Daily Pfennig : Trade Deficit

Central Banks Diversify Out Of The Dollar!

Chuck Butler — Mon, 12 Oct 2009 14:42:45 GMT

.........But First, A Word From Our Sponsor..........
Countries poised to benefit from rising commodity prices: combined into one CD

That's the Global Power Shift Index CD from EverBank®. In one CD, get the currencies of 4 countries rich in natural resources-and whose economies may benefit from rising commodity prices. The CD equally combines the following currencies:

*Australian dollar
*Brazilian real
*Norwegian krone
*Canadian dollar

CD features: 3 and 6 month terms, no monthly account fees and $20K minimum to open. Apply or learn more at http://www.everbank.com/001CurrencyCDIndexGlobalPowerShift.aspx?referid=11808

EverBank is an Equal Housing Lender and member FDIC.
......................................................

In This Issue..

* Currencies rally VS the dollar...
* Reasons why the U.S. wants a cheaper dollar...
* Interest rate differentials...
* Trade Deficit narrows...

And Now... Today's Pfennig!

Central Banks Diversify Out Of The Dollar!

Good day... And a Marvelous Monday to you! An absolutely awful weekend for our professional sports teams, as the Cardinals, Blues, and Rams all lost! The Cardinals were swept out of the playoffs! UGH! Talk about a downer for yours truly... I sat there, at the game, with my little buddy, and beautiful bride, and saw the writing on the wall early in the game... No life from those redbirds... And so, another baseball season comes to an end here in St. Louis...

Friday morning, after drying out from Thursday nights drenching, no wait, super soaking at Faurot Field in Columbia, I sat down to breakfast, and read the Pfennig... I noticed that Chris was on a roll about Geithner... I thought that it was a good finish to the things I said about him the previous day! Chris will have the conn on the Pfennig Tuesday through Friday this week...

OK... 3rd paragraph in before I get to the currencies, but Hey! Good things come to those who wait! HA! Well... The non-dollar currencies are back on the rally tracks VS the dollar this morning, after giving back some ground on Friday. The story that I brought to you on Thursday morning, about Central Banks diversifying, is really going around the block this morning... In case you forgot, the gist of the story was that Central Banks added to their currency reserves in the last quarter, and that they had put 63% of that new cash into euros and yen... For those of you keeping score at home, that's more than $80 Billion in one quarter!

No wonder, the euro and yen were taking liberties with the dollar in April, May and June... Of course, these two have continued taking liberties with the dollar in July, August and September, but we won't get the Currency Reserves data for another 3 months! But we all know what happened, and what has happened since March 1st of this year... Round and round we go, where we stop nobody knows!

Well... That is short-term wise, which over the years short term prognostications for currencies have proven to be very difficult to get right... Long term? Well, currencies for the most part make long sweeping moves, not one-way streets mind you, but long sweeping moves... And this long sweeping move by the dollar downward, is being aided by the U.S. Gov't! That's right, the U.S. Gov't, has shown a willingness to allow the dollar to weaken... Oh, yes, they carry on about a "strong dollar policy" and all that, but they don't back it up one iota... And, when we get down and dirty regarding U.S. dollar policy, it is my opinion, that the Gov't sees no way out... That they only chance they have to pay back debts, is with a cheaper dollar... That's it in a nutshell... The Gov't wants, and needs a cheaper dollar...

However, they don't want it overnight! They don't need it overnight! The debts aren't due right now... So, that's why you see them spit out stupid statements about a strong dollar policy, they all know that that's not what they really want, but they can't be seen as no willing to defend the dollar...

OK... I've given you Chuck speak... This is what I tell audiences all over North America that care to listen to me... It's all there in front of you... The deficit spending, the quantitative easing, the bailouts, the stimulus, the zero rate interest policy, the corporate scandals that go unchecked leaving foreign investors weary about their investments... And on and on and on... And then there's this little ditty, that should give you all the information you need to make the decision to diversify a portion of your investment portfolio out of the dollar... THE U.S. WANTS CHINA TO ALLOW THEIR CURRENCY TO GAIN VS THE DOLLAR!

When lawmakers, Central Bankers, U.S. Treasury Secretaries all go the China year after year, and beg, and plead, and whine, to the Chinese authorities that the renminbi needs to get stronger VS the dollar, what's a currency investors supposed to think? That's right, that the U.S. wants a weaker dollar, period.

Oh! And one more thing that's really scaring the bejeebers out of foreign investors including Central Banks, is the fact that the U.S. has this enormous national debt, and doesn't seem to care... U.S. lawmakers are oblivious to the deficit... In fact, they continue to look for new ways to deficit spend! UGH! This stuff just gets me going folks... If you could be here to see me pounding on the keys, shaking my head, and yelling at the wall, you might think I had gone crazy... Well, not as crazy as spending another, whatever, when we don't have it!

Last week, we had the former Fed Chairman, and the man I believe is at the roots of this whole financial mess we're in, Big Al Greenspan, talking about the economy, and the growth prospects, and what have you... I have no idea why anyone would listen to this guy... If you read Bill Fleckenstein's book on the Fed (Ignorance at the Federal Reserve... Greenspan's Bubbles) you'll have a Big Al's track record of wrong decisions, that go back to his days before becoming a Fed Head... Well... Ty sent me a note from James Kunstler's newsletter, where he jumped all over the Greenspan comments last week... This is a snippet of what James Kunstler had to say...

"Greenspan's greatest success may be to drive economics into such disrepute that it will be cut loose from the universities and only be taught by mail order or internet subscription from the same outfits that offer PhD's in astrology."

Now that's funny!

Alright then... Let's take a look around the horn, and see what's moving this morning... As I told you, the non-dollar currencies were back on the rally tracks VS the dollar this morning, and so, the Big Dog, euro, is moving higher, along with the Aussie dollar, Canadian dollar / loonie, and Norwegian krone...

Let's take the euro... Last week, The European Central Bank (ECB) met, and left rates unchanged, as suspected they would, and the risks were with ECB President, Trichet, after the meeting... When asked about the euro's strength, he simply repeated his statement from the previous meeting... Something about, the need for U.S. dollar strength... But nothing new, here folks, nothing to see, move along... I think his non-new statement was a indication that he's not willing to fight for dollar strength any more than he has, if the U.S. is not going to step in and join the fight! Memo to Trichet... You had better figure out who's going to be in that foxhole with you before you jump in! Bernanke? Geithner? YIKES!

The Aussie dollar (A$) continues to push the envelope of strength that a currency can gain by raising interest rates 25 BPS! I knew in my heart of hearts that a rate hike would underpin the A$, but didn't think it would be as beneficial as it has been... But then, maybe the thought that I shared with you last week, is gaining some credence... That thought? OH! I guess it would help if I reminded you what it was, eh? The thought, was that with the latest employment report showing such strength, that the Reserve Bank of Australia (RBA) would be back in November for another rate hike of 25 BPS!

The interest rate differentials just keep widening to the dollar, folks... And while, as I always say, interest rate differentials are the "end all" of currency valuation, it does go a long way toward attracting investment, and attracting investment goes a long way toward currency valuation! You know, the hip bone is connected to the leg bone, the leg bone is connected to the knee bone, etc., etc...

And while Canada certainly doesn't have a rate differential to the dollar, it does have the commodities, that are associated with energy... Oil, natural gas, and coal... If the prices of those commodities begin to rise it won't be long before we see the Bank of Canada (BOC) hike rates, whether the economy is ready for the rate hikes or not! And that thought has lit a fire under the loonie recently...

And finally, the Norwegian krone... Norway's Central Bank, The Norges Bank, resisted cutting rates to the bone, and while they never did get as low as the U.S. and Canada, they did get pretty low... But, remain higher than those in the U.S. and as I've said over and over again in the past couple of months, the Norges Bank will raise rates in 2009, so... That means the rate differential will widen.. And again, being forward looking, the currency markets' participants have taken the krone higher VS the dollar.

On the data front... Friday, the Trade Deficit narrowed for the first time in a couple of months... The thought is that the cheaper dollar during August, was the main reason for exports outpacing imports... While, a cheaper dollar won't cure the Trade Deficit completely, it certainly can put a major dent into it... So, here's another reason the U.S. Gov't would love to see a weaker dollar! Talk about "killing the golden goose"! If the U.S. Gov't were to talk up the dollar, it could very well, kill that golden exports goose!

We're still waiting for the Budget Statement to print folks... I'm always of the thought that the longer you have to wait for a piece of data to print, the more it's getting cooked, massaged, "adjusted"...

Wednesday this week, we'll see Retail Sales for September... The Butler Household Index (BHI) tells me that Retail Sales will be OK... Not negative, but OK... Not strong, but OK... Shoot Rudy, I even spent some money in September! But, my buying is small potatoes in the BHI!

Chris will bring you the results of the Retail Sales data along with the other data due this week...

So, to recap... The currencies are stronger this morning, with the euro leading the charge VS the dollar. The Central Banks diversification story that I told you about last Thursday, is really getting around the block, and causing dollar weakness. We went over the reasons for this diversification, and the willingness of the U.S. to just ignore their deficit, and spend more! Aussie, Norway, Canada's respective currencies join the euro with gains of their own VS the dollar... And... How the U.S. doesn't want to kill the golden goose... You'll have to read the entire report to get the details!

Currencies today 10/12/09: .9060, kiwi .7345, C$ .9680, euro 1.4760, sterling 1.58, Swiss .9725, rand 7.4150, krone 5.6390, SEK 6.96, forint 182.50, zloty 2.88, koruna 17.49, RUB 29.52, yen 90.10, sing 1.3970, HKD 7.75, INR 46.48, China 6.8228, pesos 13.21, BRL 1.74, dollar index 76.22, Oil $72.97, 10-year 3.38%, Silver $17.89, and Gold... $1,053.92

That's it for today... Happy Columbus Day! Did you know that bricks and mortar Banks are closed today, along with Federal offices, including the Post Office? Then why am I here? Oh! That's right, we're an internet/ direct bank! It will be a short day for us though, as we'll get everyone out of here early afternoon, hopefully. I'm headed to corporate meetings this week... I'm like the bull in the China Shop when it comes to being "corporate"! It rained so much here last week... The rivers and creeks were all over their banks... But the weekend was beautiful fall weather, ruined just a wee bit by the play of our teams! But, I won't go into that any more! It rained so much that my little buddy, Alex's, football game was postponed, now this weekend he has a game on Saturday and Sunday! OK... Onto my "other job"... HA! I hope your Columbus Day Monday is Marvelous!

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

ECB & BOE leave rates unchanged...

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

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

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

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

And Now... Today's Pfennig!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Patriot Day...

Chuck Butler — Fri, 11 Sep 2009 15:28:01 GMT

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

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

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

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

In This Issue..

* Currencies have strong rally!
* Trade Deficit jumps 16.3% in July!
* HR 1207 Gets a hearing!
* Gold gets back to $1,000!

And Now... Today's Pfennig!

Patriot Day...

Good day... And a Happy Friday to one and all! Today is Patriot Day in the U.S. and a day that brings back memories of cowardly attacks on our country 8 years ago. I remember the shock and horror on everyone's faces, and that image will remain with me to the grave. I also remember trying to write the Pfennig the "day after"... It just didn't seem that important of a thing to do, but a reader told me that to keep things as "normal" as possible was the best thing I could do... So... I wrote...

OK... The currencies, and this time I mean the majority of them not just euro and yen, added to their gains this week VS the dollar yesterday... The Big Dog, euro, is once again knocking at the door to 1.46... Who's that knocking at the door, Who's that ringing the bell? Do me a favor, open the door, and let 'em in...

