Daily Pfennig : Reserve Bank of New Zealand

3rd QTR GDP To Lift Our Spirits?

Chuck Butler — Thu, 29 Oct 2009 14:08:00 GMT

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In This Issue..

* Currencies rebound a bit VS the dollar..
* Bill Gross on the dollar...
* Norway raises rates!
* RBNZ lifts easing bias!

And Now... Today's Pfennig!

3rd QTR GDP To Lift Our Spirits?

Good day... And a Thunderin' Thursday to you once again! It's not raining at the moment, but rain is forecast for today, thus the Thunderin' Thursday name! Rain today, tomorrow and who knows when it will stop... I'm thinking of buying the blueprints to build an Ark!

Front and Center this morning, we have the non-dollar currencies showing some healing as stock futures are positive. What's driving this new found positive feeling in the risk assets? Well, it's all about the first reading of 3rd QTR GDP today, which... Is expected to show that the U.S. economy came out of the recession in the quarter. Of course, I'll be looking for the Gov't spending portion of the GDP, but other media outlets won't, and the markets will get back to looking for higher yields, which you can not get in the U.S.!

Speaking of higher yields... Norway's Norges Bank did indeedly do raise rates yesterday, making them the first European Central Bank to do so. The Norges Bank members chickened out and only opted for 25 Basis Points (BPS), when I thought they should go the full 50 BPS... But, hey! The Norges Bank is raising rates, right? Let's not get picky here! Is the European Central Bank raising rates? Is Sweden's Riksbank, or Switzerland's Central Bank raising rates? How about Canada? Or Japan? NO, NO, NO, NO, NO, NO and NO! Let's get to giving some love to the Norwegian krone!

So... Looking at the rate hike score card of major countries, we have Australia, and Norway... The exact two I told you months ago would be the first to raise rates this year, when most observers thought it would be in the first quarter of 2010... So, if the U.S. GDP is as strong as forecast (+3.2%) then investors and risk takers will be coming out of the walls again, and buying higher yielding assets... There's only a few places in the world they can go folks... Australia, New Zealand, Brazil, South Africa, the Eurozone, and Norway... The Euro wannabes of the Czech Republic, Poland and Hungary probably fall in there somewhere, but those countries are not at the top of the Hit Parade when people start looking for yield!

OK... So, the non-dollar currencies are seeing some healing this morning... The Big Dog, euro, had fallen to 1.4706 before the healing began, and is now 1.4750... The Aussie dollar (A$) had fallen to 89-cents and change, but has rebounded to .9055, as I write. And... If the trading theme remains in place, the dollar will get hammered on the positive GDP report this morning...

Well, yesterday it was PIMCO's Bill Gross's turn to give his thoughts about the dollar... Let's listen in... The dollar is an over-owned currency and likely to fall to an all-time low against major counterparts, Pacific Investment Management Co.'s Bill Gross said in an interview on CNBC.

"The Chinese, the Asians, have owned too many dollars for too long." The dollar becomes more and more owned and less and less desirable, so ultimately the direction is down. I don't sense stability in the dollar."

OK... Thanks Bill! Hey! Recall the other day when I gave you the list of "rumors" in the markets that deep-sixed the non-dollar currencies? One of the items on that list was the rumor that the tax credit for first time home buyers wouldn't be extended... Well, now there's a rumor going 'round that someone's underground, and she will rock, no wait! The rumor going around is that the tax credit will indeed by extended to April 2010... You heard it here first folks, remember that! HA!

And the folks over at the Royal Bank of Scotland (RBS) sent out a note to customers that "the euro remains in an uptrend, and investors should buy the currency when it weakens. It has dropped back to the middle of its last consolidation zone in late September and early August. In a bigger correction scenario it may make it down to 1.45-ish, but it is no longer a compelling sell, and medium term considerations favor buying dips."

Hmmm... Couldn't have said that better myself!

So... Let's get back to this thing with the risk assets... There must be quite a few of you missing class each day, for recently, there have been a ton of people telling me that I never talked about a risk asset sell off... WHAT? ARE YOU KIDDING ME? I've been talking about how stocks have been linked to currencies and commodities (the risk assets) for months now! And several months ago, I began to see the price to earnings ratios getting way out of whack (tech bubble like!) and began to talk about a stock market sell off that could adversely affect the price gains that the currencies and commodities had made since March...

I know that some of you believe that I only want to "talk up" the currencies to benefit me somehow... And would never write about a potential currency sell-off... Well I have written about it... And this isn't the first time either! I'm really pounding the keys right now, because the more I think about this, the more it ticks me off! I mean... Do these folks not recall my going through how to handle a currency sell-off? It went something like this...

If you bought currencies and precious metals to simply go with the flow and get out when the prices begin to decline to book your profits, then you simply want to watch the stocks to see if they put in a 4-day consecutive sell-off... That might be your indication... However, if you bought your currencies and precious metals to diversify your investment portfolio to: 1. not have just dollar denominated investments, 2. to provide a hedge against the potential of a further weakening in the dollar... Then you will simply want to batten down the hatches and ride this dollar strength out... And if you do anything, you might want to take this dollar strength as an opportunity to buy at cheaper levels!

Calm down, Chuck... Ok, I was gone for awhile but I'm back now... The real question is just why are stocks and currencies and commodities all being thrown into the same barrel marked Risk Assets? When fundamentals are in place, this isn't the case, for currencies and commodities have a low correlation with stocks, and they have different pricing mechanisms...

So, a return to fundamentals would be like manna from heaven for yours truly!

OK... Earlier this week I talked about the Bank of Canada officials jawboning the Canadian dollar / loonie lower... Well, they've done their job... The loonie is 2 full cents lower... I expect the markets to test the Bank of Canada (BOC) here, to see if they really want to keep the loonie from getting stronger...

The Reserve Bank of New Zealand (RBNZ) met last night, and while they officially removed their easing bias from their monetary statement, they did not come out and outright mention rate hikes.... In fact, the RBNZ said that there was "no urgency to begin withdrawing monetary policy stimulus" (low rates)... So, it was a two-handed monetary statement by the RBNZ... They removed the "easing bias" but didn't feel the urgency to move rates higher... But shoot Rudy! That's way better than the stuff they gave us at the last meeting, which was "we expect to keep the OCR (their Official Cash Rate / interest rate) at the current level until the second half of 2010"... Yes, Virginia, the RBNZ did improve their statement!

Yesterday, I talked about GMAC coming back to the well, and asking for more bailout money, to the tune of $12-15 Billion... This has some conspiracy undertones to it folks... You just have to think about GMAC and the bank they own, which in reality the taxpayers own! Well, the thoughts going around now is that GMAC, which has already gone to the well 2 times for bailout money, will get what they need, because the Gov't is "in too deep"... Oh great! Now we not only have the "too big to fail" thing, but the "in too deep" thing going for us taxpayers! Where do I sign up for more of this? I just can't get enough of Gov't owned former private sector businesses! NOT!

OK... So, like I said at the top, 3rd QTR GDP will print a preliminary figure this morning... And is expected to have gone from negative to +3.2%... That's quite a rise, don't you think? Personally, I think that it will be less than 3%, probably around 2.5%, and will have been made up of Government Sending... But don't let that get in the way of a feel good media blitz that will happen after the number is printed this morning!

U.S. New Home Sales declined in September for the first time since March... Does any one else feel that the best of the U.S economy during this recession / depression has passed us by, and that we'll be double dipping soon?

Well... With it being a Thursday, we will get the usual Weekly Initial Jobless Claims this morning... You know, this is some very disheartening data... The Weekly Initial Jobless Claims continue to remain above 500,000 each and every week! And the Continuing Claims continue near 6 million at 5.920 million! Who among us believes that the U.S. economy can REALLY recover as long as we have 16% unemployment rates?

To recap... The dollar rally continued throughout the day yesterday, but has stalled in the overnight markets, as the focus shifts to the U.S. 3rd QTR GDP, which is expected to be positive, thus technically taking the U.S. economy out of recession. This would bring the risk takers back into the markets, and thus the dollar would get hammered... The Reserve Bank of New Zealand lifted their "easing bias" but left rates unchanged, and U.S. New Homes Sales declined in September...

Gold is up $7 this morning, so it too is receiving some love, and healing!

Currencies today 10/29/09: A$ .9050, kiwi .7265, C$ .9280, euro 1.4750, sterling 1.6465, Swiss .9765, rand 7.8150, krone 5.7050, SEK 7.0170, forint 186, zloty 2.8880, koruna 17.92, RUB 29.27, yen 90.70, sing 1.3985, HKD 7.75, INR 47.21, China 6.8280, pesos 13.23, BRL 1.76, dollar index 76.26, Oil $77.83, 10-year 3.43%, Silver $16.33, and Gold... $1,035.50

That's it for today... Had a visitor yesterday... A very delightful person! It sure was nice to meet you Rebel! This past week has been the 80th anniversary of the 1929 stock market crash! I really am grateful for all of you readers that haven sent me notes this week with kind words... They are truly appreciated! A reader sent me a note yesterday giving me 3 cheers for not calling the Pay Guy a Czar... Yes, the Czars thing makes me ill! My trip to Cabo San Lucas might be nixed because of the blood clot they found in my leg... I hope not, I was really looking forward to going there! It's Thursday, so our little Christine will stop and bring us in breakfast sandwiches... Yeah for us! And on that note, I'll hit send... I hope it's dry where you are, but that your Thursday is still Thunderin'!

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

Brazil Throws The Cat Among The Pigeons!

Chuck Butler — Wed, 21 Oct 2009 14:26:05 GMT

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In This Issue..

* Real leads Commodity Currencies to the woodshed!
* Niall Ferguson speaks his mind...
* BOC leaves rates and statement unchanged...
* Bollard gives the green light!

And Now... Today's Pfennig!

Brazil Throws The Cat Among The Pigeons!

Good day... And a Wonderful Wednesday to you! How many people out there know about "network neutrality"? Well, if you don't know, you're about to find out tomorrow, when it will be decided upon... I'm not going to get into it, because after you find out what it is you'll know why I didn't explain... All I'll say is that this is just another thing that's flying below the radar that's about to be thrown in our laps...

OK... Well... Yesterday, after signing off and hitting the "send button" for the Pfennig, I saw a story that shot across the desk, and then a follow up was sent to me by Don Ries later in the morning. The story was about the Brazilian Gov't imposing a 2% tax on capital inflows... This was done in an attempt to slow down the Brazilian economy by slowing down the "hot money" that's going into the Brazilian stock market by foreigners... Talk about throwing a cat among the pigeons!

This news was like a shot to the heart and you're to blame, for the Brazilian real... Talk about pulling the rug from underneath the real! The loss for the real was 3.5% for the day! WOW! We had a reader call and accuse me of not writing about this story in yesterday's Pfennig, because I didn't want to water down the BRIC MarketSafe CD sales... WHAT? First of all, I didn't know about it until after I sent the Pfennig out... And second of all, What's a tax today that may not even be in place 6 months from now, have to do with the real's value in 3 years from now? Besides, this is good news for those that are buying the real now, for they get to buy it 3.5% cheaper! I shake my head and repeat... HOGWASH! Accusing me of hiding something!

Any way... My colleague on the Currency Capitalist newsletter, Ashish Advani, had this to say about the tax announcement in Brazil...

"Frankly, I think this move to restrict capital flows is a pointless exercise at best. It's simply a waste of time to think that they can control the strengthening Brazilian real."

OK, back to me... In addition, to Ashish's thoughts... I tend to think there's something up Bullwinkle's sleeve here... Recall that about a week ago or so, I told you that Brazil's Central Banker had mentioned the need to raise interest rates 200 Basis Points (or 2%)... So... The Gov't sees the real responding to that comment, and thinks, "Oh my God, we've got a big problem when rates really do go up 2%, for this real will skyrocket! What's a Gov't to do? Ahhh, we'll impose a tax to offset the rate hikes, thus currency neutrality"...

So... I still like the real, but this really points out what I've been trying to say for some time now... These Emerging Markets currencies are Big Swingers, when they're going good, they're really good, but when things go awry, they really go bad, fast! But, that's their game, as long as you know it, no biggie!

But like Ashish said, I see this as a short-term adjustment for the real...

OK... So, that news yesterday sent not only the real to the woodshed, but sent the Aussie, kiwi, Norwegian krone, and Canadian dollar to join the real in the woodshed! The Big Dog, euro lost about 1/2-cent, but was able to avoid the trip to the woodshed.

I also received an email yesterday from a reader that really ticked me off... And I get ticked off every time someone accuses me of this! The reader said that I was accusing the current administration with the "total deficit"... I AM NOT! I HAVE NOT! I USED TO SHOOT ARROWS AT THE PREVIOUS ADMINISTRATION FOR THEIR DEFICIT SPENDING! I CAN NOT BELIEVE I HAVE TO KEEP EXPLAINING THESE THINGS! Look... Do the research and then point a finger at me! The research in this case would show that for over 9 years, I've harped and harped about deficit spending! Remember when the U.S. Current Account Deficit reached 4.5% of GDP in 2001, and I blasted the Gov't for doing that? Of forget about it Chuck, this is akin to talking to one of your kids... One of these days when they're adults they will talk about how smart you became in your late years!

Whew! I was really pounding on the keys there... My fingers need a rest! But as long as we're on the subject of Deficit Spending, (that's been going on for more than 8 years!!!!) Ty Keough sent me this:

The U.S. is an empire in decline, according to Niall Ferguson, Harvard professor and author of The Ascent of Money.

"People have predicted the end of America in the past and been wrong," Ferguson concedes. "But let's face it: If you're trying to borrow $9 trillion to save your financial system...and already half your public debt held by foreigners, it's not really the conduct of rising empires, is it?"

Given its massive deficits and overseas military adventures, America today is similar to the Spanish Empire in the 17th century and Britain's in the 20th, he says. "Excessive debt is usually a predictor of subsequent trouble."

OK... Here's some more Niall Ferguson... Ferguson dismisses the dollar loyalists, citing the British pound -the last international reserve currency - as his example. "These things don't last forever" but don't expect it to happen overnight. "It's a long multi-decade process," he states. Even with the dollar near a 14-month low against the Euro, he claims it's not without historical precedence for the greenback to lose "another 20%" this year.

For international investors the loss is enough to offset this year's stock market gains. Not exactly great motivation for foreigners to keep buying the almighty dollar."

Sounds like Mr. Ferguson has been a loyal reader of the Pfennig for the past 17 years!

Fed Head, Janet Yellen gave a speech yesterday, which her comments are usually good for a few quotes... And this was no exception... Fed Head Yellen said, "IT IS TO BE EXPECTED THAT INTEREST RATE DIFFERENTIALS WILL DRIVE CAPITAL FLOWS and that: U.S. STRUCTURAL BUDGET DEFICITS A SERIOUS PROBLEM, WILL REQUIRE PAINFUL DECISIONS"

Well now, that's two subject that I've talked quite a bit about lately now isn't it? Interest rate differentials, and the Budget Deficit problem... And some people wonder why I say that currency and precious metals diversification is a must? Really? When your own Fed Head thinks that these things will be problems, doesn't that spell it out for you? I thought so...

Not that I'm waving the flag for the Russian ruble here folks, but I think it's important to note that I've said all along that Russia is an "oil play" and nothing more... And that the currency has rallied in step with the rise in oil prices recently... And the ruble's biggest move VS the dollar came overnight after Oil briefly touched $80 yesterday!

A few people asked me yesterday why I didn't include the Swiss franc when I was talking about Aussie and loonies going to parity against the dollar... Well, for one, I wasn't talking about that, I simply gave you a quote from Citigroup's research team. But since you asked... The franc is only 1-cent away from parity, so in my mind it's already there! I just keep thinking about the Swiss National Bank's (SNB) warning to the markets about franc strength...

But hey! What could the little old SNB do to stop the franc from going to parity against the dollar?

Well... I was wrong... There I said it! (My beautiful bride says that I never admit when I'm wrong, and I say I do, it just doesn't happen very often! HA!) I said that I thought the Bank of Canada (BOC) would lift their previous statement that their near zero interest rates would remain in place until the 2nd half of 2010... The BOC did NOT lift that statement... In fact, the BOC hung the loonie out on a line to be beaten until dry! The BOC whined about the strong loonie as working against economic growth...

So... I think the BOC did what they set out to do, and that was to: 1. stop the talk about a rate hike before their stated timeline, and 2. stem the loonie's rise... The loonie dropped about 2% on the day...

But, like most things... The pain of the BOC statement will be forgotten about in a few weeks, and I suspect the loonie to be back on the road to parity against the dollar...

And then there was this... Long time readers know my dislike of the Reserve Bank of New Zealand's (RBNZ) Gov. Bollard, due to his penchant for dissing the currency, kiwi... Well, in a turn of direction... Gov. Bollard said in a speech last night that "there is little the Bank can do to bring down the value of NZD, and that the high value of NZD is not necessarily an impediment to raising the official cash rate in order to quell rising house prices."

