Daily Pfennig : Sweden

ECB & BOE leave rates unchanged...

Chuck Butler — Fri, 09 Oct 2009 14:41:40 GMT

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

Looking for a great place to park your U.S. cash? Check out the Yield Pledge Money Market Account by going to www.dailypfennig.com and clicking EverBank Home. Its yield is pledged to remain in the top 5% in the nation!
......................................................
In This Issue..

* ECB & BOE leave rates unchanged...
* Trichet makes a mistake in judgment...
* Asian central banks defend the $..
* Gold pauses...

And Now... Today's Pfennig!

Good day...Had a horrible night here in St. Louis, as every one of our teams let victory slip away. As you all know, Chuck drove to Columbia to watch his MIZZOU Tigers take on one of their arch rivals in a rare Thursday night matchup. The game went well into the night, as it was delayed due to problems with the lights at the stadium, so Chuck probably didn't get home until early this morning. I'll have the con on the Pfennig today, but Chuck will be back in the saddle again on Monday.

As predicted, both European central banks kept interest rates unchanged. The European Central Bank and the Bank of England kept their benchmark interest rates at record lows in an effort to keep stimulating their economies. Trichet signaled that the ECB has no plans to raise rates in the near future, stating that the current level is 'appropriate' for the current economic environment. "The recovery is expected to be rather uneven," Trichet said. "It will be supported in the short term by temporary factors but will be hampered in the medium term by balance sheet issues at financial and non-financial institutions."

When asked about the recent fall of the US$, and the possibility of currency intervention, Trichet repeated the standard line saying "excess volatility and disorderly movements" hurt growth and policy makers "will continue to monitor the exchange markets closely and cooperate as appropriate". Trichet also stated that he trusts his US counter parts (big mistake!) that their statement on the strong-dollar policy. "When the Secretary of the Treasury and our friend Ben Bernanke say that a strong dollar is in the interests of the US economy and that they are pushing a strong dollar policy, this is a judgment that is obviously very important for us and the global economy." NOTE TO TRICHET: YOU CAN'T TRUST A CHEATER!!

The current administration may say they support a strong dollar, but their actions sure don't show it. Quantitative easing efforts have pumped a record amount of liquidity into the markets, and Washington has the printing presses working overtime. Unless we the laws of supply and demand have changed, all of these US$ which have been created will cause the value of these dollars to drop. We have seen a 15% drop in the value of the dollar index in the past 6 months. The current administration has no reason to support a strong dollar, and realize there is no way they are going to be able to protect the value of the dollar while pursuing their 'quantitative easing' policies. In order to protect the dollar, Geithner and Bernanke would need to shut off the printing presses, and actually put them in reverse, pulling liquidity out of the markets. There is absolutely no way this will occur anytime soon.

The Bank of England also left rates unchanged and announced they will continue to push money directly into the economy through purchases of government and corporate bonds. At least one of the policy makers in England seems to understand what is going on. Conservative leader David Cameron stated today that the policy will lead to inflation, signaling to his party's annual conference that it would stop the government's main economic stimulus program if it wins the next election. "Sometime soon that will have to stop because in the end printing money leads to inflation", Cameron said. But others remain trapped in their own twisted reality with former BOE officials calling Cameron's remarks 'dangerous'.

The dollar moved up a bit vs. the Euro and Pound after the announcement, but fell again overnight. Overall, the greenback is up compared with yesterday morning, with the biggest moves coming against the New Zealand dollar and Japanese yen. Asian central banks intervened heavily in the currency markets on Thursday to help support the US$. With China keeping the renminbi stable vs. the US$, other asian currencies not pegged to the falling dollar have risen. Governments in Japan, Thailand, Hong Kong, and Singapore were big buyers of US$ yesterday and continued with their purchases overnight. Their efforts may work to slow the decent of the US$, but it won't change the direction. These central banks just don't have the financial power to change the inevitable fall of the US$.

Data released yesterday showed initial jobless claims in the US fell slightly to 521k and continuing claims also drifted lower. Both are still near historic levels, and don't support the claims that the US economy is pulling itself out of the recession/depression. In other news, chain store sales managed to eke out a small increase in September. While the news caused a rally on Wall Street, the YOY increase was mainly because the stores had absolutely abysmal sales one year ago. The largest industry group is cautioning against reading too much into the increase, and continue to predict a decline in sales for November and December.

In another report, the Commerce Department said wholesale inventories fell 1.3% in August, worse than the 1 percent drop economists had expected. This follows a 1.6% drop in July as business continue to reduce inventories.

Today we only have one piece of data, the Trade Balance, which is expected to show a deficit of $33 billion for August. This deficit comes in spite of a falling US$ which should eventually make our exports more competitive, and force a narrowing of this balance. The continued deficit forces the US to have to attract foreign capital as imports continue to outpace exports.

Canada got a good piece of news yesterday as Canadian employers added jobs for the second straight month in September. The unemployment rate fell to 8.4% as employment rose by 30,600. The report will increase pressure on the Bank of Canada to raise interest rates from record lows, and could lead to strength in the Canadian dollar. We have been supporters of commodity based currencies, and Canada certainly has an abundance of raw materials. Their proximity to the US has caused some concern, as the US is still their largest trading partner, but Canada has worked to strengthen ties to China and is now enjoying an increase in exports to Asia as the recovery takes hold in the Far East.

An associate from headquarters down in Jacksonville emailed me last night to ask my opinion on recent events in Latvia. Now I certainly try to stay informed on all of the countries around the globe, but had to be honest and tell him I haven't really ever looked at what is going on in Latvia. But after doing a bit of research, I realized what had sparked the question. Economic troubles in the Baltic state led to concern over the future health of Swedish banks. Plunging property values in Latvia have left borrowers 'upside down' on their mortgage loans mainly provided by Swedish banks. The Latvian government had announced a plan to protect homeowners from foreclosure, angering Sweden. But overnight, Latvia has announced it is pulling away from its earlier plan, and would come to an agreement with its international lenders. It looks as if the 'Latvian' crisis will be resolved, and Swedish banks will avoid possible losses which could have occurred. The Swedish Krona is unchanged on the month, and has increased over 12% in the past 3 months. With the Latvian crisis avoided, the SEK will likely resume its move higher vs. the US$.

After hitting an all time high yesterday, Gold slipped back slightly overnight. This was the first drop in the gold price this week, after the biggest weekly advance since April. We had expected a pause in the rapid ascent for gold, and a small move higher by the US$ pushed gold lower. Many traders are now calling for a near term correction in the price as investors take profits from the rapid move. According to an analyst at HSBC: "The likelihood that long-term dollar weakness will support gold does not obviate the fact that the near-relentless increase in bullion prices recently has raised the possibility that gold is due for a pullback," HSBC Securities analyst James Steel said in a report emailed today. "A dollar rally, even if only temporary, could provide a reason for gold longs to take profits."

Currencies today 10/9/09: A$ .9074, kiwi .7405, C$ .9572, euro 1.4761, sterling 1.5987, Swiss .9720, rand 7.3611, krone 5.6326, SEK 6.9742, forint 183.26, zloty 2.8760, koruna 17.4924, RUB 29.599, yen 88.75, sing 1.3917, HKD 7.7502, INR 46.4575, China 6.8255, pesos 13.2393, BRL 1.7364, dollar index 76.06, Oil $71.38, 10-year 3.26%, Silver $17.635, and Gold... $1,049.60

That's it for today... Tough night for the St. Louis sports scene as the Cards, the Blues, and the Tigers all blew leads to end up losing. I attended the Blues home opener last night, but caught the awful 9th inning of the Cardinal's game between the first and second period. What a waste of another great start by our stud pitcher Wainwright! The Cards have backed themselves into a corner now, and will need to win the next three in a row. The Blues started off the game on top, but couldn't hold their one goal lead and fell to their first loss of the 2009-2010 season. And finally, Chuck braved the cold and rain to watch his beloved MIZZOU fall in the fourth quarter. It was raining the entire game, so I just hope Chuck doesn't come down with anything! Looks like we may finally get a bit of a break in the rain today, but the temperature sure has dropped; summer is just a memory now. Hope everyone has a Fantastic Friday and a wonderful weekend!! GO CARDS!!!!
Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

Time To Remove Stimulus?

Chuck Butler — Thu, 03 Sep 2009 15:40:00 GMT

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

Don't let market risk get in the way of potentially rewarding exposure to the BRIC currencies. Our 3-year MarketSafe® BRIC CD shields you from any market risk and provides 100% principal protection on deposits held until maturity.

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

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

In This Issue..

* Chinese stocks rise 5%!
* Risk Assets follow!
* OECD forecasts faster global growth...
* Gold & Silver kicking sand again!

And Now... Today's Pfennig!

Time To Remove Stimulus?

Good day... And a Tub Thumpin' Thursday to you! Let's hope it remains a Tub Thumpin' Thursday later today, as I head downtown to watch my beloved Cardinals play a day game! For those of you who are baseball fans, you know what I mean when I carry on about how baseball should only be played during the day!

OK... Before I get to the currencies, economies and the dolts in the world, I wanted to briefly talk about the SEC, who made an announcement yesterday that they had done an investigation of the Madoff audits, and did not find any fraud... Just mistakes... Really? Mistakes? That's what they call them? Even Bernie Madoff himself says that he was "astonished" that the SEC failed to shut him down after interviewing him in 2006!

Well... The currencies, led by the euro, have scratched and clawed their way back to levels they traded at before Tuesday's sell off... The European Central Bank (ECB) is meeting this morning, and while the markets are not expecting rates to move here, they are holding out hope that ECB President, Trichet, will announce that the economic growth expectations have been raised. So... With these thoughts going through the markets, it's no wonder the euro is back to 1.43 this morning.

However, not knowing what Trichet might say, opens Pandora's Box of risks for the euro... For if Trichet does not talk glowingly about the economic growth expectations for the Eurozone, the euro will be hung out on a line. So... Let's hope, Mr. Trichet had a good breakfast, and is feeling spry today!

But for now, it's all skipping in the sun for the euro... The ECB rarely ever ends their meeting before I hit the "send" button on the Pfennig, so... I guess we'll take it all up tomorrow!

The euro isn't the only currency that has scratched and clawed back against the dollar... Yesterday, I told you how the Aussie dollar (A$) was rallying on the back of a stronger than expected 2nd QTR GDP report... Well, now that the euro has joined in, the A$ is really making tracks higher, trading right now, within spittin' distance of 84-cents...

And... Not to gloat or anything... But, let me go back to yesterday's Pfennig and quote something I said... This is from the Pfennig 9/2...

"Talk about getting "dumped" that's what happened to the Brazilian real yesterday... Yes, most of the currencies sold off... But real was really sold off! That makes some sense in that real had out performed most currencies this year, and therefore, the selling, or profit taking would be on a larger scale... I think this selling was overdone though, and I would look for the real to make an attempt to come back today..."

Well... Guess what happened yesterday? That's right! The real came back with a vengeance! Yesterday morning the real was trading 1.9140... This morning it's trading 1.8850! OK... It's not that I'm auditioning for some kind of "spot trading" position... Geez Louise, no! I like to sleep at night! I just wanted to show that sometimes even a blind squirrel can find an acorn! (with me being the blind squirrel, in case that was confusing!)

The real, and not Brazilian real, but real winner in terms of moves VS the dollar yesterday were the Precious Metals of Gold and Silver... Kicking sand in the face of the dollar, and laughing! Gold and Silver are both stronger again this morning too!

