Daily Pfennig : Renminbi

Japan Posts a 4.8% GDP!

Chuck Butler — Mon, 16 Nov 2009 15:19:00 GMT

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In This Issue..

* Risk Aversion goes away mad...
* China just says "no" to currency flexibility...
* Maybe a return to fundamentals?
* Gold continues to soar!

And Now... Today's Pfennig!

Japan Posts a 4.8% GDP!

Good day... And a Marvelous Monday to you! It's raining here, so it's one of those Rainy Days and Mondays... But I won't let it get me down, as opposed to the song! I got a chance to check out our new digs in the building next door to us here... Very nice! And... A long way from that small office I sat in on Olive St. a decade ago, when we started EverBank... To think back 10 years ago, and where we are today... Simply amazing!

OK... As I told you Friday, the President was in China this past weekend, trying his best to get the Chinese to agree to a greater flexibility for the renminbi... Well... There were a few stories this past weekend that hinted about the Chinese agreeing to do such... But I prefer to go with this story that appeared on Reuters last night... "The Chinese government has sought to distance itself from speculation surrounding a central bank statement earlier this week that was interpreted as a shift in currency policy towards a stronger yuan. However, a report on Saturday by Xinhua, the state-controlled Chinese news agency said that the government would not allow the currency to gain against the dollar in the short term."

Wang Qing, chief Asia economist for Morgan Stanley in Hong Kong, said in a report to clients: "I consider this article an official effort by Chinese authorities to dismiss the renewed speculation of yuan appreciation in the near term."

So much for that visit to China, eh? Put that one down next to the visit to Copenhagen earlier this year... Ahem... 3 strikes and you're out in baseball... But, getting back to the trip to China... The Asia-Pacific members were pretty tough with their questions for the U.S. President, questioning his commitment to free trade... And then let him know that China is going to fight protectionism, and keep the renminbi on a leash...

On Friday, we had the currencies add a bit to their rally on Thursday, as the Risk Aversion campers were sent home without a ball... No need to go away mad... Just go away! There was a bit of interesting data reaction that happened on Friday, which only gave me some hope of returning to fundamentals... The U. of Michigan Consumer Confidence Index fell in October, which wasn't expected one iota... And... The dollar sold off! That's exactly what should happen when a country's economic data prints badly! So Hur-ray! YAHOO! But... Just like I always say... On swallow doesn't make a summer, and one reaction to a data print doesn't make for a shift in fundamentals... But could it be a start? Yes, it could... But we'll need to see more of this type of trading after data prints to indicate that the old "trading theme" has been put in our rear view mirrors, and that fundamentals have returned... But wouldn't that be a happy day? Oh happy day... Oh happy day...

I'm going to tell you this next bit, and you're not going to believe it at first... But stay with it... There was good news in Asia overnight, as the Japanese printed a 3rd QTR GDP report that showed an annualized rate of +4.8%! That was 2.9% higher than the "experts" forecast for Japan! So... Even Japan is joining the other Asian and pan-Asian countries (Australia) in posting strong economic growth!

The Asia-Pacific leaders pledged to keep stimulus measures in place until there's a "durable growth"... Hmmm... Here's hoping that the Asia-Pacific leaders let us know when that happens, for 4.8% annualized growth for Japan, sure seems like "durable growth" to me!

And... In keeping with our hopes that fundamentals return to currencies and commodities... The strong economic data for Japan, did not quash the yen! In fact, the yen has traded stronger VS the dollar overnight!

Speaking of trading stronger VS the dollar overnight... Have you seen the price of Gold? WOW! Gold has set, yet another, all-time record high overnight of $1,133! It has since given back some of that to trade at $1,127... But still... WOW!

You know... Just about 10 days ago, the dollar was looking as if it was going to make a comeback / correction... I even saw a cute little poem a trader wrote about it being the end of euro strength... But here we are 10 days later, and the dollar is looking quite weak again... The euro is back to pushing the envelope to 1.50 VS the dollar, and I just told you about Gold's run VS the dollar...

Of course this doesn't mean that a correction couldn't take place today, tomorrow, or the next day... I'm just pointing out something that I've told you all about for years now... And that is: short term forecasting for currencies is usually wrong! So, then, people ask me... Why then do you write a daily letter about currencies, Chuck? Ahhh, grasshopper, because, someone has to make sense of this daily noise, and... You never know when a "turn" might happen in the currencies...

The Aussie dollar (A$) spent the overnight sessions trying to get past .9350, but failed to do so, especially on the back of a note from a local bank analyst who went out on a limb and said the Reserve Bank of Australia (RBA) would be on hold at their next meeting on Dec. 1st... Well, that may be... But I still believe the RBA will hike rates in December! But if they don't, then we could look for an even larger hike when they come back in January! So, this keeping the A$ below .9350 won't last long, in my humble opinion!

We could get some traction from the euro and other Euro-type currencies this week, as the Euro Finance Week in Frankfurt will take place with top leaders speaking on the financial crisis and lessons to be learned from it... German Chancellor Angela Merkel, who's always good for some interesting quotes, will speak, as will European Central Bank (ECB) President, Jean-Claude Trichet...

Speaking of Euro-type currencies... The Norwegian krone, continues to follow the Big Dog, euro... But when the Big Dog, euro gets going, the krone normally out performs the euro... So... The Big Dog, euro is the key here...

OK... For some time now, I've been trying to point out to you that monetary inflation is going to sneak up on us and rip apart our investments... My good friend, David Galland, had this to say in his Friday letter... Here's David!

"Just because it's not readily apparent doesn't mean it's not there. Of course, I'm referring to the government's monetary inflation, which, thanks to a combination of factors, still hasn't jumped out of the closet to scare bond markets into cardiac arrest."

David then goes on to show his readers a table that had useful details on the progression from normal to very much not normal, leading up to the German Hyperinflation of the early 1900's... David then says, "As you can see, the situation in Germany was not so bad - until it was."

If you would like to see the "table" David refers to... Or read his excellent letter... Click here... http://www.caseyresearch.com/quick-guide/free-publications/

OK... You know, the soaring Gold price has been mostly tied to the weak dollar... But, you would have to think that "smart investors" with an eye on this monetary inflation is having some push to the price of Gold too... I know that's why I own Gold... The weak dollar thing is just icing on Gold's value in my opinion... The inflation hedge... The Deflation hedge... Or... As I call it... The "uncertainty hedge"...

And then there was this... The other night I was discussing the Health Care stuff, and told the person I was talking to that the stimulus bill, you know the one that was pushed through so fast last winter because we as a country were "near total collapse"? Well, the stimulus bill had hidden in it, part one of the Obama Health Care Plan... Hmmm didn't know that? Well, yes, grasshopper... It's the "death panels" that Sarah Palin coined them... They are called the rationing and enforcement board. And... The President has already funded them with $20.6 Billion of our taxpayer dollars!

Now... I'm not going to get into a discussion of the Health Care here... My point was simply to show that when bills are passed, it is important that they are read aloud to the people, to keep from "hiding" things in the bills... $20.6 Billion of money that the Gov't did not have!

Ok... Enough of that... My good friend, Dr. Dave Janda, was the first to expose this "hidden gem" And he's been on the speaking circuit trying to get anyone that will listen to him, and they should, to understand what's going on...

Currencies today 11/16/09: American Style: A$ .9340, kiwi .7445, C$ .9555, euro 1.4970, Sterling 1.6720, Swiss .9920, European Style: rand 7.3910, krone 5.5730, SEK 6.8060, forint 178.90, zloty 2.7375, koruna 17.0530, RUB 28.68, yen 89.50, sing 1.3850, HKD 7.75, INR 46.22, China 6.8269, pesos 13.01, BRL 1.7125, dollar index 75.03, Oil $77.19, 10-year 3.40%, Silver $17.85, and Gold... $1,130.30

That's it for today... Our resident TV personality, Ty Keough, was announcing the Missouri Valley Conference Soccer match yesterday on Fox Sports Midwest... Ty had a great line during the match, referring to one shot by a player as being a "venomous shot!" I made a drive to the country yesterday to visit my graves of my parents and oldest sister... It had been a couple of years since I made that drive, my bad... The little country town that our family farm sat outside of, hasn't changed... It's still the same quiet little country town in mid-Missouri... Went to dinner with good friends, Lisa and Kevin on Saturday night, they used to be our neighbors, and now we rarely see them... UGH! OK... Mike's here, so that means it's time to hit "send"! I hope you have a Marvelous Monday!

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

Risk Aversion Creeps Back Into The Currencies...

Chuck Butler — Thu, 12 Nov 2009 15:32:59 GMT

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

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

Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is Dec. 3rd, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referId=11808
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In This Issue..

* Comments spook currency traders...
* A$ hits 15-month high, this time going up!
* Geithner as the "joker"?
* China changes statement about the renminbi...

And Now... Today's Pfennig!

Risk Aversion Creeps Back Into The Currencies...

Good day... And a Tub Thumpin' Thursday to you! It's a Thursday, and it's not raining here! YAHOO! After a week of Indian Summer weather, we're slowly creeping back to the colder weather, but still, better than most Novembers of the past, so far!

That was a strange feeling yesterday, having a holiday in the middle of the week, but the day was nice, and I got to spend the day with my granddaughter, Delaney Grace, who sang me songs all day long!

