made during times of turmoil!

The data released in the US yesterday showed the US trade deficit widened, while our budget deficit narrowed slightly in April. Neither was much of a surprise, as the rise in the price of oil caused the trade deficit to widen while an increase in tax revenues narrowed the budget deficit. Today we will see the weekly jobs numbers which are expected to show another 430k applied for unemployment last week. We will also see the first 'official' view of inflation during April with the release of the PPI data. The producer prices are expected to have risen 6.5% YOY during April, but the boys and girls over at the Fed continue to turn a blind eye to these price increases. We will also see retail sales and business inventories in the US which are both expected to have risen slightly.

Data out of Europe this morning furthered investor's concerns as European industrial production unexpectedly declined in March. Production slipped .2% from Feb. when it climbed .6%. Economists had predicted a .3% gain. But the biggest news out of Europe this morning wasn't the drop in Industrial production, but the German Chancellor Angela Merkel's backing of Italy's Mario Draghi as the next president of the ECB. Merkel's backing is important, as the ECB is really just a mirror of Germany's Bundesbank. Germany is Europe's largest economy, and their influence over the monetary policies of the ECB is dramatic. I think the markets would be a bit worried with having an Italian taking the reins of one of the globe's most influential central bank, so having the German leader's stamp of approval is important.

Norway will release their interest rate decision this morning, and many expect them to raise their benchmark interest rate by another quarter point. This would be the first raise in a year and would give investors another reason to buy the krone (like investors really need another reason!). Norges Bank governor Oeystein Olsen is trying to steer his economy away from rising prices. Norway has Europe's lowest jobless rate, and with oil over $100 a barrel prices have been rising. Policy makers signaled in March that they would be raising rates in either May or June in order to combat inflation. We will see today which of these months it will be. No matter what happens to interest rates in Norway today, the Norwegian krone will continue to be one of the currencies every investor needs to have in their portfolio. The economic fundamentals of Norway make it, in my opinion, one of the true 'safe havens' of the currency markets.

The drop in commodity prices and the 'risk off' attitude of investors hit the South African rand and Brazilian real pretty hard yesterday. The rand weakened for a third day, and is now down over 3% vs. the US$ in the past week. South Africa's currency is the worst performer as speculation increased that the Reserve Bank of South Africa will keep interest rates on hold tomorrow. Manufacturing growth has slowed in March and consumer prices are not rising as fast as in other parts of the globe. The $10 drop in the price of crude oil has pushed the Canadian dollar lower overnight. The loonie had been on a 3 day run higher vs. the US$, but the dramatic move in oil prices ended this weeks rally. The recent elections have given the Canadian government the courage to make the cuts necessary to bring the deficits under control. As long as they carry out these cuts, the Canadian currency should continue to outperform the US$.

The Australian dollar fell yesterday on weaker employment data and a fall in commodity prices. Unemployment increased in several areas of Australia, and a reported slowdown of the Chinese economy also weighed on the currency. China is the largest importer of Australian raw materials, so any slowdown of the Chinese economy will certainly have subsequent impacts on the Australian economy. I for one, believe the Chinese economic slowdown will be controlled, and the commodities will continue to be well bid. Both of these are good news for Australia which remains as one of the 'pick' currencies on the desk.

To recap: It was a risk off day yesterday with investors rushing out of equities and commodities and running back into US treasuries. Worries over the European debt restructuring and a Chinese slowdown were the main drivers of this investor fear. Chuck gave his opinions on the latest precious metals sell off, and Jim Rogers agrees that the US$ is in trouble over the long term. Data shows Europe's recovery is slowing, and Norway is expected to raise rates. Finally, the drop in commodity prices has caused a selloff in the commodity currencies of Canada and Australia.

Currencies today 5/12/11. American Style: A$ $1.0589, kiwi .7860, C$ $1.0331, euro 1.416, sterling 1.627, Swiss $1.126, . European Style: rand 6.9397, krone 5.5161, SEK 6.3262, forint 188.39, zloty 2.7669, koruna 17.147, RUB 28.0502, yen 80.89, sing 1.2448, HKD 7.7732, INR 44.995, China 6.4988, pesos 11.7115, BRL 1.6218, dollar index 75.517, Oil $96.06, 10-year 3.17%, Silver $32.3875, and Gold $1,480.75

That's it for today. I want to welcome the newest member of the EverBank family, Tim Swanson who joined us this week as our new Chief Investment Officer. EverBank continues to grow, and Wealth Management is a big part of our plans. Tim has joined us to help start up and grow a new Wealth Management division here in St. Louis. I have had a couple of short conversations with Tim and he certainly seems to be a smart and affable guy (he says he has been reading the Pfennig, so maybe that is why he sounds so smart!). Another day of heat and rain is supposed to be in store today, a typical early summer pattern here in the Midwest. As Chuck always says, I hope everyone has a Tub Thumping Thursday!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837