Daily Pfennig : Stimulus

A Week Dominated By Data...

Chuck Butler — Mon, 29 Jun 2009 14:32:45 GMT

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In This Issue..

* Both sides of the ship...
* Currencies remain well bid...
* ECB and Riksbank meet this week...
* Baiting the hook for more stimulus?

And Now... Today's Pfennig!

A Week Dominated By Data...

Good day... And a Marvelous Monday to you! The Heat Wave finally broke Saturday night, and we had just one of the most beautiful days yesterday that I have ever seen! Which was good, because we had a backyard full of first kids, and then family to celebrate Alex's 14th birthday!

Well... We have a week ahead of us that will be dominated by the U.S. data cupboard. And this week, we'll get the June Jobs Jamboree (JJJ) on Thursday instead of Friday. Saturday is the 4th of July, and I guess the Bureau of Labor Statistics (BLS) isn't working on Friday! HA! No, they do this every now and then when the markets will be quite thin on a Friday before a Holiday weekend. And this week qualifies BIG TIME! It will be the 4th of July! And maybe, just maybe because you never know, someone in Washington D.C. will realize that the it's supposed to be about WE THE PEOPLE, not we the politicians...

Friday, I left you with the currencies moving higher on yield demand, I held by breath this morning when I turned on the currency screens, as I was concerned that another "demand" was going to be the headline. Because that's how it's been lately, eh? One day this "demand" the next day some other "demand"... But, no such new trade direction today. WHEW! I totally dislike getting whipsawed around like that, when we all know, and the traders all know, and the Hedge Fund managers all know, that in our collective heart of hearts, that in the end, the dollar will be much weaker... It's just all this stuff that goes on between now and when the end of the trend takes place.

For instance, one of the headline stories on the Bloomie this morning is that the "Best Currency Forecaster says the Dollar to Rise Most Since 1981 by year end"... WOW! Now that's an interesting forecast... But, it's just that... The "forecaster", believes that the U.S. recession will have come to an end in the U.S. this year, and U.S. growth will outpace everyone else, making the dollar the King once again... Now... I talk about going out on limbs all the time with my opinion / look ahead on things, and this is "forecast" qualifies as going out on a limb!

It's important that I tell you about these things, because... This is market commentary, and I wouldn't be doing it right, if I only told you stories on one side the ship... Right? Of course that's right! Of course, you know me, I just don't see it happening that way, and the one thing I think of when I read something like that is: rose colored glasses...

And... Speaking of the sides of the ship... Union Bank of Switzerland (UBS), the world's 2nd biggest currency trader, has just revised THEIR CURRENCY FORECAST for year end, believing the dollar will be lower... So there you go... Two stories from both sides of the ship!

Playing well with the "forecast for a strong dollar" is a story overnight that China has once again backed off their statements calling for a replacement to the dollar as the world's reserve currency. Of course, that's what the "markets read"... I don't read it that way... Let's see what you think... "China ruled out "sudden changes" to its foreign-reserves policy"... I think it's strictly China being China, aloof, cunning, and other things... Of COURSE they don't want any "SUDDEN CHANGES", they haven't had enough time to rid themselves of hundreds of billion of dollar reserves!

Even with those two stories this morning, the dollar remains on the down side against the currencies, with the euro remaining above 1.40 through Friday, overnight Sunday, and so far this morning... The euro did get a boost this morning from a report on economic confidence, as the data moved upward to an index number of 73.3, VS the 71 that was forecast...

The European Central Bank (ECB) will meet this Thursday, and I do NOT expect them to make any moves with rates, leaving their internal rate at 1%. The most important thing will be if ECB President Trichet, has something to say that could me the markets after the rate announcement.

Sweden's Central Bank, the Riksbank, also meets on Thursday this week. (there's a ton of stuff going on Thursday, eh?) With internal rates at just .50%, I guess they could cut, but what would be the point?

The Swiss franc is getting caught in the middle of a war between the Swiss National Bank (SNB) and traders... The SNB has been in the markets quite a few times recently intervening (selling francs) to keep the currency from getting too strong. And traders see that as a great opportunity to test the SNB's intestinal fortitude... I've always loved watching these things develop... If the traders "really" want to test the SNB, they'll win, as the SNB doesn't have the war chest that, say a Japan has... Unless they want to get into the "printing" business....

Besides data, and Central Bank meetings this week, it's also the end of the quarter tomorrow... Which means the books get closed as some businesses have their year end, on June 30th. This also means that 2nd QTR earnings isn't that far off, and I think these reports will be quite interesting, maybe taking some of the shine off the thoughts that the recession ended already!

The High Yielders have remained strong since Friday of last week, with Aussie, kiwi, Brazil, all leading the way. And there was no "new News" from the BRIC's over the weekend... For those of you new to class, the BRIC's are Brazil, Russia, India and China, all emerging markets that are clamoring for change and a great influence in the world's financial matters... And why not? They have more money in reserves than you can shake a stick at, and... The have the a very large portion of the world's population!

So, let's go to the data cupboard and see what else will be on the docket this week data wise...

Today we have a couple of 3rd tier reports, so nothing to write home about, but tomorrow... We'll see the April S&P Case/Shiller Home Price Index... I truly expect this data to show that Home Prices continue their downward spiral... We'll also see The Chicago Purchasing Manager report (manufacturing), and Consumer Confidence...

When we turn the calendar page to July on Wednesday, we'll be met by the ADP Employment report, and the ISM Manufacturing Index. There's also Construction Spending, Pending Home Sales, and Total Vehicle Sales. Then on Thursday, which will be the "Mother of all Economic Data and Central Bank meeting days"... The June Jobs Jamboree, along with the Weekly Initial Jobless Claims... Which is going to look really stupid for the Jobs Jamboree... You see, the monthly report from the BLS is expected to print at -350K... Whereas the "WEEKLY" Initial Jobless Claims will print at over 600K for the week! I know, I know, it doesn't add up, folks... Which is one of the things I complain about, and point out, and make fun of all the time... The BLS... Need I say more?

And then there was this... Did you know... That U.S. Treasuries posted their largest 1st half losses in 30 years? Well, that's the facts Jack! Now... Quite a few "bond dealers" believe that the worst is over... OVER? Nothing's over until we decide it is! Was it over when the Germans bombed Pearl Harbor? HAHAHAHAHAHAHA! (ok that's a line from Animal House, please I know it's incorrect, just funny!)

Seriously though... I don't see how these "bond dealers" can say something like that, as they know all too well that the supply of Treasuries that will be issued this year will be enough to send yields higher... How can they get away with saying something like that? Oh! I know! They won't be technically wrong, if Treasuries continue to lose value, as long as they don't lose as much as they did in the 1st half of this year! Shame, shame, shame...

OH, and remember last week, when I told you about the President saying "not yet" instead of a resounding "no" when asked about another Stimulus? Well... The White House Senior Advisor, David Axelrod, said this weekend that the President is ready to discuss additional measures... And the President also casually mentioned that "we have not broken the back of the recession"... Is that like baiting the hook? I think so folks...

Now... On to the Big Finish for this Marvelous Monday!

Currencies today 6/29/09: A$ .8065, kiwi .6490, C$ .8685, euro 1.4065, sterling 1.6570, Swiss .9215, rand 7.8405, krone 6.4470, SEK 7.7390, forint 196.30, zloty 3.1920, koruna 18.4855, yen 95.30, sing 1.4540, HKD 7.75, INR 48.10, China 6.8335, pesos 13.1920, BRL 1.9355, dollar index 79.94, Oil $69.69, 10-year 3.50%, Silver $14.12, and Gold... $941.95

That's it for today... As I said above, yesterday was my little buddy Alex's birthday. We went to breakfast, as we always do... Yesterday was also my darling daughter Dawn and husband Jerry's 6th wedding anniversary. I felt bad after sending out Friday's Pfennig that I had not paid respect to Farrah Fawcett, who had passed away after losing her battle with cancer on Thursday. I wonder how many T-shirts were bought and worn back in the 70's with Farrah on the T-shirt... They were everywhere! And this weekend, the info-commercial guy, Billy Mays, passed away... OK... Our little Christine returns to work today, after a brief vacation... Yay for us! And a good show for the U.S. National Soccer Team yesterday, losing the Championship game 3-2, after leading 2-0 at halftime! Gotta go... It's a Monday, so we might as well make it Marvelous, eh?

