Daily Pfennig : The Fed

Carry Trade reversals rally dollar / yen

Chuck Butler — Thu, 19 Nov 2009 15:13:25 GMT

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In This Issue..

* Carry trade reversal boosts the dollar/yen...
* STL Fed Head Bullard sends mixed signals...
* Audit of Fed in jeopardy...
* Kiwi and AUD fall...

And Now... Today's Pfennig!

Carry Trade reversals rally dollar / yen

Good day... And a Thunderin Thursday to you! Yes, the rain continues today, but I hear it is supposed to stop this afternoon. Fear of risk rained on the currency investors' parade as an equity market sell-off fueled a US dollar and Japanese yen rally. At times it looks as if we will break this pattern of markets up dollar down/ markets down dollar up, but it seems investors continue to return to the US$ and Japanese yen as soon as they become worried about equity market returns.

Many of the callers into the trade desk wonder how anyone would be buying the Japanese yen and US Dollar as 'safe haven' currencies. I think a lot of this buying of yen and dollars isn't necessarily due to investors believing they are safer in US$ and Japanese yen, but is a result of the reversal of carry trades. The dollar and yen are the two major funding currencies of the carry trade. Investors borrow yen and dollars and then invest the proceeds into higher yielding assets including equities. This is what is called the carry trade, and works best when an investor can use high leverage to increase the return. Since these trades are highly leveraged, they are closely monitored and reversed at the first sign of a possible fall in the value of the higher yielding assets. So while the popular press will talk about the 'perceived safety' of the yen and US$, I believe much of the dollar and yen buying is due instead to a reversal of the carry trade. Investors aren't buying these currencies because they think the Japanese and US economy are stronger and therefore safer than others, but are simply deleveraging to take risk off the table, and are buying yen and US$ in the course of this deleveraging.

So what caused investors to worry about their investments in the equity markets? Chuck sent me this note before heading out the door last night:

I saw currencies jump around again on Wednesday... But here's something that makes me scratch my bald head, and should make you wonder too... If you're confused with this, then don't feel alone... Fed Head Bullard was speaking yesterday and at one point he said... "FED MAY NOT START TO RAISE RATES UNTIL EARLY 2012" That really got the currencies going... But later in the same speech, he said, "MEMORY OF HOUSING BUBBLE MAY PUSH FED TO START RATE HIKES MORE QUICKLY THAN AFTER PAST RECESSIONS." WHAT? He said that the Fed may not start raising rates until 2012, but then says that the Fed may push to start rate hikes more quickly than before? In my best Andy Rooney voice... Do you ever wonder, how these Fed Heads get in the door? Oh well... The second statement didn't change the currencies, but it did change stocks... And for one of the first times in some time... U.S. stocks sold off, and non-dollar currencies rallied.

As Chuck points out, the St. Louis Fed Head Bullard seemed to be speaking out of both sides of his mouth, but his second statement that the Fed may push to start rate hikes more quickly than before scared equity investors. He stated that in the debate to tighten policy, "the idea that you might be creating asset bubbles by keeping rates too low for too long will be an important argument." This is what scared the markets.

The economic data released yesterday certainly didn't help investors confidence in the global recovery as US housing starts unexpectedly dropped 11% in October compared to the month before. The pace of construction was the fewest since April's record low, and illustrates housings reliance on government support. Obama has extended both the first time homebuyer's tax credit and instituted a new (and I believe stupid) program to give existing homebuyers a tax credit to go out and buy a new one. These programs will probably give a bit of life support to the housing market in November, but many question just how long the government can continue them.

Another piece of data released showed the cost of living in the US rose more than forecast in October as the price of gas pushed CPI up .3% following a .2% rise in September. Today we will get the weekly jobs data along with the Leading Indicators for the month of October. Last month's leading indicators surprised the market with a 1% increase, but this month the expected rise is just .4%. This would be the seventh consecutive month of increased indicators begging the question: Just how LEADING are these indicators??? They have posted positive gains for seven months, but the economy sure doesn't feel like it is picking up steam. Housing and unemployment continue to be drags on the US economy and, according to Chairman Ben S. Bernanke, economic 'headwinds' will limit the recovery for an 'extended period'.

Speaking of our esteemed fed head, Bernanke's clout among US lawmakers will be tested today as the House Financial Services committee will consider how much to expand audits of the US central bank today. Panel members will be voting on a Democratic proposal to retain a ban on audits of the Fed interest-rate decisions. This would be a big blow to Ron Paul and his bill to allow audits of the Fed. Unfortunately I believe the Democratic ban on audits will pass, and Ron Paul will have to figure another way to try and hold the Fed accountable.

The worst performing of the currencies vs. the US$ over the past 24 hours is the New Zealand dollar which fell by over 2%. The kiwi dropped as the nation's main opposition party said it will no longer accept the central bank's primary policy of targeting inflation. The head of the central bank's salary is actually tied to keeping inflation rates at an acceptable level. This is one of the main reasons interest rates in New Zealand have been among the highest of industrialized nations. But in the opinion of the nation's main opposition party, these high rates have been at the cost of slower growth and a weaker exports. In my opinion, having a central bank focus on keeping inflation within a targeted range is absolutely required; and tying the main policy makers income directly to this objective is smart.

The Australian dollar also dropped for a second day on interest rate speculation. As Chuck has written, the markets have expected the Reserve Bank to raise rates again at their December meeting, but minutes of their Nov. 3 meeting caused some concern that they will not raise rates again until 2010. The minutes, released yesterday, said the pace of interest rate increases is an 'open question' as policy makers balance the risk of inflation vs. an economy which could slow as government stimulus ends. But I am still firmly in Chuck's camp, and believe the RBA will raise rates in December, and the interest rate differentials will continue to rally the AUD$ vs. the US$.

Minutes of the Bank of England's November meeting were also released yesterday, and showed the policy makers were split on whether to extend the 'quantitative easing' program or possibly cutting rates further. The pound sterling lost ground against both the euro and US$ as investors worried about the lack of direction. The minutes show there are three different camps at the BOE, one which favors expanding the program of pumping money into the system with bond purchases, another which favored no change, and a third which wants to use another interest rate increase to stimulate the economy. The lack of a clear plan by the central bank policy makers strikes fear into investors who want to see more of an agreement on the direction of policy.

While we don't trade the Russian ruble, it is part of our BRIC MarketSafe CD (for which time is running out!). Chuck pointed out to me yesterday that the Russian ruble has been the best performing currency of the BRIC, which was surprising. A story overnight said that Russia's central bank will have to accept a stronger ruble next year as rising commodity prices move the currency higher. Strong commodity markets have pushed capital into the Russian markets, pushing the ruble higher. Policy makers had indicated they will try to cap the ruble's gains, but the IMF warned recently that these efforts to fight the rubles advance will prove 'unproductive' and that 'underlying factors' justify the ruble's strength. This is good news for holders of the BRIC MarketSafe. If you haven't purchased this latest MarketSafe CD, the cut-off is approaching - you only have until December 3 and then your opportunity is lost.

OK, to recap, the dollar rallied on carry trade reversals, the 'Audit the Fed' bill is in jeopardy, AUD$ and NZD$ fell, and the BOE is split on the future of monetary policy in England.

Currencies today 11/19/09: American style: A$ .9170, kiwi .7287, C$ .9414, euro 1.4851, sterling 1.6626, Swiss .9811, European style: rand 7.5605, krone 5.658, SEK 6.93, forint 180.17, zloty 2.789, koruna 17.2147, RUB 28.90, yen 88.86, sing 1.3904, HKD 7.75, INR 46.69, China 6.8284, pesos 13.07, BRL 1.7287, dollar index 75.54, Oil $78.77, 10-year 3.35%, Silver $18.20, and Gold... $1,134.55

That's it for today... Best of luck to Chuck this morning as he heads to the eye doctor again today. It is nice to see Kristin Kuchem back from two weeks of traveling. She said both of her presentations were well received, as investors were eager to get money diversified out of the US$! Looking forward to the Blues game this evening, as several of us from the desk are hoping to watch a win! Hope everyone has a great Thursday!!!

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

3rd QTR GDP Is Strong!

Chuck Butler — Fri, 30 Oct 2009 14:40:04 GMT

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

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

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

* Dollar gets sold after GDP report
* High yielders get bought!
* German Retail Sales decline...
* Real has wild swings!

And Now... Today's Pfennig!

3rd QTR GDP Is Strong!

Good day... And a Happy Friday to one and all! I can't believe how hard it rained here yesterday... Unbelievable! And me, with my cane, and not able to run, was stuck in it going from the car... Absolutely soaked! If I were a kid, I would have thought that to be fun! But, I'm not... It's still raining this morning too! UGH! Let's hope it stops in time for the Trick-or-Treaters!

OK... Well the rain fell on the dollar's parade yesterday too! And, just like I thought it would do... The dollar got sold like funnel cakes at a state fair, once the U.S. 3rd QTR GDP report printed... The dollar rally was stopped in its tracks, which meant that the "trading theme" that rewards the dollar when things look bad in the U.S. and punishes it when things look good, which is completely opposite of what it should do fundamental wise, was still in place!

3rd QTR GDP was 3.5%!!! Let's Party! Get on your red dress sweetheart we're going out dancing, we're going to party like it's 1999! Seriously, the Gov't officials, including Summers and Geithner think it's all seashells and balloons from here on out! So, why shouldn't we think the same? I mean they've never led us to the wrong side of the tracks have they? HAHAHA HAHAHAHAHAHA... And HAHAHAHAHAHAHA HAHAHAHAHA!

OK, don't get me wrong here, I'm glad the U.S. economy seems to be out of the recession/ depression... But, didn't we expect a bump in the economy? Didn't we think we would see growth by the end of the year, based on the stimulus and money supply extravaganza that went on the first part of this year? And... Based on the reports I saw, a large portion of the growth was actually a return of Consumer Spending in the quarter... Cash for Clunkers really helped the Consumer Spending along too!

But isn't it just like the people that win the lottery... Suddenly, they have all this cash... And they spend it until they have no cash and voila! They are back to having nothing to spend! That's how I think the U.S. economy will react once the stimulus and other monetary candy is withdrawn from the economy... I'm still pinning my colors to the mast of a double dip for the economy... We've got the first two parts... The negative growth, and now the positive growth... Where are we headed next? Only the Shadow knows!

We'll begin to see a glimpse of what's going to go on in the next couple of weeks, as the Fed's Quantitative Easing program has hit their ceiling of $300 Billion, and ended yesterday... The Fed's 7-month buying spree, remember they announced this plan while I was in Florida at spring training, seems to have put the lid on yields of Treasuries to allow the housing market some time to heal... But, as I told my publisher for the Currency Capitalist, Erika Nolan, when I met with her after the announcement... "the U.S. has just opened Pandora's Box of baaaaaaaaaddddddd things for the economy, for Japan has implemented this same program, but over 10 years ago, look how well that's turned out for them!"

Today's data brings us two of my faves... Personal Spending and Income... We'll see if the Consumer Spending continued in September or not...

There's a great headline to a story on the Bloomie this morning... The title reads: "Obama Bridge To Lasting Economic Expansion Risks Going Nowhere" A Bridge to nowhere... That sounds about right to me! It could be the Bridge Over Troubled Waters, or it could be the Bridge of Sighs... I still believe that the U.S. Gov't has spend Trillions taking us deeper into the abyss of a national debt, with little to show for it, except... The U.S. has ventured into the private sector deeper than any Gov't has before during this financial meltdown... Think they'll get out once it's over? HAHAHAHA HAHAHAHAHA! Not going to happen my friend!

OK, enough of that! It's a Friday for crying out loud, Chuck, can't you think of more pleasant things to talk about? Yes... Let's see... Oh yeah! I started telling you above about the non-dollar currency rally VS the dollar yesterday, so let's go back to that!

Well, there wasn't much to say other than the dollar got sold after the GDP report printed... It wasn't so much that the currencies rallied VS the dollar, as it was a sell off of the dollar, which led to a currency rally! The high yielding currencies of Australia, Brazil, New Zealand, and even Norway now that rate on the rise there, posted the best gains VS the dollar on the day. And that makes sense, right? I mean, haven't I been harping on the yield / interest rate differentials lately? And here's where they came out to play!

The data in the U.S. was good, which brought the risk takers out of the walls once again, and knowing that the U.S. interest rates are going to remain near zero for some time to come, they sold the dollar and those paltry yields that go with the dollar, and bought currencies that had a nice positive yield differential to the those paltry yields!