There's a great report going around by Frank Holmes, CEO and CIO of U.S. Global Investors. I had dinner with Frank Holmes in Las Vegas about 5 years ago, and run into him at conferences throughout the years... Any way... Frank Holmes put together a strong report on how September is the best month for Gold... "The gold price has risen in 16 of the 20 Septembers since 1989, by far the best success ratio of any month of the year." My good friend, David Galland, has the full story in his daily letter from yesterday... I think you can sign up for it here... http://www.caseyresearch.com/casey-services/free-publications/caseys-daily-dispatch/

OK... Chinese stocks rose 5% overnight, and that has the risk takers coming out the woodwork! That's quite a rebound for Chinese stocks. With all the talk going around about how it's time to get out of stocks before the BIG sell off, one has to wonder if this isn't akin to a star burning out... It's burns brightest just before going dark...

The Swedish krona got hit with a blow to the mid-section yesterday when the central Bank (Riksbank) announced that they were going to keep rates at historical lows until the 3rd QTR of 2010! What? How can they say that? I mean I know, they open their mouths and begin to use their voice box... But what I'm talking about is what backs up what they are saying? How do they know that? What a bunch of dolts! I used to think the Riksbank was a good Central Bank, but this blows it for them! (Not that they will be worried that the Pfennig no longer believes them to be a good Central Bank!) So... These are the cards that have been dealt to the krona... Too bad...

So... The Fed is tossing around the idea of removing pieces of the stimulus... Treasury Sec. Geithner, a.k.a. the cheater, and not the song by Bob Kuban and the In Men from the 60's! (if I recall correctly that was printed on the Pepsi label!) Any way, Geithner doesn't agree and has stated that he believes it to be "too early" to exit stimulus strategies... Geithner is getting ready for the G-20 meeting of finance ministers and Central Bankers beginning tomorrow in London, and had this to say... "We've come a very long way but I think we have to be realistic, we've got a long way to go still."

Well... That's the most intelligent thing I've heard him say so far!

Hey did you see that bond king, Bill Gross of PIMCO, chimed in on this... "To the extent that we have had a trillion dollars worth of stimulus, from the standpoint of deficits, and more, the government basically has to continue to do that and to add to that in order to keep the economy chugging along," he said. "To the extent that that's limited, to the extent that they pull back on some of those stimulus programs -- 'Cash for Clunkers' and those types of things -- then the double dip moves into the realm of possibility."

Yes... Double dipping... It's my call for this economy... And I've said that for a lonnnnnnngggggg time now!

The OECD... The Organization for Economic Cooperation and Development, issued a report yesterday that says the global economy is emerging from its worst slump since WWII, and much faster than the OECD forecast just 3 months ago!

That's nice...

You know... Whenever the currencies rally, the dollar and yen get sold, and vice versa... But... Sometimes, the yen rallies alongside its currency brothers, which is an indication of a real rout on the dollar. And that's what we've got going on this morning... The Japanese yen has joined the "dark side" and is rallying alongside its currency brothers...

Well, yesterday's data cupboard printed a stronger than expected Productivity number here in the U.S. So, doesn't that make you feel better, that you probably had to work longer hours at the same wage, because 1 in 5 American workers are out of jobs, and you have to take up the slack? That's the root of Productivity folks... Sure there are other things like technology, etc. but at the root... It's all about you...

That's why I don't like this report... So now I've given it more Pfennig space than it deserves! UGH!

Today, we'll see the Weekly Initial Jobless Claims as usual on a Tub Thumpin' Thursday, and we'll also see the color of the "services" piece of the ISM... Tomorrow is the Big Kahuna though, with the Jobs Jamboree for August...

Last week, I told you that the U.S. had to deal with another large amount of Treasuries to auction off... Last week it was $197 Billion... And no word of problems dealing with these... But, have you noticed that the 10-year yield, which just a few weeks ago was 3.80%, has fallen to 3.34%? Hmmm... I wonder how that happened? It means that the price of the 10-year has been rising, which would only happen if there was a truckload of buying... Hmmm... I had better go to the Big Finish here before I blow out a gasket!

Currencies today 9/3/09: A$ .8395, kiwi .6785, C$ .9090, euro 1.4310, sterling 1.6380, Swiss .9460, rand 7.7650, krone 6.0270, SEK 7.20, forint 192, zloty 2.8820, koruna 17.8720, RUB 31.67, yen 92.40, sing 1.44, HKD 7.7510, INR 48.91, China 6.8305, pesos 13.57, BRL 1.8850, dollar index 78.22, Oil $69.15, 10-year 3.34%, Silver $15.75, and Gold... $984.50

That's it for today... Yesterday, I talked about the number "6" and went into a silly saying... It was a local funny, in that it's a commercial on TV that does this rap about the number "6"... So, sorry if it confused everyone outside of the St. Louis area... So, I guess all the kids have gone back to school by now... When I was a kid, we didn't start school until after Labor Day... Now they start in the middle of August! My little buddy Alex, was sent home from school sick yesterday, but ate like a horse at dinner, so I expect him to be back at school today. The College Football season begins tonight! YAHOO! So.. Was this Tub Thumpin'? If not, what are you going to do to make it Tub Thumpin' today?

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

A Currency Rally Takes Shape...

Chuck Butler — Fri, 28 Aug 2009 14:38:14 GMT

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

With our latest multi-currency Index CD, we've united the currencies of 6 nations rich in resources, finances, innovation and cash. The idea being that when global growth resumes, these countries may benefit more than most.

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

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

Are you ready for the return of global growth? Ultra Resource is. 3- and 6-month terms available. Apply today or learn more at http://www.everbank.com/001CurrencyCDIndexUltraResource.aspx?referid=11808.

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

In This Issue..

* Currencies rally overnight...
* A$'s rally for 7th consecutive month!
* Will the ECB be vindicated?
* Sweden tries negative deposit rates...

And Now... Today's Pfennig!

A Currency Rally Takes Shape...

Good day... And a happy Friday to one and all! So, yesterday didn't turn out the way I thought it would go, but that's OK... I think my body is trying to tell me something, as I overslept again this morning! I'm heading out the door this morning to go "fishing"... Should be a ton of fun, with neighbor friends this weekend...

Well, front and center this morning, we are smack dab in the middle of a currency rally VS the dollar. It has all the makings of such, as the Japanese yen is getting sold, along with the green/peachback. The improved economic data this week, finally caught up with the dollar, as risk assets are back on the table.

The euro is back above 1.43, and the Aussie dollar is back above 84-cents... These two have become the two indicators of a currency rally... With euros being the offset currency to the dollar, and Aussie dollars being the proxy for global growth. The Aussie dollar is not part of the dollar index, so... If you just watch the dollar index, you won't catch the global growth proxy in that figure... In fact, I've tried to tell people for years that the dollar index is not the "end all" to currency watching.

Let's go through the dollar index, while we're on the subject... Today's lesson if you will! The dollar index is made up of 6 currencies, Euros, sterling, yen, francs, Swedish krona, and Canadian dollars... It is heavily weighted toward euros, which took over from 5 currencies that used to be a part of this index... You know, the "legacy" currencies from the Eurozone that became euros.

So... If you just watch the dollar index, you'll miss the moves of Aussie, kiwi, Brazil, South Africa, and Norway... 5 of the 6 resource countries with Canadian dollars being the 6th.

OK... Class is over... Time to get back to work on what's going on to end this last full week of August 2009.

Speaking of Aussie dollars, as we were above, it appears to me as though the A$ will put in a monthly gain for August, which, by my calculations would be the 7th month of gains for A$'s... Even in the go-go days of A$'s when it was amassing a 75% gain VS the U.S. dollar, circa 2002- July 2008, it didn't put together 7 consecutive months of gains! It's been 20 years since the A$ put together a string of monthly gains like that!

That reminds me of my trip to St. Petersburg last past March to speak at the Investment University Conference... I told people then that the dollar's run since the previous July looked as though it was ending, as investors were growing tired of taking a beating with the "safe haven" trades they went into the previous fall. Boy... That sure was "bang on", eh?

Oh... I also said it in the Pfennig, but you have to remember, I was officially "on vacation" when I went to St. Pete, and therefore didn't come back to the office to write the Pfennig for 10 more days!

A "new" reader sent me a note the other day, and said that the stock market was looking quite overbought, and asked me if a sell off in the stocks would promote the "flight to safety" (Treasuries and dollar buying) once again... I told him that I had talked about this a couple of weeks ago... But, realized there are handfuls of new readers all the time... So... Just in case you missed class that day... I asked the question about whether or not everyone else was seeing this stock move and not believing it had legs... I then said that should stocks sell off and go into the dumpster like they did after the Lehman Brothers collapse, that a return to Treasuries just might be in the cards, and would adversely affect the gains the currencies have booked since March.

We've seen glimpses of such the past couple of weeks, when "risk assets" are shunned.... But, each of those times, the selling didn't last long.

Now that we're beginning to see some countries like Australia and Norway, begin to talk about raising interest rates early next year, and some countries like Germany, France, and Japan, all pulling themselves out of recession, there's a new feeling going around, that countries around the world, will be ahead of the U.S. with regards to economic growth, and a return to higher yields... So... As a currency and precious metals holder, we all have to hope that this would be enough to offset a U.S. stock sell off...

We would then, be back to fundamentals... And oh what happy day it would be! Oh happy day... Oh happy day! Something we could all hang our hats on, and each day say... Well, fundamentally speaking, this should do this, and that should do that! Not all this crisis, investing, hodge podge bundling of risk assets that have little or no correlation to each other, and different pricing mechanisms, and looking over our shoulders for the next shoe to drop...

There was a story in the Financial Times this morning, and it reminded me of something that Chris said last week, when I was in San Francisco. Chris had talked about how the Eurozone economy was pulling itself up from the ashes, and how he thought it probably reflected on how the European Central Bank (ECB) had dealt with their recession, which was quite a bit different than here in the U.S.... The story in the Financial Times said about the same thing this morning!

Let's see what the FT had to say... "As the European Central Bank prepares for its meeting next week, the 16-country Eurozone appears to be recovering, deflationary risks have subsided and an effort to bolster bank lending is in place. The Economy appears to be vindicating the ECB's strategy."

Yesterday, the 1st revision to 2nd QTR GDP here in the U.S. printed and while I thought it would show a revision to -1.5% from -1%, it did not... It printed as unchanged at -1.%... I don't see the economy that strong, do you? I mean -1% is still a negative growth number, but it just feels like to me that it's weaker than that... You have to recall back to the months in the 2nd QTR, we were still booking some HUGE unemployment numbers each month, and the ISM Manufacturing Index was below 45, which you may recall 50 being the line in the sand to indicate expansion or contraction... But, I guess that's what the Gov't says GDP was, and you know me, whatever the Gov't says I go right along with all the time.... NOT! Geez Louise, that, in my mind, would be a crime to do that!

The weekly Initial Jobless Claims hit 570,000 last week, with the previous week revised up to 580,000... So... The Bureau of Labor Statistics (BLS) may tell us next Friday that job losses continue to fall... They lie! Just do the calculations of the Weekly Initial Jobless Claims...

OK, today, to end the week, we get two of my fave reports... Personal Income, and Spending... I saw a report that was calling for stronger personal spending, because of the "cash for clunkers" program. Well, let's hope that's the only reason Spending is forecast to be higher than Income once again! You may recall that in July, we saw Personal Income fall -1.3%, while Spending rose .4%... That's not good folks, and part of the reason we're in this mess today!

Before I head to the Big Finish... I wanted to share this story with you... In the last month, Sweden introduced negative interest rates on deposits, to spur banks to lend more... I wonder how that's working for them? Apparently, other Central Bankers are watching this to see how it works out. You see, they would follow this lead by Sweden, in a heartbeat if it meant they had a "tool" to remove the monetary medicine that Central Banks have given to the patients for a year now...