That's Central Bank parlance for: "I'm giving you the green light to push kiwi higher"...

U.S. Housing Starts were disappointing in yesterday's print from September, where a .5% gain was very much less than expected...

PPI (wholesale inflation) declined 0.6% in September... Which is a very strange number don't you think?

To recap... Do you know what Network Neutrality is? You had better find out! Brazil imposed a 2% tax on capital inflows to an attempt to slow the economy and the real's rise. The real reacted with a 3.5% drop VS the dollar. The other Commodity Currencies followed the real down VS the dollar. The Bank of Canada also tried to stop the loonie's rise, and the RBNZ's Gov. Bollard give the green light to kiwi appreciation!

Currencies today 10/21/09: A$ .9220, kiwi .7530, C$ .9475, euro 1.4930, sterling 1.6570, Swiss .9890, rand 7.3930, krone 5.5750, SEK 6.8990, forint 177.50, zloty 2.7960, koruna 17.33, RUB 29.17, yen 90.80, sing 1.3950, HKD 7.75, INR 46.48, China 6.8275, pesos 13.02, BRL 1.76, dollar index 75.46, Oil $78.30, 10-year 3.36%, Silver $17.40, and Gold... $1,052.70

That's it for today... I hope everyone is staying healthy, and away from the flu these days... Good luck to the best baseball player today, and best Cardinal since Stan Musial, Albert Pujols will undergo surgery on his right elbow today. Had a visit from one of my all-time fave people yesterday... Ellie Williams came by! Ellie has authored a few books over the years, and in one, that she wrote about 8 years ago, she even mentions me and the Pfennig! Ellie is a fellow cancer survivor, so we always have plenty to talk about! The Big Boss, Frank Trotter, was limping around the office yesterday, having suffered an ankle injury playing soccer (why, I have no idea!) I told him we could go to the orthopedist together, as my knee has never responded to the steroids that were injected into it. Looks like a scope is in my future! And with that... I'll get this out the door! I have an eye appt. this morning, so I need to get working! I sure hope your Wednesday is Wonderful!

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

Cautiously Positive?

Chuck Butler — Thu, 10 Sep 2009 14:12:04 GMT

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In This Issue..

* Euro & yen add to gains...
* RBNZ disappoints...
* Foreclosures continue to stack up!
* BOE & BOC meet today...

And Now... Today's Pfennig!

Cautiously Positive?

Good day... And a Thrillin' Thursday to you! Ahhh! A change! Just thought that with the thrilling victories my beloved Cardinals have been accumulating, that Thrillin' would be a nice change to our Thursday lineup!

Front and Center this morning... The currencies added to their gains this week yesterday, albeit small gains, but gains nonetheless. The Fed's Beige Book was "cautiously positive"... And... Overnight, the Reserve Bank of New Zealand met, and left rates unchanged as suspected... This and more as we begin our Thrillin' Thursday!

The Big Dog euro has been off the porch chasing the dollar down the street for a week now, one would think that a return to the porch for food and water might be in the cards... But, as I was telling someone yesterday... Even though all signs point to a major stock sell-off, it hasn't happened, so why stand in front of the stock and risk assets rally bus?

The euro climbed to very near 1.46 yesterday, before falling back to 1.4550 as the day ended... Overnight, the euro has traded within a narrow range. The Aussie dollar (A$) got slapped on the wrist by traders after it was reported that Australia lost 27,100 jobs in August (consensus was to lose 15,000)... The unemployment rate in Australia remained at 5.8%, but the weaker than expected data caused the A$ to slide from the 86-cent handle to .8550...

If the heat remains on the dollar the rest of this week, then I would expect the A$ to rebound from that sell-off last night. Much like the Brazilian real sell-off last week... You may recall me saying that it was overdone, and I expected the real to bounce back, which it did, and the bounce was like a Super Ball Bounce!

The Reserve Bank of New Zealand (RBNZ) met last night, and kept rates unchanged as expected... But I really thought the RBNZ would opt to change the wording of their last statement following a rate announcement, in which they talked about leaving rates unchanged for some time to come... Well... They didn't change... And instead repeated the comment from the previous meeting... "We continue to expect to keep the OCR (official Cash Rate) at or below the current level through until the latter part of 2010".

Here we go again with a Central Bank making statements about rate policy months ahead to time! I don't see where they have the data to do something like that... But, they do it! I'll bet a dollar to a Krispy Kreme that the RBNZ has to move rates higher before "the latter part of 2010", and when they do, they'll be pushing rates up in 50 BPS clips!

Kiwi also took a slap across the wrist by traders after the RBNZ rate announcement and statement. I'm not so sure about this currency's ability to rebound, but if the A$ does rebound, kiwi normally hangs on the coat tails of the A$...

So... As I look across the screens this morning... I see that the euro and yen are the only currencies that are really stronger today than yesterday... So, my statement at the beginning that the currencies had added to their gains this week, needs to be tweaked, to say just euro and yen have added to their gains this week!

The Norwegian krone, was really on a run yesterday, trading below 5.90... But, couldn't hold those gains. I was reading a story last night about Norway's inflation rate falling, and how that might push back the Norges Bank (Central Bank) timetable for a rate hike from late this year to the 1st QTR of 2010... That thought process is responsible for the pull back in the krone yesterday, and overnight.

Do you see the mental giant (NOT!) thought process that goes through some of these traders? Sometimes it's all about yield differentials, and sometimes it's all about economic growth possibilities. Just like a baseball player wishes for consistency from the Umpire, I wish for consistency from the markets... UGH!

The Fed's Beige Book was "Cautiously Positive" yesterday... And of course, you know me, I want to know why the Fed is Positive at all! Let's see... The Beige Book said, that... Most districts characterized consumer spending as "soft" with a majority of reporting retail activity as "flat." And that the Cash for Clunkers was a positive... HEY! FED HEADS! Cash for Clunkers is over!

On the real estate component... Both residential and commercial real estate markets were described as "weak"... So... Do you see anything in here that spells "positive" for the Fed Heads? I sure don't!

I'll stop there... These guys at the Fed drive me up a wall, and cause me to go over to the walls and scream at them!

One thing the Beige Book didn't contain was the report yesterday that foreclosures in the U.S. jumped above 300,000 for the sixth consecutive month! RealtyTrac Inc. reported that a total of 358,471 properties received a default or auction notice or were seized last month, which is 18% higher than it was a year ago!

And then add in those details I gave you yesterday about the Option ARMs that will reset in the next three years, and this is getting ugly folks...

Doesn't it seem as though the "people in power" have turned their backs on this problem? I mean, don't get me wrong, I don't want the Government sticking their hands in everything, but they already started down this road, and then turned around and headed down a different road... That's the Gov't's way isn't it? As my football coach used to describe someone not giving everything to a play as doing it half-a_ _ ... That's what the Gov't does... I don't want you sticking your hands in the private sector! But! If you're going to do it, do it right and until it's fixed!

The Bank of England (BOE) and the Bank of Canada (BOC) both meet today... The BOE's meeting is going on as I write, while the BOC meeting will take place later today. I look for both Central Banks to remain steady at the wheel. The BOC will really tick me off later today when they repeat their earlier statement that interest rates will remain at near zero until June of 2010... The BOC also talked about the strong Canadian dollar / loonie in their last statement, as "significantly moderating growth"... As if a strong currency is a "bad thing", which it certainly is not! But here's an opportunity... If the BOC doesn't talk about the strong currency this time out, we could see a "relief rally" in the loonie...

Today, the U.S. data cupboard has July's Trade Balance, and since it's Thursday we'll see the latest Weekly Initial Jobless Claims. The Trade Balance is a misnomer as far as I'm concerned... It should read... The Trade Deficit! And while this Trade Deficit isn't as bad as it once was, due to the depression, it remains a bugaboo...

And talk about sticky! Those darn Weekly Jobless Claims! Last week they printed 570,000 new claims, and this week is expected to be 560,000 more! I wonder when these people will be counted as "unemployed" by the Bureau of Labor Statistics (BLS)! OK... You know me... The BLS is one letter too long, as the "L" should be removed!

And... Before I recap, is it just me? Or does anyone else see stock market bubbles all over the world? I've already talked till I'm blue in the face, which is normally red!, about the U.S. stock market being overbought... But there was news yesterday that Asian stock index hit a 1-year high... And that the FTSE, London's stock exchange, returned to the 5,000 level for the first time in a year! Bubbles Greenspan, should be in hog-heaven with all these bubbles floating around!

OK... Almost ready to go the Big Finish... Let's recap first though... Euro and yen have added to this week's gains, while other currencies have seen profit taking. Central Banks in the U.K. and Canada meet today, while New Zealand's Central Bank was a disappointment. U.S. Beige Book is "cautiously positive", and Foreclosures are greater than 300,000 for the 6th straight month!

Currencies today 9/10/09: A$ .8560, kiwi .6940, C$ .92, euro 1.4530, sterling 1.6560, Swiss .9585, rand 7.6150, krone 5.9650, SEK 7.0520, forint 188.10, zloty 2.8710, koruna 17.5725, RUB 30.93, yen 92.10, sing 1.4270, HKD 7.75, INR 48.65, China 6.8292, pesos 13.54, BRL 1.8330, dollar index 77.12, Oil $71.69, 10- year 3.46%, Silver $16.07, and Gold... $984.55

That's it for today... I got the opportunity to sit down and talk with the Big Boss, Frank Trotter, yesterday... That doesn't happen very often, as he is a busy man! Frank always has a way of calming me down, or bringing me back to square one, when I'm all ticked off or keyed up about something. Get the brooms out! Cardinals sweep the Brewers! I was one of the millions probably that got my hands on the new box set from the Beatles, with all their albums re-mastered... My friend and colleague, Ann Hopkins, went to buy one for her husband, and asked me, knowing what a fan of the Beatles I am, if I wanted her to get me one too! How Sweet! And Too Sweet! It was bonus day for me, as I also received in the mail yesterday, my 40th Anniversary Woodstock CD's and DVD! WOW! OK... Enough! Time to get this Thrillin' Thursday started... I sure hope your Thursday is Thrillin'!

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

A Turn Around Tuesday!

Chuck Butler — Wed, 10 Jun 2009 14:27:03 GMT

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In This Issue..

* Another Treasury auction today...
* Goldman says to buy euros!
* Oil fuels Commodity Currencies!
* RBNZ to meet tonight...

And Now... Today's Pfennig!

A Turn Around Tuesday!

Good day... And a Wonderful Wednesday to you! Well... Yesterday was "Turn Around Tuesday"! Add to that, the fact that there were a number of reasons for the euro to lead the charge for currencies VS the dollar yesterday. And... A word from one of the economists that I keep on my list of "to read"... So, let's get to the tape from Turn Around Tuesday!

I heard yesterday someone say "well, we sure turned around today in the currencies"... And I thought, Shoot Rudy, why not name it Turn Around Tuesday? Then I went back to the history page on my trusty Bloomberg, and saw that on 4 of the last 5 Tuesdays, the currencies did in fact "turn around" their performances from the day before! Not that this is something we can hand our hats on, and make trades accordingly on Monday nights / Tuesday mornings... But, it's an interesting fact nonetheless!

So... The currencies, led by the euro, came back strong VS the dollar yesterday... There were quite a few things on the list of reasons for this rally... I could do this David Letterman style... But I don't have 10 reasons... So.. I'll start with Chuck's Top 5 Reasons the currencies rallied yesterday... (imagine me throwing the card away after reading each reason!)
#5 There were rumors that a Big Swinger Fund Manager was interested in some large chunks of Euros, Aussie and Gold...
#4 The supply thing again... $35 Billion in Treasury Notes had to be auctioned off...
#3 The Risk Traders were out in force, with the news that 10 Financial Institutions were going to be allowed to pay back their TARP funds.
#2 Goldman Sachs issued a "buy euro" recommendation to their clients...
And the number 1 reason the currencies rallied yesterday...

#1 The markets are celebrating the 345,000 job loss as reported by the BLS, last Friday, as proof the recession is coming to an end, and therefore there's no further reason to own the safe haven dollar!

To that... I have to say HOGWASH! Not that I'm going to say the markets are wrong, because that's something I learned many moons ago, that the markets are never wrong... Stupid... But never wrong! What I'm saying is that #1 I've proved that the BLS number was a farce, printed to make us feel good, and what a job it's doing, eh? And #2 Even if we accepted that the number was -345,000, why would that be a good thing?

On my list of economists that I often read, is Paul Kasriel of Northern Trust... Let's hear what he had to say about this... "The last thing Fed Chairman and Great Depression scholar Ben Bernanke wants to do is "abort the recovery by premature tightening," which is what his predecessors did in 1936 and 1937, says Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago. "At what other time has a 345,000 job loss been a reason to celebrate?"

OK... Let's not look a gift horse in the mouth, eh? The euro rallied all the way to 1.41 and change... Right now, as I type it's 1.4090... As I left you yesterday morning, the euro was trading, according to the currency round-up, at 1.3890... I had my head down doing some reading before trading, and looked up to see the euro had skipped right through the 1.39 handle... I never saw it trade with a 1.39 handle! It was that quick!

You know, the number 2 reason for the currencies to rally yesterday was quite interesting... Goldman Sachs Group Inc. advised buying the euro versus the dollar as risk aversion eases, prices of commodities rebound and talk of alternative reserve currencies undermine confidence in the greenback.

And the number 3 reason for the currencies to rally yesterday has more "air time" today, as the U.S. will have to auction $19 Billion of 10-year Treasuries... Yesterday's 3-year auction was well bid... But think about this for a minute... The Chinese have shortened up their Treasury holdings to average 3-years... So, a 3-year note probably wasn't going to have that much trouble getting sold... But 10-years? Ahhhh grasshopper, this could be the cheese that binds... We'll have to see if this auction is as "well bid"...

The Commodity Currencies are watching the price of Oil rise to over $71 a barrel, and loving every minute of it... I'm not of course, as it will affect the price of the gas I put in my vehicle. But... This is the fuel the Commodity Currencies needed to get moving (get it? The fuel, oil? HAHAHAHA) Aussie, kiwi, loonies, real, and rands really got moving yesterday and overnight... Regarding the loonie... I've told you over and over again that the price of Oil could be the harbinger for a better loonie price... And voila!

I was talking to a very good / old friend, one that I've known since we were in the 2nd grade, the other day, and he asked me what was going on with the price of Oil, as he reasoned that with the recession going on, gas consumption was down, and thus the demand would be reduced... I agreed with him, but added... The difference here, I believe, is the fact that investors are looking ahead and believe they already see inflation, and are buying Oil contracts as a hedge VS that inflation they see in our future...

Loonie holders don't care where the move comes from, they are just rejoicing a move to 91-cents!

The "winner" for the day in performance VS the dollar, was... Drum roll please... The New Zealand dollar/ kiwi... I found this strange given the fact that the Reserve Bank of New Zealand (RBNZ) meets tonight to discuss rates... I take it that traders don't believe the RBNZ will cut rates. In the Pfennig on Monday I said that "I was on the fence with this one... I'm leaning toward leaving rates unchanged, but jawboning for further rate cuts... Which is about the same as actually cutting them! So... Just cut the darn things! Quit beating around the bush!"

So... Kiwi was the winner for the day! Now we need to wait-n-see what the RBNZ does tonight!

Kiwi's kissin' cousin across the Tasman, Australia, saw June Consumer Confidence rise sharply by over 12%, the biggest one-month rise since 1974... Ahhh, 1974... Grand Funk's The Loco-Motion was the number 1 song of the year... The Top Ten also included Sweet Home Alabama, Come and Get Your Love, and The Joker... 1974 wasn't a great year for Billboard hits... But the underground FM radio stations were hitting it big then, and the music was awesome! Oh boy, did I digress or what here? Geez Louise, somebody pinch me, I've gone completely off course!

OK... I'm back from 1974 now...

Gold and Silver also enjoyed the day on Tuesday, and overnight, with Gold moving to $960... Recall, yesterday, when Gold had dropped the previous 2 days that... "With Gold hovering around $950 and Silver around $15, it certainly provides an opportunity to buy at cheaper levels than last week's lofty figures, eh? I would use these dips to my advantage... But then that's just me... It doesn't mean that it's the right thing to do!"

As I've been talking about all week, the Trade Deficit and Budget Deficit both print today... The Trade Deficit is expected to grow to $29 Billion from $27.6 Billion because of the steady rise in the price of oil... The Budget Statement which couldn't even post a positive balance in the month April, will probably add $180 Billion to the deficit column... UGH!

This afternoon, the Fed's Beige Book will print, which gives us a glimpse of what the Fed Districts see going on... There's rarely something here to move the markets, so... These are not the droids you're looking for... Move along there's nothing here to see!

