Daily Pfennig : Yen

Demand For Physical Gold Soars!.

Chuck Butler — Mon, 22 Apr 2013 21:33:04 GMT

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In This Issue.

* Gold continues to heal.

* Currencies go flat.

* Yen back on slippery slope.

* Renminbi has best week in 6 months.

And, Now, Today's Pfennig For Your Thoughts!

Demand For Physical Gold Soars!.

Good day. And a Marvelous Monday to you! Well, that was good news late Friday night, eh? Switching between the Blues hockey game, and the Cardinals baseball game, and the cable news was the order of business, after I got home from another water polo game! 6 games last week, and 6 more this week. I think the chlorine is seeping into my skin! HA! At least those natatoriums are warm!

Well. Front and Center this morning, is the price action in Gold. The shiny metal is up another $30 this morning to $1,435, as I write. I have to say that this bounce has been quite impressive for the shiny metal, and one that I didn't expect to see, right away, that is. I had a good friend, as me if the low $1,300 range was a buying opportunity. I said, that it certainly was a cheaper level, but that we had better wait-n-see, if the "boys" wanted to take it lower. Well, the "boys" might have wanted to take it lower, but the physical demand was just too much. I really liked the Big Boss, Frank Trotter's take on the Gold & Silver takedown in the Sunday Pfennig & Pfriends. Good job Boss!

Well. While Gold & Silver are on the rally tracks this morning, the currencies are not feeling so boisterous. I told you Friday, that G-20 had not chastised Japan for their attack on the yen's value, and that the yen was back on the slippery slope headed to 100. Well, The Bank of Japan (BOJ) Gov. Kuroda, came out and pounding his chest, decided to rub the markets nose in his plan to devalue the yen, in hopes that it will help revive the Japanese economy. Kuroda said that "the G-20 understood Japan's policies to revive the economy." And then turned on the green light for traders and anyone else to sell yen..

The Aussie dollar (A$) got taken to the woodshed after Aussie Treasurer, Swan, deep sixed the thoughts of a strong A$, by blaming the strong currency for the Aussie budget problems. Swan said that the budget had taken an A$ 7.5 Billion sledgehammer hit, blaming the strong A$ for the falling terms of trade. You know, we've seen these attempts by Aussie leaders to deep six the A$ in the past, and the damage has only been short-lived. Not that knowing that gives you any indication that it will be short-lived this time. Just that "in the past" that's been the trading pattern.

Across the Tasman, the New Zealand dollar is flat on the day, which is a better performance than its kissin' cousin the A$ is putting in this morning. This week brings us a Reserve Bank of New Zealand (RBNZ) meeting, at which they'll most likely leave rates unchanged, and some grumbling by the RBNZ about the strength of kiwi. Which they hope to parlay into jawboning kiwi lower. But I doubt it works. The markets have heard all of it before, and many times, from the RBNZ. remember RBNZ Gov. Bollard? Mr. I love to diss kiwi whenever I get the chance.

Lots of Central Bank activity this week. The BOJ will also meet later this week, but after their announcement last month of their new bond buying program, I doubt they'll have anything to add, other than some more chest pounding that G-20 agreed with their plan.

One currency not seeing the weakness this morning, albeit just a smidgen of strength, is the Swedish krona. Apparently, Sweden's Riksbank board member, Svensson, announced that he will step down at the end of May. So, how this all ties together is like this, stay with me on this.. Svensson is known as one of the two doves on the Riksbank board, and the markets are projecting that his replacement won't be so dovish. Which gives the Riksbank a better chance of higher rates in the future!

OK. had to stop and sing along with Van Morrison's great song, Into the Mystic. But I'm back now. See. You didn't even miss me!

I was doing some reading this past weekend, between water polo games, and came across a story on the U.S. economic outlook. In the story, the writer, painted a picture of the current slowdown as a "spring swoon", but one that would soon go away and the U.S. economy would be back on the rebound tracks, due to the housing recovery. Well, he may be correct. but let me remind him and you that the housing recovery is based on zero interest rates, easy credit, and most importantly, lack of supply. Well, that lack of supply could be wiped out in a heartbeat, should the "shadow inventory" be released on the market place. And it will be released some day, folks. probably not today, or tomorrow, but it will. and then what?

For those of you that don't know what I'm talking about when I talk about Shadow Inventory, here's your chance to learn. for those of you who already know, you can skip ahead! But the Shadow Inventory refers to the unprecedented number of foreclosures stemming from the subprime mortgage meltdown of 2007-2008 and the overall housing market collapse during that crisis, lenders were left with significant real estate holdings.

OK. And here's another thing the writer didn't mention. What if the Fed Heads go ahead with their talk of ending the current bond buying program (Quantitative Easing) after June? Funny thing. the writer didn't mention at all how the Fed's stimulus was keeping the pulse going for the economy now.

Alrighty then. The IMM Futures Position Report last week, showed that the increase in the U.S dollar long positions was modest at best, increasing by 9,000 contracts. Could this be a sign that the dollar's run is about to end? The other currencies to gain long positions were the New Zealand dollar, and the Mexican peso. Aussie, yen, and euros led the reductions of long positions. By the way, the kiwi and peso long positions reached record high levels! For whatever that's worth.

And, G-20 is over, and guess what the Chinese did last night? Ahhh grasshopper, you've been paying attention! That's right, they stopped the overnight gains in the fixing price of the renminbi/ yuan. Last week was the best week of gains in the renminbi / yuan is over 6 months! But now, G-20 members have gone home, and the Chinese don't have to play this game again for another 6 months!

Speaking of Homes here in the U.S.. The U.S. data cupboard returns today, with Existing Home Sales for March, which will probably be pretty strong. The data cupboard doesn't have a lot for us this week, mostly all 2nd and 3rd tier data reports. so, the markets will have to look somewhere else for direction.

Then There Was This. I had a reader send me a note on Friday, and say that he thought my TTWT article that day was "dead on". Now that's the kind of stuff I like to see! Because, I'm sure that if he felt that way, the article made him think.

OK. I found this on the Bloomberg. "The U.S. Mint in April has sold 153,000 ounces of American Eagle gold coins, the highest in almost three years, after futures prices started the week by plunging the most since 1980.

Sales have more than doubled from March and surged sevenfold from a year earlier, data on the Mint's website showed. The amount for all of May 2010 was 190,000 ounce.

The China Gold Association said that retail sales soared on April 15 and April 16, and the All India Gems & Jewelry Trade Federation said that demand climbed to the highest this year. Sales surged from Australia's Perth Mint, which refines almost all of the nation's bullion, Treasurer Nigel Moffatt said. He didn't provide precise figures."

Chuck.. just shows to go you that what I've been saying all along was bang on. and that is, that if there was enough physical demand, / buying, that the paper trades wouldn't be able to keep up. and they couldn't! So. keep it going!

To recap. Gold is up another $30 this morning, as physical demand is outstripping the paper trades. Currencies are flat to weak this morning. The A$ got taken to the woodshed by some dissing of the currency's strength by the Treasurer, Swan. Yen is weaker, as Kuroda beats his chest as to how smart he is, and that G-20 agrees! Central Bank meetings in New Zealand and Japan this week, and there's little market moving economic data in the U.S. this week, so the markets will have to look for direction someplace else!

Currencies today 4/22/13. American Style: A$ $1.0265, kiwi .8425, C$ .9745, euro 1.3050, sterling 1.5225, Swiss $1.0705, . European Style: rand 9.2725, krone 5.8290, SEK 6.5225, forint 229.65, zloty 3.1465, koruna 19.8750, RUB 31.60, yen 99.75, sing 1.2395, HKD 7.7640, INR 54.14, China 6.2415, pesos 12.27, BRL 2.0105, Dollar Index 82.80, Oil $88.61, 10-year 1.72%, Silver $23.63, and Gold. $1,436.26

That's it for today. The last full week of April, and the weather still hasn't warmed up. UGH! I love to spend my weekends outside, so hopefully, when the water polo season is over, the weather will have turned warm to stay, and I can get back outside! Little Braden Charles spent the night with us Saturday night. He loves to sit at the piano, and bang away at the keys. I play some for him, and he tries to immolate what I'm doing. So cute! OK. it hasn't even been a month since I was on vacation, and I'm already itching to go again! Is that an indication that I'm ready for retirement? I hope not. because I've still got a high school aged son to get through college! And with that. I hope you have a Marvelous Monday, and a warmer week!

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

Back On Terra Firma.

Chuck Butler — Fri, 19 Apr 2013 17:26:00 GMT

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To learn more and view important disclosures go to: https://www.everbank.com/personal/precious-metals.aspx?referid=11808

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EverBank World Markets

A Pfennig For Your Thoughts

April 19, 2013

In This Issue.

* Gold continues to heal.

* Currencies rebound.

* Yen back on slippery slope.

* Playing shell games with debt.

And, Now, Today's Pfennig For Your Thoughts!

Back On Terra Firma.

Good day. And a Happy Friday to one and all! The FBI say that they have killed one of the Boston bombing suspects and that the other suspect is on the run, armed and dangerous. Let's hope no one else gets hurt in this chase. I was pleasantly surprised at how quickly the authorities came to find the two men they believe responsible for the bombing. Kudos to the authorities, for sure! But scary times for the people of that area with an armed and dangerous suspect on the run. Be careful!

Well, ever since the selloff of the risk assets on Wednesday, they've come back with vengeance on their agenda, kicking tail and taking names later. Yesterday, I called it "some healing". today, I'm calling it an all-out rally! That's always nice when things move the way I believe they should be moving and especially when it ends a week, for Traders and Investors will have to think about it all weekend long. Notice I said, "the way I believe they should be moving". I'm talking fundamentals. not emotion, not wishing and hoping and thinking and praying. strictly fundamentals!

Front and Center this morning, the price of Gold is up $23, as I write, and has climbed back above $1,400. All the talk of physical demand has sure played out that way, as Gold has recovered nicely since Friday and Monday's ambush. But I'm scared of how quickly Gold has gotten back on its feet. The move could be too swift, and it would bring the paper naked shorts back to the market. These guys are not happy causing losses to everyone that owned Gold, they won't be happy until everyone has packed up their bats and balls and gone home. I don't see that happening, do you? I see panic from time to time, but the folks that bought Gold for the right reasons, diversification, inflation & uncertainty hedge, and insurance, are not panicking and instead, looking to add to their holdings, bringing their dollar cost average down in most cases. It's only the folks that bought Gold for a quick profit that have bailed. OK. so long, see ya, wouldn't want to be ya! HA!

I'm currently reading a compilation of articles that my friend, the Mogambo Guru, has written. And with every article I read, I'm reminded how the Mogambo stood in front of a HUGE crowd in Vancouver years ago, and told them, "We're all freakin' doomed". The Big Boss, Frank Trotter, and the Mogambo shared a cab to the airport at the end of that conference. Now that was a meeting of two great minds! Anyway, the thing I was getting at here is that the Mogambo has always told people that they should own physical Gold. And Silver, and Oil, just for good measure!

So. the currencies added to their healing yesterday, and overnight, really took off with the New Zealand dollar / kiwi leading the pack in value added. Oh, and remember earlier this week, when I told you that the Japanese yen had rallied but I believed it would be short-lived? Well the yen rally appears now to have been what's called a dead cat bounce. (don't worry no cats were harmed here!) as yen is back on the slippery slope heading to 100. Seems the boys and girls at the G-20 boondoggle, didn't' have one word to say about Japan's announcement to nearly equal the U.S.'s Quantitative Easing size, with an economy that's about 1/3rd the size of the U.S.

I mentioned that fact the other day, and I wonder if it hit a chord with all of you the way it did with me? If not, then you heard me then so listen to me now. Japan is going all in on this attempt to raise inflation from the dead. The Japanese economy is going to be flush with liquidity. easy credit was already there, along with zero interest rates. If they can't raise inflation from the dead, then they are going to be up the creek with no paddle. But all this QE/ bond buying/ money printing is going to deep six yen. I don't doubt that one iota!

The euro got up and brushed off the selling that was caused by comments from the Bundesbank on Wednesday evening. From my view in the cheap seats, it appears that the euro bulls would love to take the euro higher. Remember, before the comments from the Bundesbank, the euro was pushing 1.32. Now, it would think it had won 20 games if it could climb back to 1.31. A euro trader told me that 1.3134 would have to be met, before the real euro bulls came back to push it higher again. The single unit is trading around 1.3090 right now, so, it has its work cut out for it, for sure!

In Australia overnight, the ratings agency, Moodys kept Australia's credit rating at AAA, and said that the rating was "safe". But the real move higher in the Aussie dollar (A$) came from the weakness in the yen. Once, G-20 signaled that they were OK with Japan's bond buying program, yen got sold, and the higher yielding currencies, like A$'s and kiwi were bought. It also didn't hurt the A$ that the Chinese renminbi/ yuan had its strongest week in 6 months this week. If the renminbi / yuan is moving higher, that signals to the markets that China is moving in the right direction.

And don't forget that the People's Bank of China (PBOC) announced this week that the renminbi / yuan's trading band would be widened. That's HUGE news folks. the problem with the announcement though, is that the PBOC didn't say when!

I was surprised yesterday to see the Brazilian real not react favorably to the news that the Brazilian Central Bank (BCB) had hike rates. That's got to be like manna from heaven for the Brazilian Gov't, who doesn't want to see real strength, and probably held their collective breaths after the rate hike was announced. At this point, I would love to see real strength, only to spite the Brazilian Gov't!

In Canada today, March CPI (consumer inflation) will print. Without the games played with this data like they do in the U.S. Canadian CPI will probably show a gain in March that will be added to the February rise in inflation of 1.2%... I doubt it will be that strong again, given the drop in Oil prices, but still a gain, and should put the year-on-year increase in inflation at 1.4%... Still not the stuff that causes Central Bankers to choke on fear and push them to hike rates, but not too far off from that. Still, I don't see the Canadian dollar / loonie gaining any traction from this report today, unless it contains a surprise number like February.

Speaking of the loonie. Last year, I sat on a panel at the Casey Conference in Weston Florida, and I was star-struck.

Little ole me and the well respected, investment giant, James Rickards on the same panel.

I had already read James Rickard's book, Currency Wars, so I already knew a bit about him.

Yesterday, I saw some stuff that Mr. Rickards put together, and a couple of things caught my eye.

1. That he still believes that people should be long physical Gold.

2. That he likes: euros, Singapore dollars, Aussie dollars, Canadian dollars, and S. Korean won

3. And he would be short: dollars, sterling, yen, and real

This is very close to what I told the crowd in San Diego. that Singapore dollars, Aussie dollars, Canadian dollars were all currencies investors should look to own, based on strong fundamentals. I also included Chinese renminbi, and Norwegian krone.

I totally agree with the currencies to be short, although, Brazil in a speculative corner is interesting to me.

And physical Gold. it's how I've always told you to be the way to go over ETF's.

Yesterday, the data cupboard here in the U.S. had some data to show us. The Weekly Initial Jobless Claims, remained around 350,000, and the Bloomberg Consumer Comfort meter and Economic Expectations were both negative. The Philly Fed Index was stronger than expected, so that was good, but Leading Indicators (very important with Chuck) showed more rot on the vine, falling -.1%...

I've told you recently that I believed the U.S. economy was slowing down again, based on the economic data results, and yesterday's Leading Indicators is no different, and doesn't change my thought by any stretch of the imagination. The Fed Heads are talking of removing stimulus, at time when the economy is showing a lot of rot on the vine.

I saw my old nemesis, Big Al Greenspan, on the TV this morning. He's really turned into the new "Mr. Obvious" as he was asked about the labor picture in the U.S. and he said the key was to revive the economy. Oh really? Hmmm. Isn't that what the framers of our economy, the Fed Heads, have been attempting to do for the past 4 years, after implementing their first round of QE in March of 2009? The problem with their attempts to revive the economy is that they followed the Japanese blueprint.

A month or so ago, I talked about the rise of disability claims, and how people on disability and don't work, are not counted as "unemployed". Well, get these numbers.

Since the beginning of the last recession in the USA (December 2007), 1.8 million American workers have been approved for federal disability benefits. The number of individuals receiving benefits has increased +25% from 7.1 million to 8.9 million. The 8.9 million disability recipients represent 5.7% of our nation's 155.0 million civilian labor force (i.e., Americans that are either employed or seeking employment). Only 1.7% of our labor force was receiving federal disability benefits in 1970 (source: Social Security, Department of Labor) And this all comes about from the stretching the description of "disabled". High blood pressure is now considered to be "disabling". Oh well. I don't want to spend all day with this, just wanted to point out the size and number of people that are not counted as "unemployed" by our Gov't.