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

Labor Market Continues To Deteriorate...

Chuck Butler — Fri, 20 Feb 2009 14:31:16 GMT

In This Issue..

* Merkel leaves us wanting...
* Gold soars higher overnight!
* Indian rupees' worst week!
* Greenspan = Very Bad Idea!

And Now... Today's Pfennig!

Labor Market Continues To Deteriorate...

Good day... And a Happy Friday to one and all! It got cold here again... I can't wait for my March trip to a warmer climate! GM's Swedish unit Saab is filing for protection from creditors, so that it can reorganize into a business independent of GM... Hmmm... Everyone is jumping the GM ship...

Well, it's Friday, and that means yesterday we saw the print of the Weekly Initial Jobless Claims... And once again, the rot on labor's vine was exposed... The total Claims files last week was 627K, the experts had forecast 600K... But here's the thing that really hits home... The number of Americans collecting unemployment benefits has jumped to 4.99 Million, and each week and new record number is established... It certainly tells me that the labor market is still deteriorating...

At this rate... Obama's hope that his $787 Stimulus would create 3.5 million jobs, might fall well short even if it's a Smashing Success!

There was a boat-load of other data yesterday, of which none of it was good, except the Leading Indicators, which again will be goosed up by stuff that ends up being no good to the economy!

Today, we end the week with the "stupid" CPI data for January... Long Time readers know my dislike for CPI and what it does to people who depend on checks each month, and to our pocketbooks... WE all Know inflation is higher than CPI says it is, but the Gov't, and the markets go with CPI as the "official" inflation gauge... Dolts... All of them!

Well... The euro had a day in the sun, and today the clouds are forming over the single unit once again. Yesterday, I left you with a rallying euro, based on a rumor that Germany would step in to ease the financial turmoil in Europe (Eastern & Western)... Well, Germany's Chancellor Angela Merkel left the markets "wanting" more... She acknowledged that Germany "could" help... But didn't have a plan, didn't have an idea of what to do, didn't do squat! Why have the stupid press conference if that's all you're going to do! Get up there, have your plan, and act like you know what you're doing... People will follow! Geez Louise! Now I have to rip on the dolts overseas too? I'm getting too old for this stuff!

So... The euro is back to 1.26 and change this morning, and the other currencies are following along... Risk Aversion has plopped right down, smack dab in the middle of what appeared to be a Risk Takers "sighting"...

Gold even saw selling as the day went along and the Risk Aversion crowd won the battle... That is until the overnight markets saw the lower prices in Gold, and you should have seen the "rush" into buy Gold! The shiny metal is up $13 this morning to $988.30... I heard one our sales people talking to a prospective buyer on the phone... The prospective buyer admitted wanting to buy Gold below $900, and was very upset to learn it had leaped over $900 a couple of weeks ago, and not looked back. Shoot Rudy! You never know, it could fall back there again... But the view from the cheap seats, where I sit, is a changing landscape, where fiat currencies are traded in for hard assets, like Gold... I've mentioned this for the past couple of weeks now, so this shouldn't come as any shock to you dear reader... That is unless... You just "delete" the Pfennig each day! OH! The Shock! The Horror! The Humanity!

On a sidebar... I mention that, because one day about 4 years ago, Chris Gaffney and I were meeting with some investment advisors that we knew from Mark Twain Bank days... And I told them they should sign up for the Pfennig... Chris, then said, "if you don't want to read it you can always just delete it"... Of course he didn't mean it the way it sounded, but I give him a very difficult time still today... As evidenced by the above!

One currency that had moved stealth-like to higher ground VS the dollar since the beginning of 2009, was Indian rupees... Notice, I said "was"... As all that stealth-like move to higher ground VS the dollar was wiped out this week... I saw a headline last night that said this was the worst performance week by the rupee... OUCH! Time for the Central Bank to get back on the intervention horse, and repair this damage...

While I wrote those last two paragraphs, Gold has moved up another $2!

There was more selling in stocks yesterday as the Dow fell 1.2% to a new five-and-a-half year low, breaking through the previous bear-market closing low of 7552.29 hit on November 20, 2008.

And during my radio interview yesterday, I was asked about the comments from former Fed Chairman, Greenspan, that he "favored nationalization of banks"... I had seen that comment a day earlier and even commented to the Big Boss, Frank Trotter, that he sure didn't make comments like that when he was the Fed Chairman... And referred to as the "Maestro" and "Mr. Free Markets" But now that he is retired and looking at the mess he created, and yes folks, he wasn't the sole culprit, but he was the "provider"... And now that he's looking at the mess he created, he thinks we're in a huge pile of dookie, and had better do something, fast!

My friend, Bill Bonner, of the Daily Reckoning, (www.dailyreckoning) had this to say about Greenspan's comments... "Greenspan backs nationalization," says a headline.

Well, that does it for us here at The Daily Reckoning. If Greenspan is in favor of it, we're against it. No one man bears more responsibility for the present worldwide financial crisis and coming depression that Alan Greenspan.

The Fed's job is to take the punchbowl away when the party gets too wild, said former Fed chairman William McChesney Martin. Greenspan did no such thing. As soon as the party began to quiet down and people began fumbling for their car keys, Greenspan added more rum to the punch and turned up the music. By the time the credit cops finally shut it down, people were dancing on tabletops all over the world."

This "nationalization" cry is a very bad idea folks... Very bad... How bad? Very Bad! Did I say that it was a Very Bad idea? OK... Is that clear? ... Crystal... I hope!

Ty Keough sent me a note on something he saw while watching Jay Leno the other night. So, let me set the stage for this note... It's Monday night, the country had celebrated President's Day... And President Obama celebrated Past President's Day by signing the $787 Billion Stimulus Bill... OK.. Here's what Jay Leno had to say...

"Today was Presidents Day. Congress commemorated George Washington's throwing a dollar across the Potomac by throwing $780 billion down a rat hole."

I see where the New York State Attorney is taking a run at the Bank of America / Merrill Lynch merger that took place last year... NY State Attorney, Mr. Cuomo's office is trying to determine if investors were misled about the depth of Merrill's losses in late 2008 and whether details of the bonuses to Merrill employees, contained in a nonpublic document, should have been disclosed to investors. Now... I'm not saying that there was anything misleading or scandalous here... But it reminds me of about 8 years ago... Remember?

Remember about 8 years ago, when the tech-bubble burst, and we had one Corporate Scandal after another? Well, we're not doing too well these days either... Madoff... Stanford... And there will be more... I shake my head in disgust...

Time to head to the Big Finish...

Currencies today 2/20/09: A$ .6415, kiwi .5075, C$ .7950, euro 1.2640, sterling 1.4350, Swiss .8450, rand 10.1650, krone 6.9125, SEK 8.7365, forint 241.50, zloty 3.76, koruna 22.8825, yen 94, sing 1.5360, HKD 7.7540, INR 49.77, China 6.8370, pesos 14.77, BRL 2.3850, dollar index 87.63, Oil $37.75, Silver $14.36, and Gold... $993.65 (still moving higher this morning!)