Currencies today 8/28/09: A$ .8460, kiwi .6880, C$ .9265, euro 1.4375, sterling 1.6375, Swiss .9475, rand 7.7525, krone 6, SEK 7.06, forint 188.10, zloty 2.8425, koruna 17.70, RUB 31.55, yen 93.75, sing 1.4380, HKD 7.7510, INR 48.66, China 6.83, pesos 13.22, BRL 1.8660, dollar index 77.98, Oil $73.19, 10-yr 3.49%, Silver $14.55, and Gold... $953.15

That's it for today... I want to wish Mike Meyer good luck today, as he will go to have Lasik done to his eyes this afternoon... Like I said above, I'm heading out this morning, but first I have some trading to do. Yesterday, I was reading the revision to Financial Reckoning Day, called Financial Reckoning Day Fallout, by Bill Bonner and Addison Wiggin. They've also done a revision of Empire of Debt... If you never read the first editions, I suggest you pick up the "updated" versions, you won't be disappointed! I believe you can get them on Amazon or Barnes and Noble websites... It's very easy to do this! My little buddy, Alex, has his "football Jamboree" tomorrow. These teams all get together and rotate scrimmaging with each other. It's a great way for the coaches to see what they need to work on before the first game. So... Good luck to Alex and the Lindbergh Flyers 8th grade team on a good and safe season! OK... Time to get this show on the road, I have a nice calming lake waiting for me this afternoon! I sure hope your Friday is Fantastico, and you have a wonderful weekend!

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

Dollar continues it’s slide...

Chuck Butler — Fri, 31 Jul 2009 14:45:32 GMT

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

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

Some experts believe these 4 countries may become economic powerhouses in coming years. Now could be the right time to add these currencies to your portfolio. And you can do so-safely-with the U.S. denominated MarketSafe BRIC CD.
Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is August 18, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx
.........
In This Issue..

* Dollar continues to slide...
* US GDP contracts but not as fast...
* Nordic currencies outperform...
* Japanese yen continues to fall...

And Now... Today's Pfennig!

Dollar continues to slide...

Good day... The last day of July is upon us. Time just seems to keep moving faster as it seems summer just got started. The fall of the dollar also accelerated yesterday as investors moved back out of the 'safe haven' of US$ and continued to shop for more yield. The greenback tried to stage a bit of a rally in early European trading, but has fallen back off again as I sit down to write the Pfennig.

I got a call from a Reuters reporter yesterday mid morning to ask why the dollar was rallying at the same time stocks were moving higher. I quickly paged through my Bloomberg looking for some sign why both were heading higher. The trading pattern which has been established over the last few months has these two asset classes moving in opposite directions; good news for the US economy sends stocks higher and the dollar lower as investors retreat from defensive 'safe haven' positions in the US$. The opposite occurs whenever there is data which shows the global economic recovery is faltering, stocks move lower and the dollar rallies with safe haven buying.

But yesterday morning, for a short period both were moving up. I first looked at the jobs data to see if they held any clues. The Initial Jobless claims came in slightly higher than expected, confirming our calls that the labor market will continue to be a drag on the US economy. But the reporter pointed out the continuing claims has dropped. I explained to her that the continuing claims were dropping because people are falling off the rolls. Drops in continuing claims are not due to people going back to work, but are due to people being out of work longer than the labor department's records. So I didn't see anything in the jobs data which would cause stocks to rally.

Unable to find anything in the data to support the short term market movements, I moved the conversation to the longer term trends which I feel much more comfortable speaking about. And by the time the conversation was over, the quick rally in the dollar had subsided, and the dollar index was moving back down. The short term market movements are very hard to call, as the currency and equity markets can move on emotion and rumor for short spans of time. But they will always move back toward the underlying trend line. Right now, the trend is for the US$ to weaken vs. the major currencies; as investors begin to look for currencies with higher yields and better underlying fundamentals.

So the dollar continued to fall vs. every currency except the Japanese yen. The Nordic currencies of Sweden and Norway led the charge vs. the US$ with Sweden moving up over 1.5% and Norway appreciating just under 1%. As I wrote yesterday, the Swedish krona has been one of the best performers recently as their economy has begun to recover ahead of mainland Europe. Sweden's central bank, the Riksbank, was more aggressive with rate cuts than the ECB, so they will now have more room to increase them as the global economy recovers. Like Norway, Sweden went into the global recession in a fundamentally solid position, with a good trade surplus and low national debt. But Norway seems to be a bit better positioned going forward, as they rely on commodity based exports and while Sweden is geared more toward manufacturing. Both should continue to move higher vs. the US$.

The focus today will be on the 2 quarter GDP report which will be released this morning. GDP is expected to have contracted 1.5% after a 5.5% contraction in the first quarter. If the number comes in as expected, the dollar will likely sell off as investors move back into riskier assets. But as I mentioned earlier, the currency markets have started to show signs of moving away from the safe haven / risk aversion pattern recently. Investor's focus will eventually shift toward interest rate differentials. But I still think it is a bit too early for this shift to occur, and a stronger GDP figure will likely cause a further drop in the US$.

We will also see Personal consumption data for the second quarter which is expected to show US consumers are continuing to increase savings. Consumption is expected to have fallen .5% after rising 1.4% during the 1st quarter. In spite of government efforts to stimulate spending, US consumers are worried by rising unemployment and won't likely loosen their tight grip on their wallets anytime soon. Finally, we will end a busy week of data releases with the Chicago Purchasing Manager's index which is expected to show a slight increase to 43 from 39.9 reported last week. This would be a second consecutive monthly increase, a sign that the manufacturing sector is bottoming out. Even though the number continues to move higher, any number below 50 is seen as a negative indication for the economy. Even with inventories near record low levels, manufacturers will likely wait for consumers to start spending again before increasing production.

The pound sterling continued to rise against the dollar after a report showed British consumer confidence held at the highest level since April of last year. It seems the pound sterling has moved to a upward trend, after dropping most of last year.

The Japanese yen continues to fall vs. the US$ as investors sell the currency and move to higher yielding assets elsewhere. Japan's unemployment rate rose to a six year high in June and consumer prices fell at a record pace. The Japanese economy continues to be stuck in a stagnant deflationary state and will be dependent on a global economic recovery to spark exports. Increasing growth in other Asian nations (mainly China) has sparked production increases by Japanese manufacturers. This has been the one positive sign out of Japan recently, but this one piece of data couldn't halt the selling of the Japanese yen.

Elections in Japan will be held at the end of next month, and the opposition party is all but guaranteed to win. The ruling Liberal Democratic Party is in a shambles, and has produced 4 prime ministers in the last 4 years. The new government is expected to increase spending on government programs, but like the US administration, no one has figured out how to pay for these increases. The opposition's spending proposals add up to 3.5% of GDP, and the party has ruled out raising Japan's 5% consumption tax for at least 4 years. Much of the funding for the new programs will come from cutting 'waste' in existing spending programs (sound familiar?). Gross national debt in Japan is currently 180% of GDP and rising as the stimulus packages kick in.

Many factors in the Japanese economy are eerily similar to those in the US, and neither looks to recover quickly. Both the US$ and the Japanese yen will continue to be sold as investors move into currencies of countries with much better economic potential. The short and medium term prospects for these two currencies certainly look negative.

Two currencies which seem to be on a much different path than the Japanese yen are the Australian and New Zealand dollars. Both are headed for their longest set of monthly gains since 2004. With interest rates expected to start rising, and China continuing to consume commodities which both produce, these currencies should continue to perform well. Barclays Capital raised their forecasts for both currencies saying rising risk appetite will boost demand for them in the short term. "A better than expected US GDP result would be the final icing on the cake for July and would provide great opportunity for the Australian dollar to retest 83.38 cents," according to the report.
Currencies today 7/31/09: A$ .8284, kiwi .6561, C$ .9269, euro 1.4139, sterling 1.6552, Swiss .9231, rand 7.804, krone 6.1628, SEK 7.2825, forint 187.92, zloty 2.9328, koruna 18.089, yen 95.70, sing 1.4405, HKD 7.7500, INR 47.935, China 6.8321, pesos 13.2126, BRL 1.883, dollar index 78.966, Oil $66.81, 10-year 3.61%, Silver $13.63, and Gold... $938.42

That's it for today... The EverBank kickball team played or final regular season games last night and ended up victorious in both. More importantly, we were able to make it through both games without an injury! We finished in third place, so we will have a pretty good seed going into the end of season tourney. Happy Birthday to Ann Hopkins today! I have worked with Ann off and on since I started in the banking industry back in the late 80's, and she is a real treat to have on the desk. Hope everyone has a Fantastic Friday, and a wonderful weekend!!

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

Dollar rally peters out...

Chuck Butler — Thu, 30 Jul 2009 14:24:55 GMT

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

Down on the dollar? Foreign currencies at EverBank could be your answer. If you're intrigued by the possibility of lower portfolio risk and gains against a weak U.S. dollar, look to us for:

-- Familiar products: WorldCurrency CDs and Money Market Accounts
-- Many currencies: All major and some emerging currencies available
-- Expert support: Our World Markets Trading Desk is staffed with currency specialists ready to help

Apply today. Visit EverBank.com, or call the World Markets Trading Desk at 800.926.4922
......................................................
In This Issue..

* Dollar rally peters out...
* Obama defends his policies...
* Commodity currencies should outperform...
* Global Power Shift Index...

And Now... Today's Pfennig!

Dollar rally peters out...

Good day... And happy Thursday to everyone! Hope everyone made it through the 'hump day' with no worries. We started the morning here with rainshowers, but it ended up being a beautiful afternoon and evening. Currency markets were similar to the weather here, as most currencies started Wednesday in the loss column vs. the US$, but rallied as the day progressed. The dollar had strengthened over the past couple of days due to 'safe haven' demand; but a surprisingly strong durable goods number (ex autos) combined with an 'all clear' signal from President Barack Obama had investors moving back into riskier assets. The commodity based currencies also got a boost as China signaled it would maintain an accommodative policy, easing speculation that the Bank of China would try to rein in bank lending. Lots to cover today, so lets get right to it.

Durable goods orders for June were released yesterday morning, and the overall number actually showed a pretty dramatic drop of 2.5% compared to the month prior. But the overall number includes automobiles, and with many of the big 3 automobile plants shut down for part of June, the markets were focused on the number ex transportation. Orders for durable goods, excluding automobiles and aircraft unexpectedly rose 1.1% in June following an adjusted .8% rise in May. The ex auto number was strong enough for some to reason that companies would have to start boosting output in the coming months. While the 1.1% jump in orders is nice to see, the overall drop was pretty dramatic, and the auto sector makes up a large percentage of overall output for the US.

Just after noon the Fed's Beige book survey of economic conditions was released. The report said the pace of the US economic recession slowed or stabilized in most areas of the country and pointed to a protracted period of weakness as the economy transitions to recovery. The Fed said labor markets across the country were 'extremely soft' and wages and compensation were steady or falling in most areas. Not the rosiest of pictures for the economy, but not overly negative either.

The nation's #1 cheerleader was out in full force yesterday afternoon, as President Barack Obama defended his administrations policies during a speech in North Carolina. President Obama's poll ratings have slipped as unemployment continues to be a drag on consumer confidence. So he took a break from pushing his health care reform to defend his economic policies, saying he had helped avert an economic disaster as the US economy was in a "freefall". He stated that the US "may be seeing the beginning of the end of the recession", and that his stimulus plans had "helped stop a recession from becoming a depression".

The British pound was one of the biggest gainers vs. the US$ yesterday after a report showed UK house prices rose in July for a third consecutive month. Another report showed the average cost of a home in the UK rose 1.3%. The pound will probably end up in positive territory vs. the US$ this month for a fifth consecutive monthly gain. The rally is a relief for pound sterling investors as the currency dropped more than 26% vs. the US$ last year. A Standard Chartered PLC analyst predicted further strengthening for the pound sterling in a report released yesterday. The analyst stated that the US$ is in a multi-year downtrend, and the pound will likely push up to $1.75 by year end.