The dollar index has really tumbled this week... Recall when I told you how the dollar index was put together, that euros were really overweighed in the index, which means that even yesterday morning, when the dollar had rebounded a bit against the commodity currencies, the dollar index still lost ground, due to the euro strength... So, once again, I tell people that the dollar index isn't a currency... To get real currency exposure, you must own the currency... And yes, you can buy all the ETF's at Gary's Stocks and Bonds you want, you can't get the currency out of an ETF... So, if things come to push and shove, you may just want to have the ability to own the currency, eh?

Ok, I really went off on a tangent there... What I was working toward with the comment about the dollar index tumbling is that today marks the 6th consecutive day of the index falling in value, the longest such streak for the dollar index since March, when the dollar began going into the tank once again. And a lot of traders and such use the dollar index as an indicator... Well, fellas... That indicator is telling you something!

But I didn't need the dollar index to tell me the negativity toward the dollar had begun growing again, and that risk assets are the king of the hill right now... And what is being used as the "funding currency" to purchase these risk assets? That's right... The dollar!

The Japanese yen has joined its currency brothers and taken up the fight against the dollar... For the longest time, dollars and yen traded in tandem... But this week, things have changed, and yen is gaining VS the dollar... In fact, yen just went below 91! A stock company in Tokyo issued a report last night that said, "if the yen falls below 90 it may spark a downward spiral"... Hmmm...

The thing I pointed out to the boys and girls on the trading desk was that it was almost like "the old days"... The U.S. printed some bad data, and the dollar got sold! Now, that's the way it used to be! The data I'm talking about is the Trade Deficit for July, which registered its biggest increase in more than 10 years in July, as surging purchases of oil caused an unprecedented jump in imports. The deficit widened by 16.3%, its largest percentage increase since February 1999, to $31.96 Billion. That's up from the $27.49 Billion Deficit figure in June.

The trading pattern for a long time now was to buy dollars when bad data printed, (safe haven, they thought!) and the currencies would suffer... But, yesterday that changed, at least for that piece of data it did. Like I always say... One swallow doesn't make a summer... In this case, one "fundamentals trading day" doesn't make for a new trend... But it could be a start, and one that I would welcome with open arms!

We'll see how that holds up today... On this Friday, the 11th of September, Patriot Day, we'll see the Monthly Budget Statement, which should be quite a doozy, and the U. of Michigan Consumer Confidence... Probably split down the middle as far as negativity toward the dollar, unless that is, the Consumer Confidence surprises on the downside... But with the stock market kicking rear and taking names later, I would be shocked if Consumer Confidence was weak!

The Monthly Budget Statement, read Deficit! Is forecast to print a whopping addition to our already eye-popping Budget Deficit, of $140 Billion! Recall that we all thought last month's deficit of $111 Billion was bad... Well, we'll see your $111 Billion, and raise you $29 Billion!

That's just shameful folks... We, as a country, continue to spend what we don't have, and print money, and do all the stupid things that got us to this place to begin with! Pursuing the same stupid policy of excessive spending, debt expansion and monetary inflation can only compound the problems that prevent the required corrections. Doubling the money supply didn't work, and neither will any amount of money supply!

I read this somewhere, forgive me but I don't recall where, and it stuck in my head... "Buying up the bad debt of privileged institutions and dumping worthless assets on the American people is morally wrong and economically futile."

The Chinese see what we're doing folks... And they don't like it one iota! Why does that matter, you may ask? Ahhh grasshopper... Come, sit... Did you ever borrow money from your parents, grandparents? (I didn't, but I know how it works) Well, in the presence of the people you borrowed money from, you are thrifty, and show that you are doing what it takes to pay them back... Hmmm... Think of China as the parents that have lent money to the child, the U.S. They see us as doing harm to their money...

I know, that I've talked about this so many times before that you're tired of hearing about it... But, China is the gate keeper folks... We were stupid enough to get to this place, with all our deficit spending, and now... As my mother used to say... You made your bed, now lay in it!

Well! Someone opened the door and let the euro in! The single unit just traded above 1.46! You, are my shining star! Well, wait a minute here, Chuck... There are a lot of shining stars in the sky for us to see, especially when you get out into the country away from the city lights! In the case of currencies being shining stars... Aussie, kiwi, real, loonies, Swissie, krone, are all up there in the sky to shine for us all!

I know that a lot of people do not believe in the Chinese economic growth story... That's OK... But without it, we wouldn't be having this rally in risk assets... So... I tend to go along with it, until somebody can prove to me that the Chinese data is bad... For instance, last night, China reported that their Industrial Production rose 12.3% in August VS a year ago. I told you long ago that China would be the first country to come out of the global recession... And they have proved that to be bang on!

I received a note yesterday that put a smile on my face... The note was from the "Audit The Fed Coalition"... I've made such a stink about the need to audit the Fed, and to support Ron Paul's HR 1207, Bill that calls for such an audit, that these people have made me an honorary member of their coalition! Any way... The note said that House Financial Services Committee Chairman Barney Frank has officially agreed to hold hearings on HR 1207! The hearings are tentatively scheduled for Friday, September 25 at 9:00 am.

This doesn't mean we're home free here... It just means the Bill will take the next step toward giving the American people the ability to see the man behind the curtain, and where the money is going, etc. in other words, the Fed would have to defend itself to the American people...

And this has nothing to do with currencies and economies, but I have to get this off my chest... I read where U.S. Treasury Sec. Geithner, has proposed that bankers get paid in equity, something that can be "clawed back" if the bank doesn't perform. This reminds me a Gov. we had here in Missouri years ago, he said he wouldn't raise taxes without a vote of the people... But after being elected he raised the taxes without a vote by the people... But he also then put in place a law that prevented any other Gov. from ever doing that in the future... This is the same thing with Geithner... He would have stomped and whined for days years ago if they told him his pay would be in equity rather than cash...

OK... I'm back now... Hey! Gold is back above $1,000! Yesterday, it was $984, when I went through the currency round-up... And I had told you all that my new thing was to look to buy on the dips below $1,000... BTW... I wrote my Gold piece I told you about the other day, the Publisher rejected it! YIKES! Back to the drawing board!

OH! I almost forgot! The Bank of England (BOE), and the Bank of Canada (BOC) both kept rates unchanged as expected... The BOC, which I took to the woodshed yesterday morning, maintained their "conditional" commitment to keep rates at .25% until near the end of 2010... Again, I just don't see how they can make that statement... The data in Canada lately has shown signs of a nascent recovery... I would think the BOC would have to move earlier should this recovery get legs...

And... Finally, I've complained for years about this guy and his jawboning and dissing his own currency, and he's at it again... Reserve Bank of New Zealand's (RBNZ) Gov. Bollard, said, "the currency's gains are undesirable and unhelpful for an export-led recovery"... Now, that's true in one sense... But, not completely true! Look at the euro! It's strong, and Germany's exports are rivaling China's! I feel bad for kiwi... It's just not right for a Central Banker to talk about wanting his country's currency to be weaker! Where have you gone, Don Brash?

Don Brash, was the Gov. of the RBNZ years ago and understood the "perception" that a strong currency gives to a country! I met Don Brash years ago, and in fact have a picture of him with me! Oh well... A little history never hurts!

So... Let's recap... We have a strong currency rally going on, after the U.S. printed an awful one month increase in the Trade Deficit. The euro has scratched and clawed its way back to 1.46 this morning, and we're holding our breath for the Monthly Budget Statement today...And Gold is back to $1,000!

Currencies today 9/11/09: A$.8650, kiwi .7085, C$ .9295, euro 1.4615, sterling 1.67, Swiss .9655, rand 7.57, krone 5.91, SEK 6.98, forint 186.66, zloty 2.86, koruna 17.44, RUB 30.73, yen 90.80, sing 1.4210, HKD 7.75, INR 48.46, China 6.8290, pesos 13.41, BRL 1.81, dollar index 76.59, Oil $72, 10-year 3.35%, Silver $16.88, and Gold... $1,002

That's it for today... American Flag on the house today for Patriot Day... And tomorrow, it gets changed to my BIG M Flag... M for Mizzou! Or for those of you out of the state... The University of Missouri! Tomorrow is my little buddy Alex's first football game of the year... He's in 8th grade now, and the size difference of these boys at this age is amazing! Alex is on the small side, but so was I when I was his age! I don't worry about him out there, because he has a bulldog attitude, with a motor that doesn't stop on the Football field... I wonder where he got that? HA! Speaking of which, I watched some of that football game last night, the first NFL game of the year, and Troy Polamalu was something! OK.. Gotta go.. Just one last cheer for Old Mizzou, and those Lindbergh Flyers 8th grade team! Now... Let's get working on making this a Fantastico Friday!

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

A Rout On The Dollar!

Chuck Butler — Tue, 08 Sep 2009 14:35:19 GMT

.........But First, A Word From Our Sponsor..........
Countries poised to benefit from rising commodity prices: combined into one CD

*Australian dollar
*Brazilian real
*Norwegian krone
*Canadian dollar

CD features: 3 and 6 month terms, no monthly account fees and $20K minimum to open. Apply or learn more at http://www.everbank.com/001CurrencyCDIndexGlobalPowerShift.aspx?referid=11808

EverBank is an Equal Housing Lender and member FDIC.
......................................................

In This Issue..

* Currencies rally strong!
* China is upset with printing of dollars...
* The UN talks of a new currency...
* Unemployment rate rises to 9.7%

And Now... Today's Pfennig!

A Rout On The Dollar!

Good day... And a Terrific Tuesday to you! A long Holiday Weekend, that was quite good for yours truly! A great tailgate, a great Missouri Tigers victory, 3 of 4 for the Cardinals, a great end of summer bar-b-que at the Butler House, and a day to recharge the batteries... Really couldn't ask for much more... Yes, the weather could have cooperated a bit better, but, hey, that's nitpicking!

Well... Last night I was checking the markets to see what was going on, since I had walked away from the desk on Friday afternoon... And much to my surprise, the currencies, led by the euro, seemed to be breaking out of their recent trading ranges. The euro was trading 1.4335, when I checked then... And when I turned on the currency screens here at the office this morning, the euro has stretched that move to the 1.4480 level! WOW! Looks to me as though the deficits that the dollar drags around are not looking to sharp to investors... But then, what took them so long to dump that fashion faux pas? Ahhh, grasshopper... As I've said many times before... The markets will do what they are supposed to do... Just not when... Which means, sometimes you have to wait... And wait... And think that they guy ranting each day in the Pfennig is barking up the wrong tree!

Chinese stocks were up 2% overnight, so that has led to even more risk taking this morning in Europe... Wait till the "Big Boys" get back from the Hamptons this morning and see what's gone on since they left for their 3-day Holiday weekend!

You know when the dollar is not faring well, when not only the usual suspects of euro, Aussie, kiwi, loonies and francs are taking liberties with the dollar, but also the Japanese yen... And THAT folks, is an indication to me that maybe, just maybe, cause you never know, fundamentals could be coming back to the head of the class. Oh! And one other thing, that puts a nail in the dollar's coffin is, last night I checked the price of Gold too... Then it was $999. This morning... It's $1,005!!!!!!

So... We've got euros kicking tail and taking names later, and Gold kicking the dollar when it's down. We've seen this type of rout on the dollar before... They used to take place at least once a week before the financial meltdown in August of 2008... And before the collapse of Lehman Bros. That's when the markets, traders, and investors, all had their eye on the fundamentals ball, and whacking the dollar out of the park whenever another piece of bad data came the dollar's way.

If this is the beginning of another period like we saw pre-August 2008, then get strap yourself in, and make certain to keep your arms and legs inside at all times during the ride! If it's a false dawn, it sure is a strong false dawn!

One of the best writers for a newspaper, that I've come across is Ambrose Evans-Pritchard, and I came across an article he did this weekend... This news could also be one of the reasons the dollar is getting sold across the board this morning. Here's a snippet of the story...