Then There Was This. Oh, the webs we spin. My friend, Dennis Miller, sends me a list of things that a CPA sends out, and calls it "by the numbers". And this week's issue, was just what I was looking for! I told you last week about the President's budget, and how spending was going to increase 6%, but then he claimed that he was cutting the debt by $1.4 Trillion over the next ten years. Those two things didn't match and so I set out to find out where the disconnect was.

And there it was right before my eyes! "When the White House says they are "reducing" our nation's debt by $1.4 Trillion over the next decade, in reality they are projecting our debt to increase $5.27 Trillion by 2023. the $1.4 Trillion in savings comes from the fact that the baseline projection for the budget called for spending to increase $6.68 Trillion. So, the spin doctors tell us they are reducing debt by $1.4 Trillion. ($6.68 T - $5.27 T) Are you kidding me? And the markets, economists, media etc. all took what the spin doctors said about cutting debt, hook, line and sinker! It makes no sense to me, folks. where are the journalists to look under the hood? Why is it only me and a handful of others that see a statement like that and want to dig? Everybody else says, "hey look we're cutting debt". HUH? Where are your brains? Remember the commercial when they showed an egg and said this is your brains, and then cracked egg and dropped into a frying pan of hot grease and said, this is your brains on drugs? I think all these guys and girls in the media that swallow this stuff hook, line and sinker, without thinking they should look under the hood, had their brains dropped in hot grease years ago!

To recap. The "healing" turned to all-out rally overnight, led by the best performer, the New Zealand dollar. Yen is back on the slippery slope, and the commodities are back on terra firma, after a shaky performance earlier in the week. Aussie and New Zealand dollars are back on Japanese investors' minds this morning, as yen slips, they look to buy higher yielding currencies, and James Rickards gives us his picks, which aren't far off those given by Chuck two weeks ago in San Diego!

Currencies today 4/19/13. American Style: A$ $1.0340, kiwi .8470, C$ .9760, euro 1.3090, sterling 1.5345, Swiss $1.0750, . European Style: rand 9.1625, krone 5.7945, SEK 6.4985, forint 228, zloty 3.1345, koruna 19.7420, RUB 31.55, yen 99.30, sing 1.2355, HKD 7.7635, INR 53.96, China 6.2395, pesos 12.23, BRL 2.0185, Dollar Index 82.50, Oil $88.75, 10-year 1.71%, Silver $23.53, and Gold. $1,409.50,

That's it for today. Brother did I drive on some waterlogged roads yesterday! And now it's cold here again! UGH! When is spring going be here to say? OK. this is BIG NEWS. Tomorrow is my long time, good friend's birthday. Happy Birthday Frank Trotter! I hear it's also our Mike Harrell's birthday, so Happy Birthday to both. I've worked with Frank since 1981. Yes, I know, we have some kids in the office that weren't even born when that friendship began. I remember seeing Frank being introduced to us on his first day. He was spiffed out with an olive green khaki suit on. (remember it was the 80's!) So. Frank is one year older than me once again. Hey buddy, we're getting old fast! Andrew & Alex's water polo team won last night, and head to the second game of a tournament tonight. no goals for Alex, but I thought he played a very good game. OK. it's getting late, so I'll get this going. Thank you for reading the Pfennig, and I hope you have a Fantastico Friday!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
http://www.everbank.com

Returning The Carter Years...

Chuck Butler — Mon, 08 Apr 2013 18:01:51 GMT

In This Issue.

* Currencies rally on bad jobs data.

* Yen continues to slump.

* Relative calm creeps back into Eurozone.

* Roberts says Fed is manipulating Gold price.

And, Now, Today's Pfennig For Your Thoughts!

Returning The Carter Years...

Good day. And a Marvelous Monday to you! I got back from San Diego and the Global Currency Expo late last night, and then had a bad night, so I kind of slept through the alarm this morning... UGH! So, I'm dragging the line this morning... but, hey! At least I woke up! That's the first battle each day! I love San Diego... I used to think I would retire there, but then the little beach shack I used to eye, rose in price to a million dollars, and I began to look elsewhere! Seemed that a lot of people had that same Idea as me!

Well... the big news on Friday was that the Jobs Jamboree disappointed with less than 100k new jobs (88K)... But the unemployment rate dropped to 7.6%... I've explained how this all happens before so I won't go into it again, but there are a couple of things that I noticed that really tells me, and should you, the real story of labor here in the U.S. 90 million people are not working... that leaves us with a 63.3% participation rate.. That's the lowest level in the participation rate since 1979... the Carter years... At last check, the U.S. had done its best to put those years in the distant memory banks, never to bring them out again... But here we are again...

The labor news really sunk the dollar's bias to be bought that existed for most of last week. And that bias is nowhere to be found, except VS Japanese yen, this morning. The yen has been on the slippery slope ever since they announced their latest round of stimulus last week, that was implemented to ecourage inflation in Japan. The yen fell from 93 very quickly, and overnight yen reached 99 for the first time in a month of Sundays. (remember yen is a European priced currency, so the higher the number the weaker the currency is VS the dollar) Yen has since rallied back to just below 99 at 98.70, but still, it looks like this is going to continue until it doesn't...

I know, you're saying, "Hey Chuck, now that's really going out on a limb... NOT!" Well, like I told the audience in my mainstage presentation the other day... Interest rates in Greece were low for a long time, and then one day they weren't... I said the same thing would happen here in the U.S. So, all I'm saying about yen is that I don't know how weak it will get, recall if you will, that I told you that the well respected anaylst, Dennis Gartman, said that yen would weaken to 150... I find that to be quite aggressive, but then no one knows just how weak the yen will get, so, it will continue to get weak until... it doesn't!

But... the thing to remember here is that I told you yen was overvalued a long time ago, and that it should be weaker, based on fundamentals... So, if you were listening to me then, and at least hearing me later, this yen weakness comes as no surprise to you!

The other thing to think about with yen is what kind of pressure it puts on the crosses outside of dollar / yen. I think that the yen weakness is playing into the euro's ability to gain further. As I' ve explained many times over the years... the dollar / yen cross will play into other crosses that are dollar denominated... so euro / dollar sees some pressure too... So, the euro going past 1.30 and staying there is a good sign that it is stronger than the price indicates.

OK... there's more going on than yen weakness on the crosses... One of my themes in my talks at the Global Currency Expo was that the U.S. economy has become addicted to stimulus... And last week's jobs report is proof enough for me that the Fed Heads will continue their attempt to stimulate the economy by buying $85 Billion of bonds each and every month. I mentioned that I wouldn't be surprised to see a person talking at the GCE in 10 years and discussing QE 20, 21, 22, etc. And can you imagine the number of dollars that would have been printed at that time? Oh My! of course, Big Ben Bernanke and his band of Fed Heads don't really "print dollars" any longer.. .they simply, with the stroke of a hand, print electronically, and on their computer they created $85 Billion per month to pay for those bonds they buy...

I was loving a story I was reading on the Bloomberg, as I was up in the middle of the night unable to sleep soundly... the story was about the Swedish krona, and how the Riksbank (central bank) the Prime Minister, and head of the Sweden's state-owned export leader, all are singing from the same song sheet, and keeping their hands out of the cookie jar, with regards to guiding the krona weaker, as many other countries are doing to their currencies. I really liked what the export leader, Peter Yngwe, had to say about the strength of the krona. Let's listen in... "the Swedish export industry is good at being effective and streamling and in the long term that's the right way to go. In the short term it's, of course, tough, with a strengthening krona, but that the strenghth of the krona will help discipline companies and poses little risk to the Swedish economy."

Now... don't you wish every central banker would take this line of thought? I tell people over and over again, that just because a country has a strong currency that the Central Bank should go into convulsions and work to weaken the currency... That's not the answer! Instead, the country should go about making changes in manufacturing, wages, and delivery... When that happens, you'll end up trading similar to the euro... Look at Germany... they deal with a strong euro all the time, but it doesn't shut down their exports...

The bad press that upset the Eurozone's relative calm applecart, sure has passed... and therefore the relative calm has come back to the Eurozone. And when that happens the main beneficiary is the euro. But on the side bars, the emerging markets also get a lift, because with the euro being the offset currency to the dollar, the euro's strength, pushes the dollar down, and the emerging markes can take advantage of that... Of course not all the emerging markets trade in the same direction all the time, so when I say emerging markets, it's just a generalization term...

One of those emerging markets that are seeing gains is the Mexican peso... The peso has been a real strong perfomer this past year, based on the thought that the U.S. economy was coming out of its "greater depression"... As I've explained before, the peso has caused many-a-owner of the currency much pain in the past... But it's been over 20 years since their last meltdown with the currency, so, I'm somewhat in the camp that thinks it won't happen again. But the peso still isn't paying a "risk premium" for those that still "remember"... But that hasn't held the peso back, so far... I would just say, be careful, and keep a watchful eye on the goings on in Mexico... other than that, the peso is having fun basking in the sun...

I just saw a news flash that former British Prime Minister, Margaret Thatcher, has passed.. She had reached the age of 87... I do believe that Margaret Thatcher did a lot for the British,. as she championed free market economics and individual choice... I used to use a quote by her, that people would chuckle at until they realized what it was saying... Here's the quote... "the problem with socialism is that you eventually run out of other people's money" - Margaret Thatcher

Ok... I really hadn't planned on talking about that, but the news flash caught my eye, and so on... I'm sure someone out there won't take what I said about her kindly, and let me know about it, but that's OK... and it won't change my thoughts on the subject!

Elsewhere in the world... Portugal saw its constitutional court overturn 4 of the 9 austerity measures adopted by the government for its 2013 budget... that's not going to help Portugal meet its goals of in debt cuts which have to be met in order to botain future aid. But the Portuguese Gov't was quck to say that spending on social security, health, education and public enterprises will be cut...

If you ask me, and I know you didn't, but I'm going to tell you anyway... I would bet that the Deputy Reserve Bank of New Zealand (RBNZ) Gov., Spencer, is in for a trip to the woodshed from the RBNZ Gov. Wheeler... Why? I hear you asking... Well, you see, as I've told you before, Wheeler likes to follow his predecessor, Bollard, by dissing kiwi any chance he gets... But when the Deputy Dawg was asked about the housing boom, he sounded quite hawkish... and said, among other things that, " if momentum in the housing market continued, a rate rise was likely." Well, talk like that will push kiwi higher... and so, Mr. Spencer is in for some talking to, by Wheeler... because you don't make statements like that without realizing what it will do to the currency that Mr. Wheeler had worked so long to make look bad...

Well... direct renminbi / yuan and Aussie dollar (A$) trading will begin this week, April 10th... I'm surprised the markets just don't believe this to be a big thing... I do... and I have thought that these curreny swap agreements are very important, ever since I noticed that China signed one with Argentina about 4 years ago. I see it as China removing the dollar's relevance as the financing tool in the terms of trade between countries... One day, the markets will wake up and see this too...

Then There Was This... So, there I was Saturday morning, getting ready to make my grand entrance at the GCE, when I came across this story that Ed Steer had in his daily letter, regarding the manipulation of Gold... Here's a snippet of a report that former Asst. Treasury Sec. Paul Craig Roberts posted on his website... the Gov't has to be shaking a bit from this...

"For Americans, financial and economic Armageddon might be close at hand. The evidence for this conclusion is the concerted effort by the Federal Reserve and its dependent financial institutions to scare people away from gold and silver by driving down their prices.

When gold prices hit $1,917.50 an ounce on August 23, 2011, a gain of more than $500 an ounce in less than 8 months, capping a rise over a decade from $272 at the end of December 2000, the Federal Reserve panicked. With the US dollar losing value so rapidly compared to the world standard for money, the Federal Reserve's policy of printing $1 trillion annually in order to support the impaired balance sheets of banks and to finance the federal deficit was placed in danger. Who could believe the dollar's exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver.

When gold topped $1,900, Washington put out the story that gold was a bubble. The presstitute media fell in line with Washington's propaganda. "Gold looking a bit bubbly" declared CNN Money on August 23, 2011.

The Federal Reserve used its dependent "banks too big to fail" to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Federal Reserve was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3, 2013, drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27."

Chuck again... Yes, this plays well with my explanation of why I thought Gold's price was being manipulated... if it were your job to protect the value of the dollar, and you saw Gold heading toward $2,000, you would panic too...

To recap... the Jobs data from Friday was very disappointing, even with the unemployment rate dropping... We've returned to the "Carter years"... Yen continues to push the envelope of weakness, touching 99 overnight, and the currency crosses are seeing some pressure because of the dollar / yen cross. Sweden's financial leaders are singing from the same song sheet, and Margaret Thatcher has passed.

Currencies today 4/8/13... American Style: A$ $1.0410, kiwi .8450, C$ .9825, euro 1.3020, sterling 1.5310, Swiss $ 1.07,... European Style: rand 9.0405, krone 5.7310, SEK 6.4225, forint 229.05, zloty 3.1735, koruna 19.7730, RUB 31.32. yen 98.70, sing 1.2410, HKD 7.7640, INR 54.57, China 6.2650, pesos 12.14, BRL 1.9820, Dollar Index 82.59, Oil $93.40, 10-year 1.72%, Silver $27.21, and Gold... $1.575.30

That's it for today... Did I tell you that I love San Diego? It's so beautiful there... It was great seeing some EverBankers that I don't normally see all the time, and some of my former writing colleagues at the Sovereign Society at the GCE. Thanks to all the participants that had very kind things to say to me. Cardinals come home from a road trip that started their season 3-3, which isn't too shabby... My dad used to always tell me, play .750 ball at home, and .500 on the road, and you'll find yourself fighting for a pennant! It's Opening Day here in St. Louis... A day where the city should be on holiday... I'll be at the game, that is, if I can find a parking spot! Last year, we had to bribe a guy to get him to allow me to park on his lot.... UGH! The weather people were calling for rain today.. but I see the sun coming up... maybe, as usual they'll be wrong! My first trip to Busch each year is something special for me. It reminds me of when I would go to the game with my dad at Busch stadium I (Sportman's Park). The smells of hot dogs, popcorn. The sounds of the game and in the stands... it's something I cherish... And with that... I'll get out of your hair for today. Again, sorry for the delay and my oversleeping... I hope you have a marvelous Monday!

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

The Dollar Rides The White Horse.

Chuck Butler — Fri, 15 Feb 2013 17:23:29 GMT

In This Issue.

* ECB & Bundesbank talk supports the euro.

* Yen rallies.

* Norway, Canada and others in a bind .

* Gold on a losing streak.

And, Now, Today's Pfennig For Your Thoughts!

The Dollar Rides The White Horse.

Good day. And a Happy Friday to one and all! Well after 5 days adrift, the passengers of the crippled cruise ship are back on terra firma. I bet they are very thankful for that! That must have been pretty bad. And I'm thankful I wasn't on that cruise! See. it's the little things, eh? I'm running a bit late this morning, as I slept right through the alarm clock. So, I need to get to what you all open this letter up to read. My conspiracy stories! HAHAHAHAHA!

Well, the dollar is riding on the white horse this morning, and all the currencies (except yen) and metals are bowing down to pay homage to the dollar. The euro attempted to break out with a move higher overnight, but was quickly knocked back down. The euro jumped to near 1.34 when Bundesbank (Germany's Central Bank) President, Weidmann, said that "one cannot say euro is seriously overvalued." European Central Bank (ECB) President, Draghi, chimed in and said that, "real euro exchange rates are around their long-term averages." So, all-in-all, some verbal support for the euro's current level.

OK. well, I said that the currencies were down VS the dollar except yen. And it took me by surprise too! There wasn't much in the way of information that would indicate why yen is rallying this morning. There was some talk about yen's appropriate range would be 95-100, but other than that, it's position squaring or profit taking, because there's no "real reason" to be buying yen, folks.

We do have the G-20 meeting going on, and I would think that some traders that were short yen, decided to cover the short ahead of the G-20 meeting, just in case there's talk about stopping Japan from pushing for currency weakness. I think all we'll get out of this G-20 meeting is nothing more than a statement that they want members to: refrain from competitive devaluation. Then get on their private jets and head home.

The British pound sterling is much weaker this morning, on the news that January Retail Sales fell for a second consecutive month. Retail Sales fell -.6% from December when they dropped -.3%... The spin doctors in the U.K. jumped on this drop right away, and blamed it on the cold and snowy weather conditions in the U.K. during January. So much for Bank of England outgoing Gov. Mervyn King, who earlier this week said that he thought inflation would accelerate in the coming months. I would think that given the size of the retracement in Retail Sales that he had better worry more about the economy contracting than inflation accelerating!

Last week I mentioned the Brazilian real and how it had rallied to a level below the 2 figure, and remained below 2 for the whole week, which was surprising, given the Brazilian Gov't's penchant for weakening the real. Yesterday, when I was doing the currency round-up, I noticed that real was even stronger than it was last week. And I said to myself, "self. I bet the Brazilian Gov't has something to say about this soon". and lo and behold, the Brazilian Finance Minister, Mantega, was out last night, letting everyone know that, "we will not allow for an over appreciation of the real, and we won't tolerate abnormal fluctuations".