So... Last night, I'm doing some writing, and before I put the laptop to bed for the night, I checked the currencies, and while they had drifted in the early Asian session, the Big Dog, euro was still trading above 1.50, and the Aussie dollar (A$) had set a 15 month high of .9368... But when I turned the currency screens on this morning after arriving to a pitch black office, which is the way I like it this early in the morning, the euro had given back about 1/2 cent, and so had the A$... So, it was my mission to find out what caused this slippage...

The only thing I could find was a comment by the Chinese Premier, Wen Jiabao, who said that "the world faces an uneven recovery"... This made traders think twice about leaving me behind, no wait... I mean they thought twice about the green light they thought they were under to have carte blanche with the dollar...

The dollar also received a bit of love from the comments by U.S. Treasury Sec. Geithner, a.k.a. the Cheater... Geithner was doing his best Robert Rubin, circa 1995, saying that he believes strongly in the need to maintain a strong dollar and said the United States was determined to get its budget deficit down. HAHAHAHAHAHAHAHAHAHA! That's a joke, right? OH! He wasn't joking? Are you sure? Because for a minute there, I really thought he was joking, for what, in the past, has he or this administration done to back up those words? But he wasn't joking... Hmmm... And I was all ready to give him a new nickname... The Joker...

Geithner did say that the U.S. was well aware it must work to keep investors' confidence in U.S. economic policymaking... Yeah, and that's exactly what you've done, right? NOT! Hey Timothy, you might want to check the scorecard on your performance so far... The dollar index has fallen 7.6% this year, and hit a 15-month low of 74.89 yesterday...

OK... I've got to go on to something else, otherwise I'll say something that will cause people to fill my email box with nasty emails! But... It sure looks like Risk Aversion has crept back into the currencies after all these statements... We seem to run into these Risk Aversion stints about every week... They come, they take away gains, and they go away, thus allowing the gains to be reinstated...

How about that 15-month high for the A$ yesterday of .9368? At least this time the currency is on the way up when it hit that 15-month figure... 15 months ago, it was on the way down! So, here's the skinny on this move by the A$... Australian employers added jobs in October... This was unexpected... But... Caused the immediate response of speculating that the Reserve Bank of Australia (RBA) would indeedly do, raise rates at their next meeting on Dec. 1st...

There was another "push" to the A$ yesterday... And it came from Gold! The shiny metal pushed to yet another new all-time high record level of $1,117 during the day... I might remind you here that Gold is Australia's third most-valuable raw material export... Oh! By the way, Australia's unemployment rate is now 6.5%, which is still too high, but falling... And doesn't that have a nice ring to it, versus saying an unemployment rate is rising past 10%?

The A$ pulled its kissin' cousin from across the Tasman, New Zealand dollar / kiwi along for the rally yesterday... Kiwi continues to be haunted by the ghost of deficits past... But, hiding in Australia's shadow suits kiwi just fine... And New Zealand Retail Sales just posted a nice, surprise, uptick... There are all kinds of reports going around that say the New Zealand 3rd QTR GDP will be strong... I'm from Missouri, so they'll have to show me!

There was further news out of China yesterday, from the People's Bank of China (PBOC)... The PBOC stated that "the exchange rate will be guided in a proactive, controlled and gradual manner and based on international capital flows and movements in major currencies." What's the news of this you might be asking? Ahhh grasshopper, sit... Here is the news... That statement is completely different toward the Chinese currency than previous statements that said that the PBOC would keep the currency "basically stable"...

This is Central Bank parlance folks, to say that the PBOC will continue to "gradually" move the renminbi... As previously they basically said they would keep it at current levels... The foreign newspapers are all over this statement like a cheap suit, folks... But I think they're going in the wrong direction... The foreign newspapers are thinking that the PBOC has given the "high sign" that they are ready to allow the renminbi to float... Buzzzzzzzzzz! I'm sorry, that's the wrong answer... We hate to see you leave, but Johnny, tell our contestant what they've won!

I just don't see it as that... The Chinese like to play these games with words, to get everyone all lathered up... And then pull the rug out from under them... No rug pulling from under me!

The Wall Street Journal (WSJ) is reporting this morning that Central Banks around the world, like the Russian Central Bank, are buying dollars to underpin the currency from a free fall... The WSJ also said the Asian Central Banks have all been buying dollars to keep their currencies from getting too strong... Hmmm... I wonder how that's been working out for them? Oh... Here's the skinny on that... "Quite clearly, all Asian central banks have found it necessary to intervene, and it's costing us," said Korn Chatikavanij, Thailand's finance minister.

So, it's kind of nice to see other Central Banks around the world throwing good money at bad money, like the Fed Reserve has done for 15 months now... At least they're not throwing money down the toilet, nononononononono! YES THEY ARE! They're buying dollars! What dolts!

OK... While I was browsing through the WSJ, I saw another story that caught my attention... Here was the headline... "Fannie Mae, Freddie Mac say more losses are possible"... According to the WSJ, the U.S. Treasury has already injected $112 Billion into Fannie Mae and Freddie Mac since the government took them over last year... And now, more losses are possible?

Let's see... The Government took them over, and more losses are possible? Sounds like the Post Office... Sounds like Amtrak... What else has the Government taken over, and the bleeding continues? I know, and you know where I'm going with this, so I'll stop there!

What some more depressing data? October saw 332,292 U.S. homes seized by lenders or listed in default or auction documents according to RealtyTrac... October was the 8th consecutive month of 300,000 or more.... There was a 3% decline in October from September, but I wouldn't get too lathered up about that, given the chart I saw and shared with the desk the other day regarding residential loan resets that are coming due in the next two years, with peaks in Sept of 2010, and Sept 2011...

Looking at this chart tells me that the cartel, I mean the Fed will have no other choice but to keep rates low, and to keep buying Treasuries to keep the yield from getting too high... Haven't we learned anything the past 10-years? You have to learn from previous mistakes or you'll make them all over again... And that, is what, I, believe, the Fed is doing! The tried like heck to keep the Tech Bubble from bursting, by keeping rates artificially low, and credit loose as a goose... What were the unintended consequences of those actions? And what will be the unintended consequences of these actions by the Fed? I don't have an answer to that, but I don't see how this works out nice for the U.S. economy and taxpayers...

Before I go on... A reader sent me a note that made me laugh... He said, "Hey Chuck, since you can't decide on whether or not call the Fed the Fed or the cartel... Why don't you just put them together and call them the Fartel"? HAHAHA HAHAHAHAHAHA!

The data cupboard finally gets restocked today, and we'll see the usual Thursday fare of Initial Weekly Jobless Claims, which remains above 500,000 every week, and something that Tim Geithner might want to pay attention to... The U.S. Monthly Budget Statement, which will be somewhere around $160 Billion for October... Annualized, that's almost a $2 Trillion deficit in the Budget! OUCH! Say it ain't so, Joe!

To recap... The non-dollar currencies rallied all day yesterday, but have given back those gains in the overnight sessions. Most of the slippage has been from words, not actions. The Chinese premier, and the U.S. Treasury Sec. So... Don't look for this to be any reversal of the weak dollar trend... The Aussie dollar hit a 15-month high last night on a strong employment data report, which has traders thinking another rate hike on Dec. 1st is coming, and the Asian countries have been buying dollars to keep their currencies weak, and according to them they are "paying the cost"!

Currencies today 11/12/09: American Style: A$ .9315, kiwi .7370, C$ .9315, euro 1.4950, sterling 1.6580, Swiss .99, European Style: rand 7.4380, krone 5.6050, SEK 6.8550, forint 180.50, zloty 2.7645, koruna 17.0490, RUB 28.79, yen 89.80, sing 1.3870, HKD 7.75, INR 46.65, China 6.8267, pesos 13.17, BRL 1.7150, dollar index 75.25, Oil $78.67, 10-year 3.44%, Silver $17.57, and Gold... $1,116

That's it for today... Isn't that something, the Gold move? My good friend, David Galland, said that Gold is "blowing a raspberry"! HA! Well... Now that my blood has been thinned out, and had the consistency of water, the swelling in my left leg has backed off just a bit... At least I don't have to continue with the shots! Next week I go back to the cancer doctor that has been treating my left eye that was taken over by cancer... I really don't know why I have to go back, he told me last time there "was nothing else he could do"... All these things, and still life goes on, right? Yep! Little Delaney Grace was really cute the other day, trying to pawn off her carrots to me, she kept telling us that the carrots were mine to eat, not hers! Well... I'm locked down in St. Louis until late January... But my annual Christmas vacation will break things up... I know, it's a month away, but I can't help starting to get geeked about it! OK... A little long here with the Big Finish, I had better get going on this Tub Thumpin Thursday!

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

Renminbi To Become An International Currency?

Chuck Butler — Mon, 31 Aug 2009 15:02:46 GMT

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

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

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

In This Issue..

* Currencies give back ground overnight...
* Don't look too closely at U.S. data...
* India posts strong GDP...
* Lots O'-data this week!

And Now... Today's Pfennig!

Renminbi To Become An International Currency?

Good day... And a Marvelous Monday to you! A Wonderful Weekend was enjoyed by your Pfennig writer, with good friends, and Chamber of Commerce weather, on a beautiful lake! It's back to work today though. I don't understand why I didn't plan on taking today and staying an additional day at that beautiful lake! Oh well... Time to go to work!