"Cheng Siwei, former vice-chairman of the Standing Committee and now head of China's green energy drive, said Beijing was dismayed by the Fed's recourse to "credit easing"... He went on to say, "If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies."

So... According to a top member of the Communist hierarchy... The U.S. Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy... Shouldn't that be enough to compel other owners of dollars to do the same? I would certainly think so, folks... I would certainly think so!

And in a not so wide spread story... The United Nations (UN) is talking about creating a new global reserve bank to issue a new currency to protect emerging markets from the "confidence game of financial speculation... HEY! The UN said this... Not me! So... Those of us who have read the book, The Creature from Jekyll Island, have the conspiracy chills going down our collective spines right now...

Isn't this the second time this year that we've heard about a "global reserve bank"? The first time we heard about it, the IMF was to assume that role and issue special drawing rights (SDR's) as a global currency... Now, we hear something a big different, but it's the same folks... I'll tell you right now what they are doing... The "powers to be" are "getting us used to hearing about this" by releasing stories here and there... That way, when the time comes for them to unveil their plan to have a global currency, they'll be able to say..."We've been talking about this for a long time, and no on had a problem with it then!"

OK... Enough of the conspiracy stuff... Let's see what's going on with the other currencies beside euros and yen! Well, first off we'll get Central Bank meetings from the Bank of England (BOE), Bank of Canada (BOC), and the Reserve Bank of New Zealand (RBNZ), all on Thursday... I think that for the most part, the data that will print this week will be important, but all print as expected, which doesn't really move a market...

For instance... We'll see the latest Trade Deficit data, and Monthly Budget Statement... Those numbers will be not so great, but as long as they print as expected, they won't cause major earth movements. And as far as today and tomorrow are concerned the data cupboard is pretty bare, with only the Fed's Beige Book printing tomorrow afternoon... So... This rout on the dollar could get extended and push the envelope on dollar weakness...

In Australia, The August NAB Business Confidence and Conditions printed a very strong increase to put the report at a 6-year high... This report only leaves me to believe that the Reserve Bank of Australia (RBA) will probably hike rates as soon as October... Just thinking of the RBA raising rates lights a fire under the A$, and it's trading this morning at 86-cents and change...

The Canadian dollar / loonie is trading with some fire this morning after creating 27,100 new jobs in August! Canada's jobs report showed that 27,100 new jobs were created in August, when a decline of 15,000 was expected! Add this news to the one last week where Canada's output increased in the 2nd QTR, and one would have to begin to believe that Canada has exited their recession... However, the Bank of Canada (BOC) as they will prove this Thursday when they meet, has already stated that they will keep rates low until an economic recover is firmly in place and the downside risks have been put in the rear view mirror... So, the loonie won't get help from the BOC... But with Gold at $1,005, and Oil on the rise again... Well, I talked about this last week, and it's playing out... I love it when a plan comes together!

Speaking of jobs... The U.S. Jobs Jamboree on Friday held a couple of surprises... 1. the number of jobs lost in August was smaller than expected at -216,000... And 2. the unemployment rate rose to 9.7%... Oh! And the previous month's number was revised up from -247,000 to -276,000... Sneaky how that do that, eh? The media is all over the better than expected -216,000, and forgot to mention the upward revision to the previous month's number, which wasn't small potatoes either!

For many years, I've tried to get people to look at the revisions, the Weekly Hours worked, and the Avg Hourly Earnings to get the "real" beef from the Jobs Jamboree report... We just talked about the revision... The Weekly Hours Worked and Hourly Earnings were a non-event, with nothing to tell us that the economy is growing stronger, or that it's getting weaker... So, to me... The Jobs Jamboree was a washout except for the revision!

The Brazilian real got a boost yesterday, as it was announced over the weekend that a new offshore Oil reserve had been discovered. And I really liked what President Luiz Inacio Lula da Silva is proposing... The President is proposing that Brazil begin to form an Oil Fund, that would be similar to the one that I've talked glowing about for years, in Norway...

Speaking of Norway... The Norwegian krone, has taken a que from the euro, and really made a strong move overnight VS the dollar.

And in yet another step toward gaining a wider acceptance for their currency... The Chinese announced the issuance of renminbi denominated bonds in Hong Kong... This would be the first renminbi denominated bonds to trade in the Capital Markets, and a large step for the Chinese and their currency.

Speaking of the renminbi... The Chinese allowed the currency to gain VS the dollar by a wide margin overnight. This is the first significant move VS the dollar in some time...

And with all these strong currency moves... The dollar index has fallen to a low for the year at 77.24... This is a significant move, folks... Because... In the 1st QTR of this year, the dollar index got down to 77.40, and bounced higher from there... And here we are again... It was thought that the 77.40 figure would prove to be a resistance figure... But the dollar slid right past that figure... I would think that having the index remain below 77.40 for the day and overnight would be HUGE!

So... Before we head to the Big Finish... Let's recap... The dollar has fallen big overnight... The Chinese are not happy with the Fed printing dollars... The UN is talking about replacing the dollar with a global currency that is issued by a "new global reserve bank"... And all the currencies along with Gold and Silver are rallying on these things...

Currencies today 9/8/09: A$.8640, kiwi .6975, C$ .9350, euro 1.4490, sterling 1.6560, Swiss .9560, rand 7.5250, krone 5.9150, SEK 7.03, forint 186.90, zloty 2.8170, koruna 17.5475, RUB 31.32, yen 92.20, sing 1.4250, HKD 7.75, INR 48.47, China 6.8275, pesos 13.25, BRL 1.8410, dollar index 77.24, Oil $69.53, 10-year 3.43%, Silver $16.75, and Gold... $1,005

That's it for today... The boys and girls on the trading desk got to take a tour of our new space that's being created for us... Yes, the scheduled move to the building next door, is finally in stone! We'll be on the 7th floor of the tallest building around it, which means the views are something! So... How about them Tigers! Having 6 players drafted into the NFL didn't slow them down, at least it didn't against Illinois on Saturday! And, a very strong showing from my beloved Cardinals this weekend! Little Delaney Grace was quite the little show off on Sunday for all our guests... She's so darn cute! My darling daughter, Dawn, sent me a picture of her in a Missouri Tigers cheerleading outfit, the other day, and I had to show it the boys and girls on the desk (before working hours!) OK... I'm carrying on too long... Got to get this out the door... I hope your Tuesday is as Terrific as it can be!

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

Cash For Clunkers Is A Clunker!

Chuck Butler — Fri, 14 Aug 2009 15:13:00 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

Some experts believe these 4 countries may become economic powerhouses in coming years. Now could be the right time to add these currencies to your portfolio. And you can do so-safely-with the U.S. denominated MarketSafe BRIC CD.
Don't miss this unique opportunity. Deadline to buy the BRIC MarketSafe CD is August 18, 2009. Apply today or learn more at http://www.everbank.com/001CertificatesMSBRIC.aspx?referid=11808
.........

In This Issue..

* Currencies trade in a tight range again...
* U.S. Retail Sales are a clunker!
* RBA's Stevens is upbeat!
* Thoughts on Brazil...

And Now... Today's Pfennig!

Cash For Clunkers Is A Clunker!

Good day... And a Happy Friday to one and all! The end of the week... It's been a tough week for yours truly, as I've hobble around in pain all week. But, as I recall, I promised 2 years ago that I would not complain about these things in the future... So! I carry on!

Well... Front and center this morning... The currencies are trading near levels they were when I signed off yesterday morning. They did have a brief rally, after the U.S. Retail Sales data showed some real rot on the "recover is here" vine... But that rally was snuffed out, as the risk aversion campers came back to the markets...

Overnight, the Reserve Bank of Australia's (RBA) Gov. Stevens, game his semi-annual report on the Australian economy to Parliament, and he was quite upbeat... And not just about the Australian economy. Stevens was quite upbeat about most of Asia, including Australia's largest export country... Japan. I bet you thought I was going to say China! I thought that Stevens did a fantastic job of putting his thoughts out there for all to hear. Like, talking about how future quarters could show softer growth as the RBA removes "fiscal candy"... Good Show!

One thing is clear, at least to me, from this upbeat report, and that is I believe we can look for the RBA to hike rates aggressively in the first QTR of next year... And, if the future quarters are stronger than Stevens now forecasts, we could very well see a rate hike before we turn the calendar page on 2009!

Speaking of future rate hikes... Since Norway's Norges Bank moved to a tightening bias on Wednesday morning the Norwegian krone has gained 3.2%! Go krone, Go krone... I'm dancing in my seat. Carlos Santana is playing, dance, sister dance on the radio... It's all good... OK, I'm sure that's a sight you didn't want flashing before your eyes!

OK... So... Here in the U.S. we saw Retail Sales for July, which I told you yesterday was expected to be stronger because of the Gov't's cash for clunkers program... U.S. retail sales unexpectedly fell -.1% in July despite the debut of the government's "cash for clunkers" program meant to jump-start the auto business and help turn around the economy. So... Here we go again... The Gov't promises something, and it falls short of expectations... Looks like "cash for clunkers" is a Clunker!

That Retail Sales shocker yesterday really makes one stop to think about all the euphoria being exhibited about the end of the recession... So... When Retail Sales printed, you can understand the return of the risk aversion campers, eh? I wonder how this report fits into the Fed's view that the economy is "leveling"?

Today, we'll see the stupid CPI report... Just what we need on a Friday! A reminder of how the Gov't cheats those that are on fixed payments, and those that buy TIPS... Don't know what I'm talking about here? That's OK... You must be new to class! No worries! You see the Gov't began making changes to the way we calculate consumer inflation back in the mid 90's, and it's been a huge mess ever since! I'll just say this... Consumer inflation in this country has been grossly understated for 15 years... It was all done as part of a plan to allow interest rates to remain low, so that housing would become affordable for everyone... Now, that plan sure worked out well, eh? NOT!

So, enough of that! Let's talk about Brazil! Before I get into this, I must make this perfectly clear... Brazil is an emerging market, and with that moniker, they should be viewed as a speculation investment only, that is unless it's got principal protection like our BRIC MarketSafe CD! WOW, did you see how I segued right into that? Man... I are so smart!

OK, back to Brazil... I was reading a story on the Bloomie this morning about how a currency strategist at Standard Chartered Bank in New York, has forecast a level of 1.80 for the real by the end of this year, and 155 by the end of 2010... WOW! That would mean that on top of this year's already top performance of +27%, the real would add another 15% next year... That's all nice and sweet... But it is just a forecast by someone I've never hear of, so take that with how ever many grains of salt you wish!

Now that I have you all pumped up... OK, for a second there the old Hans and Franz Saturday Night skit, "were going to pump you up" flashed before my eyes... OK, were was I? Oh, now that you're all pumped up, I will remind you of what I said on Wednesday of this week... And that is, that I'm becoming very scared of this stock market run, and if it runs out of steam, the resulting sell off of stocks could adversely affect the currencies, since these two asset classes are being hog tied together, along with commodities!

Oh, and this just in this morning... Brazilian Retail Sales rose 1.7% in June beating the forecasts of a 1.2% gain. You would have to think that given the strength of this report that Brazilian domestic demand is growing and will contribute further to the thoughts that the Brazilian economy is going to rebound faster than most other countries. And when you have some of the highest yields in the world, and an economy rebounding faster than others, you get a ton of foreign investment into the country, which... Will drive up the value of a currency, which in this case is the real!

It's been a while since I last talked about Gold & Silver... And then I was reading a report written Sean Hyman about Gold, and decided to share with you some of Sean's thoughts... Sean believes that we'll see $1,300 Gold by the end of this year, and $2,500 Gold in 2010... He bases this on a number of things, but mostly on the fact that the IMF announced sales of Gold made earlier this year, is being completely offset by Chinese buying. With all the demand for Gold, having this huge IMF selling of Gold offset by the Chinese if HUGE! So... I thank Sean for his thoughts here...