And finally... I wonder what's going to happen with this one... I'm talking about the House of Representatives issuing a subpoena to the Fed for the documents related to the Bank of America (BOA) purchase of Merrill Lynch... You may recall that BOA Chairman, Ken Lewis, told the lawmakers that the Fed and U.S. Treasury made him take on Merrill Lynch, and not disclose the losses on Merrill's books... There's more laws broken in that statement than you can shake a stick at... So... This will be interesting, to see if the lawmakers find anything there... I doubt they will, because they are all in cahoots with each other in this financial mess... But, to me... There's smoke here... And I always tell you that where there's smoke there's fire! And I believe that the fire is raging here... I'll tell you what we need here... We don't need no stinkin' lawmakers going through the records... We need old ironsides... Barnaby Jones... Or Mannix! Now, those guys would get to the bottom of this!

I did a 15-minute radio interview on True News yesterday... I got to speak my mind on some things, and the interviewer never interrupted me, told me "he was losing me", or made fun of anything I was talking about... Now... That was a good interview! I got to talk about things on my mind, our products here at Everbank, the website, the phone number and the Pfennig... And the listeners got 15 minutes of "Chuck speak"... I want to thank the people at True News...

I also had a production meeting for my "other" newsletter, which is always interesting... The editors sit around and ask me... "So, Chuck, what do you want to write about this month?" Hmmm... I always say, because... Since I write something every day, you can only imagine how difficult it is come up with something new for a monthly newsletter! But I always do, somehow! If you're interested in this letter, it does cost... But it's a value at any cost! You can click here... https://www.web-purchases.com/CUC/WCUCJ900/landing

Currencies today 6/10/09: A$ .8110, kiwi .6335, C$ .9080, euro 1.41, sterling 1.6390, Swiss .9290, rand 8.03, krone 6.2810, SEK 7.6425, forint 198.28, zloty 3.1750, koruna 18.99, yen 98, sing 1.4480, HKD 7.7510, INR 47.33, China 6.8332, pesos 13.53, BRL 1.9440, dollar index 79.74, Oil $71.31, 10-year 3.87%, Silver $15.42, and Gold... $961.35

That's it for today... Did you hear about the fisherman who reeled in a missile from an F-15 fighter jet? That's a pretty interesting story, eh? Not much else to talk about this morning, as my beloved Cardinals are in a major June Swoon... UGH! When do the Rams report to training camp? Nah... I can't be that thin skinned with the redbirds, they'll break out of this... Hopefully! So... With nothing more to say, I'll get this out of here, but not before telling you to hopefully have a Wonderful Wednesday!

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

Who's Foolin' Who?

Chuck Butler — Mon, 08 Jun 2009 17:17:07 GMT

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

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

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

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

In This Issue..

* Jobs Jamboree gets a lift...
* The real numbers...
* The dollar comes back with vengeance!
* RBNZ to meet this week...

And Now... Today's Pfennig!

Who's Foolin' Who?

Good day... And a Marvelous Monday to you! You know the Jobs Jamboree data that printed on Friday, and created some HUGE euphoria among the media types that love to just "read the news" and not actually do the research to report it? Yes... It was a very good number, on the outside... Not that losing 345,000 jobs in a month is a good thing, but it is far better than the near 700,000 jobs lost a couple of months ago.

So... I've got that to talk about today... And the rebound by the dollar that has taken the euro to the 1.38 handle and looking as if it is going to go lower... And, then finally, I have to get on my soapbox again, because I don't think I want my President calling me names! So, all that and more as we begin this 2nd week of June...

OK... Well... Did you get all caught up in the euphoria of the Jobs Jamboree on Friday? I know the 2 different cable news stations we have on here in the office, sure took the number, hook, line and sinker. The markets all reacted violently to the number too... At first... You see, when the number was reported, which was -345,000 for May, the euro took off, and the dollar selling was incredible, but the flurry only lasted about 1/2 hour, then someone with an ounce of gray matter, looked closer at the number. It was like a game of Who's foolin' Who?

So... Here's the skinny... If the jobs losses were really just -345,000 in May it would have signaled a bottoming of the job losses, and a bottoming of the recession / depression, which would feed right into the inflation story, albeit a lot sooner than anyone would have expected... And with that thought, the dollar got sold. But... A funny thing happened on the way to the forum, and the currencies were soon to reverse their recent trend, and it all came back to the Jobs Jamboree...

First of all... The Bureau of Lying Statistics, I mean Labor Statistics, reported on their website that 220,000 jobs were created in May through the Birth / Death Model... And 43,000 of the 220,000 "ghost jobs" were Construction jobs... Really? You've got to be kidding me! But if you think that's all... That's just the tip of the labor iceberg... The number of unemployed persons actually increased by 787,000 in May! The number of long-term unemployed (those jobless for 27 weeks or more increased by 268,000 over the month to 3.9 million and has tripled since the start of the recession.

Not that I'm trying bum you out on a Monday morning, I just think you "should know" the score... The total number of unemployed persons is 14.5 Million... In January of this year 5 months ago it was 11.6 million... And... Oh, by the way... The 9.4% Unemployment Rate? It's probably nearing 20% in "real terms"...

The thing that gets me is that people, investors, traders, hedge funds, etc. all react to data and make investment decisions based on the data when it prints... I guess this will teach them to wait until all the dust settles and the numbers have had a chance to be exposed to the daylight! I just think it's a shame that we have to deal with these liars, and cheats, just to make us all "feel good"...

So... Eventually the truth comes to the top, because the truth... Is out there! So... Why is this bad for the currencies? Well... In normal times this news would be manna from heaven for the currencies... But these aren't normal times, as the President, U.S. Treasury Sec. and Fed Chairman all remind us at least once a week... And the trading pattern for this type of bad news, is that the inflation picture everyone was thinking of last week and the week before, just isn't going to come that fast... So... The currencies gave back gains that they had made in the last two weeks...

Whew! I typed all that "non-stop" and have to give my fat fingers a chance to rest here for a minute!

The euro also has had to deal with the Irelands rating was lowered by S&P to AA... But, I do have to say that since I've come in this morning, the bias has been to sell dollars, and buy euros... But, the move has been very small...

There's not much in the data cupboard this week, until Thursday when the May Retail Sales report prints... The Butler Household Index (BHI) tells me to expect stronger Retail Sales in May. Wednesday we'll get the May Budget Statement, which will be around a deficit of -181 Billion... Did you all get that notes I wrote last week about the month of April and the Budget Deficit... Did it hit home with you? Maybe I should repeat it just for GP...

Here's what I said on Thursday... The Budget Deficit this April was $20.9 Billion, the first deficit in this "tax-paying" month in 26 years! Can you imagine that? In April when taxes are paid, we recorded a deficit? That's pretty amazing folks... April 2009 tax receipts dropped 44% compared with those in April 2008.

And Here's what I said on Friday... And I also believe that we will return to the underlying Weak Dollar Trend for good in the 2nd half of this year... Because... By then... the U.S. Budget Deficit, which has already breached 5% of GDP (late last year), will be heading beyond 10% of GDP this year. So... Do you want to own a truck load of dollars when the markets are staring at a Budget Deficit of greater than 10% of GDP? I don't think so!

And... Then this week we get the actual data to tie it all together in a nice bow!

I just saw a news story flash across the screen quoting the President... Hmmm, seems President Obama believes that his "stimulus package" will create 600,000 jobs... Well, that should be in the bag, right? I mean if it's not people being hired to take the census, then the BLS will just create them out of thin air, and the President will be able to say... "See! I told you I would create 600,000 jobs!"

I shake my head in disgust... I really do folks... And speaking of the President... I don't know about you... But I'm tired of him apologizing to other countries... And I really don't like him calling me names... OH! He's calling you names too!

OK, back to regular stuff... The Reserve Bank of New Zealand will meet this week, and I'm on the fence regarding what they will do... I'm leaning toward leaving rates unchanged, but jawboning for further rate cuts... Which is about the same as actually cutting them! So... Just cut the darn things! Quit beating around the bush!

And... U.S. Treasury yields continue to climb higher, and that means further losses to holders... The 10-year U.S. Treasury yield hit a seven-month high this morning... Treasuries have to deal with more supply this week. Hmmm... I have to blow my own horn here and tell you that I told you a couple of months ago that this would happen... That the deficit spending would create a monster, and that monster would be the need to issue more Treasuries than ever before, and the more you issue, the less the value of those outstanding become... So, to sell them, you have to allow the markets to let the yields rise to attract investment, and... As the yields rise, those previous issues lose value, in the secondary markets... Sure, if you hold them to maturity, there's no principal loss... But how many of those Treasuries were bought last year in the flight to safety, to hold until maturity? I don't have an answer, but my guess is... Not many!

See? Deficits Do Matter! And these days it's the Budget Deficit that's taking the hits... The Trade Deficit, which used to be the Big Kahuna, is no longer adding $700 Million to the Current Account each year. In fact, the Trade Deficit will print this week for April, and is expected to remain below $30 million... Not a Surplus, but still, much better than the $65 million figures we used to see every month! As I've explained before though this is simply, not the preferred way to reduce one's Trade Deficit... To have a recession! No, it would have been far better to have our exports be competitive...

And in the "here we go again" category... Saudi Arabia, Bahrain, Kuwait and Qatar signed an agreement to create a Persian Gulf monetary union, committing themselves to working toward a common currency despite the withdrawal of the United Arab Emirates and Oman.

These "oil states" threaten to do this about once a year... Kuwait finally go tired of waiting and dropped their peg to the dollar over a year ago! But, an oil monetary unit? Now that would really put a dent in the dollar's armor, eh? Just don't go hanging your hat on that happening any time soon!

I think that we've seen some real profit taking in the past few days... A reversal of the risk taking that was going on... And... The feeling that we went too far too fast... This move back in the euro and other currencies does give all those that were sitting on the sidelines and just couldn't pull the trigger on the rally that began in March, an opportunity to get in at cheaper levels than the past two weeks...

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

Currencies today 6/8/09: A$ .7870, kiwi .62, C$ .89, euro 1.3850, sterling 1.59, Swiss .9130, rand 8.1850, krone 6.4470, SEK 7.8645, forint 207.35, zloty 3.2810, koruna 19.50, yen 98.55, sing 1.4585, HKD 7.7520, INR 47.57, China 6.8372, pesos 13.40, BRL 1.9615, dollar index 81.30, Oil $67.45, Silver $14.96, and Gold... $951.02

That's it for today... Another year at the ball game for the crowd here and another loss! I don't believe we've ever seen a winner when we go as a group! UGH! But a good time was had by all any way! Jazz camp begins this morning for my little buddy Alex. He's not just a rock-n-roller! He's one heck of a guitar player that's for sure! Better than I EVER was! My beloved Cardinals couldn't hit their way out of a wet paper bag right now, but that will change, hopefully this afternoon! Another full week on the desk... I can tell the folks here are growing tired of me being around every day! But, I'm here until I go to Vancouver for the Agora Financial Investment Symposium... It's the 10th anniversary of the Symposium... And Vancouver in July is awesome! Any way, I've got to get to work, it's a Monday, and I'm running late! I hope your Monday is Marvelous... And you have a Wonderful Week!

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

A Day Of Healing...

Chuck Butler — Thu, 12 Mar 2009 14:54:08 GMT

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In This Issue..

* Currencies have a mini-rally...
* Only to see profit taking overnight...
* Gold rebounds too!
* Retail Sales on board today...

And Now... Today's Pfennig!

A Day Of Healing...

Good day... And a Thunderin' Thursday to you! It was a Tub Thumpin' Wednesday yesterday for the currencies and Gold, after seeing them back off earlier this week! I'm in Jacksonville for a company event, and then on Friday morning, I head south to start my spring vacation! But first, some work to do here, and then on to the south!

It was 29 degrees when I got in the car to leave for the airport yesterday morning... And it was 77 degrees when I finally arrived in Jacksonville! YAHOO! But even as loud as I can say YAHOO for the warm weather, which I've said over and over again, I've got to go where it's warm, it wasn't as loud as a the YAHOO yelped by currency owners as the euro led the currencies higher and higher all day long!

And the Gold holders weren't far behind, as the shiny metal got back to $900, after seeing 3 days of selling in a row! A lot of the people here asked me about Gold, and I had to tell them the same thing I've told you dear readers for some time... These are uncertain times, and in uncertain times, it calls for the "uncertainty hedge"! And that's what happened today... Stocks, which had rallied on the Citicorp news the day before, failed to follow that up... So, what's a stock jockey to think? I'll give you my two cents here, which I told the Vice-Chairman last night... And that is... Do you believe that Citicorp really had a profitable first two months? I mean, just a couple of weeks ago they were begging for more TARP money! Keep this in mind... Liars figure, and figures lie... Not that it wasn't true, but come on! They were begging for money just a couple of weeks ago when they supposedly were booking profits? OR... Maybe they DID book the profits, good for them! But if they were booking profits, why were they knocking on TARP's door looking for more handouts?

I had better go on record and say that's just my opinion and not that of EverBank's... Even though the disclosures all spell that out!

So... For once in the past few months, the currencies broke from the stocks... Yes, I know they gained a tiny bit on the day, but not the kind of gain that would match the rally in the currencies! But... And here's where things get unwound... But, in the overnight markets, traders and investors just couldn't stand to see the euro at 1.2850, so they took the profits they had, and brought the single unit back below 1.28. It's trading about at the same level as yesterday morning... So... All that hoopla yesterday, gone down the drain overnight... The Spinners had a great song titled... It's A Shame... Appropriate here...

China's Trade Surplus for February came in at $4.84 Billion down from January's $39.1 Billion... That's a HUGE decrease, eh? But still a surplus, and in today's economic environment that's something to be proud of, eh?

German manufacturing orders fell 8% from a year earlier, so face it folks... Everything around the world is slowing down!

And in something you may have missed, because it certainly wasn't covered in the mass media... U.S. Treasury Sec. Geithner, said that the Obama administration will press Congress for legislation to allow the IMF to sell part of its stockpile of Gold... UH-OH! If the IMF is going to resort to selling Gold... Then the you know what is about to hit the fan!

Speaking of Geithner, and those that threatened me with physical harm if I kept calling him "the cheater" won, since I stopped... But trust me, I'm an old crippled, cancer fighting man now, but if someone had threatened me in my earlier life, I don't know anyone that would want to deal with me, because I didn't know the word, "give up" / or "stop"... But, I'm a big, declawed pussy cat now, so threats do get to me!

But, I digress... What I wanted to say was Speaking of Geithner... Here's what the Wall Street Journal had to report yesterday...

"Obama and Geithner are failing in their efforts to revive the economy, according to participants in the latest Wall Street Journal forecasting survey.

A majority of the 49 economists polled is dissatisfied with the administration's economic policies. On average, they gave the president a mark of 59 out of 100, and although there was a broad range of marks, 42% of respondents graded Mr. Obama below 60."

The Reserve Bank of New Zealand (RBNZ), reduced their Official Cash Rate (OCR) by 50 BPS the other day... RBNZ Gov. Bollard had this to say.... "The world economy deteriorated very rapidly late last year, amid ongoing losses and extreme volatility in international financial markets. While monetary and fiscal policy responses in many countries have been substantial we still expect the adverse economic forces generated by the crisis to remain dominant throughout 2009. The timing and extent of global recovery remain highly uncertain."

I've had my differences with Gov. Bollard in the past, as he was once who openly talked about the need for currency weakness... So, different from my one time acquaintance, and a "hero" of mine when he was Gov. of the RBNZ, Don Brash! But at least this time Bollard is bang on with his observance!

The Japanese yen, which a few days ago, looked like it was on shaky ground, has put in two days of stellar performances, which makes one wonder if what "Mr. Yen" had to say the other day is working its magic with yen... Recall, I told you that the former currency guru of Japan, Sakakibara, who is known as "Mr. Yen" said yen could rise to 70 VS the dollar, and trade in a range between 70 and 100... I disagreed with the 70, but thought 100 might hold...

But I didn't wonder too long here on this subject, because I know in my heart of hearts that yen does not have the intestinal fortitude to climb past 85... (remember, yen is a European priced currency, so as the price goes down, the more value it returns in dollars)

On Data-Watch today, we have the usual Weekly Initial Jobless Claims, which continue to be horrific week after week, and Retail Sales for February... Retail sales unexpectedly rebounded in January with a 1.0% gain, after a 3.0% drop in December. But the stronger number, which came off a low baseline in December, was likely due to heavy discounting to move inventories sitting on store shelves. The Chain stores seem to be reporting decent sales, but everyone else's sales are in the dumpster. And then I do the quick check of the Butler Household Index (BHI), and I'm convinced that today's printing of Retail Sales for Feb. are going to be disappointing!

And finally, we'll see the Business Inventories data for Feb. Last month when I reported the Business Inventories data, a reader asked me what was up with reporting this data, as they didn't know what it was about... So, I promised them that this month, I would hold class on Business Inventories, so get out your pads of paper, and a sharpened # 2 pencil, to take notes...

Business inventories are the dollar amount of inventories held by manufacturers, wholesalers, and retailers. The level of inventories in relation to sales is an important indicator of the near-term direction of production activity. This is called the "Inventory to Sales Ratio" or I-S...