But there is still the question of deficits in the UK. The BOE was one of the first central banks to institute 'quantitative easing' policies, and many are looking for them to be the first to stop the program. With the UK housing sector stabilizing, officials will likely pause the asset-purchase program which was set up to lower borrowing costs. But the UK is still going to have to deal with a record deficit, similar to the problems facing the US. The UK Treasury said it will sell a record 220 billion pounds of debt in the year ending March 2010 to offset falling tax revenues and increased government spending. Again, good news for the pound in the short term, but the storm clouds are still gathering.

Positive news out of Europe this morning has helped keep the Euro moving up in early trading. European confidence in the economic outlook increased more than economists forecast in July, as an index of executive and consumer sentiment climbed to the highest reading since November. But the economic recovery in Europe is still very fragile, as evidenced by another report which showed retail sales fell for a 14th month in July. Unemployment in the Euro region continues to be a concern, with the unemployment rate expected to reach 12 percent in 2010.

Both Morgan Stanley and BOA/Merrill Lynch told investors to sell the dollar vs. the Euro in research reports released yesterday. Morgan Stanley said investors should sell the dollar against the Euro, Norwegian krone, and Canadian dollar as the global outlook improves. "As the outlook continues to improve, we believe that currencies with strongest ties to the global growth cycle will outperform at the expense of the US dollar," a currency strategist at Morgan Stanley wrote in a note to clients. BOA raised its forecasts for the euro predicting it would rise to $1.50 by year end. The report highlighted the diversification of reserves as a key driver of the Euro. The euro is predicted to continue to gain vs. the US$ as central banks diversify reserves into Euros from US$ as the US government is debasing its currency through its program of printing money to buy assets such as Treasuries.

One currency which hasn't been performing well vs. the US$ recently is the Swiss Franc which is one of the few currencies to drop vs. the US$ over the past month. This is exactly what the Swiss National Bank has been trying to accomplish, as they have spent as much as $32 billion since March to keep the Swiss franc from appreciating. The SNB sold the franc and cut interest rates on March 12 to stem the currency's gains. The Swiss continues to be a popular choice for investors, but problems with Swiss banking and the government intervention will likely keep the Swiss franc from rallying dramatically. However, as Chuck has pointed out several times in the past, no central bank (not even the Swiss) has enough money to fight the currency markets. The markets will eventually win out, and the longer term prospect for the Swiss franc is still positive. It is just that we feel there are other currencies which have better prospects in the near term.

Norway is one such currency. Norway's central bank will likely be one of the first among the world's richest economies to begin raising rates as the global crisis shows signs of abating. Inflation in Norway is likely to increase past the Norges Bank's target, increasing pressure for Norway's central bank to hike rates. The markets are beginning to price in an increase in rates at the beginning of next year as the Norwegian economy starts to heat up. Oil revenues, and a conservative fiscal policy helped to soften the impact of the global economic crisis, and Norway is now set to be one of first European economies to recover. Retail sales in Norway were up 2.6% in May since March and underlying inflation accelerated to an annual 3.3% in June, the fastest pace in eight months. The housing market in Norway is also pushing the recovery, as property values rose 5.3% in the three months ended June, the second quarterly gain.

Norway's neighbor, Sweden, is another currency which has been performing quite well vs. the US$. The Swedish krona is second only to the Australian dollar in return vs. the US$ over the past week, and is among the top three currencies this month. Sweden's krona is benefitting from a jump in exports as Sweden's trade surplus almost doubled in June as exports to Europe and the US increased. The Swedish krona has also benefitted from recent IMF support of the Baltic region, where Swedish banks are heavily exposed.

The Australian dollar continued to climb overnight, and is the best performing currency vs. the US$ in the past week. Investors are betting that the Reserve Bank of Australia will be one of the first central banks to start raising rates. With the US Fed keeping interest rates near zero, investors are likely to search for yield, and interest rate differentials will push the AUD$ higher. We saw a similar pattern back in 2003, when the AUD$ rallied over 30% vs. the US$ on interest rate differentials. Australia's economy unexpectedly grew in the first quarter, and recent rhetoric from RBA Governor Stevens suggests the start of a tightening cycle sooner rather than later.

Brazil's real continues to be a strong performer and is expected to strengthen to 1.8 per dollar by year end according to JPMorgan Chase & Co. The real will strengthen due to faster economic growth and higher demand for commodities according to JPMorgan. The currency will benefit from a stronger trade surplus and increased foreign investment. In news released yesterday, China Development Bank Corp, the state run bank for public works projects, stated they plan on opening an office in Rio de Janeiro next year, one of its first branches outside mainland China. Close ties with China will continue to benefit Brazilian exports of commodities. The Brazilian economy will expand at an annualized pace of 4.2% in the second, third, and fourth quarters this year according to research by JPMorgan.

A great way to invest in 4 different currencies which should appreciate as the global recovery takes hold is our Global Power Shift Index CD. This newest CD offering combines the currencies of Australia, Canada, Brazil, and Norway; all countries which are perfectly positioned to take advantage of commodity price increases. The CD is available with 3 or 6 month maturities and a minimum deposit of $20,000. Call the desk for details!

Currencies today 7/30/09: A$ .8248, kiwi .6528, C$ .9213, euro 1.4061, sterling 1.6485, Swiss .9188, rand 7.7974, krone 6.2331, SEK 7.4434, forint 190.56, zloty 2.9674, koruna 18.1791, yen 95.09, sing 1.4437, HKD 7.7500, INR 48.3575, China 6.8323, pesos 13.2083, BRL 1.8935, dollar index 79.273, Oil $64.01, 10-year 3.70%, Silver $13.425, and Gold... $932.88

That's it for today... I'm running a little late this morning, as Christine is already here with the breakfast sandwiches (she even picks them up when Chuck is out!). Cardinals won again last night with a timely hit by Albert Pujols in the 15th inning. It is great to see the Cardinals coming on strong in the second half of the season, should be an interesting playoff run. Hope everyone has a Tub Thumping Thursday!!

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

A Lost Decade?

Chuck Butler — Thu, 02 Jul 2009 15:08:57 GMT

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

On election night, Amazon.com's top-selling book wasn't about Obama or even McCain. Instead, it was a book about the four American deficits that threaten to steal your wealth-and the steps you can take to reverse them.

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.

If you missed your chance to see the film-or just want more of its in-depth interviews and analysis-the IOUSA book should be at the top of your reading list. The issues it explores and the solutions it provides are too important to ignore.

Get your copy today

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

In This Issue..

* An Up and Down day for currencies...
* Jobs Jamboree moves to Thursday today...
* China to buy more Gold!
* Sweden cuts rates!

And Now... Today's Pfennig!

A Lost Decade?

Good day... And a Thankful Thursday to you! I'm reminded that we all need to be thankful for the patriots that led this country to victory and thus our freedom. The freedom for me to write a letter like this, each day, that allows me to say what I want to say (well, with the governor of the legal beagles of course!). And since this weekend we will celebrate our Independence, I thought this to be a good time to have a Thankful Thursday!

Patriots... You know, the ending story for those 56 Patriots that signed the Declaration of Independence is not a happy story... So, when we learn of their collective fates, we realize that freedom does not come free...

OK... This time of year, always stirs up the emotions, that are burning all year...

Two things have happened in the past 24 hours that have moved the currencies and caused some very wild swings... So, let's look at the "two things", eh?

When I left you yesterday, the currencies had rallied back and were waiting for more data... The data that printed was not very good, led by the ADP Employment Report for June, which came in with a greater number of job losses than was forecast (-473K VS -395 forecast)... So, according to ADP the bleeding continues... Now we have to wait for the Jobs Jamboree that will print later this morning, to see what "games people play now, every night and every day now"...

So, the currencies moved a bit more with the data printing and showing continued rot on the vine... For instance, the ISM Manufacturing Index remained below 45, which is recessionary to me... But the real blow to the dollar yesterday came when G-8 Sources announced that CHINA HAS ASKED FOR G8 ITALY SUMMIT TO DISCUSS ISSUE OF NEW GLOBAL RESERVE CURRENCY...

You should have seen the dollar selling at that point! OUCH! The euro climbed to 1.4175, and took the rest of the currencies along for the rides! This was HUGE folks! There it was... On the G-8 Agenda!

However, seeing the damage that this announcement had done so quickly, the Chinese had to do something quick... And quick they were... China's Vice Foreign Minister said he is "not aware of any plan to discuss alternative reserve currencies at next week's G-8 meeting." And the turn-around was on!

So, overnight, the dollar is firmer, and the euro has lost that 1.41 handle once again... These probes to the 1.41 handle are becoming more frequent, but with little staying power. So... There you have it... One item made the currencies soar... And the denial made them come back to earth, all within 24 hours... Jack Bauer would be proud!

While I'm talk about China, I was wondering if you all caught the interview on Fox (I didn't, of course, it was pointed out to me by a reader!) where U.S. Rep. Mark Kirk, was interviewed and asked questions about his accompanying U.S. Treasury Sec. Geithner on his Magical Currency Tour last month to China... In a private discussion with Chinese officials, Kirk was told that the Chinese were extremely concerned about the likely near term decline in the dollar because of the "explosion" of government debt. And... As a reaction to this concern, the Chinese Gov. was creating a "fund" / reserve to buy oil... And another $80 Billion worth of Gold!

OK! And did you see Gold trade higher yesterday by $15? Well, it's lost $8.50 of that gain overnight... Profit taking, and the denial by the Chinese has caused this sell-off...

The euro is also seeing some pressure this morning, as the European Central Bank (ECB) is meeting and most likely will have to admit that they will keep rates at ultra / record lows for some time to come, as the Eurozone remains in a recession.

As I explained on Monday this week, the Jobs Jamboree was moved to today, to avoid the markets being thinned out tomorrow. Apparently, the Bureau of Labor Statistics (BLS) wants everyone to see their work! HA! The "experts" believe that the Jobs losses will have increased in June, adding 20,000 lost jobs to May's "BLS adjusted" number of -345,000... I would have to think that if this prints as forecast, that the "risk takers" will be happy enough, and continue adding risk assets like stocks, currencies, precious metals... Anything greater would probably put a lid on their propensity to spend on risk assets... For now, at least!

Oh... And one more thing on the job losses for June that will print this morning... If the "forecast" number of lost jobs prints... It would mean that the number of people working today, in 2009, would be about the same number of people that were working in May of 2000! Talk about a Lost Decade! I wonder if the major media will pick up this fact? Now wouldn't that be a big surprise to all those folks that were surveyed last week for Consumer Confidence? It surprised me to see that fact! The Lost Decade... Strange but true...

The strangeness of today though will be the fact that the Weekly Initial Jobless Claims will print, and probably show that over 600,000 jobs were lost last week, and unemployment claims were filed... So... How does the BLS come up with "only" 365,000 jobs lost for the month, when one week was 600,000? The games people play now... Every night and every day now... Never meaning what they say now... Never saying what they mean... And they wile away the hours... In their ivory towers... Till they're covered up with flowers...In the back of a black limousine... - Joe South...

I've gone over the do goody-good bull of the BLS so many times in the past it makes my head spin, so I won't go there again today... But, it makes no sense to me what-so-ever that the BLS still uses a stupid "survey" when they have the ADP and Weekly Claims at their disposal... I think I know why... But again, it just doesn't make sense to me!

So... Keep an eye on the Jobs Jamboree for today...