The Big dog, euro, as the offset currency to the dollar, obviously participated in this dollar sell off... The euro's gains were stopped this morning though, when German Retail Sales printed and unexpectedly declined in September. Remember, Germany's economy exited their recession in the 2nd QTR, albeit a nascent recovery at best... So, we'll have to keep an eye on Germany's nascent recovery to see if it "double dips" too!

Speaking of Brazil... Recently, the real has really shown its tendency to take a walk on the wild side when trading gets going... I'm talking about 3-5% swings good and bad! Whew! That's something to watch! The good news is... That even though the swings in the price of the real are wild, the overall trend continues to be good for real holders... I expect the real to react to rumors this morning that the Gov't will not throw out road blocks to impede the real's performance... That would be HUGE! And very welcomed by currency traders that trade the real always looking over their shoulders to see if the Gov't will throw out the road blocks... So, like I said, there are rumors this morning, that the Gov't will announce that they are not going to impede the real's rise at this time...

And then there was this... U.S. Treasury Sec. Tim Geithner, announced yesterday that he wants the power to not only tell a corporation that they are closed for business, but to also have the power to shrink Corporations that are not having problems! He will be the "death panel" that Barney Frank talked about a couple of months ago for non-financial institutions... Shake me, Wake me, when's it's over... Maybe I'm having a bad dream, folks...

To recap... The dollar's rally was stopped in its tracks by the U.S. 3rd QTR GDP which printed a 3.5% increase, and caused investors to seek higher yielding assets, thus selling dollars. German Retail Sales unexpectedly declined in September, thus stopping the euro from rallying further this morning. And the High Yielders get all the glory when investors realize that U.S. rates are going to remain near zero for some time to come... Aussie, Brazil, New Zealand lead the pack!

Currencies today 10/30/09: A$ .9155, kiwi .7310, C$ .9360, euro 1.4845, sterling 1.6540, Swiss .9840, rand 7.6750, krone 5.63, SEK 6.9875, forint 183.61, zloty 2.8525, koruna 17.83, RUB 29.02, yen 90.90, sing 1.3970, HKD 7.75, INR 47.03, China 6.8275, pesos 13.01, BRL 1.7325, dollar index 75.87, Oil $79.58, 10-year 3.62%, Silver $16.60, and Gold... $1,044.90

That's it for today... I'm writing from home this morning, as I have a doctor's appt. first thing before I go to work... The network was a little touchy this morning, and I wasn't sure I would get this out, but it has settled down now. Whew! Big Weekend for my beloved Missouri Tigers as they travel to Colorado. And my little buddy Alex, as his team travels to Webster Groves! HA! Good news in the local paper this morning, as the best player in baseball today, Albert Pujols announced that he wants to be a Cardinal for life! Our Blues just can't get on a roll, win one, lose one... UGH! So... Tomorrow is Halloween! I can't wait to see the little ones in their costumes! Our little Delaney Grace is Dorothy from the Wizard of Oz, with ruby red shoes, a basket and Toto too! She is so darn cute! I'll leave you with the thought of a little Dorothy coming to your door! I hope it dries out here soon... And I hope you have a Fantastico Friday and Ghoulish Weekend! BOO!

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

A New Carry Trade Currency?

Chuck Butler — Mon, 28 Sep 2009 14:17:00 GMT

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

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

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

In This Issue..

* A bias to buy dollars remains...
* The Fed was warned as far back as 1999!
* Fujii gets "the memo"!
* A ton o' data all around the globe this week!

And Now... Today's Pfennig!

A New Carry Trade Currency?

Good day... And a Marvelous Monday to you! My weekend turned out to be quite grand, as all the things I said that would make it special came to pass! My Cardinals clinched their division. My beloved Missouri Tigers won on Friday night, and my little buddy's 8th grade Flyers won their game against their arch rival... WOW!

Well... Here we go with the last 3 days of September... A month that saw Gold return to $1,000, and the non-dollar currencies all return to levels they held a year ago, having withstood the onslaught of flight to safety trades that benefitted the dollar after the Lehman Bros collapse.

We've seen the Fed Chairman sound the "all clear horn" and me question, why anyone would still be listening to this guy! And our country is becoming quite divided over the health care issue... So... There we have it... September all rolled up in a nice package, to take out the trash!

Ok, we're all caught up now... On Friday, the currencies gravitated toward weaker levels, as the dollar buying continued, with stocks leading the risk assets lower... But it hasn't been a "taken to the woodshed event" for the currencies yet... So, the question remains if this is the correction we've been waiting for or not...

Last week I gave you some quotes by Nassim Taleb, but forgot to tell you that he was the author of the book, "The Black Swan"... Nassim Taleb was talking to a group of business people in Hong Kong this weekend, and asked the same question I've been asking, as he wanted to know why Big Ben Bernanke, and Treasury Sec. Tim Geithner kept their posts after failing to foresee the collapse in global credit markets. Taleb said, "Bernanke, Geithner, and Summers didn't see the crisis coming so why are they still there? Bernanke is like a pilot who didn't see a hurricane."

Good stuff, eh? Especially, when you read the Washington Post and see that the Fed was ignoring pleas from Consumer Groups, as far back as 1999, that subprime lending was expanding... Turning a deaf ear on the Consumer Groups, the Fed left rates low, and accommodating... What the heck do we have these guys for any way! The Fed has been the root cause of every financial problem we've had in this country since they were created in 1913...

OK... Last week, the Financial Times ran a story regarding the dollar laying claims to being the top Carry Trade Currency... Let's read a bit from the FT... "For years, the yen was the currency of choice to fund international Carry Trades. Analysts say negligible U.S. interest rates, its quantitative easing measures and little sing that the country is set to withdraw from its ultra-lose monetary policy anytime soon leaves it in a similar position to Japan at the start of the decade."

Well... I had already told you all that, but when you see it in the FT, it obviously gives it more credence, eh?

But, let's talk about that for a minute... If the dollar begins to become the new funding currency of the Carry Trade, that means that people will be selling the dollar short, and using the proceeds to buy a higher yielding asset... Well, in today's markets, there aren't what we would traditionally consider to be "high yielding assets"... For the Carry Trade is quite risky, therefore you need to have some cushion from the "buy side" asset... The only "real interest differential" in the world resides with Brazil... But the real is traded on a non-deliverable forward, which means it's just as liquid as say Aussie or kiwi, which were the main beneficiaries when the yen was the funding currency.

So... This new Carry Trade, might have to wait a bit before getting into 4th gear. When the Reserve Bank of Australia (RBA) begins their rate hike cycle, probably by year-end, then it might begin to make sense... Which is just another thing in the gauntlet the dollar has to run through every day!

Speaking of the Japanese yen... The yen reached a 8-month high of 89.30 overnight. I told you last week that yen is getting a lot of love from Japanese exporters that are repatriating their profits in yen, ahead of the end of the month / quarter.

I had to laugh out loud when I read a story about the Japanese Finance Minister, Fujii, who apparently hadn't gotten the memo about how Finance Ministers are supposed to jawbone the yen lower... Recall, I had told you that he said over and over again that he supported a strong yen... Well... That all changed once he got the "memo"... Fujii said last night that, "people were mistakenly saying he supported a strong yen."

Hey Fujii, got the memo now? Is it clear?... Crystal... OK, now go out there and jawbone the yen weaker, or you'll be falling on a sword!

This week is chock-full-o-data all over the globe... In the U.S. we'll end the week with the Jobs Jamboree, while Japan will print their latest Tankan report (which checks the pulse of the economy), Canada will print their latest GDP, China will print their latest Manufacturing Index, and Australia will report on Retail Sales...

In the Eurozone, Germany re-elected Angela Merkel as chancellor... Now, she just needs to figure out how to deliver those tax-cuts she promised during the campaign!

The euro had climbed back to 1.4720, but the election results were not taken as "euro friendly"... Remember, I told you that there could be tax-cuts coming in Germany, which is the Eurozone's largest economy. Tax-cuts are great, if you are in a fiscal position to do so... Germany has a nascent recovery at best going on right now, so the timing is not what traders are happy with... Therefore the euro dropped like a stone to 1.4570, but then bounced off that is back to 1.4635 as I write...

And the Reserve Bank of Australia, (RBA) which I mentioned earlier was in the news overnight, as the RBA Gov. Stevens gave a speech, that was hawkish... Stevens mentioned that the interest rates needed to move off their "unusually low levels". He also pointed out something that should be quite recognizable by all Central Bankers now, but apparently not here in the U.S.... And that is that "imbalances build up when rates are left too low for too long."

Well... The highly touted G-20 meeting last week ended not with a bang, but with some newfound strength as a group... Recall on Friday I told you that they would replace G-8 as the watchdog for the economies of the world. That news was announced later on Friday... G-20 ended with leaders from the G-20 nations saying that they plan to cooperate on an overhaul of financial regulations to prevent arbitrage in the global system. By the end of next year, banks will be required to hold more capital, and compensation policies will need to be linked to longer-term performance.

You know... When the media reports "Bankers compensation" they're not talking about real Bankers, per se... They're referring to the Merrills and Goldmans of the world that pay out Billions in bonuses, or did at least... Just thought I would clarify that point...

And then there was the British Pound sterling, which I kept saying over and over again, that this dance is gonna be a drag, no wait! I kept saying over and over again, that the pound sterling strength was a house of cards... Well, that house of cards is collapsing under the pound sterling... Even the speculators that were buying it because it was a part of the mix of currencies that made up the IMF's SDR's (Special Drawing Rights), are backing out now...

Data in the U.S. besides the Jobs Jamboree at the end of the week, include the S&P/ CaseShiller Home Price Index for July which will print tomorrow, along with Consumer Confidence, which is expected to be stronger... I guess the people they surveyed haven't seen the Bernanke video collection of his statements that couldn't be more wrong, and still believe him when he says it's all OK! Wednesday brings us the final print of 2nd QTR GDP. Thursday has two of my faves, Personal Income and Spending, and then Friday's Jobs Jamboree...

So, if the data continues to show some strength, but nothing to speak about... I would think that the risk takers will remain confused, and it could lead to further selling in stocks, and other risk assets... Don't really know... Just an opinion on what might happen...

OK, to recap... The dollar has rebounded, but nothing too strong to speak of as of this morning. G-20 is the new world economic watchdog, there's a ton o' data to print this week, all over the globe, and Japanese yen continues to outperform the other currencies VS the dollar.

Currencies today 9/28/09: A$ .8665, kiwi .7135, C$ .9135, euro 1.4650, sterling 1.5870, Swiss .9695, rand 7.44, krone 5.82, SEK 6.9750, forint 184.20, zloty 2.88, koruna 17.22, RUB 30.11, yen 89.30, sing 1.4190, HKD 7.75, INR 47.98, China 6.8274, pesos 13.57, BRL 1.7890, dollar index 76.90, Oil $65.77, 10-year 3.32%, Silver $15.99, and Gold... $992.10

That's it for today... A great weekend, even with the rain on Saturday! It rained so hard that Alex's football game was stopped, and they had to pick it up and finish it yesterday... When I played football, back in the dark ages, we played in any kid of weather... That was a long time ago! It cleared up for a wonderful Saturday night block party with neighbors... Cards are Central Division Champions! (they were picked to finish 4th in this division) Now, it's onto the playoffs... Got to find some way of getting playoff tickets! I'm a month away from heading to Los Cabos, Mexico for the Sovereign Society's Offshore Advantage Academy. 11-4 through 11-7... You can go to www.soveignsociety.com to find out more! I'm flying solo today with the currencies this morning, as Jen is out, so I've got to get working! I hope your Monday is Marvelous!

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

The Dollar Gets Ambushed!

Chuck Butler — Tue, 22 Sep 2009 14:43:15 GMT

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

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In This Issue..

* Non-dollar currencies soar!
* Weber gives the green light...
* Is the Fed buying more Treasuries?
* China considering IMF's Gold!

And Now... Today's Pfennig!

The Dollar Gets Ambushed!

Good day... And a Terrific Tuesday to you! A Tuesday that needs no "turn-around", as the currency actions VS the dollar overnight are amazing! The dollar got ambushed overnight, as the euro shot right straight through the 1.47 handle, and has just traded 1.48! Hmmm... Didn't I say yesterday that the I didn't think the dollar strength we were seeing was any change in the recent trend? ... I love it when a plan comes together!

Traders have found a "soft spot" in the dollar, and are really going after it! I don't recall the last time I saw this kind of a move overnight. It must have been back when the dollar was getting sold like funnel cakes at a state fair, almost every day in the spring of 2008... But, I really don't recall... But, that doesn't put a damper on this morning's move! No way!