Business Inventories tend to rise when economic conditions are strong; since sales are rising at the same time, the inventory-to-sales ratio may remain stable, or rise at a very slow pace. Inventories tend to drop when economic conditions are weak; since sales are falling at the same time, the inventory-to-sales ratio may remain relatively stable. The I-S ratio then begins to rise as sales fall more quickly than inventory growth.

So... If things play out the way I think they will, recall that I've said over and over again, that this dance is gonna be a drag, no, I've said over and over again that soaring inflation is going to be on the other side of this current asset price deflation... And one of the reasons will be buyers wanting to buy and spend again, and businesses that don't have the products on their shelves because of the depression... Money chasing too few goods... And we'll see the proof in the pudding right here in Business Inventories and the I-S Ratio!

OK, that's enough, put your pads of paper and #2 pencils away, as we're finished for the day! Let's go to the Big Finish!

Currencies today 3/12/09: A$.6455, kiwi .5130, C$ .7760, euro 1.2780, sterling 1.3770, Swiss .8650, rand 10.26, krone 6.9620, SEK 8.8320, forint 239.80, zloty 3.6225, koruna 21.21, yen 96.30, sing 1.53, HKD 7.7545, INR 51.80, China 6.8388, pesos 15.16, BRL 2.35, dollar index 87.93, Oil $42.79, Silver $12.86, and Gold.... $912.80

That's it for today... Thanks to Mike for Pfilling in on the Pfennig yesterday, great job! He doesn't know it, but I'm going to back out of writing from my hotel room tomorrow... Mike, you did such a great job, you get to do more! Yeah for you! Our little Christine, loves to say, "yeah for whomever" so... We have that going for us! The trip here was somewhat uneventful, I didn't have anyone drop their hard case luggage on my head or anything! The plane out of St. Louis was delayed as there was a "maintenance issue"... I told Kristin, when I got here, that I wish they wouldn't tell me these things! Just say, "we're waiting for a passenger to board, or something" One time, years ago, the Big Boss, Frank Trotter, and I were looking out the window of a plane, and saw what appeared to be oil pouring out of the plane's wing... We were just about to get up and get off the plane, when a maintenance truck pulled up to stop the bleeding... Things you wish you didn't know about, for sure! OK, I give a presentation on World Markets this morning, so I have to look sharp, no wait, that won't happen, I have to feel sharp, no wait, that won't happen, OK, I just have to get up there and do it! HAHAHA! Time go... I hope you have a Thunderin' Thursday!

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

A "New & Improved Stimulus Package"

Chuck Butler — Thu, 29 Jan 2009 15:32:02 GMT

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

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

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

In This Issue..

* The dollar fights back!
* Another $900 Billion in the red...
* RBNZ cuts rates 150 BPS!
* Jamie Dimon tells it like it is...

And Now... Today's Pfennig!

A "New & Improved Stimulus Package"

Good day... And a Thunderin' Thursday to you! Well... The Fed kept rates at near zero, as if they had any ability to raise them, the House sent the Stimulus Bill on to the Senate, the dollar rebounded on all these two items, and I have some very strong quotes for you at the end of today's lesson... So, get your coffee, or OJ, or V-8, sit down, and let's go!

OK, I had better start with the dollar reaction to the two items yesterday, as what looked like an end to this dollar strength mess, was about to take place as the euro pushed to 1.33, taking the other currencies along for the ride, was just a head fake... The dollar had more strength to show us, after the Fed kept rates unchanged, and the House passed the Stimulus Bill.

You see, it's very simple... Or maybe I mean to say it's simple minded people... Nah, I won't go that far! These dollar bulls are thinking, it's simple... that with the Fed greasing the tracks with ZIRP (zero interest rate policy), and now with the ability to buy Treasuries that everyone else wants to sell, because of the paltry yields they receive on them, and... Another "NEW AND IMPROVED" Stimulus Bill, the economy is going to flourish, and it will be all seashells and balloons from here on out... So... Why not buy the dollar, eh?

I'LL TELL YOU WHY NOT! First of all the Fed is out of control, doing whatever they want to do, with no one, to stop them... And they are NOT making the best decisions, they are following the same footprint that Japan made a decade ago! But don't let that get in the way of the euphoria the dollar bulls have going for them right now!

And second... Now this is really going to get my blood boiling, but this newest Stimulus Bill... Another almost $900 Billion on the red side of our ledger... And for what? The same graft and cronyism that went on in the 30's with the WPA, and spending on people that if you give them money, what incentive will they have to work on that bridge or highway that needs to be repaired? I'm really sick in my stomach about all this folks... I really just don't know how the media is taking this hook, line and sinker!

I know that the House approved $819 Billion, but I believe that by the time the Senate gets finished with it the Bill will have grown to $890 Billion, or close to $900 Billion as I sate above! When it's all said and done, I bet there's some pork there... And some money allocated to things you wish you knew about and could vote on before it was passed... But wait, we can't vote on these things, we can only vote for the dolts that passed the Bill... Hey... It's your representative, folks... We The People put them there!

OK, I had better stop there... Let's talk about the Fed... Well, the Fed's FOMC decided to keep rates unchanged, which was the consensus view, and made a statement that the "economy has weakened further"... NO DOOKIE SHERLOCK! What a bunch of dolts! We ALL KNOW THE ECONOMY HAS WEAKENED FURTHER... WHAT WE WANT TO KNOW IS... WHAT ARE YOU GOING TO DO ABOUT IT? Well, for that, we go to our correspondent on the scene... Hello? Are you there? Yes, I'm here, and I'm with Fed Chairman Ben Bernanke... Mr. Chairman the folks at home want to know what the Fed is going to do to stimulate the economy, as apparently, cutting interest rates to near zero hasn't done the trick... Ahem... Let me clear my voice, because I want the folks back home to hear this clearly... We, at the Fed, are prepared to buy long-term Treasuries, to get private interest rates down, which we believe will reduce the spreads in Treasuries and mortgage backed securities. If we can get mortgage rates even lower than the multi-decade lows we are now seeing, then we believe we'll have stimulated the economy... Thank you Mr. Chairman for you time...

Well... I'm of the opinion that should the Fed begin buying long-term Treasuries, which in reality, I believe they have been doing all along, through their offshore accounts (this is all conspiracy thoughts folks, this does not exist according to our leaders)... But... If they do come out in the open and do it, then I believe we should move to abolish the Fed!

And... I told you yesterday that it would be nice if the Fed spilled their guts, and told us everything... What they were doing, how they were going to do it, how much of it will they use, and how they will monitor it... But that didn't happen, of course! Keep us in the dark, right? Because we're not as intelligent as them, right Fed Heads? Well, I don't know what schools they attended to learn their economics and communications... But, my small little local school taught these things better than theirs!

OK, I had better go on to other things before I get in trouble with the legal beagles... The Reserve Bank of New Zealand (RBNZ) did cut rates yesterday, as I suspected they would... But the went even further with their rate cut than I had forecast. Recall, that I said earlier this week that the RBNZ would probably cut 100 BPS? Well, they cut 150 BPS! WOW! Talk about cutting into a fat hog! That pushes the total rate cuts since July 2008, at 475 BPS! RBNZ Gov. Bollard had a lot to say afterward, and I don't have the time or space to give you everything he said, so... Here's a snippet... "Globally, there has been considerable policy stimulus put in place and we expect this to help bring about a recovery in growth over time. However, there remains huge uncertainty about the timing and strength of a recovery."

The news knocked the stuffing out of kiwi, which had rallied yesterday to 53+ cents... Kiwi, is now at 52-cents...

All of the currencies are off their levels from yesterday, as the dollar strength has hit every currency...

OK... I just read an interview that Jamie Dimon, CEO of JP Morgan Chase gave at the World Economic Forum in Davos, Switzerland... This is interest stuff folks, and I wasn't planning on coming across this, so the Pfennig is going to be a bit longer today than usual, by the time I highlight Mr. Dimon, and then the other "quotes" I promised at the start... So... With no further ado... Here's Jamie Dimon...

"Banks gave consumers weapons of mass destruction by loading them up with debt." WOW! OK, there's more... "We gave them the weapons of mass destruction to borrow too much. I don't blame them, I blame the CEO's of their own businesses." Then there's this... And this is the good stuff...

"To policy makers, I say where were they? They approved Basel II that didn't work, (these were the rules governing how much capital banks hold to back their loans) they approved all these banks. Now they're beating up on everyone, saying look at these mistakes, and we're going to come and fix it." And he ended with this ditty... "God knows, some really stupid things were done by American banks, and by American Investment Banks."

WOW! Mr. Dimon probably won't be getting a Christmas card next year from his fellow Bank CEO's! But I love his doing his best Aaron Neville, and telling it like it is... Don't be ashamed to let your conscience be your guide...

Of course, I have to say right here, right now, that the bank I work for, EverBank, didn't and doesn't fall into that category of American Banks that Dimon was talking about! We didn't "play the subprime, creative loans game" and we didn't get in bed with these guys either! And... I'm sure there are quite a few American Banks that are in our category... But the spotlight always gets shined on the "bad apples"...

OK... Now that I've completely gone off my pre-typing path... Let me get back on that path, and go to my two quotes for today... I believe that I ran this Thomas Jefferson quote before... But the Marx quote is a real zinger!

"If the American people ever allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property, until their children wake up homeless on the continent their fathers conquered ... I sincerely believe that the banking institutions having the issuing power of money are more dangerous to liberty than standing armies." --Thomas Jefferson

And then this... "Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism"
-Karl Marx, Das Kapital, 1867

Boy oh boy! This is getting very strange, eh?

And then there was this... I can't understand why the public isn't gathering their pitchforks and rakes on this one... Or maybe, the media didn't tell them about this... Hmmm. That's probably more like it... Any way... Here's what I'm talking about...

Bloomberg reported this... American International Group Inc., the insurer that nearly collapsed because of losses on credit- default swaps, offered about $450 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation.
About 400 workers at the financial products unit may get the money in two installments, said the people, who declined to be named because the payments were confidential. The business was responsible for about $34 billion in write downs since 2007 as the market value of swaps AIG sold to banks plunged amid the subprime mortgage market collapse.
The payments bring to more than $1 billion the amount AIG has committed to keep its employees from leaving. The New York- based insurer took a federal bailout in September to avoid bankruptcy and is selling units to repay the government. AIG disclosed the existence of the unit's retention program in regulatory filings, including a quarterly report in August.

Geez Louise! I'm going to go yell at the walls right now! Serenity Now!

OK, I'm back now... Hey!, I don't want to be like this! I'm really a fun loving person! But since you don't get this stuff on your cable news or national news or even local news, I'm here to deliver that! I can't help but get all caught up in the doltness of these people!

We'll get more data today here in the U.S.... Weekly Initial Jobless Claims, and Durable Goods, and New Home Sales... None of this will be good for the economy...

Currencies today 1/29/09: A$ .66, kiwi .5210, C$ .8235, euro 1.3120, sterling 1.4320, Swiss .87, rand 9.9220, krone 6.7150, SEK 8.02, forint 218.40, zloty 3.3325, koruna 20.9050, yen 89.60, sing 1.5025, HKD 7.7566, INR 48.98, China 6.8380, pesos 14.02, BRL 2.2580, dollar index 84.59, Oil $41.09, Silver $11.78, and Gold... $878.70

That's it for today... The customer call in conference yesterday went well... We didn't have that many callers... I guess people didn't want to hear what I had to say! My poor little buddy Alex, had to spend most of yesterday and into late last night, in the emergency room at the hospital, as he did a number on his nose in a sledding accident. He'll be fine... Nothing new for boys! That will put the kyboshes on basketball and wrestling for this year though... He won't be happy about that! Don't know what I was thinking the other day when I said "6 more weeks till pitchers and catchers report for spring training"... We're about 2 weeks away! YAHOO!, not that sounds better than 6 weeks! Then... Before we know it, March will be here, and my annual sojourn to Florida... YAHOO! OK... I'm doing good on time this morning, so I must have been typing faster than normal! HA! Any way... Time to go, I hope your Thursday is Thunderin'!

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

A Bailout For The Big 3...

Chuck Butler — Wed, 10 Dec 2008 14:44:31 GMT

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

Now in Print: What You Need to Know About America's Economic Crisis

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

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

....

In This Issue..

* Another currency rally....

* Bank of Canada cuts 75 BPS!

* A Santa rally?

* What Asia thinks...

And Now... Today's Pfennig!

A Bailout For The Big 3...

Good day... And a Wonderful Wednesday to you! We didn't get that snow I talked about yesterday, I guess the milk and bread on the grocery store shelves are safe today! Had to get "all dressed up" last night for a function that brought together a ton of old Mark Twain Bank people, among others. It was great, but I stood for two hours and I'm paying for it this morning... UGH!

OK... Another day of "healing" for the currencies, as the 1.29 handle was achieved and held on to in the overnight markets. Slowly... Like sand through the hourglass, these are the days of currency healing! HA! That show, Days of our Lives, was burned into my brain as a kid, as it was my mother's fave soap.

The single unit was higher within the 1.29 handle overnight than it is right now, as it has given back a bit of ground on the news that a European Union Commissioner, Buti, said that, "economic indicators point south very badly." This is strictly, jawboning to keep the euro's move VS the dollar in check, folks...

The Bank of Canada (BOC) did cut rates yesterday 75 BPS... You may recall me telling you yesterday that the "experts" thought the cut would be 50 BPS, but I thought it would be 75 BPS... Maybe, one day, these surveys of "experts" will include the Pfennig writer, as he seems to be more "on target" than the current "experts"! Now, Chuck, who would you be referring to here? HA!

I also said yesterday that I didn't think the markets would care, and they didn't, as the larger rate cut did little to hurt the loonie. In fact, the loonie rallied a bit on the news!

Again, I don't understand the mentality here with these Central Bank rate cuts... It's not the cost of the credit that's keeping the credit crisis all locked up, it's the availability of such credit / money! So... Here's a memo to Central Banks around the world... "STOP ALREADY!" All you're are doing is inviting inflation into your economy, and debasing your currency!

That glimmering light that I talked about the other day for the Credit Crisis is getting smaller all the time, as the Big 3 still don't have their bailout from the Gov't (read taxpayers)... It now looks as though it could get done today, but at a much smaller figure than previously discussed. It now looks as though the Big 3 will get $15 Billion and they had better smile and say "thank you very much" as they leave the room!

It also looks like the Big 3 will get the "Car Czar" that they so desperately fought to keep from looking over them. The "Car Czar" will have the power to call Chapter 11 on GM or Chrysler should they not deliver a sound plan by the end of March. Geez Louise, why do they get 4 months to some up with a sound plan? They should have had one to get the funds to begin with! OK, I had better stop there, I'm really pounding the keys right now... I think I'll step away for a minute and cool off...

OK, I'm back now, hope you didn't miss me, or that I was away too long! No wait, this is text, you have no idea how long I was gone! Silly me!

You know... I was thinking aloud in my car yesterday, and saying to myself that it sure looks like all those pundits that called for a breakup of the European Union by the end of the year, will have to put their tails between their collective legs, and fade away... You know, the European Union (EU) had more pressure on them in 2005, when the French voted no on the Constitution, and other things, and they held steadfast then, and if they could it then, then this little tiff with Spain and Italy will pass... These pundits like to point to the problems that Italy is experiencing... And I say..."What's so new about that? Italy has had problems since I've been following currencies (1985 for those of you keeping score at home)! I truly believe that Italy and Spain like to complain about the European Union and the euro, but when they get behind closed doors, when they let their hair hang down, they thank their lucky stars that they were included in the Euro Club!

The boys and girls over at Bank of America (BOA) believe they are seeing the dollar repatriation flows waning... Now, I wonder how many research people they employ over at BOA, when all it would take is for one of them to read the Pfennig, to see that I said all that yesterday! Any way... Let's listen to what BOA had to say about this... "The repatriation demand for the dollar may have run its course, we retain our core long euro-dollar exposure and add long euro-dollar exposure today"... Now... You would think that given the size of BOA that saying something like that could really "move the market"...

But, given the markets "don't care" attitude until the credit crisis unlocks, I understand why it didn't! The BIG POINT here is that we could very well be seeing all this dollar repatriation end. And... Like I said Monday, the risk takers were slowly dipping their toes back into the waters which is what it will take to get the currencies and precious metals on the rally tracks again. But, put these two things working together, and voila' you've got the makings of what could very well be a Santa Rally...

The boys over at the Bank of Japan (BOJ) are at "it" again... Mom... He's doing it again! He's looking at me! Mom! He's got his hand on my side of the car seat! OK, I'll stop there... But the BOJ was "jawboning" again in an attempt to keep the yen from strengthening further VS the dollar. BOJ Gov Shirakawa reminded the markets last night that the Ministry of Finance has the option of intervening if necessary... The Ministry of Finance (MOF) are the signal callers for the BOJ, and they are the ones that determine if intervention is to come into play. For new readers... BOJ intervention means the Bank sells yen in the markets to keep it from getting too strong.

In the currency world, this is called a "dirty float"... And the MOF and BOJ like to keep it "dirty"...