That's it for today... Had a great interview on the radio yesterday, about 20 minutes long... You give me 20 minutes to talk, and I'll fill your airwaves! And besides, I've always said that I had a "face for radio"! I made the Big Boss, Frank Trotter, wait outside his own office, as I used his office to do the interview. Hey! I sit on the Trading Desk, it's too loud to do an interview there! My "Les Nessman" office was converted into our studio, so, whenever I have an interview, and this week I had 4 of them, I have to go find an empty office... Tomorrow is the 2nd largest Mardi Gras party in the country, right here in St. Louis! It's going to be a COLD one too, unfortunately! But I doubt it slows down the revelers that are die hard Mardi Gras partiers... I used to go... But I can't do all that walking around any longer... And... I got too old! I hope everyone has a great time! But BE Careful! I hope, you have a Wonderful Weekend!

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

A Retail Sales Surprise!

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

In This Issue….

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

And Now... Today's Pfennig!

A Retail Sales Surprise!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

It's Not My Fault, It Must Be Yours!

Chuck Butler — Thu, 12 Feb 2009 14:40:46 GMT

In This Issue..

* What's $78 Billion among friends?
* Currencies fade with bias to buy Gold...
* Could the Carry Trade Unwind be done?
* U.S. soccer beats Mexico...

And Now... Today's Pfennig!

It's Not My Fault, It Must Be Yours!

Good day... And a Thunderin' Thursday to you! Well... Front and center this morning, I'm going to tell you something that will surprise a few and make a few happy. I've had my say on the Bailouts, TARP, Stimulus, and spending. I've beaten them to a pulp, and some readers have expressed their contempt with me carrying on with this beating. So... Unless something cracks, I'll just leave it all as it stands, and go on with life. This all has been too much for my blood pressure to take! I'll report the facts on this stuff, and leave the commentary for people that think they "know better"...

For instance, it was reported the other day that the Treasury Dept. has overpaid for stock received from TARP recipients by $78 Billion. You see, for every $100 given in TARP, the Treasury was to receive $100 in stock / assets, but when all the beans are counted, the Treasury is $78 Billion short on stock /assets... But, what the heck, what's $78 Billion among friends?

I was totally amused at the lawmakers grilling of Bank CEO's yesterday. In going along with the general practice that exists today... "It's always someone else's fault for it can't be my own fault" The lawmakers pointed fingers and blasted these CEO's for "earning a living"... This is dangerous ground folks, as it speaks of doing away with the way businesses have been run for eons, and shakes the very foundation of Capitalism... If the lawmakers had stopped and thought about their TARP money before they began to hand it out with no accountability, and lending requirements, maybe things would be moving in the right direction by now... And I know... This is getting to opinionated and I'm not going there anymore.

Oh! And one more thing... Please no more emails blasting me for taking the new administration to the woodshed so early in their rein... It's NOT A POLITICAL THING! For any reader that was around in 2001 when the then new administration had just taken over, and their first order of business was to place tariffs on Steel imports, I came out with both guns a blazin' that this was protectionism and had no place in free markets and Capitalism... I ranted and railed on this new president for this move. Funny, I don't recall receiving the nasty emails I get now for doing the same thing to this new president back then.. Hmmm...

OK... The dollar was in the driver's seat yesterday, as the risk takers have all gone home... A heading on Bloomberg this morning tells it all... "Stocks fall worldwide on concern stimulus plans may fail" The Stimulus they are talking about is the "new and improved" Stimulus package that the Senate approved yesterday, which came in lower than the previous package. This version's total comes in at $789 Billion.

Yesterday's potential market moving data didn't materialize, as the Trade Deficit did not narrow as much as forecast, and last month's number was revised upward. For the record and for those of you keeping score at home, the Trade Deficit for December printed at $39.9 Billion, and November's Deficit was revised from $40.4 Billion to $41.6 Billion. Exports have fallen off the cliff as 1. Global demand is waning, and 2. the dollar is overvalued and too strong to allow U.S. exports to be competitive.

Today, we'll see Retail Sales for January. The BHI (Butler Household Index) tells me that we should look for a very disappointing number from January. We'll also see the Weekly Initial Jobless Claims that continue to show more rot on labor's vine. Last week, the Initial Claims showed a record of 626K filed. This week, the "experts" are looking for 610K... I'll go out on the limb and say it will be even more disappointing. UGH!

Well... As I told the interviewer the other day... I believe what we're seeing right now is a general increased concern regarding fiat currencies, which has Gold on the rally tracks once again. Yesterday, Gold soared upward and onward by $23... And it has already added $3 since the London Morning Fixing earlier... As my friend, the Mogambo Guru, tells his readers... Everyone should own Gold... "see how easy this investing stuff is? Whee!" And let me repeat something I said before. My friend, Bill Bonner of the Daily Reckoning, www.dailyreckoning.com coined this saying for his "trade of the decade" at the turn of the century... "The trade of the decade is to sell the DOW and buy Gold on the dips"... WOW...

And now that Central Banks all over the world are having a race to zero... Deposit rates no longer hold the hammer over Gold's non interest bearing status. So... When Gold is on one scale, and cash (like dollars!) is on the other side of the scale... Guess what happens! I was surprised that I didn't get any comments yesterday from the media or readers about what I said Gold was... "An Uncertainty Hedge"... Are you uncertain as to what all this that's going on is going to bring us?

An ECB minister, Papademos, was speaking overnight about how "a further easing of the Eurozone monetary policy may be appropriate as risks to growth and inflation are to the downside." Then another ECB minister, Liikanen, said that "at the next meeting it is possible we could move." No dookie Sherlock! Your leader, Mr. Trichet, has all but told us to look for lower rates at the March 5 meeting...

Lower interest rates in the Eurozone won't necessarily hurt the euro, as they sure haven't hurt the dollar! There's a whole trading pattern that deals with a currency not losing value even after a debasing rate cut... I'll put that all together, and bring it to you probably next week, as we've got time before March 5 comes around any way!

Instead, the market movers for euros this morning has been 1. risk aversion in play 2. more flight to the safety of Treasuries, and 3. recession type data, like this morning's December print of Industrial Production for the Eurozone, which fell -2.6% for the month, and moved the annual year-o-year figure at -12% OUCH! Now, that's recession type data! And something that really brings that thought I've made a few times now, about the move to Gold...

Pound sterling has gone back on the slippery slide downward, after a brief rally last week. I was getting a little hot under the collar with the sterling strength last week, but, as with all things, patience is a virtue... Sterling is showing its true colors again, and the folks over at BNP Paribas say that the "downside risks for pound sterling VS dollars have increased"... Hmmm... That's big time research dept there... I could of, and in fact I already did all by my lonesome, tell you that!

The Aussie dollar (A$) just won't go away quietly... Yes, I fully understand that it has fallen from the lofty level 98-cents to present day levels of around 65-cents... But since it got to this mid-65 cent range, it has held steady Eddie. Now, of course I realize that I just gave it the kiss of death, but really this is worth pointing out. And with yen now stalled out around 90, it kind of makes you wonder if the Carry Trade unwind is over... Makes you stop to think doesn't it? Australia keeps cutting interest rates, and it remains in the mid-65 cent range... Yen has had every opportunity under the sun to go further to 85, and can't seem to find any terra firma below 90... Therefore, I'm pronouncing the unwinding of the Carry Trade as a done deal... This is where the munchkin coroner comes out and proclaims the Carry Trade as truly dead... As Coroner , I thoroughly examined her And she's not only merely dead She's really most sincerely dead...

Well... At least we can hope so! This would be a good indication that risk aversion is dying out... Although I'm truly aware that this risk aversion has a ways to go, we have to get to this place before we can begin to make plans to send risk aversion to a state run home...

On a sidebar here... Whenever I used to sit around late into the night with my friends, they would invariably get me to do my imitation of the Lollipop Guild... HAHAHAHAHA! Of course this is when they also would have me play my guitar, which I now haven't picked up in some time...

OK... Enough of that silliness! Your Pfennig writer has really gone out on a limb this morning with the Carry Trade thingy, eh?

I'm out of ideas for today, so with no further ado...

