Daily Pfennig : Swiss National Bank

G-20 Heats Up...

Chuck Butler — Fri, 25 Sep 2009 14:28:46 GMT

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In This Issue..

* Dollar's rally is cut short...
* Major problems for loans still exist...
* Yen rallies on exporter repatriation...
* Kiwi gets whacked!

And Now... Today's Pfennig!

G-20 Heats Up...

Good day... And a Happy Friday to one and all! It's still raining here in St. Louis this morning, but I won't that get me down, as it is a Friday! G-20 has gotten a bit ugly, folks... Seems everyone just can't seem to get along! Imagine that! 20 different countries, and now they want to be able to watch another country's finances and comment on them! Oh, I can see that working out real well! NOT!

So... Yesterday, we had the dollar gaining back the ground that it had lost the previous day, but at the end of the day, we're looking very much like the currencies hadn't moved from morning to morning... And overnight, didn't bring about much movement... So... When you get to the currency round-up below, you'll see the dollar's gains were small, and short-lived.

The U.K. and France are a bit upset with the U.S. and the President's plan to reduce the number of board members to the IMF, and guess who is on the chopping block? That's right... The U.K. and France! I really don't care about all this stuff, except to watch the saber rattling, and jockeying for "supreme leader"... I won't say any more about that here...

I did notice thought that, just as I said months ago, regarding the BRIC countries, that they would have to be reckoned with, due to their HUGE Treasury Chests of reserves, and the fact that they have a good portion of the World's population... Ok, where was I? Oh!, I noticed that it was going to be announced today that G-20 was going to take over as the main forum for global economic coordination. They will take that over from the G-8...

Well, guess who's a part of G-20 that wasn't a part of G-8? The BRIC countries! They will have more say in what goes on economically! Just like I said they would! This is a big deal, in that this shifts the power from the rich countries to the emerging markets... Yes, the rich countries are still in the Group of 20... But, the emerging markets outweigh them now!

And already, we can hear China taking shots at the U.S.... And, now that everyone can comment on other countries' economies, the U.S. took a shot at Germany, saying that they haven't done enough to spur Domestic Demand... Germany's chancellor, Angela Merkel, who is up for election on Sunday, shot back at the U.S., and said... "We should also look at imbalances between currency regions and not pick on specific countries within the Eurozone."

OK... Let's talk about something else... I was reading the Financial Times last night, and came across a story that really said something... Here it is... The FT...

"Losses on loans at U.S. banks and other lenders rose to $53 Billion in the first quarter, almost triple the previous high, reached in 2002, said a group of regulators, including the Federal Reserve and the Federal Deposit Insurance Corp. Nonbank lenders, particularly hedge funds, hold $1 of every $3 in troubled loans and 47% of all distressed loans. Loans made to media and telecommunications companies were in the worst state. Lending to the financial-services sector was the next worst, followed by loans to property companies."

But Hey! According to people in power that should know better, it's time to sound the all-clear horn!

And that brings me to something I wrote about the other day, regarding the delayed foreclosures... A reader was kind enough to send me this that maybe explains the delays...

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose on 60 million mortgages. That is the number of American mortgages currently reported to be held by MERS. Over half of all new U.S. residential mortgage loans are registered with MERS and recorded in its name. Holdings of the Kansas Supreme Court are not binding on the rest of the country, but they are dicta of which other courts take note; and the reasoning behind the decision is sound.

And... As another reader pointed out to me... It sure doesn't make the holder of the loan any richer to foreclose on it, given the state of the housing market today...

Ok... Enough of that! Yesterday, I talked about how Japanese yen was living right these days, rallying when the dollar is weak, and rallying alongside the dollar when it's not! Well... One of the reasons this could be happening with regularity, is that it is believed that Japanese exporters are repatriating their profits, as their fiscal first half ends this month...

So, does that mean the rug gets pulled out from beneath yen next week? Hmmm... I don't think so... I think that the one thing that's really underpinning yen right now is this new found appreciation by the Bank of Japan for yen strength! Just last night, Japan's Finance Minister Hirohisa Fujii reiterated his opposition to intervention in foreign- exchange markets.

Now, I don't know how long the exporters in Japan are going to go along with this new found appreciation for yen strength... But for now... Yen is on the verge of gaining even more ground...

In New Zealand overnight... The string of good data prints ended with a thud! New Zealand's Trade Deficit widened almost double what was expected! UGH! Remember, New Zealand has to import lots of things, and when the exports of wool, dairy, and lumber aren't strong, their deficit gets whacked! So, New Zealand would always have a Trade Deficit... But, at times it gets completely out of hand, and this is one of those times... Kiwi, got taken to the woodshed after the report printed, as well it should!

The Swiss National Bank (SNB) had a board member giving an interview last night, and when asked about the SNB's repeated jawboning to get the franc weaker, he had this to say... "with regards to the Swiss franc this means that we counter an appreciation of the franc against the euro decisively."

Now, that's a horse of a different color! All this time we were led to believe that the SNB would intervene to get the franc weaker VS the dollar! No wonder the franc has kicked some dollar tail lately, without a peep from the SNB... The franc was allowed to get stronger VS the dollar, as long as the euro was moving in the same direction, same general percentage move VS the dollar!

Our mortgage production guru, Stacy Blair, was talking the other day in a meeting, and mentioned that mortgage rates had edged down again, and production was picking up once more... Well, that plays well with a story I read last night... The average interest rate for U.S. home mortgages fell to less than 5%, and loan applications surged 13%, the Mortgage Bankers Association said. The nationwide average rate on a 30-year fixed-rate mortgage declined to 4.97%. The application surge amounted to a 50% increase compared with the end of June.

OK... So... I would guess that most of that stuff is re-financing loans, but hey! Like I told everyone on our desk 6 months ago, when the rates were in the 4% region... Go refinance your home loan! And then put the money you save each month in savings!

We get back to some data in the U.S. today, and I think that it could have a lot to do on whether the currencies rally or not VS the dollar. Durable Goods Orders for August prints first, and is expected to really fall back from July's strong 4.9% print... August is expected to print just a .4% gain for Durable Goods... That won't get the "strong recovery flag wavers" out, and that won't be good for the non-dollar currencies...

Then later we get the U. of Michigan Consumer Confidence report, which could turns things around for the non-dollar currencies... As the Consumer Confidence report is expected to be strong... ????? Why? I have no idea... (besides the obvious, stock strength)

We'll also see New Home Sales data for August...

Have you noticed the collapse of the Oil price? Pretty steep drop in just a couple of days! I told you the other day that the G-20 might put pressure on commodities... Oil is off, and Gold has fallen back below $1,000 wink, wink...

So... To recap, the dollar's rally was stopped short. The G-20 is the new global economic monitor, and the U.S. is ticking the U.K. and France off, regarding seats on the IMF board. G-20 is getting hot and heavy... Japanese exporters are repatriating their profits thus propping up Yen... And, New Zealand's Trade Deficit widens again...

Currencies today 9/25/09: A$ .8650, kiwi .7185, C$ .9175, euro 1.4685, sterling 1.6010, Swiss .9720, rand 7.4280, krone 5.7850, SEK 6.9170, forint 184.25, zloty 2.8550, koruna 17.15, RUB 30.09, yen 90.20, sing 1.4160, HKD 7.75, INR 47.98, China 6.8286, pesos 13.48, BRL 1.7995, dollar index 76.73, Oil $66.28, 10-year 3.36%, Silver 16.31, and Gold $997.32

That's it for today... Well... The Cubs lost last night, which means the Cardinals' magic number remains at 1... They could clinch tonight in Colorado... My beloved Missouri Tigers play on ESPN tonight as they take on Nevada, in Reno... And my little buddy Alex, plays football tomorrow as his 8th grade team takes on their big rival! Tomorrow night is our subdivision's big block party, so it will be a grand weekend for yours truly, especially if, the Cards clinch, Mizzou and Lindberg 8th graders win, and the rain stops! I think I'm going to go to the Mizzou game VS Nebraska next Thursday night, now that will be exciting! OK... Suzy Q is here, so I must be running late... Time to go.. I hope you have a Fantastico Friday, and Wild and Wacky Weekend!

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

A Gusher Of Federal Money...

Chuck Butler — Wed, 19 Aug 2009 18:23:37 GMT

...But First, A Word From Our Sponsor...
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* High upside potential
* No market risk to deposited principal
* Low $1,500 minimum deposit

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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..

* No currency movement to speak of...
* Buffett calls out the deficits...
* PIMCO does too!
* SNB selling francs to stem gains.....

And Now... Today's Pfennig!

A Gusher Of Federal Money...

Good day... And a Wonderful Wednesday to you! Another day with the medicine in my knee and it feels better yet today... I did have to ice it last night though, I guess I'm still not out of the woods here, but I can see the exit!

There was very little in the way of movement in the currencies yesterday. The euro moved to 1.4150, but was brought back down to the 1.41 handle overnight. Stocks rebounded yesterday, which gave a few risk takers the intestinal fortitude to dip their toes back into the risk assets water... But there just weren't enough of them to give the currencies the push they deserved to get.

OK... I gone for a few minutes, but I'm back now... My all-time fave Journey song was on the radio, so I had to stop to sing along. As always it's a good thing there's no one else here with me in the early morning! Oh! My fave Journey song? I knew you were wondering... The Girl Can't Help It...

Sorry about that tangent, but, you know me, I just type what's on my mind! But, back to currencies we go!

In a classic case of "The Markets do what they're supposed to do... Just not when" There are more than a handful of very well educated people and well respected investor types that have see the writing on the wall for the dollar... But... The markets have decided that it's just not the right time...

This is what I always say about diversification folks... It's the Hedge or insurance if you will that the Markets do what they're supposed to do... Now! Or whenever it is they do it... There won't be any tornado warning sirens, it will just happen... And you'll either be diversified with a portion of your investment portfolio out of the dollar or you won't... The great thing about this country is that you have the freedom to choose what goes in your investment portfolio... That is at least right now you do...

The reason this whole idea came to light for me this morning is a story that appeared on the Bloomie that was a reprint from a NY newspaper that I refuse to mention. The title line on the story goes like this: "Buffett Says U.S. Federal Debt Poses Risks to Economy, Dollar." OK, so you know that this had to pique my interest, eh?

Calling it the "gusher of federal money"... Buffett had this to say... "The U.S. must address the massive amounts of "monetary medicine" that have been pumped into the financial system and now pose threats to the world's largest economy and its currency."

So... Just chalk this down to yet another Big Kahuna, that sees the writing on the wall for the dollar, but the time is not right... That makes me think of those old wine commercials that would say, "we will sell no wine before its time"...

The folks over at PIMCO (Pacific Investment Management Co), the world's largest bond fund, also believe that the dollar will weaken as the U.S. pumps "massive" amounts of money into the economy. They even go further, in a letter to customers, saying that the drop of the dollar will come mostly against the emerging market currencies. "the greenback is losing its status as the world's reserve currency, said Curtis Melbourne, a PIMCO portfolio-manager. He went on to say... "Investors should consider whether it makes sense to take advantage of any periods of U.S. dollar strength to diversify their currency exposure."

WOW! Isn't this what I always say to you... Always, always be yourself, no wait! I always say to use dollar strength as opportunities to buy at cheaper levels! But the really funny thing that I saw was this... A reader sent a link to this story from PIMCO to me... And said... "Maybe if they read the pfennig they would have had a clue before today?" HAHAHAHAHAHA! That's absolutely correct! And I'll tell you this... A lot of Big Houses have people in research and trading desks that read the Pfennig each day...

There's more risk aversion creeping into the markets overnight (thus the drop back to 1.41 in the euro we just talked about), as the Shanghai Index fell -4.3% overnight... That weighed on European stocks this morning, and will carry over to U.S. stocks most likely...

The data cupboard has been emptied out and is looking to get restocked today... So the only thing besides sentiment moving the markets today will be the direction of stocks...

Talk about being tied to China... The Aussie dollar (A$) pushed to 83-cents yesterday before the rot on the Shanghai Index's vine was exposed... And the A$ is back to 82-cents this morning...

And... Just to confirm one more time that the Risk Aversion campers have taken over the campground, Japanese yen is the strongest it has been in weeks, looking as though it will take out the 94 handle... Feeling stronger every day, I know I'm all right now...

One currency that seems to "hang in there" the most, with no upside or downside to speak of, is the Swiss franc... Wanna know why? It's not because the Swiss National Bank (SNB) has warned the markets about franc strength... It's because the SNB has been sell francs every time it begins to move higher... SNB member Thomas Jordan was interviewed yesterday, and he confirmed what the markets had suspected for some time now, and that is that the SNB was selling francs to stem gains...

You know... I don't like it when a country's Central Bank sells its own currency... You may recall that the Reserve Bank of Australia (RBA) has done this in the past to keep their currency from moving too high too fast. This is where I think Central Banks overstep their job description... They are supposed to protect the value of the currency... NOT harm the value of their currency! I understand what these Central Banks are attempting to do here, it still doesn't mean that I have to like it!

Speaking of Central Banks... The cartel, I mean the Fed Reserve, has been keeping very quiet recently... I think that since Big Ben Bernanke told Congress that he had no idea where $500 Billion dollars that left the Fed went, he's doing damage control... He is up for re-appointment in January, and that statement won't be a gold star on his resume', eh? I was reading my friend, John Mauldin's weekly letter this past weekend, and he mentioned that some pretty important people that are "in the know" made a bet that Big Ben won't get re-appointed by the President in January... WOW! One and done for the helicopter Ben? I'll have to see that to believe it, as he has gone along with all the back room deals, brokerage sales, and changes to power that the administration is orchestrating... Whatever administration it was or is... Doesn't matter folks... There's been no change, except for the different color of lipstick on the pig...

Speaking of such a thing... That was the title of my presentation to that HUGE crowd of people in Vancouver at the Agora Financial Reserve's Wealth Symposium last month... That presentation was so well received, that I'm using it again in San Francisco on Friday... Updating it of course! Right Jason? And that is... "Applying a different color of lipstick to the pig"... Of course long time readers know that I've used the term: you can put lipstick on a pig, but it's still a pig; for a long time, and way before it became popular last fall during the election. The pigs in this case are the deficit and the dollar...

For instance... The deficit continues to grow to record levels each day, but is Washington D.C. addressing it? NO! they have decided to place all their attention on another item that's taking all of their time and efforts. Just applying a different colored lipstick to the pig, folks... That's all it is...

We learn these things in media training... To divert... To something you want to talk about... That's what's happening here...