Recall earlier this week I told you that Sweden's Riksbank would meet on Thursday, and I said that: "With internal rates at just .50%, I guess they could cut, but what would be the point?" Well... The Riksbank surprised the markets this morning, and did cut 25 BPS bringing their internal rate to just 25 BPS or 1/4%... I would think that any good that Swedish krona buyers saw in the past 5 days, will be wiped out by this news, as the rate cut at this time has to signal "bad stuff" for the economy... The only thing left for the Riksbank now is to implement Quantitative Easing, which if they aren't afraid to cut rates to 25 BPS, they certainly won't have any "moral" problems with Quantitative Easing...

And like I said for the U.K., Switzerland, and U.S. when they announced their Quantitative Easing... "Hey, Japan's been doing it for over a decade now, and look how well it's worked for their economy!" I shake my head in disgust, that anyone with an ounce of brain power would go down the same road as Japan with regards to how they responded to their economic meltdown of the 90's... But we have... Step for step... Beginning with the $150 Billion in stimulus checks... And moving on to larger sized measures from there...

I've told you all this before, but for new readers they might not know... That in the 90's I was a currency and foreign bond trader... I watched the Japanese introduce stimulus after stimulus, and budget gadgets after budget gadget! And, like I said, look at how well it worked in their economy? History may not repeat itself, but it rhymes according to Mark Twain... And what we're doing with our economy rhymes with what Japan did in the 90's...

Oh! I know, the rose colored glasses wearers will say, "but Chuck, we reacted "much earlier" in the recession than the Japanese did" Yes... We did, so, what does that mean? That instead of a greater than decade economic funk that we'll experience something shorter in time? OH, so a 5 year economic funk is worth adding Trillions to our National Debt? I don't think so...

With regards to the interest rate policy that adds to these woes... Janet Yellen, president of the Federal Reserve Bank of San Francisco, went further than other policymakers in assuring that the Fed is not likely to push its interest rate up in the near future. Ms. Yellen was speaking to reporters and said." it is "not outside the realm of possibility" that the central bank will let the interest rate remain close to zero for several years."

Oh great! Just go ahead and fuel that future inflation... And rack up the deficits... We can go on like this forever, right? NOT! There's no way this can go on forever! And... If the markets were doing their job, it wouldn't be going on now, without major pain in the yield on Treasuries and the value of the dollar! When out of the 29 largest nations in the world, the U.S. has the worst debt/GDP ratio, you've got to take a step back and say Whoa, there partner! Unfortunately, no one (except Ron Paul) in Washington D.C. is doing that... This is getting completely out of control, folks... Completely out of control!

The markets always do what the markets should... Just not always when they should... I learned that a long time ago, from my old, old boss, Ed Bonawitz, and I'm reminded of that all the time...

Like remember when I was calling for an end to the Carry Trade, and a Japanese yen rally, 2-3 years before it finally happened? The markets finally did what they were supposed to do, it just took 2-3 years!

Well... The euro has been in a steady downward move since I came in this morning. I turned on the screens and the single unit was trading just below 1.41... It's now moved down to 1.4060... No biggie, but a steady downward move in the past two hours...

A long time reader sent me a note yesterday regarding yesterday's Pfennig... "Uriah Heep, The Ventures, Soros, Rivlin, Sylvester, and Lucy! All in one Pfennig" It caused Cranium Spin!

Yes, I was on a roll yesterday... I don't think I was on quite the same roll today...

And while I don't like to head into the Big Finish on a "down note", I'll have to today, as it's beginning to get late... The "down note" is from "down under" (get it?) Australia's Trade Deficit widened in April to A$556 million ($448 million worth), as coal exports fell... This news caused a weakening in the A$ overnight... But remember, this is from April... And in April, China was just beginning to show signs of their stimulus working... I'll bet a dollar to a Krispy Kreme that next month this number will be narrower and if not, then the following month we'll see the narrowing... So, no need to be alarmed here, there's nothing to see here, move along! It does provide cheaper levels of the A$ though!

And... I just noticed this, so I won't end it on the A$ story... The price of Oil fell out of bed yesterday, moving from over $71 yesterday morning to $67.85 this morning... WOW!

Currencies today 7/2/09: A$ .8030, kiwi .6360, C$ .8685, euro 1.4070, sterling 1.64, Swiss .9230, rand 7.8050, krone 6.3635, SEK 7.70, forint 190.60, zloty 3.1040, koruna 18.2885, yen 96.60, sing 1.45, HKD 7.75, INR 47.96, China 6.8312, pesos 13.10, BRL 1.9320, dollar index 80.09, Oil $67.85, 10-year 3.55%, Silver $13.50, and Gold... $933.75

That's it for today... So... The U.S. has begun a military offensive in Afghanistan... I wish for safety for those soldiers... Little Delaney Grace came for a visit last night... What a cutie! And she's beginning to really talk, which is cute, but she never stops talking! She was copying everything I did at the dinner table, cracking me up! The Streets of San Francisco aren't as safe any longer... Karl Malden has passed away at 97 last night... Colby Rasmus bangs a walk off homer in the 10th for the Cardinals, and today is our Jen Mclean's son, Drew's 2nd birthday! Happy Birthday, Drew! And with that, I'm going to head to the high school where my son, Alex, will be playing in a jazz concert this morning, and he has a guitar solo... Wouldn't miss that! Time to hit send, and be thankful on a Thursday!

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

Currencies Continue to Rally...

Chuck Butler — Fri, 24 Apr 2009 16:08:07 GMT

.........But First, A Word From Our Sponsor..........
Record 2008 results take EverBank® to new heights.

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

.Record net income of $46.0 million, a 52% increase from 2007
.Assets grew by 28% during the year to over $7.0 billion
.Bank deposits grew by 29% during the year, an increase of $1.1 billion and the largest annual deposit growth in company history to over $5.0 billion

The numbers-they say it all. We've solidified our place as one of the nation's strongest and most stable banks. And there's no mystery to our success. We're well-diversified, we've never engaged in subprime lending and we've got smart, dedicated folks working for us. Take advantage of our strength and stability. Visit http://www.everbank.com/?referid=11808.

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

In This Issue..

* An auction announcement...
* Euro soars!
* Gold back to $900...
* Who's telling the truth?

And Now... Today's Pfennig!

Currencies Rally...

Good day... And a Happy Friday to you! A Fantastico Friday to boot! I leave for Bermuda very early tomorrow morning, so no late night shenanigans for me tonight! HA! I'm still trying to make sure I've beaten that pneumonia, and being a "good boy"!

Well... Front and center this morning, we have a Big currency rally going on... Recall yesterday, I told you of the beginning of the rally... Well, it really got legs as the day went on, and once again, it was not sold off overnight, but added to! Here's what I believe, and you won't see this anywhere else, my friends, is moving these currencies so violently higher VS the dollar...

First, let me set the stage... I've been carrying on about how the Deficit Spending here in the U.S. was going to require a TON of Treasuries to be sold to finance that Deficit Spending... I even told you the other day that the U.K. Gilts were getting clobbered because of the largest Budget Deficit in the U.K. since World War II, and that what happened in the U.K. had been carrying over to the U.S.... OK... Got the picture, right?

Well... Yesterday morning the U.S. announced that they would sell Treasuries in these amounts, and tenors... $40 Billion 2-year, $35 Billion 5-year and $26 Billion 7-year next Monday, Tuesday, and Wednesday respectively... OMG! That's over $100 Billion in new Treasury issuance that the markets are going to have to digest... Is it the straw that breaks the proverbial camel's back? Are the markets saying, "we don't believe you will be able to successfully auction that amount without aggressively raising the yield?" I think so... Now, see if CNBC, MSNBC, FBN, CNN or any of the other media stations run this story!

There's nothing else THAT BIG that could have moved the euro like this... Oh! I haven't even told you where the single unit is trading this morning! My Bad! 1.3230! That's right... It skipped to my Lou right through the 1.31 handle, like a hot knife goes through margarine! The euro did get an additional boost this morning when it was announced that German Business Confidence, as measured by the think tank IFO, rebounded from a 26-year low this month...

So... Let's slow down, those beginning paragraphs have me out of breath! OK, I'm calmed down now... So, let's look around the horn to see what the other currencies are doing, now that the BIG DOG, euro has left the porch to chase the dollar down the street. Well, the usual suspects like the euro-alternative currencies like Norway, Sweden, Switzerland are all much stronger VS the dollar this morning... And a look to the High Yielders, shows that they too have moved in step with the Big Dog.. Aussie, kiwi, rand, and real are all taking liberties VS the dollar.

There's another high yielder that I don't talk about all the time, and the last time I did, I gave it the kiss of death, watching it fall a couple percent after I mentioned it... The Indian rupee... Well... The rupee is on the rally tracks again, and this time, someone other than me is noticing... The folks over at Reliance Equities International have noticed that the Indian stock market has risen for 7 straight weeks, and believe that they will see additional flow into this market... Therefore they believe the rupee may be in store to gain 6.7% in the coming weeks... Now, for you big swingers out there... 6.7% probably doesn't even show up on your radar... But for all the rest of us, worried more about the "Return of Capital, rather than the Return on Capital" these days... That doesn't sound too shabby!

On the data front yesterday we had the Initial Weekly Jobless Claims, which came in as expected, which doesn't make it any better! The total of unemployed people filing claims last week totaled 640,000! Something that most people don't look at, but I've trained the folks here to do, as Chris Gaffney yelled out yesterday morning... "Continuing Claims are awful, they have risen to 6,137,000!"

Existing Home Sales continued to show the housing markets is still in search of a bottom... Existing Home Sales fell 3%, and the home prices continue to fall with the median price down 12% from a year ago... The other day, I made a statement that I should have been taken to the woodshed for... I said that with interest rates this low, people should be taking advantage of them and buying those houses now... But... As I keep saying, home prices will continue to fall... So why buy now if you can get it cheaper tomorrow? Sorry... What I should have said was to refinance now is a very good idea!

In Canada yesterday... The Bank of Canada (BOC) explained the details of Quantitative Easing "should they need it"... That was HUGE for the loonie, as the BOC hasn't implemented this monetary policy yet... They just have it ready and on the shelf should they need it... Good plan!

Another item that has helped to boost the loonie (Canadian dollar) was a report yesterday that showed Retail Sales unexpectedly rose .2% in February... Geez Louise, can't they get this data on a more timely basis? February seems like a month of Sundays ago to me! Any way, the Canadian economy does have a pulse... And that's a good thing!

Gold didn't like the color of the Treasury Auction announcement yesterday either, and the shiny metal pushed back over $900 once again. Oh... And here's a story that just hit the news wires this morning... It is reported that China has increased their Gold holdings 76% to the 5th Biggest Country (of Gold holdings). China increased their holdings from 454 Tons to 1,054 Tons... For those of you keeping score at home that's $31 Billion dollars worth of Gold!

OK... Before we head to the Big Finish today... Have you heard or seen the story going around about Bank of America's (BOA) purchase of Merrill Lynch (Merrill)? OMG! This is HUGE! BOA's CEO, Ken Lewis testified this week and said that Fed Chairman Ben Bernanke and then-Treasury Department chief Henry Paulson pressured Bank of America to not discuss its increasingly troubled plan to buy Merrill Lynch -- a deal that later triggered a government bailout of BOA... Now, all my licenses in the brokerage business tell me that that's a HUGE NO-NO! A Company is supposed to alert their shareholders of any materially significant financial hits... If I were a shareholder of BOA, I would be steaming mad right now! As a market participant it still ticks me off!

Now... Here's the latest from the Wall Street Journal this morning... "The Federal Reserve didn't advise Bank of America or CEO Ken Lewis "on any questions of disclosure," a spokeswoman for Fed Chairman Ben Bernanke said."