OK, I was laughing when I wrote that last bit, but notice I didn't carry on... Maybe I'm growing up! HA!

Down Under in the South Pacific, Australia saw a very nice rise in Consumer Confidence of 7.6%, adding on to November's 4.3% gain. The index collapsed this summer, but with the rate cuts the Reserve Bank of Australia (RBA) have instituted, it seems to be rounding back into shape.

In New Zealand, Reserve Bank of New Zealand (RBNZ) Gov. Bollard, gave a speech titled "Everyone needs to play their part." In the speech, Bollard, reminded everyone that New Zealand's inflation rate is still very high (5.1%). Hmmm... Was that the "wink and nod" that interest rates are not going to go much lower? I think it was folks.. But I guess it all depends on if the rest of the world continues to think that by cutting rates they will unlock the credit crisis!

Both of these things for Aussie and kiwi could underpin the currencies at current levels...

And another "Commodity Currency" the Brazilian real really put on the Ritz yesterday with a very strong rally... Just another sign that the risk takers are dipping their toes again...

OK... I'll slide away from the currencies for a minute to talk about a news article that one of my fave writers, William Pesek, provided to Bloomberg, titled: China Will Be Happy Geithner Isn't a Goldman Guy... Here are some snippets of the article that can be read in its entirety at: http://www.bloomberg.com/apps/news?pid=20601039&sid=aa4nka49enf0&refer=columnist_pesek

"Why does Goldman Sachs run your government?"

After seven-plus years in Asia, I'm no longer startled by this question. It was posed to me yet again recently -- this time by Kuala Lumpur taxi driver Sumit Kotari.

"What's wrong with America is that it's run by investment bankers, mostly from the same bank," the 49-year-old Malaysian said. "How can Americans stand for it? Is Barack Obama from Goldman Sachs, too?"

It has been reported in Asia that Neel Kashkari, assistant Treasury secretary in charge of the Troubled Asset Relief Program, worked for the same New York-based investment bank. President-elect Obama's decision to seek advice from other former Goldman Sachs bigwigs, such as Robert Rubin, also grabbed attention.

Even the guy helping choose a replacement for Timothy Geithner at the Fed Bank of New York came from Goldman Sachs. It makes one breathe a sigh of relief that Geithner, who will be the next Treasury secretary, doesn't have Goldman Sachs on his resume.

The point here isn't to pick on Goldman Sachs. Yet it is seen by many in Asia as the gold standard of investment banks. Its name also is a byword for the perception of incestuous ties between Wall Street and Washington."

OK, I'm back now... The point of the discussion is to acknowledge that to Asian, it appears that Goldman Sachs runs our country... Now, that may be perception, but as they teach you perception is reality. And you have to wonder if the Asian Central Banks are shaking their heads at what we're doing, and how we're doing it... Now, some might say, "Who cares what the Asian Central Banks think of what and how we're doing it.?" Ahhh grasshopper... We all have to be very cognizant of what the Asian Central Banks think about us, because, you see... They hold most of our I.O.U.'s and they could make things very messy for us any time they wish!

So... How about the Illinois Gov. getting arrested yesterday? Could it be two Illinois Governors incarcerated? That whole story is pretty amazing that someone would do what he is alleged to have done, knowing that his phone was tapped!

Ok enough of that! We'll see the Monthly Budget Statement / Deficit for November, today... Look for it to explode!

Currencies today 12/10/08: A$ .6590, kiwi .5465, C$ .7950, euro 1.2950, sterling 1.4830, Swiss .83, ISK 261, rand 10.21, krone 7.0475, SEK 8.1650, forint 203.50, zloty 3.05, koruna 19.99, yen 92.60, baht 35.50, sing 1.5010, HKD 7.75, INR 49.01, China 6.8835, pesos 13.50, BRL 2.4725, dollar index 85.71, Oil $43.80, Silver $10.02, and Gold... $792

That's it for today... Got a chance to talk to my old friend, and softball teammate, the wiley old veteran Jack last night. Talk about someone that doesn't seem to age... And someone that loves Missouri Football more than me, Dean... And my good friend and colleague, Chris Gaffney, helped me out BIG TIME, by going out in the rain and moving my car up next to the door for me... What a class guy! My little buddy, Alex, is still in the sick bay, poor guy... I was remiss in not mentioning the retirement of Greg Maddux the other day... There's another class guy! One more day of getting up with the milkman, and then I'm off to see the Wizard... Well, not really, just vacation... I do go to the eye doctor again next week while I'm on vacation. Unfortunately, I've had no improvement in my left eye... Time to get movin'! I hope your Wednesday is Wonderful!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

It's All About The Jobs Jamboree...

Chuck Butler — Fri, 05 Dec 2008 14:49:30 GMT

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

Now in Print: What You Need to Know About America's Economic Crisis

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

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

....

In This Issue..

* Currencies rally then fall back...

* Rate slashers!

* Following Japan? Let's hope not!

* Canada's woes mount...

And Now... Today's Pfennig!

It's All About The Jobs Jamboree...

Good day... And a Happy Friday to one and all! A Fantastico Friday! A Jobs Jamboree Friday! Anything else, Chuck? No, I don't think so, I'll stop there... It's all about the Jobs Jamboree today. It's all about finding out just how badly the rot on the labor vine has gotten... The Weekly Initial Jobless Claims, yesterday, remained above 500K per week, which doesn't bode well for next month's data... But first... November's Jobs Jamboree on the docket!

The "experts" have forecast a -335K drop in jobs for November... But, your old Pfennig writer believes that this forecast is low. I think it will be closer to -375K... The reason I say that is the employment piece of the ISM report that printed the other day... The employment index of that report showed some real serious rot on the labor vine... I read a report last night, where an economist was attempting to show how the report should read -750K... As bad as -375K is, I don't think the Bureau of Labor Statistics (BLS) would have anything to do with printing a -750K report!

The currencies rallied a bit yesterday, but settled down for a long winter's nap in a tight range overnight ahead of the Jobs Jamboree data. The euro saw the bright side of 1.28 yesterday, but as I said, the range became tight overnight... You see no one wants to take a position on either side of the ledger ahead of this crucial labor report this morning. And the fact that Factory Orders in Germany dropped last month, isn't helping the single unit this morning after yesterday's rally.

OK, enough on that! Yesterday, I left you with the Bank of England (BOE) and the European Central Bank (ECB) meeting and us waiting for their rate announcements, which came about 1/2 hour after I hit the send button. The BOE cut 100 BPS (1%) from their rates, while the ECB opted for 75 BPS (3/4%)... I really do feel as though the BOE has taken a page from the U.S. and Japan's book on how to deal with all this, and is on the road to zero percent rates. I don't feel the ECB will go there... While they may go lower in the Eurozone, I don't think ECB President Trichet, has any intention of following the "Japanese model"...

Trichet said something yesterday that made me believe that he won't become Trichet-san... Trichet said that, "we mustn't confuse Deflation with Dis-inflation" He went on to also say, "The ECB will NOT get trapped at rat levels too low"

So... We had Australia drop 100 BPS, New Zealand drop 150 BPS, Sweden drop 150 BPS, U.K. drop 100 BPS, and Eurozone drop 75 BPS all this week, and for the most part, none of these currencies got taken to the woodshed for debasing their currencies by such large margins... Normally, a 25 BPS rate cut can cause a currency some major problems... But nothing here... So... Why... Do... I... Think... This... Is... Happening...? Hmmmm... It's probably a case of unconventional measures are seen as not working, so conventional ones have little chance. And... If you really get to the root of the credit crisis problem... It alls circles around the fact that the availability of credit not the cost of credit is the issue.

But that doesn't stop these Central Bankers from slashing rates at an alarming pace, eh? I think these Central Bankers are quite aware of the fact that the markets' focus has become so myopic on the Credit Crisis, that they could do a handstand on their desk while sticking out their tongue while announcing a rate cut, and the markets wouldn't notice...

PIMCO (the world's largest bond dealer) issued a report on pound sterling yesterday, that's quite interesting... The writer, Myles Bradshaw, a money manager for PIMCO, said in a report yesterday, that, "if you were shorting the pound, now is the time to reduce those positions"... Hmmm... You see Mr. Bradshaw makes a strong / good point about how interest rates in the U.K. have been brought to levels not seen since Winston Churchill was around. And that may be enough to keep the U.K. economy from falling off a cliff...

Well, that goes against my earlier call that I believe the BOE will follow the Japanese model, and cut rates to near zero. I say this, because the U.K. has major problems folks, and I don't think having rates at 1951 levels, has anything to do with how bad things will get here...

The China- America talks ended yesterday, with an agreement between the two giant countries to provide $20 Billion to fund trade and agreed to deep financial ties... However, the two couldn't leave a meeting without needling the other... U.S. Treasury Sec. Paulson, urged China to continue to allow currency flexibility... And the Chinese told the U.S. to: "tackle your own problems, such as excessive consumption and debt" You can't believe how that made me chuckle... Our leaders won't talk about excessive consumption and debt, (I do, and have for years!) but the Chinese go right for the wound, that the U.S. tries to place a band-aid on... And they nailed it!

Did you see this news yesterday on the Fox news website... "Israel is reportedly drawing up plans to strike Iran's nuclear facilities and is preparing to do so without U.S. backing." Now... I'm not going to get into the what's and so ons here... I merely mention this to point out something... After the news story hit the website, Swiss francs rallied strongly, which told me that it still holds the "flight to safety" badge... Unfortunately, though, Gold did not rally... Hmmm... Very disappointing...

OK, now that there was some denials of the story, the Swiss franc has given back it's gains yesterday...

There was a story reported in the Wall Street Journal yesterday that certainly is a sign of the times, in my opinion... Here you go, and see if you get the same felling of this sign of the times that I did...

WSJ... "U.S. retailers reported some of the weakest sales figures in years for November, which included the Black Friday kickoff to the holiday shopping season.

Gap reported a 10% drop in same-store sales, while Macy's fell 13% and Nordstrom dropped 16%. Target reported a 10% drop, worse than expected, though Black Friday sales were stronger than the rest of the month. But Wal-Mart topped estimates on increased store traffic and purchase size."

I've had a lot of questions over the years about PPP... Well... PPP is Purchasing Power Parity, and is most well known in the Economist Magazine's Big Mac Index, where the monitor the price of a Big Mac all over the world, with the idea that if a Big Mac is more expensive in Europe than it is in the U.S. the European currency is overvalued by the percentage of the Big Mac price difference. Well... You know, this is all good on paper, but you have to look at what's going on in a country first... If for instance the wages of Europeans is on a whole higher than that of Americans, then their standard of life is "more expensive" and therefore the price increase in the Big Mac means nothing to me...

OK, so, now that I've gone through that exercise, it's still a good thing to check PPP just to make certain things don't get out of whack by too much of a margin... And in that light, my old Corp. FX guru, Ashish, sent me a note about PP yesterday, that showed the euro still overvalued VS the dollar, but by a far less amount than a few months ago. It showed the pound to be undervalued, along with the Swedish krone... Hmmm... Oh, well, none of these are too out of whack... And... As I told a crowd of people at one of the FX University Tours that I now use the Ipod index instead of the Big Mac index...

The lawmakers in Japan, have taken a page from the U.S. book and announced that they are looking at the possibility of allowing tax breaks on profits made overseas and brought back to Japan (repatriation)... You may recall that in 2005 the U.S. did this same thing, and really did a bang up job of propping up the dollar for that year... Should this law pass in Japan, it could very well spell a period of further yen strength. I'll keep an eye on this...

The news from Canada just seems to get worse all the time, which has led to a large drop in the loonie in the past month. This morning, it was their version of the Jobs Jamboree, which showed a much larger than expected drop in jobs... -70K VS the -25K forecast... Take the Commodity prices collapse, the low interest rates, the parliament suspension possibility, and now a hickey on the economy with job losses, and you can see why the loonie has dropped by almost 6% since 11/21... UGH!

Speaking of Commodity prices... Our friend, Jim Rogers, was speaking again yesterday and made some great points regarding Commodity Prices... Here are a couple of quips from Jim Rogers... "Commodities will be the place to be if and when we come out of the downturn. The only thing where fundamentals are unimpaired are commodities. Farmers can't get loans for fertilizer now. Nobody can get a loan for a zinc mine. So we are going to have some serious, serious supply problems before too much longer."

And more importantly for some folks to know... Jim Rogers said that he, "hasn't sold any commodities since the bull market began."

We had the TV on the automakers pleas to lawmakers yesterday for bailout money... At one point it was really sad, as one of the Big 3 CEO's, which by the way did NOT take private jets to D.C. this time as they did the last time, and really ticked some people off... This time they took hybrid cars) I think it was Ford's CEO, was pleading his case, and the look on his face was so sad, it looked like he was saying, "please dad, can I have my allowance early, I've got this important date and she expects me to take her someplace nice"... Please dad? It was sad...

Someone in the news said that while everyone is ranting about the bailouts, it certainly seems to be a better course of action than to allow 100's of thousands of autoworkers to lose their jobs... I guess he has a point there... But, who's fault is this? Mine? Did I make awful choices the past 30 years regarding cars and how they were built, and what to build? I was telling Ty Keough the other day that I have never owned a Big 3 made car that didn't have a major problem at one point... Transmission, engine, you name it I experience it, with all three! Maybe I was the exception, the black cloud if you will, but you can see how my view would be shaded here...

What? You didn't think I was going to go to the Big Finish without talking about something controversial did you? HA!

So... Which way will the currencies go with a nasty Jobs Jamboree figure? Well, in the days before the Trading Theme was put into place... It would have meant "curtains" for the dollar... But with the Trading Theme allowing dollar strength the deeper, darker, and more dangerous the data gets, one would think that we would see more dollar strength, with a nasty Jobs Jamboree figure today.. We'll have to go into the weekend on that note folks... A nasty Jobs Jamboree...

Currencies today 12/5/08: A$ .6420, kiwi .53, C$ .7755, euro 1.27, sterling 1.4685, Swiss .8250, ISK 261, rand 10.27, krone 7.2050, SEK 8.34, forint 209.90, zloty 3.06, koruna 20.3315, yen 92.10, baht 35.60, sing 1.5220, HKD 7.75, INR 49.60, China 6.8810, pesos 13.65, BRL 2.5380, dollar index 87.03, Oil $44.20, Silver $9.47, and Gold... $769.40

That's it for today... Lots of goings on this weekend... We've got St. Nick's Day tomorrow, the Big 12 Championship Game for my beloved Missouri Tigers, Sunday is Pearl Harbor Day, the first "day of infamy" , all this, and I'll be heading to Jacksonville for the weekend! I'll be back in the saddle again on Monday, no worries! I received some very sad news yesterday, my best friend, Mike, whom I've known since 2nd grade (that's 1962) called to let me know that his mom had passed away. Yes, she was old, but the thin that was sad was that she was diagnosed with cancer in the fall, and didn't make it to Christmas. Again, this hits me hard, because I've been lucky enough, and with the good grace of God, been able to live with this disease. OK... No need to stay down here, it is a Friday, which means the weekend is ahead! Mary Owens just walked in, so I must be late! Time to go, and hopefully have a Fantastico Friday... Hope yours is Fantastico too!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Buying Buicks Instead Of Bonds...

Chuck Butler — Thu, 04 Dec 2008 15:04:11 GMT

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

Now in Print: What You Need to Know About America's Economic Crisis

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

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

....

In This Issue..

* Currencies trade in a tight range...

* Another new plan to help homeowners...

* RBNZ and Riksbank slash interest rates!

* The Governorator speaks!

And Now... Today's Pfennig!

Buying Buicks Instead Of Bonds...

Good day... And a Tub Thumpin' Thursday to you! It's going to be a Tub Thumpin' Thursday in Europe for sure, given the Central Banks of England and the Eurozone are meeting and will probably cut interest rates to levels that haven't been seen in a while! The automakers are in deep dookie folks, according to them, and are in need of funds / bailout money right now! The head of Ford believes his company can withstand the recession, but fears for GM and Chrysler... The UAW has made some concessions to help the automakers, but it could be a case of too little, too late...

Well... Another day of doldrums in the currencies, with the bias, what little there is, to buy dollars. The stock jockeys received some manna from heaven yesterday when it was announced that the U.S. Treasury Department is considering a plan to halt the slide in home prices that would lower mortgage rates using Fannie Mae and Freddie Mac. The plan could reduce rates for newly issued loans to as low as 4.5%.

Here's a snippet of the story that ran in the Wall Street Journal yesterday..."Government officials are under pressure to stem foreclosures, which underpin much of the current financial crisis. Treasury has struggled for months to come up with a plan that would ease the market without appearing to bail out homeowners and lenders.

Under the plan, Treasury would buy securities underpinning loans guaranteed by the two mortgage giants, which are temporarily under the control of the government, as well as those guaranteed by the Federal Housing Administration. Fannie and Freddie guarantee a large proportion of all new home loans made in the U.S."