When I signed off on Friday morning, the currencies were enjoying a very nice rally, which remained in place the rest of the day. The Consumer Income and Spending data was very much as I describe it would be, and so there was no surprise for the markets to deal with. You may recall, that I told you that Spending would be greater than Income, as the "Cars for Clunkers" probably had something to do with the Spending be so much stronger than the Income piece...

The currencies ran into a speed bump in the overnight markets though... When I checked the Japanese market last night, stocks were rallying on the news of the election results. The ruling party was voted out, and a pro-consumer driven growth party was put in... But, I guess what turned this around overnight was the fact that while the opposition party in Japan ran on a platform that promised change, when the dust settled, there are many questions... And when there are questions about leadership, risk assets don't fare too well... And thus, the reversal of the currency rally.

So, as we all know, the trading pattern of the last 9 months... When risk assets don't fare well, the dollar and Japanese yen do... And vice-versa. Yes, even though Japanese stocks sold off overnight, the yen was in play. It's just some strange phenomenon that has a grip over the markets for 9 months...

It will be interesting to see if the opposition party in Japan will actually change the way the Gov't does business... And if it does, what kind of "change" will take place. One would hope for the Japanese economy that it lifts the economy from the doldrums that have hung over the Japanese like the Sword of Damocles for a very long time now... That's right! We're not talking 2-3 years, not 5-6 years, not even 9-10 years... Japan's problems go back to the early 90's... YIKES!

Every time, the economy would attempt to pull itself up by the bootstraps the Japanese Gov't would introduce some sort of stimulus, and burden its Gov't with more debt... I know it sounds familiar... And I long ago told you all that the U.S. was following Japan's steps, but hoped that the U.S. would not take 15 years or more to reverse their steps... Unfortunately, those hopes and dreams are taking a beating!

Which is why I questioned the reappointment of Big Ben Bernanke last week. The leader of the Fed Heads, has really, in my opinion, stepped in the doggie dookie and followed the Japanese even though he said he wouldn't! My friend Bill Bonner had an interesting thought about Bernanke's reappointment... "Obama picked him to continue as head of America's central bank, the Federal Reserve...even though his predecessor, a Republican, appointed him."

I know, I know, the media is making Big Ben out to be the "savior of the world" right now... I suggest we all wait-n-see if all that he's done really does "save the world" or if it just masks the problems, and they come back even worse in the near future... If I were a betting man, I would put money on the latter of those things.

I noticed a story on the Bloomie this morning that says "The Federal Reserve will be unable to prevent the Trillions of dollars in Government stimulus pumped in the U.S. economy from stoking inflation later this decade, according to a survey of business economists."

They didn't ask me... But I would have been all about that idea!

In fact, I think the cartel, I mean the Fed Reserve will have to accept the fact that inflation is growing at first, because they 1. won't recognize its beginnings, and 2. won't have the guts to raise interest rates, and remove quantitative easing at the first signs of inflation, because the economy's recovery will be nascent at best. So, a higher level of inflation will have to be accepted by the Fed... And unfortunately, you and me!

OK... Let's stop talking about the Fed, they make my stomach turn any way!

When I got home last night, I was reading a story that really got me thinking... The story was about how China has gone from Exporter to Importer. The story explains that the stimulus that the Chinese Gov't put into the economy this year, has really spurred consumer demand, and exports from South Korea jumped 26.6%, Taiwan 41%, Japan 30.2%, and the European Union 23.5%...

The idea here was that the Chinese Gov't wanted to reduce their dependence on the U.S. consumer... You see, from my vantage point, the Chinese Gov't has done their part in curbing the global imbalances that used to exist, and I used to rant about almost every day! Now the trick is to see if the domestic demand can really take off from here now that the stimulus has, well, stimulated the economy! And did you see where China announced that they are going to begin to build light trucks? Putting people to work making things... Wow! What a concept! It's what made the U.S. economy powerhouse that it once was...

The South China Morning Post had a very interesting story in it this morning regarding the Chinese renminbi becoming an international currency. Let's go to the tape! "Vice-Premier Wang Qishan has been put in charge of a task force to make the renminbi (yuan) a currency for international trade. The recession has encouraged Chinese officials to speed up the currency programme. As the downturn erodes U.S. influence, China is losing faith in the dollar and sees the time coming for the renminbi to become a major world currency.

The renminbi is not convertible for purely financial purposes, ruling it out as a reserve currency for now, but China has started to carve out a bigger international role for it, beginning with the currency swap agreements China has put in place."

SEE! I TOLD YOU! I TOLD YOU that was what China was doing when it signed those currency swap agreements with 6 different countries, and is currently working on ones with Brazil and Thailand! China was gaining a wider acceptance for their currency... Slowly but surely (who's Shirley?) China was begin to provide convertibility to the renminbi, and then and only then will it be picked up by currency dealers all around the world! It's all happening right before our eyes folks... Don't close your eyes, this won't go away by closing your eyes!

Staying in Asia... The Indian GDP surprised on the upside when it printed last night... A 2nd QTR 6.1% rise in economic growth VS last year, is a very good performance for India. The rupee has been hanging around a corner for the past couple of months, so maybe this kind of news will attract foreign investment once again, and drive that currency higher VS the dollar...

You know... The data that printed in the U.S. last week, wasn't half bad! In fact, as long as you don't want to turn it over to expose the rot on the underside, you might begin to feel as though the economy is recovering... Unfortunately, there is that rot on the underside to deal with... Therefore, I'm pinning my colors to the mast of a "W" shaped economic future... I know Chris talked about this while I was in San Francisco, and gave all his reasons for his thoughts... So I won't go over them again... But just to say that the rot on the underside of the economy is what leads me to think this...

The data cupboards all over the globe will get a workout this week... There are 2nd QTR GDP's to print, Manufacturing Indexes to print, Jobs Jamborees, and Central Bank meetings... So, the currencies won't have to take their only direction from stocks! The currencies will bet taken in so many directions this week, which is why I'm saying right here, right now, that this will be a very volatile week... This Friday will be interesting in that, a lot of the "big boys" on currency trading desks will be gone to add a day to the Labor Day Holiday weekend, and volume will be thin, but Friday is also a Jobs Jamboree Friday...

The sell off that I saw going on in the currencies when I first began writing this morning, has picked up steam... But still, not a strong sell off just yet...

And on that note, I'll head to the Big Finish! But for one more thought... The U.S. 10-year Treasury Note yield has fallen in the past week, which means there had to be some buying of the note to drive up the price (remember, with bonds, when the price goes up, the yield goes down, and vice-versa). You don't think it could be more Fed buying do you? I have my suspicions for sure!

Currencies today 8/31/09: A$ .8380, kiwi .6815, C$ .9060, euro 1.4280, sterling 1.62, Swiss .9415, rand 7.7875, krone 6.0250, SEK 7.1550, forint 190.30, zloty 2.8750, koruna 17.77, RUB 31.8350, yen 93.25, sing 1.4435, HKD 7.7505, INR 48.82, China 6.8305, pesos 13.29, BRL 1.8810, dollar index 78.49, Oil $71.15, 10-year 3.41%, Silver $14.72, and Gold... $955.37

That's it for today... It's going to be a hectic week here, so I had better get my rest when I go home! Mike Meyer just walked in, and he had Lasik done on his eyes Friday, and he's smiling from ear to ear! So... I guess it all went OK! A great weekend for the Cardinals, who are really on a roll, and probably hate to see August end! We were all sitting around a campfire on Friday night, listening to the ballgame, when Albert Pujols hit his "walk off" home run... High fives all around! This coming weekend will be a 3-day Labor Day Holiday weekend. College football begins this weekend, which means my beloved Missouri Tigers play Illinois at the Dome downtown. Go Tigers! It's a rebuilding year for the Tigers, but I still expect them to be good! And congrats to the U.S. kids from California who won the Little League Championship yesterday... OK... Time to go... I hope your week starts off with a Marvelous Monday!

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

China Is Back On The G-9 Docket...

Chuck Butler — Mon, 06 Jul 2009 15:10:19 GMT

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In This Issue..

* Risk Aversion is strong once again...
* Currencies get sold...
* What's China really up to?
* RBA to leave rates unchanged?

And Now... Today's Pfennig!

China Is Back On The G-9 Docket...

Good day... And a Marvelous Monday to you! Some people have the day off today, so we'll probably not be back in full force until tomorrow... Not that we've been in full force, as a workforce in the U.S. for some time... But that's another story for another day! Today is a new day, and new week!

Friday's thinned out markets were not what the currencies wanted to see, as the bias to Risk Aversion was magnified in the thinned out markets, only making the selling of the currencies even worse... Some "levels" were hit in the thinned out markets, and that caused even more selling in the overnight markets as Japan and Asia came on board.

I'm really kind of shocked at the Asian selling... You may recall that last week we had the wild swing Thursday, after there were reports that China had obtained approval to attend the G-8 meeting this week in Italy, and discuss replacing the dollar as the world's reserve currency. The dollar was sold like funnel cakes at a state fair, after that report hit the news wires... But it was quickly turned around when the Chinese denied they knew anything about the contents of the report...