Currencies today 2/12/09: A$ .65, kiwi .5195, C$ .8045, euro 1.2855, sterling 1.4230, Swiss .8610, rand 10.0950, krone 6.8735, SEK 8.4050, forint 232, zloty 3.58, koruna 22.29, yen 90, sing 1.51, HKD 7.7515, INR 48.84, China 6.8340, pesos 14.59, BRL 2.2870, dollar index 86.14, Oil $35.53 (the price of oil just keeps falling!), Silver $13.45, and Gold... $944.44

That's it for today... What a nice win, in awful conditions, for the U.S. men's soccer team VS Mexico last night. My little buddy, Alex, and I watched the game together. Soccer was never "his" sport, but when I was a youngster, growing up in South St. Louis, where everyone and their brother was Catholic, German, Irish, Italian, French, and any other European background, soccer was played all the time, well, when we weren't playing baseball, basketball, football, and hockey! We have two, count'em... Two, soccer greats, and members of the St. Louis Soccer Hall of Fame on this trading desk... Don Ries, and Ty Keough... Both grew up on the South side of St. Louis, where so many athletes came from. Today, would have been my oldest sister Brenda's birthday. We lost her to cancer 20 years ago, she would have been 58 today... OK... It's also Charles Darwin's 200th birthday! Suzy Q just arrived... I need to get this sent, so... I hope you have a Thunderin' Thursday!

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

Geithner's Plan Disappoints...

Chuck Butler — Wed, 11 Feb 2009 15:19:14 GMT

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In This Issue..

* Trade Deficit to narrow further...
* Currencies rally, then sell off...
* Obama's stimulus loses backers...
* Riksbank cuts 100 BPS unexpectedly...

And Now... Today's Pfennig!

Geithner's Plan Disappoints...

Good day... And a Wonderful Wednesday to you! Well... Tim Geithner didn't experience a Terrific Tuesday, as I had wished for him... And now, it looks as though the shine is coming off the new President as more and more individuals are "not buying" his appeal to the nation to get a stimulus package passed... The currencies rallied and then sold off after Geithner gave the details of his "new and improved" plan... We've got some potential market moving data printing today and more! So... Let's go to the tape!

Front and Center this morning, we have some data that could potentially move the currencies today. I'm talking about the Trade Deficit for December. The "experts" have forecast a narrowing of the December Trade Deficit from $40.4 Billion in November, to $35.7 Billion. Now, that all sounds wonderful, as this is one of the twin deficits that I have banged on for years now. But the resolution is completely different than what I wanted to see. I wanted to see U.S. exports bring the Trade Deficit down... Instead we have a complete collapse of demand for imports... And with the dollar stronger than it was 7 months ago, exports are falling like a house of cards.

Now, here's the potential market moving piece of this data... Last month (January) when the November $40.4 Billion Deficit printed, it was more narrow than forecast, and sparked the dollar to a 1.5% gain in one day. But that's not all, the rest of that week the dollar gained 2.5% (in the dollar index)... So... While this isn't the path I would have liked to see the Trade Deficit narrow, it is narrowing...

Unfortunately, for the Twin Deficits, the other Deficit, that resides in the Budget, is taking up the slack... I now figure that the Budget Deficit could very well hit $3 Trillion this year... We already have $1.2 Trillion from the Congressional Budget Office, $838 Billion in the "new and improved" stimulus package the Senate passed yesterday, and don't forget the $350 Billion in TARP money that was carried over from last year, that will be spent this year... And you know, there will be "another" spending package coming in the future, because people like you and me are calling out this "new and improved" stimulus package...

A recent poll by Pew Research Center found that a narrow majority of Americans, just 51%, support the stimulus. And that's down from 57% in January. Even worse for the administration, support seems to be dropping among people who say they've learned more about the stimulus:
Notably, support for the proposal is now much lower than it was in January among those who have heard a lot about the economic stimulus. By 49% to 41%...

And here's something in the plan that I bet you didn't know was a part of it. I thank a dear reader for bringing this to my attention. He's a doctor, so I believe he knows what he's talking about here folks...

"This past weekend and Monday I took the time to read "The Obama Stimulus Plan." I will leave politics to the side and will leave my interpretation from an Economic perspective aside ( I double majored at Bucknell in Chemistry and Economics ). What I will NOT leave to the side is what is buried in "The Bill" from a health care standpoint. YOU NEED TO KNOW.....the "stimulus bill" is a Trojan Horse.....hidden in "this horse" is the legislation to NATIONALIZE HEALTH CARE."

So... Do I have your attention now? Here's a link to the story by Betsy McCaughey on Bloomberg...
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLzfDxfbwhzs

OK... I won't carry on about that... I've given you the information to do with as you please.

Back to the task at hand... The Geithner Plan was a bust according to the markets... Here's what the Wall Street Journal had to say about the stock sell off... "Financial stocks led a broad move down in the market on the heels of Geithner's unveiling of the Treasury's bank-rescue plan and Senate passage of the stimulus measure. The Dow Jones Industrial Average dropped by roughly 350 points, or 4.2%, reaching its worst levels of the day in mid-afternoon trading. Bank of America and Citigroup experienced double-digit percentage losses."

Currencies followed along with stocks, like they have for a couple of weeks now. The euro, which had traded up to near 1.31, fell back to yesterday morning's figure of 1.2975, as if nothing had happened. The high yielders like Aussie, kiwi, and Brazil, had all been trading higher this week on hopes that the Geithner Plan would bring the risk takers back to the markets. But that didn't happen, as Geithner really disappointed the markets with his plan...

It was reported yesterday that economic advisors for Obama were in a tug-o-war with Geithner on this Plan, and that Geithner had won... Given the reaction by the markets, I think I would like to see what the Advisors had planned, to make a choice between the two! Maybe Geithner is swayed by the old regime at the Treasury, given he had his hands in there helping the old Treasury Sec. Paulson, with his bailouts and TARP last year... Hmmmm... Makes you wonder...

I read the text of the Geithner Plan... And was very disappointed... I will say that the Treasury's plan to make this all transparent is good... In fact you can follow the money trail at this website: www.finacialstability.gov But, the rest of it was the same old, spending taxpayer funds on shoring up financial institutions... Could go up to $1 Trillion!

You all know where I stand on this spending that we can't afford, and placing the burden of paying it off on our grandchildren... It's downright immoral! Let the financial institutions that can't cut the mustard sell themselves to someone who can, or close, and when all the dust settles, we'll be left with the financial institutions that are strong and ready to grow! But that won't happen, as my friend Bill Bonner (www.dailyreckoning.com) says about the Fed and Treasury propping up these institutions... He calls them "the meddlers"... Great term!

So... As I said above, the Geithner Plan rubbed the markets the wrong way, and stocks and currencies hit the skids... Bonds had a banner day... Of course you knew they would after I talked about how they had started the year off with the worst performance since 1980! UGH! And... As always, well for the past 6 months... As the risk takers took their high yielders rally and went home... Japanese yen, rallied... There was another currency that rallied along side yen yesterday... Swiss francs... But that didn't last through the night...

One of the biggest losers (to use the name of the TV show my beautiful bride can't miss each week), was the Swedish Krone, as the Swedish Central Bank, the Riksbank, made a larger than expected rate cut of 100 BPS (50 BPS was forecast). The Riksbank also basically outlined their plan to cut rates further in future meetings.

British pound sterling lost ground too, when the Bank of England's (BOE) Gov. Mervyn King made some statements about the U.K. being in a "deep recession" and that it will "probably require lower interest rates and an increase of money supply"....

Now, the lower interest rates aren't what put the kyboshes on the pound's recent strength... It was the comment about increasing money supply... Which in my book of how to value a currency is one of the top valuation indicators. You see, inflation in the U.K. has fallen to .05%, 1.5% below the ceiling target for inflation, and lowering the interest rate is one thing, but increasing money supply? I truly believe that increasing money supply places the velocity of money rule in place, and inflation can spiral when that happens... It's akin to "playing with fire"... Somebody is going to get burned!