A long time reader sent me some notes yesterday, and this one snippet I think addresses this in its entirety... "Here we are with the Japanese experience fresh on our doorstep, and we (or at least our government) is doing almost exactly the same thing. REFUSING to acknowledge weak balance sheets, denying reality, and virtually guarantying that the problems will continue and get worse."

OK... Enough of that! I could get started down a road that would lead to by blood pressure shooting through the roof, so... Let's not go there!

We haven't heard the term "green shoots" from Big Ben lately either... Again, I think that once you get the taste of your foot being in your mouth, you don't want to experience that again! Remember when I told you that Big Ben's "green shoots" were nothing but nut grass, weeds if you will? Here's the image I would get whenever Big Ben or the copy cat media types would mention "green shoots"... A guy feels ravenously hungry late at night and raids the fridge. All that's in there is a plate covered with aluminum foil. He removes the foil and finds a putrid piece of meat, covered with mold. He holds his nose and takes a close look. "Great", he says, "green shoots"... (OK, I didn't make that up, a reader sent me that note, and I told him that I definitely would use it in the Pfennig!)

I don't recall how long ago it was that I said this, but I do know that I said this at some point in the past... And that is that the so called recession that we're in is really a depression, and each time it looks like we're going to come out, we fall back... I think I even said that we could have a quarter of positive growth, only to fall back to negative the following quarter... Let's face it folks, this is a depression, not a recession...

Yesterday's data cupboard had the semi-stupid PPI (wholesale inflation) print for July, and the index printed a negative -.9%! Reversing June's jump to +1.8%... Year on Year, PPI is -6.8%... That spells price deflation, folks... And just means that things should be cheaper... But wait! Do you see cheaper prices? The thing I've been noticing lately is that when we send out for lunch each day, that the prices of things might not have moved, but the size of what you get sure got smaller... Which means that we're paying more for less! Not less for more! Something is awry here don't you think?

We also saw Housing Starts and Building Permits, which I carried on about yesterday... Well, they did not expand like forecast, but fell in numbers instead. Housing Starts were forecast to be 599,000, and came in at 581,000. And Building Permits were forecast to be 577,000 and came in at 560,000... Not as lofty as the forecasts, but still... 581,000 new housing starts when we are already choking on the inventory of houses that we have... I don't get it... I really don't...

I'm watching the euro pop up here in the past few minutes gaining 1/4 euro, which isn't much, I'm well aware of... I'm just marking the move up...

Currencies today 8/19/09: A$ .8220, kiwi .6705, C$ .9030, euro 1.4135, sterling 1.6430, Swiss .9315, rand 8.0750, krone 6.1325, SEK 7.2475, forint 194, zloty 2.9550, koruna 18.16, yen 94.10, sing 1.4505, HKD 7.7515, INR 48.80, China 6.8341, pesos 12.96, BRL 1.8435, dollar index 79.10, Oil $68.75, 10-yr 3.44%, Silver $13.65, and Gold... $935.25

That's it for today... And for me this week, and through to next Tuesday. Chris will have the conn on the Pfennig those 3 days. I'll be traveling tomorrow, and miss my darling daughter Dawn's 30th birthday... Tomorrow is also our little Christine's oldest son, Jamieson's birthday! So Happy Birthday to you two! I have two videos to do today, so I have to get ready to do those this morning. Remember when I told you that I would be doing videos where I answer questions that are sent it, for the subscribers of the Currency Capitalist? Well, we've been doing them for over a month now. I think it's going well. I mean I'm just myself, answering questions to the best of my ability, nothing more, nothing less... Our BRIC MarketSafe CD was quite the in-demand issue! And like all issues that we've done in the past, we saw a flood of applicants at the last moment... The cut off was yesterday, and our people were here late last night still approving on-line applications. WOW! A great job by everyone that was associated with this issue from products, to marketing, to legal, to operations, the newsletter writers, and of course the sales desk... And that guy that came up with the idea in the first place! OK... I've carried on enough here... Time to go! I hope your Wednesday is Wonderful, and I'll talk to you next on Tuesday next week!

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

Risk aversion disappears again...

Chuck Butler — Mon, 20 Jul 2009 16:08:10 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?referid=11808
.........
In This Issue..

* Risk aversion has left the building...
* CIT survives without Fed help...
* SNB tries to fight the markets...
* Light week for US data...

And Now... Today's Pfennig!

Risk aversion disappears again...

Good day... We had just an amazing weekend of weather here in St. Louis, and this morning is shaping up to be another beautiful day. Friday turned out to be a beautiful day for those who have taken our advice and diversified their holdings out of the dollar. Risk aversion was placed on the back burner again, and investors moved money back out of the dollar into higher yielding currencies. The dollar and yen got sold but all other currencies rallied, and investors also turned back toward gold pushing the metal above $950 for the first time in over a month.

So what caused all of this confidence? First, the housing data released Friday morning in the US showed a slight pick up in both building permits and housing starts. While the housing markets have a long way to go, the data have given investors an indication that construction may have found a bottom. Not to throw cold water on investors confidence in the building numbers, but while the residential market may be bottoming out, the commercial market continues to tumble. I spoke to a good friend over the weekend who is a commercial real estate developer down in Memphis. He told me that his development pipeline has completely dried up, and even the brokerage side of his business has slowed. The only part of his business which has picked up is the marketing of foreclosed properties. He has shifted his concentration to helping banks and lenders 'work out' of commercial projects which they have taken back onto their books. The economy has kept most companies from opening new stores, and many continue to shut down under performing ones. My good friend tells me most of the people he talks to don't believe the commercial real estate market will turn around until the end of next year. Not good news for the banks who are still reeling from the residential real estate bust.

But I digress. Investors weren't focused on the commercial real estate market on Friday, they were just happy to see a possible bottom in the residential sector. Their confidence was boosted further after rumors spread that CIT would likely be saved from bankruptcy. Sunday these rumors were confirmed as it was reported that the CIT Group board had reached an agreement with bondholders that should keep the struggling business lender out of bankruptcy court. According to the Wall Street Journal, the deal won't permanently fix the company, but it buys time for the lender to restructure itself.

We have blasted the administration in the past for the way they are handling the economy, so to be fair I will have to give them kudos for the way they handled the CIT meltdown. Instead of throwing good money after bad (the taxpayers have already given CIT $2.23 billion of TARP funds), Geitner and Bernanke passed on an AIG type bailout, and even stayed away from arranging a Merrill Lynch style 'shotgun wedding'. Instead, they did exactly what they should have done and let the markets rescue CIT. It is still yet to be seen if the restructuring will ultimately work, but it is good to see the private capital markets are being left to their own accord, without intervention by the Fed. (Yes, I know the Fed is still involved, but not AS involved as they could have been!!)

The Euro climbed on Friday on some good economic reports. It was reported early Friday that Europe posted a trade surplus for a second month in a row. May's trade surplus rose to 800 million euros as exports fell less than imports. The data add to evidence that commerce with the rest of the world will likely pull the Euro region out of the recession. Another report showed German producer prices fell at the fastest rate in more than 40 years last month as energy costs declined and demand weakened. The June decline of 4.6% from a year earlier was the biggest drop since December 1968. Lower producer prices are a good for the European economy where industrial production rose for the first time in nine months in May and manufacturing orders in Germany increased the most in two years.

The rally by the Swiss franc was dampened by intervention as the Swiss National Bank sold the currency to halt its rise. The sales, which occurred over the past few weeks, were the SNB's first solo currency market interventions since 1992. While they have been able to beat back the currency markets for now, the SNB doesn't have deep enough pockets to fight a long protracted war against the currency market. As Chuck has pointed out several times in the past, intervention can move the market in the short term, but it takes a very large amount of reserves and an iron willed effort to fight the longer term trend. The Swiss franc will likely keep pace with the Euro, as both gain vs. a falling US$.

As investors regained their confidence, the higher yielding currencies of Australia and New Zealand advanced. Both currencies moved up over 1.5% vs. the US$ and hit the highest levels in two weeks vs. the Japanese yen. The Canadian dollar also rallied, completing its first five-day increase since May. A run up in crude oil helped strengthen the loonie by over 4% vs. the greenback last week.

Chuck is waking up in Vancouver this morning, his favorite city located north of St. Louis. While he spent most of the day yesterday traveling, he was able to send me the following from David Rosenberg, who is usually pretty good with his thoughts....

"It is the second anniversary of the credit crunch and after all of the fiscal and monetary policy initiatives, the best we get are "green shoots" and now that story is getting stale. Go back two years and you will see that the Fed Funds rate was 5.25%, Today it is zero. The fiscal deficit was 2% of GDP two years ago. Today it is 13%. Mortgage rates were 6.5%. Today they are 4.7%. Homeowner affordability with all the government measures is 70% stronger today than it was then too. The Fed's balance sheet then was $850 Billion. Today it is bloated at $2 Trillion. The government has tried just about everything. Or has it? What if we were to tell you that the one policy tool that is unchanged since the summer of 2007 is... The U.S. dollar? It is exactly the save level now, on any trade-weighted measure, as it was back then. The greenback is struggling at the 50-day moving average, and this could well be the next policy shoe to drop... "

David makes an excellent point. In spite of all of the negative numbers with regard to the US economy, the value of the dollar is basically unchanged over the past two years. This is bound to change, as US policy makers will have to let the dollar fall in order in the face of rising inflation and skittish foreign investors. As we have repeatedly pointed out, the administration has three choices with regard to the tremendous debt load which has been built up in recent years. 1) They can increase revenues (yes, they are increasing taxes, but these increased taxes are already spent on the new health care program). 2) They can decrease expenditures (big government is back, expenditures aren't going to fall anytime soon!). 3) They can let the dollar fall in order to pay back the debt with cheaper dollars (the most likely scenario!!).

As always, we encourage you to protect yourself from the eventual drop in the value of the dollar by diversifying your investments into other currencies and gold or silver.

We start what looks to be a pretty light week of data here in the US with the Leading Indicators index which will be released later this morning. This is the Conference Board's gauge of the economic outlook for the next three to six months and is expected to show an slight increase. If so, it would be the first time the index has shown three consecutive months of increases since 2004. But even those that are expecting the index to show another rise are preaching caution. Most economists believe that even if the index indicates the recession is ending, recovery will be slow. High unemployment and cautious consumers will keep the US economy under pressure.

After today, the markets will have to turn their attention to the weekly jobless claims to be released on Thursday as tomorrow and Wednesday will only bring the ABC consumer confidence number and MBA Mortgage application data neither of which are closely watched. We will also get more data on the housing market on Thursday with the release of Existing home sales data. Friday will close the week out with the U of Mich confidence number. As I said, should be a rather slow week on the data front. Now on to the currency wrap-up:

Currencies today 7/20/09: A$ .8113, kiwi .6535, C$ .9057, euro 1.4216, sterling 1.6522, Swiss .9366, rand 7.9646, krone 6.3411, SEK 7.7407, forint 192.16, zloty 3.0236, koruna 18.1879, yen 94.61, sing 1.4399, HKD 7.750, INR 48.255, China 6.8320, pesos 13.26, BRL 1.9261, dollar index 78.92, Oil $64.74, 10-year 3.69%, Silver $13.7175, and Gold... $952.98

That's it for today... As I said in the opening paragraph, the weekend weather was just phenomenal here in St. Louis. I competed in another triathlon yesterday, and did ok; not a personal best, but ran through some pretty bad leg cramps. Congratulations to my training partner, Matt B. who ended up the overall winner. And a big congrats goes out to Tom Watson, who just missed an 8 foot birdie put to become the oldest person to win a major. It is an inspiration when a guy almost double the age of his competitors can go out and beat all but one! Hope everyone has a great start to your week and a Marvelous Monday!!

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

Increasing SDR Issuance...

Chuck Butler — Thu, 25 Jun 2009 15:17:40 GMT

.........But First, A Word From Our Sponsor..........
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In This Issue..

* Fed confuses markets, risk assets get sold...
* SNB intervenes to stop franc's rise
* ECB issues 12-month liquidity...
* Bernanke to get grilled?

And Now... Today's Pfennig!

Increasing SDR Issuance...

Good day... And a Tub Thumpin' Thursday to you! Yes, I know the currencies and commodities got whipsawed yesterday, and my Cardinals got spanked, but that's no reason for us to not enjoy a Tub Thumpin' Thursday! Every day is a gift, and it has nothing to do with stocks, bonds, currencies, and commodities!

OK... Not that I try to be philosophical, sometimes it just comes out that way! Besides, you don't want to think that I'm just a smart *** all the time! HAHAHAHAHAHA!

Well, as I said in the open, the currencies and commodities got whipsawed yesterday, and the culprit was the FOMC minutes... You see, the Fed Reserve met to discuss rates, and other items. And what they said just blew away the bond vigilantes, and really ticked off the Hawks, but in the end, what they said, was really that things will remain status quo...

Their announcement of bond buying didn't measure up to what the bond folks wanted to see, and their announcement that interest rates won't be going up for some time, didn't measure up to the inflation Hawks, who wanted a comment about fighting inflation. Instead, what they received was more Alfred E. Newman on inflation... "What, me worry?" That's how ridiculous their statement was folks... The Fed still looks for inflation to "remain subdued for some time"... Although... Their outlook for the economy was slightly upbeat...

So... If your confused about what the Fed is thinking... Then join the rest of us! The markets spent the day trying to sort it out, and when it was all said and done, they couldn't, so they sold risk assets... So... The 1.41 level the euro enjoyed yesterday morning when I signed off, is now 1.3945...

On top of all this, the Swiss National Bank (SNB) has issued a communiqué' that talks about their "new aggressiveness" toward Swiss franc strength. Now, isn't that just one of the most ridiculous things for a Central Bank to say about it's currency! Would someone over there at the SNB, please think about what you're saying!

Oh well... This is all I'll say about the SNB... It's hard to soar with the eagles when you have to work with a bunch of turkeys! OH! And it's also reported that this "aggressiveness" showed up as intervention by the SNB yesterday... They sold francs in the markets... UGH!

OK, let's get back to the Fed, and their bond purchase program / Quantitative Easing / monetizing the debt / money printing... It's all the same... Oh, one more thing, it's the road to ruins, but don't let that get in the way of the Fed Party! You see, the Fed didn't announce anything this time, because all the world was watching and waiting for them to announce a "mega-buying program"... I told you earlier in the week to NOT expect the Fed to announce any changes to their road to ruins at this meeting, but instead the August meeting, when during the dog days of summer, when almost every #1 trader on earth is on vacation...