But... This weekend, while the charcoal was burning everywhere, the splashing in the swimming pools, and the display of fireworks had everyone's attention, the Chinese admitted that they were going to G-8! Where's the selling now? Isn't this confirmed now? Has something changed?

The answer to the Has Something Changed question, is yes... Currency strategists have come to the conclusion that China won't get anywhere with their desires to replace the dollar with SDR's (special drawing rights). Even with France throwing their two-cents into the discussion, and having their Finance Minister (Lagarde), and Bank of France Gov. (Noyer) calling for an increased discussion of currency coordination, the Currency strategists just aren't budging... They believe there's no way China, even with the backing of Brazil, Russia, and India, will get any traction...

Hmmm... So... It's over? Not hardly folks! I think that the comments coming from the French officials says..."We need to give the emerging markets more say in how the world's economy is run"... A foot in the door, if you will... And... When you have the war chests like Brazil, Russia, India and China have, a foot in the door, is like having a wide enough space that you could drive a Mack Truck through!

Of course that's just my opinion... I could be wrong... But then, somewhere in the back of your mind, you're thinking... Hey, this Chuck guy may just be, because you never know... He might be right!

OK... Playing games with your mind isn't what I was trying to do there... I was simply crossing the T's for the legal beagles...

So... We begin the week with the currencies weaker than they were last week, and the euro about ready to lose the 1.39 handle. The High Yielders are taking it on the chin too, with the exception of Brazil, but once that market opens we could very well see the real play catch-up.

The data cupboard is relatively empty this week, with the Initial Jobless Claims on Thursday, and the Trade Deficit data on Friday, the only "real" data this week... So, the G-8 meeting on Wednesday will have center stage, and any comments from the "outsiders" (China, etc.) creating pressure points for the dollar this week.

One of the worst performing currencies in the past couple of weeks is the Canadian dollar / loonie. No wonder, with the price of Oil dropping and Gold stuck in a rut... Nothing to give the loonie a boost... And overnight, the price of Oil has "gapped" down to $64, putting even more pressure on the loonie.

Let me explain what I think we're seeing in the price of Oil... I think a large part of the run-up in the price of Oil was caused by investors taking positions to hedge VS inflation... And in recent days, those fears of inflation have been put on hold... And these investors have no patience... So, those positions are getting sold, and... That's what's pushed Oil down so much in the past week.

Tonight, the Reserve Bank of Australia (RBA) meets to discuss rates... I fully expect the RBA to keep rates unchanged at an internal level of 3%. But, I also expect them to muddy the euphoria of unchanged rates, by leaving their easing bias intact. Put yourself in the shoes of the RBA... You may want to say the end of rate cuts has been seen and the next move, whenever that is, will be higher... But! You don't want to open Pandora's Box of currency rallies... The RBA would be the only Central Bank in the world that had removed their easing bias, with an eye on higher rates... The flood gates of investors seeking a currency that will be raising interest rates, would be thrown open, and an unwanted at this time, run-up in the A$ would take place.

So... The RBA will be cautious with their words, and keep their rate hike cards in their back pockets for now... Waiting for the right time to pull them out and throw them on the table!

Did you hear about China and Hong Kong agreeing to settle cross-border trades in renminbi? I know, you're scratching your head and saying, but Chuck, isn't Hong Kong a part of China? I could swear I saw the U.K. hand it over to China years ago! Ahhh grasshopper, you are correct... But, Hong Kong retains their own currency, the Hong Kong dollar, or "honkers" as currency traders call them. And... Renminbi has never been allowed outside of the mainland China... But now Hong Kong Banks will be able to borrow or buy renminbi!

I know this sounds like small potatoes... But, these are baby steps for China and what I believe their goal is... And that is, to gain wider acceptance for their currency... It's how they will be able to spring the coup someday to replace the dollar as the reserve currency... I truly believe their call to use SDR's is just a smokescreen... These currency agreements that China has signed with Argentina, and the Southeast Asia countries, and have on the table with Brazil, is the real thing to watch... I see the SDR's as a sort of stalking horse for China's wish for wider acceptance for the renminbi...

And to round out our discussion today... Our old friend, Jim Rogers, was back in the news last night. Let's listen in to Jim Rogers, author of a few best selling books, and long considered an excellent investment mind...

"The government is printing lots of money and borrowing even more; that's not the basis for a sound currency. The idea that anybody would lend money to the U.S. government for 30 years at 3 or 4 or 5 or 6 percent interest is mind-boggling to me." Jim also said that he olds fewer dollar than a year ago, and plans to short U.S. government bonds someday."

Of course this is a reoccurring theme with yours truly... I have harped and harped about this since the beginning of this year. In fact, in February, the title of my Currency Capitalist letter was: U.S. Treasuries the next great bubble...

The number of bonds being issued... And the question of who's buying them? For instance, the U.S. had more than doubled bond issuance to $963 Billion in the first half of this year, with another $1.1 Trillion scheduled to be sold by then end of the year. U.S. debt issues have lost 4.46% in the first 6 months of this year, and I just don't see how that trend can be turned around, when $1.1 Trillion in new issuance will be forced down the throats of investors before we sing Auld Lang Syne for 2009!

The Bank of Japan believes that they are seeing signs of an end to their recession, saying that they are more optimistic about the economy since 2006... I wonder how many times since 1990 that Bank of Japan officials have said those words? Probably enough times to make you wealthy if you had a Gold coin for every time they said it!

Speaking of Gold... Another $10 off the price this morning, down to $922... Silver is in danger of losing the $13 handle! Did I hear someone say... Bargains? Well, only if they go up from here, eh?

Currencies today 7/6/09: A$ .79, kiwi .6265, C$ .8585, euro 1.39, sterling 1.6125, Swiss .9145, rand 8.0230, krone 6.5215, SEK 7.8560, forint 197.25, zloty 3.16, koruna 18.6750, yen 95.20, sing 1.4575, HKD 7.75, INR 48.47, China 6.8340, pesos 13.36, BRL 1.9530, dollar index 80.86, Oil $63.76, 10-year 3.51%, Silver $13.09, and Gold... $922.70

That's it for today... I hope you all had a grand 4th of July holiday! It was pretty low key at the Butler House, as my little buddy, Alex, was suffering from a case of swimmer's ear, and the weather did not cooperate, as it rained, and rained hard, all weekend. I did get to spend some time with good friends on Friday night before the rain came. The rain didn't stop me from putting my Weber grill to use all weekend! The Agora Financial Investment Symposium in Vancouver is only two weeks away. Last year, I go food poisoning while in Vancouver, and believe me... being on the road, is no place, to get sick like that! I have better memories of Vancouver though... I've actually written my presentation for the general session in Vancouver... WOW! That's a first for me! Now, that workshop thing... You should check out Vancouver, and the Agora Financial Investment Symposium at: http://www.agorafinancial.com/AFsymposium/ OK! Time to go, Mike's here! I hope your Monday is Marvelous! Tell yourself that today will be a Marvelous Monday!

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

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

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

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In This Issue..

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

And Now... Today's Pfennig!

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

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

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

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

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

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

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

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

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

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

"The long term budget outlook: impending catastrophe"

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sounds about right to me!

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

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

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

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

Stuck In A Range...

Chuck Butler — Wed, 17 Jun 2009 15:59:22 GMT

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

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

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

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

In This Issue..

* A Turn Around Tuesday?
* BRIC meeting doesn't get covered by the media?
* Are the Bearer Bonds real or fakes?
* QTC's get Gov. backing!

And Now... Today's Pfennig!

Stuck In A Range...

Good day... And a Wonderful Wednesday to you! Remember last week, when I said that we had a "Turn Around Tuesday?" I came in this morning to find a story that Chris Gaffney had printed off the Bloomie for me... The writer refers to the price action yesterday as "Turn Around Tuesday!" OK... I for one, don't even begin to believe that I was the originator of a saying like that for the currencies... I just find it interesting, that a week after I make a big deal out Turn Around Tuesday that it is used in a story with much wider distribution than my little old Pfennig!

Cool Beans, eh? OK... Well... If yesterday was Turn Around Tuesday as the writer said, I sure didn't see it! We had a "stop the dollar at the 1.38 border" Tuesday... But a complete turn around from Monday's sell off, after Russian Finance Minister, Kudrin, threw a cat among the pigeons? Not that I saw!

We do seem to be stuck in a trading range of 1.37 to 1.40... With probes below 1.37 and above 1.40 short-lived. That's OK with me, at this point, but it had better not last too long, or traders will grow tired of the boring range... And, I will be yelling at the walls for some price action!

Well... The BRIC (Brazil, Russia, India and China) meeting didn't really bring about the Thunder and lightening as I thought it would... The leaders of these countries did discuss the need for a "more diversified monetary system to reduce dependency on the world's reserve currency." (read the dollar!) They also discussed selling bonds and swapping currency among the group. Now if we rewind back to Monday, I said that I thought this could be what they would do... The crystal ball was bang on that day! HA!

I can't believe the markets have allowed this to be swept under the rug... This could be colossal if it's carried through... And this way, all of them can smile and say they believe in the dollar and U.S. Treasuries while not dealing with them! Personally, I think the reason the markets aren't paying attention to these goings on, is that the media isn't covering it... The grip that the administration has on the media is really beginning to show just how tight it is...