Sean is a regular contributor to the FX University Daily newsletter that the Sovereign Society publishes... I'm a part of FX University, along with Sean. Speaking of FX University... Many of you know how the FX University did what we called "currency tours" last year, visiting 8 different cities to hold one-day classes on Foreign Exchange (FX)... That format is going to change... In February 2010, we'll hold a 3-day event in Scottsdale Arizona... So... The number of people able to attend these classes will be greatly reduced! I suggest that you visit http://www.worldcurrencywatchfxu.com/main/

OK... Thanks for all the positive notes about abolishing the Fed yesterday... I did receive a few that thought I had lost my marbles, and didn't have any problem telling me so! But that's OK... I didn't think it was going to be met with 100% approval / participation! Quite a few told me to join Ron Paul's bandwagon... I've been on his bandwagon for some time now! But for those skeptics to my call to abolish the cartel, I mean the Fed, I simply suggest you read the book: The Creature From Jekyll Island... But for an appetizer, I suggest you first read William Fleckenstein's book, The Age of Ignorance at the Fed, Greenspan's Bubbles...

And... Let me make something perfectly clear... This letter is Chuck's letter... And therefore it is Chuck's opinions, not those of the Bank! While I'm sure that I'm loved by one and all at EverBank, they do not influence my opinions, this is all me, folks... Just imagine what my poor beautiful bride has had to put up with for 33 years!

OK... We had some housecleaning to do this morning, I sorry about that, but just some things to get off my chest and out the door...

Before I head to the Big Finish, I wanted to talk a bit about Canada... While the U.S. was posting an increase in their Trade Deficit, Canada printed a narrowing Trade Deficit! Rising exports and falling imports resulted in a HUGE narrowing in Canada's trade deficit in June which came in at C$55 million, which was much smaller than May's revised C$1.1 billion trade shortfall... This is a nice piece of data for Canada, and I would love to see this deficit narrow further next month, and get back to the days of surpluses in Canada!

One would think this data to be a feather in the loonies' cap!

Currencies today 8/14/09: A$ .8435, kiwi .6820, C$ .9205, euro 1.4290, sterling 1.6565, Swiss .9360, rand 8.0550, krone 6.0250, SEK 7.1250, forint 188.50, zloty 2.8875, koruna 18.51, yen 95, sing 1.4425, HKD 7.7505, INR 48.25, China 6.8344, pesos 12.84, BRL 1.8230, dollar index 78.35, Oil $70.75, 10-yr 3.60%, Silver $15.10, and Gold... $958.70

That's it for today... I'm late, I'm late... It took me the longest time to write this today... My friend David Galland told me to use this voice system to write. I'll have to look into that, with all the writing that I do! Hey! I forgot to mention to Chicagoans that Chris is in Chicago to speak to the Chicago Investment Seminar sponsored by Taipan publishing... I just booked my flight to Williamsburg VA to speak at a private meeting of investors... I fly on Sept 11... That's kind of creepy to me, but I'll get over it! Next week it's the San Francisco Money Show on the weekend... Yes, I give up a lot of weekends, but, when I retire, every day will be a weekend! OK... The knee doctor says there's nothing major, and I go back for a shot relieve the pain and swelling on Monday... That's all good! I have to get going now, hope you have a Happy Friday!

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

Germany & France Exit The Recession...

Chuck Butler — Thu, 13 Aug 2009 14:59:59 GMT

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

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

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

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

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

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

In This Issue..

* Currencies rally...
* Eurozone growth unexpectedly stronger!
* FOMC extends QE...
* Norges is the first!

And Now... Today's Pfennig!

Germany & France Exit The Recession...

Good day... And a Tub Thumpin' Thursday to you! Well... Turn-around Tuesday came 24 hours later this week! HA! Yes, the currencies came back yesterday, but not with a lot of conviction... You see... Stocks rallied, but that doesn't mean what I talked about yesterday still won't happen... Be careful there!

The euro has received some additional love this morning, as the Eurozone's economic growth printed better than expected, albeit still negative... But... Germany and France showed growth, which I must say is very unexpected! That means that both Germany and France have exited the recession... Well, that is at least for now! For those of you keeping score at home, Eurozone GDP fell -.1%, which is far better than the -.5% that was expected... Oh! And this is for the 2nd QTR... You would have to think that data like this would be very good for the euro, and from the looks of it, that's exactly what's happening!

Whenever the Big Dog, (euro) gets off the porch to chase the dollar down the street, all the little dogs get to chase too... And so, the usual suspects have posted gains since yesterday morning, like Norway, Switzerland, Aussie and so on...

The BIG news yesterday was from the FOMC meeting, where the Fed Heads left rates at near zero, but were kind enough to tell us that their Quantitative Easing would remain in place through October... That's all nice and sweet, eh? So... What, are they going to do here, Buy some Treasuries out in the open and say see we told you we were going to do this, and then go back to the dark, smokey room and buy some more from the Primary Dealers just for GP? That just ticks me off! But there's not a darn thing I can do to stop them!

What I would like to do is to start a movement to abolish the Fed... OK, who's with me? I just had a chuckle, because that reminded me of the Will Ferrell Old School movie when he's trying to get people to streak to the commons... Come on now, if you've seen that movie, you know you're laughing right now!

I had a guy one time tell me, I know of no one that can talk serious one minute and go right into some funny thought, sing a song, or whatever the opposite reaction would be to the serious thought, like you do, Chuck... I thanked him!

But getting back to the thought of abolishing the Fed... Think about this for a minute... What good are they? Have we not had dozens of recession and one Great Depression since they were created? Have we not seen a 95% loss of purchasing power for the dollar since they were created? Let me tell you something else, folks... If the markets set the interest rates based on activity, we would never experience inflation or deflation...

OK, I'll stop there, I know that I've ticked off a few people that think the Fed walks on water, and is here to protect us financially...

Well... In news you won't hear on radio or TV... The U.S. Budget Deficit swelled to $180.7 Billion in July, from $102.8 Billion in June... Hmmm... Think about that for a minute folks... In June, when quarterly tax receipts should be enough to cover the expenditures, they not only were not enough, but they fell short by $180.7 Billion dollars! This is a combination of slower tax receipts because of the depression were in, and... The unsustainable deficit spending by the Gov't. Oh! And the Budget Deficit year to date is now $1.27 Trillion... But you don't see the knuckleheads in Washington D.C. doing anything about it, except for coming up with new things to spend more money on... I say fire them all!

Speaking of tax receipts... My friend, and writer & Marketing genius extraordinaire, David Galland, had this to say recently in one of his most excellent news letters... Here's David...

"I like the idea of also forcing the government to stop automatically withdrawing taxes from paychecks. Instead, wage earners would be responsible for sending out their tax payments on a monthly basis. By my back-of-the-envelope calculations, it would take about two months of writing out the big checks to Uncle Sam before people came to grips with just what government (or, in this case, one slice of government) is actually costing them. and out would come the pitchforks. We cannot afford our current level of government, and the sooner we get around to cutting it back, the better. Period." -- Thanks David... As always you think on a different level than the rest of us!

The Trade Deficit also grew larger in July as Oil prices rose... The Trade Deficit moved to $27 Billion from $26 Billion... Now, the Trade Deficit is much smaller than it used to be thanks to the depression, but, the fact remains that it is still nipping at the heals of the dollar like one of those small dogs, and whenever it is that the U.S. comes out of this depression, this figure will balloon once again...

Today's data will be dominated by Retail Sales for July, which because of the CARS program, will be stronger than usual, probably getting quite close to a positive 1% for the month... Less Autos, the data would be quite disappointing at just .1%, but, you know me... I don't like that taking this, that and the other thing out just so things look the way you want them to look!

It's also a Thursday, so the Weekly Initial Jobless Claims will also print. Recall that on Monday of this week I told you the data would get going again this week? Well, we've got it going on today for sure!

Yesterday, Norway's Norges Bank met, and while they left rates unchanged, they became the first Central Bank to move to a tightening bias! YAHOO! And the krone was the best performing currency yesterday and overnight on that news, as it should! Long time readers know my affection for the krone due to a number of reasons, but none so important than the fact that Norway has a financial surplus, has had one, has one, and will have one for as long as I can see... Norway didn't get involved in the sub-prime bond buying game... And they have a very strong Central Bank in the Norges Bank... Last spring, the NY Times, which I don't read for a number of reasons, but had this sent to me, called the Norwegian krone the safest currency in the world. Now... I like it when someone other than me climbs out on that limb, especially if your going to climb that far out!

Tonight, the Gov. of the Reserve Bank of Australia (RBA), Stevens will provide a testimony to the Parliament regarding the economy, etc. I think that the A$ traders are holding their breath until he speaks, as this could be a real market moving speech! But then it could also be as dull as watching paint dry...

The A$ is back above 84-cents after spending a couple of days down in the 82-cent handle...

OK... So... We had good news from Germany, France and Norway this morning... Not so good news from the U.S. though...

Realty Trac Inc. is reporting this morning that a total of 360,149 properties received a default or auction notice or were seized last month. UGH! Foreclosure filings in the U.S. climbed to a record for the third time in five months in July. All those jobs that were cut and still being cut, are having a real negative affect on this, and personally, I don't see this getting any better any time soon! UGH!

There's been a lot of talk about the news the other day that China's loan growth had seen a huge fall last month... A lot of people think that this is the end of China's growth... I see it differently... I see it as China just taking some air out of the balloon... They saw their economy moving ahead of the rest of the world at a very fast pace, and didn't want it to: 1. overheat, and 2. Have nowhere to go with everyone else in recession... Now, I'm sure a lot of you will say, Chuck... Doesn't China risk the chance of popping their economic bubble altogether? Well... Yes, they do... But, they knew how to administer stimulus to make the economy click, I assume they know how to pull some if back when they need to...

And... I just think about the fact that since 2003, I've seen story after story by writers that thought they knew what was happening in China, say the economic growth was going to slow down... And they were WRONG!

And with that thought... No wait! I've got another thing from David Galland... He said that Dan Ferris sent this to him... "Members of Congress should be compelled to wear uniforms just like NASCAR drivers, so we can identify their corporate sponsors." yeah, right on! Now that's change that's really change!

Currencies today 8/13/09: A$ .8440, kiwi .6795, C$ .9245, euro 1.4275, sterling 1.6625, Swiss .9315, rand 7.9675, krone 6.0220, SEK 7.1475, forint 188, zloty 2.88, koruna 18, yen 96.20, sing 1.4415, HKD 7.7515, INR 48.10, China 6.8337, pesos 12.84, BRL 1.8385, dollar index 78.50, Oil $71.64, 10-yr 3.73%, Silver $15, and Gold... $957.15

That's it for today... I had a long time reader send me a note yesterday and tell me that I have enough to worry about with the Fed, Treasury, deficits, etc. and shouldn't get worked up when the Cardinals lose a game they should have won... HA! Yes, that's correct! It is just a game... And yes, I'm talking about baseball, not the Fed, Treasury and deficits! HA! Well... I go to the knee doctor today, I'm afraid of what he's going to find... All I know, is that the pain, swelling and stiffness is much worse in this knee than it was in the right knee that I had scoped in 2003! UGH! My little buddy, Alex is home. He seemed to have grown 6 inches while at camp! OK... I must really be running late, as Mike, Suzy Q, and Mary are all here! So... Get that Tub Thumpin' Thursday going!

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

$75 Billion In New Treasuries This week...

Chuck Butler — Tue, 11 Aug 2009 14:43:47 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

In This Issue..

* Currencies adrift all day yesterday...
* Data prints begin today with Productivity...
* Stop to think!
* Chinese data is impressive...