So... The bond vigilantes who want bond yields low realize, with the amount of supply that the Treasury is issuing these days, that the only way to get those lower yields is to have the Gov't buying bonds!

I came across something yesterday, that I yelled across the desk to make certain everyone knew... Recall at least a month or so ago, I told you how China had called for a new reserve currency, replacing the dollar with SDR's (special drawing rights), which would be a basket of currencies. This news received a ton of publicity... But one thing that didn't receive a ton of publicity was the fact that President Obama agreed at an economic summit in London that SDR's should now be used to help stabilize the balance sheets of nations struggling to combat the current crisis.

Now... On the outside that looks harmless right? Just helping these struggling nations... But! Could this also be a baby step toward a global currency? Could this be a baby step toward a further devaluation of the dollar, and it's signed off on by the President?

OK, now here's the thing that really caught my eye... The IMF is going to issued $300 Billion worth of SDR's. That's 10 Times... That's right, I said 10 Times the amount of SDR's that CURRENTLY EXIST!

Could this be the facility for China to quietly exchange dollar reserves for SDR's? Come on! Somebody has got to see this the same way I do!

I mean, it was just LAST WEEK, that the countries of Brazil, Russia, India and China (BRIC's) called for a "more diversified international monetary system?" Why, yes, Chuck, it was... Just last week! And then this week, the IMF "just happens" to be issuing 10-TIMES the amount of SDR's that CURRENTLY EXIST! Hmmmm...

I probably should stop there... I'll be accusing people of all sorts of things if I continue on this path... But there's some food for thought, eh? You won't see this on TV... They have more important things to show you and talk about, like... The President killing a fly! That's a really sad thing, to think that our news has come to that!

OK... New Home Sales for May dipped lower, but the inventory of homes for sales also dipped... And, we got the surprise of year when Durable Orders for May showed an unexpected and very strong gain of 1.8%... While I think this is wonderful news, I have to question it... I mean, with the automobile industry basically shut-down, one would think this number to be quite lower... However, I'm told... That non-defense aircraft orders more than offset the auto losses. OK, so, this is NOT a green-shoot folks... This is a One-and-done!

OH! And to follow up on yesterday report regarding Existing Home Sales... I totally forgot to mention that Foreclosure Sales are soaring, and thus a big part of the rise in Existing Home Sales... So, no green-shoot here either!

Today, we'll see the Weekly Initial Jobless Claims, and... The Final print of 1st QTR GDP, which will remain at -5.7%...

So, once again, not much on the data watch for today.

Before I go to the Big Finish... I want to follow up on the news I wrote about yesterday regarding the European Central Bank's (ECB) EUR 300 Billion injection of liquidity out 12-months... The total came in at a higher figure than that, at EUR 442 Billion... Still, much lower than the forecasts, which had seen some call for a number as high as EUR 1 Trillion! And... This morning, the Eurozone announced that Industrial Orders fell 1% in April... So that data isn't helping the euro any either!

And then there was this from the NY Times this morning... "The U.S. House Oversight and Government Reform Committee will question Federal Reserve Chairman Ben Bernanke about his role in Bank of America's acquisition of Merrill Lynch. While Republican lawmakers are launching an attack on Bernanke, who is Republican, Democrats are defending him."

Man, is that all mixed up! But... A week ago or so, we were getting reports about the Bank of America (BOA) purchase of Merrill Lynch... And now, nothing, absolutely nothing, say it again! Any wonder why? Well, maybe it will come out in the U.S. House Oversight and Government Reform Committee questioning, although I doubt it...

And the State of California... The largest economy in the U.S. and in the top 7 economies of the world (used to be 7th, but with their recession, who knows?), announced that they were going to pay their bills with IOU's... The state's controller said. "Next Wednesday, we start a fiscal year with a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression."

And... The Fed believes the recession is easing? Hmmm... Maybe they are too far away from the California books and records!

I'm on a roll here, somebody stop me! OK, I'm stopped!

The Treasury will auction $27 Billion of 7-year Treasuries today... Just keep the supply spigot open must be the Treasury's motto these days!

Currencies today 6/25/09: A$ .7955, kiwi .6360, C$ .8605, euro 1.3940, sterling 1.6280, Swiss .9095, rand 8.0775, krone 6.5170, SEK 7.9350, forint 199, zloty 3.24, koruna 18.72, yen 96.40, sing 1.4575, HKD 7.75, INR 48.65, China 6.8345, pesos 13.27, BRL 1.9705, dollar index 80.78, Oil $69.05, 10-year 3.69%, Silver $13.86, and Gold... $934.20

That's it for today... Draggin' the line today, late night with my little buddy Alex's baseball game. A ringing double and single with two RBI for Alex last night, in his last game of the year. HEY! How about the U.S. National Team, beating Spain in soccer / football? WOW! It's been a while since the U.S. beat a ranked national team. So good for them! No breakfast sandwiches today for the boys and girls, as out little Christine is on holiday... Yay for her! She normally picks them up and I buy, but I forgot to do both this morning! UGH! 11-0 spanking by the Mets last night, leaves the Cardinals only 1 game in front in their division... Well... I'm going to attempt to have a Tub Thumpin' Thursday, I hope you do too!

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

Gold Vending Machines!

Chuck Butler — Thu, 18 Jun 2009 14:59:35 GMT

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

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

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

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

In This Issue..

* More range trading...
* SNB doesn't target the franc...
* Norges Bank cuts rate but looks forward...
* Buy your gold and Snickers!

And Now... Today's Pfennig!

Gold Vending Machines!

Good day... And a Tub Thumpin' Thursday to you! It was 95 here yesterday, and forecast to be even warmer, or should I say hotter, today! WOW! Like overnight, it turned to summer, after the coldest, most wet, spring I can ever recall... I know, I'll get 100 emails reminding me that summer doesn't officially start until next week... I'm just talking about the summer-like weather!

The currencies remained in that range I talked about yesterday, with a slight bias to sell dollars, but not much of one. Crude Oil prices moved higher on the day and overnight, which doesn't play well with a dollar rally, and therefore, has pushed the dollar down a bit... But again, we're talking minor moves. It's as if someone (traders) are waiting for something BIG to happen with data, the Fed, the Treasury, before taking one direction.

Did you hear about the Gold vending machine in Germany? I saw this yesterday morning, and thought it to be a hoax... Then someone in the office brought me a print out of a story in the U.K. Telegraph... OK, so maybe it's not a hoax... Any way... Here's the skinny... In Germany, they've come up with a vending machine that can update prices of Gold every few minutes, and... Dispense 1 gram Gold wafers, 10 gram Gold bars, or coins... There's about a 30% increase in the market price! WOW! Imagine that, you need some Gold in your pocket just for GP, and you simply walk up to a vending machine and buy some, as simple as getting that Zero bar, or Snickers!

OK... What gives a guy this kind of idea to make a vending machine that disperses Gold? It's all about taking advantage of the times, folks... I may have told you this in the Pfennig before, I don't recall, but I use it in my presentation for Gold... Investment in Gold increased 427% last year... To put it into Tonnes of Gold, retail investment purchases of Gold reached approximately 108 Tonnes of Gold in 2008, up from 36 Tonnes in 2007, and 28 Tonnes in 2006!

I was talking with the Big Boss, Frank Trotter, who, by the way scored a goal from about 30 yards out in his soccer match the other day... Ty Keough, our one-time national team player, and long time pro, was quite impressed, and that says a lot, because Ty has seen some soccer in his years... You may know Ty or heard of him... But do you know his dad? His dad is a soccer legend, playing on the U.S. national team that beat Great Briton in the World Cup in the 50's, and then went on to be the winningest college coach, with multiple national championships at St. Louis University...

Oh, I digress, there, I'm so sorry... But once I got talking about soccer, of which I played a ton of in my youth, I just started typing... UGH! Any way, I was talking to the Big Boss, Frank Trotter, the other day, and Frank mentioned that he was concerned that Gold could be the next bubble... I assured him that I didn't see it that way, not until my neighbors are asking if they can buy Gold at $1,200 oz! (I tried to get them to buy it at $800 oz, to no avail!)

Remember when we were kids? No wait, we wouldn't all have been kids at the same time you dufus Chuck! OK, when I was a kid... We used to have these bomb shelters in our schools, and we would practice going into them... It was a different time, the cold war was strong, and the fear was put in all of us toward Russia... I had a teacher, many moons ago, that told the class that it was a good thing that Russia and China didn't see eye-to-eye... Well... I wonder what he thinks about the news that China and Russia have agreed to use each other's currencies and eliminate the use of dollars in their trade?

It kind of feels like Russia and China are ganging up on the dollar!

The other "new kid on the block" Brazil, is joining in with Russia and China... But that news didn't help the Brazilian real yesterday, as it saw one of its worst days in weeks! But that's the real... I watch it trade some days, and your eyes grow very wide open in amazement of the wild swings in this currency. It will move 2-3% in a day, either way, in a heartbeat! Which tells you that the "number of players" in real, is smallish when compared to the second most liquid currency in the world... The euro! So... If you're going to own reals, you need to be aware that it has these wild swings!

Speaking of the euro... It's getting a boost this morning from an improved outlook for risk today, as U.S. stock futures are stronger. The "Big Dog" looks a little tired of chasing the dollar, and then being pulled back on to the porch over and over again recently... But, as always, always I tell you tutor turtle, be yourself... No wait! I always tell you that all this is "noise"... Investment portfolio diversification into currencies and precious metals is a long-term relationship... The dollar didn't lose over 90% of its value overnight! The euro didn't gain over 50% VS the dollar overnight! These things are long sweeping moves, and you have to drown out the "noise"... Otherwise, you'll become a currency and metals "trader", and chasing these assets all over the board!

Pound sterling is getting hit on the chin this morning, as retail sales fell in May, which was the first drop in 3 months... Retail Sales fell .6% in May, and pretty much squashes those so-called "green shoots" that have been talked about for the U.K. economy... I think you can expect to see stuff like this for the next year... Up and down, in and out, green and brown shoots... And... Like I've said before, if it's happening in the U.K. it won't be long before we experience the same, as the U.K. just seems to be ahead of the U.S., time-wise...

The Swiss franc is stronger this morning than recent trading sessions as the Swiss National Bank (SNB) met, left rates unchanged, and made a statement that has given a green light to franc traders to buy... The SNB announced that they were not targeting a specific exchange rate for the currency. You may recall that the SNB had previously stated that they were not happy with franc strength, and had intervened on occasion to keep the currency from strengthening... I would be careful here, as this could be a "trap" Oh, you don't think Central Banks set traps for traders? OK, well, maybe they don't really set a "trap", but they do send mixed messages that cause losses!

Big Al Greenspan was famous for these "mixed messages" that were called "Greenspeak"... After reading two books on Big Al, I can tell you that I personally think that "Greenspeak" was gobble-de-gook! Confuse everyone so they think you are some sort of messiah! Right Big Al? When... In reality, he was just "a guy", who really screwed things up!

Today, we will see the Weekly Initial Jobless Claims, which for me has turned into watching the "Continuing Claims"... This part of the data tells me if unemployed people are being re-hired... I haven't see that happening, as Continuing Claims have continued to grow larger in numbers... We'll also see the Philly Fed Index, (manufacturing)...

The real meat (where's the beef?) will come from a testimony before the Senate Banking Committee by U.S. Treasury Sec. Geithner, on the President's plan to overhaul the U.S. Financial regulatory system... I doubt these Senators will understand what Geithner is talking about, and will "rubber stamp" the plan... Which means, folks... That the Gov't gets its foot in the door further...

I know, I know, I get quite a few emails from people that take exception to me getting upset with the Gov't getting more involved in the markets, etc. as they say, "Yeah, Chuck, and you think the "markets" have done a better job?" Well... The markets are the markets, folks... If left alone, they will act as markets should... What? You didn't like the fact that the Mr. Market, as my friend, Bill Bonner, calls it, turned the whole credit, and deficit spending on its ear? Mr. Market was just trying to correct what was wrong... Getting the Gov't involved is just plain, wrong! One foot in the door... Then next it's the next thing, and the next, and pretty soon, the Gov't is completely in the door, and hanging out on your couch!

Please... These are just my opinions... If you don't like them, you have that right! It is still a free country for speech! Just delete it and go on with your life! OR... You didn't pay anything for all this, that I've been giving to people since 1992...

In Norway yesterday, the Norwegian Central Bank, The Norges Bank, surprised me and the markets by cutting rates 1/4% of 25 BPS... I did say the other day that the Norges Bank was the only Central Bank that was meeting this week, that had some room to cut rates... The Norges Bank did say in their press conference after the rate announcement that rates were at the "bottom" and that they were looking toward the first quarter 2010 as the timing on the first rate hike!

Well, with traders so forward looking, this was good news for the krone, as the rate cuts was quickly put in the rear view mirror, and now everyone is looking forward to higher rates!

And under the heading of "dirty float"... The Reserve Bank of Australia (RBA) is reported to have sold the most A$'s in the month of May, since February 2004! Now, go back to May and recall the move in A$'s... The currency gained almost 10% in the month... So, the A$ would have gained even more if the RBA had not sold A$1.4 Billion A$'s in the month! I personally think the RBA was just trying to smooth out the trading the A$, which given this information would have been moving up the charts with a bullet in May!

I don't think the RBA would get involved if the move was a slow, general appreciation of the currency... So, I don't look for future intervention to keep the A$ from gaining the ground I believe it will gain rest of this year, as inflation fears grow stronger and stronger...

And on that positive note... I think I'll head to the Big Finish!

Currencies today 6/18/09: A$ .7945, kiwi .6355, C$ .8835, euro 1.3935, sterling 1.6260, Swiss .9280, rand 8.1380, krone 6.37, SEK 7.8725, forint 204, zloty 3.26, koruna 19.16, yen 95.80, sing 1.4570, HKD 7.7503, INR 48.25, China 6.8350, pesos 13.46, BRL 1.97, dollar index 80.42, Oil $71.30, 10-year 3.69, Silver $14.25, and Gold... $938.20

That's it for today... That's a pretty interesting story about the Gold vending machine, eh? Here in the office we have one of those "honor snack trays", where people pay for what they take... Can you imagine one of those that had Gold coins in it? HAHAHAHAHA! Another good win for the Cardinals VS the Tigers last night... Of course I can only watch 5 innings or so, before it's bed time. I get up the next morning, and watch the highlights! This weekend is Father's Day... Don't forget your dad! More on that tomorrow... I just love this time of year when the daylight lasts until 9 pm... The daylight lifts spirits, I believe, and now spirits get lifted longer each day! HA! OK... How about making this a Tub Thumpin' Thursday, eh?