One other thing from the meeting... The BRIC nations announced that they wanted to take a more active role in the world's financing system... And with $2.8 Trillion in currency reserves among the 4 of them... That would be more than a "kind gesture"...

Speaking of the media... I have to wonder what the media is thinking on this one... Here's the skinny... First of all, this story came to me a week ago... But at first, I thought, I had better make certain this is not a hoax before talking about it... What am I talking about? I'm talking about the report that two Japanese men were caught at the Swiss-Italian border with $130 Billion in U.S. Treasuries!!!!!!! Now, Chris and I were talking about this yesterday, and Chris said, "But I thought all Treasuries were book entry for some time now"... Yes, since 1982 (a great year, with the Cardinals winning the World Series!) Treasuries have been book entry only... So... The question I had from the beginning is "are they real or fake?" Because I didn't want to waste your time and mine if they were fake bonds... But apparently the someone believes them to be real...

Hmmm... $130 Billion in bearer bonds... Does this intrigue anyone? It sure does for yours truly. Does this mean that the U.S. Treasury has been printing bearer bonds and selling them under the cover of a dark night? That's the only explanation I can come up, IF THEY ARE FOR SURE REAL!

I don't know what to make of this except it has my attention, and I can't believe I don't see one story on cable news... But it's all over the news in Europe and Asia... More later, as additional news comes to light on this...

OK... Yesterday, I talked about the Current Account Deficit, which is expected to be $85 Billion for the 1st QTR... What I didn't talk about is that this would be the lowest level for the Current Account in a decade! And would represent just 1.5% of GDP. Now... I used to go out and talk about how the dollar entered the weak dollar trend in Feb. of 2002, after the Current Account Deficit reached 4% of GDP, which historically had been the line in the sand for currency issues...

But let's put this in perspective, eh? Back in 2001 and 2002, our GDP was running at 4-5%... It's now negative... So, maybe this won't be the harbinger to reversing the weak dollar trend, that it looks like on the outside... Besides, as I've said over and over again lately, the whole deficit talk used to center on the Trade Deficit (which account for the majority of the Current Account), and with the global recession going on, the Trade Deficit, while still having issues, is no longer the focal point... Instead, the Budget Deficit (the 2nd of the Twin Deficits) has taken the reins of the focal point... If it's not one thing it's another, my mother used to tell me! (the you-know-what disturber in me just has to make this comment... "no wonder the Current Account is lower, we don't report debts or the bonds that represent the debts!"... That's in reaction to the $130 Billion in bearer bonds!)

I came across a news story yesterday morning that caught my attention... It seems that the Gov't of Australia, has decided to put Government backing on state issued bonds like the QTC's (Queensland Treasury). This is HUGE for these issues, especially since the states in Australia were seeing downgrades in ratings! Now, the country of Australia has a higher rating, and these bonds will carry that rating, since they are now backed by the Gov.! The one thing it will do though, is tighten up the yield on these bonds... Probably by about 10-15 Basis points...

Why am I talking about this? Because... If the QTC bonds now have a higher rating, more institutions will be able to buy them, and the more investment in Australia, the more flows into Aussie dollars! The news brought the A$ back to 80-cents yesterday briefly... But this is going to take some time to work through. The thing here is that in the long run, this is good for the A$!

In China overnight, we had an announcement that could really become a problem with protectionism... China has introduced an explicit "Buy Chinese" policy as part of its economic stimulus program in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.

Now, long time readers know that I've always banged on 1. the Bush administration when they placed tariffs on Japanese Steel about 8 years ago, 2. Schumer and Graham for introducing a bill to place tariffs on Chinese exports to the U.S. Because... Both represent protectionism... And a currency will normally get taken to the woodshed for being associated with a country that takes protectionism measures...

So... Will this hurt the Chinese renminbi? Ahhh grasshopper, remember, the Chinese renminbi is a "manipulated currency". The Chinese Gov. decides what value the renminbi will be... So... In a regular floating currency scenario, yes, this would hurt the currency... But in China's situation, it's all different.

However, the reason I make a big deal out of this is that this announcement could lead to other countries placing their own protectionism measures to offset China... One protectionism measure, begets another, and another, and another... Oh boy! NOT!

Talk about smashing a bug! This would be just like doing that to the promises of a global recovery... Somebody stop them for they know not what they are doing! Or maybe the Chinese do...

Yesterday, Housing Starts in the U.S. surprised on the upside, and so did Building Permits... I don't like this for the simple reason that we already have an "inventory" issue with houses that have been built and not bought or occupied. But, the media was all over this new, because... It's the opposite from what I told you the day before that economists, Shiller, Roubini and Whitney had to say about housing! And the Housing Starts and Building Permits data flies opposite of the report this morning that mortgage applications fell 15.8% this month!

We also saw that Industrial Production fell -1.1% in May... So output was off sharply at factories, utilities and mines, in May, which is completely opposite of those that are saying the recession is over...

Today, in addition to the Current Account data, we'll also see the stupid CPI data for May... You never know what that data has in store for us, because the Gov't doesn't know what they want it to show for us yet! HAHAHAHAHAHAHA! Of course that's my feeling toward CPI, and I've explained it all many times over the years... But, in a nutshell, CPI is kept artificially low by the Gov't by re-weighting things that get too expensive, or substituting things that get too expensive... We all know why CPI is kept artificially low too, don't we? Yes... We do...

Now... I spent more time on CPI this month than I care to! It's just a dumb report that the media will be all over like a cheap suit!

I heard a great old song on the radio this morning that pretty much puts my feelings toward the direction of the country into words... "but you tell me over and over and over again my friend, ah, you don't believe we're on the eve of destruction." - Barry McGuire

And then, I see where the President is going to announce his sweeping regulatory changes today... Hmmm... Do you see what I see? This is a shift from markets driven regulation to Political regulation... Markets to politics... Somebody stop the madness! Serenity now!

Currencies today 6/17/09: A$ .7925, kiwi .6295, C$ .8805, euro 1.3865, sterling 1.6260, Swiss .9190, rand 8.0530, krone 6.4115, SEK 7.8350, forint 204, zloty 3.2580, koruna 19.2570, yen 96.40, sing 1.4580, HKD 7.7505, INR 48.08, China 6.8370, pesos 13.45, BRL 1.9735, dollar index 80.72, Oil $69.69, 10-year 3.67%, Silver $14.10, and Gold... $932

That's it for today... A pretty busy day for yours truly yesterday, with the monthly Review & Focus due, and the regular daily stuff all rolled into one day... Thank goodness, Chris and Mike help me with the Review & Focus these days! Speaking of the Review & Focus, I did a story on whether inflation or deflation is worse for an economy... You'll want to check that out, when it shows up in your mailbox! Hey! My beloved Cardinals scored more than 2 runs in a game last night... YAHOO! It's been a tough month for the redbirds, a June Swoon, if you will. Last night's game VS the Tigers reminded me of the 2006 World Series match-up, and we all know the outcome of that series! 10th World Championship for the Cardinals! OK, enough of that, time is a wastin'! I hope your Wednesday is Wonderful!

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

Maybe, Just Maybe A Break In The Link?

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

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In This Issue..

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

And Now... Today's Pfennig!

Maybe, Just Maybe A Break In The Link?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Dollar Rebounds...

Chuck Butler — Tue, 26 May 2009 14:59:28 GMT

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In This Issue..

* Too far, too fast?
* Currencies give back some ground...
* Did China send a message?
* The Mogambo and more!

And Now... Today's Pfennig!

The Dollar Rebounds...

Good day... And a Terrific Tuesday to you! I hope your Memorial Day Holiday weekend was grand... We had beautiful days Friday and Saturday, but Sunday and Monday brought the monsoons! Still... I got to spend time with family and friends, and attend a Cardinals game! YAHOO!

Well... Recall on Friday morning, I told you about how we could see wild swings because of the thinned out trading desks? Well, that's exactly what happened... The Big Dog, euro, traded well into the 1.40 level, up to 1.4050 at one point! The currencies across the board were kicking sand in the dollar's face and laugh. You may also recall that I said that Friday didn't seem like a good time to buy given the strength... And that too, has played out with the currencies giving back a good chunk of ground taken last week, in the overnight markets.

The dollar has another thing going for it this morning besides the "currencies went too far too fast" trading... You see, N. Korea conducted missile tests yesterday... That makes two missile tests that have been carried out in the past week... First Iran, now N. Korea... What's really strange though is that Gold has given back $15 of its gains from last week... It would certainly seem to me that this is backwards... If we have these countries going around test missiles, investors should be flocking to Gold...

My friend, the Mogambo Guru, did it again yesterday, he nailed my thoughts right on the head! The Mogambo was referring to an article about "3 Sound Reasons to Buy Gold"... Let's listen in on the Mogambo Guru, who can be found at the Daily Reckoning www.dailyreckoning.com

"I admit that I did not read the article, but as far as I know, there are only two good reasons to own gold; to preserve wealth when prices are stable, and to make a lot of fiat wealth when your government acts so stupid as to create, or allow to be created, excess money and credit that eventually destroys the currency, especially when undertaken so as to enlarge the size of government, like now, which makes the problem of inflation worse because those more government weenies have a bigger incentive to save their own phony-baloney jobs, but can only make things worse."