And Now... Today's Pfennig!

$75 Billion In New Treasuries This week...

Good day... And a Terrific Tuesday to you! Well, no data yesterday left the markets drifting about the open waters. Stocks rebounded, which gave the risk assets a bias to be bought, but for the most part, the day was much like being a drift in the ocean, with no direction or cares!

That will all change beginning today with the Nonfarm Productivity report for the 2nd QTR... Long time readers know my dislike for this data, as I believe it simply shows that one person works longer hours! The Fed Heads used to be all over this data like a cheap suit, and probably still trip over themselves to see the data when it prints... But to me, it's not what Big Al Greenspan made it out to be...

Tomorrow is the big data day this week with both the Trade & Monthly Budget Balances printing for July... The Trade Deficit should tick up some, as Oil prices have gained in recent weeks, and the Monthly Budget Deficit? Oh my! It is forecast to be $180 Billion in the red! Which annualized would be more than $2.1 Trillion! But don't worry about it folks, no biggie according to the folks in Washington D.C. The Treasury will just issue more bonds, and the Fed will buy up any that don't get bought, and pay for them with money they printed up fresh that day!

You know that I'm be facetious with the "don't worry" talk... I've been talking about this deficit spending for quite a few years now... I like the fact that others have joined in now that the numbers have gotten so large they are as obvious as a man with a hatchet in his forehead, but at least they've joined the "stop the deficit spending movement"...

Speaking of The Treasury issuing Bonds... This week alone the Treasury will auction $37 Billion of 3-year Notes, $23 Billion of 10-year notes, and $15 Billion of 30-year bonds... Even using "new math" that brings this week's issuance to $75 Billion! That sound? That sound you hear is foreigners choking on all this issuance! Does anyone know how to apply the Heimlich maneuver?

The "got yield" scenario I talked about yesterday, didn't play out yesterday, as stocks came back... The A$ saw some selling along with kiwi, reals, and any other "high yielder"... The selling wasn't bad, so we can probably put it down to profit taking.

I'm doing some research on the years around the depression, looking at market movements, and confidence levels... It's amazing the things that were being said right up and to the stock market crash about how everything was fine... Then skip ahead to the 80's and you had the same things going on with lofty praises for the S&L industry, especially one by Big Al Greenspan, and then the S&L industry circled the bowl... Makes you wonder, and I'm not talking about wondering who wrote the book of love... No, I'm talking about how this should make you wonder, or question, what's being said about how great stocks are right now... When the President makes comments about "a good time to buy stocks", you've got to stop and think folks... Just stop!

OK... I wanted to give everyone an update on the popularity of the BRIC MarketSafe CD we introduced last month... With over a week to go until we reach the funding deadline, this CD has received a ton of newsletter writer coverage, and interest... The funding has gone quite well, and we expect to open this CD with a very large amount of cash... That's exciting for me, as I saw this as an opportunity to deal in "speculative" investments, without market risk, and jumped on getting this available to our customers...

I also wanted to follow up on the Jobs Jamboree data we talked about yesterday morning... I had a very nice reader tell me that I "hadn't fallen off turnip truck" as the participation rate fell! That's right! As she said to me... "So, all those poor men and women that were hit at the beginning of the recession have the great pleasure of no longer being counted as either employed or unemployed."

I also wanted to follow up on last week's talk on the Weekly Initial Jobless Claims that fell for the previous week... I had a reader who recently became unemployed in California tell me the problems with trying to file as unemployed! Let's listen in to him explain his attempt to file as unemployed...

"Filled out the unemployment application on-line the day I was laid off.
About four days latter they send you another form to fill out and return. If not returned immediately, you lose your benefits.

Received a letter indicating they would call me 7 weeks after applying, to determine eligibility. It is scheduled for September 27th at 1 PM to
3 PM.

About two weeks afterwards, found there is no way to reach a human. The only way to reach them is EMAIL, which takes a couple of days to respond. EMAIL has a canned response, we will contact you on Sept 27th."

OK... Enough of that! China came out with some data today... While exports continue to suffer the stimulus that the Gov't put into the economy, which made sense due to the fact that the Gov't had a war chest of cash to put into the economy, which is the exact opposite of the situation in most countries including the U.S. Chinese Industrial Production growth was strong, marking three consecutive months of improvement in Industrial Production. The ongoing recovery of domestic demand is good, while consumer demand keeps holding up well with July retail sales growth up 15.2% year-on-year...

Now, I fully understand how there can be questions about the validity of Chinese data... But come on! We don't live there, we have no idea! And they don't have a John Williams (Shadow Stats) to show everyone that the Gov't's official data prints are misleading and most times inaccurate!

I saw this report on the Bloomie this morning from Zillow... "Almost one-quarter of U.S. mortgage holders owed more than their homes were worth in the second quarter and that figure may rise to as much as 30 percent by mid-2010 as job losses and foreclosures climb."

That's depressing stuff... Very depressing... So! Before I go to the Big Finish, I've got to find a "feel good" story... Of course if I were the Gov't I would have a pocket full of those, to pull out whenever the consumers needed one! HA! But, I'm not the Gov't! thank goodness! Whenever I think of the Gov't, I think of those words that Ronald Reagan spoke regarding the scariest words a person can hear... "I'm from the Gov't and I'm here to help"

OK... The euro looks to be catching some wind in its sails this morning, as it has gained 1/4 euro since I came in... I know that's chicken feed, but Hey! You've got to start somewhere, and after Friday's bloodletting, the tourniquet was applied on Monday, and today maybe we'll see it gain back lost ground... For... It is "Turn-around Tuesday!" (well hopefully it will be!)

And if the risk assets (like stocks) are rebounding, Gold and Silver should be on the docket to rally too... And a quick look at the Bloomie tells me they are indeed, rebounding... So, now, let's go to the Big Finish!

Currencies today 8/11/09: A$ .8365, kiwi .6715, C$ .9125, euro 1.4170, sterling 1.6475, Swiss .9250, rand 8.13, krone 6.2125, SEK 7.28, forint 191.80, zloty 2.9370, koruna 18.19, yen 96.50, sing 1.4460, HKD 7.7505, INR 48.02, China 6.8350, pesos 12.96, BRL 1.84, dollar index 79.12, Oil $70.73, 10-yr 3.78%, Silver $14.43, and Gold... $947.60

That's it for today... I barely mentioned it yesterday, and have been remiss in not mentioning it before, but next week I head to San Francisco Money Show. San Francisco has always been one of my fave cities to visit, and last year I had a blast there, except for that red-eye I had to take home so I could be on the desk Monday morning! I played in San Francisco when I was a young man playing my guitar... Right there in the Cannery... Last year, we went across the peninsula to an awesome restaurant named the Cliff House... I hope to make it back there this year! But, the real reason I go there is to talk to audiences about diversifying, and what I see going on, and or happening in the future... It's just my thoughts, but I seem to fill the rooms, so that's a good thing! Nice win by my beloved Cardinals last night. I was in bed by the 6th inning when they scored all their runs! UGH! Time to go... Try to make your Tuesday Terrific!

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

Stuck In A Range...

Chuck Butler — Wed, 17 Jun 2009 15:59:22 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..

* A Turn Around Tuesday?
* BRIC meeting doesn't get covered by the media?
* Are the Bearer Bonds real or fakes?
* QTC's get Gov. backing!

And Now... Today's Pfennig!

Stuck In A Range...

Good day... And a Wonderful Wednesday to you! Remember last week, when I said that we had a "Turn Around Tuesday?" I came in this morning to find a story that Chris Gaffney had printed off the Bloomie for me... The writer refers to the price action yesterday as "Turn Around Tuesday!" OK... I for one, don't even begin to believe that I was the originator of a saying like that for the currencies... I just find it interesting, that a week after I make a big deal out Turn Around Tuesday that it is used in a story with much wider distribution than my little old Pfennig!

Cool Beans, eh? OK... Well... If yesterday was Turn Around Tuesday as the writer said, I sure didn't see it! We had a "stop the dollar at the 1.38 border" Tuesday... But a complete turn around from Monday's sell off, after Russian Finance Minister, Kudrin, threw a cat among the pigeons? Not that I saw!

We do seem to be stuck in a trading range of 1.37 to 1.40... With probes below 1.37 and above 1.40 short-lived. That's OK with me, at this point, but it had better not last too long, or traders will grow tired of the boring range... And, I will be yelling at the walls for some price action!

Well... The BRIC (Brazil, Russia, India and China) meeting didn't really bring about the Thunder and lightening as I thought it would... The leaders of these countries did discuss the need for a "more diversified monetary system to reduce dependency on the world's reserve currency." (read the dollar!) They also discussed selling bonds and swapping currency among the group. Now if we rewind back to Monday, I said that I thought this could be what they would do... The crystal ball was bang on that day! HA!

I can't believe the markets have allowed this to be swept under the rug... This could be colossal if it's carried through... And this way, all of them can smile and say they believe in the dollar and U.S. Treasuries while not dealing with them! Personally, I think the reason the markets aren't paying attention to these goings on, is that the media isn't covering it... The grip that the administration has on the media is really beginning to show just how tight it is...

One other thing from the meeting... The BRIC nations announced that they wanted to take a more active role in the world's financing system... And with $2.8 Trillion in currency reserves among the 4 of them... That would be more than a "kind gesture"...

Speaking of the media... I have to wonder what the media is thinking on this one... Here's the skinny... First of all, this story came to me a week ago... But at first, I thought, I had better make certain this is not a hoax before talking about it... What am I talking about? I'm talking about the report that two Japanese men were caught at the Swiss-Italian border with $130 Billion in U.S. Treasuries!!!!!!! Now, Chris and I were talking about this yesterday, and Chris said, "But I thought all Treasuries were book entry for some time now"... Yes, since 1982 (a great year, with the Cardinals winning the World Series!) Treasuries have been book entry only... So... The question I had from the beginning is "are they real or fake?" Because I didn't want to waste your time and mine if they were fake bonds... But apparently the someone believes them to be real...

Hmmm... $130 Billion in bearer bonds... Does this intrigue anyone? It sure does for yours truly. Does this mean that the U.S. Treasury has been printing bearer bonds and selling them under the cover of a dark night? That's the only explanation I can come up, IF THEY ARE FOR SURE REAL!

I don't know what to make of this except it has my attention, and I can't believe I don't see one story on cable news... But it's all over the news in Europe and Asia... More later, as additional news comes to light on this...

OK... Yesterday, I talked about the Current Account Deficit, which is expected to be $85 Billion for the 1st QTR... What I didn't talk about is that this would be the lowest level for the Current Account in a decade! And would represent just 1.5% of GDP. Now... I used to go out and talk about how the dollar entered the weak dollar trend in Feb. of 2002, after the Current Account Deficit reached 4% of GDP, which historically had been the line in the sand for currency issues...

But let's put this in perspective, eh? Back in 2001 and 2002, our GDP was running at 4-5%... It's now negative... So, maybe this won't be the harbinger to reversing the weak dollar trend, that it looks like on the outside... Besides, as I've said over and over again lately, the whole deficit talk used to center on the Trade Deficit (which account for the majority of the Current Account), and with the global recession going on, the Trade Deficit, while still having issues, is no longer the focal point... Instead, the Budget Deficit (the 2nd of the Twin Deficits) has taken the reins of the focal point... If it's not one thing it's another, my mother used to tell me! (the you-know-what disturber in me just has to make this comment... "no wonder the Current Account is lower, we don't report debts or the bonds that represent the debts!"... That's in reaction to the $130 Billion in bearer bonds!)