This is what I feared last week when I mentioned that real was rallying. While I don't believe the Brazilian Gov't is going to pull out all stops to weaken the real again, for they need a stronger real to combat inflation that is running above their target level and has for the past two years. But, they will fight the appreciation every step of the way, in order to keep the appreciation orderly and under control. I still say to be careful here, and only use the speculative portion of your portfolio if you feel compelled to own real.

The Canadian dollar / loonie touched parity again yesterday, albeit briefly. the currency continues to remain near parity, which to me is a good level for loonies right now, given some of the things going on that we've talked about here. The Bank of Canada (BOC) would love to raise rates to squash the housing bubble in Toronto, but the rest of Canada still needs the accommodative rates. So, the loonie sits here, without any reason to move stronger and without any reason to move weaker.

Another country keeping their eyes on the currency and its appreciation is Norway. The Norges Bank would love to hike rates, but they don't want the krone to take off for the moon. These central banks from Canada, Norway, Sweden, Brazil, and others are all in the same boat. They would love to hike rates, but they don't want their currency going on a flight to the moon. I feel for them. but, if I were the captain of any of these ships, I would just stop the worrying, and do what's best for their economy, and having housing bubbles, and rising inflation are not good things for the economy!

And the good times for the Indian rupee didn't last one month! Remember a month ago, I told you how the rupee was on a good run, but wondered how long that would last. well, it lasted about a month. Too many questions hang over the rupee, right now, and until they are answered the rupee will be held accountable.

The price of Gold continues to weaken, much to my surprise, and I'm beginning to worry about the shiny metal's price. I see where billionaire, George Soros, cut his Gold ETF holdings last quarter. and now I see where Dennis Gartman has put a short on Gold. But guys like John Paulson are maintaining their holdings, and I see where Peter Shiff is still calling for Gold to climb to $5,000 an ounce. So, there's two way trading, which is always a good thing. I saw one analyst, call for Gold to fall to $1,550 and then take off to the moon. I would think that if Gold begins to head toward $1,550, a lot of people will be bailing, thinking the bull market is over. But not me. I'll be looking to buy more at the much cheaper price!

Today, the U.S. Data cupboard has some juicy tidbits for us. Two of my fave Industrial Production and Capacity Utilization, will print their January outcomes.. U of Michigan Confidence for the first part of this month, and the Net TIC Flows. you know, the Net Foreign Purchases. which used to rule the data roost, but has been reduced to picking up the pieces, is always an interesting print anyway.

Then There Was This. This is a real treat for you all today. The Big Boss, Frank Trotter, sent me some notes from his travels, and I have them here for you. Frank is an excellent writer, when he can find time to write! So. here's the Big Boss!

"On Wednesday night here in Aspen we hosted a reception to welcome and introduce EverBank's mortgage team in the mountains to the community. It turns out that it was EverBank that was being introduced since each team member is well known as a true all-star in the market. It is clear that this solidifies EverBank as the premier jumbo mortgage lender in and near Aspen, Vail, Glenwood Springs and Telluride with more to come. It was great to meet all the clients and soon to be clients who attended and I enjoyed telling people about all the ways that EverBank can help with all the banking basics done right and provide opportunities for global diversification.

As we look how various things impact the global marketplace we forget sometimes Burke's reminder that "Those who don't know history are destined to repeat it." Along those lines I was walking our dog here in Aspen along an abandoned railway line now turned into a pathway. The snow was about knee deep and when I scraped a layer off what appeared to be a historical marker (now you know who reads those things). It said that the railroad had ceased to exist when President Wilson nationalized all railroads in 1917 due to "too much competition".

I do vaguely recall this chapter of American history, but hold on there partner - nationalization of all US railroads for too much competition has legal precedent? Humm . . . We have an example within the week of what happens to currencies when the government goes on a nationalization plan as in Venezuela (with Argentina seemly attempting to follow on as an acolyte). As Chris noted the other day this is not a political blog but political actions do impact the global markets. We remain vigilant when we hear "government can fix it" out of the mouths of politicians worldwide."

Chuck again. Thanks Frank! When Frank writes or talks, he makes us think.

To recap. the dollar is riding the white horse today, with all the currencies except yen, bowing down to the dollar. Yen is stronger due to what Chuck thinks is the closing of short positions ahead of the G-20 meeting, just in case something is said about Japan's pushing for currency weakness.A handful of countries and their Central Banks would love to raise rates to squash housing problems, but don't do it, in order to keep their currencies from taking off for the moon.

Currencies today 2/15/13. American Style: A$ $1.0335, kiwi .8485, C$ .9975, euro 1.3315, sterling 1.5480, Swiss $1.0825, . European Style: rand 8.8190, krone 5.5560, SEK 6.3475, forint 219.55, zloty 3.1415, koruna 19.0650, RUB 30.14, yen 92.70, sing 1.2370, HKD 7.7545, INR 54.22, China 6.2362, pesos 12.70, BRL 1.9590, Dollar Index 80.55, Oil $96.72, 10-year 1.99%, Silver $30.31, and Gold. $1,628.10 and, it's Friday, so here's the link to the U.S. Debt Clock. click here: http://www.usdebtclock.org/index.html

That's it for today. Well, did you have a nice Valentine's Day? I was visited by two of my sweethearts, darling daughter Dawn, and granddaughter, Delaney Grace (along with grandson Everett) yesterday. They brought me a cupcake and a handmade valentine card. We're all getting together tonight and getting fish dinners from the VFW hall. a staple for us during lent. I totally missed talking about my very good friend, and spring training buddy's birthday the other day. Happy Birthday, Duane! And Sunday is Mike Meyer's birthday, so Happy Birthday, Mike! He's a youngster, that thinks he's getting old. I told him, "don't rush it"! and with that. it's time to get this out the door. Thanks for reading the Pfennig, and I hope you have a Fantastico Friday!

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

Let's All Kick The Can Down The Road.

Chuck Butler — Wed, 23 Jan 2013 17:45:50 GMT

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

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To learn more and view important disclosures go to: https://www.everbank.com/personal/precious-metals.aspx?referid=11808

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

In This Issue.

* Currencies & metals range trade.

* Mental giants buying yen.

* Aussie inflation rises.

* BOC to leave rates unchanged.

And, Now, Today's A Pfennig For Your Thoughts newsletter!

Let's All Kick The Can Down The Road.

Good day. And a Wonderful Wednesday to you! I sure did receive quite a few responses to the Pfennig yesterday, with wonderful stories about Stan The Man Musial. Great stuff, folks! Thank you! When I left to go home yesterday afternoon, it was snowing like there was no tomorrow, but by the time I got closer to my home in my little river town, there was no sign of the snow! OK. by way of the map, I know I live "southwest" from the office, but it's not THAT far! Crazy snowfall!

Well. the currencies and metals are trading in the same clothes they wore yesterday. We did see a little slippage in the levels yesterday morning, but all-in-all, it was a tight trading range, and by the time I left to drive on snow-covered roads, the currencies and metals were back to their early morning levels. There just wasn't any market moving data to drive the markets yesterday, nor was there any movement in the debt ceiling talks except to talk about delaying them.

What? Talk about kicking the can down the road. Yes. our illustrious leaders, said with tongue in cheek, will vote today on giving the government enough borrowing leeway to meet 3 months worth of obligations, thus delaying the demands for spending cuts, and the whole mess. I have to say that once again, I'm very disappointed in our leaders decision to delay this debt ceiling decision. It's almost as if the debt ceiling doesn't really mean anything. If we reach it, and extraordinary measures can be taken to allow us to continue business as usual, and then when those extraordinary measures run out, we simply move the goal posts, I have to wonder, what significance does it have in the first place!

Don't get me wrong here. I know that the debt ceiling is important, as it makes us stop to think about the deficit spending that's going on. In 2011, I think we almost pushed hard enough, but it all got kicked down the road. and now that we've caught up with the can, we're going to kick it further down the road.

OK. I'll get down from my soapbox now. Hey! European Central Bank President Mario Draghi, gave a speech yesterday, and said that, "We can begin 2013 on a more confident note, precisely because significant progress was made during 2012. The darkest clouds over the euro area subsided. Europe's leaders recognized that monetary union needs to be complemented by a financial union, a fiscal union, a genuine economic union and eventually a deeper political union."

Well. I like the part about the "darkest clouds" subsiding. I would agree. but if you read between lines. he's saying the same thing I keep saying. that the Eurozone and euro are not out of the woods yet. The relative calm that has been cast over the Eurozone, is welcome, given what the area had to go through the past two years. But the Eurozone leaders have too kicked the can down the road, but in their case, they are at least making spending cuts now.

In Spain yesterday, their bond auction went quite well, as there was unprecedented demand for Spanish paper. Today, Portugal goes to the auction block. If things go well with the Portuguese auction, then you will have even further proof that the Eurozone is improving and the optimism toward the Eurozone is increasing.

Speaking of kicking the can down the road. Although it's not a long kick, the Japanese are delaying the monetary stimulus that's been OK'd by the Gov't and the Bank of Japan (BOJ). I have to laugh because one of the headline stories on the news wires this morning is that the Japanese yen rallies on monetary stimulus delay. What? So these guys and gals buying yen because the stimulus is being delayed are figuring that the BOJ will not implement the stimulus? Come on! You've got to be kidding me! These yen buyers can't be that intelligently handicapped. The stimulus is coming, and even if the BOJ can hold off for a longer period of time than I think they can, the Japanese Gov't led by Abe, will find another way to weaken yen! He's told everyone that we wants inflation, and a weaker yen.

Sure the markets could fight him and the BOJ, but seriously folks, why? Japan has lost its credibility toward how they would finance their unsustainable debt. So, why delay the inevitable? Like a couple of my presentations last year. What may seem evident, may not be imminent.

In Australia overnight, Aussie 4th QTR consumer inflation rose from 2% to 2.2% (VS the previous quarter). The rise wasn't as strong as the markets and experts had forecast (2.4%) and so the Aussie dollar (A$) gave back some of its gains. You see, the mental giants that saw inflation here not rise as much as forecast, believed that this will cause the Reserve Bank of Australia (RBA) to pull the dust covers off the rate cut machine once more. You know me. I don't like inflation, and so to me, any gain in inflation is not good, and certainly doesn't warrant a rate cut! Remember what I always tell you. data can enable rate moves, it doesn't force them.

I see where the folks over at Goldman Sachs have raised their forecasts for the euro. They say that they see the euro rising to 1.40 over the next 3 to 6 months. WOW! They also lowered their forecasts for yen. Now. remember what I always tell you about these Financial Institution forecasts. 1. They change them in a heartbeat and 2. There's always the question of whether they are long or short the asset they are forecasting. But, still, I find it interesting to tell you about them, because if an institution as big as this one is telling their clients this info, it just might be the push that could move the asset.

The Bank of Canada (BOC) meets this morning. The BOC has really disappointed me this past year, in keeping their tightening bias, and verbal exercises talking about how sooner or later the accommodative adjustments will need to be removed, that were nothing more than words. So, at today's meeting, I expect more of the same. I am concerned though that the BOC could be holding back the rate hike because the Canadian dollar / loonie continues to show persistent strength. (A rate hike could push the loonie even stronger) I would hope that the BOC wouldn't go down this path. if rates need to be pushed higher than do it!

I had to stop for a moment to sing along with the Casinos, and their great oldie, "Then you can tell me goodbye".

The UK is going down a road I don't believe they'll end up liking in the long run. And that is leaving the European Union. PM Cameron said there will be a UK referendum on the subject. I'm just saying.

Well. the so-called monetary experts of the world are back in Davos Switzerland to discuss the state of the world's finances. This meeting is always good for a quote or two from the more known economists and analysts. Besides that, it's nothing more than a boondoggle.

The price of Oil is a dollar stronger this morning. with all the great stories about the U.S. finding and extracting oil here at home, one would think that the price of Oil would come down. Remember, I told you about the May 2011 call by speaker / analyst for $40 Oil, and how someone else picked up the fight and made a similar call in May 2012. I wish they were correct! But so far, lower oil prices are not to be found. And that's because, in my opinion, Oil is now used as an anti dollar investment.

The other anti-dollar investment, Gold. (Silver & Platinum too!) is unchanged this morning, after bumping up to $1,695 yesterday, it dropped back to $1,692, where it sits this morning. I think that getting back to $1,700 is very psychological and would be a big step toward moving higher for the shiny metal. I see where Currency Wars author, James Rickards said that the "Bundesbank's Gold repatriation is world historical". I agree. because I think that they are just the first to do this, there will be more. And it's all good for Gold, folks..

Then There Was This. In the news lately are stories about a silver shortage. I saw this interview with Dan Norcini, a well respected analyst, who had this to say about the shortage news.

"Most of the time shortages don't mean there is not a lot of the commodity around, it just means there is not a lot of it available at that particular price. In other words, silver is sitting out in the vaults of investors. There are guys with 1,000 ounce bars, and quite frankly, they are not interested in selling that metal at prices down near $30. As a matter of fact, when we look at that weekly price chart now, Eric, 4 out of the last 5 weeks preceding this one the silver has dipped down to $30 or below $30, and it has encountered very substantial buying down at those levels. The bears could not crack the market below that ($30 level).

What that means is if there is a demand for silver out there and it can't be met by the available supply on the market, the price is going to have to go higher. It's going to have to get to a level where people where people who are holding these big bars are willing to relinquish it in size or part with their metal."

Chuck again. This is what I always tell you Tutor Turtle. it's something that my dad taught me many years ago, and that is. there's no such thing as a shortage, it's merely something that' in need of a price adjustment.

To recap. The currencies and metals are trading in the same clothes they wore most of yesterday. No major data to drive the markets left them looking for something to trade off of, and when left with nothing, they simply left their clothes on and went to bed. the U.S. Gov't is about to kick the can down the road on the debt ceiling, and things in the Eurozone are improving.

Currencies today 1/23/13. American Style: A$ $1.0555, kiwi .8420, C$ $1.0085, euro 1.3350, sterling 1.5865, Swiss $1.0765, . European Style: rand 8.9475, krone 5.5465, SEK 6.5060, forint 219.90, zloty 3.1160, koruna 19.1560, RUB 30.15, yen 88.55, sing 1.2265, HKD 7.7530, INR 53.66, China 6.2177, pesos 12.64, BRL 2.0380, Dollar Index 79.73, Oil $96.75, 10-year 1.84%, Silver $32.35, and Gold. $1,694.83

That's it for today. Our Blues got off to a fast start in the shortened NHL season, but took their first loss last night in Chicago. The Cardinals winter warm-up took place this past weekend. I've never been one to stand in long lines for an autograph, so I don't attend. about 10 years ago, my friend Jack Stapleton took me to the winter warm-up luncheon, and I bid on a picture of Stan Musial that he would sign. I won, and now it sits proudly on my back bar at home. Along with pictures of me in my football uniform, and wrestling. I put them there to remind me of what I used to look like. it was a long time ago now. funny really. And with that. I thank you for reading the Pfennig, and I hope you have a Wonderful Wednesday!

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

BOJ To Expand Monetary Stimulus.

Chuck Butler — Tue, 22 Jan 2013 21:30:44 GMT

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

There's no smarter way to buy gold or silver

-Choose from coins, bars or unallocated metal -No storage or annual fees on Unallocated Accounts -Low account minimums of $5,000 for Unallocated Accounts and $7,500 for Allocated Accounts

To learn more and view important disclosures go to: https://www.everbank.com/personal/precious-metals.aspx?referid=11808

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

In This Issue.

* German ZEW soars.

* Oil & Gold head higher.

* Global growth gets a boost!

* Yen weakness continues.

And, Now, Today's Pfennig For Your Thoughts!

BOJ To Expand Monetary Stimulus.

Good day. And a Tom Terrific Tuesday to you! Well. It's been a tough weekend emotionally wise for your Pfennig editor. I arrived back in town on Saturday to hear about the passing of my dad's favorite baseball player, Stan the Man Musial. This news shook me as if Stan Musial was a member if my family. I don't know that I can ever put into words that would describe the loss that not only myself but all of Cardinal Nation feels. On the statue of Stan the sits outside Busch Stadium these words are inscribed: Here stands baseball's perfect warrior; here stands baseball's perfect knight. No one that ever met The Man, ever said anything bad about him. I doubt there are many people alive that can lay claim to that. I have a bit of stats on Stan in the Big Finish. But I won't spend all day on this, so . here we go.