OK... So they came up with a plan... I have to think about this a bit, as I see the "good" it could do, but there's always a "bad" to these things too, and once again, I'm sure it circles around the fact that Gov't is going to be in the mortgage business... We inch closer and closer, all the time to socialism folks... It all began when they mandated that in a free country we HAVE to wear seat belts... Now don't get me wrong, I wear them because I believe it's the safe / right thing to do, but shouldn't that be MY choice and not the mandate of the Gov't? Any way, please don't flood my email box with notes telling me how wrong I am on this... It won't help, this is what I believe, period!

Whew! I really went off on a tangent there, eh? OK, before you begin to think I'm a nut case... Let's get back to currencies and economies!

The Reserve Bank of New Zealand (RBNZ) did cut rates, as I suspected, by 150 BPS yesterday... This brings the total of rate cuts by the RBNZ since September to 325 BPS! I think the RBNZ truly believes that global inflation is taking a major step backwards... And it probably is to a degree, but the RBNZ had better be ready to go the "other way" once this slide in inflation tips back... Of course I don't believe we'll see that for some time (6-months at least), so go ahead and frolic in the sun with rate cuts while you can RBNZ... Just be ready, that's all I'm saying...

Bond holders of New Zealand issues have to be frolicking in the sun for sure, and their "locked in yield to maturity" is now, at least 150 BPS, if not 325 BPS higher than new issues, which makes their bonds "more valuable"...

U.K. Prime Minister Gordon Brown unveiled a scheme to allow borrowers experiencing a temporary loss of income due to the downturn to defer mortgage interest payments for up to two years. The U.K. Gov't will guarantee the lenders against the risk of loss from the deferred payments... That's going to be quite interesting to see how that plays out... But shoot Rudy, if the Gov't is going to let you go Ollie, Ollie, oxen free on your mortgage payment for two years, with NO bad stuff happening to you and your credit, I can see the mortgage holders lining up on the right for this!

The U.S. Fed Reserve's Beige Book that usually gives us an indication of what to expect in the next FOMC meeting, which will take place December 16th, printed yesterday... And it could be probably listed on Amazon under "horror" books! Put away the sharp objects folks, for it's not just me ranting about these problems any longer, the Fed Reserve, your Central Bank, you know, the people that are supposed to be protecting the value of our currency, by providing price stability, and full employment (and are failing miserably at both!), now are ADMITTING that the problems are real... Here's a short review from the Beige Book...

Based on data collected prior to November 24th, the Beige Book painted a grim picture of the outlook for growth in the fourth quarter. Lenders tightened standards for loans and lending contracted over the period. Several districts noted increases in delinquencies and defaults.

Consumer spending, which played a lead role in the growth downturn in the third quarter, was reported to have weakened.

Hey, this little tidbit came across my screen yesterday... The number of days that the S&P 500 has moved up or down by more than 5% during the Trading Day...

1950 - 2006 34 days...

2008 44 days! With 22 of them coming since October 1st!

Talk about volatile! WOW!

OK... One of my fave economic writers, Caroline Baum, wrote a piece on Bloomberg that caught my eye... Hey! That makes sense now, since I really can only see good out of one eye! Anyway... Here's a snippet of the story by Caroline Baum, titled, "Bernanke should buy Buicks instead of bonds"...

"It tells you just how far we've come when the headline, "Fed May Buy Treasuries," gets a reaction.

Buying Treasuries is the age-old way of adding reserves to the banking system, setting in motion the money-creation process.

Historically, these so-called permanent open market operations were designed to have no impact on the shape of the yield curve. The goal was simply to satisfy the banking system's demand for reserves.

Treasury securities used to make up the lion's share of the Federal Reserve's balance sheet. No longer. As of Nov. 28, the Fed held $476 billion of securities carrying the full faith and credit of the U.S. government, less than a quarter of its balance sheet. One year ago, the comparable figures for the Fed's Treasury holdings were $780 billion and 90 percent.

When the banking system starts functioning again, and the Fed has to mop up all the excess reserves banks are holding instead of lending, the reality is "it doesn't have enough Treasuries," said Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago.

Banks were holding $605 billion of reserves in excess of the amount required as of Nov. 19. "Maybe the Fed will have to raise reserve requirements," Kasriel says. "It'll be 1937 all over again."

Many Great Depression scholars, including the late Milton Friedman and Anna Schwartz, point to the Fed's doubling of reserve requirements in 1936-1937 as triggering the second leg down in the economy, which was recovering in the mid-1930s."

OK, back to me... All this talk today is causing me to search for something "fun" to talk about, because it's all been gloom and doom, eh?

Sweden's Riksbank announced a 175 BPS rate cut this morning. WOW! Another Huge cut, makes you think that the Bank of England and European Central Bank might have something up their sleeves too! And in Canada, their Central Bank doesn't meet until next week, but Canada has other problems going on, as there are rumblings about a suspension of Parliament...

The Governorator, Arnold Schwarzenegger, has called a Fiscal Emergency for the state of California... I feel like he won't be the only governor to do so... You see, the Federal Gov't is giving all it's McLovin' to Financial Institutions right now, and the States are hurtin' for certain... The states that have for decades told the Fed Gov't to "get out of their business", will now be knocking on the Gov't's door, and be the next in line to ask for bailouts...

And then, one final thought before going to the Big Finish... I saw this yesterday, and almost fell out of my chair! (now that would not be a good thing!) Let's see what your take is on this....

I know that sure seemed as though the Fed and Treasury had found every last way of pushing off debt from one generation to the next, BlackRock's Peter Fisher has thought of a clever new one: a 100-year treasury bond. That way, the government can keep borrowing money to finance today's bailouts, and won't really have to start bleeding cash until after most of us are dead and gone...

Let's hope that thought by Peter Fisher doesn't even cross the minds of Paulson and Bernanke!

Currencies today 12/4/08: A$ .6470, kiwi .5365, C$ .7945, euro 1.2640, sterling 1.46, Swiss .8245, ISK 261, rand 10.2585, krone 7.17, SEK 8.3430, forint 207, zloty 3.0650, koruna 20.3425, yen 92.55, baht 35.70, sing 1.5275, HKD 7.7510, INR 49.85, China 6.8820, pesos 13.62, BRL 2.4790, dollar index 87.22, Oil $47.16, Silver $9.57, and Gold... $769.35

That's it for today... The snow that was predicted for us yesterday failed to materialize... That's fine with me! Our office coordinator, Danielle, put up my little Christmas Tree by my desk yesterday after I left. My tree is decorated with Missouri Tigers stuff! It's beginning to look a lot like Christmas... (got you singing that song didn't I?) We've been in our office here for 4 years today (I believe)... And we already outgrew the space that seemed to be HUGE when we moved in... So, we'll be moving next door in 6 months... I sure hope we run out of space again in 4 years! I go to see my kidney doctor this afternoon. He's a delightful man, that I truly enjoy going to see... My darling daughter, Dawn, sent us pictures of Delaney Grace on Santa's lap... They were hilarious, as Delaney wanted no part of the Big Guy! I used to be the Santa at my older kids' school and in the neighborhood. (it's the one thing I DO have the body for! HA!) I kind of miss doing that, instead I just go and read The Night Before Christmas to Dawn's kindergarten class... The kids love it, I love it, and it's over in about 10 minutes! Sort of like the reading time for a Pfennig! Speaking of which... I need to go... I hope you have a Tub Thumpin' Thursday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Automakers Say They Need Funding Now...

Chuck Butler — Wed, 03 Dec 2008 14:54:31 GMT

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

Now in Print: What You Need to Know About America's Economic Crisis

Based on the eye-opening film, IOUSA is your guide to America's enormous economic crisis. You won't find a more concise and complete evaluati

In This Issue..

* Currencies trade in a tight range...

* China...

* Commodity prices to blame...

* "Safe" Treasuries?

And Now... Today's Pfennig!

Automakers Say They Need Funding Now...

Good day... And a Wonderful Wednesday to you! Well... I went "shopping" yesterday evening... At least I can say I did my bit to keep the economy afloat! HA! Thanks to all who sent along notes to me yesterday with kind words. I truly appreciate the kind words, you are all too kind! The automakers made their pleas to Congress yesterday, and they claim they are in deep dookie! GM says they need $4 Billion right now! And... The original $25 Billion figure has grown to $35 to $40 Billion...

The currencies were lifeless yesterday, with only a blip up in euros to 1.2740, only to give it back overnight. Aussie dollars (A$) rallied on the Huge 100 BPS rate cut news from the previous night, but at the end of the day, that was all but forgotten... It was as if the currencies did a Hans and Franz... Got all pumped up... But then turned into 100 lb weaklings again as the day turned to night.

Hey! I've written a bit about China this week, and the renminbi, and I must have scared quite a few holders of the currency, because, my trading screen is lit up with nothing but renminbi sell trades... Interesting... For the last couple of years, I tried to illustrate a picture that would show that owning Japanese yen, was a far better choice than Chinese renminbi... But, that fell on blind eyes... I see that UBS (Union Bank of Switzerland) believes that there "limited scope" for renminbi to drop much further, while Morgan Stanley believes we'll see a 10% drop in renminbi...

I think I will pin my colors to the UBS mast on that one... I just can't see why China would want all the negative press that would go along with allowing their currency to drop VS the dollar by 10%... The UBS research team said that, "Depreciation would likely invite criticism that china is a adopting a beggar-thy-neighbor type of policy, leading to possible protectionist responses from China's major export markets."

The NBER call on the recession brought out a lot of economists that are saying, "they knew it all along"... Yeah, right... However, there was one particular economist / analyst that has been saying the U.S. was in a recession for years! That's our old friend, John Williams of Shadow Statistics (shadowstats.com) I would love to show you the chart, but the Pfennig template doesn't allow me to do that... So, you'll just have to read about it!

Shadowstats.com uses a methodology that calculates GDP "old school" and when using this methodology, Showstats.com says that beside a brief blip into positive growth in 2004, the U.S. economy has been in negative GDP growth since 2000! I guess, John Williams won't be asked to be the keynote speaker at the NBER holiday party, eh? HA!

The U.S. data cupboard gets restocked today as we build to a crescendo on Friday with the Jobs Jamboree. Today, we'll see the ADP employment report, which as I've explained in the past, is a good indicator as to what we can expect in the Jobs Jamboree numbers. ADP is forecast to show a negative -200K job loss in November. Right now, the Jobs Jamboree is forecast to show a negative -325K job loss in November, so the ADP report is no sight for sore eyes over at the Bureau of Labor Statistics (BLS), who count the beans on the Jobs Jamboree. (and quite poorly, I might add!)

The "stupid" Productivity data for the 3rd QTR will also print... The old Fed Chairman, Big Al Greenspan, used to think the world of Productivity... He thought is was the "end all" in the "new economy" and the reason inflation stayed low, and he could keep rates low... Well, it wasn't the "end all", and the "new economy" was a bust, inflation wasn't really low, it was just "adjusted with changes to the CPI basket of goods to make inflation figures look low, and keeping interest rates so low, is the root of all evil for us today, now weren't they...

The awful fundamentals continue to mount for the U.S. and the dollar... But, as I've said over and over and over again, this dance is gonna be a drag... No wait! I have no idea where that Dave Clark 5 song came from! But, as I've said before, and will say again... These fundamentals are being swept under the rug and ignored, as long as the Credit Crisis has a tight grip on the markets. But, in my heart of hearts, I truly believe that all this bad data will come back to haunt the dollar, if the Credit Crisis can get some WD-40 applied to it, and unlock it.

The Reserve Bank of New Zealand's rate cut announcement should be coming forth this afternoon. Yesterday, I said I thought the RBNZ would cut 150 BPS... They very well could go more than 150 BPS, as their internal cash rate was the highest in the industrialized nations before all this rate cutting began in September.

I saw a piece of data that pointed out that Commodity Prices are down 18% YOY. OUCH! This is the worst performance for Commodity Prices since 1991. This is the main culprit in the poor currency performances of the Commodity Currencies like: A$, kiwi, loonies, rand, and real... (Australia, New Zealand, Canada, South Africa, and Brazil) This, and the unwinding of the Carry Trade, which hurt the high yielding Commodity Currencies, A$, kiwi, rand and real. So, a double whammy hitting these guys...

So... You have to ask yourself this question... Do you believe the Commodities are finished? Is this the end of their bull market that lasted only 7 years? Remember, our friend, Jim Rogers has documented that for over 200 years, Commodity Bull Markets averaged 17-22 years in length... And you might be saying but Chuck, you just said that Commodities were down 18% this year... Doesn't that tell you that it came to an end? Ahhh... Grasshopper... This Bull Market is a Trend, and trends are not "One-Way Streets" they have volatility, and they can see losses... But in the end, the underlying fundamentals return and the trend continues.

This is exactly what I tell you about the currency trends all the time... We had dollar weakness from 2002 thru 2004, then dollar strength in 2005, only to return to the underlying fundamentals in 2006, 2007, and 1/2 of 2008. Was the dollar strength in 2005 the "end of the weak dollar trend"? No! it wasn't... And I truly believe that the dollar strength since July this year will prove NOT to be the end of the weak dollar trend now!

You know, one of the things fueling dollar strength right now is the flight to safety in U.S. Treasuries... Oh by gosh, by golly, it's time for mistletoe and holly, and some straight talk about Treasuries. Everyone and their brother is buying Treasuries, which pushes the prices of the asset higher, and the yield lower... Big Ben Bernanke must be getting a bonus at the end of the year, for the Treasuries he sells... I say this because he announced the other day that the Fed is "considering" to buy long term Treasuries. (when you see "considering" just figure that it's a done deal!) Well, the Fed hasn't bought long term Treasuries since I was a kid, the Beatles were new, and I had hair!

For your troubles... A 3-month T-Bill will pay you 6 BPS... Folks, after the broker takes his pound of flesh to do the trade, you are paying the Gov't to hold your money! Want to go out further on the yield curve? OK... How about a 10-year Treasury? 2.70%, which again, will barely pay you anything by the time the broker charges you to do the trade. And those "long-term Treasuries" that Big Ben is "considering" buying? Where do I sign up for 3.2% yield in a 30-year Treasury... NOT!

It's crazy! I don't see the appeal... Especially considering the fact that when the Credit Crisis in unlocked, the unwinding in these "safe" Treasuries should be quite swift and push the price of those bonds down quickly, which will cause some investors to book losses, while paying the Gov't to hold their money...

These are just my thoughts... Market commentary...

OK, before I head to the Big Finish, someone asked me to talk about Swiss francs, as they think that Swiss Banking is going to cause a Big problem for the franc. Hmmmm... Could be, but I would think the Swiss, being a rich nation, would be able to deal with the problems that UBS and others have without causing too much of a problem for them and the franc. I still think of Swiss francs as a very good alternative to euros... Along with Norway, Sweden and Denmark... All surplus / positive balance of payments countries...

Oh, and this one last thing... I saw where mortgage applications more than doubled last week. This is probably the result of the announcement that the Fed will begin to buy mortgage backed debt directly... Yes, that's right folks... The Gov't may very well own your mortgage in the future... Now, as inviting as having a Gov't guaranteed loan might sound... Does anyone else find this arrangement to be creepy?

Currencies today 12/3/08: A$ .6435, kiwi .5295, C$ .7985, euro 1.2645, sterling 1.4735, Swiss .8265, ISK (no quote yesterday), rand 10.2825, krone 7.0850, SEK 8.2675, forint 207.25, zloty 3.03, koruna 20.18, yen 93.20, baht 35.55, sing 1.5290, HKD 7.7515, INR 50, China 6.8820, pesos 13.61, BRL 2.4190, dollar index 87.07, Oil $47.29, Silver $9.43, and Gold... $776.75

That's it for today... You know it's the Christmas season when Rudolf the Red nosed Reindeer is on TV... And tonight, it will be on TV for the 44th year! WOW! That's a looooonnnnngggg time! We're supposed to get our first "accumulation" of snow this afternoon. Since I walk with a cane these days to offset all the stuff they did to allow me to keep my leg, snow is no friend of mine... But, just another obstacle for me that I take in stride... We had a "full desk" yesterday, WOW! Everyone was in their places with bright shiny faces! This Saturday is St. Nick's Day... This is a great tradition in our house. My older kids, Dawn and Andrew, still put their shoes out side their room door until they moved out of the house! Saturday night is the Big 12 Championship. This will be the second consecutive year that my beloved Missouri Tigers play the Big Bad Oklahoma Sooners who have scored 60+ points in their last 4 games... I will be somewhere Saturday night, and not able to watch the game, which is probably a good thing. I'll record the game... Just in case... You never know! Time to go... I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

The NBER Finally Says So!

Chuck Butler — Tue, 02 Dec 2008 16:16:46 GMT

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

Now in Print: What You Need to Know About America's Economic Crisis

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

Get your copy today: http://rcm.amazon.com/e/cm?t=dailyreckonin-20&o=1&p=8&l=as1&asins=0470222778&fc1=000000&IS2=1<1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr

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

In This Issue..

* RBA cuts 100 BPS...

* It IS a recession!

* Paulson to ruffle feathers?

* Yen to rally hard?