I came across a news story yesterday morning that caught my attention... It seems that the Gov't of Australia, has decided to put Government backing on state issued bonds like the QTC's (Queensland Treasury). This is HUGE for these issues, especially since the states in Australia were seeing downgrades in ratings! Now, the country of Australia has a higher rating, and these bonds will carry that rating, since they are now backed by the Gov.! The one thing it will do though, is tighten up the yield on these bonds... Probably by about 10-15 Basis points...

Why am I talking about this? Because... If the QTC bonds now have a higher rating, more institutions will be able to buy them, and the more investment in Australia, the more flows into Aussie dollars! The news brought the A$ back to 80-cents yesterday briefly... But this is going to take some time to work through. The thing here is that in the long run, this is good for the A$!

In China overnight, we had an announcement that could really become a problem with protectionism... China has introduced an explicit "Buy Chinese" policy as part of its economic stimulus program in a move that will amplify tensions with trade partners and increase the likelihood of protectionism around the world.

Now, long time readers know that I've always banged on 1. the Bush administration when they placed tariffs on Japanese Steel about 8 years ago, 2. Schumer and Graham for introducing a bill to place tariffs on Chinese exports to the U.S. Because... Both represent protectionism... And a currency will normally get taken to the woodshed for being associated with a country that takes protectionism measures...

So... Will this hurt the Chinese renminbi? Ahhh grasshopper, remember, the Chinese renminbi is a "manipulated currency". The Chinese Gov. decides what value the renminbi will be... So... In a regular floating currency scenario, yes, this would hurt the currency... But in China's situation, it's all different.

However, the reason I make a big deal out of this is that this announcement could lead to other countries placing their own protectionism measures to offset China... One protectionism measure, begets another, and another, and another... Oh boy! NOT!

Talk about smashing a bug! This would be just like doing that to the promises of a global recovery... Somebody stop them for they know not what they are doing! Or maybe the Chinese do...

Yesterday, Housing Starts in the U.S. surprised on the upside, and so did Building Permits... I don't like this for the simple reason that we already have an "inventory" issue with houses that have been built and not bought or occupied. But, the media was all over this new, because... It's the opposite from what I told you the day before that economists, Shiller, Roubini and Whitney had to say about housing! And the Housing Starts and Building Permits data flies opposite of the report this morning that mortgage applications fell 15.8% this month!

We also saw that Industrial Production fell -1.1% in May... So output was off sharply at factories, utilities and mines, in May, which is completely opposite of those that are saying the recession is over...

Today, in addition to the Current Account data, we'll also see the stupid CPI data for May... You never know what that data has in store for us, because the Gov't doesn't know what they want it to show for us yet! HAHAHAHAHAHAHA! Of course that's my feeling toward CPI, and I've explained it all many times over the years... But, in a nutshell, CPI is kept artificially low by the Gov't by re-weighting things that get too expensive, or substituting things that get too expensive... We all know why CPI is kept artificially low too, don't we? Yes... We do...

Now... I spent more time on CPI this month than I care to! It's just a dumb report that the media will be all over like a cheap suit!

I heard a great old song on the radio this morning that pretty much puts my feelings toward the direction of the country into words... "but you tell me over and over and over again my friend, ah, you don't believe we're on the eve of destruction." - Barry McGuire

And then, I see where the President is going to announce his sweeping regulatory changes today... Hmmm... Do you see what I see? This is a shift from markets driven regulation to Political regulation... Markets to politics... Somebody stop the madness! Serenity now!

Currencies today 6/17/09: A$ .7925, kiwi .6295, C$ .8805, euro 1.3865, sterling 1.6260, Swiss .9190, rand 8.0530, krone 6.4115, SEK 7.8350, forint 204, zloty 3.2580, koruna 19.2570, yen 96.40, sing 1.4580, HKD 7.7505, INR 48.08, China 6.8370, pesos 13.45, BRL 1.9735, dollar index 80.72, Oil $69.69, 10-year 3.67%, Silver $14.10, and Gold... $932

That's it for today... A pretty busy day for yours truly yesterday, with the monthly Review & Focus due, and the regular daily stuff all rolled into one day... Thank goodness, Chris and Mike help me with the Review & Focus these days! Speaking of the Review & Focus, I did a story on whether inflation or deflation is worse for an economy... You'll want to check that out, when it shows up in your mailbox! Hey! My beloved Cardinals scored more than 2 runs in a game last night... YAHOO! It's been a tough month for the redbirds, a June Swoon, if you will. Last night's game VS the Tigers reminded me of the 2006 World Series match-up, and we all know the outcome of that series! 10th World Championship for the Cardinals! OK, enough of that, time is a wastin'! I hope your Wednesday is Wonderful!

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

Who's Foolin' Who?

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

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

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

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

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

In This Issue..

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

And Now... Today's Pfennig!

Who's Foolin' Who?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OMB Makes New Deficit Forecast...

Chuck Butler — Tue, 12 May 2009 17:08:33 GMT

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

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

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

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

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

In This Issue..

* The BLS adds jobs...
* Growing Deficits again...
* Jim Rogers....
* A Trade Surplus for Canada...

And Now... Today's Pfennig!

OMB Makes New Deficit Forecast...

Good day... And a Terrific Tuesday to you! Well... I'm here! Lost Wages... No I mean, Las Vegas! It's such a long flight here! UGH! And the plane was packed... Like I said about a month ago, when you take a flight, it sure doesn't seem like people have cut back on spending!

OK... Well, the currencies took a breather VS the dollar yesterday, and basically traded right around the currency round-up levels most of the day. Overnight, things were pretty quiet too... The markets are trying to figure out which way they are going to go with the dollar... The Deficit is growing, which SHOULD be bad for the dollar, but in recent times, fundamentals get a little hazy at times. So... Let's go to the tape on the Office of Budget Management (OMB)

The OMB reported yesterday that they were revising the Budget Deficit for this fiscal year, which ends Sept. 30th. Get this folks... The OMB says that this year's deficit will be 12.9% of GDP, and next year's deficit will be 8.5% of GDP... OUCH! Now... Let me put these figures into some framework... First of all, back in 1985, finance ministers of the world met at the Plaza Hotel in New York, and were scared to death that the U.S. deficit was out of control... At that time it was 2.5% of GDP! The Plaza Accord called for a weaker dollar to deal with this, what was called out of control, deficit.

In 2001, the U.S. Deficit reached 4.5% of GDP, which historically meant that a country experiencing debt levels at 4.5% of GDP would experience a currency crisis, or at the very least a major debasing of the currency....

Now skip forward to today... 8.5% of GDP? Where the heck are the finance ministers of the world now, and why are they scared to death regarding this out of control deficit? The only country crying wolf at these figures is China! Oh... And one more thing about the 8.5% of GDP... This is the highest level our debt has been in 60 years, since the end of World War II...

I shake my head in disgust... What has become of our republic... Oh... And to add injury to insult... This morning, the Trade Deficit, which had fallen recently due to the recession, actually gapped up 5.5% in March... That makes sense to me, actually... You see, the dollar was still "stronger" in the first part of the year, thus eliminating the ability for exports to make a dent in this Deficit... The sharp narrowing of this deficit looks to be leveling off, and once again, that does not bode well for the dollar... The return of the Twin Deficits could be in cards once again, and that could be devastating once again for the dollar.

Oh.... And one more thing on the Jobs Jamboree from Friday, that I completely forgot to talk about yesterday... The jobs created were "ghost jobs"! The totally insane Bureau of Labor Statistics (BLS) added... 226,000 jobs from what they believe was "business creation"... WHAT? Are you kidding me? What a bunch of dolts! Business creation during a recession like this, that would add 226,000 jobs! I'll tell you what happened here... The Gov't needed this report to show some sunshine... And voila! The BLS came through! But here's the rub... It will lead people back into the markets artificially... If losses come, then the BLS should be held responsible for this artificial attempt to make us feel good! OH... And don't forget, in a future month, the BLS will have to take these out because they won't materialize... And when they do... That month's jobs data will suffer... But hey! I can hear the dolts over at the BLS now... Just push it down the road for somebody else to deal with....

I'm watching, the best I can that is, from the road, the euro go on a run here this morning, and 1.37 looks like it could very well be its next stop. The flight to safety (read Treasuries) seems to be wearing off, and I've told you time and time again in the past, right here, right now, that when the "BIG GUYS" grew tired of the paltry yields in Treasuries, they would unload them as swiftly as they bought them, and that would cause the dollar to be under severe pressure... I'm not saying that this is what's happening right now... But it sure has the smell of it... Yields on Treasuries have been rising, which indicates selling, as the prices of the bond goes down with the sales... And the dollar has been teetering...

Our long-time friend, Jim Rogers, was interviewed on Bloomberg TV yesterday... And it's always of importance what Mr. Rogers has to say... So let's listen in to Jim Rogers!

"The dollar's rally is set to end in a currency crisis," said Jim Rogers on Bloomberg TV... He went on to say... "We're going to have a currency crisis, probably this fall or the fall of 2010. It's been building up for a long time. We've had a huge rally in the dollar, and artificial rally in the dollar, so it's time for a currency crisis."

I'm with you Jimmy! This artificial dollar rally has lasted way too long! But, if you look at the move in the currencies since March 1st, that I put in the Pfennig yesterday, then we may be on to something here... My problem is the link with stocks that currencies have held onto for a few months... I just can't get my arms around the fact that "all's right on the night" in the financial markets, that the recession is nearing an end, and stocks will continue to rally... I just don't see it that way, and if the currencies hang on to this link, then that wouldn't be a good thing... BUT! This is a runaway bus at this time folks, and you won't see me stepping in front of that bus! So... Let's just go with the flow!

Good news this morning from Canada, as their Trade Surplus increased to $1.1 Billion in March. The March figure was larger than expected... This is another in the list of things that have gone right for the Canadian dollar / loonie, recently... The news is tempered with the fact that imports saw big decline, which would be a representation of a slow economy. But, again, this bus is moving...

I've got to get going here, I speak in a couple of hours... I seem to be coughing a lot this morning, that's got to stop before I go on stage! So... This will be a bit shorter than usual this morning... I am... On the road!

Currencies today 5/12/09: A$ .7655, kiwi .6075, C$ .8615, euro 1.3660, sterling 1.5275, Swiss .9050, rand 8.44, krone 6.4270, SEK 7.7870, forint 204.65, zloty 3.2190, koruna 19.6180, yen 96.70, sing 1.4570, HKD 7.75, INR 49.32, China 6.8221, pesos 13.16, BRL 2.0590, dollar index 82.33, Oil $59.33, Silver $14.17, and Gold... 917.20

That's it for today.... I had a very nice dinner last night, and enjoyed the light show in downtown Vegas with my cohorts here at the show... Chris Gaffney, Jason Coots, John Ryan, Erica Phillips, and Pam Strickland... This is the largest, attendance wise, show that the Money Show people do... We go to Orlando, Vegas, San Francisco, and D.C. each year. It will be interesting to see how the recession affects the attendance at this show... As I recall, the Orlando show in February saw a huge fall in attendance... OK... The Conference Center here is about two football fields away from the hotel... So... I have to set out earlier for the trip than most people! OK... Time to go! I hope your Tuesday is Terrific!

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

A Huge Rally Gets Stopped!

Chuck Butler — Mon, 11 May 2009 14:41:07 GMT

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

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

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

In This Issue..

* Jobs Jamboree results...
* A double whack for Treasuries...
* The loonie is stealth like...
* Oil on the rise...

And Now... Today's Pfennig!

A Huge Rally Gets Stopped!

Good day... And a Marvelous Monday to you! I hope you enjoyed your Mother's Day weekend. Friday was absolutely crazy in the markets. The currency screens lit up, the price of Oil was on the rise, and Treasury yields were rising, thus pushing the value of existing bonds downward. An absolutely crazy day, that scared the bejeebers out of the Chinese... So, let's go to the tape to see what's going on here...