Well. my sabbatical in the warm sun of S. Florida was just what the doctored ordered, although it wasn't all rest and relaxation. But I kept track of what was going on in the markets through the Pfennig (Thanks Chris & Mike!) and my trusty iPad. Even still, I was somewhat surprised to see the lofty price of Oil this morning ($95+). And. of Gold ($1,692). Seems the story that I sent Chris last week about Germany's Bundesbank looking to retrieve their Gold held at the Bank of France and at the Bank of NY has really stirred up a hornet's nest in the markets. The fear and suspicion going around right now is really elevated. And for once, all this fear hasn't driven investors to dollars and Treasuries!

The euro is stronger this morning by a tad on the news that German Investor Confidence, as measured by the think tank ZEW, increased to the highest level in 2 ½ - years, this month. In Germany, the Eurozone's largest economy, the markets use this report issued by ZEW, in an effort to predict what the economy might look like in 6 months from now. Get this. the index number soared from 6.9 in December to 31.5 this month! WOW! Does this mean the recovery in the Germany economy is here? Well, no. But it does give the Germans hope that a recovery could be coming! See, what happens when all the negativity is stuffed away in the closet?

This, in no way, is any indication that the euro is out of the woods. Shoot Rudy, Cyprus is a good example. There's going to be an agreement on aid for Cyprus in March, and that alone, although it will be small shakes compared to the other problems in peripheral Eurozone countries, is evidence that a threat to the euro remains in the shadows.

The Aussie dollar (A$) (& Kiwi) are stronger by about 1/2-cent this morning on news that the Bank of Japan (BOJ) is "all in" on the idea to provide an expansion of monetary stimulus for the Japanese economy. Remember what I've told you for years and years now about the A$... It's a proxy for global growth. And if the markets believe that global growth has a better than the average bear chance of gaining traction if the BOJ expands stimulus, then the A$ will be the benefactor. And so it is.

There have been a lot of pundits writing about the impending fall of the A$... They believe that when the Reserve Bank of Australia (RBA) comes back to the rate cut table in the first quarter of this year, that they will cut rates and hang the A$ out on a line. Well. I don't know about that! But I will give them some agreement on the rate cut idea. I personally don't believe the RBA needs to raise rates, given the recovery in China, the rising iron ore prices, and now the stimulus in Japan. These things will all provide good growth opportunities for the Aussie economy. But, the RBA being a Central Bank, they will feel that they "have to add assistance".

So, see, it's not just the Fed that I bang on with this "need to provide assistance". The "Currency Wars" story is really beginning to get some air play around the world. But like I've said all along, since reading the great book, Currency Wars by James Rickards, that it might be all well and good that this is happening, but look to the U.S. dollar to lead the currencies down, which means that other currencies will remain at greater value than the U.S. dollar. of course that's my opinion, and I could be wrong.

I read a story this past weekend, about how Norway's Sovereign Wealth Fund (SWF) ($700+ Billion is size) is beginning to look to other markets for their bond investments. The "other markets" being countries that don't have truck loads of debt. Doesn't that sound like my call for the Emerging Markets because they don't have debt loads to drag them down? So. I have to stop the patting myself on the back before the bursitis pops up! HA! But seriously.If Norway's SWF is looking to invest in these lower debt burdened countries. I think that's a ringing endorsement for the Emerging Markets, eh?

The rising price of Oil has the Petrol Currencies moving higher VS the dollar this morning. Countries that include: Norway, Canada, Brazil, and Russia, are all seeing their currencies bid stronger. I'm sure Brazil's Dilma Rousseff doesn't like seeing the Brazilian real move stronger, but it is what it is right now. And besides. if she isn't ready to see an improving real price, then she shouldn't be targeting higher growth for this year. (her Presidential term is about half over, so if she wants to get reelected Brazil had better turn the economy around!)

I mentioned the Chinese recovery above. and it's always good to go back and revisit something, so here we go! The Chinese recovery got a boost this past weekend when Baosteel, China's largest iron and steel conglomerate raised their March booking prices on steel. This is the 3rd consecutive monthly increase, folks. and that tells me that there's a firmer outlook for steel demand. you don't have a firmer outlook for demand without a recovery going on. So, this is just another notch in our belt, that we use to measure the Chinese recovery.

The poor Canadian dollar / loonie. it tries to play catch up with the other Commodity Currencies, but then there's always the U.S. dollar dragging it down. I like Canada and the loonie. but until it can find a way to leave the U.S. dollar at the door when it heads to the dance, it will have this albatross around its neck. That doesn't mean we all bail on loonies. That just means we have to be patient, and understanding. sounds like a troubled kid, eh? Canada will print their November Retail Sales report today, which doesn't look like it will be good, but I doubt that much will be taken into the report, given the Bank of Canada (BOC) is scheduled to meet tomorrow. All eyes will be focused on that meeting.

This thing with the Bundesbank and Germany's Gold is the kind of stuff I love. The intrigue, the conspiracy theories. Remember the TV show 24? Now that was great TV! OK, so you get where I'm coming from on this whole thing, right? I mean, what happens if Germany isn't the only country to get the willies and request a repatriation of the Gold they hold in other countries? Who's next? It's almost like a game of musical chairs. and the last country to ask for their Gold will be left without a chair. I bet the boys and girls in China and Russia are watching this all unfold and smiling like Cheshire Cats, for they hold their own Gold. What do you think about all this?

Not much in the form of market moving data from the U.S. data cupboard this morning. Some Existing Home Sales data, and regional manufacturing indexes from Chicago and Richmond. So, the Gold story is going to get even more air play today, because this data on the docket isn't going to hold the markets' attention for too long!

Then There Was This. I saw this last week in the U.K. Telegraph by one of my fave writers, Ambrose Evans-Pritchard and thought it played well with what I've been trying to tell you about Central Banks buying Gold this past year. (remember the line? If Central Banks are buying Gold, then why shouldn't you be buying it?). So. here we go.

"The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project. Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.

They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen. The central bank buyers are of course the rising powers of Asia and the commodity bloc, now holders of two thirds of the world's $11 trillion foreign reserves, and all its incremental reserves.

It is no secret that China is buying the dips, seeking to raise the gold share of its reserves well above 2pc. Russia has openly targeted a 10pc share. Variants of this are occurring from the Pacific region to the Gulf and Latin America. And now the Bundesbank has chosen to pull part of its gold from New York and Paris."

Chuck again. follow the money, folks. follow the money.

To recap. The currencies are a bit stronger this morning as German Business Confidence hit a 2 ½-year high this month, and the BOJ announced that they were all in on expanding monetary stimulus. The price of Oil and Gold is higher this morning. And the recovery in China got a boost from an increase in the outlook for steel demand. Norway's SWF is looking to push investment in Gov't Bonds to the countries that aren't burdened by huge debt loads. read Emerging markets!

Currencies today 1/22/13. American Style: A$ $1.0570, kiwi .8415, C$ $1.0070, euro 1.3345, sterling 1.5875, Swiss $1.0765, . European Style: rand 8.8490, krone 5.5825, SEK 6.5150, forint 220.25, zloty 3.1225, koruna 19.1950, RUB 30.20, yen 88.65, sing 1.2265, HKD 7.7530, INR 53.80, China 6.2199, pesos 12.68, BRL 2.0445, Dollar Index 79.75, Oil $95.55, 10-year 1.87%, Silver $31.96, and Gold $1,692.00

That's it for today. you know. 20,000 men have played in the major leagues and only four players have finished among the top 20 for home runs, RBI's, and batting average - Babe Ruth, Lou Gehrig, Ted Williams and Stan Musial. Only three men have accumulated more than 6,000 total bases - Willie Mays, Henry Aaron, and Stan Musial. Only one man had both lists - Stan Musial. And a real statement on what kind of man he was, he was never thrown out of a game for arguing. There's a great story that illustrates this, but I've run out of space and time for that today. I got back in town about the same time as the deep cold front. lucky me! NOT! I kept asking myself when I got off the plane here in St. Louis, why I was coming back? Oh well. Mike's here, so it must be time to get this out the door! I hope you have a Tom Terrific Tuesday

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

Bad News Begins To Build Up Against The Dollar.

Chuck Butler — Fri, 11 Jan 2013 17:10:57 GMT

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In This Issue.

* Draghi sounds upbeat, euro soars.

* Gold adds $20!

* A$ reaches for the stars.

* Yen weakness continues.

And, Now, Today's Pfennig For Your Thoughts!

Bad News Begins To Build Up Against The Dollar.

Good day. And a Happy Friday to one and all! So far so good this morning, so I've got that going for me! The first full week of the year, always seems to be long. Especially if you see a full year's calendar! I turned on the iPod this morning, and Alvin Lee is playing: I'm Going Home. Did you ever see him perform that in the Woodstock movie? One of my all-time fave songs and performances.

Well. after I signed off yesterday, things began to heat up. By mid-morning, the euro was pushing toward 1.32 and taking the other "little dogs" along for the run to chase the dollar down the street. I saw a story title on the Bloomberg this morning that made me laugh. The title was: "Gold falls on stronger dollar" Hmmm. I wonder if the writer had seen the dollar's performance this week before submitting that story! Yes, the dollar has started 2013, the way I would think it would given the problems that the U.S. faces between now and March 27th.

I outlined them for you last week, so I won't go into that again, but you all know what I'm talking about. Oh, BTW. we breached the debt ceiling on December 31st. Right now, we're operating on the "extraordinary measures" that outgoing Treasury Sec. Tim Geithner implanted. But, as I told you the other day, an independent company believes those "extraordinary measures" will run out sometime between mid-Feb and March 1st. We've already breached the debt limit by nearly $23 Billion dollars! And then the fun and games begin. I've got an interesting piece for you in the TTWS section of the Pfennig this morning, that relates to the debt ceiling. You'll want to make sure you don't miss that!

So. the currencies, led by the euro, (just like the "old days") gained against the dollar yesterday. For what reason? Well. I told you that the European Central Bank (ECB) meeting would be no great shakes. I was wrong. Apparently, there was a great shake (probably from Crown Candy, yum!) in the ECB meeting. it came when ECB President Mario Draghi said that he saw positive signs in the Eurozone economy. I particularly liked this quote from Draghi, "We spoke a lot about contagion when things go poorly, but I believe there is a positive contagion when things go well. And I think that's also what is in play now. There is a positive contagion." - Mario Draghi

I don't think the markets were ready for an upbeat ECB. Now, this in no way signals that the ECB is calling off the dogs, and that they believe that everything will be seashells and balloons from here on out! No. The ECB is quite aware that the wolf is always at the door in the Eurozone. but for now, the relative calm that I've talked about in recent months, is allowing the ECB to breathe easier. The relative calm has been the ECB's "breathe-right strip"!

So. hearing this talk of stronger growth and better times from the ECB, the euro took off! Soon 1.32 was taken out, and the single unit pushed to 1.3270. The euro has given back a small piece this morning, but what was impressive was that move yesterday. It was the "perfect storm" for the euro, given the strong Chinese data in the early morning, the news that Spain's bond auction was better than expected, and then the ECB comments later in the morning.

And the dollar wasn't seeing anything to support it. The Weekly Initial Jobless Claims increased again moving to 371,000 last week. In addition, the job front isn't getting any good news either. American Express announced that they would be cutting 8.5% of their work force, (5,400 jobs) and Morgan Stanley said they would cut 1,600 workers. In a separate report, an analyst forecast that 5,000 jobs would be gone from Morgan Stanley before June. It's my experience in these times that leads me to believe that we'll see more and more of these announcements. It's like piling on without a penalty. you can hear these companies saying, "hey! Everyone else is making a job cut announcement, let's get ours out there too, so no one notices".

Last night, we had two Fed Heads, (Bullard and Kocherlakota) and each had their own agenda. Bullard was upset that the Fed has tied fed policy to economic data. And Kocherlakota believes that Fed policy is "too tight". If you were the leader of a country, wouldn't you be laughing right now? I mean what's going on in the U.S. would have to be funny to someone on the outside. Unfortunately, we're on the inside, and it's not so funny inside here.

The U.S. data cupboard will print November's Trade Deficit this morning. It should show a small narrowing from October's $42.2 Billion deficit. Oil prices were cheaper in November, if you recall. BTW I'm still looking for the $40 oil that was promised me in May of 2011. I also heard about it April of 2012. I'm not poking fun at anyone for making that call. I'm simply saying that I'm still waiting!

The Aussie dollar (A$) really reached for the stars yesterday, and as a result, traders are betting that the gains were excessive, and thus a bout of profit taking for the A$... As I've said quite a few times in the past year. I truly believe that a $1.04 -1.05 range for the A$ is a fair value for the currency, given its fundamentals, and China's recovery. I think that any time the A$ gets some wind in its sails and heads higher it will be met with resistance and profit taking.

The Japanese yen continued to move in the opposite direction as most of the other currencies, and reached its weakest level VS the dollar since June 2010! The yen did touch 89 overnight, but has since gained back a bit, but remains offered. So, how far will this weakness go with the yen? Good question, Chuck! Well. no one knows for sure. but I think it depends on what happens to the dollar. if the dollar goes for a ride on the slippery slope and begins to lose value against the euro even more, it will be difficult for the yen to continue to weaken, for the crosses will catch up with it.

But, should the dollar rally, then yen could get back to the weakening, and it could take it easily past 90. and higher. (remember, yen is a European priced currency, which means the higher the price, the lower the value VS dollars) The new Japanese Gov't is all about yen weakness, folks. they want 2% inflation, and it looks like the Bank of Japan (BOJ) has signed on to that idea. So, look for more drive from the Japanese Gov't to weaken the yen.

In the tale of two currencies. (yen and renminbi), the Chinese renminbi/ yuan reached a 19-year high this week, and looks to continue to gain VS the dollar given the recovery in China. Remember though, at this point, the renminbi/ yuan is a controlled currency, so after reaching its 19-year high earlier this week, we've seen the currency weaken a bit. That's just the Chinese Gov't making sure that traders and investors don't begin to trade the renminbi /yuan as if it were on a One-Way Street. I think the renminbi/ yuan will get back to the small doses of appreciation soon.

China overtook Japan as the largest foreign holder of U.S. Treasuries last year. I have to wonder if that's a prize or not. Anyway. what I'm saying is that China has passed Japan in many ways in recent years, with the two exchanging places. China is on the way up, and Japan on the way down. Can you dig it? HA! I have no idea why that came out. but I must have had a 60's flashback!

Well.. the price of Gold soared by $20 yesterday, as the dollar was getting sold like tie-dye T-shirts at a Grateful Dead Concert. The shiny metal is giving back $5 of that move yesterday in the morning trading, as traders and investors take profits in the currencies and metals. I want to bring something to your attention regarding the U.S. Gold Holdings. there's a petition at the White House Internet site calling upon the U.S. Gov't to audit the U.S. Gold reserve - and to account for any surreptitious ownership claims to the gold. Really! I'm not kidding you! If 25,000 people electronically sign the petition, the White House is obliged to forward it to policy experts for review and to make a public statement about it.

Now, we all know that an "audit" isn't going to take place, but wouldn't you like to see the Gov't squirm around as they tell the public that an "audit" isn't necessary? I know I would pay to see that! Here's the link to the site: https://petitions.whitehouse.gov/petition/perform-assayed-public-audit-a...

Then There Was This. OK. have you all been following the story going around about how the President is thinking about using a law that was probably intended for use on something else, and implementing it now, to avert the debt ceiling and the threat of a Gov't shutdown? I'm talking about the $1 Trillion platinum coin that would be minted by the Gov't and deposited at the Fed Reserve. The White House Press Sec. didn't deny that this was happening, when asked yesterday, and that is leading many observers to believe that the President will indeed use this way to circumvent the debt ceiling.

I came across this response by Lawrence Williams in response to this news. "It would have to constitute the most gigantic fraud ever perpetuated by a government and probably make the U.S. dollar and the U.S. economy the laughing stock of the world. If anything, it would trigger a huge investment surge into gold and silver as all faith in government-created money would evaporate!

Firstly - why platinum? It is based on a legal technicality allowing the U.S. to mint platinum coins of any face value. However, given that $1 trillion dollars worth of platinum at current prices represents around 8 or 9 times the amount of platinum ever mined throughout history, a trillion dollar face value coin would have to bring any kind of money creation into even more disrepute than it already is."

Chuck again. let me repeat this. $1 Trillion dollars worth of platinum at current prices represents 8 or 9 times the amount of platinum EVER MINED THROUGHOUT HISTORY! So, if you issue/ mint a coin that's worth $1 Trillion in platinum, and there's not enough platinum to back it up, then you have created money out of thin air. How the dollar would survive something like this is beyond my gray matter's ability to reason.

To recap. A perfect storm was created for the currencies and metals yesterday, when ECB President Draghi talked upbeat about the Eurozone economy. his comments added to the news that Spain's bond auction was a very good one, and that China had printed a very strong exports data overnight. Gold soared $20, but has given back $5 this morning on profit taking in both the currencies and metals.