Oh Great! Now we have a "he said - no he didn't" scenario! That's their plan folks... Attempt to confuse the masses, throw up smoke screens, and maybe it all goes away... Not on my watch! We need to know who's telling the truth!

And one of the things they will use to direct everyone's attention away from this awful thing, is... Drum roll please.............. The Stress Tests! That's right! They are supposed to be talked about today... I still hold to my beliefs that we won't really be told the truth about these 19 largest banks... I can only hope to be wrong!

Oh, and one more thing... A reader asked me why I never talked about Silver, always choosing to talk about Gold... Hmmm... I guess it's sort of like the Paris Hilton thing... Or let's see what else could I compare it to.... Any way, I don't mean to short change Silver, when I talk about Gold you can believe that it includes Silver... Imagine my poor fat fingers if I had to type Gold and Silver every time I talked about Gold and Silver...

And... On that note... Time to go to the Big Finish!

Currencies today 4/24/09: A$ .7185, kiwi .5680, C$ .8225, euro 1.3250, sterling 1.4625, Swiss .8775, rand 8.8550, krone 6.5650, SEK 8.20, forint 223.40, zloty 3.4150, koruna 20.1950, yen 96.88, sing 1.49, HKD 7.75, INR 49.88, China 6.8272, pesos 13.12, BRL 2.2050, dollar index 84.78, Oil $49.91, Silver $12.82, and Gold... $911

That's it for today... And for me for the next week! Chris Gaffney will have the conn on the Pfennig next week. I'm very excited about going to Bermuda, although it looks like the good folks at the Sovereign Society are going to keep me busy! Cardinals sweep the Mets! Wow! That has a great sound to it... The Cubs come to town tonight, it sure would be sweet to sweep them too! But that's getting greedy, I would be giddy with 2 of 3! Tomorrow is the draft for the NFL, the Rams have the second pick... Memo to the Rams... Don't blow it! An absolutely beautiful day here yesterday... My dad used to say to me when it would be blue skies, sunny, warm days... He would say... "Chuck, they don't have days like this in the Soviet Union"... I use that saying with my kids, and they look at me like I should be wrapped in a white suit! OK... Time to go... Hope all's well with everyone, and you have a Fantastico Friday!

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

Hold on to your hat...

Chuck Butler — Thu, 19 Mar 2009 15:06:14 GMT

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

Down on the dollar? Foreign currencies at EverBank could be your answer. If you're intrigued by the possibility of lower portfolio risk and gains against a weak U.S. dollar, look to us for:

Apply today. Visit EverBank.com, or call the World Markets Trading Desk at 800.926.4922
......................................................

In This Issue..

* Fed opens the pocket book...
* Creative measures...
* Inflation/dollar debasement concern...
* Currencies soar...

And Now... Today's Pfennig!

Hold on to your hat...

Good day...And a Tub-Thumpin' Thursday to you. Well, yesterday was certainly one wild Wednesday for the record books. It started out like any other day we've had over the past week or so with the dollar down and many of the currencies up a bit, but nothing really out of the ordinary. Then it happened...the Fed adjourned and hit the markets with a big one.

Many of the market participants weren't looking for an announcement or plans from the Fed to buy Treasuries today, but instead, were anticipating further discussions on how to proceed. It appears there has been disagreement on how to provide aggressive actions with interest rates already at rock bottom. The way they saw it, there were three options. One was to increase the TALF to buy frozen assets, another way was to expand purchases of mortgage backed securities and agency securities, or to begin buying long term Treasuries.

The Fed decided to go ahead and buy $300 billion of longer term Treasuries over the next 6 months to help improve conditions in private credit markets. The central bank will begin purchases of the Treasuries late next week and buy them 2 to 3 times a week and concentrate in two-year to 10-year debt. In addition, they said "To provide greater support to mortgage lending and housing markets, the committee decided to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities." These additional purchases kick the tally for the past year up to $1.15 trillion.

The Fed also said they will consider expanding the Term Asset-Backed Securities Loan Facility (TALF) to include other financial assets. Broadening the TALF to include older, illiquid and lower rated securities could allow investment funds to repackage assets and sell them to a wider audience. In other words, the TALF would provide loans to investors and agree to take this illiquid debt as collateral. The Fed will also increase its purchases of agency debt this year by up to $100 billion to a total of $200 billion.

The 10 year note yields plunged to 2.48% from 3.01% late yesterday and marked the biggest decline since 1962. Since most mortgage rates are based on the 10 year, they are trying to drive rates down as they haven't been falling with the traditional Fed rate cuts. Former St. Louis Fed president Poole said "We are not even close to the bottom and therefore the Fed is engaging in a massive quantitative easing. We still have a very serious recession in front of us." Quantitative easing is the injection of funds into the economy as the main policy tool. This type of policy may continue until the Fed feels more comfortable. Oh, and by the way...rates were left unchanged in case you were wondering.

Now, with all of that being said, the dollar sold off quicker than funnel cakes at a state fair as Chuck would say. What we have here is a situation where the printing presses are running so much that they are about to overheat. Generally when we have money thrown from the helicopter and the government buying this much debt, it will ultimately cause inflation to soar. At this point, the only concern the Fed has is trying to stabilize the economy and really isn't worried about heightened inflation or any other negative repercussions.

As Chuck has said on many occasions, when rates or yields fall, one of two things need to happen in order to attract capital. One is to increase rates, which we know isn't going to happen, and the other is a general debasement of the currency. Well, the currency markets figured it out right when these moves were announced that a weaker dollar is what will be necessary to make the wheels turn. Not to mention that higher inflation, which is not a positive attribute for a currency, is the end result. It seems what Chuck has been harping on for a long, long time is now coming full circle.

This had to be one of the quickest currency moves that I have ever seen as the euro flew all of the way up to the 1.35 handle before I left for the evening. It was literally like watching the speedometer on your car climb as you push the pedal to the floor. The numbers just kept going and going...blowing past 1.31, then 1.32, and finally up to 1.35. We had the Swedish krona gain over 8%, Norway and New Zealand up around 6%, and the euro up 5% just to name a few.

The Dollar Index fell 2.7% yesterday to 84.595, its largest one day drop since 1971, and increased the dollar's decline to 5.6% since March 4. As I came in this morning, there hasn't been any type of sell off and the currencies remain in the same range as where we last left them with the euro holding the 1.35 mark. Gold also joined in on the mugging as it was trading around $940, when just several hours prior it had even dipped below $900. These types of huge movements obviously can't be sustained so I'm sure we'll see some type of correction, but remember what happened on the way down. We had a few massive movements downward and then a steady depreciation for several months. I'm not saying this will happen, but its certainly possible to see the currency market appreciate as quickly as we saw it fall.

In the midst of all the action, we did have some economic releases that I'll mention as well. The second piece of inflation came out today and actually rose more than expected from January by .4% and pushed the annual core inflation rate to 1.8%, up from 1.7%. We also had the 4th quarter current account deficit narrow more than expected to $132.8 following a revision to the previous figure of $181.3 billion from $174.1 billion. Today we have jobs numbers, leading indicators, and the Philly Fed Index which are all expected to fall from previous numbers. On to the Big Finish...

Currencies today 3/19/2009: A$ .6817, kiwi .5461, C$ .8062, euro 1.3519, sterling 1.4314, Swiss .8786, rand 9.6275, krone 6.4437, SEK 8.0576, forint 220.77, zloty 3.3497, koruna 19.8855, yen 95.58, sing 1.5172, HKD 7.7516, INR 50.3112, China 6.8284, pesos 13.9501, BRL 2.2495, dollar index 84.028, Oil $49.70, Silver $12.86, and Gold... 937.17

That's it for today...Hopefully I was able to shed some light on that wild ride from yesterday. There was a lot to talk about and was more "numbers" intensive than usual so it was a little on the dry side today but I tried my best to throw it out there for you. March Madness officially begins today so good luck on those brackets. Its going to be a busy day here on the desk, so until tomorrow...I am outta here. Have a Tub Thumpin Thursday!!

Mike Meyer
Assistant Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

Obama picks his economic team...

Chuck Butler — Mon, 24 Nov 2008 16:19:37 GMT

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

Gold and silver prices are down.

For a simple and inexpensive way to own gold or silver, consider the non-FDIC insured Pooled Metals Select Account from EverBank®. This economic alternative to buying actual bars or coins lets you "pool" your metal with other investors, saving you from costly storage or maintenance fees.

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

Apply online. Simply go to EverBank.com, mouse over "Products" then select "Precious Metals." For important disclosures visit: http://www.everbank.com/001MetalsTBLegal.aspx?TB_iframe=true&height=400&width=700

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

In This Issue..

* Obama picks his economic team...

* Nordic currencies rise...

* US floods market with dollars...

* China looks to keep growth at 8%...

And Now... Today's Pfennig!

Obama picks his economic team...

Good day... Hope everyone had a great weekend, mine sure was. We had a fun time Friday night bowling and playing pool at our Xmas party. Unfortunately Chuck wasn't able to attend, as he was down in Florida speaking at a Wealth Masters Conference. He will be heading back into St. Louis today, and will be back in the saddle tomorrow morning for what will be a short week.

The big news over the weekend was the unveiling of President elect Obama's economic team. Obama has picked Timothy Geithner, head of the Federal Reserve Bank of New York, to be his Treasury secretary, and former Treasury chief Lawrence Summers will be White House economic director. Obama is also likely to nominate New Mexico Governor Bill Richardson as Commerce Secretary. Geithner has had a primary role in the Federal Reserve's attempt to steer Wall Street through the current financial tsunami. He also oversees most of the Fed's special lending programs set up this year to channel more than $1 trillion to banks and other financial institutions.

Just this weekend, Geithner helped push for additional funds to help Citigroup avoid a possible bankruptcy. The nation's largest financial services firm received $306 billion of US government guarantees for troubled mortgages and toxic assets to stabilize the bank after its stock fell 60 percent last week. Citigroup also will get a $20 billion cash injection from the Treasury department, adding to the $25 billion the company received last month under the TARP. Just last week, current Treasury Secretary Henry Paulson was saying there aren't any firms which are 'too big to fail', but I guess the rest of the administration decided he was wrong. The bailout of Citigroup has stabilized overseas markets, with currency investors starting to move back out of the 'safe haven' of US treasuries.

The dollar has fallen vs. all of the major currencies in early European trading, with the high yielding currency of Brazil leading the way with a 3.57% increase vs. the US$ since Friday. The Nordic currencies of the Swedish krona and Norwegian krone were in second and third place vs. the US$ with increases of just over 2%. The high yielding South African rand was number 4, and the Danish krone rounded out the top five performing currencies this weekend. Chuck has been talking about the Viking Index CD during his presentations, which is a combination of the currencies of Norway, Sweden, and Denmark. This index gives investors an excellent way to take advantage of the short term strength of the US$; investing into currencies of countries with good solid underlying economic fundamentals.

The economic fundamentals of the US continue to weaken, and congress is now predicted to send President elect Obama an economic stimulus package the day he takes office January 20th. Senator Charles Schumer and House Majority Leader Steny Hoyer both said they would have a $500 to $700 billion stimulus package waiting on the new president's desk. The Federal Reserve, which has already pumped out hundreds of billions of dollars, is looking to flood the world financial system with even more money. The Treasury, on course to borrow some $1.5 trillion this fiscal year, will have to tap global capital markets for even more to finance this new economic rescue package.

The Fed has set up currency swap lines with more than a dozen other central banks. Some of these arrangements, including those with Europe, Britain and Japan, are open-ended, allowing the Fed's counterparts to draw as many dollars as they need. The US has also established individual $30 billion swap lines with Brazil, Mexico, South Korea, and Singapore. These currency swaps are one of the items which has been propping up the value of the US$.