That Mogambo... He's great!

There's one more thing hanging over the euro like the Sword of Damocles this morning... It's an internal memo from the German Banking Regulators, that points out German Banks are set for a series of serious downgrades from their bad loan positions. This internal memo (if it was really intended to be "internal" then why was it all over the news?) is suggesting that the likely write-offs may reach 816 Billion euros! YIKES! Hmmmm... I guess German Chancellor, Angela Merkel's plan to protect these banks that was greatly criticized when first presented, doesn't look so bad to these banks now, eh? This is serious stuff, folks...

There was little in the way of movement yesterday with the U.S. closed for Memorial Day. Most of the action as taken place overnight, first in Asia and now in Europe... Just when it appeared that the fundamentals had slipped in through the back door, and were present once again, with the dollar getting sold, we have the N. Korea story, the German Banks story, and... Too far, too fast story, turning this once run-away bus around...

In other news... Guess who's going to visit China to discuss foreign exchange rates? Yes, U.S. Treasury Sec. Geithner is going to China... And in what I view as a "political message" to Geithner before he gets there, to put him back on his heels... The Chinese moved the renminbi weaker overnight by .7%, the largest overnight move this year! I believe this was done just to emphasize to the new U.S. Treasury Sec. that he has no power here... Sort of like the Good Witch Glenda, telling the wicked witch to go away, that she had no power in munchkin land!

Friday, I saw a blurb that I yelled across to our Foreign Bond Trader, Don Ries, that Moodys had downgraded the rating on the Australian QTC bonds from AAA to Aaa... Not that big of a deal, but... Could lead to some selling by institutions that have strict buying rules that do not allow bonds to be held with a rating less than AAA...

This move by Moodys got me thinking about the story I wrote about earlier last week, about how Moodys could downgrade the U.S.'s AAA rating... Then I read one of my fave writers, William Pesek, and he just happened to be talking about Moodys and their ratings! Using a line that "love" to use, "Opening Pandora's Box"... He said it like this... "Moodys Opens Pandora's Box on AAA Debt Ratings"...

You did notice last week after the rumor of a U.S. downgrade, U.S. Treasury Sec. Geithner, immediately let it be known that the Obama administration is committed to reducing the federal budget... I saw that and had a great big chuckle! Well, if the administration is committed to reducing the federal budget, they sure have a strange way of going about it!

Today, we'll see the color of the latest Case-Shiller House Price Index, and while I've seen some people calling for this report to signal an end of the house price decline, I don't see it that way... And.. In fact, I believe those people are going to be disappointed. Look for the Case-Shiller House Price Index to show yet another month of declines... Probably hitting -18.7% declines...

We'll also see Consumer Confidence for this month... Hmmm, it's expected to show an increase... Well... Why not? I guess... Stocks have put in a good month, eh? And that holds a lot of weight for these people that get surveyed! Me? I would think that the rising unemployment, the bankruptcies of Chrysler and most likely GM, would weigh heavily on the minds of those surveyed... Any way... Consumer Confidence is expected to rise a bit, but remain quite low...

Before I go to the Big Finish, I thought I would talk a bit about the amount of supply that is going to be auctioned by the U.S. this week... The U.S. Treasury will auction $162 Billion in securities, with maturities ranging from three months to seven years. $162 Billion Folks! In one week! This supply has got to be choking the foreigners we need to buy it so that our deficit can be financed! When will they do the Roberto Duran, "no mas"? Let's hope it doesn't come to that, but quite frankly I wouldn't blame the buyers if they did back away... Too much of something isn't good...

Currencies today 5/26/09: A$ .7725, kiwi .6125, C$ .8825, euro 1.3885, sterling 1.5830, Swiss .9170, rand 8.39, krone 6.4660, SEK 7.60, forint 203.75, zloty 3.20, koruna 19.27, yen 94.90, sing 1.4535, HKD 7.7515, INR 47.89, China 6.8331, pesos 13.24, BRL 2.0270, dollar index 80.72, Oil $59.83, Silver $14.35, and Gold... $944.50

That's it for today... I received quite a few emails from readers regarding the "ambush" on CNBC last week... One reader sent me a note and said, those guys call their show "Power Lunch", but he believes it should be "Lower Punch"! HA! Thanks to all who sent along notes telling me to forget about those people at CNBC, and that's what I plan to do! We're in the last week of May! WOW! I will be spending the entire month of June here, with zero trips planned! My beloved Cardinals won 5 in a row last week, but are still not hitting the ball. UGH! My little buddy, Alex, has 3 more days of school this week and then summer break! That also means his older siblings, whom both are teachers, get their summer break too! OK... It's that time of the morning... Let's get this going, and have a Terrific Tuesday!

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

US$ benefits from the swine flu...

Chuck Butler — Mon, 27 Apr 2009 15:00:05 GMT

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In This Issue..

* Swine flu causes rush to US$...
* The US$ wins no matter what??
* US Treasury starts a busy week...
* Chinese Renminbi moves back up..

And Now... Today's Pfennig!

US$ benefits from the swine flu...

Good day... And welcome to another week. Chuck headed off to Bermuda on Saturday, so you are all stuck with me for the whole week. Both he and Frank will be giving presentations at the Sovereign Society's Total Wealth Symposium; Frank representing EverBank and Chuck representing his paid newsletter, Currency Capitalist (www.worldcurrencywatch.com). Frank and Chuck probably log more miles than anyone else in the company, and while it may sound like fun to travel to all of the exotic locals, travel is tough. And with the big news over the weekend, airplanes and airports are the last place I would want to be right now.

The story which is dominating the trading screens this morning is the outbreak of swine flu in Mexico, and the fear of it spreading into a pandemic. The flu has jumped off of the North American Continent and is now a global concern, with cases being reported as far away as New Zealand. President Obama's administration has declared a public health emergency, with cases now being reported in several US states. Hopefully health officials will be able to keep the virus somewhat contained, and this won't become as predominate as the SARS outbreak.

As most would predict, the Mexican Peso has dropped significantly moving down almost 3% vs. the US$ overnight. Fears of a global pandemic have driven investors out of the high yielding currencies of New Zealand, Australia, and Brazil. Risk aversion seems to be back in vogue, with investors moving funds back into US Treasuries and the Japanese yen. I read a story over the weekend which suggested the US$ will continue to strengthen no matter what happens in the global economy. The story suggested that the US$ would increase if the administration's efforts to stimulate our economy work, and we lead the rest of the globe into the recovery phase. On the other hand, the US$ will also strengthen if the global economy continues to weaken, as investors will purchase US treasuries as a safe haven.

While that is what has been happening lately, I don't agree that the US$ will win no matter what happens. China and Europe both seem to be on the path toward recovery, with China leading the way. Countries, such as the UK and US, which have participated in 'quantitative easing' have thrown an incredible amount of money supply into the markets in an attempt to stimulate their economies. Eventually, this flood of money will be inflationary, as these administrations will not be able to pull all of this new money back out of the markets. As inflation increases, the value of the US$, Japanese yen, and UK pound will fall. On the other hand, those countries which are able to pull through the global slowdown with limited generation of money supply will be able to return to growth without an inflationary spike.

The Euro has been able to hold onto the $1.31 level over the weekend, as German consumer confidence held steady. The reports out of Germany gave us the first indications that the European economy was beginning to pull out of the recession. ECB ministers are split over the need to follow the UK, US, and Japan down the 'quantitative easing' path, and the leveling off of consumer confidence may keep the ECB from heading down this dangerous path. I think the ECB will probably cut interest rates one more time in May, but hopefully they will be able to avoid monetizing their debt as we have seen the US and UK do recently. If they can avoid 'quantitative easing', the Euro should be able to hold above $1.30 and perhaps start a move back up toward $1.40.

I had been prepared to talk about the tremendous amount of US Treasury issuance this week, and what impact it would have on the dollar. It was going to be interesting to see if all of the new supply would finally outstrip demand. But the outbreak of the swine flu has probably saved the US Treasury for now. Investor demand for the US $ has increased with the pandemic fears, and the timing of this increase couldn't be better for the US. It will still be interesting to see what the new supply does to interest rates, but the US has probably dodged a bullet for now.

It will be a light day of data here in the US today, with only the Dallas Fed Manufacturing activity scheduled for release. Tomorrow we will see a couple measures of consumer confidence, along with the S&P/CaseShiller Home price index. Wednesday will be the big day with the release of 1st quarter GDP and personal consumption along with the FOMC rate decision. Thursday will be another big day of reports with Personal income and spending for March along with the weekly jobless claims and the Chicago Purchasing Manager report. Finally, we will close out the week on Friday with data which will give us a better picture of the state of US manufacturing, with the release of March Factory orders, ISM manufacturing index, and the vehicle sales numbers.

None of the data scheduled to be released this week is expected to show much improvement for the US. Wednesday will be the interesting one, as GDP will probably show a 4.7% drop for the first quarter of 2009. This is bit of an improvement from the 6.3% drop in the 4th quarter of 2008, but still equates to a dramatic slowdown in the US economy. Following the release of the GDP figure, the FOMC will make their rate announcement. They obviously can't cut rates, so the markets will concentrate on the accompanying statement, looking for information on additional 'quantitative easing' which is being planned.