And Now... Today's Pfennig!

The NBER Finally Says So!

Good day... And a Terrific Tuesday to you! Quoting one of my all time fave Christmas songs, Baby, it's Cold Out There! Winter has arrived, and I had to drag out the big heavy winter coat this morning. So... The seasons pass us, which is a good thing, because without winter, we couldn't have spring, and spring training!

OK... Right out of the starters blocks this morning, the Reserve Bank of Australia (RBA) pulled the rug right out from under the "high yield status" of their economy, with another HUGE rate cut overnight... This time, the RBA cut 100 BPS, to an internal cash rate of 4.25%. This brings the total since September to 300 BPS! WOW! Talk about effectively unwinding seven years of tightening! The statement following the rate announcement leads me to believe that the RBA is probably finished cutting rates for now... It will be a wait-n-see what happens globally, before the RBA entertains any talk of further rate cuts... At least that's my opinion!

Had a long talk with the legal beagles yesterday... The just don't like what / how I say things. This all stems from complaints we've received that claim that, "I give investment advice". Of course when the currencies were going up, up, up and away, in my beautiful balloon, for 6 years, we didn't hear of any complaints or claims that I was "giving investment advice"... Any way... It is what it is... I call it "Market Commentary"... And everything I say is "Chuck's opinion" not that of EverBank's and the last time I looked... Opinion is: not to provide investment advice or to manage your money - THOSE ARE DECISIONS THAT YOU HAVE TO MAKE.

Well... Now that I've said all that... Guess what finally happened yesterday, that I've said was the case since January? Yes, the National Bureau of Economic Research (NBER) finally came clean and said that the U.S. has been in a recession since December, 2007. Here's where I could go totally sophomoric on you and say, "I told you so!" but I won't, no wait, I already did! But, that's not my intention. I only carry on about his because recently I've had a few people tell me that I have no foresight, and that I merely react to things... Hmmm... I said this was a recession 11 months ago, long before the un-dynamic duo of Paulson and Bernanke would admit it, and long before your friendly neighborhood economist would admit it, and way before the NBER, the official arbiters of this call, admitted it.

The currencies remained in a very tight range yesterday with a bias to buy dollars, with the Huge stock sell off... The stock jockeys didn't fall all over themselves on this news, and that surprised me... Here's why... You see, most times, in the past, by the time the NBER gets around to calling a recession, the recession is either over or about to be over. So, knowing this, I figured the stock jockeys would be falling all over themselves, calling out that the light at the end of the tunnel could be seen...

The problem with that mentality is that not all recession calls by the NBER have signaled the end of the recession. Take... The recession that started in July 1981, which was announced in January 1982, and that recession ended 10 months later in November 1982. That's the scenario I'm afraid that we are going to revisit this time. I've already said that I believe 4th QTR GDP will show a negative -5% figure, so that's right now, and there's no way, the economy rebounds from a negative -5% drop in a heartbeat... This is going to be a long, protracted recession, but then, the song remains the same here for me... I've said that for a long time now!

We heard from Federal Reserve Chairman Big Ben Bernanke yesterday... Big Ben said "further interest-rate cuts are "certainly feasible," but he warned there are limits to how much such action would revive an economy likely to stay weak well into next year."

Mr. Bernanke also said the "Fed's powers don't end with the federal funds rate, and its ability to inject liquidity into markets through its balance sheets "remains effective."

I guess, that was the wink and nod that interest rates are going lower, and that... The Fed is going to continue to take in toxic securities on their balance sheet...

OK... There's a story on the news wires this morning that according to the charts at the Bank of Tokyo, yen could push to 79.75 VS the dollar. WOW! I think these chartists should go back and check their angles again, because that's a phenomenal move in yen, and I can't believe the Bank of Japan (BOJ) wouldn't be in the markets intervening (selling yen) to keep that from happening... But for what its worth... There you go!

Today, we'll see U.S. Treasury Sec. Paulson speaking about the U.S. / China economic strategy... Hmmm... I wonder if old Hank, will ruffle a few Chinese feathers with his speech, or will he go quietly? I think that after yesterday's .75% drop in renminbi, followed by a "regular" .30% drop last night, which puts renminbi at a 5-month low, that Paulson will be in a feather ruffling mood, especially, given the thought that he only has about a month left on his Treasury Sec. watch...

Remember about a month ago, I told you all about the early part of this decade, when the global economies were all fighting with recessions, and that the currencies were getting rewarded whenever a Central Bank cut rates to promote growth? I said then, that we could very well relive that scenario, and each time the RBA gives us one of those "mega rate cuts" I notice the A$ rallies... I guess, after we get through the next two weeks of Central Bank rate cuts, we'll have a better idea if this is going to play out again, but for now, it sure is beginning to look like it will...

Looks like the airlines are "hurtin' for certain" as I saw two different ads in the weekend paper for $49 flights... Southwest and American Airlines were promoting those discount flights... Of course there were tons of "terms and conditions" but the key here is the offer of discount flights...

I see from the U.K. Telegraph that AIG is beginning to sell off assets in an attempt to pay back the $153 Billion "loan" the Gov't gave them. And I see where JP Morgan Chase is going to lay off 9,000 employees. And that there are rumors that Britain is entertaining thoughts about joining the euro again... They can forget about that! The people of Britain are NOT going to vote for that to happen... At least that's how I see it from the cheap seats.

And yesterday... The piece of data that "told me" we were in a recession, the ISM (manufacturing) Index printed... And the index number fell by a greater margin than the "experts" forecast, and brought it to the lowest level (36.2) since 1982! Again, folks, this is a very "telling" piece of data, and confirms my belief that we're in for a long, protracted recession, as this looks like the early 80's recession and not those willy nilly ones of the 90's and 2000's!

The only data we'll see today, is the vehicle sales, which is expected to fall again... I see where Ford is going to announce that they are going to change their focus to small, fuel efficient cars instead of Trucks and SUV's, hoping that will "win over" Congress to give them a loan... I also see where Ford is offering "employee prices" plus a rebate for a select group of their cars... (that "employee pricing" is a bunch of bunk if my opinion any way!)

So, there's a collection of some of the items that's will drag on the U.S. economy... And eventually the dollar, once we get past this credit crisis...

Next on the rate cut block is the Reserve Bank of New Zealand, (RBNZ) who meets tonight... I think the RBNZ will play a game of poker with the RBA, and say..."I'll see your 100 BPS, and raise you 50 BPS"... That's right, I think we'll see 150 BPS rate cut from the RBNZ... Like I've said a few times now, rates are going lower all over the world folks, we should all get ready for this!

I sure ruffled a few feathers yesterday when I printed a comment from someone else about the Energy Dept... Folks... The point was simply that we don't need the Gov't operating private businesses, like banking... That's all it was...

The Retail folks are "happy" with the sales figures from the first weekend of Christmas sales... But, "happy" isn't "giddy"... And that's going to be a problem for the retailers this Christmas... They'll see sales... But they won't be "giddy"... And wasn't that a shame in NY where a Wal-Mart worker lost his life in a store opening stampede? That's a shame, it really is... It's not like Wal-Mart was giving stuff away free! I'll stop there, the story is sad enough...

Time to head to the Big Finish...

Currencies today 12/2/08: A$ .6480, kiwi .5345, C$ .8040, euro 1.2670, sterling 1.4940, Swiss .8290, ISK 230, rand 10.38, krone 7.0875, SEK 8.3175, forint 206.35, zloty 3.0160, koruna 20.2860, yen 92.20, baht 35.50, sing 1.5285, HKD 7.75, INR 50.14, China 6.8875, pesos 13.55, BRL 2.30, dollar index 86.85, Oil $49.23 ( I paid $1.84 for premium gas this morning, YAHOO!), Silver $9.44, and Gold... $778

That's it for today... My little buddy, Alex, was writing a paper on the Revolutionary War last night, and we were talking about "taxation without representation", and thought for a moment before going to bed, that, I kind of feel like that's what we're receiving now, today! Today is my long time friend, Ed Bonawitz's, birthday! Happy Birthday Ed! Ed and I began working together at the old First National Bank of St. Louis in 1980... I don't think the Dead Sea was even sick yet, then! There's a HUGE black out here in the St. Louis area this morning... We have electricity here are work, otherwise I would have turned around and gone back home! But, there will be a few people here affected by it, and the kids in those blacked out areas are jumping for joy this morning, as schools are closed where there is no electricity. Not my kids... My two oldest, Dawn and Andrew are teachers in the school district that they attended as youngsters, and my little buddy, Alex, goes to the same school district... And it's not affected! I can hear Alex complaining now! Oh well... Time to go... Hope your Tuesday is Terrific!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Back to Risk Aversion...

Chuck Butler — Mon, 01 Dec 2008 15:44:41 GMT

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In This Issue..

* Japanese yen rallies...
* Renminbi stumbles...
* A very tough data week in store...
* Rate cuts all around the world...

And Now... Today's Pfennig!

Back to Risk Aversion...

Good day... And a Marvelous Monday to you! In addition, Welcome to December! We had our first "dusting" of snow over the weekend, after experiencing wonderful weather Thursday and Friday. As much as they tried, even my beloved Missouri Tigers losing to ultra-rival, Kansas on Saturday, couldn't ruin what was a very fun and relaxing weekend for yours truly!

Well... When I left you last Wednesday, I had thought that we could be on the cusp of a "change" in the currencies, as the Trading Theme that had held a tight grip on the currencies since July, was thrown to the side for a couple of days... But, I doubt "that" has happened, as a return to risk aversion is back on the table, which means the currencies and precious metals get sold, while Japanese yen, and U.S. Treasuries (read dollars) get bought.

And Japanese yen is "getting bought!" Yen is trading in the 93 range this morning... Strong, very strong!

When this all began, I truly believed that it would last through the elections and on to the end of the year... Then the magnitude of the problems were revealed, and I changed that to lasting probably through to spring. The longer it takes the "boys" Paulson and Bernanke, to get this credit market crisis unlocked, the longer it will take before we return to the fundamentals that continue to get worse by the day.

On Friday, Chris printed some thoughts I had left him regarding the data that printed on Wednesday, wasn't that just downright scary? I know that a ton of you all had the day off on Friday, and didn't see the Pfennig that day, so for those of you that missed class on Friday, here's what I had to say about the data prints from Wednesday...

New-Home Sales Sink 5.3% to Lowest Level in 17
Years U. Mich. Confidence - new low since '80
Chicago PMI collapses Consumer Spending Fell to 7-Year Low in October (manufacturing for that region)
Americans' Food Stamp Use Nears All-Time High

And can't imagine what in the world the people that make the official call on a recession the NBER (National Bureau of Economic Research) are thinking... I called this a recession back in January, and they have yet to make the call... Amazing!

Of all that bad data, the only one that will have a good outcome in the end, is the Consumer Spending falling to a 7-year low. We've gone on with this spending more than we make, for far too long! Now, if we could just get the Gov't to do the same!

Now onto this week... So, as I said above, the risk aversion theme is back... There will be a ton o' data print this week with it all culminating on Friday with the Jobs Jamboree... Just peeking ahead at Friday, the "experts" believe the job losses for November will be 320K, with the unemployment rate moving to 6.8% from 6.5%. That's downright ugly folks.

Speaking of ugly... Today, we'll see the color of the Nov. ISM (manufacturing) Index, which collapsed to 37 last month, and is expected to have fallen to 32 in Nov. All this "bad data" does is put the Trading Theme front and center even more...

OK, The Chinese renminbi has fallen .73% overnight, which is the largest drop for the currency since dropping the peg to the dollar in July 2005. I find it interesting that the banking officials allowed the renminbi to drop by that large of an amount right before, U.S. Treasury Sec. Paulson is about to visit... Can't you just hear the Chinese saying something like this to Paulson... "See, Mr. Treasury Sec. we can play games with our currency too, and so now if you'll just get yourself back on that plane, and leave us alone, we'll see where the currency goes next."

The Chinese have their own problems right now, and making sure their currency continues to strengthen isn't one of them! China has shifted from "inflation fighting" which requires a strong currency, to "promoting growth" which doesn't! And with exports set to collapse next year, given the U.S. recession, a currency strengthening just isn't on their agenda any longer.

There will be a truck load of Central Bank rate meetings this week, beginning with the Reserve Bank of Australia (RBA) tonight. The Reserve Bank of New Zealand (RBNZ), Bank of England (BOE) and European Central Bank (ECB) are all expected to cut rates this week, and then next week, we'll see rate cuts from the Bank of Canada (BOC) and the Fed Reserve...

Global rates are going lower and lower folks, we had all better be prepared for this, as it is going to happen, no doubts. For instance, I fully expect the RBA to announce a 75 BPS rate cut tonight or tomorrow, whenever they do it...

Now... Enough rate talk... How about we visit the goings on with the bailouts? Oh, goodness gracious, no! I don't want to go there! My blood pressure is doing just fine today! Oh? I have to? The little guy on my right shoulder is telling me to not go there, and the little guy on my left shoulder is telling me to do it, NOW! Hmmm... Ok, I won't do it, but what I will do is give you a thought from a reader, who is an investment advisor regarding all of this and the Gov't taking ownership of banks... Let's listen in...

"Does anybody out there have any memory of the reason given for the establishment of the DEPARTMENT OF ENERGY during the Carter Administration? Anybody? Anything? No? Didn't think so. Bottom line .. . we've spent several hundred billion dollars in support of an agency the reason for which not one person who reads this can remember. Ready? It was very simple, and at the time everybody thought it very appropriate. The Department of Energy was instituted 8-04-1977 TO LESSEN OUR DEPENDENCE ON FOREIGN OIL. HEY, PRETTY EFFICIENT, HUH? AND NOW IT'S 2008, 31 YEARS LATER, AND THE BUDGET FOR THIS NECESSARY DEPARTMENT IS AT $24.2 BILLION A YEAR, THEY HAVE 16,000 FEDERAL EMPLOYEES, AND APPROXIMATELY 100,000 CONTRACT EMPLOYEES AND LOOK AT THE JOB THEY HAVE DONE! THIS IS WHERE YOU SLAP YOUR FOREHEAD AND SAY 'WHAT WAS I THINKING?' Ah yes, good ole bureaucracy. And now we are going to turn the Banking system over to them?"

Now, that's one of those things you say, Whoa There Partner! I've warned about this Gov't sticking their hands into banks and acting like owners before... But that's exactly what's happening folks...

OK, enough... Let's talk Gold a bit... Mark O'Byrne, executive director at Gold & Silver Investments, has his attention on the open interest numbers.

Comex gold futures open interest-the number of outstanding contracts-declined sharply this month, falling to 289,700 contracts in the week ended November 18, according to the Commodity Futures Trading Commission. That's down 9.3% from a month ago.

What the low open interest means is "that nearly all the speculative froth has been liquidated and remaining longs are 'strong hands'," O'Byrne says. "This will encourage more long interest to enter the market and should contribute to markedly higher prices in the coming weeks."

OK... But... We need to see the markets return their focus on the fundamentals to weaken the dollar before we get any "real traction" in Gold... At least that's my opinion, although Gold did have its best month in 9 years in November, gaining 11%...

Well, the good news from the weekend was that the Black Friday retail Sales were stronger than expected... But what's going to happen when, as I said above, job losses post a 320K figure at the end of the week? I think it takes the wind out of those sails in a heartbeat!

I've gone on a bit this morning, but there's lot to talk about, and that means an Iceland update! Reuters reported on Friday that... REYKJAVIK, Nov 28 (Reuters) - Iceland's parliament passed legislation on Friday to curb currency outflows and the central bank vowed to restrict credit as authorities moved to restart trade in the collapsed Icelandic crown.
    "The bank will maintain tight control over the access of banks to central bank credit until exchange market stability has been achieved," Sedlabanki said on its Web site.
    It said temporary currency restrictions, which had been necessary for Iceland to function at a basic level, would be lifted in stages.
    "A considerable proportion of crown-denominated securities are owned by foreign investors. Lifting restrictions by stages will make it possible to unwind their crown-denominated positions in a systematic way, as the external balance permits, without undue impact on the exchange rate."

There have been quite a few individuals that have ripped us for our handling of the Iceland meltdown, but as you can read above, there WERE CURRENCY CONTROLS in place...

One industry that's not experiencing slowing sales... Guns... Barack Obama apparently is the best salesman the gun industry has had in years! With many buyers worrying about higher taxes or limits put on guns and ammo, sales are quite brisk since the election... I sure wish I was talking about home sales being brisk, or computers, or something like that...