Currencies today 1/11/13. American Style: A$ $1.0560, kiwi .84, C$ $1.0165, euro 1.3255, sterling 1.6110, Swiss $1.0905, . European Style: rand 8.6855, krone 5.5435, SEK 6.5055, forint 223.75, zloty 3.09, koruna 19.3350, RUB 30.30, yen 88.90, sing 1.2255, HKD 7.7520, INR 54.75, China 6.2150, pesos 12.65, BRL 2.0355, Dollar Index 79.82, Oil $93.18, 10-year 1.88%, Silver $30.66, and Gold. $1,668.00 and it's Friday, so let's take a peek at the U.S. Debt Clock. Click here: http://www.usdebtclock.org/index.html

That's it for today. A Big Happy Birthday ( tomorrow) to my oldest son, Andrew. 31 years ago (tomorrow) we had 9 inches of snow fall on the day he was born. I remember taking darling daughter Dawn who was 2 ½ to the florist shop and letting her pick out a gift to take to her mom and new brother. She was so cute, and talked to the salesperson, about how proud she was to be a Big Sister. Funny how that seems to have happened last week, but I can't remember what I had for dinner last night! HA! So. Happy Birthday, Andrew! My beloved Missouri Tigers travel to Ole Miss to play basketball tomorrow night. their first SEC road game. And this is it for me, for the next week. I'll be gone, and like I said earlier in the week, Hopefully Chris and Mike will work out taking the conn on the Pfennig next week. Alright, now dig this baby. I thank you for reading the Pfennig. now go out and make this a Fantastico Friday!

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

The FOMC Throws A Cat Among The Pigeons!

Chuck Butler — Fri, 04 Jan 2013 17:31:00 GMT

In This Issue.

* Currencies, metals & Treasuries getting sold.

* Is this the beginning of a change for the dollar?

* Yen drops to a 2-year low VS dollar.

* Chuck breaks down the timeline.

And, Now, Today's Pfennig For Your Thoughts!

The FOMC Throws A Cat Among The Pigeons!

Good day. And a Happy Friday to one and all! It sure doesn't look like it's going to be a Happy Friday for the currencies and metals though. The Fed has thrown a cat among the pigeons, and the markets have scattered on the risk assets. It's a Jobs Jamboree Friday, and I've got more to talk about on the upcoming days of reckoning for the U.S. So. let's get going! This is really ugly folks, so go ahead and skip down to take a peek at the currency roundup, then come back, and I'll attempt to explain!

Well. The FOMC meeting minutes were the watershed event that brought a HUGE dollar rally yesterday afternoon and overnight. The euro las lost 1-cent, the yen is at a 2-year low VS the dollar, Gold has lost $35, and Treasuries are getting sold like funnel cakes at a state fair! What, in the world is going on here? Ahhh, grasshopper, the Fed threw a cat among the pigeons yesterday by saying in their minutes that they thought they would end their latest round of Quantitative Easing (QE) in 2013. For those of you keeping score at home, that's $85 Billion in monthly bond purchases. So, from that you can see why Treasuries are getting dumped, but. the currencies and Gold?

And. did the Fed Heads say when they would end their latest round of QE in 2013? NO! So, it could end up being on the last day of 2013, when they also announce a new round of QE! Did the markets EVER take a moment to think of that scenario? NOOOOOOO! They just went "all in" and began selling Treasuries. The 10-year yield, which yesterday morning was 1.83%, has risen to 1.96% this morning. (remember, as bond yields rise, the price of the bond drops) So, is this the watershed event that could swing a multi-year rally for the dollar? What I'm talking about here is will the rising bond yields, remove the need to hold risk assets? That's what it appears to be saying today. but let me remind you that, we have seen these moves higher in bond yields a few times in the past couple of years, and they didn't end up being too much of anything. Remember, the Fed IS STILL BUYING $85 Billion per month!

I also don't think the dollar has the ability any longer to go on a multi-year strong trend. but then that's just me, as I see the debt being a major problem for the dollar to deal with. But. for now, it's all about the dollar today. Mamma said there would be days like this, Mamma said. Two days ago, the markets were so down on the dollar, the green/peachback looked like it has lost its puppy. Then, the markets thought the Fiscal Cliff Deal would hurt the dollar since it never even addressed debt reduction. Two days later, and the markets think that the Fed saying they would end QEIII in 2013, that it's the end-all medicine to what ails the dollar. I told you long ago, that traders were a fickle bunch.

Well. the markets are also taking a leap of faith in the Jobs Jamboree today. The markets have decided that the U.S. probably kicked some tail and took names later with regards to job creation in December. The ADP report yesterday really surprised the markets by saying job creation according to them increased by 215,000! (140,000 was forecast) The experts believe that the BLS (Bureau of Labor Statistics) will print a 153,000 increase, with the Unemployment Rate remaining at 7.7%... So, to get to 215,000, the BLS will have to get to cooking the books, eh? Come on Chuck, that's like feeding the bears isn't it? Don't encourage the BLS!

In our monthly contest in the office to pick the jobs number, of which I've never won, (imagine that! The boss not winning. hmmm) I'll have to make a guess as to what I believe will be the number this month. Given the ADP blowout of job creation, you would think that I would be going with a number north of 153,000. But, then we've got the 3-month average of around 133,000 a month, and given that in December the Fiscal Cliff was still thought to be a reality that small businesses would have to deal with, I would think the number would be disappointing. But then there's seasonal workers in December. I'm going with 140,000.

The Big thing about the data today, is that the markets believe it will be very good, and they have bought dollars ahead of the data print. Should the number disappoint, as I believe it will, then we could see those dollar purchases unwind. But should the number surprise on the upside, and given the BLS's propensity to play games with the numbers, it very well could, and that would bring about more dollar buying. So. I guess, we have to pay attention at 7:30 (CT) to the announcement.

Well. with the currencies and metals in the woodshed for a beating this morning, I could be Polly-Anna-like and say, Hey! We get to buy at much cheaper levels today! But I'm not feeling very Polly-Anna-like this morning. In fact, I actually feel like I need to go back to bed! But, that's not an option. so I carry on despite my ill feeling.

But we do get to buy at much cheaper levels this morning. Dollar averaging, right? The problem is, that this dollar buying could go on for a few days. At least one currency that is getting sold deserve to be getting sold. The Japanese yen, as I said above is at a 2-year low VS the dollar this morning, as it trades well into the 88 handle. Yen is still relatively strong, folks, so this move weaker has the potential to keep going for some time.

The euro, Aussie dollar (A$), kiwi, pound sterling, and few others are all down 1-cent since yesterday morning. And with Gold down $35 and Silver down nearly $1, this is a real rout of the currencies and metals this morning. There's not much to say to sugar coat it. the markets have taken some words in the FOMC meeting minutes as the gospel, without even knowing the "end date". We'll have to see if this is for real, or just a false dawn for the dollar. I believe it to be the latter, but then that's just my opinion and I could be wrong!

After re-reading the analysis that I gave you of the Budget Deal (BD) yesterday, I realized that I had mentioned two months, but didn't really breakdown the time and the items, and not wanting to sound like the Fed Heads, I decided to write some more on this... so... first up in late February, we'll have the extraordinary measures that U.S. Treasury Sec. Tim Geithner has implemented to avert a Gov't shutdown because of the debt ceiling limit being breached... there will be fight in Congress in the weeks leading up to late February between those that want to willy nilly raise the debt limit, and those that will only do so, if there are some deep spending cuts... Oh. and Geithner has announced that he will leave his post as U.S. Treasury Sec. BEFORE the discussions on the debt ceiling begin. Nothing like getting out of Dodge, eh?

Then we move to early March, this is when the sequestration of the $109 Billion in spending cuts for this year will have to be dealt with... There will be cries from those that believe these cuts, which half are from the Pentagon's budget, will weaken our national defense... This could get really ugly... But. tax increases without spending cuts? That doesn't seem right, and this is where those that want debt cuts will dig in their heels.

And then March 27th... the short term budget fix for funding government agencies expires, and once again, the specter of shutting down the Gov't will be raised... Yes, it's all fun and games until somebody loses an eye! OR a country has to face up to its unsustainable deficit spending habits!

Then There Was This. I saw this last night and it caught my eye. I had noticed that a lot of pundits were saying that the Fiscal Deal that was done this week would allow the rating agencies to back off their threats of a downgrade. I thought. that's strange, there were no debt cuts, and the ratings agencies were all about our rising debt. So, it was interesting to see this print on MoneyNews.com.

"The United States must do more than the recently passed fiscal cliff measures if the country is to rescue its Aaa debt rating from its current negative outlook, rating agency Moody's Investors Service said.

Standard & Poor's said the deal does not affect its negative view of the U.S. credit outlook, and said more work remains ahead for policymakers.

The last minute deal passed on Tuesday to avert potentially devastating tax hikes and spending cuts clarifies the medium-term deficit and debt trajectory of the federal government, Moody's said in a statement.

However, it does not provide a basis for meaningful improvement in the government's debt ratios over the medium-term, Moody's said."

Chuck again. This is going to get really ugly before it's over, IF it ever does get over! I really don't believe that we'll see meaningful debt cuts, and out debts will continue to mount, which will weigh on the dollar.

To recap. The FOMC said that they would end their QEIII in 2013, and that's all the markets needed to sell currencies, metals, and Treasuries! And sell them with force, they did! It's an ugly day for the currencies and metals, and it could get uglier should the Jobs Jamboree surprise to the upside like the ADP report did yesterday. Yen is at a 2-year low VS the dollar, as well it should be, but there's more rot on this vine to be exposed.

Currencies today 1/4/13. American Style: A$ $1.0410, kiwi .8225, C$ $1.0085, euro 1.3110, sterling 1.6025, Swiss $1.0760, . European Style: rand 8.64, krone 5.6075, SEK 6.5570, forint 223.80, zloty 3.1660, koruna 19.48, RUB 30.50, yen 88.25, sing 1.2305, HKD 7.7515, INR 55.07, China 6.2305, pesos 12.82, BRL 2.0445, Dollar Index 80.80, Oil $91.61, 10-year 1.96%, Silver $30.54, and Gold. $1,631.45. And with it being Friday, here's our chance to take a peek at the U.S. Debt Clock, click here: http://www.usdebtclock.org/index.html

That's it for today. a great song by the Allman Brothers is playing on the iPod this morning, In Memory of Elizabeth Reed. Alex won his wrestling match last night, his first in over a month after suffering a concussion. I have a new mouse pad on my desk that has pictures of my three grandkids on it. So, now I see their smiling faces while I'm working! Hey! The Orlando Money Show is less than a month away! I have two speaking times, and the Big Boss, Frank Trotter has a main-stage presentation! WOW! I always enjoy the Orlando Money Show, as it's the biggest one that's done, and I get to get away from the cold for a few days! (although it hasn't exactly been warm in Orlando the last two years!) you can check the show out here. I expect to see you there! http://www.moneyshow.com/tradeshow/orlando/world_moneyshow/

Now. go out and have a Fantastico Friday!

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

The Fiscal Cliff Is Averted (for now!)

Chuck Butler — Wed, 02 Jan 2013 18:29:00 GMT

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In This Issue.

* Risk asset classes soar.

* But what's to come in 2 months?.

* Yen begins 2013 being offered.

* Happy New Year!.

And, Now, Today's Pfennig For Your Thoughts!

The Fiscal Cliff Is Averted (for now!)

Good day. And a Wonderful Wednesday to you! And welcome to January, and a New Year! My New Year's celebration was low key, but fun, and I got to spend it with a close group of friends, which is always a treat. I hope you had a fun celebration, and didn't have to spend yesterday making resolutions not to do "that" again! HA!

Well, Front and Center this morning, I have to tell you that I'm beginning to think that I am sage-like. OK, get back up from the floor onto your chair, try to stop laughing so hard, and listen to what I've got to say. a couple of months ago, I told you that I believed our lawmakers would find a way to kick the can further down the road, and if they did, the dollar would get punished. If they didn't, and we went cliff diving, we could very well see a return to 2008-like trading, as a so-called, flight to safety rewarded the dollar and Treasuries.

Well. in an 11-th hour (not really) deal, the lawmakers did find a way to kick the can down further down the road. And. the currencies and metals are taking liberties with the U.S. dollar this morning to start 2013. Here's the skinny on the deal, as I see it. The so-called "fiscal cliff" has been avoided (for now). The key parts of the bill that the House and Senate agreed on, contains very few cuts to spending. let me get that put out front and center on this, because to me, spending cuts were what I wanted to see. Instead, the lawmakers raised tax rates on household incomes above $450,000, they allowed the payroll tax cut to expire, extended the unemployment benefits, and did something called a delay to sequestration for two months.

All that means is that the lawmakers have put off the discussions of defense and domestic spending cuts by two months. Which is about the time the "extraordinary measures" that U.S. Treasury Sec. Geithner has implemented to avoid the debt ceiling crashing in.. So. we have some "fun and games" still to come. But they have two months to point fingers and play the "blame game" so, we get to deal with that! Boy. aren't we the lucky ones?

So. getting back to the sage-like comment. Long time readers know that I'm just having some fun with that. I'm the last person to think that I would sage-like! It was all in fun, so let's not get our feathers all ruffled, eh? But wouldn't it be great to have a "sage" at our disposal?

So. in our old way of calling trading sessions Risk On or Risk Off, this would be considered a Risk On Day. For all the risk asset classes are rallying. stocks, currencies and commodities. Shoot Rudy, Gold is up $18 this morning! We hadn't seen Gold on this kind of a positive run in what seems like a long time. I guess the "boy & girls" that manipulate the price of Gold & Silver, are still away from their desks. The price of Oil is really moving higher once again, and look at those 10-year Treasury yields. The gapped up 13 BPS from Monday to 1.83% Looks like the markets aren't taking that so-called flight to safety, eh?

Speaking of being away from their desks. Japan is on vacation all this week, but that hasn't stopped the markets from pushing the Japanese yen even lower. Yen begins 2013 being offered, and the price falling VS the dollar and euro nearly every day. I suspect this will be the overwhelming trend for yen in 2013, which is has been a long time coming, and it's going to be a long time gone. Appears to be a long time, yes, a long time, long time, before the dawn. (CSNY)

We start the year off today with the data cupboard on the docket. the ISM Manufacturing Index for December will print this morning. After falling to below the line in the sand figure of 50 in November, manufacturing is expected to recover back above the 50 index figure. Should the number surprise on the down side (which I think it will) it will quickly be dismissed as "fiscal cliff" driven. But, if the index number is as expected, there will be no discussion of the "fiscal cliff" affecting the result. It's just the way we do things these days folks. if we need to, for the feeling good need, add an asterisk then we do so without batting an eye. If we are "surprised" by the outcome and it makes us feel good, then we scratch the need for an asterisk.

Of course to me, all the data the Gov't prints needs an asterisk! But then that's just me. and of course a person like John Williams at Shadowstats.com. And coming this Friday, we'll get the biggest piece of data to start the year. The December Jobs Data. It's all a crock to me. But, it's better that I stop there. better that I don't go into data prints, otherwise I'll do all the writing, hammering on the keys, getting my blood pressure soaring, and then have the legal beagles erase it all and tell me I can't say those things! HA!

And I Love Her, by the Beatles is playing on the iPod. what a great song! The kiss my lover brings, she brings to me.in my opinion, you can't beat the Beatles for melodies, lyrics and musicality. Speaking of music and lyrics. I heard a song the other day on the satellite radio, by Ronny Montrose (just Montrose to us old guys!) And in the song he singing about how he wants Gold, he wants Silver, because paper money don't hold. The song is nearly 40 years old (1974) and even then, a rock-n-roller knew about owning Gold & Silver!

Speaking of Gold & Silver. they both gained for a 12th consecutive year in 2012, which happens to be the longest winning streak in at least nine decades! And once again, Silver outperformed Gold in 2012. Silver gained 10.7% in 2012, while Gold added 7.45%... Not too shabby, given the price manipulation became nearly a daily thing in 2012. But, guess what metal outperformed Gold & Silver in 2012? . If you guessed platinum then you win the Cupie doll! Platinum gained 12% against the dollar in 2012. we began to offer platinum in addition to our Gold & Silver offerings in 2012, so it looks like our timing was good!

The Canadian dollar/ loonie, which I talked about a lot on Monday, has gained 1-cent in the currency rally overnight. Canada will also print a jobs report this Friday, which is, at this point for me, more realistic then the BLS cooked books printing in the U.S. But then one has to scale back the economy-size factor, of the U.S. VS Canada. Any way. last month Canada added 55,000 jobs which was HUGE for a one-month gain, so I'm expected this to be watered down in December. The Canadian economy is strong, but not "that strong"!