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

Russian Rumors...

Chuck Butler — Thu, 28 May 2009 14:40:07 GMT

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

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

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

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

In This Issue..

* dollar rallies on N. Korea warning...
* Emerging Markets decouple...
* A debt upgrade for New Zealand...
* Swiss francs rise despite SNB warnings...

And Now... Today's Pfennig!

Russian Rumors...

Good day... And a Thunderin' Thursday to you! Yes, the rain continues here in St. Louis, but that's normal for this time of year. But the rain brings the thunder... And so it is a Thunderin' Thursday!

Well... The dollar came back with some vengeance yesterday pushing the Big Dog, euro, back well within the 1.38 handle, and all the other little dogs, other currencies, followed. There wasn't data to speak of yesterday to push the dollar higher, it was simply a case of fright, as safe haven flows went the dollar's way after the news of a N. Korea attack warning spread throughout the markets.

Funny thing... I get a daily email from a news source that gives the highlights at mid-day... And yesterday, the email said, well, the email didn't really "say" anything, it can't talk! Any way, the email contained these two headline stories... 1. Crude rises for third session... And 2. Gold down for second day... I then glanced at the screen, and saw Crude Oil trading down on the day, and Gold up $5.80 on the day... So much for that news source, eh?

Yesterday, I talked about the high yielders, highlighting Brazil's return to a Current Account Surplus... But the high yielders have more to say about the dollar's future value... You see, it's more than the Commodity Currencies... It's also the Emerging Markets currencies, which seem to have a life of their own. There was a lot of talk last year about how the Emerging Markets economies had decoupled from the U.S. and a U.S. slowdown would no longer affect them negatively as a U.S. slowdown would have in the past. For a few months there, the decouple story was laughed at, as the Emerging Markets sold off just like everyone else. But then, like the Phoenix Bird, they rose from the ashes... And it's these Emerging Markets currencies that have taken the biggest bite out of the dollar this year!

OK... This is not an endorsement to run out and buy Chilean pesos! You've got to be very careful with these Emerging Markets currencies, as they are smallish, they are illiquid in most cases, and they have wild swings. Take for instance two more "mature" Emerging Markets, Brazil and South Africa... These two do NOT fall into the illiquid category... But currencies like S. Korean won, and Chilean pesos definitely do!

The real point here was to talk about the decoupling... It's happening just as those that saw that it could, said it would. It just took some time to get legs underneath themselves. Remember last year they called the action from July to December, "De-Leveraging"... This simply meant people were selling everything non-dollar and buying dollars... You might recall me questioning this thinking, but who am I to say this was wrong! Well, I read yesterday that this price action in Emerging Markets is being called the "Re-Leveraging"!

Speaking of an Emerging Markets Country / currency... The Russian ruble (illiquid!) was in the news yesterday... And here's where, I just didn't get the dollar strength yesterday... Here's the skinny... Rumors were flying around yesterday that Russia is planning to revise the weightings in their basket of currencies they use to value the ruble... The rumor had the weighting in euros for the basket, changed from 45% now, to 55% in October, and 60% in December....

Now... If true... This would be HUGE for the euro! Now we just need to all be Sherlocks and find out what's going on here... The Truth is Out There!

OK... Back to the majors!

The euro has recovered a bit this morning on the news from the European Commission, who, this morning said that European Confidence in the economic outlook increased to a 6-month high this month... The people surveyed repeated the thought that record-low interest rates, and the Government spending plans may be starting to work, and the economy may have bottomed... Hmmmm... I hate to be the bearer of bad news to these people, but I don't think their economy has bottomed...

I say this because I truly believe there's another hic-cup for not only the European economy, but the U.S. economy. I see where quite a few economists are now saying that the U.S. recession will in this year... Hmmm... Here's what I think... I do think that we'll see a quarter later this year with positive growth... But then I think it's followed by a negative growth quarter, thus... A bump...

And... Yesterday, I talked about how we might be seeing the end of the link between stocks and currencies, and stocks had gained the previous day, and currencies had not... Well, yesterday stocks sold off, and so did currencies... But this time, I think it had more to do with the N. Korea news than any "link" between the two... I really do think we're beginning to see a break... Let's hope so, because that would mean that we're taking baby steps toward getting back to "fundamentals"...

And these fundamentals include the fact that stocks and currencies have a low correlation to each other, and different pricing mechanisms...

U.S. Treasury yields continue to climb with the 10-year Treasury gaining 19 Basis points in yield yesterday... That pushes the annual climb in yield for this note to 148 Basis points... Hey! You can't say I didn't bring this to your attention before it happened!

My friend, Bill Bonner, had this to say about Treasuries yesterday in the Daily Reckoning (www.dailyreckoning.com) "The US Treasury market is in a bubble. Like all bubbles, it will pop. And as always, when bubbles pop, there are those who get hurt - and those who profit. The difference is how well you're prepared for it."

Oh, and one more thing... With Treasury yields rising... Mortgage rates will HAVE to follow... And that's not going to make Messrs Obama, Bernanke, Geithner and anyone else involved in artificially keeping mortgage rates low, happy... But, that's fine with me! I don't really care if they are happy with this development or not! They are responsible for this rise in yields, so they can only be unhappy with themselves!

In New Zealand overnight... The 2009-2010 Budget printed, and showed remarkable restraint (for New Zealand!) The Finance Minister, Mr. English, then spoke about how near term deficits are high, he believes that they are at a "peak"... Which is Finance Minister parlance for: We'll see our debt to GDP ratio shrink from here on out! That kind of talk is manna from heaven for kiwi investors, and the folks over at S&P liked it too, as they immediately raised the outlook for New Zealand's debt from negative to stable...

Last week, we had S&P lower the U.K.'s debt outlook and the pound sterling took off for higher ground... Sort of backwards thinking, eh? Any way... Kiwi has responded favorably for the time being, but without the Big Dog, euro, off the porch chasing the dollar down the street, kiwi will have a difficult time adding to these gains...

Someone asked me yesterday why I hadn't mentioned the Canadian dollar / loonie lately, given my statement that crude oil was rising yesterday... OK... The reader was right! I should have been all over the loonie like a cheap suit! The Loonie has gained 13% since March 1st, and Crude Oil has moved from $40.15 to $63.40 since March 1st...

It was a year ago, that the loonie was basking in the sun of parity with the U.S. dollar... All the talk then was that the loonie could go into uncharted waters VS the dollar... We all know that didn't happen... And the reason? Oil fell and commodities like Gold fell... But guess what's happening again? Oil and Gold are rising again... Hmmmm...

I saw something yesterday that hit me as strange... Forbes Magazine had a lead story titled: "Make A Buck On The Rising Euro"... The reason I found this strange, is that I've heard Steve Forbes talk the past few years and each time he emphasizes that the dollar is strong and will remain strong... But now his magazine had a story on how to make money buying the euro... Which means, to make money in the euro, (for dollar based investors) the dollar would have be weak! Strange, eh?

Anyway, the writer, Ryan Campbell, goes on to talk about how the euro has risen VS the dollar since March (something I told you weeks ago!), but also adds that the "charts sound the all-clear for euro bulls." Interesting... I hadn't heard from my charts guy lately, maybe this will wake him from his slumber!

And Swiss francs continue to defy the Swiss National Bank (SNB)... Francs have pushed to near 92-cents... Recall that the SNB issued verbal warnings pre- 90-cents that they were not happy with franc strength... Well, apparently that's all the SNB has... Verbal warnings, because they have not stepped in front of this franc fueled bus!

And Swedish krone is seeing some selling pressure this morning, as the old story regarding the Eastern European Banking woes, was brought up again... This is old news! Wrap it up in newspaper and carry it out with the other trash!

So... As I get ready to head to the Big Finish, I see that the currencies, led by the Big Dog, euro, are getting off the porch once again to chase the dollar. One currency that's not participating is the Japanese yen, which has taken a big spill overnight to near 97... However, that bad performance in yen hasn't spilled over to other currencies...

Currencies today 5/28/09: A$ .7840, kiwi .6255, C$ .8955, euro 1.3895, sterling 1.5960, Swiss .9195, rand 8.0425, krone 6.4730, SEK 7.7690, forint 204.30, zloty 3.2250, koruna 19.2450, yen 96.90, sing 1.4525, HKD 7.7530, INR 47.66, China 6.8289, pesos 13.24, BRL 2.04, dollar index 80.75, Oil $63.43, Silver $14.94, and Gold... $952.10

That's it for today... It's breakfast sandwich day on the desk... Every Thursday, I buy and our little Christine flies... I used to pick them up when I came in, but they would be stone cold by the time everyone else comes in, so now Christine does the picking up! Yahoo! Friday is bagel day, as my old latte' buddy Michelle, still picks up bagels. We used to do go to get the bagels together, along with a latte'... But... I had to stop drinking latte's and caffeine altogether. UGH! Last day of school for my kids! Time for Alice Cooper's School's Out For Summer! I don't want to miss this tomorrow, so I'll talk about it today... Sunday is our cake baker, Cheryl Harper's birthday... Happy Birthday, Cheryl! A big trading day for Chuck and Jen today, so, I'll get started... I hope your Thursday is Thunderin' in a good way!

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

Currencies Bounce Back!

Chuck Butler — Tue, 19 May 2009 15:12:34 GMT

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In This Issue..

* Risk Assets soar!
* German Investor Confidence surprises!
* High yielders kicking tail...
* Who's afraid of the SNB?

And Now... Today's Pfennig!

Currencies Bounce Back!

Good day... And a Terrific Tuesday to you! Finally! Spring has arrived and for more than one day at a time here in St. Louis! YAHOO! A very cold and wet spring for us, brought us to the middle of May before normal spring weather was upon us... Good things come to those who are patient, right?

OK... Speaking of patience... I think that's what we'll all have to possess a lot of going forward with these currencies and stocks... Here's what I'm talking about... Yesterday morning it looked as though the recent rally in stocks was over, complete, pack up the bags, get on the bus, Gus... And with the trading theme of throwing all risk assets in the same bag and trading them alike that's been in place since last July, this would seem to be a nail in the coffin of the currency rally we've seen going on since March 1st....

But, NOOOOOOOOO! Let me tell you all about it now... First, we had what I called the potential White Knight for risk assets yesterday, the Indian election results, which pushed the Indian stock market to levels it hadn't seen in some time. That carried over to the Japanese stocks, which carried over to Europe and finally the U.S. It took most of the day to really get things going, but by the time I was packing up to head home, the move was on... And risk assets all around, save for the safe haven Gold, kicked into gear, and were off to the races. And Currencies were in the pole position of this rally!

I just can't get my arms around this stock rally folks... What are they rallying for? Corporate earnings are awful... And the prospects of future earnings are awful... Why do I say that? Well... Have you seen the rot on the labor market's vine lately? "Real" unemployment is north of 16%... And with announcements like the one last night from American Express, where they say they will layoff 4,000 employees, hitting the news wires each day... There's just no way that consumers are going to have the "juice" to support corporate earnings... Those that do have the "juice" will probably squirrel it away, and those that don't, well... They don't have any to squirrel away or spend!

But... I always think of things logically, right? This is logical that stocks would suffer going forward... But will it play out this way? Who knows? I'm certainly not even your last choice for a stock jockey! But... It just seems to me that this is just the way it is... Some things will never change... It's just the way it is...

OK... The "other" news this morning that's fueling a huge currency move overnight... German Investor Confidence, as measured by the think tank ZEW, rose more than the "experts" were forecasting, and reached a 3-year high this month! WOW! OK, I hate to throw cold water on this, but this "investor confidence" is all tied to the rally in stocks... And what's good for the goose (the U.S.) in stocks, is good for the gander (EUROPE) in stocks...

But hey! Why step in front of this bus? If the stock jockeys want to take their assets higher, then I'm not going to throw myself under their bus! The ZEW report is "supposed" to predict economic developments 6 months ahead... Well... By the time we sit down to eat our Turkey on Thanksgiving, I'll look back and see if the ZEW think tank predicted correctly!

The Huge currency rally is across the board, including the once beaten and battered pound sterling, which has really mounted a strong performance in recent weeks... Yes, things in the U.K. are still teetering... But the pound sterling has seemed to have weathered the storm... At least for now!

Of course, in this crazy mixed up world we live in with currencies, a Huge rally currently means that Japanese yen is back on the selling blocks. And... The high yielders are soaring...

The Aussie dollar (A$) seemed to ignore the news from China overnight that the Chinese had ordered an immediate 30% Steel production cut by all mills to address 25-30% over-capacity. Then it seemed for certain the A$ would back off when Reserve Bank of Australia (RBA) Gov. Stevens' gave a speech and revealed his bias toward easing rates further. Watch... At some point in the near future, there will a story that hits the news wires that claims traders are selling the A$ because they believe the RBA will lower rates further... And they will all act as though they "just found this fact out!" But for now... The A$ is kicking tail and taking names later!

I keep seeing one story after another these days from people that claim they "know" the Bank Stress Tests were a "sham"... Well? Didn't I tell you that first? Didn't I tell you the Gov't would not tell us the "real facts" because if they did, they would spook the markets, and even more important spook our foreign buyers of U.S. debt! And we can't afford for that to happen!

But just for kicks... Here's a sample of the stories I'm talking about... Put away the sharp objects before reading, we don't want any injuries.... This is... Howard Davidowitz, Chairman of Davidowitz & Associates, talking... (NOT ME!) "The stress tests were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can't get more money from Congress. It's the 'greater fool' theory. We're now in Barack Obama's world where money goes to those that should never receive a penny....we're bailing everyone out. The bailout money is in the sewer and gone."

OK... That's just a sample of the things I read each day and night... Of course last night I didn't do any reading, as I was glued to my TV for the final 2 hours of my fave show, 24!

And in a story that makes you wonder what the heck these people are thinking... Two economists, Gregory Mankiw, former White House advisor, and Ken Rogoff, former Chief Economist at the IMF, believe that the U.S. economy is in need of a dose of good old-fashioned inflation! WHAT? They believe the Fed should have a looser rein on inflation, to help debt-strapped consumers and governments to meet their obligations... Again... WHAT? I have to wonder just what else the Fed can do to create an inflationary environment! Come on! They've cut rates to near zero... The implemented Quantitative Easing... They've pushed Trillions into the system... And these two dunderheads want more? Did they stop, in the name of love, and think about what they were saying before they said it?