Front and center to talk about this morning, was the Jobs Jamboree... The mass media would have you believe that the recession has ended, and there are no longer any problems with the credit markets, and liquidity, not to mention the sorry state of financial institutions... Why? Because after the previous month's job losses were revised up from 663,000 to 699,000 (nobody cared about that!) the April figures came in at, according to the media, "just" 539,000... YAHOO! Let's have a party, according to what I kept seeing on the TV!

Well... Before we go and buy the party favors and balloons, let's take a closer look at the number, to see where the jobs were created... Something an old-time journalist would do, before claiming it to be party time! Well, what to my wondering eyes did appear? 72,000 jobs created by the Gov't. That's right... Add those back and the civilian job market did add / create some jobs... But not the lofty number of jobs the media would have you to believe. It's not that I want to see jobs lost, folks... I just want things to be reported correctly, so that investment decisions can be made on facts, not fiction.

So... Here's how I would have reported it... "April's job losses finally put a tourniquet around the labor market and created jobs for the first time in 6 months. The "absolute" number of jobs lost remained above 600,000, but, April's figures do give hope that we will see further gains in future months."

OK, enough of that! The hoopla over the labor data kick started the risk assets, as, if you recall, I said they would on Friday. Currencies led the way, with commodities in second, and stocks finally getting a clue later in the day. The Big Dog, euro, led the little dogs (the rest of the currencies) off the porch to really chase the dollar down the street. This chase lasted all day, and by late afternoon, I yelled across the desk that the dollar index has moved to the downside of its 200-day moving average! This move really lit a fire under the dollar bears, and they came out to play for the first time in a month of Sundays.

So, the risk assets were kicking some tail and taking names later... What was hurting? U.S. Treasuries! As I've said over and over again in the past, holders of Treasuries are growing tired of the paltry yields... And now, the currency the Treasuries were denominated in was getting hammered... The move out of Treasuries drove down the price, and pushed the yield higher... I doubt the Fed and Treasury are happy about that! The Fed will have to start buying more Treasuries to get the yield under control...

Another entity that wasn't happy about watching their $750 Billion or so, of dollar denominated Treasuries get double whacked like that in one day... The Chinese! How would you like to take on losses like that?

But really folks, yes, the price action in the currencies and Treasuries were violent on Friday, but... This has been happening for about 2 months now... Yes, we've seen the back and forth of these assets, but when you put a line on the 2-month performances, you'll see this wasn't just a one-and-done!

OK, so the Chinese watched all this and thought they were in a horror picture show! I saw a Chinese official try to wipe out China's harping about "the need for a replacement reserve currency"... Shoot Rudy, wouldn't you do the same thing?

So... The "backing off" by the Chinese, has everyone re-thinking Friday's price action... For if the Chinese are going to balk, the rest of the world needs to stop and take a breather. Again, folks, this is one of the very bad things that I've tried to explain to you over the years regarding the imbalances between the U.S. and China... With China doing the "rope-a-dope" regarding their call on the dollar, the euro and other currencies have backed off their lofty figures of Friday... The Big Dog, euro was nearing 1.37 on Friday afternoon, when I left for home... It's back down to 1.36 this morning...

The move on Friday proved to be just too fast... And the currencies are coming back to fill the gaps they passed up on Friday.

Did you hear that the Fed used a "different" method of valuing the banks? The Fed's "yardstick" Tier 1 Capital surprised quite a few observers... Many analysts thought that the Fed would use what's called "tangible common equity", which would look at the assets and make them accountable for unrealized losses... But NOOOOOOOOO! Had the Fed used "tangible common equity" the total hole the banks would be in would be $68 Billion deeper!

My dad used to tell me... Chuck, figures lie, and liars figure...

Not that I'm accusing the Fed & Treasury of just going through the motions on this... No wait, I guess that IS what I'm doing!

Let's go back to the mention above regarding the dollar index moving downward through its 200-day moving average... The dollar index is a measure of the value of the dollar relative to a basket of foreign currencies. It is a weighted geometric mean of the dollar's value compared to the euro (EUR), Japanese yen (JPY), Pound sterling (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF).

It was started in March 1973, soon after the dismantling of the Bretton Woods system. At that time, the value of the Dollar Index was 100.000 and has since traded as high as the mid-160s but also into the low 70s. It currently stands at 82.63...

The dollar index is heavily weighted toward euros...

Many institutional investors use the dollar index as their means of trading the dollar... And to see it fall through its 200-day moving average, was enough proof for them that the dollar is heading south.

The 200-day moving average, for those of you unfamiliar with this term, is a long-term moving average that helps determine the overall health of the asset, which in this case we're talking about the dollar. It is for all practical purposes a dividing line, if you will, between as asset being healthy and one that is not.

OK, enough of the lessons! I mentioned at the top that the price of Oil was on the rise Friday, and although it has backed off now, with the Chinese comments, for a while there on Friday, you could see the bubbling crude, black gold, Texas Tea, spouting off toward $100 again... Yes, Oil saw a $60 handle briefly on Friday... It's back down to $57.42 this morning... Now, that's one thing we DON'T need is a rising Oil price!

The Canadian dollar / loonie on the other hand, loves a rising Oil price! Recall, I told you a few times in the past that the loonie needs a stronger Oil price to really go a tear higher... But even with the move in Oil recently, the loonie has been moving steadily higher VS the dollar. When I say recently for Oil's move, I'm talking about the last 2 months... In the last two months crude oil is up +31% (since March 1st)... WOW! No wonder the loonie has gained almost 12% since that same March 1st date...

In fact, I just ran a currency scorecard using March 1, 2009 as my beginning date, and the currency moves since that date have been phenomenal! Except for yen, which is flat during the past two months. How do these sound? Kiwi +22%, Sweden +19%, Norway +12%, and so on...

The U.S. data cupboard is empty today, but gets restocked tomorrow with the latest Trade Deficit report... The way the Trade Deficit has been falling in the past 6 months, I might have to say Trade Balance, and not assume it will be a deficit some day! Well, the fall in the Trade Deficit is a direct result of the U.S. recession. U.S. consumers "finally", taking a breather on spending... The reduction in the Trade Deficit however, has NOT been a result of improving exports, which would be the preferable method of reducing the Trade Deficit. If exports were leading the way, it would mean that U.S. manufacturing was hitting on at least 6 of 8, and that would be good for the economy! But... Instead, we get a reduction from a lack of consumer spending... A combo of both would be great! But that's pie in the sky stuff!

We'll also see April's Retail Sales on Wednesday. March's Retail Sales were awful (-.9%)... I do expect to see April's figures to be stronger, according to the BHI... (Butler household index)...

At least all the rate cuts are over for this month. The Bank Stress Tests are a thing of the past, and we can maybe... Just maybe, return to the fundamentals!

Currencies today 5/11/09: A$ .7620, kiwi .6025, C$ .8655, euro 1.3580, sterling 1.5115, Swiss .9020, rand 8.3650, krone 6.4120, SEK 7.7375, forint 205.50, zloty 3.2280, koruna 19.6520, yen 97.80, sing 1.46, HKD 7.75, INR 49.50, China 6.8239, (see when China got spooked on Friday, they weakened the renminbi!) pesos 13.12, BRL 2.06, dollar index 82.63, Oil $57.42, Silver $13.83, and Gold... $912.50

That's it for today... I'm headed to Las Vegas today... So the Pfennig will be going out later the rest of the week, as I'll be in a different time zone... I'll speaking 3 different times at the Las Vegas Money Show. I don't know how I got signed up for 3 different times, but it is what it is... Cards get one of three from the Reds... Tough weekend for my beloved Cardinals! It was great seeing all the kids yesterday. Little Delaney Grace entertained us, singing songs and just being a toddler... I'm running a bit late today, as I had to finish packing for my trip this morning. I do not enjoy Las Vegas, so, this is one of those trips where you can't wait to get there, so your time there can start and get on toward leaving! On that note... I hope your Monday is Marvelous... And you have a wonderful week!

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

Budget Deficit Triples!

Chuck Butler — Mon, 13 Apr 2009 13:51:00 GMT

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

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

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

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

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

In This Issue..

* Currencies rebound
* Budget Deficit makes up for Trade data...
* China's currency reserves continue to grow...
* High yielders are best performers...

And Now... Today's Pfennig!

Budget Deficit Triples!

Good day... And a Marvelous Monday to you! And a Happy Easter Monday to those who get the day off! I'm still battling this, whatever it is that I have, which means I spent the weekend in the sick bay... UGH! Oh well, we carry on... But... Talk about short-n-sweet... That's today's Pfennig for sure!

The lack of volume on Friday didn't yield any wild swings, and the currencies pared their losses from the day before (trade deficit plunges)... This morning, the currencies, led by the euro, are moving higher VS the dollar, but at this point it's baby steps... The bias to sell dollars hangs over the currencies however... It seems to me that it's very much like trying to hold a kid back from ripping open their Christmas presents... It sure seems inevitable, but when is the question... As I used to say in my presentations, imagine if you will a big old Ford rambling down an icy country road, and it begins to spin out of control... You know for sure that you're heading toward that guard rail, and your Ford will make impact with that guard rail, it's just a matter of time....

Well... Some water and time has passed under the bridge now and traders and investors are dipping their toes back into the risk waters again. The Mayo comments last week, really threw a spanner in the works for the risk takers... But, as I said, time has now passed, and the comments are in the rear view mirror now. With risk back on the menu, the high yielders are the first to get attention... And the Aussie dollar (A$) is soaring this morning, passing the 72-cent figure this morning... And the Brazilian real has really taken some HUGE strides recently... In fact, in the past 3 months... The real is up over 6% VS the dollar!

And do you know what currency is at the top of the heap with regard to performance VS the dollar this year? That's right! It's the real!

Speaking of high yielders... The South African rand, which I've always said is too volatile for my liking, is the best performer in the past 3 months... So... With the A$, real and rand all percolating... You can see that investors are growing tired of paltry yields, and looking to higher yielding countries. Of course, whenever the cold wet blanker of risk aversion is thrown over the markets, the risk takers head of the hills... But, for now they are taking on risk, and that spells Happy Times Are Here Again for the High Yielders...

Of course, I laugh out laugh (LOL) whenever I say "high yielder" as if they really have "high yield"... Compared to the majors like the U.S., U.K., Japan, Canada, and even the European Union, these "are" high yields!

OK... Did you read the news, this morning, when the paper landed in your yard? China's currency reserves grew by 16% in the first QTR, VS a year ago... This puts China's currency reserves at $1.9537 Trillion, at the end of March... Hmmm... Makes you wonder, why the rest of the world doesn't treat China like E.F. Hutton, and listen to them when they complain about stuff, like the safety of its holdings... Yes, China has complained recently about the monetary policies the U.S. is using to keep the economy's pulse pumping.

Speaking of the monetary policies being used... Friday, the Budget Deficit printed... And has, right now (which is before a ton of the spending is booked) tripled to $957 Billion! That's in the first 6 months of the fiscal year... So... Let's just say, we don't spend any of the funds already allocated to revive the economy... That would put the annual deficit at almost $2 Trillion! And, then... Add in the spending already allocated... Remember, a couple of months ago, I told you that at first I calculated the deficit this year to be $2.5 Trillion, but then raised it to over $3 Trillion? Well, it sure appears that we as a country are well on the way to a $3 Trillion Budget Deficit this year, which should put our National Debt at around $14 Trillion dollars!

And... Of course that's just a drop in the bucket, when you add in all the future payments we will owe on the endowments like Social Security, and Medicare... And, Oh, by the way, just where do those war expenses get booked? Is that the proverbial "off balance sheet item"? You bet it is folks...