And here's a sign that a country's currency is on the downward slope... Mexico's Central Bank said that it will "continue to intervene to support the peso"... UH-OH! Let's see what this intervention has gotten the Central Bank so far this year... The peso is down 4.7% this year, and lost 2.3% of that yesterday! The Central Bank bought $1.1 Billion worth of pesos last week to prop up the currency... Their foreign reserves now stand at $82 Billion worth, so they could play this game for some time... But, in the end, the markets have deeper pockets, and if they smell blood in the water, like I think they do now with pesos, they will test the Central Bank's willingness to spend those foreign reserves!

The folks over at Citigroup, issued a report on China yesterday, and they are bucking the trend to downplay China in 2009... Citigroup believes China will surprise on the upside, and their currency, the renminbi, will continue to gain VS the dollar in 2009 to 6.6, from current levels of 6.83... So... This is one of the few reports that follow along with my general feeling of China...

The Geithner Plan was good for Gold, as the shiny metal gained $20 yesterday, and is up another $10 this morning, and is trading at $924.69... I gave a long interview yesterday regarding deflation and inflation. I tried to explain how the deflation we are seeing right now is asset deflation, not your ordinary monetary deflation, for that would require a contraction of money supply... I was asked what assets perform well in a deflationary cycle... Cash... And while Gold is the same as cash... Gold! I have a new term that I came up with for Gold... An "uncertainty hedge"... How do you like that one? Everyone is uncertain as to what's going on and what will happen with all this spending going on, and what performs well? The "uncertainty hedge"!

And on that note... I think I'll head to the Big Finish! And don't look now but the price of Oil is falling again....

Currencies today 2/11/09: A$ .6530, kiwi .5230, C$ .8025, euro 1.2950, sterling 1.4360, Swiss .8655, rand 9.8980, krone 6.7175, SEK 8.2430, forint 227.50, zloty 3.5140, koruna 22.0850, yen 89.90, sing 1.5060, HKD 7.7510, INR 48.69, China 6.8330, pesos 14.60, BRL 2.2890, dollar index 85.60, Oil $37.84, Silver $13.39, and Gold... $924.69

That's it for today... I tried and tried to get "something" out of the Geithner Plan last night, but it totally lacked specifics, and I understand why the markets began to circle the bowl. Speaking of last night... I tried to watch our Blues play hockey, but they were just not playing well, so I switched it off, and began to research for today's letter! Now that's how bad the Blues were playing! Lots of young talented players, but it looks like they won't make the playoffs again this year. UGH! T-minus 3 days left till Valentine's Day... Are you ready? Tomorrow is Lincoln's Birthday... His 200th birthday! WOW! Can anyone explain to me why he doesn't have a holiday? That putting all Presidents into one holiday, is a bunch of bunk in my book! OK... Suzy Q just arrived, so that tells me it's time to get this all wrapped up in a bow and sent! I hope your Wednesday is Wonderful!

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

The Geithner Plan Day!

Chuck Butler — Tue, 10 Feb 2009 14:55:49 GMT

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In This Issue..

* Talking stimulus again...
* Currencies rally, then sell off...
* Aussie Business Confidence slumps...
* The Mogambo on Gold...

And Now... Today's Pfennig!

The Geithner Plan Day!

Good day... And a Terrific Tuesday to you! The President talked to us last night regarding the "new and Improved" Stimulus package. He sounded a bit defensive, don't you think? But, I will say this, he tried to stay on the high road, when defending the package. He really ripped people like me, that oppose the package, and see it as spending only. I think he forgot to mention that people like me that oppose it, oppose it because we can't afford it! But the President firmly believes our economy could completely collapse without this, so I can see where he feels the urgency to get this bill signed.

OK... Enough of that! I don't like talking about stuff like that, because I'll have 100 people write me nasty emails about politics, and 100 people write me that I was bang on!

Well... I don't know, I don't know, I don't know where I'm a going to go when the volcano blows... Things around the world just don't see to be anything to write home about... This morning, the euro has lost all the ground it gained yesterday and more, before climbing back this morning. The euro led the other currencies (minus yen) to higher ground yesterday, and the rally last most of the day. The euro climbed to near 1.31, before profit taking set in last in the day bringing it to just above 1.30. However, in the overnight market, the euro has been sold again down to 1.2894 before rallying back as I write to 1.2970... Here's the skinny...

Russia owes the European Union and other countries a boat load of money on loans made to Russia. This has been a "known" thing for years now. But... Russia is now asking the European Union to moderate talks with foreign creditors on $400 Billion of loans... This obviously shows that the credit crisis is still in play, and now affecting Governments from obtaining needed credit. This news has caused the euro to take a shot to the mid-section...

OK... The President was very clear last night that U.S. Treasury Sec. Geithner will explain his "new and improved" plan for dealing with the remaining $350 Billion from the TARP (troubled assets relief program). Now, I have no idea what Geithner is going to say, but I know what he had better say, or else the risk takers are going to go back under their rocks and stay for awhile. I expect Geithner to talk about how the remaining $350 Billion will come with some major strings attached, like: a provision that any of the funds taken are to be used to clear up funds for lending.

And here's where the cheese binds folks... Without the credit markets operating in a near-normal capacity, the "new and improved" Stimulus Package that's going through Capitol Hill now, won't stand a chance! Businesses need to get credit to expand and hire workers, individuals need to get credit to buy homes, etc.

I was talking to a banker that I've known for a very long time last week, and one that was a lender for many years, and he thinks that even if the credit markets unlock, who's going to have a "sound" balance sheet to obtain a loan? His thought was that "whey would any lending institution make a loan when 500K jobs losses are posted each month, and bankruptcies are at record levels, and regulators are breathing down their necks to make certain we don't slip back into past lending practices... Just imagine, if you will... A return to the old adage that a lender looks at the borrower's ABILITY TO REPAY THE LOAN...

OK... So now, after having said all that... I need to say, that we HAVE to find a way to get past all this... The Credit markets need to unlock! Or else... We'll be stuck in Jimmy Carter's "malaise" for years to come! We don't even want to slip into anything resembling "Japan's lost decade"...

So, I've spent the morning talking about stimulus and TARP, and the credit crisis... Time to skip over to something else!

Yesterday, the Aussie dollar had it all going on, rising to well above 68-cents... Overnight, however, with the euro getting sold, the A$ has seen selling. Add to the euro's plight, the fact that Aussie Business Confidence dropped to a record low last month, and we've got A$ selling down below 67-cents... But hey! At .6670, the A$ is still quite a bit higher than it was just a week ago...

With the risk takers on the run yesterday afternoon and overnight, the Japanese yen is back on the rally tracks after a couple of days off of them.

Union Bank of Switzerland (UBS) announced more layoffs along with more losses last night, but assured everyone that they would return to profit next year.

A couple of weeks ago, I talked about how I believed U.S. Treasuries were the next bubble to burst... I spent a ton of time explaining how this would work in my presentations last week at the Orlando Money Show. Well... A quick look at the Merrill Lynch Treasury Master Index, shows that Treasuries have lost 3.6% so far this year... That's the worst start in any year since 1980!

I remember what was going on in the early 80's in bonds... I was running the bond operations at Mark Twain Bank, and this is nothing like that... But... I think the thing that resembles this move in bonds the most is what happened in the 90's. Back then, the bond markets' participants made sure the President's spending plans were put aside and a balanced budget was pursued instead. The bond market participants drove up borrowing costs then... And it looks like they have plans on doing that again, which would really throw a spanner in the works for President Obama's plans...

I'm so bummed about all of this... If the lawmakers in Washington had just had read their Financial Reckoning Day books that were sent to them 6 years ago, or their I.O.U.S.A. books that were sent to them last year, maybe we could have done something about this before it got so dire... BTW Bill Bonner and Addison Wiggin wrote Financial Reckoning Day, and Addison Wiggin and Kate Incontrerra wrote I.O.U.S.A.