The only thing I can think of, or find in the news, that brought about this HUGE move in the currencies VS the dollar, is the fact that European Central Bank (ECB) Council Member, Axel Weber pretty much gave the "green light" to traders, when he said in an interview that the euro's strength is not out of line with fundamentals... That's right! The way I read that is this... It's Central Bank parlance for... "go ahead and drive the euro higher!"

Weber also said, "There were some stronger data coming from the Eurozone compared to some other regions. So, I think that the behavior of the foreign exchange markets is not out of line with these developments over the recent months."

Now... These comments carry even extra weight due to the position Axel Weber holds as President of the Bundesbank... Buba, as I used to call them, is Germany's Central Bank, and has always held a position of influence on the ECB...

So, Axel Weber says the euro's rally is OK with him... That's Big Folks... For, currency traders like to know that they can run up or down a currency and not fear that the Central Bank is going to step in with currency intervention to stop the run. And, for all intent gives them the Green Light...

OK... Now that the euro has pushed the envelope to 1.48, I expect to see some strong profit taking when the U.S. traders arrive... But, keep this in mind... The euro hit 1.48, and therefore, we now know that traders will take it there a few times before they give up... So, if the euro falls back into the 1.47 handle, look for it to bounce, at least a couple of times. I've explained this trading before... It really comes down to how badly the euro bulls want to push the envelope... Or the dollar bears want to push too!

The euro isn't the only currency gaining VS the dollar... Euro, Swiss francs, kiwi, and Swedish krona have all hit 2009 highs overnight, with kiwi gaining to .7215... A quick look at yesterday's currency round-up shows that kiwi was trading at .7040... Using my "new math" talents... That's a 175 pips move! WOW! New Zealand received some very good news on their deficit problem, as their annual deficit fell from 8.1% of GDP to 5.9% of GDP... Still too high, but moving in the right direction!

For once, it seems, the Aussie dollar (A$) followed its kissin' cousin from across the Tasman, kiwi, higher... It's normally the other way around!

You know what I think? I think that the markets are beginning to look at the man behind the curtain at the Fed, and realize he's just pulling levers, and creating special effects...

OK, I'll explain... Yesterday, I talked to you about the "new record" in size of Treasury Auctions will be shoved down the throats of the markets this week, to the tune of $112 Billion worth of 2, 5, and 7 year notes...

Well... I came across this yesterday, from Morgan Stanley...

"Households reduced Q2 Treasury purchases from their blistering pace in Q1 Foreign accounts reduced Q2 UST purchases as the Fed ramped up Q/E ops. Bank Q2 purchases remained anemic."

In normal speak, what that's saying is that Mom and Pop buying of Treasuries has backed off... You may recall me telling you many months ago that Mom and Pop buying of Treasuries had taken up the slack from declining foreign purchases... The Mom and Pop buying was credited to the "flight to safety", when the walls came crashing down last fall...

So... If Mom and Pop buying is backing off, and it was used to offset declining foreign purchases, who's left at the table to buy the Treasury's issuance this week and in a couple of weeks, and a couple of weeks after that?

Well... It's the Fed... I read this, and just couldn't believe my eyes! The Fed is taking on more and more.. I read where it is believed that about 50% of U.S. Treasury issuance in the 2nd QTR saw Fed intermediation... $164 Billion in the 2nd QTR ended up on the Fed's books, while foreigners bought $101 Billion and Mom and Pops bought $29 Billion... When you add in the Primary Dealers, the total of Non-Fed buying was $158 Billion...

Let me be perfectly clear on this... This is only speculation at this point... But it certainly makes sense doesn't it?

Now... Why isn't the main media all over this? Where are the questions about how the upcoming record amounts of Treasury issuance will be taken, and by whom? Why am I the only one asking these questions? It's just little old me (yeah, right! HA!), and my laptop... Oh, and let's not forget that the Administration has already given us the bad news that $9 Trillion in Budget Deficits will need financing in the next 10-years...

This all makes me sick to my stomach... I mean come on! This Deficit Spending has got to stop! And We've got to say NO to any additional new Deficit Spending! Stop it, right here, right now! Cut government in half... Get rid of non-Constitutional agencies... Audit the Fed, and turn this around!

OK... I've got to talk about something else before I throw my keyboard! I used to throw my keyboard, slamming it down on the desk all the time, and break them... The IT people would laugh, and just bring down a new one for me... But, since I got sick two years ago, I don't throw my keyboard any more... But, I was tempted... I could have gone into a song by The Squeeze there, but I didn't...

Remember last week, when I told you about the IMF wanting to get permission to sell quite a bit of their Gold? And at that time, I said... "China, are you ready to buy?" ... Thinking, of course, that China would be the only country that could / would buy up the 403 tons of Gold that the IMF is putting up for sale...

Well... Guess who answered my call? That's right, China! It is reported this morning, that China is considering buying the Gold that the IMF is offering. It's not clear whether they want just "some of the offering" or "all of the offering"... My guess would be the latter... As this would just add to China's goal of diversifying their U.S. dollar reserves...

And... If China does take down 403 Tons of Gold, that will take away from their Treasury purchases, don't you think?

But, I'm not going down that Treasury road again... I'm staying on the high road with Gold! Which at one point yesterday morning, looked weak... I even mentioned on the desk that it looked like Gold was getting spanked, as it was down over $10... But, later in the day, the shiny metal had come back and was on the positive side of the ledger for the day! And now, this news that China is considering buying the IMF's offering of Gold, has Gold on the high road too... Gold is up $12 this morning, back to $1,016!

So... Throwing stones at the dollar this morning on two fronts... The currency and Precious Metals fronts... Hey! I'm not throwing the stones! The markets, traders, investors, etc. are doing the throwing!

You know, each day, when I'm writing the Pfennig, the currencies are all trading, except... The Brazilian real... The real is still not a floating currency, as it goes through a "fixing" each day, but then the markets take it over, and trade it the rest of the day. So... When you have an overnight market like we've just had, when the non-dollar currencies have all spring-boarded higher, I sit with anticipation for the "fixing" for real, and then watch as the markets play catch-up... The move will be stunning, I'm sure... As real is much like South African rand, when it come to the wild swings...

There's not really any data in the U.S. cupboard this morning... In fact, the only thing I see globally is July's print of Canadian Retail Sales... And with it being so delayed, I doubt it will mean much when it does print!

I thought I would play a game of "Remember when?" Here's how it goes... Remember when the Swiss National Bank said they would intervene to keep the franc weak? Or... Remember when the Brazilian Central Bank Gov. said that he would do everything in his power to keep the real above 2? OK, I'll stop there... Oh... Swiss francs? They have gained almost 15%, and Brazilian real? Well, it's trading at 1.82... So let's just say that the "2" thing wasn't in the cards!

So, what am I getting at here? Well... I've told you for years now that Central Bank intervention can stop currency runs for short periods of time only... And that Central Bank jawboning will only last as long as traders want it too, for if the Central Bank doesn't back up the jawboning, then just like a child, Traders will then push the envelope...

OK... Maybe some day we'll play again, only with Big Ben Bernanke!

So... Traders have ambushed the dollar overnight, and Axel Weber has given them the green light to do so. Could the Fed be the major buyer of Treasuries? China may be the buyer for the IMF's Gold sales, and no data today to speak of...

Currencies today 9/22/09: A$ .8740, kiwi .7215, C$ .9375, euro 1.48, sterling 1.6340, Swiss .9775, rand 6.8250, krone 5.8350, SEK 6.8275, forint 183.30, zloty 2.80, koruna 17, RUB 30.12, yen 91.40, sing 1.4110, HKD 7.75, INR 47.96, China 6.8269, pesos 13.30, BRL 1.8240, dollar index 76.13, Oil $70.80, 10-year 3.49%, Silver $17.26, and Gold... $1,017.10

That's it for today... Cardinals' magic number to win their division is 3... Pretty amazing, eh? With two weeks left in the season! Hey, Californians... Did you see the little blurb in the L.A. Times quoting yours truly? Yes, there was a story in the L.A. Times this past weekend regarding "Foreign Currency Investing"... I spend a good amount of time on the phone with the writer, Kathy Kristof, who seemed quite interested in what I was saying! Today, is the first full day of Autumn... YIKES, you and I know all too well what follows Autumn! Oh well, maybe we can make Autumn last longer than usual! HA! So... Welcome to Autumn! And with that... I'll hit send, and get this on the delivery truck to your computer! I hope you can make this Tuesday totally Terrific!

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

Feds Say NO To CIT...

Chuck Butler — Thu, 16 Jul 2009 14:40:18 GMT

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In This Issue..

* Currencies have strong day...
* What are the qualifications?
* JP Morgan posts 36% increase in earnings...
* RBA attempts to keep A$'s in check...

And Now... Today's Pfennig!

Feds Say NO To CIT...

Good day... And a Tub Thumpin' Thursday to you! The first day this week that I've gotten up and to work at my normal time. I hit the wall yesterday afternoon, went home, watched about 10 minutes of the Wizard of Oz (my all-time fave movie) with granddaughter Delaney Grace, and then went to sleep! Crazy, I know, but when you hit the wall, you hit the wall!

Yesterday was a strong day in the currencies. I wrote yesterday about how the euro was inching toward 1.41, but the level had been a tough row to hoe, with the euro giving back ground each time it went higher than 1.41... And... That was the case yesterday! The euro did trade higher than 1.41. It was 1.4120 when I left the office! But, as I turn on the screens this morning, the single unit has fallen below the 1.41 figure...

I think we'll probably see a day when the Risk Aversion campers come back out to play, given the news on CIT... The lender, CIT, was told that they would NOT receive any Federal assistance... (I guess they didn't have any ex-Goldman Sachs employees at CIT!) This news has pushed stock futures down this morning, and the "risk" of yet another bankruptcy that could shake the market is on the table. You know me... I would prefer that the Gov't was not involved in all this, so on one hand, I'm not sorry that CIT will not get assistance... On the other hand though, it really raises the question as to just what are the qualifications to receiving federal funds? Because Lehman Brothers, (Goldman's biggest competitor at the time) didn't qualify... But AIG did... Of course AIG owed Goldman a ton of money.. Maybe that's the qualification! Oh, I'm not going to get started on all this, I'm sure there are all kinds of stories going around for you all to read that would keep me out of the hot seat with the legal beagles!

So... If the Risk Aversion campers come back out to play today, that means we could see pressure on the currencies once again... Unless... Yes, unless we saw a break of the link with stocks and currencies... And then traders and investors would look at the fact that the "green shoots" are nothing but dandelions, and the U.S. fundamentals are rotten, which will cause more deficit spending, more dollar printing, more monetizing debt, and all the other things that should, fundamentally speaking, weigh heavily on the dollar!

All of the currencies, except yen, are off their highs of yesterday this morning. With Risk Aversion back on the table, Japanese yen is rallying again... This going back and forth from one day to the next is really beginning to give me rash! I'm tired of it! I'm also tired of writing about it!

OK, did you see the results of the FOMC's meeting minutes yesterday? In case you didn't, the minutes read like a book from the fiction section of the book store... The Fed revised up growth for the rest of this year and next year. Although the Fed raised their growth forecast... they raised the expected ranges for the unemployment rate through the forecast. So... What I took from the minutes is that the Fed doesn't believe the unemployment problem will begin to seriously reverse itself until 2011...

So... I just don't know where the growth will come from... And yes, I'm very well aware of the fact that labor is a lagging factor of growth... But with 1 in 5 people unemployed, I don't see where the growth will come from... Do you?

Oh... And U.S. Foreclosure filings hit a record in the first half of 2009... More than 1.5 Million properties received a default or auction notice or were seized by banks in the first 6 months of this year... That's a 15% increase from 2008's first half... One in 84 U.S. Households received a filing... But the Fed see's growth? Maybe if this data was showing a bottom... But from what I see, it is much like house prices still searching for a bottom...

Speaking of the Fed.. I read this in the Wall Street Journal...

"More than 175 prominent economists are warning that "the independence of U.S. monetary policy is at risk" because of attacks on the Fed. They are urging Congress and the president to "avoid compromising [the U.S. central bank's] ability to manage monetary policy as it sees fit" and to refrain from politicizing its decisions on emergency loans to financial institutions.

The move to publicly defend the Fed's role reflects growing unease among academic economists, former Fed officials and some investors that the vehemence of the criticism from Congress of the Fed's handling of the financial crisis suggests a readiness in Congress to weaken the freedom the Fed has to move interest rates as it see fits."

Hmmm... I would like a list of those 175 prominent economists so I can give them a piece of my mind! While the Fed is "supposed" to be independent, its mere existence is questionable at best! Why not let the markets decide what interest rates should be? Again, though, I won't get into all this deeper, because, it would take over the entire letter for weeks! I just thought I would throw it out there and see what it hit...