As the Fed has stepped up its efforts to combat the credit crisis, our US balance sheet has mushroomed. Assets rose to $2.2 trillion from just $924 billion less than three months ago. The central bank's holdings are likely to increase further. "I would not be surprised to see them aggregate to $3 trillion - roughly 20 percent of GDP - by the time we ring in the new year," Dallas Fed President, Richard Fisher said on Nov. 4th.

On November 3, the department tripled its estimate of planned debt sales in the final three months of the year to a record $550 billion. Paulson told a conference in Washington November 17 that the US will issue some $1.5 trillion worth of Treasury securities in the fiscal year that began October 1st. And that number is also likely to grow. Obama's pick for his administration's economic advisor, Lawrence Summers told the same conference that the US needs a "speedy, substantial and sustained" stimulus package to aid the economy. By the time it all ends, the TARP will likely be closer to $2 trillion than $1 trillion.

The danger, other than the fact that eventually our children and grand children will have to repay this debt, is that this dumping of dollars into the world's financial markets will end up with inflation sky rocketing higher. After all, the ultra-easy Fed policy of the late 90's is exactly what fueled the asset bubbles and the problems we are dealing with today. But Bernanke and Paulson aren't worried about inflation right now, as they try to prevent the biggest credit catastrophe in decades from sending the economy into a deflationary nosedive. Over the long run, the current policies will create inflation, and with the huge amount of money supply being pumped into the markets, the move from deflation to inflation will be abrupt. The Fed won't be able to immediately drain the markets of the huge amounts of money supply which have been pumped in. Unfortunately I think we could be facing a rapid increase in inflation just around the corner.

China announced plans for a second Chinese stimulus package in order to keep their economy expanding at a rate over 8 percent for each of the next two years. The new proposals include income tax cuts, salary increases, and larger housing subsidies, Chinese reported yesterday. The new proposals show the government is determined to maintain strong growth as the rest of the world slips into recession. A growing Chinese economy will provide an anchor to the overall Asian region, and will help stabilize commodity prices. I continue to believe the Asian currencies, along with the currencies of commodity exporters, have some of the best value. China will maintain a good growth rate, and is slowly moving toward a more balanced economy, with internal demand picking up some of the slack left by the western recession.

While this week will be short, it is packed with data as we will see home sales today. Tomorrow is a bigger day as we get 3rd quarter GDP, Personal Consumption, Consumer Confidence, and the S&P Home price index. And to close out the data week on Wednesday we will get Durable goods, Personal income and spending, New Home sales, U of Mich confidence, and the PCE numbers along with the weekly jobs data. Like I said, it will be a lot of data packed into a very short week. Could make for some volatile days in the currency markets.

Currencies today 11/24/08: A$ .6387, kiwi .5398, C$ .7905, euro 1.2751, sterling 1.4991, Swiss .8257, ISK (No Quote), rand 10.28, krone 7.0627, SEK 8.1964, forint 207.03, zloty 3.0363, koruna 19.98, yen 95.49, baht 35.29, sing 1.5175, HKD 7.7525, INR 50.09, China 6.8285, pesos 13.5737, BRL 2.3906, dollar index 86.96, Oil $51.65, Silver $10.04, and Gold... $821.00

That's it for today... As I said in the first paragraph, the Xmas party on Friday night was a great time, even though I wasn't among the top bowlers or pool players. Yesterday my son and I had to choose between going duck hunting or heading to the Rams game. We chose correctly, as the Rams got embarrassed by the Chicago Bears, and Brendan and I had a great afternoon in the duck blind. This will be a short week, as Chuck emailed me that we will be shutting the phones down early on Wednesday. Both Chuck and I will be out on Friday, as I will be heading up to Chicago for my son's hockey tournament and Chuck will be cleaning up from his big Thanksgiving day bash. Hope everyone has a great start to the short week, and a Marvelous Monday!!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Financial storms claim two more...

Chuck Butler — Mon, 15 Sep 2008 13:57:30 GMT

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

Announcing the FX University Seminar Series. It could open your portfolio to new horizons.

Come learn from some of the world's authorities on foreign currency investing. The one-day seminar will take place in 8 cities across the nation this September and October.

What this seminar can mean for you: Get an expert's view on a vast range of currency opportunities - leave with tips, tactics and insights you need to diversify with confidence.

As a seminar sponsor and participant, we're pleased to offer you access to this exclusive event. For locations and dates, and to register, call 866.584.4096. Cost to register is only $99 for EverBank customers.

EverBank is a Member FDIC and Equal Housing Lender.

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

In This Issue..

* Financial storms claim two more victims...

* Yen and Swiss Francs move back up...

* Euro approaches 1.45 before reversing course...

* Oil below $100...

And Now... Today's Pfennig!

Financial storms claim two more...

Good day... The financial storm claimed another victim this weekend as Lehman Brothers Holdings Inc. filed for bankruptcy after being unable to find a buyer. Bank of America, who was rumored to be bidding on Lehman ended up buying Merrill Lynch & Co and AIG Inc. is asking the fed for an emergency loan. All of this financial turmoil has sent the dollar lower vs. most of the major currencies as investors are beginning to realize the situation in the US markets is worse than the rest of the world.

Over the past three months, currency traders have rallied the dollar on the basis that the US was in better shape than Europe. They will now need to rethink their strategies, as the past few weekends show just how bad the US financial sector is ailing. And unfortunately, their will likely be more to come. Risk aversion is a popular theme in the markets again, and the purchase of US treasuries actually helped to keep the US$ from falling further.

The best performers over the weekend were the Japanese yen and Swiss franc, both traditional funding currencies of the carry trade. As Chuck has explained several times in the past, when market volatility increases, traders typically start to exit the carry trades which are only profitable during times of relative calm in the markets. The reversal of the carry trades means investors sell the emerging markets and high yield currencies and use the funds to pay down loans which they had taken out in the low yielding 'funding' currencies of Japanese yen and Swiss francs. The Japanese yen strengthened as much as 3.4% vs. the US dollar overnight, and the Swiss franc had the biggest one day gain in six months.

I have to say I am surprised Treasury Secretary Paulson stayed away from helping another bunch of his Wall Street buddies. I read where Paulson said Wall Street has been aware of Lehman's troubles for a long time and had time to prepare for any crisis at the company. I know we closed out all of our currency trades with Lehman a couple of months ago, and hopefully most other prudent companies did the same. I hope this weekend's events are an indication that some sanity has returned to the Treasury department, and a line has been drawn after the widest expansion of federal safety nets to the financial system since the Great Depression. Its about time we quit guaranteeing the losses at these huge financial firms.

The big news over the weekend overshadowed data released Friday which showed the drop in August's US retail sales was the largest of the year. The .3% decline in purchases followed a .5% drop in July. The figures signal faltering consumer spending will keep inflation in check, adding strength to our argument that the Federal Reserve will likely resume lowering US interest rates by year end. Consumer weakness in the US will extend the recession which I believe we are already in, and force Bernanke to go back to the easing rates here. Lower interest rates in the US will put pressure on the dollar rally which has occurred over the past three months.

The other piece of data released on Friday here in the US showed producer prices fell in August for the first time this year. The dramatic drop in the price of oil was the main reason for the easing of producer inflation. Speaking of oil prices, crude continued to drop over the weekend falling back below $100 for the first time since the beginning of April. It should be interesting to see how this continued drop in crude will impact the dollar. Recently, the dollar and oil have had a negative correlation, with a surge in oil prices corresponding with a drop in the dollar, and the opposite occurring over the past few months.

The Euro hit a high of 1.4481 in early European trading before moving back down below 1.42. European Central Bank Vice President Lucas Papademos gave a shot in the arm to the Euro over the weekend when he signaled the ECB has little intention of pursuing US style tax and interest rate cuts to support the European economy. "There are indications that broad-based second-round effects are materializing and we want to make sure that they don't become even stronger and broader," Papademos told reporters in Hamburg. "It's not considered likely" that the euro area economy will shrink in the third quarter, he added. His comments were echoed by ECB council member Yves Mersch, who said slower economic growth and a drop in oil prices have not blunted inflation risks. The ECB will continue to battle inflation, and will likely react with another rate increase if benchmark inflation remains above their goal of 2 percent. This difference in the predicted paths of interest rates could be the factor which finally reverses the dramatic rebound in the dollar.

The Australian and New Zealand dollars fell as investors exited the carry trades. Both currencies continue to drop as investors move away from the higher yielding currencies and back into 'safer' assets. The fall in commodity prices, a lowering of interest rates, and this reversal of carry trade investments have combined to move the kiwi 12 percent lower vs. the US$ over the past three months. During the same time period, the Australian dollar has fallen almost 14 percent vs. the US$. The only good news for the Australian dollar lately has been the three day rally in the price of gold, a major export for Australia. If Australia can refrain from further drops in interest rates and gold continues to rally, we could see the Aussie dollar make up some of the losses we have seen recently.

Should be an interesting day today in the currency markets, as investors digest this weekends events. In prior crises, after the initial sell-off in the dollar, the dollar actually rallied back up as investors moved into cash and the 'safe haven' of US Treasuries. But a major sell off in the US stock market could further losses in the dollar as foreign investors may finally decide they have had enough of the rollercoaster ride of the US investments. But with most of the world's economies slowing, investors are going to have to search hard for places to invest.

We continue to suggest investments into the Asian currencies and economies. While all of the global economy is expected to slow, Asia will continue to be the world's growth engine. And with a burgeoning middle class in India and China, internal demand will make up some of the demand lost to recessions in the US and possibly Europe. The Chinese Renminbi, Singapore dollar, and Japanese yen should continue to be some of the best performers going forward. I also think some of the economies with strong underlying economic fundamentals will again become popular. These include the Swiss franc, Swedish krona, and Norwegian krone all of which look cheap at their current levels.

Investors who have been waiting for a signal to purchase may want to start putting some of the US$ sitting on the sidelines back to work. As it becomes more and more apparent that the US will need to lower rates again before increasing them, the dollar will get back on its long term downward spiral. This weekend's events could be the catalyst which finally ends this dollar rally.

Currencies today 9/15/08: A$ .8047, kiwi .6551, C$ .9324, euro 1.4185, sterling 1.7899, Swiss .8936, ISK 91.64, rand 8.2046, krone 5.7726, SEK 6.7497, forint 169.91, zloty 2.3749, koruna 17.075, yen 105.33, baht 34.57, sing 1.4340, HKD 7.7926, INR 45.935, China 6.844, pesos 10.7113, BRL 1.7810, dollar index 78.966, Oil $96.58, Silver $10.86, and Gold... $775.02

That's it for today... St Louis got the remnants of Ike yesterday with tropical storm type wins and rains rolled through the area. I actually ran with my wife in a half-marathon during the height of the storm. Almost 5,000 similarly crazy runners toughed out the heavy rain and strong winds, but the race had to be ended at 10 miles due to flooding on the race course. We were pretty upset, as my wife was running a personal best up until they shut us down. I feel sorry for all of the people down in Texas who are still without power, the winds also knocked out the power in some homes here. Hope everyone has a Marvelous Monday, and a great start to your week!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Currencies Rally On Bad U.S. Data...

Chuck Butler — Wed, 27 Aug 2008 14:02:53 GMT

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

Announcing the FX University Seminar Series. It could open your portfolio to new horizons.

Come learn from some of the world's authorities on foreign currency investing. The one-day seminar will take place in 8 cities across the nation this September and October.

What this seminar can mean for you: Get an expert's view on a vast range of currency opportunities - leave with tips, tactics and insights you need to diversify with confidence.

EverBank is a Member FDIC and Equal Housing Lender.

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

In This Issue..

* Dollar rally is stopped!

* FOMC meeting minutes...

* Housing data you won't see on TV!