And to add to my / our misery this morning... Fannie Mae and Freddie Mac, remember these two? They kick started all these losses, now say they need more bailout funding. Well, let me clarify that, they said they will need $200 Billion more if the housing market continues to deteriorate. Well... They might as well get in line for that $200 Billion now folks... That's how I see it...

And then there was Gold... My friend, the Mogambo Guru, had this to say in his weekly letter that posts on the Daily Reckoning site, (along side my Pfennig!) www.dailyreckoning.com So, here's the Mogambo talking about buying Gold!

"Well, since you asked, the point is that "At the end of 2007, above-ground privately held gold bullion amounted to less than $650 billion, and the total amount of silver and platinum bullion was less than $5 billion. Put together, this is less than 1/3 of 1 percent of the estimated $187 trillion of global financial assets", which doesn't even start to address the implications that "China, Russia and the OPEC countries are considering substantial increases to their gold allocations in order to diversify their US dollar risk", which means that "Any reallocation by these countries will drive prices much higher."

>>> back to me, briefly... I get asked all the time about the Gov't confiscating our Gold like they did in the 30's... I tell people that times are different. Back then, Gold was a part of our money. Dollars were backed by Gold, and therefore the Gov't had a "need" for the Gold... But that's no more! Therefore, I just don't see the Gov't getting involved in a confiscation... Besides, as I told the crowds last week, I've got a rake, you've probably got a pitchfork, and if they want to take my Gold, they will face the rake and pitchfork! HA

But, I think the Mogambo nailed it even better, so back to my friend, the Mogambo Guru...

"And in that regard, people keep asking me if the government is going to confiscate gold, and I tell them "Why don't you ask the government?" Hahaha! As if they would tell you the truth! Hahaha!

But not even mentioning that the Federal Reserve can print up all the money it wants, so they would not confiscate gold for the money, or the fact that all the gold held at the Federal Reserve is chump change; if the Fed still has all of its reported 261 million ounces, then at even $1,000 an ounce, all the gold would only be worth a lousy $261 billion dollars!
Less than a quarter of the Federal budget deficit for this year alone!
Hahaha!

And then the government has to store the gold someplace and start absorbing all of the expenses of guarding it, which doesn't even address that the "takings clause" of the Constitution which prevents the government from taking anything away from you, including gold, without paying full market value to you, the owner.

So will the government confiscate gold? Why in the hell would they want to do that?

>>>> Ahhh... The Mogambo on a Tuesday, there's not a better way to start a Tuesday! (except of course if you won the lottery and asked for Gold instead of dollars!)

OK... So to sum up today... U.S. Treasury Sec. Geithner will give his "new and improved" plan for TARP money. But before he speaks, the Fed Chairman, Big Ben Bernanke, will speak on lending programs at the Fed... The markets will wait for Geithner, to see if the risk takers are coming back... Let's hope he can do a Bullwinkle and pull a rabbit out of his hat!

Currencies today 2/10/09: A$ .6670, kiwi .5335, C$ .8165, euro 1.2970, sterling 1.48, Swiss .8625, rand 9.6960, krone 6.6760, SEK 8.1250, forint 222.25, zloty 3.4410, koruna 21.6375, yen 91, sing 1.4975, HKD 7.7510, INR 48.74, China 6.8325, pesos 14.20, BRL 2.2545, dollar index 86.10, Oil $40.59, Silver $12.95, and Gold... $895.78

That's it for today... Hey! How about those Missouri Tigers! My beloved Tigers came back from a double digit deficit against the reigning National Champion Kansas Jayhawks, and beat them on a last second shot! WOW! Not only was the victory sweet before a home crowd, but it was against rival Kansas! Britney Spears, I mean, Alex Rodriguez, admitted to using steroids yesterday, which works out well, since he was exposed for using them the day before! The NY papers are calling him A-Roid... Isn't this all sad? He was supposed to be the anti-Barry Bonds... And now he's on Barry's team... We're just a few days away from pitchers and catchers reporting for spring training, maybe we can forget about A-Rod then... I'm one month away from leaving for Florida, where I will remain for the rest of the month! I'll be speaking at the Investment U. Conference in St. Petersburg at a tre' cool hotel down the street from now demolished, Al Lang Stadium! You have to be a member of the Oxford Club to attend, so if you are a member, get signed up and go where it's warm! See you there! Whew! Enough typing today! I sure hope your Tuesday is Terrific! (I also hope that Timothy Geithner's Tuesday is Terrific too!)

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

Jobs Jamboree / Horror Show!

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

...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..

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

And Now... Today's Pfennig!

Jobs Jamboree / Horror Show!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

But, following tradition, they passed it anyway.

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

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

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

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

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

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

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

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

Talking Stimulus Deux

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

.........But First, A Word From Our Sponsor..........
Gold and silver prices are down.

Invest for as little as $5,000, avoid costly broker commissions, and receive account statements every month.

In This Issue..

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

And Now... Today's Pfennig!

Talking Stimulus Deux

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Talking Stimulus...

Chuck Butler — Tue, 03 Feb 2009 15:38:56 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..

* A very tight range for currencies...
* RBA cuts rates to historic low!
* Spending that doesn't create jobs...
* Gold see profit taking...

And Now... Today's Pfennig!

Talking Stimulus...

Good day... And a Terrific Tuesday to you! On the road again, I just can't wait to get on the road again... Yes, all my bags are packed and I'm ready to go! Won't be back until late Saturday night, and back in the saddle next Monday. And I'm leaving just in time, as yet another cold front has moved into St. Louis! UGH!

Well... Let's see... What to talk about today? I could talk about the Aussie rate cut and stimulus package... I could talk about the "new and improved" stimulus package and all the "non-stimulus spending attached to it... I could talk about how it sure seems as though the euro, and then the other currencies, are taking their cues to rally from equities... Now, this is certainly a short term phenomenon because we all know that currencies have different pricing mechanisms than stocks, and a very low correlation to stocks, which is why they make excellent diversification assets, along with Gold and Silver.

Well... What's it going to be boy? Oh, Shoot Rudy, I'll just talk about all of them, and probably more, you never know what's going to come to me, as I start typing!

OK... Front and center this morning... The euro is a bit higher than yesterday, having climbed to 1.28 and change. But, actually, this figure is a bit lower than the high yesterday. At one point the euro was within spittin' distance of 1.29... The trading range has been tight, like Tupperware! That reminds me of... No... Not today, Chuck!

The Reserve Bank of Australia (RBA) did cut rates 100 BPS last night, to the lowest internal rate of all time... (3.25%) The RBA issued a statement that said something about future rate cuts not being as aggressive as those across the last 4 months. Now, that's a good sign, but it's also a bad sign, as it suggests that the RBA isn't finished cutting rates. Right before the rate announcement, the Gov't announced a stimulus package. Now, I don't like this, as it puts the RBA, which I've always held in high regard, in the same boat as all the other countries doing stimulus packages... birds do it, bees do it, Even educated fleas do it... And I'm not talking about falling in love... I'm talking about stimulus packages... The RBA believes that with a combination of fiscal and monetary stimulus, they can kick start their economy...

Memo to the RBA... While domestic demand is a good thing to have... You need China to grow again... Any way... The news of the combination of fiscal and monetary stimulus, has lifted the A$ up off the mat... But I doubt it will have much follow through... Not without a euro rally to 1.30 and higher...

OK, speaking of stimulus... I'm very upset with the "new and Improved" stimulus package. I'm sure you've figured this out already from previous rants. However, now... I'm even more ticked off! Oh, and the TV / Cable media are swallowing the propaganda from the White House, hook, line and sinker! Here's what I'm talking about folks...