Oh... I had better stop right there! I can get all geeked up whenever I begin talking about our deficits... I begin to wonder, no wait! I said I was going to stop! OK, onward and upward to something else! I'm going to step away for a minute, I'll be right back...

OK, I'm back! I had to get up and walk around for a minute, that deficit talk just get right under my skin from the get-go! Then you add in the consumer debt, and you just go crazy! Yes, maybe Credit Card Debt is plunging, but Mortgage foreclosures are soaring, according to Reuters...

So... Gold, which has had a difficult time pushing back to $900, is up $5 this morning. I was checking the best returns this morning, year-to-date, and I noticed that Silver had pushed higher by over 9% so far this year... It's out performing Gold, right now... The real winners this year, so far, are... Platinum and Palladium, up 32 and 27% respectively. WOW!

As I said at the top this morning, it's Easter Monday, which means it's a holiday in parts of the world, and that means we won't be "fully staffed" in the markets again today... But the U.S. stock jockeys are back in the saddle, and that should add to the excitement of the day!

Well... Here in the U.S., the data cupboard is bare... But the remainder of the week, sees it get restocked daily! Tomorrow's big report will be the Retail Sales for March, which given the indication of the BHI (Butler Household Index), should be a bit better than recent reports... Wednesday is Tax Day, and we'll see the stupid CPI, and the TIC reports. Industrial Production and my fave, Capacity Utilization also prints on Wednesday. Thursday brings us a slew of data, of which the Weekly Initial Jobless Claims will be the most important. And we finish this week with the U. of Michigan Consumer Confidence report for this month.

So... With me dragging a bit, some countries on holiday, and no data today, I think I'll head to the Big Finish... Will you join me?

Currencies today 4/13/09: A$ .7245, kiwi .5860, C$ .8165, euro 1.3210, sterling 1.4730, Swiss .8685, rand 9.0550, krone 6.6225, SEK 8.2240, forint 219.20, zloty 3.2910, koruna 20, yen 100.50, sing 1.5250, HKD 7.75, INR 49.87, China 6.8350, pesos 13.11, BRL 2.17, dollar index 85.44, Oil $50.84, Silver $12.51, and Gold... $887.40

That's it for today... A Big weekend for St. Louis sports teams... Our Blues finally made it back to the playoffs after 5 years. But that doesn't tell the whole story. 2 months ago they were in last place (15th) and ended the season in 6th place! That's quite a run! And my beloved Cardinals completed a sweep of the Astros... You should have seen my little granddaughter, Delaney Grace yesterday, all dressed up for Easter... So cute! All the kids were at home yesterday along with other members of the family... A nice day, even if the weather didn't cooperate! My oldest son, Andrew, is in the process of buying his first home. He's found a real nice one at a great price! OK... I'm coughing my fool head off, so I'll hit send and try to get this stopped before people come in... I hope your Monday is Marvelous!

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

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

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

In This Issue..

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

And Now... Today's Pfennig!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Geithner's Plan Disappoints...

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

.........But First, A Word From Our Sponsor..........
Gold and silver prices moving higher again.

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

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

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

In This Issue..

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

And Now... Today's Pfennig!

Geithner's Plan Disappoints...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Dollar Swings A Mighty Big Hammer!

Chuck Butler — Wed, 14 Jan 2009 17:01:53 GMT

.........But First, A Word From Our Sponsor..........
Foreign Currency IRAs from EverBank®: diversify your retirement portfolio

Our wide range of IRAs even includes two foreign currency accounts: the WorldCurrencySM CD and WorldCurrency Access Deposit Account.

Diversify your retirement portfolio globally. You can seek gains (though loss of principal is possible), hedge against inflation and lower overall portfolio risk. Simply choose your account type and the currency that's right for you. Our currency IRAs are FDIC insured against bank insolvency only.

Build for retirement your way, only at EverBank®. Visit http://www.everbank.com/002IRA.aspx.

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

In This Issue..

* Another dollar rally....
* Rumors in Ireland...
* Trade Deficit narrows...
* Retail Sales to disappoint?

And Now... Today's Pfennig!

The Dollar Swings A Mighty Hammer!

Good day... And a Wonderful Wednesday to you! I'm writing from home today, as I will not be in the office on this wonderful Wednesday. Writing from home, or the road, always presents problems for me, as I'm so used to being in the "saddle" at my desk, and having information all around me. But, my little work desk at home has some of those amenities... So, what the heck, quit your grumpiness, and get to writing, Chuck!

The dollar ripped through the 1.32 handle of the euro yesterday, like a hot knife goes through butter! There was little to no resistance in that 1.32 handle, and before you could tell one of the many people on the desk here that sneeze all day, God Bless you, we were trading with a 1.31 handle in euros. The talk about a European Central Bank (ECB) rate cut has really ramped up this week, and taken its toll on the single unit. No one is mentioning that even if the ECB cuts 75 BPS this week, they'll still have a an interest rate / yield advantage over the U.S! I guess they'll sort that all out somewhere down the line, eh?

There's a rumor going round, that's someone's underground, no wait, there's a rumor going around that Ireland had requested aid from the IMF... Whoa there Partner! I know that things in Ireland have turned around on a dime from boom to bust, but I wasn't aware of a problem that would run that deep... The rumors were denied, of course, but you know me... Where there's smoke, there's fire... I'm reminded of an email I received 2 weeks ago from a reader in Ireland, that talked of a major slowdown in the economy. The writer, was very adamant about how bad things had gotten that he compared Ireland to a banana republic! I responded to him, and said, no... That can't be, because we've got a corner on being a banana republic right here in the U.S.A.!

You should have seen the sell off in euros when this rumor hit the streets! It was scary how fast a currency could lose a handle! But, after the rumors were denied, the single unit rallied back nearly as fast as it fell, and is now trading, as I write at 1.3225. The dollar is swinging a mighty hammer once again...

Talk about a flight to Risk Aversion! This rumor has the Risk Aversion campers battening down the hatches and heading to the cellars! Risk Aversion is NOT good for currencies and commodities.

Another reason for the Risk Aversion campers to batten down the hatches is the report from yesterday that Citigroup is going to sell their brokerage arm, Smith Barney, to Morgan Stanley for $2.7 Billion in cash... This to me, sounds like a fire sale, and that Citigroup is in deep dookie once again... Citigroup has already received $45 Billion from the Gov't in TARP money, much more than any other bank has received, for sure!

This news scares the bejeebers out of me, as Citigroup has always prided themselves on the fact that a customer could do "one-stop investing"... I guess, we'll have to wait-n-see if Citigroup announces a sale of another unit somewhere down the line, eh? But for now... This news is not good for any asset!

Well... Today, we'll see the color of the Retail Sales for December. We all know that December Retail Sales should be kicking rear and taking names later... But... And that's a BIG BUT... Not last month, unfortunately. As we get ready for the printing of Retail Sales, the experts say that Retail Sales will have fallen -1.2%, following a -1.8% in November. The Butler Household Index (BHI) tells me that while Christmas shopping was good, it wasn't on scale with other years, and I believe the Retail Sales will be very disappointing this morning.

OK, what do we have here? A Fed Head talking about our ZIRP (zero interest rate policy). I know, we're not quite at zero yet with the official rate, but the Fed Funds people would tell you differently! So, in my book, I say ZIRP! Well, this Fed Head, Lacker, thinks that interest rates will stay very low for some time... Say it ain't so, Joe! I don't want to see rates at zero for a long time, folks! That's part of the reason we're in this mess to begin with!

Oh, and yesterday, Big Ben Bernanke, was speaking over in London, and kind of threw some cold water on Obama's $800 Billion stimulus plan... I can hear Obama saying... "Hey! He backed all the other stimulus plans, but now he's throwing cold water on mine!" Well... I said "kind of threw" I didn't say he DID throw cold water on the plan... I'll let you decide... Here's Big Ben... Fed Chairman Ben Bernanke said the "stimulus package being crafted by Barack Obama and Congress could provide a "significant boost" to the sinking economy. But he warned that such a recovery won't last unless other steps are taken to stabilize the shaky financial system." And what is he talking about in the "other steps"?

Here's more Big Ben... "There will be no lasting recovery without further government action and funds to strengthen the financial system, with the timing of an economic recovery "highly uncertain." OH GREAT! More Government action! That's Central Bank parlance for "we're getting our hands deeper into the cookie jar"!

OK, I've gone this far, and have not mentioned the huge drop in the Trade Deficit that showed up in the print yesterday... The Trade Deficit fell from $56.8 Billion in October to $40.4 Billion in November! WOW! This fabulous! Or is it? Let's take a closer look at the numbers... U.S. exports fell $8.7 Billion and imports fell $25 Billion. Lower oil imports accounted for more than half of this drop, but ex-petroleum imports also fell $10.5 Billion.

So... Here's the problem folks... As I tried to explain yesterday... A narrowing Trade Deficit because of less spending and larger exports would be manna from heaven... But a narrowing Trade Deficit because spending was slashed, and exports also fell, is not a good thing for the economy. It simply means that 1. The U.S. consumer has dried up and with consumption at least 70% of GDP, we're in for a long recession... And 2. that the dollar is too strong, otherwise exports wouldn't be so far off too. Yes, I'm quite aware of the fact that the recession is hitting all over the globe, but come on, we still buy Chinese and Japanese and even German exports even in a recession don't we? These same countries would be doing the same with U.S. exports...

And then there's this... News of the weird... Chris Gaffney saw a story yesterday that he sent to me, that qualifies for this category... Here's a snippet of the story... "The Bank of England will be able to print extra money without having legally to declare it under new plans which will heighten fears that the Government will secretly pump extra cash into the economy." Oh boy! Just what the pound sterling needs as a stabilizer eh? NOT! This is awful news for the pound folks...

I've said for months now that the Bank of England (BOE) was following in the Fed's & Treasury's steps, which could be to ruin, but following nonetheless! This is just another step in the Fed's & Treasury's direction. The free use of a printing press... The story went so far as to say "this will spark comparisons with the Weimar Germany and Zimbabwe, were uncontrolled use of the printing press ultimately caused hyperinflation." This is where they're getting a little out of control with the sensationalism... I prefer to say that it should compare to the U.S.... Which may still see hyperinflation in the future... But not the kind of Germany and Zimbabwe! YIKES!

So... As I get ready to head to the Big Finish... It looks as though that Trading Theme is back in force again, and the dollar will benefit any time the data shows the recession to be deeper, darker and more dangerous... Makes no sense to me! But that's the work of the mental giants these days... So... If Retail Sales is as disappointing as I suspect it to be in about 15 minutes, then the dollar should be supported today...

Currencies today 1/14/09: A$ .6670, kiwi .5440, C$ .8185, euro 1.3190 (slipped back again), sterling 1.4535, Swiss .8925, rand 10.0450, krone 7.14, SEK 8.30, forint 210.20, zloty 3.1420, koruna 20.42, yen 89.45, sing 1.4920, HKD 7.7570, INR 48.83, China 6.8350, pesos 13.83, BRL 2.3140, dollar index 84.15, Oil $38.87, Silver $10.76, and Gold... 826.50

That's it for today... Thanks to all who sent along good wishes for clean reports this week... I told you yesterday that I was draggin' the line a bit... I went home and fell asleep... Woke up to take some medicine and back to bed... Feeling a bit better this morning... Rest... It's a Godsend! I got my itinerary for the Orlando Money Show next month (Feb 3thru 7) yesterday... I'm looking forward to some warm weather already! I'll be at two presentations, and one EverBank Town Hall Meeting... So, I'll be busy! My little buddy, Alex, and beautiful bride used to accompany me on this trip each year, and Alex would go to Disney World, or Universal Studios to ride roller coasters and stuff, but now that he's older, it's not good to take him out of school, so no more rock-n-rollercoaster for him. :( OH well... Time to go... I hope your Wednesday is Wonderful!

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