And... I can't understand why they believe that running 6% inflation for "at least a couple of years" is a good thing! Talk about "spooking our foreign investors"! And talk about sending the dollar to the woodshed! Let's hope these two go away... Don't go away mad, just go away...

And then... It sure looks like the Bank of Canada (BOC) is doing everything they can to put a 100 miles of desert between them and Quantitative Easing... There will be a speech today by BOC Gov. Murray titled: "Unconventional Monetary Policy Measures and the Zero-Bound, Differing International Approaches and Critical Considerations"... Now, that looks like a speech title that his marketing team came up with... Why not say... "the rest of the world is doing Quantitative Easing, and we're not!"

Of course... Should this be the "real" gist of his speech, the Canadian dollar / loonie should look to continue its recent strong performance!

The Swiss franc is nearing 90-cents again... Every time it gets to this level, the Swiss National Bank (SNB) makes a statement that "they are watching the currency gains closely" This is supposed to scare traders to not take the franc higher... Who's afraid of the SNB? Of course "real traders" like the ones that were around when I began to deal in currencies, would take this message as a challenge, and push the franc to the point that the SNB had to intervene or lose credibility... And then they would attempt to push the franc higher! But today's traders, are not your "father's traders"... They are wimps! Every time a Central Bank jawbones their currency lower, traders just put their tails between their legs and go home... Give up, quit... Hey! Quitters don't win, and winners don't quit! You can't quit here! When the Germans bombed Peal Harbor, did we quit? NO! (ok that's a line from Animal House, I don't want 100 emails telling me that the Germans didn't bomb Pearl Harbor! HA!)

Today, the data cupboard yields Housing Starts for April... I saw a news story on the TV yesterday that said "Home Builders were seeing a pick-up of new homes being built"... Well... That should be our indication that Housing Starts for April will be stronger! See how easy this stuff is? HAHAHAHAHA!

I always get a kick out of my friend, The Mogambo Guru, and the ending each week of his newsletter... Each week he ends his letter with some message about buying Gold and Silver... And then this line... "Whee! This investing stuff is easy!"

The Mogambo always puts a smile on my face!

Currencies today 5/19/09: A$ .7760, kiwi .6050, C$ .8640, euro 1.3635, sterling 1.5480, Swiss .8990, rand 8.4620, krone 6.42, SEK 7.6675, forint 203.85, zloty 3.20, koruna 19.5660, yen 96.20, sing 1.4610, HKD 7.7510, INR 47.79, China 6.846, pesos 12.91, BRL 2.07, dollar index 82.12, Oil $59.89, Silver $13.94, and Gold.... $922.80

That's it for today... It was good to get back in the saddle yesterday... I actually will be in the saddle for 2 months before travel begins again... WHEW! My beloved Cardinals' good start to the season has just about been turned completely around... They just got swept by the Brew Crew! UGH! And two HUGE Rivals come to town the Cubs and Royals... They need help! NOW! We have another birthday in the office today... Charlotte Reeves is celebrating a birthday... That does it for birthdays this month... Our office here has really added some people in the past couple of years... I don't even know all the people in the office these days! This coming weekend is Memorial Day weekend. Time to make plans! Oh! And don't forget what the day is all about! Time to go... I hope your Tuesday is Terrific!

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

Currencies Rally Yesterday...

Chuck Butler — Thu, 23 Apr 2009 13:03:03 GMT

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In This Issue..

* Euro climbs back to 1.30...
* High Yielders bounce back...
* Gold to hit $1,500?
* Kurt Richebacher...

And Now... Today's Pfennig!

Currencies Rally...

Good day... And a Tub Thumpin' Thursday to you! Yes, it's a Tub Thumpin' Thursday because it's finally supposed to be warm here today, and... The Card and Mets in a day game at Busch today... Wink, wink... It's also a Tub Thumpin' Thursday because... I said so! HA-HA!

Well... We had a rally in the currencies yesterday and this time the rally wasn't reversed overnight by profit taking! WOW! It's been some time since we could say that! Maybe it was the good karma the overnight markets received by my little buddy Alex's base hit last night to drive in 2 runs! Or, the good karma from a Cardinals pitcher going into the 9th inning of a game! WOW! Or... Maybe, just maybe, cause you never know, fundamentals are creeping back into the currency markets?

A one day rally does not make a trend... Nor does a bear market rally that lasts 9 months! Fundamentals dictate trends... Charts do not... And neither does bear market rallies! For they are built on short covering, deleveraging, safe haven flows, and profit taking... Not Fundamentals!

I've been wanting to get that off my chest for some time now... I know, I've explained this before, but it's been awhile, and thought it needed to be said once again for a refresher or for the new readers! On that note... Did you know that the Pfennig is now read by a very large number of people each day? It something to behold, for your humble Pfennig writer, that began this endeavor with hand written notes about the overnight markets on the desks of the bond salesmen so they didn't have to spend their mornings trying to catch up!

OK... Back to the task at hand... Well... I see that Commerzbank is telling their clients that these rallies in the euro are opportunities to sell their positions... Hmmm... Of course they must be talking about "trading positions" clients... Not investment portfolio diversification clients!

The euro, which tried for a week to get back to 1.30, finally climbed above the figure yesterday morning, and has remained there. The single unit received an additional boost this morning when the Good ZEW Business Confidence report that printed earlier this week, was followed up by the European Manufacturing Index rising... Does this mean the Eurozone's recession is easing? Hmmm... I don't think so... I just think it shows what I've been talking about for some time, and that is the fact that in the Eurozone, 80% of their trade is among themselves... But! You have to like the resiliency, eh?

The Big Dog (euro) was off the porch yesterday chasing the dollar down the street, which means the rest of the smaller dogs get to stretch their legs too! And so, currencies like Aussie, Swiss, kiwi, rand, and real all enjoyed their exercise! One of these things is not like the other, can you guess which one it is? Right! It's Swiss francs! All the other currencies mentioned are high yielders...

So, what's with Swiss getting mixed in with the high yielders? Ahhh grasshopper, Credit Suisse posted a return to the black... A profit... And that's a good thing for Switzerland, as Credit Suisse, and UBS had really pulled the franc down in the past quarter... But don't look for any sustained gains here, as The Swiss National Bank's (SNB) vice-chairman, Hildebrand, that the bank would continue to limit gains in the franc... That's Central Bank parlance for they will intervene, and sell francs to keep it weak...

Now... I find that statement by Hildebrand very interesting... Because just last week, the SNB issued a statement that said they didn't think it was a competition by countries to weaken their currencies... Hmmm... When a Central Bank makes two different statements within a month talking about how they will extend currency purchases as long as necessary to prevent appreciation of the franc to ward off deflation... You've got to wonder how many other Central Banks will follow?

Just to explain further for those of you new to class... A strong currency goes a long way toward fighting inflation... Well, if inflation isn't your concern, and you would like to actually see some inflation in your economy (not deflation) then a weak currency would go a long way toward achieving that goal...

I think the U.S. Fed and Treasury would love to follow, but they just can't right now, with all the safe haven flows into the U.S.

Gold pushed higher yesterday and then again this morning at the London fixing... There's a great story on the U.K. Telegraph by Ambrose Evans-Pritchard regarding Gold, and how it could rise to $1,500... Here's a link to the whole story... http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5184036/Gold-price-could-hit-1500.html

But for those of you with no spare time to play on the internet, here are a couple of snippets...

"In normal times, gold mining companies sell - or "hedge" - a chunk of their output in advance through bullion banks. These banks cover their positions by leasing gold from central banks. This bread-and-butter trade created excess supply of 500 Tonnes each year until the start of this decade.

Low real interest rates have caused the process to reverse, creating a shortfall of about 500 Tonnes. The process accelerates as rates turn negative, leading to a scramble by market players to find physical gold."

OK... Back to me... I'll follow that up with a story I read the other day that the claims that The NYSE-Liffe futures exchange has, it seems, run out of 1 kg bars of gold. WOW! This physical demand for Gold is really beginning to get very serious... We did some research on our Metals Select product, and found that comparing March 2008 to March 2009, our trades for physical Gold increased by over 200%! I just finished an outline to a presentation that I'll be making at the Las Vegas Money Show that will be web-cast on Gold... And in the presentation, I talk about these uncertain times... The fear that everyone walks around with, from the crackpots shooting missiles, to those gearing up nuclear capabilities, to those throwing good money at bad situations... Gold, is the answer...

Well... Speaking of throwing good money at a bad situation... I received a couple of emails from people that weren't happy that I made fun of the $100 million that the Obama camp was told to cut from the Budget... The claimed that I was being unfair to Obama... Well... I said, very quickly... That apparently they hadn't been readers very long, or else they would recall me lambasting the previous administration for their deficit spending too! Shoot Rudy, I don't care who's making the decisions, as long as it involves adding over $3 Trillion to the National Debt in one year, I'm going to point out how bad that is for us, our kids, and our grandkids...

Think the call for an alternative reserve currency by China is a thing of the past? I think the Chinese are just getting warmed up! Memememememememe... Testing, testing, 1,2,3... Ahem, there my voice is clear! Seriously though... The research folks over at ING said that they believe with China's Trade Surplus swelling to $325 Billion this year, thus boosting their currency reserves (read dollars), it will add pressure on the Chinese to push for an alternative reserve currency, other than the dollar. Recall, that the Chinese earlier this month threw a cat among the pigeons by saying they wanted to create SDR's (special drawing rights) that would include a number of currencies, and that would be the global currency...

That was met with a cold shoulder at the G-20... But for how long? With that kind of a war chest of dollars, the Chinese could really start throwing their weight around. Recall that Chinese PM Wen Jiabao said earlier this month that he feared that the dollar was going to weaken given the spending, and thus their need to borrow in the U.S.

The Bank of Canada will give the details of their announcement the other day to cut their target rate and place a hold on it, but not the discount rate. They'll also give details on what they will do with regards to Quantitative Easing...

And... The Bank of England didn't back off reports that they would issue a budget deficit larger than any since World War II yesterday... That's exactly what they did... Not, good stuff for the U.K. economy or the pound sterling, folks...

Time to head to the Big Finish, and eat my apple...

Currencies today 4/23/09: A$ .7115, kiwi .56, C$ .8090, euro 1.3050, sterling 1.4525, Swiss .8640, rand 8.9475, krone 6.6750, SEK 8.4125, forint 227.80, zloty 3.3840, koruna 20.60, yen 98.20, sing 1.5010, HKD 7.75, INR 50.07, China 6.8299, pesos 13.22, BRL 2.21, dollar index 86.03, Oil $48.57, Silver $12.47, and Gold... $894

That's it for today... Do you Twitter? I keep getting asked to join people's twitter conversations... I have to say that I understand what it is... But don't understand the need... And, think about it, the base word to Twitter is Twit... That cracks me up! Of course there's more to that discussion but not here! Late game for my little buddy Alex last night... And on a school night! Good thing I got a 3 hour nap in when I got home! Ok... This is really serious stuff... My friend, Addison Wiggin at Agora Publishing made an announcement the other day that I asked if I could relay to my readers. Remember the late, great Kurt Richebacher? Well, his newsletter is being continued in the framework of the great Austrian economics guru. Here's a link for more information...
http://www.richebacher.com/the-dr-richebacher-legacy/

OK... Time to get going if I'm going to sneak out of here and head to downtown... Ooops! Guess I let the cat out of the bag! Oh well, I'm sure you figured that out when I first told you there was a day game today! I sure hope our Thursday is Tub Thumpin'!

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

A building block...

Chuck Butler — Mon, 16 Mar 2009 13:57:08 GMT

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In This Issue..

* A quiet Friday...
* Euro hits 1.30...
* Chinese concern...
* This week in data...

And Now... Today's Pfennig!

A building block...

Good day...And a Marvelous Monday to you. Its hard to believe that Monday morning is already upon us, where does the time go? Just as the currency market took a breather, our cold weather from last week decided to follow suit as it turned out to be a nice late winter weekend. Friday was fairly uneventful as the currencies traded in a tight range throughout the course of the day so it will be interesting to see how this week shapes up. Let's see if the currencies can build from last week...

Volatility was basically non-existent during Friday trading with less than a .50% difference between the high and the low of the dollar index. The overall bias, however, was a weaker dollar and the euro held onto 1.29 for a majority of the day and was near 1.2920 as I left the desk. The pound and Swiss franc were the only two currencies left on the bench last week with losses of about 1% and 2.5% against the dollar respectively. The rest were able to turn in a decent week with the Swedish krona on top of the pile posting a 6.5% gain.

The SEK got beat up last month on concern of its lending exposure to the Baltic states but traders have come in not only on thoughts of it being oversold but also as risk aversion has eased a bit. We saw Swedish inflation fall to a 3 year low of .9% as rising unemployment and slower demand are keeping prices contained. Their central bank, the Riksbank, will meet on Friday and most are looking for a .25% cut to .75%, so we'll see if there are any surprises. The bottom line, not only with this currency but all of the other small European currencies, is that the euro needs to appreciate in order to provide any type of sustained traction.

I saw a report where Citigroup's technical analysis team said that if the euro trades above 1.2992, we could see sharp appreciation and a break out of this range bound trading pattern we have seen for a while now. They didn't provide any estimates as to how much but we did see he euro snap out of its 4 week decline last week. Its nice to see that we aren't the only ones out there taking notice that a turn in the currency market could be inching closer.

As I came in this morning, we had a sizable sell off in the dollar during overnight trading with the euro shooting up to 1.3040. It looks as though investors in Asia were feeling better after the results of the G-20 meeting. The Asian stock markets were up on the day as the G-20 finance ministers vowed to combat the global recession by working together to clean up the toxic assets and OPEC refraining from cutting output. We blew right past that 1.2992 figure here this morning so we should get a better idea of its staying power as the day progresses.

China threw a cat among the pigeons as they voiced concerns about their holdings of US Treasuries and wanted assurances their investments are safe. Premier Jiaboa said "We have lent a huge amount of money to the US and I request the US to maintain its good credit, to honor its promises, and to guarantee the safety of China's assets." A Chinese analyst commented that they are worried the US may solve its problems by printing money which would stoke inflation and if the US can make sure this won't happen, then China should continue to invest.

President Obama quickly responded to ease those concerns by saying in a press conference "Not just the Chinese government, but every investor can have absolute confidence in the soundness of investments in the US." Continued Chinese investment in Treasuries are crucial in financing the stimulus packages. I wouldn't think any type of a major sell off is likely but I could see them backing off a bit if they don't feel comfortable. It will be interesting to see if anything changes going forward, but I don't blame them for wanting some type of re-assurance.