The package has a "buy American" portion in the package... This is protectionism folks... And here's what gets my goat the most about protectionism at this stage of the recession... Fed Chairman, Big Ben Bernanke, is supposedly a "U.S. depression guru"... Well, Big Ben, wasn't the protectionism of the 1930's one of the reasons for the Great Depression? And is just so happens that now we've had "the cheater's" confirmation, calling China "currency manipulators", and that was followed up with the "buy American" portion of the package...

Look... There's nothing wrong with the slogan, Buy American... In fact, I think it would be a great thing to go around saying and doing, based on our manufacturing prowess... But, that's not what I'm talking about here... I'm talking about protectionism, at a time when the global economies are hurting and need to export to us... I'm really surprised that the currency traders haven't seen this and taken the dollar to the woodshed... But then, maybe they're getting the wool pulled over their eyes...

The other thing that ticks me off on the "new and improved" stimulus package is the fact that a very small piece of the $816 Billion (before the Senate adds their pork!), stimulus is for the infrastructure projects that have been billed as a "major piece" of this plan! HOGWASH! Now, I'm not going to sit here and pass judgment on all the "items" that are being allocated Billions of dollars, like $1 Billion to deal with the census problems, and $88 Billion to help move the Public Health Service into a new building next year, and $650 million for TV Converter boxes. The list of items like this goes on and on... And all worthy items, I'm sure... But none of these types of spending allocations, and I repeat this so you get the full force of this statement... None of these types of spending allocations are doing anything to create jobs. Oh... And just for those of you keeping score at home... $50 Billion is allocated to bricks and mortar... Infrastructure... Which has had "top billing" on this package... Well, the truth is out... I sure hope someone takes their lawmakers to the woodshed for this!

And... One more thing that's really ticking me off about how we're going about "attempting to stop the correction" , which in my mind should NEVER have been done in the first place, and that is this creation of a "bad bank"... Again... And I really want to stress this point... Why not focus on creating a "good bank"? Because creating a "bad bank" has all kinds of problems attached to it, and IT DOES NOTHING TO CREATE JOBS!

OK... Enough! You are quite full of you know what and vinegar this morning, Chuck... Yes, I know, maybe I'm excited about traveling to Orlando! And maybe not... Who knows?

The Trading Theme is back in place, big time, these days. And with the Trading Theme right now, and short-term I'm sure, is this connection between equities and currencies... And currencies had better break that connection in a New York Minute, because I don't see any good times ahead for stocks... I really thought they would experience an Obama bounce, but not so... The DOW sold off to the tune of -9.5% in January! OUCH! But you never know with these markets... If they are left alone, they will work through good times and bad times, based on fundamentals... If they have the Gov't sticking their hands in there, acting like they know what they're doing, messing with the fundamentals Gods... Then... We get bubbles...

But... Like I said above, currencies are a different bird than equities, and have different pricing mechanisms, so this association can't last too long...

I saw this story, and had to talk about it... Well, everyone knows how I have beaten the U.K. pound sterling around the head and shoulders for months now... And the currency has responded losing 27% in the past 6 months... Well... There's someone beating the drum for the pound sterling these days... Let's listen in... Jim O'Neill, chief economist at Goldman Sachs Group, Inc. had this to say... "the U.K. is no Reykjavik-on-Thames" (referring of course to the meltdown / collapse of the Iceland economy, Gov't, and currency) Mr. O'Neill, also had this to say... "The pound is very cheap for the first time in our professional history. You need to make sure that the U.K. is Reykjavik-on-Thames before you bet against the pound."

Hmmm... I guess he means now... Don't bet against it now... Because betting against it since August has been quite profitable!

The Swiss franc continues to get dragged through the mud by the bank scandal that I talked about last month, between UBS and Italian municipalities... There's been some new rot found on UBS's vine, and since UBS is such a large piece of Switzerland... The franc gets hammered... What the franc needs right now is a rally by the euro, so it can grab hold of the euro's coattails!

Oh... And before I head to the Big Finish... I want to tell you that next week, we get "the plan"... Treasury Secretary Timothy Geithner will give a speech next week in which he will outline the Obama administration's financial-rescue plans. Whew! I feel so much better now! NOT!

Oh, and one more thing... The count is now two tax cheaters found in the new administration... First we had "the cheater" Treasury Sec. Geithner, and now we have Tom Daschle... Oh brother! Now... Where's the change? Wouldn't it be a huge stance that this kind of scandal and bad press on his administration will not be tolerated, if Obama asked these two to fall on sword?

I know, I keep saying one more thing, but this time I really mean it! After talking up Gold yesterday, it sold off $20! UGH! Profit taking, I have to believe, as there's nothing to show me that Gold should have been sold!

Currencies today 2/3/09: A$ .6390, kiwi .5055, C$ .8040, euro 1.2875, sterling 1.4260, Swiss .8640, rand 10.13, krone 7.0425, SEK 8.35, forint 232.65, zloty 3.5425, koruna 22.07, yen 89.50, sing 1.5150, HKD 7.7535, INR 48.82, China 6.8402, pesos 14.48, BRL 2.3175, dollar index 85.89, Oil $40.20, Silver $12.37, and Gold... $906

That's it for today... I noticed the other day, as I passed by a gas station, that the price of gas had jumped 20-cents in one day, while the price of oil has remained constant, if not cheaper... Oh the games people play now, every night and every day now... This will be my first trip with Chris, since last May. He's a busy guy, and doesn't have time for me to be dragging him around the country! Hey! This is exciting too! We're currently working on a new way of bringing me to you! Each working day, (that I'm here, which won't be very often in March!) Kristin will sit down with me, and do a quick overview of the Pfennig, and ask me to further explain a couple of things I talked about in the Pfennig each day. This will all be a video (in our cool studio) and placed on our website... Now, how cool is that? We're practicing now, and hope to be "live from St. Louis" no, wait! That would "taped from St. Louis" on the website soon... I will, of course, let you know more, when we're ready! Well, people are arriving, I must be late! I hope your Tuesday is terrific!

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

Another FOMC Day....

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

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In This Issue..

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

And Now... Today's Pfennig!

FOMC Day....

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Maybe It's Time For A Change?

Chuck Butler — Wed, 26 Nov 2008 17:14:00 GMT

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In This Issue..

* Currencies continue to rally...
* More Stimulus...
* Data shows more rot on the vine...
* A Thanksgiving thought...

And Now... Today's Pfennig!

Maybe It's Time For A Change?

Good day... And a Wonderful Wednesday to you! The day before Thanksgiving... Tonight is, historically, the biggest "going out" night for the younger crowd, as they all return home from college, etc. Not for yours truly though... A little reminder that Friday I will not be writing... Friday night, a large group of friends and family are starting the holiday season off with a gathering at the Butler House, before all heading to see the Trans Siberian Orchestra's Holiday Concert... I'm getting pumped up for that!

OK... Another rally day in the currencies yesterday... One that wasn't as pronounced as Monday's 3-cent rally... But a rally just the same, and at one point, the euro was trading above 1.30... Hadn't seen that level in a while, so welcome back to the 1.30 level, Mr. euro...

Someone sent me a note the other day, and said, why don't you talk about Australia, Canada, and Swiss more? Hmmmm... Maybe they don't read the Pfennig "every day"... But those currencies are in my notes most days, and if they are not, they are a part of the overall direction in currencies that are being pushed down by the Trading Theme... But in the spirit of the season...

Aussie dollars have rebounded nicely the last three days, but this is really putting a band-aid on a bullet wound, for the A$ has suffered a shot to the heart, and you're to blame, no wait! They've gotten bashed, beaten and left for dead, by the unwinding Carry Trades, and Commodities price collapse. Large interest rate cuts by the Reserve Bank of Australia (RBA) haven't helped the A$... And so... Until risk is back in the markets, driving commodities higher and bringing the battered Carry Traders back, the A$ will not be on the short list of currencies that can mount a rally VS the dollar... Should those two items come back with vengeance? Now that's a horse of a different color!