The Aussie dollar (A$) is knocking on the door of $1.05 this morning. And is the best performing currency in the overnight sessions. The A$'s kissin' cousin across the Tasman, the New Zealand dollar / kiwi is in second place, so both of these Commodity Currencies are quite strong this morning. With the U.S. "Fiscal Cliff" now put off for two months, we could very well see a strong move by higher yielding (relatively speaking) currencies.

In fact, this morning, I saw a story about the return of the Carry Trade is really helping the Emerging Markets like Turkey. The Carry Trade return for the Polish zloty was 16.8% in 2012, and 15.5% for the Hungarian forint. Turkey's Carry Trade return was 6%... For the Hedge Fund traders, that love deals like this, these Carry Trade returns were like manna from heaven. For you and me? Well, we would have to find a broker that would allow us to short the dollar, yen, euro or any other low yielding currency and to buy an Emerging Markets currency, with retail size amounts of money. I don't think you'll find that. But, what you could have done is buy into our Emerging Markets MarketSafe CD that we issued last year. If these Emerging Markets continue to rock and roll, we just might bring that CD back, like Disney brings back Snow White from the "vault".

Looky here. I'm almost to the Big Finish, and I haven't talked about the euro yet. Well, I think the relative calm that has come over the Eurozone, will continue to allow the euro to be stealth-like in its gains VS the dollar. As I say over and over again. the euro is not out of the woods, but it is at least stabilizing. Especially given the focus being shifted to the U.S. these past couple of weeks. and with the talks, on debt reduction, being sequestered for two months, the focus is going to remain in the U.S. and that's all good for the euro. But. before you go out and make a big investment in euros, let me remind you that as I keep saying. the euro isn't out of the woods, and all it takes is for a peripheral country's problems to get blown up and the euro will be back on the selling blocks.

As I head to the Big Finish, Gold has added $5 to its gains this morning, bringing the total to $23! That's quite a one-day move, eh?

Then There Was This. my good friend, Doctor Dave Janda, has a radio show called "Operation Freedom" that I've been honored to be a guest on about ½-dozen times in the past few years. This past week, he interviewed, G. Edward Griffin, and he sent me the link to the interview.. Mr. Griffin is the author of the book on the origin of the Fed called, "The Creature From Jekyll Island". I've talked about this book for a couple of years now, and how it should be mandatory reading in schools. well. I thought I would also give you the link to the interview. The good doctor and Mr. Griffin talk about things that I wish they could have talked about for hours. So. if you have about 20 minutes, this is a good listen. http://www.davejanda.com/audio/GEdwardGriffin123012.mp3

Chuck again. Listening to this interview, I got inspired and went to find my copy of the Creature from Jekyll Island book. I figured I needed to re-read it, for it has been a couple of years since I first read it. and I read so much that all these facts get mixed up as to who wrote about them, and so on.

To recap. The Fiscal Cliff was averted, for now. and the risk asset classes of currencies, commodities and stocks are soaring this morning! Our lawmakers found a way to kick the can further down the road, and begin the tax hikes that will become the norm in this country. In two months they will once again address the spending cuts about the same time the extraordinary measures to keep us from defaulting because we've hit the debt ceiling limit will expire. That will be fun times again! NOT!

Currencies today 1/2/13. American Style: A$ $1.0495, kiwi .8360, C$ $1.0150, euro 1.3275, sterling 1.6305, Swiss $1.0980, . European Style: rand 8.4660, krone 5.5180, SEK 6.4570, forint 219.55, zloty 3.0640, koruna 18.9770, RUB 30.17, yen 87.05, sing 1.22, HKD 7.7510, INR 54.35, China 6.2320, pesos 12.78, BRL 2.04, Dollar Index 79.44, Oil $92.98, 10-year 1.83%, Silver $31.13, and Gold. $1,687.80

That's it for today. So, did you make a New Year's Resolution? I stopped making those many years ago. we start the year on the trading desk down one person, as Monday was Lori's last day, as she dropped us like a bad habit. But our little Christine is back today from vacation. Welcome back, oh, by the way, you have to do the work of two people, hope you rested on vacation! HA! Well. I always try to watch the Rose Bowl Game. the beauty of that surrounding area of the Rose Bowl is just magnificent. The game is usually good too! I usually watch the Rose Bowl Parade too, but missed it yesterday. Well, I had better get going on this day on the trading desk. I hope you begin 2013 on the right track, and that you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Currencies Feel The Freezing Rain.

Chuck Butler — Fri, 28 Dec 2012 18:12:27 GMT

In This Issue.

* Tight ranges for the currencies.

* Except for yen.

* Fiscal Cliff talks resume?.

* Norway back on the rally tracks.

And, Now, Today's Pfennig For Your Thoughts!

Currencies Feel The Freezing Rain.

Good day. And a Happy Friday to one and all! Yes. I'm back! Chris let the cat out of the bag yesterday, so here I am, back in the saddle once again! I hope you all had a great Christmas or holiday that you observe. I sure did! My vacation was interrupted for 2.5 days to travel to South Florida for a meeting, but at least it was to S. Florida and not anywhere North! The cold weather has set in, and I already am tired of it! Like today, we are expecting some freezing rain. YUCK!

Well. from the looks of what Chris was reporting while I was away, the currencies look as though they've been hit by freezing rain, as they haven't really gone anywhere to speak of. Except that is.. Japanese yen. I kept warning you all that the debt and flailing economy was going to get to yen eventually. And eventually has finally come around for the yen. So, in case you've been on vacation, like me, and hadn't seen the rot on yen's vine, you've still got time to react, as yen is still below 90, but at the rate it has fallen from 79 to 86 (I know the numbers went higher, but since it's a European priced currency, as the numbers rise, the value of yen falls)

Sooner or later, love it gonna getcha. No wait! Sooner or later, the debt was going to catch up with Japan. For the longest time, the markets believed that Japan's debt could be self-financed by the Japanese population. But, as I pointed out some time ago when talking about this, the Japanese population is growing older, and the youngsters have no interest in bailing out the Gov't's debt. So. here we go! Yen has taken its seat on the slippery slope, I wonder where it will get off.

The other "thing" that's weighing on the yen these days is the simple matter of it no longer being the "king pin" of the region. The other Asian currencies are taking liberties with yen these days, and the central banks of those Asian countries like S. Korea, are not doing anything to stop these gains. That's because these central banks believe in the Chinese recovery story. And all have pinned their colors to the Chinese renminbi/ yuan mast. yen is no longer the lead dog in Asian.

The other currencies taking on water are Gold and Silver. It's been a nasty December to remember for these two. You would have to think that the price manipulators are smiling like Cheshire Cats these days. They believe they are beyond the law, and can't be touched. They may be right. But then, here in the U.S. people or organizations in the past that have thought that, usually trip up, and get what's coming to them. That's the hope I have, and I'm sure as Gold & Silver holders you hope so too!

The euro is down this morning, about ½-cent. As we head into the end of the quarter & year, we could very well see some interesting currency moves, especially since we still have the "Fiscal Cliff" talks continuing. I heard a couple of people talking on TV yesterday, saying that they didn't know what everyone was referring to, when they say "Fiscal Cliff". Are you kidding me? As many times as it has been mentioned in the past couple of months, wouldn't you think that they would have stopped and just Googled it? Oh well. personally, I don't think that the Fiscal Cliff will be that Big a deal. I think that the increases in taxes that are coming from other things that I can't mention here, will be enough to bring the economy to its knees once again, but then, that's just my opinion, and I could be wrong.

Apparently the "talks" are going to resume today. Oh boy! On a side bar. I saw a cartoon yesterday that if it weren't so true it would be funny. An old, opened, used and bent up can of soup 1,000 times its size, representing our debt, is in the road, and the Democrats and Republicans are attempting to kick it down the road, and say, "This is going to be more difficult than we thought".

I know, I kept saying all along that I believed that our leaders would find a way to kick the can down the road further, and avert the so-called "Fiscal Cliff". And unless an 11th hour deal can be put together and agreed on, it looks like I'll have racked up another "wrong thought". UGH! But, remember, if our leaders don't reach a deal to kick the can further down the road, that the markets will most likely see this taking global growth to 2008 levels, and we could very well see a return to the so-called flight to safety of dollars and Treasuries. Now, there's one thought I wish I were wrong about!

OK. Well. the Aussie dollar (A$) remains well bid around $1.04 (it's actually a shade below that figure this morning, but still "around" it!) I would have to think that given the rot on the yen's vine that Japanese investors will have even more reason to get out of the low yielding yen and invest in a "higher yielding" (well it is when compared to yen!) currency like the A$.

The Canadian dollar / loonie, is a bit weaker this morning, as the Fiscal Cliff non-talks, are dragging the loonie lower. As it appears that the loonie will be the first to feel the heat of a "non-agreement on the Fiscal Cliff". of course all these currencies (except yen) that have been held down by the U.S. impasse could really bounce should an agreement get ironed out.

I read a story this morning, that highlighted the fact that the Norwegian krone will book its first gain VS the dollar since 2009, this year. I was shocked to read that! I know that 2008 was not good to any currency other than the dollar, but I don't recall 2010, and 2011 being that "bad" to the krone. But if Bloomberg says it was, then it was! I think that the markets had it all wrong to paint the krone with the same brush used on the euro.

Let's do a quick run-through on Norway, OK? First of all Norway is Western Europe's largest crude exporter. the country is backed with a $680 Billion sovereign wealth fund and boasts the largest surplus of any AAA rated nation. and now it's considered to be the world's safest credit. It costs less to insure against a default in Norway that it does to insure against a default in the U.S.

So, that certainly doesn't sound like the Eurozone, does it? So, maybe, just maybe, because you never know, the markets will begin to see Norway and krone for what it truly is. the world's safest credit! (hey! I didn't say that. the markets did!)

At my S. Florida meeting last week, I was asked what I wanted to happen. I said that while I still believed an agreement would be found, that my fiscal prudence tattoo would lead me to say that I hoped we went cliff diving. We have to start to stop our deficit spending at some time, right?

Did you see that U.S. Consumer Confidence fell out of bed this month? Yes, the Consumer Confidence index number, fell from 71.5 to 65.1 the first two weeks of December. OUCH! But this is all about the fear of increased taxes. Well, you know me, I always say that this number is too high, given all the "bad things" going on here in the U.S. so, for once, I believe, by Joe, they've got it right!

Hey. did you also see that stormin' Norman Schwarzkopf died yesterday. Remember him? He was our military leader during the successful "desert storm" war in the Gulf. He was someone we could all rally around. That was sad news to me to hear of his death at the age of 78.

OK. back to other stuff. I saw that the "dim sum" bonds that we've talked about several times in the past year, were the best performing bonds in Asia this past year, rising over 6%, which was greater than any local currency bond issued in any other Asian country. For those of you new to class, a "dim sum bond" or DSB, is a bond issued by a corporation denominated in renminbi/ yuan. These bonds are issued outside of China, at first in Hong Kong only, but now in Australia too. Eventually, mom & pops here in the U.S. will find a way to invest in these bonds, but for now, it's mostly local and institution owners.

But, the point here is that we'll continue to see things like this spread, as China continues to open up its markets, and spread the use of its currency. Long time readers of the Pfennig know all too well that I've been preaching about China's desire to remove the U.S. dollar as the standard (reserve currency), and this is just another step in achieving that desire.

Then There Was This. from Reuters. "The 2012 holiday season may have been the worst for retailers since the 2008 financial crisis, with sales growth far below expectations, forcing many to offer massive post-Christmas discounts in hopes of shedding excess inventory.

While chains like Wal-Mart Stores Inc and Gap Inc are thought to have done well, analysts expect much less from the likes of book seller Barnes & Noble Inc and department store chain J. C. Penney Co Inc.

Shares of retailers dropped sharply on Wednesday, helping drag broader indexes lower, as investors realized they were likely to be disappointed when companies start to report results in a few weeks' time."

Chuck again. it's already happening folks. the economic slowdown. are you ready?

To recap. The currencies continue to move is small ranges, but are susceptible to quarter / year end moves that could really be violent. Yen continues its slide, and is no longer the king-pin of currencies in Asia. Fiscal Cliff talks or non-talks are really holding the currencies down, should something get done to avert the cliff we could see a strong bounce.

Currencies today 12/28/12: American Style: A$ $1.0385, kiwi .8210, C$ $1.0050, euro 1.3190, sterling 1.6145, Swiss $1.0920, . European Style: rand 8.4950, krone 5.5830, SEK 6.50, forint 2220.50, zloty 3.0925, koruna 19.0520, RUB 30.48, yen 86.05, sing 1.2225, HKD 7.7515, INR 54.77, China 6.2315, pesos 12.99, BRL 2.0415, Dollar Index 79.75, Oil $91.04, 10-year 1.71%, Silver $30.50, and Gold. $1,660. and it's Friday. so here's your chance to take a peek at the U.S. debt clock, click here: http://www.usdebtclock.org/index.html

That's it for today. That was not as easy as it appeared, putting this together today, coming in stone cold, and trying to figure out what to talk about! But, like the true professional that I am, I pulled it together in time! HA! I got to go to the Missouri - Illinois Braggin' Rights game last Saturday, that was a blast! (Thanks Rick!) The 3 grandkids were really special at Christmas, a real joy for me. the whole family, grandkids and all, celebrated my wife's birthday the day after Christmas. They restaurant put us in a private room, they must have known about my grandsons! But a great meal and a good time was had by all. our Antione just emailed me and told me that they got to take their new baby home on Wednesday, and she's doing great. (she was born early) So, they are now getting to enjoy their new bundle of joy at home. Now, that's some great news to end with! I hope you have a Fantastico Friday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

US Treasury Secretary warns the debt ceiling will be hit in 4 days...

Chuck Butler — Thu, 27 Dec 2012 18:12:02 GMT

In This Issue.

* Debt ceiling awaits...

* European confidence propels the euro higher...

* Taylor predicts the yen will continue to fall...

* The Big Boss shares some thoughts...

And, Now, Today's Pfennig For Your Thoughts!

US Treasury Secretary warns the debt ceiling will be hit in 4 days...

Good day. The currency markets continued to be held hostage by events (or rather non-events) in Washington D.C. The President and Congress came back to the Capitol and will begin work on a compromise to try and avoid the automatic spending cuts and tax increases which are now just 4 days away. Investors seem to finally be coming to the realization that a 'no deal' is actually a possibility, as equity markets across the globe have been ticking lower.

I was in contact with Chuck yesterday regarding some policy issues on the desk, and during one of these email exchanges he pointed to a headline which he had just seen come across his screen. The US Treasury department announced yesterday that the US would reach the debt limit on December 31. The letter, from Treasury Secretary Tim Geithner to Congressional leaders, said the Treasury would begin employing 'extraordinary measures' to finance $200 billion in deficits. The letter closed by saying that under 'normal circumstances' this money would last the government about two months, but it then goes on to say that 'given the significant uncertainty' that exists, it is impossible to predict how long these measures will last.

So we will hit the debt ceiling, but the Treasury has already found a way to vault the ceiling a bit. I'm sure the timing of this letter was designed to calm the markets and let them know that the country would not 'shut down' on December 31. Secretary Geithner had found an extra $200 billion of extra room, just like one of us finding an extra $20 in the pocket of that coat you just pulled out of the closet. But Congress and the President will still need to get something worked out, as the spending cuts and tax increases will still begin on January 1st.

The currency markets were mostly unchanged yesterday in very light trading volumes. The euro was one of the biggest movers vs. the US$, climbing up to an eight month high vs. the US$. French consumer confidence unexpectedly improved this month, propelling the euro higher. The improvement in an index of French household sentiment was the first monthly increase since May. A separate report showed the Italians are also gaining confidence in the area's recovery, as Italian business confidence data also showed improvement.

The pound sterling has been recovering from a pre Christmas drop and climbed back above $1.62 for a short time overnight. A report released today showed UK home prices rose last month to the highest level since the beginning of 2012. The data showed the number of loans banks approved for house purchases rose to 33,634 last month from 33,128 in October. The recovery of the housing market shows that the UK economy may finally be on an upward trend. The pound has gained just under 2% vs. the euro in 2012, as investors looked to diversify away from the sovereign debt crisis.

The Japanese yen continued to fall vs. the US$ as newly elected Prime Minister Abe was approved by the Japanese parliament. Abe is pushing for a target inflation rate of 2%, double the current target of the BOJ. And even that target is elusive, as a report tomorrow is predicted to show Japan's consumer prices fell .1% in November from a year earlier. The markets think Abe will be successful in getting the BOJ to take even more 'extraordinary measures' to get inflation back into their economy.

One of the ways he will be looking to increase inflation is by doing what the US has been doing: print and issue as much currency as the markets will bear. These 'bold monetary easing' measures will drive the value of the yen lower which should actually help the export driven economy of Japan. We could be entering a new era of 'currency wars' with both Japan and the US looking to devalue their currencies (albeit the US may not be devaluing our currency on purpose).