* Sweden to sell Gold...

And Now... Today's Pfennig!

Currencies Rally On Bad U.S. Data...

Good day... And a Wonderful Wednesday to you! I'm back. I just couldn't answer the bell yesterday morning, as the night before was simply rough on your old Pfennig writer. I'm in my last week of treatment and it has been a tough row to hoe, and I feel bad that I was not able to stiffen the back and make it through the day. But, no biggie, I've got great people here to take care of things when I'm gone...

When I finally dragged myself out of bed yesterday, I saw that the dollar was taking liberties with the euro and other currencies once again. It was another game of "your economy is worse than mine", as German Business Confidence took a ride on the slippery slope down. You should have seen the "bandwagon jumpers" falling all over themselves to write about how cool it was to own the dollar. I chuckled, no big laugh as that might upset my stomach! But, their claim to be cool, was quickly squashed like a bug, when the housing numbers printed, and then later in the day, with the latest FOMC meeting minutes... More on this in a minute....

The euro has continued to rally overnight on news from European Central Bank (ECB) member, Weber, who said, "there's no scope for interest rate cuts and the bank may even need to raise borrowing costs again once the economy emerges from its slump." So... The beat goes on from the ECB... Providing price stability, and not falling into the "Bernanke trap" of being the stock markets' "best friend".... Of course the part about possibly raising rates once the economy emerges from its slump is standard Central Bank parlance... Any Central Banker can say that, and not be stepping outside the lines. Because... Once any economy, even the likes of Japan, recovers the Central Bank may raise rates! Any way... I like that he came out and spoke about there being no scope for rate cuts... That was BIG for the euro this morning, let's see if it carries weight all day, or is just a quick blip for the single unit.

OK... So, now back to the data yesterday... First of all, I wanted to touch on the FOMC meeting minutes... Here's what the Wall Street Journal had to say about the minutes... "U.S. Federal Reserve officials downgraded their economic forecast at their last policy-setting meeting, according to meeting minutes, and said they expect inflation to fall in coming months. And while officials expect the next change in interest rates to be an increase, most "did not see the current stance of policy as particularly accommodative," the minutes said, suggesting that interest rates are likely to remain steady for the foreseeable future."

So... What's all the hub-bub about higher rates in the U.S.? It's not going to happen this year! When will these knuckleheads get the memo? Nevertheless, the dollar has lost some ground because of these minutes, now we have to wait-n-see if the currency rally has any legs to it.

The Housing Data was not as "great" as I heard the cheerleaders on TV carrying on about... Here's the way I see the data... July New Home Sales rose 2.4%, and that's the number the cheerleaders were shouting about... But what they failed to mention is that a good piece of that 2.4% rise came about because of the downward revision in the previous months' numbers! It breaks down like this... June's number was revised down to 503,000 from a previously estimated 530,000. As a result, the level of sales in July of 515,000 was below market expectations of 521,000. Not so good looking now, eh? And June's revised number of 503,000? Well, The revised June number represents the lowest level of activity since 1991! But you I bet you didn't hear that on TV did you?

The piece of data yesterday that WAS good for the dollar came in the August Consumer Confidence data, which showed a very nice increase in confidence from 51.9 to 56.9. Yes, gas prices are down (thank goodness), but apparently, the people surveyed didn't go to see my friend, Addison Wiggin's movie, I.O.U.S.A.!

Or, they didn't read my friend, John Mauldin's, latest "Out of the Box" newsletter, where he has guest writers put forth "out of the box" ideas, research, information, it's all there each week. Yesterday's letter was from a gentleman named, Bennet Sedacca, who is the president of Atlantic Advisors in Winter Park, Florida. Mr. Sedacca researched financial institutions, and came up with a list called, "Dead Man Walking"... And one called, "Limping but not dead yet"... It's pretty scary, the number of names on this list, folks... But he sums it up like this...

"I am certain that I have missed a bunch of names on the "Dead man Walking List", but the pattern is rather easy to discern. As I stated early on, when we have one or two firms in trouble, we can deal with it. But when we add rising unemployment, explosive debt growth in recent years and non-performing assets to many hobbled financial institutions with trillions of dollars of exposure, it is hard not to be concerned."

And yet... Consumer Confidence rises! Oh! And the Wall Street Journal also had this little ditty that you may have missed... "The FDIC may need to borrow money from the Treasury to cover cash flow problems, which would be the first such borrowing since the early-1990s..."

And why would the FDIC need to borrow money? Oh, you know why... I don't need to go into the bag of bad news again...

Today, we'll see the color of the July Durable Goods Orders, which is forecast to have gone flat VS a .8% rise in June. This is a second tier piece of data that shouldn't hold much water with direction for the currencies today, but is still important in my mind.

There was a report on Reuters yesterday that the Swedish Central Bank (Riksbank) announced a Gold Sale of 15 Tonnes that will take place Sept 27, 2008 through Sept 26, 2009. That's not good news for Gold, as the shiny metal has been able to sidestep Central Bank Gold Sales for the past few years as it rallied stronger and stronger.

This morning, Swedish Consumer Confidence this month, has risen from a 13-year low... I don't think the Gold sale announcement had anything to do with this bump in confidence, unless Swedes don't own gold! I find that to be preposterous!

In Norway, this morning, the July unemployment data showed that the country's unemployment rate will remain near the lowest levels in two decades! Unemployment did rise 2.6% in the past 3 months, but the previous quarter's 2.4% was the lowest level, as I said, in two decades! With regard to the rest of Europe... Norway's economy continues to be the belle of the ball!

And in Iceland... Inflation is rising again, and that's not a good thing, given the banking crisis, and lack of liquidity that's still going on there. The reason I say that, is that the Central Bank will probably raise interest rates again, but it won't help deposit rates because of the lack of liquidity!

Currencies today 8/27/08: A$ .8625, kiwi .7020, C$ .9575, euro 1.4760, sterling 1.8475, Swiss .9160, ISK 82.30, rand 7.7710, krone 5.3725, SEK 6.3660, forint 159.75, zloty 2.2550, koruna 16.64, yen 108.80, baht 34, sing 1.4275, HKD 7.8080, INR 43.75, China 6.8375, pesos 10.13, BRL 1.6280, dollar index 76.77, Oil $117, Silver $13.73, and Gold... $832.06

That's it for today... Cardinals take one in the gut last night, getting whomped 12-zip! UGH! Good thing college football begins this week! Which reminds me, ESPN says that this Friday, is "wear your college colors day"... This public service announcement was brought to you by... HA! My little buddy, Alex, is really working hard juggling homework and football practice. I told him to get used to it, and work on managing his time better... He'll get it figured out, he's a smart kid! Well, Mary Owens just walked in, which means this is late! So... I had better get it out the door! I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Markets May be Saving it up for Today...

Chuck Butler — Fri, 28 Mar 2008 15:14:00 GMT

........But first a word from our sponsor.......
EverBank® Metals Select
Solidify your portfolio with gold or silver.

Many financial experts agree: A truly diversified portfolio should include an allocation of metals. Proven to be an effective hedge against inflation and economic uncertainty, gold and silver hold an important and unique place in your portfolio. Call 800.926.4922 or learn more at EverBank.com.
................................................

In This Issue...

* Consumption rose...
* Inflation fell...
* Swedish surplus...
* Euro setting the tone...

And Now... Today's Pfennig!

With yesterday's range bound trading, the markets may be saving it up for today...

Good day...and a Fantastic Friday to you...the dollar had the upper hand yesterday on better than expected inflation and consumption reports. Not much direction in the markets overnight, so I guess its up the US traders to round out the week:

We'll start off with the final revision of 4th quarter personal consumption coming in stronger than originally anticipated. The dollar rose as the Commerce Department's report showed consumer spending was revised up to an annual pace of 2.3% from the prior estimate of 1.9%, but is still lower than the third quarter figure of 2.8%. Economists are already expecting first quarter spending to slow down in the neighborhood of .5%.

The final GDP numbers for the fourth quarter came in as expected at .6%, but it did reveal that the economy would have actually contracted without a boost from exports. Excluding an improvement in trade, the economy shrank at a .4% annual pace. It looks as though the weak dollar has done some good, but we'll see if its enough to offset the slowing economy when the advance reading of first quarter growth is released on April 30.

The figures today also included a first look at corporate profits for the quarter. Profits from current production dropped 3.3% to an annual rate of $1.57 trillion and marks the second consecutive decline. The figure may be understated because the government doesn't take into account asset write downs and loan loss provisions in calculating current quarter profits. It looks like slower consumer demand and spending is starting to leave a mark on the corporate world.

With 4th quarter inflation coming in lower than originally anticipated, it gave some the urge to buy dollars yesterday. Core PCE for the last three months of 2007, which excludes food and energy, came in at 2.5% as opposed to the previous annual projection of 2.7%. This morning we have inflation data for February, which is also expected to improve and may spillover to support the dollar today. Feb's core PCE is expected to come in at .1%, down from January's .3%.

Sweden's trade surplus widened to a two year high of 17.1 billion SEK ($2.9 billion) last month from a year earlier as exports picked up for a third month running. Exports increased by 18% in February while imports rose by 12%, indicating that trade will make a significant contribution to growth in the first quarter. The Swedish economy grew at a faster than expected pace in the 4th quarter and retail sales surged 1.7% from January. Given these positive notes, the SEK continues to be one of those currencies that seem to have the right stuff going forward.

New Zealand's 4th quarter GDP grew 1% from the third quarter and expanded at an annual pace of 3.7%, which is the fastest pace in three years on increased exports of butter, cheese, and crude oil. The caution light is still on, however, because of its involvement in the carry trade along with its high current account deficit.

While we're in that part of the world, Japan's consumer prices rose at the fastest pace in a decade in February as companies passed on higher costs of oil and food to households, with prices climbing 1% from last year. Excluding energy and food, Japan's consumer prices fell .1% and Parliament's decision on whether to extend a higher tax on gasoline may also affect consumer prices, as the abolishment may lower core prices by .4%.

With not much in the way of action in overnight trading, the results of consumer spending and PCE may determine how we end the week. Spending by US consumers is expected to rise at .1% last month, down from January's .3%, as falling home prices, record energy costs, and a shaky job market hinders spending. The inflation reports are expected to show a drop in inflation last month, vindicating the Fed's decision to focus on reviving growth at a time when prices were accelerating. It's just difficult to say that inflation is under control at this point as rising oil is causing price increases on just about everything.

The euro is trading back above the 1.58 handle as European Central Bank council member Axel Weber said the bank will raise interest rates if needed to curb inflation, even as a global credit squeeze threatens to damp economic inflation. He went on to say that while the current rate of 4% is helping to contain inflation, the ECB will act if its price stability goal is threatened. The markets at this point like to see this type of hawkish stance, so we have the euro trying to get a fire lit under the rest of the currencies this morning.

Currencies today: A$ ..9218, kiwi .8047, C$ ..9846, euro 1.5826, sterling 2.0010, Swiss .1.0055, ISK 77.82, rand 8.0110, krone 5.0771, SEK 5.9305, forint 162.45, zloty 2.2263, koruna 15.9620, yen 99.87, baht 31.44, sing 1.3785, HKD 7.7816, INR 39.91, China 7.0122, pesos 10.7008, BRL 1.7405, dollar index 71.56, Oil $106.86, Silver $18.3750, and Gold... $945.50

That's it for today......Again, I want to thank Chuck for letting me fill in and say this has been an awesome experience. I also want to thank all of you with you kind words and encouragement, its very much appreciated. I had a serious case of writer's block this morning, I guess Bagel Friday in the office consumed my thoughts...anyway, enjoy the day and have an excellent weekend. Thanks again Chuck!

Mike Meyer
Assistant Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837
EverBank.com