With not much to report on from Friday, we can look at what is due out here in the US this week. This morning we have Empire manufacturing, TIC flows data from January, and February industrial production along with capacity utilization. The TIC figures are going to be a big one, which are supposed to show an increase, and will tell us for sure if foreigners were still buying up US financial assets. The rest of the data out today is expected to disappoint.

Tuesday brings us supply side inflation with the producer price index and Wednesday will give us CPI along with the 4th quarter current account balance. The Fed meets on Wednesday as well and are expected to keep rates unchanged but any comments or statements that result could be market movers. We round out the week with jobs numbers and leading indicators, both of which are expected to be worse than previous figures.

All in all, the data out this week points toward a continuation of the recessionary pressures and not much in the way of good news. Lawrence Summers cautioned that monthly job losses of 600k+ are unlikely to end soon and job cuts are probably not going to stop imminently. Consumer spending is the back bone of our economy so as job losses continue to mount, its difficult to see any type of sustained improvement.

I'll finish up with gold today as it continues to quickly bounce off of the minor sell offs we have seen. The actions taken by the Swiss National Bank last week have tarnished its view as a safe haven investment in some eyes, so gold would seem to be one of the few assets left classified as such. UBS said a couple of weeks ago they see gold trading as high as $1,100 within the next three months, which doesn't seem too far fetched especially as support levels continue ratcheting upward. We've seen a small pullback so far with the risk takers out in the markets this morning but its still holding onto $920 as I write. Until tomorrow...

Currencies today 3/16/09: A$ .66.19, kiwi .5309, C$ .7900, euro 1.3027, sterling 1.4221, Swiss .8452, rand 9.9158, krone 6.7672, SEK 8.4452, forint 227.89, zloty 3.4308, koruna 20.4326, yen 98.26, sing 1.5329, HKD 7.7528, INR 51.3350, China 6.8382, pesos 14.5153, BRL 2.3051, dollar index 86.667, Oil $44.24, Silver $13.0750, and Gold... 924.52

That's it for today...Hopefully everyone was able to enjoy their weekend, I know I did. We have March Madness to look forward to, so get your brackets filled out and the best of luck to you. It was a good weekend for our Missouri Tigers as they won the Big 12 championship for the first time and pulled a number 3 seed in the tournament. Anyway, we have a busy week ahead of us so I had better get to work. Have a Marvelous Monday!

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

On the turning?

Chuck Butler — Fri, 13 Mar 2009 12:57:34 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..

* SNB surprise...
* Currencies continue...
* Retail Sales...
* Recipe for inflation...

And Now... Today's Pfennig!

On the turning?

Good day...And a Fantastic Friday to you. It would be nice to have some of that warm weather they have in Jacksonville make its way north, but hopefully its right around the corner...patience. Yesterday was a wild ride so hopefully you had that seat belt fastened tight and both hands on the wheel. I have a lot to talk about so I'll get right to it...

We were greeted yesterday morning with some big news out of Switzerland where they not only cut rates to .25% from .50% but also decided to take matters into their own hands. Chuck sent me some thoughts before he left for vacation, so here you go. "The Swiss National Bank (SNB) intervened in the markets yesterday with a bang! The SNB sold francs for euros and dollars to further reduce the price of money (since they've already cut interest rates to the bone). Francs went from 86-cents to 84-cents in one day! UGH!"

We don't know exactly how much the SNB sold off but I saw a report that estimates 2 billion euros were purchased and that doesn't take into consideration other currencies that may have been bought. This was their first intervention in the foreign exchange market since 1992 spurred not only by internal economic pressures but also its appreciation against the euro and pound by 10% and 30% respectively since the end of July.

As these central banks paint themselves into a corner by dropping rates to virtually zero, there really isn't any other choice but to use "creative" or "alternative" measures in order to provide pressure relief. Since 80% of Switzerland's trade is within the European Union, this imbalance in exchange rates basically offset the rate cuts we have seen thus far. The franc traded as low as .8356 but recovered a bit to .8440 before I left for the night as the currency market actually finished higher after that surprise. If the other European currencies begin to appreciate, I would think the chances of another intervention would become lower.

As I just mentioned, the markets seem to have just shrugged that off and went on with business. Now all of the sudden we had euros trading well into the 1.29 handle (which was, in part, supported by the SNB buys) and the emerging markets posting gains. The Mexican peso and South African rand were the top two currencies, which would seem counter intuitive given the intervention and market turmoil. Risk was up but the dollar index was down, is this pattern setting a stage...lets see what Chuck thinks...

"Does this all begin to look like the peak in the dollar's rise? Could be folks, for all this week, even with the profit taking, the currencies have moved higher VS the dollar led by the euro... (except of course francs which were sold by the SNB!) The failure of the dollar to launch is beginning to look like it could weigh on the green/peachback. Just like at the beginning of December, when I gave you the wink and nod that we could see a Santa rally in euros, and dadgummit we did, this is beginning to look a lot like Christmas.... Every where I go... The dollar's can't rise here, and the euro is gaining there, but do we really know for sure this is the end of the dollar's run? NO! we don't know for sure, but... If you were looking to get in on the ground floor, the bottom if you will, this could be it! But then, it could be a false dawn too... Which means you won't have gotten in on the ground floor... But, at least it will be a cheaper level than in December!"

Well, you heard it here folks. Maybe, just maybe this is a sign the roadies are finishing their mic checks and the stage is ready for the opening act. I don't know about you but I found my seat and am sticking around to see what kind of show this will bring. The currencies held their own in the overnight session and are right where I left them last night, so lets see which way the US markets decide to take the ball today.

February retail sales did fall, as indicated by the Butler Household Index (BHI), by .1% but January's number was revised up to 1.8% from 1.0% so the media ran with that story claiming the pullback in consumer spending may be nearing an end. I would think its difficult to make that call right now given that unemployment remains on the rise. Initial jobless claims remained above 600,000 last week for the 6th straight time, coming in at 654k and the week before that was revised up to 645k.

Where is the money going to come from to support sales if more people are losing jobs. Not only that, Americans' net worth fell in 2008, erasing 4 years of gains, as the value of their homes and investment portfolios declined. According to the Federal Reserve, household net worth was $51.5 trillion, down $11.2 trillion or 18%, from 2007 and marks the first decline since 2002.

We have the January trade balance due out today and is expected to narrow by $1.9 billion from December's figure to $38 billion. True, the number is moving in the right direction but not because we are taking steps to correct it but because trade flows are falling...not exactly what you're looking for. The University of Michigan Confidence measurement comes out today as well and is expected to fall from last month. Until the jobs and housing markets show signs of stabilizing, I really don't see much that would provide support for consumer confidence.

Chuck spent quite a bit of time yesterday on business inventories explaining how a decrease points toward inflation once things do turn around, so here are the results. We saw a 1.1% drop for January and then a revision down to -1.6% from -1.3% in the December figure. I guess the point about this data is that its reactionary so as demand rises, there won't be enough supply on hand at first causing the inflation he so eloquently described. I hope I brought that full circle for you.

Gold, the uncertainty hedge, had a nice showing yesterday climbing all of the way to $930 and has held around $920 so far today. There was enough uncertainty flying around so it provided a nice place to roost for the moment. That sub $900 level from a couple of days ago doesn't look so bad now. Anyway, before I head to the big finish, here are some final words from Chuck before he heads out: "There are a lot of questions in the box regarding my statement yesterday about the IMF and Gold... Here's the skinny... First of all, if the IMF sells large quantities of Gold, I believe Gold will take a temporary hit, maybe providing some good buying levels... If the IMF does sell though... I Believe that it means the Obama campers are scared about liquidity and cash, and they need to have some on hand... That's the whole gist of my statement, sorry I was a bit confusing to some, and probably all, but shoot Rudy! Now I get to talk to you all another day, when I thought I was finished!

BTW... I forgot to mention yesterday that this is it for me! I'm officially on vacation right after breakfast this morning... You're in good hands with Mike, he's wanted to do this for so long! I'll be speaking at the Oxford Club Investment U Conference March 26th, and then I go back on vacation! So... See you in April!"

Currencies today 3/13/09: A$ ..6585, kiwi .5235, C$ .7822, euro 1.2901, sterling 1.4047, Swiss .8435, rand 9.9552, krone 6.8445, SEK 8.5804, forint 229.09, zloty 3.4718, koruna 20.5138, yen 98.30, sing 1.5416, HKD 7.7537, INR 51.6525, China 6.8381, pesos 14.7097, BRL 2.2957, dollar index 87.37, Oil $46.69, Silver $12.98, and Gold... 921.35

That's it for today...the Asian and European equity markets were all up so we'll see if that feeds into another rally today in the US. Other than that, not much to report from overnight. Its going to be a busy weekend for me but I'm looking forward to relaxing a bit at some point. We had our St. Louis Blues win a big one last night as they are still fighting for a playoff spot and the Missouri Tigers had a win the in Big 12 Tournament. Speaking of that, I saw where Syracuse and UConn went into 6 Ots...talk about a long day at the office. Well, its time to get Friday started so have a great weekend and a Fantastic Friday.

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

A HUGE Currency Rally!

Chuck Butler — Thu, 11 Dec 2008 15:00:55 GMT

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

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In This Issue..

* Another currency rally....

* SNB cuts another 50 BPS!

* Budget Deficit continues to widen!

* Treasury yields go south for the winter!

And Now... Today's Pfennig!

A HUGE Currency Rally!

Good day... And a Tub Thumpin' Thursday to you! It's been quite the rally this week in the currencies led by the euro, which is like old times, eh? The Big Dog on the porch finally gets to stretch its legs and chase the dollar down the street! It's been a long time since we've seen this go on for more than a day. Yes, we've seen one day spikes, and even two day rallies turn into false dawns, but this one has lasted about a week now. Ever since last Friday's awful Jobs Jamboree, the tide has turned, and the Trading Theme that has held the currencies in a full nelson since the end of July, could very well be on the way out the door. I said that about the Trading Theme earlier this week, so I just wanted to repeat that to emphasize the point!

So... Yesterday, we saw the euro lead the currencies higher all day, with the single unit finishing the day in the 1.3050 area... I turned on the currency screens this morning, and what did my wondering eyes did appear, but the euro trading at 1.3170, and others bringing up the rear!

The Swiss National Bank (SNB) cut rates further this morning, bringing their internal rate to 1/2%, 50 BPS, that's it... So, one would think that bringing your interest rates to near zero, would NOT be a good thing for the currency, right? Well, in this day and age of rewarding a currency for lower interest rates to promote growth, that's not the case. The franc has rallied on the news... Of course it's probably just caught up in the euro's move higher.

Looks like the U.S. House of Representatives approved a $14 Billion package for GM and Chrysler, but the Senate has put some roadblocks out on this deal, and that puts the whole deal in jeopardy... A Final Jeopardy if you will for the contestants Gm and Chrysler! Notice I didn't include Ford. The people at Ford, backed out, and tried to put a 100 miles of desert between them and GM & Chrysler. Good for them!

Well, earlier in the week, the glimmering light of the bailout for the Big 3, helped the currencies... But now that the Trading Theme seems to be taking its last breaths, the news of the bailout in jeopardy, has helped the currencies, as this would mean that we could finally be back to focusing on fundamentals! Could we really? Is it possible? Well, maybe if you're real good and take a nap... No wait, that's what I used to tell the kids on Christmas Eve! It IS possible... But we need a few more days of what we've seen so far this week to confirm the Trading Theme to be a thing of the past.

Speaking of things of the past... A Bank of New York (BONY) strategist, issued a statement saying the, "Carry Trade is Dead and Buried." Hmmm... I beg to differ with him on that, for if we get investors and traders focused on fundamentals again, and the risk takers come out of the woodwork again, the Carry Trade could very well be on the burners again... But then, I do see his thought here and that is (I think it is) that if every Central Bank is cutting interest rates to the bone, there won't be any "high yielders" left to buy on the buy-side of the Carry Trade. Well, let's see now... Aussie and New Zealand were the BIG WINNERS of the last Carry Trade craziness, and their rates are lower, but still 3 and 4 hundred basis points above those in Japan, Switzerland and the U.S.! But, the Carry Traders might have to look further, and do some additional leg work this time to find the "high yielders" like... Brazil, and India...

OK... I came across this story yesterday and really had my blood boiling... I wanted to talk to the Big Boss Frank Trotter about it and get his thoughts, but the poor guy was tied up on the phone all day, well, all day that is, until I left to go home! Anyway, here's the base story, that the entire piece can be read here: http://www.cnbc.com/id/28153817/

The U.S. Federal Reserve is considering issuing its own debt for the first time, the Wall Street Journal said, citing people familiar with the matter.

"Fed officials have approached Congress about the move, which could include issuing bills or some other form of debt and would provide the central bank with more flexibility to tackle the financial crisis."

NOW WAIT JUST A MINUTE THERE BIG BEN! This is the bailiwick of the Treasury Dept, issuing debt! You've already got the printing press for currency, and now you want to issue your own Debt? This is complete madness I tell you, complete madness! I think the Fed is thinking of ways to deal with deflation...

Oh well, apparently, Big Ben can do whatever he pleases these days, the new President has named an "energy Czar" and the automakers might get a "Car Czar", the new President had better think about naming a Fed Reserve and Treasury dept Czar!

OK, yesterday's printing of the Monthly Budget Statement saw the monthly deficit not "as bad" as forecast, with the figure posting a $164.8 Billion deficit, instead of $171 Billion as forecast... That's still really bad folks, let's not get caught up in the media spin of talking about how it "wasn't as bad as forecast"! Let's focus on the fact that for the second consecutive month the Budget Deficit widened... And this month it went from $98 Billion in October to $164.8 Billion in November!

Of course you know why this is happening, right? No? Ahhh grasshopper... Recall the bailout money? Well, whenever any of it is spent, it will show up here! Want even further bad news here? Government revenue fell 4.2%, while spending soared 24%!

The Treasury Dept has written checks on all but $15 million of the first half of the $700 Billion allocated to help financial institutions.

So, as I said the other day when I mentioned that the President-elect's plan to spend more money on infrastructure since 1950 might be the right thing to do at the wrong time... We've got the deep, dark recession going on, the Credit Crisis and this collapse of revenue... But don't let that stop him! Why would we want to stop with the deficit spending here? I shake my head in disgust!

Today's data cupboard has the Trade Deficit for November, which should narrow, given the collapse of the Oil price. That and the recession should allow the Trade Deficit to narrow... But, let's not get caught up in the media spin on this too... You see, the Trade Deficit is still $53 Billion, which annually is $636 Billion... Which is probably right about where it will end out this year...