The Chinese Renminbi moved back up to trade near its 2009 high amid signs of a recovery in the Chinese economy. Vice Premier Wang Qishan said the Chinese economy is performing 'better-than-expected'. The news came as China is readying to release a second wave of stimulus funds aimed at infrastructure improvements. This news should bolster the price of raw materials, and help offset some of the recent selling of the commodity currencies.

Currencies today 4/27/09: A$ .7143, kiwi .5655, C$ .8223, euro 1.3140, sterling 1.4558, Swiss .8721, rand 8.8275, krone 6.6758, SEK 8.167, forint 225.29, zloty 3.4781, koruna 20.285, yen 96.58, sing 1.4966, HKD 7.75, INR 50.24, China 6.8272, pesos 13.74, BRL 2.1838, dollar index 85.206, Oil $48.86, Silver $13.02, and Gold... $912.90

That's it for today... Had an absolutely beautiful weekend here in St. Louis, albeit a bit warmer than some would like. It seemed we skipped right through spring and moved on to summer, with temperatures reaching near 90 degrees. The Cards took two out of three from the Cubbys this weekend, with Albert Pujols hitting a monster grand slam on Saturday which nearly left the ballpark. I wasn't able to make it down to any of the Cards games, as Brendan's hockey team had two games and a practice this weekend. Having some computer/phone problems this morning, with a few of the folks on the desk not able to log into the phones (not a good way to start the week). I had better get this out so I can log in and help out! Hope everyone has a Marvelous Monday!!

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

All Eyes On Retail Sales...

Chuck Butler — Tue, 14 Apr 2009 13:27:38 GMT

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

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In This Issue..

* Currencies rebound
* Singapore's big announcement...
* China's currency gets back on rally tracks...
* BHI says to expect a rebound in sales...

And Now... Today's Pfennig!

All Eyes On Retail Sales...

Good day... And a Terrific Tuesday to you! I'm feeling marginally better today, so I've got that going for me! You should have seen the currency screens lighting up yesterday... WOW! A lot of pent up trading from a Friday that saw thin volume due to the Holiday. This type of volume, even with a few countries still on Holiday too!

The volume... Was all good for the currencies, as that bias to sell dollars I talked about really came shining through on the day. As I signed off yesterday, I told you that the euro had rallied since I had come in, and that rally took off in the early morning trading. The single unit climbed to near 1.34 before giving back ground in the afternoon.

The euro euphoria was interrupted by a report in a newspaper that talked about how the European Central Bank (ECB) will probably have to cut rates further, due to the depth of the recession in the Eurozone. Nothing like a party pooper to ruin a rally, eh? But, that's what happened! The euro in the overnight market gave up more ground, and has now fallen back below 1.33...

Instead, the low yielders took the conn and rallied overnight, with yen leading the way... Strange... But true... 5 days of high yielders rallying, and then yen comes back... Strange... Very strange...

At one point yesterday, with the euro rallying to near 1.34 and the Aussie trading at 73-cents, I said to Jennifer, "I bet stocks are soaring" ( I said that because of what I've explained recently that stocks and currencies had been tied together with the Risk bow), a quick check of stocks showed that stocks were off... Selling was the order of the day... I then said, "Maybe, just maybe, because you never know... Stocks and currencies are breaking the link."

Boy, wouldn't that be sweet, to get this back to fundamentals! Especially during the stocks earnings period! But, as I told the Big Boss, Frank Trotter, when he called in to get an update, "as I always say, one day of trading doesn't make a trend." We'll have to keep our eyes out for this pattern to see if it really gets back to fundamentals, where stocks and currencies have a low correlation to each other!

A couple of weeks ago, when Chris was writing the Pfennig for me, he wrote about Singapore, and how the Monetary Authority of Singapore (MAS) had indicated it might push the Sing dollar lower. In fact, here's what he had to say in the Pfennig, March 30th, "Another currency you may want to consider exiting is the Singapore dollar. According to a story I read on Bloomberg this morning, the Monetary Authority of Singapore may devalue their currency and allow it to drop 4 percent against the US dollar in the next few months."

Well... Last night, the MAS announced a downward re-centering of the Sing dollar trading band while maintaining the width of the trading band and the policy of zero appreciation. OK... There it is... Forget all the trade widening and so on, and center on the "policy of zero appreciation"... That does not bode well for the Sing dollar... And for Chris' statement on March 30th? Bang On! Timely!

The thing I can't get out of head, is the fact that Singapore needs to keep its currency in line (value VS the dollar and euro) with the other currencies in Asia in order to keep its exports competitive... I guess, the MAS is thinking there aren't going to be any exports! And the ones that are there, they (Singapore) will have a "cheaper currency" and an advantage!

At least the MAS didn't devalue the currency, as these types of small countries tend to do to tilt the playing field toward them! And believe or don't... The Sing dollar rallied on the news that the MAS didn't devalue the currency... So... This is like manna from heaven for anyone trying to switch out of Sing dollars and into something else... The currency rallied overnight!

Of course... What to go to, is the question... But I think I've told you enough about how Norway was named the safest currency in the world by Time... And that I've always been a fan of Surplus countries... And that I've recently told you we should be looking only to the countries that have not entered into Quantitative Easing... There! That should narrow it down for you!

Speaking of the other Asian currencies... I already told you that Japanese yen rallied overnight... But so did the Chinese renminbi, which posted its best move VS the dollar in almost 3 weeks!

So... Did you see that Goldman Sachs is going to raise $5 Billion to repay the U.S.? Rumor has it that Goldman Sachs, wants to repay the Gov't, to shed the Gov't's pay limits... I think we'll see more and more of this... As, these financial institutions took the funds as a way to raise cheap capital, and did not have strings attached... Once the strings were attached, the capital didn't look so good any more, and therefore I believe we'll begin to see quite a few give back the money the Gov't gave them to begin loaning out to consumers...

We, as taxpayers are happy to see these guys give the money back!

Speaking of taxpayers... Tomorrow is the dreadful day! You have one day to get your taxes all done, if not already done... Mine have been done for a while, and just sitting there, as if they might go away if I don't sign them and mail them away! HA!

OK... Back to the task at hand!

Today, all eyes are on the U.S. Retail Sales report for March, which will print. The forecasters are looking for an improved Retail Sales report in March VS the negative result for Feb. As I said yesterday, the BHI (Butler household index) indicates to me that I should agree with the forecasters. The "experts" believe Retail Sales will be better because of the auto industry's incentives that began last month.

I also hear that the Gov't's turn-around on tax returns is stepped up this year, which gets money back into the hands of consumers at a faster pace than previous years... And we all know what happens when consumers get money in their hands! They spend it!

Gold rebounded nicely for most of the day yesterday, climbing to within spittin' distance of $900 once again... But lost ground, along with the euro and the high yielders at the end of the day. I have to say that I like the fact that Gold has stuck around this level for about 10 days, in that it allows more and more people to buy it at this sub $900 price.

Obama gives us "his view", which probably won't coincide with reality, of the economy today... This should be interesting at least!

Big Ben Bernanke speaks today... Some of you will say, whoop-de-do! He doesn't do anything for me! And some of you will say, I don't believe a word he says! And then some will say, I can't wait to hear what this windbag says next! And I could go on, but won't... You get my drift, that everyone is across the board on this guy... Me? You needn't ask! You know where I stand on this guy... Borrowing a few lines from Charlie Daniels...
He's a snake in the grass, I tell ya guys.
He may look dumb but that's just a disguise,
He's a mastermind in the ways of espionage...

OK, enough fun... Time to head to the Big Finish!

Currencies today 4/14/09: A$ .73, kiwi .59, C$ .8240, euro 1.3285, sterling 1.4920, Swiss .8760, rand 9.0275, krone 6.6240, SEK 8.17, forint 218, zloty 3.29, koruna 19.99, yen 99.80, sing 1.4975, HKD 7.75, INR 49.89, China 6.8323, pesos 13.07, BRL 2.1720, dollar index 84.81, Oil $50.48, Silver $12.70, and Gold... $896.45

That's it for today... Yesterday was a blur for me... I worked here until about 3, went home took some cough medicine, sat in my recliner and fell asleep immediately... Woke up in time to see the last 15 minutes of 24, and went back to sleep... Nice win by the Cardinals last night in the desert. Well... Today is the day... I go for my quarterly scans this afternoon. I think that after this quarterly scan, I'll have one more on a quarterly basis, before I go to 6-month intervals... That is as long as they remain clean! Which I don't have any reason to believe they won't be clean. Of course I never knew in the first place I had cancer until they scanned me for something else! Talk about the luck of the Irish! OK... Let's get ready for Retail Sales, and have a Terrific Tuesday!

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

The Trading Theme Returns...

Chuck Butler — Fri, 27 Feb 2009 14:56:32 GMT

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In This Issue..

* U.S. data prints awful!
* Eastern Europe gets 24.5 Billion euros!
* More Problems for Citi...
* Gold at a discount...

And Now... Today's Pfennig!

The Trading Theme Returns...

Good day... And a Happy Friday to one and all! I'm going to go out on a limb and say it will be a Fantastico Friday! I don't know why, it's cold and rainy here, and we're supposed to get snow tonight... But Shoot Rudy, why not? Every day is a blessing, and Friday's are special! At least in my book!