Ok... Remember last week when I told you how June is normally a "good month" for the Budget Statement here in the U.S.? Well... For the first time since 1991, June was a deficit for the Budget! The Budget Deficit was $94.3 Billion in June! OUCH! Hey! Don't we normally see quarterly tax returns to keep the Budget Balance from turning to a deficit in June? Why yes, Chuck, we do... Or... DID! Not this year, folks... And probably not next year either! Tax receipts fell 17% (year on year) in June... And for all of you keeping score at home... For the year so far... Revenues are down 17.9%, and expenditures are up 20.5%... Not a good formula, eh?

Have you seen the results of the first set of earnings reports this week? Goldman and now JP Morgan reported some nice earnings... That's nice, eh? I say that with my own style of facetious tone!

I'll say this... You can scrap what I wrote about earlier that the Risk Aversion campers will come out to play today because of the CIT verdict... That's because JP Morgan just announced a 36% increase in 2nd QTR earnings! And you should have seen the currencies turn from red to green! The euro is back above 1.41... See how fickle these traders are? They can turn on you in a NY minute!

The JP Morgan earnings will have to hold fort on the markets forgetting about CIT, until more earnings announcements come out... So far, the "banks" have surprised me on their earnings...

I really do think that if we could put all this back and forth behind us the euro would move 3 to 4% higher, and then wait to see what happens then... But, that's a BIG IF...

Today, we'll see the Weekly Initial Jobless Claims, which really dropped last week... I had the thought when I saw the figure drop last week that maybe we've saturated the layoffs... In other words, maybe, Corporations are getting pretty close to not being able to cut any more jobs... It's a thought...

We'll also see the color of the TIC's data (Treasury International Capital) or... What used to be called the Net foreign Purchases report... The TIC's data will be May's print, and is expected to remain quite low, thus not covering the required amount of purchases to finance the Current Account Deficit... Which means, the financing gets shoved to next month... We keep shoving this all down the road... Just like everything else... We'll let someone else deal with it in the future... That's so sad! My friend, Bill Bonner, talks about this, in the award winning movie, I.O.U.S.A. Bonner recalls that Thomas Jefferson called it "immoral for one generation to load up the next generation with debt."

But, we go on about our lives each day, without worry about what we are doing to future generations... Again... I had better stop there before I go off on a tangent so long you could grow a beard while reading! HA!

I received an email yesterday responding to my discussing the increase in taxes on the wealthy... Just like I said in the Pfennig yesterday, where you stand on this all depends on what pain you'll receive... I did see that in most states, the taxes would go above 50% to pay for the health care...

And then there was this... I see where the Reserve Bank of Australia (RBA) sold A-dollars
(A$) in June... Hmmm... I said a few weeks ago that I didn't think the RBA was selling A$'s to keep a lid on the currency, but merely evening out the flows... But now, the June total was A$1.9 Billion of its own currency, sold...

I've now changed my mind on this... I believe the RBA is attempting to keep the A$ around 80-cents, given the global recession and everything else going on the financial markets, the RBA probably sees a real problem with a soaring A$ at this point. While I never like a Central Bank selling their own currency... I can't say that I blame the RBA here... They have one of the best stories going around regarding a currency, and if left untouched by the RBA, the currency could be soaring right now, which would in normal times be OK with the RBA, but in current times, is not OK with the RBA... So...

Until the markets decide they want to push the envelope with the RBA on keeping the A$ around 80-cents... That's where it will remain... But... Should the markets decide to push the envelope and test the RBA's mettle, then 80-cents will be left in the rear view mirror... Unfortunately, and I've talked about this before, today's currency traders don't have the cajones to fight Central Banks any more...

Currencies today 7/16/09: A$ .8015, kiwi .6460, C$ .8940, euro 1.4115, sterling 1.6450, Swiss .9325, rand 8.10, krone 6.3675, SEK 7.7770, forint 193.50, zloty 3.0350, koruna 18.3420, yen 93.90, sing 1.4510, HKD 7.75, INR 48.70, China 6.8311, pesos 13.57, BRL 1.9330, dollar index 79.38, Oil $60.95, 10-year 3.59%, Silver $13.27, and Gold... $939.50

That's it for today... And for me, for 2 weeks! Yes, I'll be gone, first to Vancouver, and then when I return, I'll be heading down the road on vacation with my family. Before I got sick two years ago, the Butler family would pack up our camper and head to Southwest Missouri for a vacation. My kids love camping! So, it's a week of relaxation for me. No cell phones, no laptops, no communication, as we are very deep in the Ozark Mountains! This will be the first time since I got sick two years ago, that we'll attempt camping again... Chris will be kind enough to take the conn on the Pfennig for me. I will send updates from Vancouver, but not from vacation... Speaking of Vancouver, getting there, and getting out are awful things to have to go through, but while I'm in Vancouver, it's an awesome city! Ok... Back to getting this out on time! YAHOO! It's time to make this a Tub Thumpin' Thursday!

Chuck Butler
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

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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

More Stimulus On The Way?

Chuck Butler — Wed, 24 Jun 2009 14:53:55 GMT

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

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*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..

* Euro leads currencies higher...
* Commodities rally back on FOMC thoughts...
* FOMC meeting today...
* NZ Consumer Confidence on the rise...

And Now... Today's Pfennig!

More Stimulus On The Way?

Good day... And a Wonderful Wednesday to you! Well... Yesterday, the title of The Pfennig was: So Far... It's A Turn Around Tuesday! And... That theme played well throughout the day, and by day's end, it had been quite the Turn Around Tuesday! Now, we have to see what's in store for us today, as the last couple of weeks have seen the Wednesday trading quite the opposite of Tuesday's trading! Strange trading pattern don't you agree?

Overnight, the euro climbed as high as 1.4140, only to sit at the cusp of 1.41 as I begin to write this morning. Of course 1.41 certainly looks a lot different from the 1.35-1.40 range we've seen in recent days. But then, we've seen these probes above 1.40 before only end with the euro falling back to the 1.35-1.40 range again...

I would imagine that the thing weighing heavily on the euro to bring it back to 1.41 and now a little below that figure is the news that the European Central Bank (ECB) had allocated EURO 300 Billion in 12 month funds for liquidity... I think any sell off from this announcement is strictly a knee-jerk reaction to the announcement. But when the dust settles and the traders / investors realize that EU 300 Billion is far less than the numbers that were rumored (some as high as 1 Trillion euros), this knee-jerk reaction will slow...

One of these times it will shake the cobwebs off, and proceed to either move higher, or lower than the established range... For now, I would have to think that given the sentiment in the market that's growing toward anger with the U.S. deficit spending tactics, the move would look to go higher... But, who knows? I can only look at things from a fundamentals viewpoint and from 17 years experience trading currencies...

Once the euro got going, or the Big Dog got off the porch, the other currencies (little dogs) were also on the rise VS the dollar... And Commodities, after spending Monday circling the bowl, came back with a vengeance! And we all know that when the Commodities rally, so do the Commodity currencies of Aussie, kiwi, Canada, Brazil, and South Africa!

Speaking of Brazil... Recall when I told you that this currency can give you whiplash? The volatile, wild swings in the currency are enough to make someone request oxygen! So, after a day (Monday) that saw the Brazilian real move back above "2", it was posted the best performance of any currency on earth, on Tuesday!

Brazil's real had its biggest gain in more than a month, as Commodities rallied, and... The currency also bounced back after investors "overreacted" yesterday to speculation the Central Bank will intervene to keep the real at "2"... The real gained 2.7 percent, the best performer in the world and its biggest gain since May 4, to 1.9794 per U.S. dollar.

The real has gained 17 percent this year, the best performance among the 16 most-traded currencies, as commodities rallied.

One thing that helped the Commodities rally yesterday was the fact that it finally "occurred" to traders and investors that the Fed's FOMC meets today, and will probably signal that interest rates will be held to near zero in the U.S. for the rest of the year.

Now... Why would that be a feather in Commodities' hat? Ahhh, grasshopper... You have to remember that the underlying fear in the markets is that the Fed will NOT be pro-active in removing their stimulus when inflation begins to knock at the door... And making a statement that interest rates will remain near zero for the rest of the year, simply makes those fears even stronger... And what will people flock to when inflation is racing toward double digits?... Commodities...

Of course, tomorrow will be a different story should the Fed not make an interest statement like that!

I listening to the radio, while I write... And the song that's playing is Elton John's "Friends", which was the theme song of my senior prom! Now, that's a really old song!

OK, I'm back now... See how my fat fingers decide to start typing things that pop into my mind?

So, the Fed's FOMC is today... I just can't see them doing anything but trying to calm the markets' fears about inflation, while keeping rates Steady Eddie. You all know that I'm not a fan of the Fed... I just don't see how a entity, who's main job is to protect the value of our currency, could keep their job, given the fact that the dollar has lost over 90% of its value since they took over! I mean, the Fed is NOT a Gov't Agency, folks... It's supposed to be an independent entity... But now, it's got it's hands in all kinds of things that aren't on their job description, and they are in cahoots with the U.S. Treasury, and before we know it they will be regulating all the banks and financial institutions... All, from doing such a good job at protecting the value of the dollar! I shake my head in disgust... And I should NOT be the only one doing so!

So... While I'm on my soapbox, and ranting at the Fed, and the people making the decisions... Big Ben Bernanke is up for reappointment... I think the thing I would like to see from Big Ben before I would reappoint him is for Big Ben to come out and say... "I'm in favor of Ron Paul's Bill to audit the Fed" Now, that would cause me to fall out of my chair from the shock of disbelief!

Speaking of the bill to "audit the Fed" I believe every voting citizen should contact their representative and let them know you support the bill to "audit the Fed"...

And... While I'm up here on the soapbox, I might as well get this rant off my chest too... Well folks... I think we're in for yet another stimulus package... yesterday, during a press conference the president was asked about that very thing, and his reply was not a resounding "NO"... it was a "not yet"...

Now you know me... I said after the first $150 Billion in the spring of 2008, that there would be more... and I said after the $787 Billion this past winter, that there would be more... and does a "not yet" from the Gov't that loves to spend money, give you a warm and fuzzy that there won't be another one? I didn't think so!

Yesterday, the data cupboard gave us Existing Home Sales data... For the second consecutive month, sales of previously owned homes in the U.S. increased, but the improvement was less than expected, further fueling fears of a slow, weak recovery for the economy as a whole... And the most important thing from the report is that the Home Sales were driven by two things... A drop in home prices... The median price for an existing home last month was $173,000, down 16.8% from $207,900 in May 2008. And... The low mortgage rates that existed up until about 3 weeks ago... Mortgage rates have climbed back above 5% (remember when we thought that was a low rate?) and the message that I'm getting is that mortgage lending is drying up once again... Most of the lending had centered on re-fi's any way, not Home Sales...

Hey! Remember earlier this month when the Jobs Jamboree number printed and everyone (except those that knew better because of the BLS) was celebrating? Well... I saw a piece on Reuters last night that caught my attention... Mass layoffs -- at least 50 job losses by a single employer -- grew to 2,933 last month, from April's 2,712, the U.S. Labor Department reported. That is practically a tie with March's figure, which set a record. Hmmm... That certainly paints a different picture of the labor market than the BLS Jobs Jamboree now doesn't it?

The Data cupboard will also give us the latest readings on Durable Goods (don't expect miracles here!) New Home Sales (no miracles here either!) and then the FOMC... The U.S. Treasury will also be auctioning $37 Billion of 5-year Notes today... Good luck!

Down in New Zealand... Consumer Confidence surprised to the upside, and is helping to boost the kiwi performance this morning... These are "index" numbers so they probably don't make much sense on the outside... Just look at them as "better"... New Zealand Consumer Confidence rose to an 18 month high in 2nd QTR from 96.0 to 106. Optimism about near term prospects improved from -57 to -28.

And finally... Gold and Silver have taken some tough shots to their respective mid-sections this week... I even said to Chris Gaffney yesterday... "Silver sure is tempting below $14, isn't it?" I'm reminded of an old saying we use to have on the Margin Desk in my early years in the brokerage business... Just input the asset and price to make this saying work... For instance, we'll use Silver... "Hey! If you liked Silver enough to buy it at $15, you'll Love it at $13.98!"

Of course, I personally don't expect Gold and Silver to remain at these bargain basement prices too long, but then that's just my opinion, and according to the Legal Beagles, I have to say that I could be wrong!