And... $53 Billion still needs to be financed! Let's not forget that little ditty!

I just watched the euro gap up to 1.32... This is a rout like I've not seen since last summer! And wouldn't you know it, here it is, and I'm going on vacation! Oh well, maybe the old adage that the currencies rally when Chuck's away, will come back!

I just can't pass up on this one though... And I know the legal beagles will be all over me on this, but here goes... This certainly looks like the Santa rally that I talked about earlier this week, eh?

I know, I know, it could all be reversed in a New York Minute, but you've seen these types of routs before...

Another currency on the rally tracks this week is the Chinese renminbi... After all the "bad talk" about China last week, the Chinese have said, "you'll be sorry"! What I'm talking about here is the fact that everyone is dissing the renminbi right now, and selling it, and pushing forward contracts down in value... And the Chinese, because they can, have moved the renminbi higher VS the dollar this week! There! In Your Face, disgrace!

So... What's everyone thinking these days buying Treasuries? I mean, the yield on a 3 month T-Bill is 1 BP! You have to go out 30 years in a Treasury Bond to get 3% yield! OUCH! But, investors keep buying! Well, I think what you've got going on here is simply the fact that all this repatriation of dollars has investors with tons of cash, that they don't want to put into banks, (for a number of reasons, like FDIC insurance limits, shaky banks, etc.) So, they put the cash into Treasuries, realizing that they may not earn any interest, but it will be there when they want it at some point in the future. And this "point in the future" is what scares the bejeebers out of me! Because when the icing is off the cake here, there will be a swift exodus from Treasuries, as no one will want to be the last man standing here... UH-OH! Just be careful folks...

The weekly Initial Jobless Claims will also print this morning. We've seen a huge increase to average above 500K in the Weekly Initial Claims, and that should hold true today. This isn't a good thing folks...

Well, the rally this week hasn't been cornered by currencies... The Commodities have come back too! Oil is up $2, but the real meat here is the rally in Gold! Gold this morning is perched above $827, when it was sitting at $770 just a week ago!

Currencies today 12/11/08: A$ .6660, kiwi .5525, C$ .8015, euro 1.3235, sterling 1.49, Swiss .84, ISK 215.50, rand 10.13, krone 6.95, SEK 8, forint 199, zloty 3.01, koruna 19.64, yen 91.30, baht 35, sing 1.4890, HKD 7.75, INR 48.30, China 6.8515, pesos 13.30, BRL 2.3950, dollar index 84.33, Oil $45.50, Silver $10.46, and Gold... $832

That's it for today... And for me until after Christmas... I'll probably send Chris notes from time to time, but I really don't expect to be monitoring the markets THAT much while on vacation! And of course, I'll attempt to write a Christmas Pfennig, which has been a tradition that goes back to 1992! I've got the Review & Focus to do while on vacation and my "other" newsletter, the Currency Capitalist to do too! Don't know what I'm talking about there? Well, for new readers, I was honored to be asked to be the main writer for a "paid for" newsletter that is published by the Sovereign Society, called the "Currency Capitalist"... So, I've got "all that" going for me! My little buddy, Alex, is still sick, poor guy, he was supposed to be playing in the 7&8th grade jazz ensemble concerts last night... It's beginning to look a lot like Christmas, as the house gets decorated, and we will finally go to cut down our Christmas tree on Sunday. (Hope Alex is better by then!) This is late for us, as we normally put up our tree earlier in the month! I love a Christmas Tree in the house! OK, I've carried on enough, Mike's here, Mary's here... I'll head out now... I'll leave you with the note I put in the December Review & Focus...

I wish everyone a joyous Holiday Season. Myself, I celebrate Christmas, and say Merry Christmas in hopes that it doesn't offend anyone that doesn't celebrate Christmas.

May the light of faith, the warmth of heart, and the love of family be your gifts this year...

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Misguided risk aversion...

Chuck Butler — Fri, 21 Nov 2008 16:31:01 GMT

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In This Issue..

* Bad data pushes investors into US treasuries...

* Barclay's says the euro will rally...

* SNB surprises with a rate cut...

* Iceland gets their bailout...

And Now... Today's Pfennig!

Misguided risk aversion...

Good day...The dollar rallied a bit yesterday on some very poor economic data which illustrated just how bad things are getting here in the US. As Chuck has repeatedly told everyone, in the current trade pattern the dollar rallies whenever we get negative data for the US economy. Investors get spooked by this negative data, and run scared into the 'safety' of US treasuries.

Ty sent me a quote from respected newsletter owner/author Bill Bonner yesterday: "Misguided risk aversion, anyone? A few months ago, investors stretched for yields. Now, it's safety they reach for...and grab U.S. Treasury debt with both hands. Investors now seem to have an unqualified trust in the full faith and credit of the world's largest debtor. Yields on 91-day T-bills have fallen to 0.11% - scarcely a tenth of one percent!"

And when you adjust these yields for US inflation, the real yields on US treasuries are negative (even the 10 yr treasury real yield is -.43%!!). These investors won't be parked in US Treasuries for long, but while fear continues to drive the markets, the US dollar will remain strong.

The data which sent shivers down investors spines yesterday was a one two punch of weekly jobless claims and leading indicators. The number of Americans filing for unemployment benefits approached a 26-year high of 542,000 last week. The Unemployment rate will likely increase another 100 bps by this time next year, and stay at these elevated levels for an extended period of time.

The second blow came shortly after the jobs data was released, as the index of leading US economic indicators fell in October for the third time in four months. The Conference Board's gauge dropped .8%, more than forecast, after rising .1% in September. This index points to the direction of the economy over the next three to six months. Consumers and companies are cutting back as job losses mount and housing and manufacturing sink deeper into a slump. These two pieces of data indicate just how quickly the US economy is falling into recession.

Investors fled stocks and moved back into dollars throughout the trading day yesterday, rallying the dollar index back to the highest level since April 2006. We moved above 88 on the dollar index a week ago, but it was unable to maintain the higher level.

The same thing occurred last night, as equity markets in Asia rebounded, bringing the dollar index back below the 88 handle. Apparently there was speculation that a sale of Citigroup Inc. will reduce risk in the financial system, slightly increasing the confidence of investors. This is how perverse these markets have become; the possible sale of one of the largest financial firms in the US actually rallies the markets.

The European Union announced that is crafting a coordinated economic stimulus package to spur its 27 nation economy. European Commission President Jose Barroso told reporters in Brussels today that the commission will announce a fiscal stimulus plan next week. The plan will be based on member states taking measures suited to their own economic situation. I like the approach the EU is taking to the crisis, as they will design the stimulus to try and meet the differing needs by each country. According to the EC president, "Everyone is suffering from the crisis and everyone needs treatment, but not everyone needs the same pill."

According to Barclay's Capital, the euro will strengthen 16 percent against the dollar in the next 12 months as Chinese demand drives up prices for oil, reducing the US currencies attractiveness. Two-thirds of the euro's 22 percent slide since the July peak of $1.6038 can be accounted for by plunging oil prices, Barclays said. China is the second largest oil consumer after the US, and "Contrary to current received wisdom, oil prices are much more important for the euro-dollar cross than either the stock market or interest rate differential right now," wrote London-based David Woo, global head of currency strategy at Barclay's. Declining oil prices have helped the greenback by narrowing the US current account deficit, reducing the US's need for overseas funding, Woo said. He forecasts the euro will trade in a range around $1.24 in the next three months, but then rally to $1.45 over the next year as accelerating growth in China helps oil prices retrace their recent fall.

I agree with Barclay's analysis of global commodity prices. China and the rest of Asia will continue to be the world's growth engine, and demand for commodities will increase. The stimulus packages which are being pushed will put additional upward pressure on raw material prices. The commodity rally will not only help the Euro, but will help push up prices of the Norwegian krone, Australian dollar, and Brazilian real.

Switzerland's central bank surprised the market yesterday, dropping its benchmark interest rate by 100 basis points. The Swiss National Bank reduced its target for the three month Libor to 1 percent and promised a 'generous and flexible' supply of Swiss Francs. It's the third unscheduled move by the SNB since the beginning of October. I would expect the SNB to keep rates on hold at their meeting next month given the extent of yesterday's move. The Swiss Franc fell as the dollar strengthened yesterday, but rallied overnight and is now trading close to where it was prior to the SNB move.

In other interest rate news, the Bank of Japan kept its benchmark rate at .3 percent today and said it will consider pumping more money into the financial system to prop up an economy that fell into recession last quarter. Japanese banks are in a much better financial position that banks in the Eurozone or the US, and the Japanese consumers are flush with cash. Japan went through a long deflationary period, and consumers there are less leveraged than here in the US. The stronger position of Japanese banks, and the more solid consumer base will enable the Japanese economy to weather the global slowdown much better than most other economies. The yen will retain its attractiveness as the world faces a long, long recession.

Technical analysts predict the yen may rally to 92.50 in the short term, and could move above the 13 year high of 90.93 which it hit on October 24. According to the analysts, the so-called support level is near the bottom line of a trend channel that tracks the dollar's decline from a two week high of 100.55 yen on Nov. 4. The US currency is poised to extend a 3.5% loss this month as it failed to rise above the 20 day moving average and the down trend is still very clear.

The Australian dollar approached a five year low against the dollar in late US trading and the New Zealand dollar traded near a six year low as investors moved out of the carry trades after the negative US data yesterday. But the Australian dollar bounced back overnight as the Reserve Bank of Australia announced it had bought a record 3.15 billion Australian dollars in October. The RBA continued to purchase its own currency this morning, "providing liquidity as on previous occasions," said a spokesman for the Sydney-based central bank. The Australian dollar has posted a record monthly drop in October and the RBA has been purchasing the AUD$ in an attempt to slow the drop. Commodity prices continue to fall, dragging down the exchange rates of commodity exporting countries. Falling interest rates have also put pressure on the higher yielding currencies of NZD and AUD.

Iceland finally got the long promised bailout from the IMF and four Nordic countries yesterday. The IMF and four Nordic countries gave Iceland a $4.6 billion bailout. The Icelandic government will also borrow about $6.3 billion from the UK, Germany, and the Netherlands to cover foreign deposit guarantees at failed lenders. While the rescue was desperately needed, it will heap almost $11 billion of debt on the shoulders of the islands population of just 320,000. "This is an extraordinary scale of problem related to the size of the economy," IMF Mission Chief to Iceland Poul Tomsen told reporters. "Iceland is in an unprecedented situation." GDP in Iceland is predicted to shrink about 10 percent next year, the IMF says. The island had the fifth-highest per capita income in the world in 2007, but the collapse of their financial system has caused the Icelandic krona to lose two thirds of its value this year. The rescue may start to add some liquidity back into the banking system, but the massive amount of debt will likely keep the Icelandic economy from rebounding for a number of years.

Currencies today 11/21/08: A$ .6212, kiwi .5272, C$ .7817, euro 1.258, sterling 1.4982, Swiss .8194, ISK (No Quote), rand 10.46, krone 7.0831, SEK 7.2031, forint 211.78, zloty 3.046, koruna 20.405, yen 94.87, baht 35.22, sing 1.5304, HKD 7.7513, INR 50.02, China 6.8311, pesos 13.8031, BRL 2.457, dollar index 87.56, Oil $50.38, Silver $9.17, and Gold... $756.88

That's it for today... Big day here on the desk as we are all excited about our Christmas party tonight. Yes, it is a bit early for a Xmas party, but I'm not one to complain about free food and drinks!! And the party is being held at a bowling alley, which is right up our alley (pun intended) as we are a fairly competitive group. I actually took a bowling class in college, but I haven't bowled in a few years, so I hope I can recall some of what I learned back then. 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

SNB Cut Rates 100 BPS!

Chuck Butler — Thu, 20 Nov 2008 15:01:41 GMT

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

In This Issue..

* Trading Theme returns...

* Automakers' bailout vote today...

* Not using all your arrows...

* Housing Starts go back to 1959!

And Now... Today's Pfennig!

SNB Cut Rates 100 BPS!

Good day... And a Tub Thumpin' Thursday to you! It's a short week for me, so this IS a Tub Thumpin' Thursday! I head to Florida tomorrow, and I'm ready! After last week, and the cold that's set in here, I'm ready! Too bad I'll be working about 1/2 the time! But, I'm not complainin'!

OK... Whew! What an awful day yesterday for the currencies... In the morning, they ere in rally mode with the euro gaining ground to well within the 1.27 handle. But then the Trading Theme set in, and those gains were wiped out. The Trading Theme was set off by the awful Housing data, which reminded everyone of the deep, dark , dangerous days ahead... I bought some euros, and watched them rise, and went off to do something else... When I returned, they had fallen... UGH! The Japanese yen, however, rallied, as is the case with the Trading Theme... Risk trades get unwound, which benefits dollars, and yen. I've explained all this before, so I won't get into it again, but there's someone that has gone into the problems (credit markets and the Fed and Treasury's response to the crisis), and does a great job of telling it like it is... So, instead of hearing from me, ranting and cursing the "leaders" I'll let someone else explain it to you... This is a fellow named Ted Cook, that Ty Keough sent my way...

"One hardly knows where to begin. America has currently embraced the monetary policies of a banana republic. The Argentine and Zimbabwe models cannot be far behind. For years (35 to be exact) we have warned about the consequences of unbridled credit expansion. We argued that artificially low interest rates would lead to catastrophe. Now the first installment of this crisis has been visited upon us. Our policymakers have greeted this dilemma with even more ruinous money and credit policies that compound the problem. We've had the earthquake. The Tsunami is yet to come.

The monetary authorities in Washington, who are supposedly the brightest among us, have adopted a short-term strategy resplendent with economic error. As usual, the politicians are clueless. Somehow the idea has gained ground that recklessly expanding money and credit (inflating) will cure our economic ills without repercussions. Nothing could be further from the truth. This is currency debasement on a grand scale."

OK... Back to me... I see where Iceland is getting $2.1 Billion from the IMF, and $2.5 Billion from the Nordic Countries of Finland, Sweden, Norway, and Denmark to help resurrect the Icelandic economy. Seems like it's a case of too little too late to me, but maybe this can unlock the markets there a bit. For those of you keeping score at home, we received a price of 182.10 on our Icelandic currency this week. Now... I know there are people out there that don't believe that we receive a price like this when the Central Bank posts a daily figure of around 139... But let me tell you how this all works... I think the easiest way to explain this is to look at the Wall Street Journal, or most newspapers' business section, and you'll see the Fed Reserve rates for currencies that day. Since currencies only really trade at the level that's posted in the paper for a mili-second, it's merely used as a reference. It's not an indication where trades are being bought and sold.