One of the 'big names' in the currency business is John Taylor, founder and chairman of currency hedge fund FX Concepts LLC. Taylor, during a phone interview with Bloomberg yesterday, predicted the yen would fall to 90 yen / dollar before reversing course sometime in 2013. "There is no reason for the yen to be strong now," Taylor told the Bloomberg reporter. "The yen could go to 90 vs. the dollar into early February before reversing course." According to the Bloomberg story written by Liz McCormick, Taylor is predicting the dollar will slide during the first part of 2013, but will shift as the year continues. "All our cycles and models tell us something is going to happen in February that will turn the markets around," said Taylor. "The year will start off with risk-on, stock markets up and then it's going to get into trouble later."

Investors in the Brazilian real would love to see more 'risk on' days during 2013. The Brazilian currency made a nice move higher yesterday as the Brazilian central bank intervened in the markets. The real appreciated to a six week high yesterday morning as the central bank sold $1.8 billion of currency swaps and agreed to lend as much as $2 billion in foreign exchange credit lines. Both moves were designed to boost the value of the real, and they seemed to be successful as the real jumped nearly 1.5% vs. the US$. The Brazilian currency has lost 8.82% vs. the US$ during 2012, and the only major currency which has performed worse than the Real in 2012 is the Japanese yen which is down 10.41% vs. the dollar. On the brighter side for investors holding the Brazilian real, the currency typically follows a big down year with a big up year (-34.73% '02 followed by +22.43% in '03, -23.09% '08 followed by +32.67% in '09). The currency has been down a total of 20.59% since the end of 2010, so perhaps a big move higher could be in store for 2013? One thing is for certain, the Brazilian real is one of the most volatile currencies we deal with.

Gold stabilized yesterday, and if finally looks as if the big fall in prices which has been occurring over the past 30 days may be ending. The Australian dollar moved lower overnight and is just one of 3 currencies headed for monthly drop vs. the US$(-.69%). The other two currencies which look to close out December with a drop are the Japanese yen (-4.33%) and the New Zealand dollar (-.15%).

And then there was this. The big boss, Frank Trotter sent me the following to share with Pfennig readers today: "Back in graduate school we had a case about a major newspaper, if I recall the Washington Post. In the 1960's the paper was on top of the world and in the process was easy to share this wealth through union negotiations with workers. Come the 1970's (one can only imagine if it was today) newspaper revenue was way down and the paper was balanced on the edge. A new negotiation was required and the paper was able to reduce it's obligations and flourish. Lax negotiations in the good times had nearly ruined the company but all concerned worked together to solve the problem with considerable economic pain and suffering on both sides. POR.

Roll forward over thirty years and on the way in I listened to a piece on the radio about Contra Costa County, California and the pensions of the fire department there. The plan is protected from alteration by state law and many former fire fighters have annual payouts greater than $100,000. The department will now have to close four stations to make budget after a new tax initiative failed. The Social Security Administration says that a 65 year old male has a life expectancy of 17 years - making this roughly the equivalent of a $1.2 million nest egg for retirement quite likely entering them into the fabled "1%". There was apparently no effort made to change the pension plan in the process. This story is repeated across the US creating an enormous retirement liability that simply will not be funded.

Sometimes I think we are all becoming Greek. We have seen the unrest in the streets in Greece every time a new austerity measure is passed; there is a simple refusal to consider raising the retirement age there or cutting back the payouts. Over the past ten years now, highlighted by the current lack of a fiscal policy debate from any large party here in the US, we have ignored the obvious - the benefits we are collectively set to receive exceed any reasonable ability to pay by a large measure without Chinese level economic growth.

Some say that there is no problem as long as interest rates on US Treasuries remain low - they say the invisible hand of the market speaks louder than theory. While I agree with the invisible hand, in this case the results have been rigged as the Federal Reserve and some of our foreign trading partners purchased over 80% of the debt issued in FY2012. Play against a house that is fixing the game is hardly an indication of market price discovery, and if it occurred in the private sector would likely result in long terms of incarceration. Also remember that until the world woke up after Lehman Brothers that Greece enjoyed borrowing costs nearly at the same level as Germany before skyrocketing as investors actually began to read their reports.

As a heavily jaded and cynical political observer and fan of no party it seems sometimes like a cheap and un-constructive comment that the only thing I expect out of the political process is nothing. There is scant good news in the world of US federal deficits, that even with about a $500 billion dollar reduction between the last Bush era budget of FY2009 and the projected FY2013 budget we stand near a trillion dollars short. But as I read the entrails laid out on the table before me here at delphi I only see a façade of changes either at year end or soon thereafter, with an explicit call from many to continue to try and "fix things" through stimulation. In the distant mists I see more dollar depreciation as time goes by, even as other countries and blocks attempt to win by competitive devaluations."

Chris again. I really enjoy Frank's writing; I always end up thinking 'I should have wrote that' after reading his contributions. Thanks again to Frank for sharing this Pfennig Pfodder with all of us.

To recap. Congress and the President resume negotiations regarding the budget impasse today, and the Treasury secretary sent notice to congress that we will hit the debt ceiling on December 31. Currency markets were mostly flat, but the euro managed to move higher on improved confidence data. The Japanese yen continued to fall, and Currency Hedge Fund investor John Taylor predicts it will hit 90 before turning around. The Brazilian real jumped higher yesterday on the back of intervention. And I closed out today's Pfennig with an excellent piece by the big boss Frank Trotter.

Currencies today 12/27/12. American Style: A$ $1.0381, kiwi .8200, C$ $1.008, euro 1.3276, sterling 1.6171, Swiss $1.0989. European Style: rand 8.5055, krone 5.5609, SEK 6.4975, forint 218.65, zloty 3.0625, koruna 18.9075, RUB 30.4559, JPY 85.79, SGD 1.2219, HKD 7.7518, INR 54.9375, China 6.2370, pesos 12.9075, BRL 2.0442, Dollar Index 79.381, Oil $90.98, 10-year 1.77%, Silver $29.8625, Gold $1,654.91, and Platinum $1538.25.

That's it for today. Another day down for my Pfennig writing, and I have heard that Chuck will be back in the saddle tomorrow. We missed out on the snow yesterday, the storm actually split and dropped some snow both north and south of St. Louis. My kids were upset, as they wanted to take advantage of their time off of school to get some late night sledding in. I hope all of you have a great Thursday, and thanks for reading the Pfennig!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Tragedy in Connecticut...

Chuck Butler — Mon, 17 Dec 2012 17:38:54 GMT

In This Issue.

* Say a prayer for the families in CT...

* CPI gives a green light to the FED...

* Japanese elections send the yen lower...

* Bond investors ignore the rating agencies...

And, Now, Today's Pfennig For Your Thoughts!

Tragedy in Connecticut...

Good day. I will start today's Pfennig with a moment of silence and encourage all of you to say a quick prayer for the families effected by Friday's horrific event. . . . . . . There is absolutely nothing that can be said other than my thoughts and prayers go out to the parents and loved ones who lost their lives Friday morning. This is certainly a crazy world in which we live in, and each minute of every day is a gift from god. Life is short, live it to the fullest!

The currency markets were fairly flat on Friday, with the dollar slipping a bit in morning trading but staying within a tight range. The drop was caused by a larger than expected drop in consumer prices here in the US during the month of November. The CPI report showed prices fell .3% during November compared to an expected drop of .2%. The YOY figures showed prices rose 1.8% vs. November of last year, just .1% less than economists projections. A drop in energy prices is what pushed the overall prices down, and the core (Ex Food and Energy) numbers showed prices actually increased .1% last month. Currency traders took the dollar lower on this data as inflation doesn't seem to be presenting any barrier to the Fed's unlimited stimulus plans.

The Euro moved higher on Friday after EU finance ministers agreed to put the ECB in charge of all euro-area lenders. A single European bank supervisor was one of the items pushed by German leaders, and most believe that it is another necessary step to help avoid future debt problems. Placing all of the European banks under one set of rules and one regulator should help restore confidence in the banking system and it will also enable the new rescue fund to provide direct bailouts to these banks.

The news helped to make the euro one of the best performing currencies vs. the US$ on Friday with a gain of .69%; as I mentioned earlier the overall market was pretty flat. On the other side of the ledger, the Japanese yen was one of the worst performers on Friday, losing .20% vs. the dollar. The traders were focused on the Japanese elections which occurred over the weekend. As expected, Japan's Liberal Democratic Party led by Shinzo Abe won easily. The win is going to be seen by Abe as a mandate to act on his campaign promises to get the Japanese economy growing again. His plan is to double Japan's inflation goal from 1 to 2% and to provide unlimited easing in order to try and stimulate economic growth. Abe is wanting to throw all caution to the wind, and will push the Bank of Japan to allow additional monetary expansion.

Japan's currency has fallen over 5% in the past month as it became apparent that Abe would win. Currency investors are worried that these expansionary policies and 'forced' inflation will lead to drop in the value of the Japanese yen. Sound familiar? While Bernanke and his compatriots at the Fed haven't been as vocal as Abe on wanting inflation, I would definitely watch how the markets treat the Japanese yen over the next few weeks as the policies Abe will put into place are similar to those being contemplated by our own central bank.

The only currency which performed worse than the Japanese yen on Friday was the Canadian dollar which lost ground vs. the US$ after a week factory sales number. Statistics Canada said factory manufacturing sales declined 1.4% in October, the biggest decline since January. The fall was not large (as I have indicated, the currency markets were pretty flat) and was probably more of a easing of an overbought position. Currency traders were probably ready to take some of their profits in the loonie off the table, and the data presented them with a good opportunity to do just that. The Canadian dollar still ended the week with a slight gain vs. the US$.

Moving back over to the US, Friday's tragedy has taken the focus of the media away from the debt crisis, which may actually be good for the negotiations. The glare of the media sometimes has a blinding effect on politicians, keeping them from seeing what lies ahead. With all of the attention shifted to the tragic events in CT, there has apparently been some progress on the fiscal cliff negotiations. Republican leaders have put tax increases for the wealthiest back on the table, and this weekend agreed to push the debt limit debate out another year. Now it is the President's turn to identify some spending cuts to bring back to the negotiating table.

As I mentioned in yesterday's Pfennig and Pfriends, I expect a compromise to be reached during the final week of this year, but this compromise will not present any 'real' solution to our debt problem. Our leaders in Washington have realized the simplest way to pay down the debt is to simply print more dollars. This 'strategy' (if you can call it that) will work as long as investors continue to accept the US$ as the globe's reserve currency and buy our debt. The big problem will occur if/when foreign investors finally decide to reduce their dollar holdings, or if / when a substitute global currency emerges.

Chuck is hopefully sleeping in a bit this morning, but sent me the following yesterday to share with all of you this morning: The latest reports from the IMM Positions of last week show that the net U.S. dollar (USD) short positions really grew! And the main beneficiaries of those short dollar positions were what the markets call the "dollar bloc" (Aussie, Canada, New Zealand). In fact Aussie dollar long positions grew to a record level! But then, so did Mexican pesos... Now sure what everyone is all lathered up about regarding pesos, given the history, that apparently the young-guns don't know about, and have failed to read up about... I had to remind some of the young-guns the other day about when Mexico decided to move the decimal point on their currency valuation... Any way... I always find these IMM Positions to be interesting and reflecting on what we're seeing in the spot currency markets each day... the thing to always keep in mind here is that these futures positions can change in a heartbeat... So, just use this info as "additional fodder" for your decisions...

Thanks for the insight Chuck, we certainly appreciate it! As Chuck mentioned, the Aussie dollar long positions have grown to a record level, and the value of the AUD certainly reflects this. The Aussie dollar rose to the strongest in 19 months vs. the Japanese yen but actually move a bit lower vs. the US$ over the weekend. The RBA will be releasing the minutes from their meeting earlier this month when interest rates were reduced, and investors will be looking for any indications that more rate moves are likely. Neither Chuck nor I expected the rate cut, and we now expect Australian rates to remain in place into next year. The RBA just cut rates a bit earlier than we expected.

Today we will get the Empire Manufacturing numbers along with the TIC flows which is an indication of just how confident foreign investors are in the US economy. Tomorrow we will get the Current Account balance for 3rd quarter and the NAHB housing market index. Wednesday will bring more housing data and Thursday we get 3rd quarter GDP along with the weekly jobs numbers. And Friday (the end of the world according to some) has an unusually large amount of data with Personal Income and spending along with the Durable Goods numbers for November.

And then there was this. Neither Chuck and I have been fans of the rating agencies, as both of us feel they are typically 'late to the game' with their credit adjustments. All of the rating agencies certainly took a hit to their credibility with the subprime meltdown and euro-area bond crisis. This morning I found an article on Bloomberg which indicates bond investors seem to agree with our skepticism of these rating agencies. According to Bloomberg, "Yields on sovereign securities moved in the opposite direction from what ratings suggested in 53 percent of the 32 upgrades, downgrades and changes in credit outlook. .. This year, investors ignored 56 percent of Moody's rating and outlook changes and 50 percent of those by S&P." Apparently fixed income investors are relying more and more on their own research, and depending less on the rating of the issue they are purchasing. This, in my opinion, is a good thing! Investors should always do their own due diligence, and should never depend simply on a rating by a firm which was paid by the bond issuer rate it.

To recap. The currency markets were flat on Friday, with the dollar drifting lower in early trading. Japanese elections over the weekend pushed the yen lower as a win for Abe and his LDP party assure further stimulus measures in Japan. No solution for the debt crisis, but negotiations seem to be taking a better turn (that is if you want to see the can kicked further down the road). The Canadian dollar dropped, but the selloff was likely due to an overbought level rather than a change in sentiment. And Chuck shared the IMM Position data which indicates the Aussie dollar is a favorite among currency investors.

Currencies today 12/17/12. American Style: A$ $1.0539, kiwi .8439, C$ $1.0128, euro 1.3157, sterling 1.6204, Swiss $1.0893. European Style: rand 8.5624, krone 5.6024, SEK 6.6482, forint 218.29, zloty 3.1060, koruna 19.173, RUB 30.8211, yen 83.74, sing 1.2206, HKD 7.7501, INR 54.855, China 6.2370, pesos 12.782, BRL 2.0877, Dollar Index 79.576, Oil $86.67, 10-year 1.72%, Silver $32.235 and Gold $1,692.60.

That's it for today. Happy Birthday to Jennifer McLean who is turning XX today! No, I won't do that to Jennifer, but I will let you know that I have been working with Jennifer for nearly 20 years now, so you can do the math (Jenn did start working at a young age!). I spent most of yesterday over at my mom's who hosted us for an early Christmas dinner. I went over a bit early to watch the Rams game with mom who is an avid fan. Unfortunately our Rams weren't able to stop the NFL's leading rusher who put an end to any hopes of a wild card for our home town team. After the game we had a great time exchanging presents and enjoyed an amazing dinner which she had prepared. The evening took on a bit more meaning after the tragic events of last Friday. The holiday season can get very busy and I admit to not being too excited about being 'dragged' to family events at times in the past. But I realize I am very lucky to have so many family members live close by, and I am looking forward to each of the many holiday gatherings which I will be attending over the upcoming holiday season. Life is sometimes too short, make sure you give your loved ones a hug today. Thanks for reading the Pfennig, and hopefully we will all have a Magnificent Monday to start off the week.

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

What Will NY Traders Think Of Currency / Metals Rally?

Chuck Butler — Mon, 26 Nov 2012 17:50:18 GMT

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

There's no smarter way to buy gold or silver

-Choose from coins, bars or unallocated metal -No storage or annual fees on Unallocated Accounts -Low account minimums of $5,000 for Unallocated Accounts and $7,500 for Allocated Accounts

To learn more and view important disclosures go to: https://www.everbank.com/personal/precious-metals.aspx?referid=11808

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

In This Issue.

* Currency / metals trade flat.

* Yen halts slide. for now.

* Foreign Investors flock to China.

* Frank on the Fiscal Cliff.

And, Now, Today's Pfennig For Your Thoughts!

What Will NY Traders Think Of Currency / Metals Rally?

Good day. And a Marvelous Monday to you! I hope your Thanksgiving Day and weekend was grand. We began decorating the house inside and outside. I just love it this time of year, when the houses all get decorated, and lit up. The markets were open on Friday, and last night, so it's back to business as usual this week. Did you see the highlights of the football game in Miami yesterday? The water sprinklers started a cycle right in the middle of the game! Instead of having a play of the game, they had a "spray of the game". HAHAHAHAHAHA!