Currencies today 6/24/09: A$ .8010, kiwi .6435, C$ .8740, euro 1.4085, sterling 1.6585, Swiss .9320, rand 8.0830, krone 6.4120, SEK 7.85, forint 197.30, zloty 3.2180, koruna 18.56, yen 95, sing 1.4525, HKD 7.75, INR 48.52, China 6.8330, pesos 13.28, BRL 1.9790, dollar index 78.75, Oil $68.77, 10-year 3.64%, Silver $13.92, and Gold... $928.40

That's it for today... The Heat Wave continues here... But, like I told someone yesterday... Hey! It's summer, it's supposed to be hot! When I was a young man playing my guitar around the country out of VW micro-bus, I built in-ground swimming pools as a day job. In Oklahoma! Now talk about a HOT job! YIKES! I know there are hotter jobs, but that was the worst for me! Nice game last night for my beloved Cardinals... And, my little buddy, Alex, has his last baseball game of the year tonight. At least it is an 8:15 game! Well, the doctor visit yesterday was interesting... He's happy that I've done so well... But the honeymoon on the weight is over according to him! Of course, I have no idea what's he's talking about! HAHAHAHAHA! Let's get this going... I hope you have a Wonderful Wednesday!

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

Currencies and Commodities Sell Off...

Chuck Butler — Mon, 22 Jun 2009 15:15:09 GMT

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

* Overnight markets ambush risk assets...
* Germany's IFO Business Confidence gains again...
* A$'s get pounded by opposite thought story...
* More supply to auction off for the U.S....

And Now... Today's Pfennig!

Currencies and Commodities Sell Off...

Good day... And a Marvelous Monday to you! I hope your Father's Day weekend was grand... Mine sure was! I'm feeling the affects of the "grand" weekend this morning too! And... It was the first day of Summer! So we had all that going for us, eh?

Front and center this morning, I'm as proud as a peacock this morning. I just read an email from good friend, and excellent market analyst, Mary Anne Aden... Mary Anne sent me a note letting me know that the one and only Richard Russell had quoted me in his letter June 10th... She said it went something like..."this is from Chuck Butler's always terrific column..." WOW! Being quoted in Richard Russell's letter is like the top of the list for me!

OK, Chuck, you have to come down from cloud 9... Hey You, get off of my cloud! Even the fact that the currencies and commodities have sold off in the overnight markets can't stop me from this seashells and balloons feeling...

Yes... The currencies and commodities have sold off in the overnight markets... Even a good print by Germany's think tank IFO on Business Confidence, hasn't wrapped a tourniquet around this sell off... This wasn't a "one and done" for Business Confidence in Germany either! This happens to be the third consecutive month of positive gains for this data. Now... One would think that this should signal something, right? I mean, if I walked up to you on the street and said, "Germany's Business Confidence has posted positive gains for 3 consecutive months"... You would probably, no wait, definitely think (because I know you are very astute, and pay attention in class each day), that Germany's economy must be coming out of their recession... Hmmm... Yes, that's what I would think too! But... The euro isn't showing any thoughts by traders like that!

I think that in the next print of GDP in Germany (the Eurozone's largest economy), we'll see a nice improvement from the previous quarter's negative -6.7% decline! I'm not thinking that GDP will go to a positive print... But if it knocks out half of that decline, that would show that things are improving... And if things are improving in Germany, the rest of the Eurozone will grad on to the coat tails!

The U.S. Fed meets this week, in an otherwise quiet week data, and talks, and we'll have to see what's up Big Ben's sleeve now... I would suspect that this week will be a non-event... But in August, the Fed will most likely be setting off some late fireworks, with an increase in their bond buying program... Quantitative Easing... UGH! And that thought leads me talk about the amount of supply hitting the markets in the near future... But I wont' bore you with my description of the supply... Here are my friends, Addison Wiggin and Ian Mathias...

My friends, Ian Mathias and Addison Wiggin over at the 5-Minute Forecast, never cease to amaze me the way they describe things! Here's a piece of their letter from Friday, June 19th...

"The U.S. government announced yesterday it will auction a record $104 billion in debt next week. Despite obvious warning signs that the world has had its fill of American paper, the Treasury will forge ahead: $40 billion in 2-years Tuesday, $37 billion in 5-year notes Wednesday and $27 billion in 7-year garbage on Thursday.

They must "get it." Last week's sharp rise in 10-year yields was as sure a sign as any that investors everywhere are getting cold feet. A prudent government would take a break. let things cool off. But there's no rest for Uncle Sam, or his Treasury. They've got the mother of all Ponzi schemes to run:"

I'll get to meet up with Ian and Addison next month in Vancouver... I'm looking forward to that!

So... Like I said, the data is pretty weak this week... So, we'll be scratching and clawing for the markets to throw us bone.

Down Under... The Aussie dollar (A$) has taken on some water overnight after a story printed and quoted the Morning Herald's economic editor... The quote went something like this... "the market was wrong in discounting little to no chance of another RBA cut this year, and a high chance of a hike in the first few months of next year" ...

You might recall last week I told you that the market in Australia had basically decided that the Reserve Bank of Australia (RBA) had come to an end of their rate cut cycle... I then threw in my own 2-cents and said that the first rate hike would come in the 1st QTR next year... Well, the Economics Editor at the Morning Herald doesn't agree... And the A$ has sold off big time since the paper hit the news stands! Come on! That's just one person's opinion, isn't it? Last week, the market players were all about the end of rate cuts... And they are now going to be swayed by one opinion? Where's the intestinal fortitude?

And then there was this... Not happy with having their heavy hand in just about everything these days... The Fed is reviewing the Repo market... Apparently, the poor old Repo market is getting blamed for exacerbating the financial turmoil that followed the collapse of Lehman Brothers last fall. For those of you not familiar with this market... It's a utility for overnight funding... (some go longer than overnight, but the overnight repo and rev repo market is what is being reviewed) So... Look for more Gov't. reforms in a market that has existed for many years just fine and dandy...

I'm going to stop there this morning, as I forgot to print a "Corporate feel good story" on Friday, I will do so today... So, look for that after the "that's it for today" segment...

But... First, speaking of feel good stories... I saw this flash across the screens this morning... New York Times reporter David Rohde, who disappeared in Afghanistan in November 2008, has escaped from his Taliban kidnappers and is under U.S. military protection.... Cool, eh?

Currencies today 6/22/09: A$ .7960, kiwi .6350, C$ .8745, euro 1.3845, sterling 1.6440, Swiss .9190, rand 8.1575, krone 6.4950, SEK 8.00, forint 201.65, zloty 3.2575, koruna 18.80, yen 96, sing 1.4580, HKD 7.7503, INR 48.59, China 6.8355, pesos 13.42, BRL 1.9750, dollar index 80.75, Oil $68.30 (this has really backed off the past couple of days!), 10-year 3.73, Silver $13.88, and Gold... $925.35

That's it for today... My little buddy, Alex, and I were on our own for part of the weekend, and we did just fine! Last week, I bought a used Bass Guitar, and now I can add some bass to Alex's guitar playing... It's fun! The two of us, "jamming" in the basement! All we need is drummer, so people can feel a beat, yeah..... HA! It's alive! It's alive! My beloved Cardinals actually had their offense come alive this past week... A nice weekend sweep of the cross state Royals, was sweet! I just heard on the radio that the "heat index" could hit 110 today here in St. Louis! My mind immediately flashes back to when I was a kid, and we didn't have air conditioning! Then we got one that cooled one room... I had 6 siblings so the 9 of us would all sleep in that one room! We were NOT allowed to go in that room during the day! And look! We survived! HA! OK, thanks for going with me on the trip down memory lane... Time to go to the Corporate Feel Good Story... I hope you have a Marvelous Monday!

*********************************************************************
I have my own business, working out of my home, representing a small agency called Markle & Associates here in the Pacific Northwest. We represent six wool carpeting mills and a bamboo and hardwood importer. And because our products are "green", environmentally friendly, we do have an edge over the synthetic products and anything tied to petroleum. But nevertheless, we have still been affected by the economic downturn. What I've found to keep the business coming is a simple tool we all know about: networking. Years ago I heard a statement about the success of networking that said it was the single most powerful way to increase business. Faster results than advertising, and cheaper than any other marketing attempt.

So, I've made that my thrust over the years and make sure I stay involved in my industry organizations, participate in meetings on the chapter and national levels and volunteer for positions to help these organizations grow. In my industry, it meant remaining connected over the years with design organizations like NKBA (National Kitchen & Bath Association), NWSID, (Northwest Society of Interior Designers), American Society of Interior Designers (ASID) and International Interior Design Association (IIDA). The reason networking works is because people buy from people, rather than simply from businesses. Learning that key has helped my business to keep going in diverse economic climates, including this one.
*********************************************************************************

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

Happy Friday, Here We Go Again!

Chuck Butler — Fri, 12 Jun 2009 16:34:31 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..

* Currency rally gets wiped out...
* Geithner to talk about a strong dollar?
* Brazil cuts rates!
* The Fed to control everything? YIKES!

And Now... Today's Pfennig!

Here We Go Again!

Good day... And a Happy Friday to one and all! Another seemingly long week for yours truly... Where's a 3-day Holiday weekend when you need one? Have you been following the goings on with the investigation into the Bank of America (BOA) purchase of Merrill Lynch? Whoa, there partner! I thought for sure this would get all swept under the rug, but it's all coming out, every dirty deed! Dirty deeds done dirt cheap!

Before we get into the goings on there... Let's talk about the currencies and their huge jump yesterday, only to see chicken traders come out of the woodwork overnight to support the dollar going into the G-8 meeting.

Yesterday, the currencies had it all going on VS the dollar... The euro at one point in the afternoon hit a high of 1.4170! You can imagine the long, stale trades that finally could take a profit there, eh? Well... It happened, and by the time I left for the day, the euro had backed off that lofty figure. But not like it backed off overnight... The reason I call these guys chicken traders, is that they are afraid to be short the dollar going into the G-8 meeting... Now... I have to ask this question... Did they NOT KNOW there was an upcoming G-8 meeting this weekend yesterday when they took the euro to 1.4170? I did, in fact, I told you 3 days ago that there was going to be a G-8 meeting!

Here's the skinny... The chicken traders are scared to death of having short dollar positions ahead of the G-8, where they fear U.S. Treasury Sec. Geithner will say that the U.S. favors a strong dollar! Geez Louise! Here we go again! How many times can a U.S. Treasury Sec. go to the well with that saying and get positive traction? For each time they do say that, they follow it up with an attack on the Chinese renminbi, saying it must appreciate. Well, how can that happen if they "truly" believe in a strong dollar? Add to that, the goings on now... How can anyone in the Gov't say they believe in a strong dollar when they are implementing Quantitative Easing?

The other thing boosting the dollar this morning is a report that Big Ben Bernanke is calling for reduced bond buying, thus reducing the pressure on the dollar. Now... That would be great news, if it were really going to play out... But these guys are like junkies now, this Quantitative Easing is like cocaine to the Fed, and the bond markets... And soon enough, the bond guys will be clamoring for more cocaine/ bond buying / Quantitative Easing! And the Fed is the pusher...
You know the dealer,
the dealer is a man
With the love grass in his hand
Oh but the pusher is a monster
Good God, he's not a natural man

OK... A blast from the past there! My good friend, Rick, likes to guess at the band's name when I put lyrics in the Pfennig... This one is waaaaaayyyy before your time Rick!

So... The dollar will end the week getting some love from the chicken traders... Bawk, Bawk... (I do that really loud, when pitchers pitch around Albert Pujols!)

The news that the Fed "might reduce bond buying" hit the high yielders in the mid-section, knocking the air out of them! But, these currencies are resilient, and after the wind is restored in their mid-sections, they climb back on the rally tracks! You have to love currencies that show resilience!

The dollar received an additional boost overnight... You'll want to sit down for this one... and put the coffee down, to not risk spilling it and burning yourself! Here's the skinny... Japanese Finance Minister Yosano who stated that "we have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental," and "so our trust in US Treasuries is absolutely unshakable."

What else did you expect from a country that is the second largest holder of U.S. Treasuries? But... The dollar basks in the sun from those comments...

Did you hear that U.S. Treasury Sec. Geithner is clamoring for more power for the Federal Reserve. In Geithner's mind the Fed should be the Big Dog regulator in the markets... Hmmm... Let's see now... Could he want to see that because of the Fed's "wonderful" track record of allowing the dollar to lose over 90% of its value since they took over the stewardship of the currency? Yeah, that's the ticket! I shake my head in disgust that this is even being talked about... The Federal Reserve Bank is not even a Gov't Agency! The Fed is a Farce! Come on people, get your rakes, and pitchforks, and let Geithner and the administration know this is not in the best interest of this country!