Well... Chris left me a note last night about the day's happenings, as I was "out of touch" all day. So... I guess it would be best to let Chris give us the recap on yesterday, eh? Here's Chris... "The big news on the day was the durable goods orders, which came in even worse than expected. The dollar had lost ground vs. most of the currencies up until the durable goods number came in. The bad data for the US sent the dollar back up as investors headed back to the 'safe haven' of US Treasuries. Initial jobless claims also came in well above expectations with continuing claims climbing over 5 million for the first time ever. Continuing claims have only climbed above 4.5 million twice since the data has been recorded. They hit 4.6 million in May of 1975 and again in October of 1982. These peaks were very short lived as the came at the height of these two recessions. The problem with today's numbers is that we are still at the beginning stages of our recession and the jobs numbers look to only get worse.

The new home sales data also continued to disappoint with the month on month number dropping 10.2%. According to White House National Economic Council Director Lawrence Summers, "The US is caught in a vicious cycle where economic and financial weaknesses are feeding on each other". Obama's first budget request anticipates the government will run a deficit totaling $1.75 trillion in the fiscal year ending Sept 30. This is equivalent to 12 % of GDP (assuming we don't have a further dramatic drop in GDP or an increase in deficit spending, both of which are likely). The administration is only projecting a drop of 1.2% for the US economy this year, followed by growth of 3.2% in 2010. Sounds like a pretty rosy picture given the recent economic data!! Obama's predictions are much more optimistic than most economist's who are predicting a 2% contraction this year and growth of 1.8% in 2010. Tomorrow we will see just how realistic these optimistic growth predictions are, with the release of 4th quarter GDP along with several other pieces of data.

I'm putting my money on worse than expected growth, and higher than anticipated deficits and unemployment for the next two years. Some may call me a bear, but I prefer the word 'realist'"

Thanks to Chris for getting my Friday going for me!

Yes, it certainly sounded as though the Trading Theme that help a tight grip on the currencies in the last quarter of 2008, certainly had a hand in yesterday's move, eh? The data in the U.S. was awful, absolutely awful... And whenever it looks the darkest, and most dangerous in the U.S. the flight to safety (read Treasuries) kicks into gear, and the dollar rallies...

Big News this morning from Europe, as The World Bank, the European Investment Bank (EIB), and the European Bank for Reconstruction and Development (EBRD) announced that they will provide $24.5 Billion euros ($31 Billion dollars worth) to help the European banks and businesses cope with the global financial meltdown.

Let me recap this for you, in case you missed class that week that I discussed it every day... East European nations are struggling to refinance loans that have gone bad on them, and in today's world of a credit crisis, there's no chance that they can get the refinancing done, and that word spread through Europe two weeks ago, inflicting major pain on the euro...

While $24.5 Billion euros sounds like a lot... I'm afraid it is but a drop in a bucket to what will be needed in the end... But... It's a start! And you've got to start somewhere, eh?

The news hasn't helped the euro though, as the single unit remains offered... But then, the U.S. investors haven't wiped the sleep out of their eyes yet... Maybe after they see the news, the euro can catch a bid in its sails... Maybe...

My long-time colleague and friend, Ed Bonawitz, sent me a link to a story that was originally printed in the Wall Street Journal regarding Citigroup... It seems there are some problems, and not little ones, that would kick in if the U.S. Gov. does go ahead and take a 40% stake in the bank...

The problems center around the fact that Citi is in 100 countries... And... With a 40% stake in Citi taken by the Gov. it could kick in some "fallout" around the world. For instance... lets consider Citi's stake in Banamex, Mexico's 2nd largest bank by assets. According to a Mexican law, any institution that is more than 10%-owned by a foreign government can not run a bank in the country. This has sparked concerns that Citi may be required to curtail some or all of its stake in the bank, a unit which has been called "a crown jewel" of Citi's operations.

Now... Multiply those problems times 100...

In a "sign of the times"... Denver's Rocky Mountain News will publish its final edition today, and the Hearst Corp. said it may close the San Francisco Chronicle unless it can quickly slash costs. Four newspaper owners have filed for bankruptcy protection since December: Tribune Co., owner of the Chicago Tribune and the Los Angeles Times; the closely held Star Tribune paper in Minneapolis; the parent company of the Philadelphia Inquirer and the Philadelphia Daily News; and New Haven Register owner Journal Register Co. And finally, last week I told the boys and girls on the desk that a Sunday edition of the NY Times was now worth more than the stock of the company... At least that's what I read!

Speaking of newspapers... I had a nice interview with the Pittsburgh-Post Gazette on Wednesday afternoon. The writer wanted to know why suddenly, there's a mass move to buy Gold... Well... That's like throwing me a slightly arched softball when I was younger... You would find in the next field after I was finished taking my swing at it! Anyway, no, I'm not going to slip into a rendition of Glory Days!

But... I told him, a lot of stuff, things that I tell you all the time... But the writer was especially interested in the thought that Gold no longer has competition from deposit rates... Since countries all over the world are lowering interest rates, albeit, some faster than others, deposit rates are pretty darn low... And with Gold being a non-interest bearing investment, the deposit rates no longer hold a hammer over the shiny metal!

And... As I look at the screens this morning, and see Gold trading at $946, I think to myself... Well! That's a $50 discount to earlier this week! But... Now it seems a chartist believes that Gold has put in a double top, and is set to retrace 50% of its gain since October, which would take it back to $850... I tell you this, so you know what the chartist believes he sees right now... But me? Hmmm... I guess it could happen, any thing can happen these days... But... And there should be a drum roll here... If that should happen Gold will have formed a stronger base at $850 to slingshot it back to $1,000 and beyond... That's my story and I'm sticking to it!

So... After looking at the screens for the Gold price, I noticed that collateral damage across the board that the Trading Theme caused yesterday by pushing the dollar higher. It would be difficult to find a currency that gained VS the dollar yesterday...

It's awful looking out there, folks... Shoot Rudy, even Mexican pesos are trading with an ugly looking 15 handle! And Japanese yen, which we used to be able to count on every day to be the Lone Ranger VS the dollar, is now on the back side of their rally days... And Chinese renminbi? Stuck in the mud... There's no better way to describe what's going on with renminbi...

Well... The data cupboard, which wasn't so kind to the U.S. economy yesterday, yields more bad news today, I'm afraid... We'll see the latest revision to 4th QTR 2008 GDP, which is supposed to take us to -5.4% from -3.8%... I said all along that 4th QTR GDP would be -5%, so maybe this one gets us there, and I can pay myself on the back... HA! We'll also see The Chicago Purchasing Manager's Index (manufacturing), and the U. of Michigan Consumer Confidence.

So... If the Trading Theme comes back into play today, we'll head into the weekend with the dollar swinging a mighty hammer once again... No currencies will want to step in front of that dollar bus...

It's the end of February, and if you are a long time Pfennig reader you know that I get all physced out about March. As March bring about my annual trek to Florida for spring training, and warm of course... This year, instead of going and coming back for a day or two, I'm going to remain in Florida from March 11th to April 1st. I'll be speaking at the Investment U. conference at the end of the month in St. Petersburg, but other than that, I'll be in and around Jupiter... And no! I'm not going to Jupiter to get more stupider! HA! So, now I just have to get through 11 more days, of this freaky weather here in St. Louis!

Currencies today 2/27/09: A$ .6440, kiwi .5025, C$ .7935, euro 1.2660, sterling 1.42, Swiss .8515, rand 9.9220, krone 7, SEK 9.04, forint 235.40, zloty 3.70, koruna 22.14, yen 97.60, sing 1.5470, HKD 7.7540, INR 51.10, China 6.84, pesos 15.07, BRL 2.3450, dollar index 88.26, Oil $44.26, Silver $13.21, and Gold... $948.40

That's it for today... I spent another eventful day at the Siteman Cancer Center yesterday. At one point in the day, I actually thought that I would get to leave there without them inflicting pain on my eye for once... But, I was mistaken... Badly! OUCH! Wednesday, I had lunch with my oldest friend in the world. Robin and I have been friends since kindergarten. He's a successful lawyer, helping people. Not the kind that people usually despise! Tomorrow is my older sister's birthday... Happy Birthday, Barb! Barbara just began reading the Pfennig about 3 or 4 months ago. In fact all my sisters now at least receive it. They always wondered what the heck I did for a living! Now, I need to convert my two brothers! A big win for the Blues last night, as they move within 3 points of the playoffs. And how about those loveable Missouri Tigers? A BIG win on Wednesday night. Next up for the Tigers is BIG BAD Kansas... That will be a tough one on the road... OK... Hope everyone gets to enjoy this Friday and the weekend... Get out and have a Fantastico Friday!

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

When Will Foreigners say "No Mas"?

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

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In This Issue..

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

And Now... Today's Pfennig!

When Will Foreigners say "No Mas"?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A Retail Sales Surprise!

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

In This Issue….

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

And Now... Today's Pfennig!

A Retail Sales Surprise!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jobs Jamboree / Horror Show!

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

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In This Issue..

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

And Now... Today's Pfennig!

Jobs Jamboree / Horror Show!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But, following tradition, they passed it anyway.

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

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

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

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

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

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

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

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

Talking Stimulus Deux

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

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In This Issue..

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

And Now... Today's Pfennig!

Talking Stimulus Deux

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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