Then there was the Housing data yesterday... October Housing Starts fell 4.5%, and Building Permits fell 12%! OUCH! That's just awful data! The Housing Starts fell to an annual rate of 791,000, which is the lowest since records began in 1959! That's 1959 folks! I hadn't even started kindergarten yet! We hadn't even launched Alan Shepard into space yet! Oh, the Soviets were way ahead of us at that time, only to be caught and passed later... But I digress, with this space exploration talk!

I don't mean to try to get everyone's attention away from the awful Housing data, like the media would do... I think of the cable news people doing this story, something like this: "Today, we saw the October Housing Starts fall 4.5%, and how about Paris Hilton breaking up with her boyfriend yesterday?"

OK, I'm back now, the research team over at JP Morgan sent out a note to clients yesterday, telling them that they believe the Fed will cut interest rates to zero by the next two meetings, Dec. 16, and Jan 28, and leave them there for the rest of 2009. Recall, that I wrote about how I believed the Fed was going to cut rates to zero about a month ago? I said then that the Fed is thinking that they can be "Saved by Zero"... Well... It's nice to see the BIG research teams jump on my bandwagon!

I guess, the Nestea Plunge in the Consumer Price Index (CPI) yesterday convinced them to make that call... October CPI took the biggest Plunge in 61 years by falling 1% in the month!

Falling asset prices... Falling inflation (so they say)... Falling Home prices... And Falling Job Creation... This is getting pretty ugly folks... And here's Jimmy Buffett (a reader reminded me of this!) I don't know ---- I don't know --- I don't know where I'm gonna go when the volcano blows. Mr. Utley! (you can hear those steel drums playing in your head now can't you?)

I ran some numbers last week for our monthly newsletter to clients, called the Review & Focus, (shameless plug) because I wanted to see if our age-old portfolio theory thought about how diversifying your investment portfolio reduces the overall risk of your portfolio, was holding true, given the currency sell of since July... Lo and Behold, it's tru, it's tru, I did see a putty tat! Yes, with the S&P 500 off more than 39% in the past year, a $100,000 investment in the S&P would not have done you very good... But by allocated 20% to Gold, and 20% to 3 currencies, euros, Swiss, and yen, and you can even substitute Aussie to prove the point even more... You are left with far more money in your portfolio, than if you did not diversify.

So... Yes, the currencies have fallen on difficult times since July, but they are still doing their work as a risk reducing machine for investment portfolios... Interesting... Those are the facts, Jack!

Today... The Data Cupboard will yield, the Weekly Initial Jobless Claims, which last week jumped above 500K... I would look for this to remain above 500K... And that my friends, is not a good thing. We'll also see the Philly Fed Index (manufacturing), and one of my fave data pieces, Leading Indicators... If everyone would have paid attention to the Leading Indicators in the last year, they were telling us that something was wrong... And I believe they'll still indicate something still is going wrong, as they are forecast to post a negative -.6% print for October...

The Data Cupboard will be emptied after today, with nothing to report tomorrow.

In the Eurozone... ECB member Nowotny made a clever comment that has helped the euro a bit this morning... Nowotny was talking about interest rates cuts and said, "it makes perfect sense not to use all your firepower at once." Like I always say about not using all the arrows in your quiver! Yes, this is what I was referring to yesterday when I was talking to a long time customer... I said that the ECB would be more pragmatic when it came to their rate cuts... Yes, they participated in the coordinated round of rate cuts, and they cut rates 50 BPS at the last meeting... But... I believe they will pause for the cause, and take a look at what their two previous rate cuts did to the economic landscape before going off and cutting rates like there's no tomorrow.

Speaking of rate cuts... The Swiss National Bank (SNB) decided to take the plunge this morning and take out their yield that's offered... The SNB cut rates 100 BPS! That's crazy man! Crazy!

Speaking of crazy... The automakers were on Capitol Hill yesterday pleading for some bailout money... I understand that the proceedings were a bit heated at times, as well they should be! I think there will be a vote today on whether the Big 3 get some additional bailout money... You might recall that they already received $25 Billion to put toward alternative fuel vehicles... Yeah, I bet it went there, right? Oh, that's right, I see a whole line of alternative fuel cars rolling off the lines right now! NOT! If I were in charge of the purse strings here, I don't think I would give them a dime, until they demonstrated that they will change...

And... Finally, before I head to the Big Finish... Did you happen to see or hear or read any of the conversation between Sen. Ron Paul, and Big Ben Bernanke? Oh, this is classic stuff! Here's a link to a site that has the video of the back and forth between these two... Simply classic! http://news.goldseek.com/RonPaul/1227028538.php

Currencies today 11/20/08: A$ .6305, kiwi .54, C$ .7955, euro 1.2545, sterling 1.4865, Swiss .8210, ISK 182.10, rand 10.5675, krone 7.0740, SEK 8.15, forint 215.15, zloty 3.0740, koruna 20.43, yen 95.70, baht 35.15, sing 1.5290, HKD 7.75, INR 50.15, China 6.8342, pesos 13.40, BRL 2.3890, dollar index 87.62, Oil $52.15, Silver $9.39, and Gold... $745.50

That's it for today... And that's it for me till next Tuesday. Chris will have the conn on the Pfennig till then. Hey! I paid (technically below $2) $2 for premium gas last night! WOW! It's a good thing the oil price plunged when it did, given the state of the economy right now, eh? Still no improvement in the eye... My little buddy, Alex, and I were on our own last night, so we opted to go out for dinner after his guitar lesson! Tomorrow night is the office holiday party... I don't know who set this date, but to me, it's like putting up your Christmas decorations and lights before Thanksgiving! Just a little early, eh? Oh well, I'm not complaining, just observing... I'll be gone for it anyway... OK, Mike's here, better hit the send button! I hope your Thursday is Tub Thumpin'!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Paulson Speaks With A "Double Tongue"

Chuck Butler — Thu, 19 Jun 2008 14:38:00 GMT

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In This Issue....

* The U.S. economy in a wreck!
* More problems to come...
* Funky accounting at the Fed...
* SNB leaves rates unchanged...

And Now... Today's Pfennig!

Paulson Speaks With A "Double Tongue"

Good day... And a Tub Thumpin' Thursday to you! I was alone last night, and decided to write... Oh Boy! Are you, dear reader, in trouble when I begin writing at night for the next morning! My Cardinals were losing again, so my attention turned to putting down all these thoughts that keep coming into my head... Like Michael Keaton in Night Shift (what a great movie!) I need a recorder to put all these thoughts down... Like... Feed the mayo to the tuna!

OK... Front and Center this morning, the euro's rally that went on all day yesterday and into the early Asian session (all the way to 1.5580) ended this morning... Someone, somewhere decided that the U.S. will be able to squeeze by this slowdown... Unfortunately, I don't agree! I see the U.S. being involved with the multi-car accident on the highway... But as Pfennig readers you already know that... However, instead of just hearing from me all the time about this meltdown of the U.S. economy, let's hear from an organization that tracks these things...

The LEAP/E2020 team has decided to launch an alert on the July-December 2008 period, in their Summer 2008 Special - edition of the Global Europe Anticipation Bulletin, the LEAP/E2020 team paints a pretty ugly picture... Here are some snippets of their thoughts...

"In a few weeks time (after the next G8- and other organizations-meetings have taken place), when it will be confirmed that there is no way to stabilize the US currency (not to mention the eccentric idea of pushing it up) because the US economy is sinking always deeper into the recession and because the world is already filled with US Dollars no one knows what to do with, then the global financial system will burst out in various sub-systems trying to survive as much as they can before a new global financial equilibrium is found. As he is embarking on this road to nowhere, consciously or not, voluntarily or not, Ben Bernanke is signing the end of the current financial system. The return to a "strong Dollar" is a bit like the « liberation of Iraq » : wishful thinking turning into a nightmare."

"A Dollar in distress (EUR 1 = USD 1.75 at the end of 2008): Panic-fear of a US currency and economy collapse eats into the American collective psyche."

OK... To me, things are getting uglier every day, but the media and thus the markets aren't paying attention. A reader in Jacksonville, sent me a note and wanted me to add Big Ben to the list of Pfennig readers. HA! Now that's funny, right there! Big Ben reading the Pfennig? Maybe it would do him some good! Before I go on though... Here are a couple of items on the "bad" side of the ledger that might have slipped by the media and markets yesterday...

Did you see that Fifth Third Bank had to raise about $1 Billion in new capital? I have to say here, right now, front and center, that the bad debt losses are just now beginning to mount... You think we saw some before? I would think we just scratched the surface.

John Paulson, founder of the Hedge Fund Co. Paulson & Co., believes the IMF's forecast for $945 Billion in write downs is too light... He believes the total will be $1.3 Trillion... Here's what he had to say...

"We're only about a third of the way through the write downs. There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing."

Well... What do we have here? Another Central Banker out to make Big Ben look like a yellow belly when it comes to fighting inflation, that's what! OK... So, I guess you want to know what / who I'm talking about, eh? Well, you all know that I've been sky high on the Brazilian real, right? So, this plays well with that feeling...

Brazil's Central Banker, Meirelles, was talking about the difference between the Brazilian Central Bank and the Bank of England... Of course you could insert the Fed and Ben Bernanke in place of the Bank of England very easily! Here's Meirelles....

"We have an inflation problem, we are aware of it and we will use the main tool at our disposal- interest rates- to make sure it doesn't spiral out of control. The UK, on the other hand, acknowledges inflationary concerns but chooses to characterize it as 'temporary' and say that putting the monetary brakes on aggressively now is not an option because of its potential negative impact on growth. In short- they are willing to take a risk with respect to inflation for fear of a hard landing. Not very comforting."

Hey! And speaking of people talking bad about other people (something I would never do! Well, never in my sleep! HA!) I came across someone else that is calling out U.S. Treasury Sec. Paulson and his so-called "strong dollar policy"... Here's what the analysts at Barclays Capital wrote to their clients yesterday... "U.S. Treasury Secretary Henry Paulson is "double-tongued" because he wants the dollar to gain to curb inflation while he lobbies Asian countries to strengthen their currencies, according to Barclays Capital."

I've been pointing out the ridiculousness of Paulson's "strong dollar policy" for years now... Nice to see someone else has finally figured it out!

Oh, and remember yesterday when I called the Fed the new "junk bond house"? Well... Now they are not only the new "junk bond house" they are also the new "ENRON accounting firm"... Here's the story, by Jonathan Weil on Bloomberg...

"The Federal Reserve is just days away from completing the financing for its bailout of Bear Stearns Cos., after which the central bank will have another big decision to make: how to account for it.

Flip through the footnotes to the Fed's latest annual report, and you'll come across an open secret. The Fed doesn't follow normal accounting rules, as promulgated by any of the major standard-setting boards. Rather, the Fed writes its own, in a document called the Financial Accounting Manual for Federal Reserve Banks.

If you ever wanted to design an accounting regime to help a bank cook its books, the Fed's would be perfect. This doesn't exactly inspire faith in the U.S. financial system, at a time when a good example might help a lot."

Foreigners that buy U.S. assets and finance the Current Account Deficit need to have faith in the U.S. Financial System to continue buying... The Fed's not exactly giving foreigners a reason to buy U.S. assets are they now?

So folks... The Fed's FOMC meets next week on Wednesday... Just what do you think will happen once the Fed leaves rates unchanged and doesn't remove their downside risks to growth? Well, if the last meeting is any indication, then the dollar will get sold like funnel cakes at a State Fair! The economy hasn't shown one sign of recovery or strength... But inflation keeps rising as does the unemployment numbers, so the Fed's hands are tied... And the dollar will suffer...

While I'm being gloom and doomish... All the warnings about Iceland are coming to roost, as the country experiences a problem with their banking system. This is all played out in the Icelandic krona, along with the lack of liquidity.... The once high interest rates available are no longer there when trying to buy, as dealers slice a fat slice of this currency as their payment for dealing in it... Even the euro rally yesterday didn't help the krona...

OK... Enough of that dark side stuff!

The Swiss National Bank (SNB) left rates unchanged this morning, as expected, and the non-action has left the franc holding the bag. I said earlier this week that I hoped that the SNB would put an end to the franc being used as a financing currency for the Carry Trade, by raising interest rates, thus making the borrowing costs too expensive... But NOOOOOOO! The SNB wouldn't throw me a bone on that one...

In the U.K. this morning, the rumors of the U.K. consumer being dead have been greatly exaggerated! U.K. Retail Sales printed at a record pace in May, jumping by a remarkable 3.5% (the highest such print since the series began (1986) and a far cry from the -0.1% print expected.) Once again, the Bank of England (BOE) has to be kicking themselves for cutting interest rates ahead data like this... Inflation here is the highest it's been in a while... And Retail Sales are soaring... I think it's time for the BOE to come back to the table and reverse their last rate cut with a hike... I would expect this news to give a nice push to the pound...

The Norwegian and Swedish currencies have really backed off recently... But I have to continue to think that these are just buying opportunities not crying opportunities... Positive Balance of Payment countries like these two don't come around that often!

Currencies today 6/19/08: A$ .9470, kiwi .7575, C$ .9835, euro 1.5495, sterling 1.9690, Swiss .9585, ISK 82, rand 8.0280, krone 5.1850, SEK 6.07, forint 156.30, zloty 2.1750, koruna 15.55, yen 107.60, baht 33.42, sing 1.3690, HKD 7.8080, INR 42.97, China 6.8770, pesos 10.31, BRL 1.6075, dollar index 73.52, Oil $136.50, Silver $17.28, and Gold... $888.35

That's it for today... Finally! Some chamber of commerce type weather here in St. Louis! Spring is finally here, but wait! Next week we begin Summer! Another day of meetings for yours truly today... UGH! Well... Did you know... That June 19th, 1954, the Tasmanian Devil was introduced in the Bugs Bunny animated short Devil May Hare? We call our little Christine "Taz" on Fridays, as she comes in like the Tasmanian Devil. HAHAHAHA! Kristin will be speaking at the Freedom Fest in Las Vegas next month, along with an additional trip to Las Vegas later in the month to speak at the Wealth Masters Conference... She's taking a load of speaking engagements off my calendar, thus allowing me to not have to travel... Of course, after hearing her speak, I'm sure the organizers will probably drop me like a bad habit! Time to go to work, before the meetings begin... I hope your Thursday is Tub Thumpin'!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837
www.everbank.com