OK... Right after I hit "send" yesterday, the Central Bank of Brazil announced a rate cut... This was a huge rate cut, VS the forecasts... The Central Bank cut 100 BPS or 1%. Let me tell you what's going on here... First of all, Brazil see's an opening... They can promote growth, and get a foot in the door of countries that have been struggling to show any growth... But first, there's the real... The real has really seen some strong winds in its sails lately... It has gained nearly 20% VS the dollar in the past 3 months... And what did the Central Bank Gov. say about 3 weeks ago?

Well... Let's draw this out... The real was trading around 2.03, and the Central Bank Gov. said he "would keep the real above 2"... You may recall at the time I said that in the old days, traders would take that statement as a challenge, and go after the real Big Time to make it stronger and to put egg on the face of the Central Bank... Well... While there may have been some of that... The currency pushed higher on the back of the High Yielders, and Commodity Prices rise... And the real soon was trading below "2"! (real is a European Style currency so the lower the price the more value it returns in dollars!) In fact, the real traded to 1.93!

Yesterday, after the announcement, the real lost some ground, as a currency should lose when a Central Bank debases the currency with an interest rate cut! But soon, the real was rallying once again, having put the rate cut in its rear view mirror. Now... That was a good sign for the real... But, I truly believe that the Central Bank here will look to lower interest rates on a couple occasions in the future... To me... That kind of information is like manna from heaven! For if the currency is going to weaken briefly after rate cuts, but rebound quickly, that would make for some good trading info... Of course, just because it's happened in the past, doesn't mean it will continue!

OK... Now... Let's talk about the Bank of America (BOA) and Merrill deal... First, you might recall me telling you about a month ago that BOA Chairman, Ken Lewis, testified that the Fed and Treasury pressured him into buying Merrill Lynch, and not disclosing the losses on Merrill's books... The Gov't even gave BOA the money to make the purchase! And... You may recall that Big Ben Bernanke immediately dismissed these statements, as false... Well, someone with some intestinal fortitude decided to investigate this deal...

The other day I told you the records had been subpoenaed and that I thought it would get all swept under a rug... But NOOOOOOO!!!! Yesterday, it was revealed that Fed officials sharply criticized Bank of America and CEO Kenneth Lewis in emails to each other after the bank tried to pull out of its deal to buy troubled investment bank Merrill Lynch, according to documents unearthed by Congressional investigators. The emails confirm Fed Chairman Bernanke was willing to threaten Mr. Lewis's removal as CEO if he reneged on the Merrill deal and later sought assistance. OMG!

And now... Ken Lewis is telling lawmakers that government officials pressed him to buy Merrill Lynch even after he became aware of major losses at the investment bank. Uh-Oh! The Fed and Treasury need to pull a Lucy here and do some 'xplainin'!

The data cupboard was busy yesterday with Retail Sales and Weekly Initial Jobless Claims... First, Retail Sales for May were bang on expectations of a .5% gain... A closer look though revealed that the major move here was in gas prices, which if you take them out, Retail Sales only gained .2%... But you know me, I don't like taking things out, or adding things in... Let the data speak for itself!

The Weekly Initial Jobless Claims were better than recent reports coming in at 601K VS the previous week's 625K... The problem here folks is that while the Corporations may be cutting back on the layoffs, people that are out of work are remaining that way... The continuing claims rose to 6816K from 6757K the previous month... I mentioned on the desk yesterday, that the media was reporting the 601K number as "good", but somehow forgetting to mention that the continuing claims weren't good! There comes a time when you just can't fire anyone else!

Today, we see some minor data, with the U. of Michigan Confidence Index the only recognizable data print today. It's a Big Day in the Big Finish... And... I'm back to sharing a "Feel Good" Corporate story during this recession... So, let's get to it!

Currencies today 6/12/09: A$ .8140, kiwi .6410, C$ .8950, euro 1.4035, sterling 1.6475, Swiss .93, rand 8.0120, krone 6.35, SEK 7.65, forint 198.35, zloty 3.1920, koruna 19, yen 98.10, sing 1.4520, HKD 7.7507, INR 47.55, China 6.8352, pesos 13.41, BRL 1.9240, dollar index 80.07, Oil $71.52, 10-year 3.80%, Silver $15.09, and Gold... $950

That's it for today... Sunday is the 10-year anniversary of my long time friend Jen Mclean! It's hard enough thinking about EverBank (the internet bank) being more than 10-years old! This weekend will also be the 2-year anniversary of my first cancer surgery to remove my left kidney... Less than 2-weeks later I would undergo the most difficult of the two surgeries... I recall all the wonderful emails from readers at that time, they were, and remain very special to me. Two years, since I was told I had cancer... I knew I would be here 2 years later, and I remember telling you all that I would beat it! I'm not out of the woods, just yet... But I'm well on my way! And then finally... Today, 33 years ago, I said "I do" to my beautiful bride... She remains just as beautiful, and we have 3 beautiful children... OK, enough... I don't want our little Christine crying! HA! I hope you have a Happy Friday!

******************************************************
Here's this week's "feel good" corporate story...

The Garden House, a 10 room B&B in Key West, Florida where flip flops are considered formal attire, is having its best year ever. I attribute that to a great quality product, a passion for customer service, the poor showing of the dollar( which is why I'm an avid reader of the Pfennig ), and a miserable winter up north. Let it snow let it snow let it snow! When they're shoveling snow we're shoveling margaritas. Cheers!
www.stay@gardenhousekeywest.com

***********************************************

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

A Rare Day, Indeed!

Chuck Butler — Fri, 22 May 2009 14:17:06 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..

* Stocks, bonds and dollars get sold!
* The U.S. to lose our AAA credit rating?
* A return to fundamentals day 2...
* A Corporate Feel Good story for a Friday...

And Now... Today's Pfennig!

A Rare Day, Indeed!

Good day... And a Happy Friday to one and all! A Fantastico Friday here in St. Louis, as we bask in the sun of a 3-game sweep by my beloved Cardinals over the Cubbies! It's also the beginning of a 3-day Holiday weekend. It's Memorial Day on Monday! Time to reflect and give thanks for those that put their lives on the line for our freedom...

OK... Front and Center this morning the Big Dog (euro) has left the porch and is chasing the dollar down the street! I got home yesterday afternoon, rested, and then checked the currencies at the NY closing before they handed the books over to Japan, and saw that the euro had leap-frogged to the 1.39 handle! WOW! What was going on?

Well... First of all... Didn't I tell you long ago that whenever the fundamentals returned to the markets that had been absent since July of 2008, we would see the dollar return to the underlying weak trend? OK... I don't know if this is "exactly" what's happened, but I do know this... The negativity toward owning dollars is growing like a nut-grass weed does on hot summer days. I also know that ever since the euro moved higher than its 200-day moving average on May 8th, there's been little or no looking back. And... To finish this up, people are beginning to notice the monetary policies of the U.S., the rising deficits, the supply that's needed to finance the deficits, and... The thought that the U.S.'s credit rating could be downgraded... OUCH! Hey! That's going to leave a mark!

Seriously though... This would not be a good thing... You know, Bill Gross of PIMCO, the world's largest bond house, right? I've quoted him on quite a few occasions in the past... Well, anyway, Bill Gross, said that he believed that the U.S. would eventually lose their Triple A (AAA) rating...

Don't look for any answers from that crew on CNBC! Don't know if you caught my appearance on the CNBC Power Lunch yesterday... But, they had this "lynching mob" ready and waiting for me... I was told by the producer that I would get a chance to tell my "story" on the comment I made the other day about the PPT. (Plunge Protection Team) BUZZZZZZZZ, WRONG! Thank you for playing, there's a nice parting gift for you at the door! As I tried to put the whole thing into context, one of the "lynch mob" said to me, "You're losing me"... Oh really? You only have an attention span of 1 minute? Any way... I know, I know, these guys are there to entertain, not inform... and they thought it was entertaining to mock me, rather than listen and maybe have their viewers informed...

OK... I know, my public relations people will be reeling this morning when they read that, but... I just had to get it off my chest. The mass media is so to blame for a lot of this mess we're in... The sat there and said nothing... They looked the other way, while the Gov't slowly tears at our Constitution... OK, I had better stop now!

Back to currencies, because THAT'S the story of today! It sure looks like the scene we've seen before when the dollar reaches this threshold of major weakness again... It looks like the scene, it smells like the scene, walks like the scene, it must be the scene! The dollar is once again on the threshold of major weakness!

Why do I think the "fundamentals" have come back into play? Well... Bad data... Since July of last year, we've been in this funky trading theme that rewarded the dollar, every time things looked bad in the U.S. for the economy... However, in the last week, we've begun to see a change... Not a "sea change" yet... But a change... And this is when you want to get in on something, not after the "sea change" has come! Then you're chasing the market...

Yesterday's bad data came on two fronts, one that everyone had the chance to see, and one you would have to pay close attention to... 1. Initial Jobless Claims rose again last week. This time to 637,000, which was higher than forecast, and the previous week's number was revised upward... And then number 2. The Fed left the markets out on a line... You see they did NOT purchase as many Treasuries as the markets believed they would... On the outside that would seem to be a good thing... But underneath the covers, things are different... The markets took this lower bond purchase by the Fed as an indication that they will have to come back and do more later, as the Fed attempts to hold down long term Treasury yields... And in doing so... The dollar will get stuck in the middle. In fact, here's the dollar's new song... Clowns (bad data) to the left of me, Jokers (the Fed) to the right, here I am stuck in the middle with you!

Yesterday was also a very bad day at Red Rock for not only the dollar, but stocks, and bonds! You don't normally see days like that... I read somewhere that there have only been 18 days since 1990 that we've seen a day like yesterday! Stocks and bonds both getting sold? Where were the funds going from those sales? Ahhhh grasshopper, this is playing out just as I told you it would when the safe haven buying of Treasuries were reversed... The funds, yesterday, were obviously going toward currencies and metals!

And, the currencies and metals have added to their gains from yesterday in the overnight markets! And going into a thinned out Friday, before a holiday weekend, trading... This could get ugly for the dollar today... If I had been standing on the sidelines waiting to get in, I don't think today would be the day... Although the currencies might continue this move higher, I just don't think that chasing a market in a thinned out market, is the prudent thing to do... And on the other side, we could just as easy see a big sell off today... Because, as I always tell you, be yourself! No, wait, that's Tutor Turtle and Mr. Wizard talking... I always tell you that in thinned out markets, you can see wild swings...

OK... So it wasn't just the Big Dog, euro kicking sand in the face of the dollar bulls yesterday... All the little dogs were able to get off the porch and chase the dollar down the street too. For instance the Canadian dollar / loonie reached .8875, a level it hadn't traded at since October of last year! Aussie dollars (A$) has a 78-cent handle, something it hasn't seen since October of last year... And look at the Indian rupee go! And Gold is $955!

When we return on Tuesday of next week, the data cupboard will be overflowing with data here in the U.S. All sorts of Housing data, which I can't see as anything good for the dollar, given the new direction and return to fundamentals.

Currencies today 5/22/09: A$ .7835, kiwi .6190, C$ .8870, euro 1.3955, sterling 1.5880, Swiss .9175, rand 8.33, krone 6.3880, SEK 7.5225, forint 199.50, zloty 3.1325, koruna 19.1550, yen 94, sing 1.4430, HKD 7.7518, INR 47.11, China 6.8232, pesos 13.14, BRL 2.03, dollar index 80.15, Oil $61.60, Silver $14.65, and Gold... $955

That's it for today... After the signoff, I'll bring you this week's "Feel Good Corporate Story"... Great time last night with colleagues, Chris Gaffney, Jen Mclain, and Christine Peplow, as we were all treated to a game at Busch stadium to watch our Cardinals! And to watch Albert Pujols hit a monster home run! And... An "almost" complete game by our pitcher! WOW! What a night! So.. It's Memorial Day, on Monday... It's more than breaking out the grills, opening the pools, and all that... Although that's all fun! OK... Time to get to the "feel good" story... Remember, I asked for stories from businesses that were doing good during the recession so that you weren't always reading depressing stories! Here's this week's... I hope your Friday is Fantastico, and your Memorial Day Holiday weekend is grand!

This week's highlighted Company.... "My online business, Cool Cribs Lifestyles, started last August and has skyrocketed higher than initial goals ever imagined. We sell high quality Spiritual Living products that have meaning behind them and are chosen with love and care. As so many people are looking for sense behind all the turmoil they see in daily life and on the news, they are reaching out for items to warm their hearts and comfort their souls. This is the niche we fill. We love what we do, provide excellent customer service and offers products chosen with love.

Aside from this, we also sell the coolest retro handsets for cell phones that harkens back to the old days. This is one hot little item we simply can't keep in stock."