The Canadian dollar is getting tarred with the same brush as the A$, only the main commodity pushing the C$ down is the price of oil... Now, this is a case of: Torn between two lovers, feeling like a fool... I would love to see the C$ rebound, but it needs a higher oil price to do so, and I'm not about to turn my back on lower oil prices! I love less than $2 gas!

Now there are those that would tell you that this current level of the price of oil is just a fleeting moment price, and that we're still in store for $8 gas down the road... OK, I'm not sure I can get my arms around that, unless... We as a country do what we've done about gas driven automobiles for the last 35 years... Nothing, absolutely nothing! Then $8 gas is probably in our future... But it's not now, and won't be next week or next month, or even next year... Let's all hope it's not in our future at all!

The Swiss franc... Oh, where to start? The Swiss National Bank (SNB) shot an arrow into the heart of the franc last week, when they cut interest rates 100 BPS... Who would have thought that the SNB had 100 BPS of rate cut arrows in their quiver? But they did, and now francs are back on the block.... The "block" I'm talking about is the selling short block to fund Carry Trades, where they held court with Japanese yen, until the SNB began raising rates in 2007... Then the U.S. dollar took over, and that's where we are now... Good thing for francs that the Carry Trade and risk Aversion is hanging over the markets like the Sword of Damocles right now...

You know... We've been stuck in this Trading Theme of investors buying dollars whenever the economic Tsunami looks deeper, darker and more dangerous, for so long now, I had to sit back and examine this current currency rally further for what it was... At first, I thought this was simply a case of the currencies rallying because the "light at the end of the tunnel was brighter" as witnessed by the large rallies in stocks, caused by the bailout of Citicorp... But, then if that was the "true case" we would have seen the yen get sold along with the dollar... And guess what? Japanese yen was rallying too, while the dollar got sold!

In short- it seems like the market is starting to realize that all the various stimulus packages and bailouts our "leaders are throwing at the problems our economy faces and recognizing that while they may or may not lead us to the promised land of no deep, dark, dangerous recession, one thing that is a certainty is they will need to be financed. And isn't this the Big Problem for the dollar that I've talked about for over a year now? In the end, the reality will be that this is all negative for the dollar... And well, in the end, our fiscal well being.

Yes, I completely understand that Europe faces a similar challenge, but let's face the facts here, Europe has a surplus, right now at least, and does not have the funding requirements that the U.S. does...

And finally, there's the "other" thought... The dollar has gone a long way in a very short time erasing 5 years of gains from some currencies... It was about time that it paused for the cause...

So... In keeping with the thought about the stimulus packages and bailouts... The Fed and Treasury announced another round yesterday... You might want to sit down, and reach for your wallet, just to make sure it's still there!

Here's how the Wall Street Journal reported the news... "The U.S. on Tuesday stepped up its efforts to support strained credit markets through new programs aimed at boosting consumer credit and the market for mortgage-backed securities.

Under the Term Asset-Backed Securities Loan Facility, or TALF, the Federal Reserve will extend up to $200 billion in non-recourse loans to holders of asset-backed securities backed by consumer and small-business loans.

The Fed also said it will purchase up to $100 billion in GSE debt through a series of competitive auctions starting next week. It will also purchase up to $500 billion in mortgage-backed securities backed by GSEs, with the goal of starting that program by the end of the year."

For those of you that didn't experience "new math"... (HAHAHAHAHAHA 2+2 is still 4!) the tote board shows us that yesterday's announcement totals $800 Billion in addition to what they already have in the hopper! Geez Louise, when will this all stop? The Fed's balance sheet has grown by over $1.3 Trillion so far this year and could very well be turning Japanese once again! What am I talking about here? Well... You all know how I've been saying that the U.S. if following Japan's model of the 90's? Well... The Japanese added debt on to debt creating stimulus packages and bailouts too, and then lowered interest rates to zero, and the only thing left was targeting the quantity of money rather than its price. By that I'm trying to say that they didn't care what happened to the yen's value, they printed and printed... Oh brother! Here we go again! Are we doomed to experience a decade of deflation like the Japanese did?

I don't think so... I think our deflationary period will be much shorter, and then on the other side of that, we'll see inflation that will cause you to reach for your wallet again to see if it's still there! This inflation will push commodities back into the limelight, and once again the dollar will be punished...

That's my story, and I'm sticking to it!

OK... The data yesterday was more of the same-o, same-o, awful looking stuff... U.S. preliminary 3rd QTR GDP printed at negative -.5%, and Personal Consumption (which the Fed used to look at closely, but doubt they do any longer) fell to negative -3.7% from -3.2% in the 3rd QTR. And, the S&P/CaseShiller House Price Index fell another 17.4% in September from a year ago. The rot on the Housing price vine still has some additional deterioration to go, unfortunately...

The Data Cupboard continues to yield plenty for us to look at each day with a heaping helping of Personal Income and Spending for October today. In addition, we'll see Durable Goods Orders for October, the Weekly Initial Jobless Claims, Chicago Purchasing Managers Index (manufacturing for that region), U of Michigan Consumer Confidence, and New Home Sales for October... Whew! My fingers are worn out after all that! HA!

But there's more... I've been wanting to have a brief discussion about this for some time now, and each day I experience a loss of memory and forget to do so! What am I talking about, I hear you asking? Well... It's Gold... And not just the price of Gold in dollars, which has rebounded nicely this past week... But to point out that Gold has been rising VS all the currencies. Which makes sense right? The dollar has pounded the currencies for 4 months, and Gold gets stronger in those currencies... It's an interesting situation... So, Gold hasn't sunk VS the other currencies like it has VS the dollar.

OK... Here's the dilemma for the currency traders today... We've got all this data to deal with, and everyone is going to be trying to leave early today to get a head start on getting home for Thanksgiving... Will the lack of volume this afternoon cause wild swings? It has a history of doing so...

China has cut their internal interest rate to help stimulate their economy, which the OED lowered their forecast for China's economic growth from 9% to 7.5%... Well... 7.5% still sounds pretty darn good, doesn't it? Especially, when you consider that by the time the 4th QTR U.S. GDP numbers are printed (not until probably Fed 2009), they will show U.S. GDP to be a negative -5.0%!!!!!!

OK... Now that was a lot for the day before Thanksgiving, eh? I had better stop here, as I don't want to get you stuffed before your Thanksgiving meal!

Currencies today 11/26/08: A$ .6480, kiwi .55, C$ .8175, euro 1.2960, sterling 1.5340, Swiss .8375, ISK 235 (really, this is the quote we received Monday!) rand 9.8880, krone 6.9530, SEK 7.9260, forint 201.30, zloty 2.9180, koruna 19.48, yen 95.40, baht 35.20, sing 1.5080, HKD 7.7550, INR 49.43, China 6.8285, pesos 13.37, BRL 2.3370, dollar index 85.38, Oil $51.60, Silver $10.29, and Gold... $816.84

That's it for today... Well... I've written today's Pfennig knowing all long that I had no network to get it out... I noticed the problem when I logged on this morning... No network... And since I get here long before most of our IT people are wiping the sleep out of their eyes, (not a knock on them, just to point out how early I get here) The Pfennig probably won't go out for a few hours this morning... So... I've got that going for me this morning! UGH!

Tomorrow is Thanksgiving... It's quite a day as families gather and celebrate with wonderful meals and lively conversations. It's also a day for some great football games! Here's a Thanksgiving poem for you...

Leaves are falling everywhere,
A bit of chill is in the air,
It's time for fun and food galore,
For turkey, pumpkin pie, and more...
Autumn is here and that means one thing,
All the joy that Thanksgiving brings.

And as we gather together
From wherever we live
We give thanks to our Fathers above
For the earth and its harvest,
For freedom and peace,
And, especially,
For the people we Love.

I hope everyone has a wonderful and fulfilling Thanksgiving.

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