Currencies today 12/1/08: A$ .6425, kiwi .5355, C$ .8045, euro 1.2675, sterling 1.5040, Swiss .8285, ISK 230, rand 10.25, krone 7.0280, SEK 8.1825, forint 207.35, zloty 3.0425, koruna 20.2330, yen 93.90, baht 35.75, sing 1.5285, HKD 7.7518, INR 50.29, China 6.8842, pesos 10.25, BRL 2.3735, dollar index 86.71, Oil $52.07, Silver $9.94, and Gold... $794.00

That's it for today... Well... It's that time of year. Time to get our the decorations for outside and inside the house. It will be a lot of fun this year with Little Delaney Grace around. She had her Mizzou cheerleading outfit on Saturday, but it didn't help the Tigers, UGH! Now we have to play the best team in the country (in my opinion) Oklahoma for the Big 12 Championship this Saturday. The promise of this season has not panned out for the Tigers, but... They are still exciting to watch, and had a good season, not just the season they hoped to have! My little buddy, Alex, tells me that he's ready to "cut down the tree" this year. That's good because I can't get down on the ground to do it any longer! OK... The snow is blowing around outside, the wind is blowing a bitter cold air around, it must be getting close to winter! I hope you have a Marvelous Monday!

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

Chuck finally heads back home...

Chuck Butler — Thu, 23 Oct 2008 17:00:19 GMT

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In This Issue..

* Chuck's thoughts...

* US housing still a drag...

* Rate cuts push currencies lower...

* Yen rallies and is joined by some odd partners...

And Now... Today's Pfennig!

Chuck finally heads back home...

Good day...Another big move up by the dollar and the Japanese yen last night. Really just another repeat of what we have been seeing each day of this week, dollar down, gold down, and oil down. And with the stock market falling dramatically yesterday, all of us on the desk were searching for something that was actually up yesterday. Our bond trader, Don Reis let me know that muni bonds rallied dramatically, along with US treasuries. So I guess investors are just continuing to park funds into the US fixed income markets.

Chuck is headed back home this afternoon, after spending the past two weeks traveling the country with FX University. I'm sure he will be happy to get to sleep in his own bed again tonight, and will catch up on his rest tomorrow. He sent me the following note to share with readers:

"Well... Another day and another dollar rally... I'd like to thank Chris for all his work on the Pfennig while I've been out... I'll talk to you all on Monday. But for now... Chris did an excellent job putting together all my different reasons for the dollar being so strong yesterday, didn't he? Since nothing's changed in that regard, and nothing probably will for months, I thought I would skip the dollar talk and go somewhere else...

First of all... Here's a quote by Thomas Jefferson that really struck a chord with me... (remember Thomas Jefferson wrote this over 200 years ago!)

""The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution....Bankers are more dangerous than standing armies......(and) if the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and CORPORATIONS that will grow up around them will deprive the People of all their property until their children will wake up homeless on the continent their Fathers conquered."

Now if that doesn't shake you up, and get you mad at all these dolts that have put our country in this mess, that's now spreading into Europe, I don't know what will... OH! Maybe it's this...

Yesterday, I came across a story regarding the audit of the credit ratings agency, Moodys... You see, the examiners are convinced that ratings Agencies employees were doing no good in rating those mortgage bonds so high... Well, in an examination of email they found this quote by an employee of S&P (according to the story on Bloomberg) "An e-mail that a S&P employee wrote to a co-worker in 2006, obtained by committee investigators, said, ``Let's hope we are all wealthy and retired by the time this house of cards falters."

And in an investigation over at Moodys... the Employees at Moody's Investors Service told executives that issuing dubious creditworthy ratings to mortgage-backed securities made it appear they were incompetent or ``sold our soul to the devil for revenue"...

Shame, shame, shame... Shame on all of you! But then, they haven't been convicted of anything yet, so in this country they are presumed innocent until found guilty..."

Chuck always calls it like it is! And he just sent me another message reminding me that the founding father of all of this mess, Alan Greenspan, will be on capitol hill today addressing the House Committee on Oversight and Government Reform. Big Al was very vocal in his aversion to increasing financial supervision as Fed chairman from August 1987 to January 2006. He said in a May 2005 speech that "private regulation generally has proved far better at constraining excessive risk-taking than has government regulation." During his term at the Fed's helm, Greenspan repeatedly warned lawmakers against inhibiting markets, such as by tightening oversight of certain types of derivatives.

Greenspan's office released a copy of the prepared testimony he will give to congress today, and in it the Former Fed head does a dramatic about face. He is now trying his best to distance himself from the free-market culture that he helped create. But during his testimony today, he will call for tighter regulation of financial companies. "Firms that bundle loans into securities for sale should be required to keep part of those securities," Greenspan will say in his testimony today. Other rules should address fraud and settlement of trades, he will say. I doubt if any of his buddies on Capitol Hill will really let him have it (they let the rating agency heads skate right on through yesterday). As usual, the individuals who were asleep at the wheel during the creation of this crisis will be let off the hook and left to enjoy their retirement while all of us taxpayers pay for their excesses.

I haven't written much about the data releases in the US this week as it has been a very slow data week. Today will be the most interesting piece of data as we will get the weekly jobs numbers along with the US house price index. Initial jobless claims will probably increase again this week, as the US economy continues to stumble along in a recession.

Yesterday we got more bad news on the US housing front, as US foreclosure filings increased 71 percent in the third quarter from a year earlier. Foreclosures are now at the highest on record as home prices continue to fall and stricter mortgage standards make it harder for homeowners to sell or refinance. As we have repeatedly warned, the government bailout on Wall Street will not have an impact on the housing market slide. All of the money given to the big Wall Street financial firms is being used to make up for the losses they have on the 'creative' investments they sold each other. All of the talk about how this bailout money will help homeowners is just a bunch of Paulson doublespeak.

Now the administration is finally starting to talk about giving homeowners some relief, with both the candidates and congress suggesting we come up with a second bailout package aimed at individuals. I guess the first $1.3 trillion just didn't do the job, or maybe it was just aimed at the wrong institutions. As we have been saying all along, this financial crisis still has a few surprises to spring on us, and it is far from over for the US taxpayers.

One of the reasons I have heard for the fall of the Euro is that currency traders expect the ECB to continue to cut rates to stimulate their economy. But ECB President Trichet has held to his commitment to combat inflation which continues to hold above the ECBs 2% target. But on this side of the Atlantic, officials are more than willing to ignore inflation and as our FOMC is expected to continue to be very aggressive cutting rates over the next few weeks. The FOMC will probably reduce the benchmark federal funds rate by half a point next week to just 1%, the lowest since May of 2004. The official rate has never been lower. So how can currency traders be taking the euro lower on the mere possibility of ECB cuts when the US has all but guaranteed even more aggressive reductions? It doesn't make sense to me, but none of the markets haven't been making much sense lately!

Both the Reserve Bank of New Zealand and the Riksbank in Sweden cut rates last night. New Zealand cut by a record 100 basis points last night in an aggressive move to stimulate their economy. The RBNZ did not express concern over the fall of the New Zealand dollar or imported inflation in their accompanying statement. The kiwi initially rallied on the cut, as markets had actually priced in an even more aggressive cut. But the short rally didn't last and the kiwi is opening up this morning down slightly from where it was trading yesterday.

Sweden cut its key lending rate by a half-point for the second time in two weeks and forecast another similar reduction within six months to cushion the economic slowdown. It also lowered forecasts for growth and inflation. "The interest rate cuts are aimed at alleviating the effects of the financial crisis on the real economy and at the same time attaining the inflation target of 2 percent." The cut was widely expected so it didn't have a dramatic impact on the Swedish Krona which is actually up a bit vs. the US$.

The yen continued to strengthen overnight, but was joined by some odd bedfellows. We are used to seeing the yen rally as currency trades are reversed, but over this morning the high yielding currencies of South Africa, Mexico, and Brazil have joined it. As I mentioned yesterday, expect the unexpected in these markets. Apparently the South African rand is rallying after the central bank assured investors that banks in South Africa are well-capitalized and won't need a government bailout. South African banks have very little direct holdings in US sub-prime related assets and do banking in a more traditional manner. The report from the Central Bank assured investors that the banking system in South Africa is very well regulated and 'safe and boring'.

The rand rallied in spite of another drop in Gold which is close to breaking below $700 per ounce. And I thought my purchase at $850 was well timed! We continue to have trouble buying coins or bars in either gold or silver, so the shortage of the physical metal remains. Apparently much of the selling of gold and silver is coming from institutional holders who are having to raise cash, and are using sales of these hard assets. I continue to believe that both gold and silver are cheap at these levels, as global inflation will spike as a result of the tremendous increases in global money supplies.

On to the currencies:

Currencies today 10/23/08: A$ .6603, kiwi .5879, C$ .7873, euro 1.2795, sterling 1.6185, Swiss .8570, ISK (No Quote), rand 11.18, krone 7.1741, SEK 7.8481, forint 222.26, zloty 3.0928, koruna 20.2269, yen 97.35, baht 34.63, sing 1.5029, HKD 7.7529, INR 49.82, China 6.8355, pesos 14.1105, BRL 2.5052, dollar index 85.67, Oil $68.10, Silver $9.3663, and Gold... $706.37

That's it for today...I will be happy to see Chuck back in the office next week, hopefully he will bring a little currency rally along with him. Blues lost a tough one last night, but are still off to a great start. My wife and I will be heading to the hockey game on Friday night, and Chuck will be going also. I just heard that Sarah Palin will be dropping the puck, so it should be a fun night. The markets continue to be crazy, and the phone volume has picked up again, so I'll have to jump now. Hope everyone has a Tub-Thumpin Thursday!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

German Business Confidence Falls...

Chuck Butler — Mon, 23 Jun 2008 14:13:14 GMT

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In This Issue..

* The euro gives back 1-cent...

* The Economist agrees with Chuck!

* RBNZ takes a shot at kiwi...

* FOMC week!

And Now... Today's Pfennig!

German Business Confidence Falls...

Good day... And a Marvelous Monday to you! Friday turned out to be Fantastico, as I hoped it would, and it ended with a nice surprise retirement party for long colleague, John Kaupisch. I couldn't talk about it Friday, because it was a surprise... But it was real nice, and John was surprised... His last day is July 3... First guy to retire here... I'll probably be the next, but with a 13-year old, I doubt that happens any time in the near future!

The currencies held steady Eddie on Friday, with the euro popping up to 1.5660 at one point, only to end the day around 1.5620. Still, a nice day given all the negativity the euro had been receiving because of the Fed's rhetoric, and other minor stuff in the Eurozone... Overnight though, the euro has gotten treated like a red headed step child (OK no nasty comments, it's just a saying). The German Business Confidence as measured by the think tank, IFO, fell to the lowest level in more than two years this month... Business leaders are feeling the pinch of record Oil prices and the threat of higher interest rates.

This report is much like the Investors Confidence Index that the think tank, ZEW, printed about 10 days ago... Things are slowing down in Germany, the Eurozone's largest economy, but not grinding to a halt like in the U.S. So... It's my opinion that give it a couple of days and this report will be in the rear view mirror, and no one will remember it showed this softness in the economy...

The reason I say that is because... The Fed's FOMC meets this Wednesday... And sometime today or tomorrow, the focus will shift to the FOMC meeting. And I fully expect the FOMC to leave rates unchanged, as opposed to the markets' feelings two weeks ago, when Fed Chairman Big Ben Bernanke threw a cat among the pigeons with his claim to be an "inflation fighter" ... You know how I've printed the words to the song "girl watcher" in the past, with I'm a Fed watcher, I'm a Fed watcher? Well, we could change the words around here and say... I'm an inflation fighter, an inflation fighter, watching inflation go higher, way, way higher! HAHAHAHAHAHA!

Speaking of the Fed... A reader was kind enough to send me some of the latest Economist's views... And it's nice to see that someone else has jumped on my bandwagon that the Fed will have to come back in a couple of months and cut rates, instead of raising them... Let's see what the Economist magazine had to say...

"The Fed will stay its hand to gauge the impact of the tax rebates and effect of surging commodity prices on inflation, but should still cut the fed funds rate by a further 50 basis points before end-2008."

And then they sound like a Pfennig reader here too... "Real GDP is forecast to rise by 0.8% this year and by 1.1% in 2009. Notwithstanding a rise in first-quarter GDP, economic conditions may already be recessionary. No sustained recovery in the housing market is likely until 2010. The severe weakness of domestic demand should help to contain inflationary pressures, but the rapid pick-up in upstream prices this year suggests that inflationary pressures may take longer to ease than we assume."

OK... Well, at least I'm not out on the limb by my lonesome...

With the U.S. stock market going into the tank on Friday, the Japanese yen and Swiss franc were able to gain back some ground... But it would take more than a one day 200 point move down, to really get those Carry Trades unwound, and I'm not sure anyone really wants to see U.S. stocks lose much more ground... Me? It wouldn't mean a hill of beans to my stock portfolio, as I sold every stock I own, except one back in November... But still, stocks going down right now, on top of all the other stuff we have going on, just wouldn't be a good thing to experience.

I do believe that stocks are overvalued that's why I sold when I did, but still, there's always a time and a place for a bear stock market, and this would be an awful time for the bear to wake up... Oh, and the only reason I'm talking about stocks is that they play in the Carry Trade which affects the Japanese yen and Swiss franc... I wouldn't be your LAST choice as a stock guy!

The Indian rupee, which had recently received some wind in its sails and recovered a bit from the sell-off this spring, hit a snag overnight, as it is rumored that inflation has really taken hold of the economy... Now, normally, in this day, the market mentality is to reward a currency that has an economy with inflation, as they view this as simply a currency that will receive higher interest rates. But, it looks like those rules don't apply to the rupee right now.

It appears that stock market losses are leading some to believe that there will be an outflow of funds that will not be offset by an inflow of funds that are attracted by higher yields. I'll keep my eye on rupees here, as this whole scenario has be squirming in my seat!

The Reserve Bank of New Zealand (RBNZ) is once again taking shots at the currency... The RBNZ, last year, kept taking shots at the currency, but the currency had a nice defense shield built up in the yield it was offering, and the currency was able to withstand the RBNZ's shots... Well... They're doing it again... The RBNZ just issued a report showing the economy shrank, which is fine, that's what they've wanted for some time now... But then they decided to go further, and say kiwi would extend its recent decline... OK, they actually said "may extend", but when a Central Bank talks like that, the markets don't hear the word "may"!

And did you see this news about Israel? The Herald Tribune reported on Friday the following:

"Israel carried out a major military exercise earlier this month that American officials say appeared to be a rehearsal for a potential bombing attack on Iran's nuclear facilities.

Several American officials said the Israeli exercise appeared to be an effort to develop the military's capacity to carry out long-range strikes and to demonstrate the seriousness with which Israel views Iran's nuclear program.

More than 100 Israeli F-16 and F-15 fighters participated in the maneuvers, which were carried out over the eastern Mediterranean and over Greece during the first week of June, American officials said."

Oh please let that just be a warning...

But... The reason I talk about this is the news brought Oil prices up by over $4 on Friday, and they are up another $1 this morning... This kind of saber rattling will give Oil speculators even more reason to take a flyer on rising Oil prices... But like I said, Please, let it just be a warning...

The data cupboard is empty today, but will restock tomorrow with the latest Case / Shiller Home Price Index, and Consumer Confidence. Neither one of those should be good for the dollar. We'll also start a two-day FOMC meeting, culminating in a rate announcement on Wednesday. I've always contended that the FOMC doesn't have enough to talk about to take up two days, and therefore, believe that they spend their day playing Battleship! By Joe, you've sunk my Battleship!

I noticed the river in my little river town lapping at the road again yesterday as I drove past, and the thought came to me about the levees breaking up north of St. Louis on the Mississippi River. When those levees broke, the river destroyed a ton of crops on farm land... And knowing that area, it was probably mostly corn... That won't play well with wanting food prices to come down...

Currencies today 6/23/08: A$ .9515, kiwi .7585, C$ .9835, euro 1.5525, sterling 1.9625, Swiss .9580, ISK 82.70, rand 8.0380, krone 5.1625, SEK 6.0480, forint 153.40, zloty 2.1670, koruna 15.55, yen 107.60, baht 33.43, sing 1.3680, HKD 7.8060, INR 42.97, dollar index 73.42, Oil $136.50, Silver $17.24, and Gold... $901.85

That's it for today... Sad news on the radio this morning, as comedian George Carlin has died at 71... What a funny guy! And someone that said what was on his mind for sure! Well, let's see, last week I had someone send me a note telling me not to cry when his Phillies beat up my Cardinals... We won 2 of 3... Same thing happened this weekend, as someone sent me a note telling me not to cry when his Red Sox beat up my Cardinals... Again, we took 2 of 3... So... Maybe I've got something there, let's see who do we play this week? HA! More meetings this week... I'm "meetinged out"! I spent most of Saturday dealing with a broken down automobile... Went out, and ended up on the side of the road... Time to get a new car! As I sat there and called my beautiful bride to come get me, and the tow truck, all on my cell phone, I thought... What the heck did we do before these cell phones? I would have had to walk down the road and find a pay phone, in my hobbled condition! Thank goodness for my cell phone! I rarely use it, except to check baseball scores or to see what time it is, but this time was different!

OK... The last full week of June... Summer officially started on Saturday, so we have that going for us, eh? Hang in there this week, the data should be awful, and the Fed will disappoint those that bought dollars in anticipation of a rate hike... I hope your Monday is Marvelous and your week is Wonderful!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837