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

Fundamentals Return...

Chuck Butler — Thu, 21 May 2009 15:48:14 GMT

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In This Issue..

* Currencies & Gold move together!
* Fed downgrades economic growth...
* More on China...
* Yen breaks the trading pattern...

And Now... Today's Pfennig!

Fundamentals Return...

Good day... And a Tub Thumpin' Thursday to you! It's Tub Thumpin' here, as the warm winds of spring have finally sprung, the Cardinals have won two in a row from the rival Cubs, and I'm headed to Busch Stadium tonight! Oh! And fundamentals, as far as currencies and metals are concerned, seemed to be in place yesterday...

That's right... The rout on the dollar was on (recall yesterday, Wayne and Garth playing street hockey... Game On!) and this time... Not only did the currencies rally VS the dollar, Gold and Silver took part in the proceedings too! It's been a long time since we've seen this happen... For the most part, whenever the currencies (minus yen) rallied, Gold would back off, and vice versa... Not yesterday! For the first time in a long time, the negativity toward the dollar was front and center BIG TIME!

The currency rally began early in the morning, and really gained steam as the day went on, and especially after the minutes of the FOMC meeting printed. You see, the Fed Heads had discussed that the economy is in a weakened condition and the economic projections for 2009 and 2010 were actually revised lower. The thing I took out of the minutes was this statement by the Fed Heads... the housing market "remained depressed but seemed to have leveled off"...

Memo to Fed Heads... Better be careful with those kind of statements... Did you all make a similar statement late in 2007? Look how well that prognostication worked out!

So... This news from the Fed about downgrading the growth outlooks for 2009 and 2010, is the key folks... You see, during the July 2008 - Feb. 2009 timeline, we traded under a different Trading Theme, that was well documented in this letter. But for new readers, the Trading Theme threw fundamentals out of the window, and rewarded the dollar every time data indicated the economy to be deeper, darker, and more dangerous in the recession / depression. This was against all fundamentals...

But yesterday, with the Fed downgrading growth forecasts, the dollar got sold like funnel cakes at a state fair! Finally! A return to fundamentals! Well, at least for one day that is. We certainly need to see more than one day of this to make any kind of final change in the Trading Theme trend... But it sure was nice to see for one day!

The Big Dog, euro, led the way for the other currencies (little dogs) yesterday. The euro finally, traded above its key resistance of 1.3740. A level that had stopped the euro "cold" three previous times. You may recall about a week ago, I told you that this is what happens with currencies, in the time (since 1992) that I've followed currencies. They make a run at a resistance level, and get knocked down. They make another, only to get knocked down, and then another with the same result. Sooner or later, love is gonna get ya', no wait! Sooner or later, traders and market participants either 1. take this as a challenge and push the currency through the resistance level, or 2. they give up, take the ball and go home... And the currency then falls back through previous gained ground.

In this case, the euro finally moved higher and through the 1.3740 level, and traded all the way up to 1.38 on the day... The good news for euro holders is that there has been little to no profit taking overnight, and the Big Dog is still trading with a 1.38 handle this morning!

Long time currency followers would have to admit that this all looks very similar to previous periods where the negativity toward the dollar was very strong, and seemed take on a life of its own. Even your run of the mill dollar bull, begins to see things they way his counterpart the dollar bear sees them...

I think that the markets have come to the realization that the U.S. has taken the road that leads to easy monetary policy... And everyone knows what's at the end of that rainbow! Inflation!

A couple of weeks ago, I participated in an editorial roundtable with my publishers for my "other" newsletter, The Currency Capitalist, (shameless plug!) and in the meeting I was trying to get everyone to agree with me that China was up to something. This was right after the announcement of their currency swap line with Argentina... Someone raised the question, a very astute question I might add, about why would China want to see the dollar lose value, when they own so many Treasuries...

I then pointed out something I had researched... That China had been stealth-like in doing so, but had shortened their maturities to less then 3 years... Which would mean that they could allow these to mature and not sell them pre-maturely... Could this be a "time-line" toward the lines of thought that China wants to replace the dollar as the world's reserve currency?

OK... That was a couple of weeks ago, in a meeting... But yesterday, Chris Gaffney sent me a story that appeared on Reuters... Here's a snippet... "China has engineered a subtle yet significant shift in the investment of its foreign exchange reserves, a sign of how it is willing to act on concerns about financing an explosion of U.S. debt."

And then this... "China's move to the shorter end of the U.S. debt spectrum is a defensive tactic adopted by the wider market as well on the view that the United States will have to raise interest rates down the road to control inflationary pressures when the economy recovers from the financial crisis."

So... Now there are "others" that are sniffing around this trail of tears I think I've discovered, for if there is no "long-term" plan by the Chinese to replace the dollar as the world's reserve currency, then I'll have egg all over my face! Well... The good thing for me, is that this is a very long tailed story... And I'll get to point to it over and over again in the coming years!

Doesn't that just make you get chills of excitement? HA!

A currency that "I like" but had fallen badly last summer, the Brazilian real, has really pushed higher in recent months (since March 1st). Yesterday it looked as though it would trade below the 2 handle for the first time in 8 months! (BRL is a European Style currency, where as the price goes down, it returns more value VS the dollar) For those of you keeping score at home, the real has gained 17% since March 1st... With Brazil being a "high yield" currency, the return grows even more... But, that's in the past... And past performance does not indicate that future performance will duplicate... (that's for the legal beagles!)

Well... Recall earlier this week I talked about pound sterling nearing its 200-day moving average? Well... Forget about it! Yesterday, Standard & Poors (S&P) decided to place the U.K. on negative outlook... And the pound sterling quickly became the G-10's worst performing currency on the day... For those of you wanting to know what's what with these ratings from S&P... When S&P imposes negative outlook they foresee a greater than 50% chance of downgrade within the next two years, this is compared to negative watch which implies a greater than 50% chance of downgrade within the next few months.

I said earlier that the euro (Big Dog) had seen little to no profit taking overnight, and was trading with a 1.38 handle this morning... It has just slipped below that level, as I prepare to go to the Big Finish... Data wise for the Big Dog, Eurozone PMI's (manufacturing indexes) surprised to the upside for this month. Now... It's true that this manufacturing data is still in negative territory, but this data supports the thought that the worst is behind the Eurozone... That remains to be seen... But for now, that's good news!

In Japan overnight... In yet another sign that the Fundamentals may have re-emerged, if for only one night, the yen rallied with the other currencies. Yes, this has not been the case for several months now. When the dollar rallied, yen rallied along with it... But not yesterday and last night... Yen pushed to a 94 handle for the first time in 2 months!

The data cupboard comes back with a plethora of data this morning... The Weekly Initial Jobless Claims prints first, followed by Leading Indicators and the Philly Fed Index (manufacturing for the region)...

And then there was Gold... And Silver! Year-to-date, Silver is outperforming Gold! Silver is up almost 25% this year, while Gold is up 6.6%. Our newest member to the currency and metals desk, Aaron Stevenson, pointed something out to me the other day regarding Silver... "the Gold/Silver ratio has increase to about 64 from 51 this time last year." Hmmm... Very interesting...

Speaking of Gold... I had a long discussion with a long time customer last week in Las Vegas at the Money Show. We were discussing Gold confiscation... Again, I said it before and I'll say it again, I don't believe the Gov't would do this again... But... The customer gave me something to think about. In "his scenario" the Gov't devalues the dollar, and pushes Gold to $10,000 an ounce... Well... Now that's "out there"... But as a Gold holder, I certainly would love to see $10,000 an ounce... My problem is that I don't want to see what the U.S. economy looks like with $10,000 Gold! It may not be worth it folks...

OK... Before I go to the Big Finish, I need to make certain everyone understands that the previous paragraph was just a "discussion" of scenarios... I'm not saying, and neither is my customer saying that we believe Gold is going to $10,000 an ounce! It was just a figure to use to see if I would "bite" at confiscation at that level!

Currencies today 5/21/09: A$ .7715, kiwi .6050, C$ .8765, euro 1.3795, sterling 1.5660, Swiss .9080, rand 8.3950, krone 6.4075, SEK 7.5990, forint 201.20, zloty 3.1850, koruna 19.35, yen 94.97, sing 1.4570, HKD 7.7525, INR 47.33, China 6.8247, pesos 13.03, BRL 2.0330, dollar index 81.18, Oil $60.73, Silver $14.25, and Gold... $940.67

That's it for today... $7 Billion more being injected to GM by the Gov't... The sound of that just doesn't give me a warm and fuzzy! I was sitting in the high school auditorium with my little buddy, Alex, last night at a meeting for football players and parents. Alex's football coach came up to him and told him he needed to "gain weight"... I had a major flashback... When I entered high school I weighed 125 pounds, and the football coach told me I needed to "gain weight", I tried and tried, but to no avail. The coaches even had me tested to see if I had a "tape worm"... But finally, the weight began to cling to me... And... After my football career was over, I had to fight to keep my weight down, now that I'm somewhat immobile, I really have a fight on my hands... And I can't stop thinking about how I needed to "gain weight" in high school! I told Alex, "I was a skinny kid like you at your age, look at me now... You had better be careful... Oh, look at how I've carried on with this story... Shame on me! I hope your Thursday is Thunderin'!

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

Riksbank Holds Off On QE...

Chuck Butler — Tue, 21 Apr 2009 13:34:22 GMT

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In This Issue..

* Currencies trade in a tight range...
* German Investor Confidence rises!
* Thoughts from Jim Rogers...
* Kohn on the economy...

And Now... Today's Pfennig!

Riksbank Holds Off On QE...

Good day... And a Terrific Tuesday to you! I'm staring at all this white space on the Pfennig template, and I absolutely drew a blank... I couldn't think of, or can't think of a thing to say! Whoa there partner! That can't happen! There's got to be something, anything, to talk about... OK! I'm back now, I really have no idea where that was going, it was an out of body experience! HAHAHAHA!

OK... The currencies traded in a very tight range yesterday, after the dollar had ambushed them on Friday and in the Sunday night trading sessions. It's been a week since we saw currency strength, other than Japanese yen. So, we should be due for a bounce. There continues to be more whispering about the eventual dollar weakness, but for now, it's not enough to get us back to where the dollar should be trading on a fundamentals basis.

The euro got a lift this morning when German Investor Confidence as measured by the think tank ZEW, rose to the highest level in nearly two years during April. WOW! The index rose to 13 from a -3.5 in March... Quite the turnaround, eh? It is reported that Investor Confidence rose due to the Gov't's efforts to revive the economy. Don't know if you follow this or not, but European stocks just posted their 6th consecutive week of appreciation... You have to wonder if the stocks are telling us something here... Like, has the financial crisis in Europe bottomed out and is now on the recovery path? Don't know... And like I always say, one report doesn't make a trend, just like one swallow doesn't make a summer.

Sweden's Riksbank met this morning and surprised the markets (and me) by cutting only 50 BPS (75 BPS was the consensus), and in the other more important announcement... Riksbank Gov. Ingves said, "measures such as buying bonds were not on the cards at the moment". So, no Quantitative Easing (QE) for Sweden, just yet... But, unless things turn around soon in Sweden, the Riksbank will have to come back to decide on QE at sometime in the future... But for now, the krona is seeing a nice bid, and rallying on the news...

You know... Yesterday I talked about Canada, and how I "believed" that the Bank of Canada (BOC) was going to introduce QE, and IF they did I would mark them off my Hit Parade... But, I didn't say that the BOC was going to do that for certain! So... They could put it off like the Riksbank did... We'll just have to wait-n-see! Of course, I certainly fully expect them to go that route now, rather than later... But, I'm just saying, you never know...

Fed Head Kohn, was speaking yesterday, and said something that I sort of agree with... Kohn said the, "U.S. economy may stabilize this year, and begin a slow recovery". Hmmm... Well... By the end of the year, I see unemployment, by BLS accounting methods, at 10%, maybe 11%... Of course if you count all the people that have seen their unemployment benefits expire, or people that are working part time jobs because they can't find full employment, the unemployment rate is probably somewhere around 16% now... And heading to 20% when all the heads are counted as unemployed that should be counted as such.

So... With that in mind, I have to wonder how the economy "stabilizes"... Credit will still be hard to find, and so on... But, I do believe that our -6% GDP now, will turn to something better by year-end... Maybe -1 or -2% or, we might even squeeze out a small positive number, which you would then hear the media and politicians claim, that "we're out of the recession"... HOGWASH! But, that's just my view on it... But, I liked the fact that Kohn at least sounded a bit worried, and with caution regarding the economy. Apparently he left Big Ben Bernanke's rose colored glasses at home!

Even with a small gain in GDP, the Fed will keep interest rates at current levels, as they can't appear to smashing the golden egg too soon...

The high flying high yielders, which basked in the early spring sun during March, have retreated to their dressing rooms, as risk aversion has cast a shadow on the high yielders. Risk Aversion is a result of the earnings season for equities. So, that means the like of Aussie, kiwi, rand, real, are all softer and not looking as perky as they did a couple of weeks ago. But... Once currencies and stocks hit splitsville, and get back to fundamentals, investors looking for any yield, no matter how small, as long as it beats the paltry yields they get now in the U.S., Japan, and most of Europe, will look to these high yielders... So... That could mean that buying them now, when they are cheaper than they were a couple of weeks ago, just might be the ticket! But who's to say that they won't get cheaper? Ahhh grasshopper, that's the dilemma we face everyday with every purchase we make, weather it be the Aussie dollar, or auto tires, or new computers... You see my point, I'm sure...

Speaking of the Aussie dollar... The Reserve Bank of Australia (RBA) just released their minutes of the last meeting, where the RBA voted to cut interest rates 25 BPS... It appears that the decision was a close one between no cut and 25 BPS. RBS Gov. Stevens believes the Aussie economy is well placed to rebound... All this has helped the A$ to remain above 70-cents overnight and this morning.

OK... I've been champing at the bit all morning to get to this interview in Barron's with our long time friend, and investment guru, Jim Rogers... I can't get to all of the interview, so I pulled out a few quotes that plays well with what I've been talking about... Here's Jim Rogers!

"Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn't last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous.

It's laughable on its face, but politicians think they've got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse."

He then talked about something that I've been talking about for a couple of months now... The Treasury bubble... Let's listen in...

"I am anticipating shorting bonds -- the U.S. long bond. It's about the only real bubble around that I can see right now -- other than the U.S. dollar. I am not shorting bonds at this moment because I've shorted plenty of bubbles in my day, and I have learned that you better wait because they go up higher than any rational person can anticipate. But my plan is to short the long bond in the U.S. sometime in the foreseeable future."

Isn't that amazing... I just talked about this again the other day!

So... The Gov't's "stress test" results are going to be revealed beginning this Friday... It will be interesting to see what the results are... But, I wouldn't get too excited about all of this, as I don't think we'll get a chance to look under the hood at these financial institutions... Not that I want to or have the time to anyway! But I'm sure there are those out there that would love to get that chance... Buzzzzzzzz, wrong answer! Thank you for playing, there's a nice parting gift for you at the door!

Yesterday, Leading Indicators for March printed worse figure than forecast, but the previous month's -.4% initial print was revised to -.2%... March's figure was -.2%... So... Leading Indicators is still telling us that there will be more pain to suffer through ahead... Hey! That's why they are called "Leading Indicators!"

The U. of Michigan preliminary reading of Consumer Confidence for the first two weeks of April, printed stronger than expected at 61.9, up from the previous month's total of 57.3... Of course when this report was compiled, stocks were still in rally mode... Before earnings season, etc. I doubt the final report will be so pie in the sky...

No real data to deal with today in the U.S. or Europe... So... Once again, focus will be on the earnings... We will get some more Fed speak this morning from Fed Head Hoenig... And then mid morning will see U.S. Treasury Sec. Geithner testify before the oversight panel... Would that be oversight on TARP or Tax returns? HAHAHAHAHA!

I did it again last week... I placed the kiss of death on a currency by talking nice about it! This time it was Indian rupees... Last week I talked about how the rupee had performed nicely / stealth like, under the radar... But, the rupee has now given back all that stealth-like gain! In the past, a move like this would have the Central Bank's hands all over it (with intervention)... But this move might just be associated with the high yielders, and the risk aversion.

Gold rebounded nicely yesterday, up about $15, and has added $3 this morning... Just didn't see right to see it getting sold like that last week... Maybe calmer, cooler, more intelligent heads took over!

Well... It's time to head to the Big Finish. We have a birthday girl here today, and I've got to get to work on my presentations for Bermuda! UGH!

Currencies today 4/21/09: A$ .7005, kiwi .5540, C$ .8075, euro 1.2950, Sterling 1.4535, Swiss .8555, rand 9.13, krone 6.80, SEK 8.63, forint 231.90, zloty 3.4125, koruna 20.90, yen 98.10, sing 1.5080, HKD 7.75, INR 50.41, China 6.8317, pesos 13.39, BRL 2.2375, dollar index 86.58, Oil $45.87, Silver $12.18, and Gold $888

That's it for today... Except to say a Big Happy Birthday to our accountant magnificent, Mary Owens... Mary is not only a magnificent accountant, but also a magnificent quilt maker! It's down to the last 5 hours for my fave show 24... It's so intense! Did you see the Washington Nationals' jerseys they had on Friday night? Nationals was spelled Natinals... How embarrassing, and they wore them! That's a shame, Washington waited so long for a baseball team, and now they have one that can't win, and a marketing department that can't spell! Crazy! The NFL Draft is this Saturday. Our Rams have the second pick... I sure hope they don't blow it! This team needs help! Good luck to our Blues tonight, they are down 3 games to none. Their goal is almost impossible.. Slim and none, and Slim just left town... But... You have to believe! I hope you have a Terrific Tuesday!

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

High yeilders continue to rally...

Chuck Butler — Mon, 23 Mar 2009 13:47:52 GMT

In This Issue..

* High yeilders continue to rally...
* Quantitative easing drives the markets...
* Inventories to drive inflation...
* Happy Birthday Chuck...

And Now... Today's Pfennig!

High yeilders continue to rally...

Good day... I'm back from a long vacation with the family down in Florida, I had a great time but it actually feels good to get back to work. But before I get started this morning, I want to compliment Mike on what a fantastic job he did on the Pfennigs while Chuck and I were in Florida. Mike jumped right in and cranked out some great information, setting the bar rather high for me. We have a busy week ahead of us, so better get right to it.

Currency investors continued to pull out of the dollar and move funds back into higher yielding currencies on Friday. The best performing currencies on Friday were the higher yielding commodity based currencies of Australia, New Zealand, and South Africa. Investors were eager to move money back into the higher interest rates available in these currencies as markets began to stabilize. With the Feds announcement last week that it will buy $300 billion of US government bonds, deflation is now a thing of the past. This purchase by the Fed monetizes the debt, basically pumping the cash directly into the markets. It is the most inflationary action the Fed can take, Bernanke has now put the printing presses in high gear. With deflation no longer a worry, commodity currencies have begun to look attractive again.

The Norwegian Krone was one of the top performers last week with investors looking to move funds back into this country which should benefit from the rising inflation. With oil moving back up, investors began to move back into the Norwegian Krone. But the Norwegian Krone has more than just oil going for it. Norway has solid economic fundamentals and a fully funded pension system, two of the main reasons it continues to be a currency which should be in everyone's portfolio.

Quantitative easing is what drove the currency markets at the end of last week, as Federal Reserve Chairman Ben Bernanke continues to try and drive down interest rates here in the US. As Mike wrote last week, Bernanke continues to do everything he can to drive interest rates down.

Today US Treasury Secretary Timothy Geithner will announce details of his plan to buy up to $1 trillion dollars worth of toxic assets from the banks who own them. His plan is to form a private/public joint venture to bid on these toxic mortgage assets, creating a 'market' for them and getting them off of bank's balance sheets. His hope is that with these assets removed, the banks will be able to start lending again. "By providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets," Geithner said in an op-ed piece published in today's Wall Street Journal. "The ability to sell assets to this fund will make it easier for banks to raise private capital."

But I still question just how effective his plan will be. After all, many of the same guys who decided to buy these toxic assets are still running these banks. Will private capital rush back into these banks whose management made these incredibly bad investment decisions? And removing the toxic assets from bank's balance sheets won't help the housing market, so homeowners who are upside down in their home loans still aren't going to qualify for new loans.

But Bernanke is going to try his best to 'manufacture' a refinance boom; hoping to help homeowners pull any equity left in their homes back out and get them to start spending again. But with home prices falling in the double digits across most of the nation, homeowners who are refinancing don't have much equity left in their homes. The ATM which was the American Home has run out of cash. And doesn't Bernanke realize that this is exactly what put us into this mess? Trying to hold down interest rates at abnormally low levels sure doesn't sound like an intelligent way to get us back out of this mess.

I spoke to a reporter from the WSJ last week regarding what both Chuck and Mike wrote about the decline in inventories and the inflationary impact these declines could have. I guess my quotes hit the edit room floor, as nothing ever showed up in print, but I read another story over the weekend regarding these inventories. The story said the news about global manufacturing was so bad, it might actually be good. You see, inventories serve as a cushion between demand and production. The theory is that with inventories down, as the recovery begins, there will be immediate demand on manufacturers to crank up production.

But as I pointed out to the Wall Street Journal reporter, production will undoubtedly lag demand. While many plants are sitting idle, some of the companies who operated them are now out of business. And those manufacturers who were smart enough to weather this economic storm are going to wait to make sure demand is here to stay before ramping up production again. Also, the record unemployment means many of the workers who will be needed to ramp up this production will have to be re-hired. Some will be able to walk right back into their old positions, but many will have to be trained. Also, the supply chain for raw materials and the shipment of finished goods will take time to get back to normal. All of these delays in production meeting demand will be inflationary, as more consumers will be chasing fewer goods on the shelves. So while I agree that the low inventory levels could allow manufacturing to recover more quickly, they also increase the likelihood of a jump in inflation as the recovery begins.

China helped to ease pressure on the US Treasuries after a Top Foreign-Exchange official said they will continue to purchase US Treasuries. "Treasuries form an important element of China's investment strategy for its foreign currency reserves," Hu Xiaolian said at a briefing today. "We will continue this practice". The announcement was undoubtedly aimed at stabilizing the US Treasury market, which faced selling pressure after Premier Wen Jiabal said he was "worried" about the safety of US Treasuries last week. As we have repeatedly warned our readers, the US is dependent on China's continued purchasing of our Treasuries. Without Chinese buying, rates here in the US would move up, and the currency would drop dramatically. While the pressure may be off for the short term, China will undoubtedly look to continue to reduce their purchases of US assets, and continue to diversify their reserves.

China isn't the only country which will be looking to diversify their currency reserves out of the dollar. Chuck spotted the following story on Reuter's over the weekend, and sent it to me to include in the Pfennig. It calls into question the status of the US$ as the world's reserve currency:

'A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.'

While we don't necessarily believe this move will happen overnight, I agree that countries will be looking to diversify their reserves.

It was Chuck's birthday yesterday, and he asked me to share the following paragraph with all of his readers:

Well, I'm sending this along to Chris on Sunday night. It's my birthday today... And I got to spend my day in the beautiful Florida sun, watching my beloved Cardinals play baseball, with my little buddy Alex, and my beautiful bride. My older kids went home on Saturday. All I'll add is that birthdays didn't used to mean too much to me, except when I was 16, and 21... But after my scare of almost 2 years ago, these birthdays mean so much more to me now, and to get to spend them the way I did today, I can only say, that I have been blessed. I thank you dear reader for another year, and will leave you with some words that my long time friend, Ed Bonawitz sent me today... "Remember, a birthday is Nature's way of telling you to eat more cake."

Currencies today 3/23/2009: A$ .6988, kiwi .5676, C$ .8105, euro 1.3642, sterling 1.4588, Swiss .8882, rand 9.4566, krone 6.3181, SEK 8.0676, forint 222.56, zloty 3.3463, koruna 19.601, yen 96.38, sing 1.5098, HKD 7.7502, INR 50.42, China 6.8332, pesos 14.083, BRL 2.27, dollar index 83.325, Oil $52.50, Silver $13.86, and Gold... 951.63

That's it for today... What a birthday present the Mizzou Tigers gave Chuck yesterday, hanging on to make it to the Sweet 16 for the first time in several years. I also want to congratulate my alma mater's basketball team, the Washington University Bears, as they repeated as NCAA Division 3 Men's basketball champions. The head coach, Mark Edwards, was my fraternity's faculty advisor during my undergraduate years at Wash. U and it is great to see his team so successful. The lady bears also made it to the finals but came up just short. Christine just came in and told me it is Chachi's birthday, so Happy Birthday to you Chachi!! Hope everyone has a Marvelous Monday!!

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

Hold on to your hat...

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

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In This Issue..

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

And Now... Today's Pfennig!

Hold on to your hat...

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

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

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

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

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

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

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

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

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

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

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

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

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

The Geithner Plan Day!

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

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In This Issue..

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

And Now... Today's Pfennig!

The Geithner Plan Day!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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