Well. The currencies and metals had a field day on Thursday in the foreign markets. It became very clear to me that the foreign traders are all about taking the dollar lower when there is no fear of a U.S. reversal. It also has become very clear to me that the U.S. market participants are fighting Big Ben Bernanke and the Fed Heads every step of the way. How so? Ahhh grasshopper. We should know by now that The Fed is in on the Gov't's wish to have a cheaper dollar in order to pay debts with cheaper dollars, and that's why they've carried out 3 rounds of Quantitative Easing (QE), one round of Operation Twist, have kept interest rates near zero for a very long time, and have stated that they will remain there for some time to come.. All these things have been done to weaken the dollar, but. the U.S. market participants (not me!) aren't letting that happen. Well, they've allowed a lot of it to happen the past 11 years, but. there's more work to be done. Just get a Fed Head on the Butler patio, and we'll get the truth! Oh, and I can. handle the truth!

So, the currencies and metals rallied on Thursday in the foreign markets and then attempted to hold on in Friday's sessions. Here in the U.S. on Friday, the senior traders all took the day off to make it a 4-day weekend in the Hamptons, and the junior boys and girls were left to trade, which meant "don't screw anything up!" And they didn't. there was some profit taking that happened, but other than that, the volume was Olive Oyl thin.

The overnight markets of Asia and Europe haven't really had any direction, as they all wait to see what their U.S. counterparts think about this currency and metals rally. If anything, the currencies and metals are weaker by a small margin this morning. For instance, Gold is down $4, as I write, and the euro is flat.. I'm actually a little surprised that the euro is flat and not getting hammered this morning, given the goings on with Greece this past weekend.

On Friday, it appeared that there would be an agreement on the measures of the latest bailout payment to Greece. But then this past weekend there was a story in the press regarding a Greek deal that didn't sound so much like a "given".. compared to what was being said on Friday. Putting uncertainty right smack dab in the middle of this trading session. And we should all know by now that the markets don't like "uncertainty". But. as I said, so far this morning, the euro has shrugged off this news and is trading flat on the day.

The Japanese yen halted it slide the past two trading sessions. I'm actually surprised a bit, for it looked as though the yen was ready for a nice long ride on the slippery slope. And it still is headed in that direction, but has paused for the cause. That's a good thing for investors looking for an exit door with yen. At least the exit doors haven't gotten overcrowded yet. But seeing the latest minutes by the Bank of Japan (BOJ) could send the crowds in that direction. The new members of the BOJ sounded very dovish, and proposed the wording changed in their statement, to reflect their dovish position. I don't know how the BOJ could make their current easing measures any more accommodating. But apparently the new members of the BOJ think so..

Well.. I've been telling you about the economic recovery in China for some time now. so I liked seeing a story on Reuters this past weekend about how foreign investors are flocking back to the Chinese economy and markets. They have pumped $4 Billion into Chinese equity funds in the past two months. The article quoted a few investment analysts who believe that China is a better value right now than it was 5 years ago, and undervalued VS the rest of Asia. Don't look at me and be confused. I told you China would recover faster than everyone else, because they had a treasure chest of reserves and the ability to direct where those funds for recovery would be spent. And that's exactly what's going on here.

The currency rally of late last week, pushed the Aussie dollar (A$) back above $1.04. this currency has gone back and forth through the $1.04 handle for a couple of months now. And Let me remind you that I told you that $1.04 seems to me to be a good value for the A$... There's not much in the way of data expected from Australia this week, except one report later in the week, so the A$ will struggle to hold on to $1.04.

In fact, I would think that the Thanksgiving Day rally in the currencies and metals will be on tenterhooks this week. Remember, the Fiscal Cliff is closer to us by one week, and there's been no word from D.C. of a deal to avert the Fiscal Cliff. Remember, what I told you about the Fiscal Cliff. that the markets are scared to death that it will bring about major problems for the U.S. economy and there could very well be a repeat of 2008, where investors flock to the so-called safe havens of dollars and Treasuries.

Two currencies that have been on my hit parade for some time now. Norwegian krone and Swedish krona continue to be tarred with the same brush as the euro. I'm concerned about the next Riksbank (Sweden) meeting in December, where I'm pretty sure we'll see another rate cut. And therefore, right now, I prefer Norway over Sweden. But, to me that's like saying I prefer one thing over another, but still like both! Sort of like me preferring one Beatles song over another.

I was reading an article by Vedran Vuk, who's taken the conn of David Galland's weekly letter while David relocates his family. Vedran is a smart cookie folks. and he had this title to his article, which I thought was very clever. "Even if Gold is Stupid, It's Still Smart". And then he goes about explaining how it's to everyone's preferences, and who's to judge the preferences of others? I liked his article very much, because it helps explain why there still millions of investors that don't own Gold.

Speaking of Gold. At $1,751, which is where it's trading right now as I write, it looks very expensive. But if you ask the 20 or so Gold analysts that write about Gold, the large majority of them would tell you that Gold is cheap compared to where they see it going. I don't know if Gold is going as high as some of the analysts say it will go. But, what I do know is that Gold is a store of value. I don't get all caught up in the price of Gold, except when the price manipulators take it down. I like it for its store of value and wealth.

The U.S. data cupboard gets caught up this week, and will have a truck-load of data to look starting today with some minor reports but heating up tomorrow . So, with no data anywhere today, it will be interesting to see how the senior traders here in the U.S. view the currency and metals rally from last week.

Then There Was This. I was delighted to see an email from my long time friend, and Big Boss, Frank Trotter yesterday. I told you that he's an excellent writer, and here's a treat for us. Frank's thoughts. "As both the fiscal cliff of legislation approaches and just the reality that fiscal policy needs to be dealt with, another potential is starting to creep out of hiding. We have long said that politicians have three alternatives when it comes to fiscal policy: 1) Cut spending and be run out of office; 2) raise taxes and be run out of office, or; 3) keep on the same pathway and plan to debase the currency so that debts can be paid back with money that has less purchasing power. Smart politicians have for many years selected door #3 creating the situation we have before us today. Now #4 may come into play.

One solution for national politicians has been used before but certainly has the potential to become the primary tool. Maintain current revenue policy and push the spending programs back onto state, provincial, and local governments. Hard liners on both sides can claim victory: no increase in taxes as and the deficit shrinks, no loss in benefits sustaining promises made. Instead of kicking the can down the road we'll see hot potato on rocket fuel. We'll see how this plays out but watch out for the shifting shell game." - Frank Trotter

Chuck again. I love it when Frank sends me notes for the Pfennig!

To recap. The currencies and metals rallied hard late last week, with the U.S. senior traders all out for a 4-day weekend. It will be interesting to see how the NY traders want to take this rally. The currencies and metals have drifted a little weaker overnight, as they wait to see the outcome too! The Japanese yen halted its ride on the slippery slope, but for how long? And foreign investors are flocking back to the Chinese economy and markets.

Currencies today 11/26/12. American Style: A$ $1.0440, kiwi .82.10, C$ $1.0065, euro 1.2960, sterling 1.60, Swiss $1.0760, . European Style: rand 8.8770, krone 5.6675, SEK 6.6330, forint 217.40, zloty 3.1710, koruna 19.51, RUB 31.01, yen 81.05, sing 1.2250, HKD 7.75, INR 55.72, China 6.2250, pesos 12.98, BRL 2.0775, Dollar Index 80.23, Oil $88, 10-year 1.66%, Silver $34.19, and Gold. $1, 751.00

That's it for today. Well. did you hear that J.R. Ewing died? Yes, Larry Hagman died this past weekend. Wasn't J.R. Ewing the guy you dislike, unless he's on your team? You bet! I remember a group of friends would all get together on Friday nights to watch Dallas. Pretty funny thinking about that now. Well, my beloved Missouri Tigers football team unmercifully ended their season on Saturday. I think the coach lost his team this year, as they appeared to be going through motions on Saturday. At least the basketball team is off to a good start! And I'm going crazy not seeing hockey on the TV. That's a shame that hockey will lose a ton of fans this year, just like they did the last time their season was wiped out by owner/ labor problems. Oh well, as someone that I love dearly says. "it's only a game". And thanks to Jerry, Alex and Kathy for a great job on getting the lights on the house yesterday! And with that. I thank you for reading the Pfennig, and hope you have a Marvelous Monday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

The Risk Fears Return To The Eurozone.

Chuck Butler — Wed, 21 Nov 2012 17:29:44 GMT

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

There's no smarter way to buy gold or silver

-Choose from coins, bars or unallocated metal -No storage or annual fees on Unallocated Accounts -Low account minimums of $5,000 for Unallocated Accounts and $7,500 for Allocated Accounts

To learn more and view important disclosures go to: https://www.everbank.com/personal/precious-metals.aspx?referid=11808

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

In This Issue.

* Relapse to dollar buying.

* Yen slides further.

* New Carry Trade appears to be real.

* It's Turkey Day!

And, Now, Today's Pfennig For Your Thoughts!

The Risk Fears Return To The Eurozone.

Good day. And a Wonderful Wednesday to you! The day before Thanksgiving! So, in keeping with Pfennig Tradition, here's a snippet of the Turkey Day song by Adam Sandler. "Turkey for me, Turkey for you, Let's eat the turkey in my big brown shoe. Love to eat turkey at the table, I once saw a move with Betty Grable" A very funny song, but the best part is watching him attempt to sing it without laughing at his own singing and the words to the song! OK. an upbeat way to start today, right? That's right baby! I'm all revved up and ready to go! So. let's go!

Well. we had a relapse of dollar buying yesterday. It does appear to have been a one day and done thing, but still, the currencies and metals were unable to add to the gains they had the previous day. Part of the dollar buying was brought about by this rift that's going on between the Eurozone leaders and the IMF over. you guessed it. Greece! You know, I keep hearing people say that Greece doesn't need austerity, it needs growth. And economic growth is needed by every country. But let me explain something to these uninformed people that don't believe austerity to be worthy.

If Greece or even the U.S. for that matter, didn't have this huge weight of debt weighing on them, their leaders could focus on growing the economy. But this huge weight just keeps getting in the way, so. you must remove the weight, at least part of it, before the economy can grow at clips that are needed. Not the 1.9% or 2.2% stuff the U.S. has been posting. Shoot Rudy, the Gov't alone can spend enough to generate 2% of GDP! But is that real economic growth? Hardly. So. austerity is needed to get some debt out of the way of economic growth. And yes, I'm fully aware that first there will be some pain from the austerity, but as the football coach used to tell me. There's no gain, without pain.

It's my opinion, and of course I could be wrong, so I'm fully aware of that, and don't need thousands of people telling me I'm wrong.

Getting back to the Eurozone, Greece and the IMF. What a tangled web they weave, eh? After a period of somewhat calm in the Eurozone, the risk fears are returning to the Eurozone. and that will weigh heavily on the euro, just like it did earlier this year. German Finance Minister, Wolfgang Schaeuble, said, "We have a series of options on the table on how to close the financing gap (for Greece). We discussed the issue very intensively, but since the questions are so complicated we didn't come to a final agreement." And the beat goes on, with unfinished business regarding how to deal with Greece. Another meeting was scheduled for Nov. 26.. But right now, I would guess that meeting will also be a waste of time.

The Japanese yen is continuing its turn on the slippery slide. The yen fell to an 82 handle which is the first time we've seen it that weak in about 7 months, and then it was going in the opposite direction! If this yen selling continues to weaken the currency, then I'll finally get this huge albatross from around my neck! Yesterday, I told you about how there was talk in the markets about using yen as the funding currency of the new Carry Trade. I said then, that this could be the actual end of yen strength if the new Carry Trade were to take off.

And don't look for the Japanese Gov't to step in the way of this yen selling. In fact, not that I would like to see this, but. since the Japanese Gov't is so hell-bent on having a weaker currency to introduce inflation in their economy, I would think that this to be the best time for them to intervene in the markets and sell yen. if everybody else is selling yen, this is the Gov't's opportunity to pile on! And if that happens, folks. this ride on the slippery slope for yen will last much longer.

I mentioned yesterday that Brazil's Gov't hadn't finished their beating down of the real. That the Gov't had just taken a breather. well. "they're back"! Brazil's President, Dilma Rousseff told a Brazilian newspaper that "Brazil's currency is overvalued". That tells me that even with the real at a very weak 2.08, that the Gov't is looking for more weakness. I totally dislike Gov't's getting their hands in the cookie jar and messing with these things. So, let's see. I'm going to list the currency cookie jar manipulators.

The U.S., Japan, China, Brazil, Switzerland, and I'm sure there are more, but these countries make a habit of manipulating their respective currencies. China, at least doesn't sell their currency to keep it from gaining. But they are still guilty of manipulation..

The Aussie dollar (A$) got whacked yesterday, in the one day and done dollar buying. But, I really don't expect that downward move yesterday to last. You see, as I explained yesterday, if the "new Carry Trade" is for real. The options to buy higher yielding currencies in the Carry Trade are limited. And when you get down to it, the only one that makes sense is the A$... real, pesos and rand are too volatile to work well in a Carry Trade. So, if the "new Carry Trade" if for real, and yen is the selling / financing currency. The A$ looks to be the default buying currency.

But all that's predicated on the talk that there's a new Carry Trade. And of course, I know that with the yen proceeds investors aren't tied to buying a higher yielding currency, they could choose to buy high paying dividend stocks, or high yielding bonds. But, that's not how it has worked in the past.

Moving along. The Weekly Initial Jobless Claims which normally print on Tub Thumpin' Thursdays, will be moved up to print today. the experts are forecasting a 410,000 number for unemployment claims filed last week. WOW! The U. of Michigan Consumer Confidence survey for the first two weeks of Nov. will also print. Big deal, right? And then on the back pages of the newspaper, in a corner where most people won't see it, you'll see Leading Indicators for October. And I would look for a fall from the previous rise of .6%... because..

The economic reports like Industrial Production, Durable Goods Orders, and Factory Orders have all taken the Nestea Plunge since their mid-year peaks folks.. have you been charting the data reports? For instance. The latest print of Industrial Production has dropped 1.4% from its July peak. You might say, but Chuck, the devastation from Sandy, is probably hurting these numbers.

Well, maybe. But not as much as you would think, for the declines have been spread out over the months, not just in October. What I think is really happening there folks, is that Companies, etc. are gearing down for the Fiscal Cliff.

Then There Was This. Did you hear about these goings on at Hewlett Packard (HP)? This isn't stock talk, but instead scandal stuff. HP announced that they had to take a more than $8 Billion write down on an Accounting Misstatement at a British Company it bought last year for $10 Billion. HP says that there were "serious accounting improprieties, disclosure failures and outright misrepresentations at Autonomy Corporation PLC." When the former managers of Autonomy were made aware of the allegations, they said, they were "shocked" at the claims.

Chuck again. I just had to put that story in the Pfennig today. makes you shudder to think about buying another company doesn't it? And. as colleague John Pataky said in a meeting yesterday, "it gives new meaning to the word Autonomy, doesn't it? "

To recap. We went into a relapse of dollar buying yesterday, but it appears to be a one day and done deal. The euro is being trampled on again by Greece. The risk in the region is being brought back to life, and our calm is dissipating. Yen is getting whacked almost daily now, and leads Chuck to believe that the talk of a new Carry Trade are real.

Currencies today 11/21/12. American Style: A$ $1.0370, kiwi .8140, C$ $1.0030, euro 1.2805, sterling 1.5935, Swiss $1.0635, . European Style: rand 8.9570, krone 5.7270, SEK 6.7350, forint 219.50, zloty 3.2220, koruna 19.9040, RUB 31.21, yen 82.35, sing 1.2250, HKD 7.7505, INR 55.12, China 6.2296, pesos 13.02, BRL 2.0980, Dollar Index 81.01, Oil $87.53, 10-year 1.66%, Silver $33.10, and Gold. $1,727.25

That's it for today. and. for this week for me. Hopefully Chris will pick up the conn on the Pfennig on Friday. Congrats go out to Mike Meyer and his bride, Sarah, as they announced that they are expecting a baby. Good stuff! Did you see that a kid at an Iowa div 3 school scored 138 points in a basketball game? WOW! I don't care if you're playing in the backyard, 138 points is unbelievable! OK. if you're one of the millions of people that will be traveling for Thanksgiving, please be careful. don't drive fast and take chances! OK. I have this thought for you for tomorrow. You know I told you about the writer in my local paper, the Life Sherpa. well he had this in his notes the other day, and I loved it! A recently married couple wrote in to ask about the have and have nots for a Thanksgiving dinner table. the have nots: resentment and anger. The haves: the people you love.

And with that. I wish you a very Happy Thanksgiving.

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

A Risk Negative Feeling Casts Its Net On The Markets

Chuck Butler — Wed, 03 Oct 2012 16:43:40 GMT

In This Issue.

* Chinese Services falls.

* Aussie Trade Deficit widens.

* More on Gold from Bill Gross.

* Yen begins to weaken again.

And, Now, Today's Pfennig For Your Thoughts!

A Risk Negative Feeling Casts Its Net On The Markets

Good day. And a Wonderful Wednesday to you! Cardinals back into playoffs, but at least they are there, for one game at least! This new 2-wildcard playoff thing that baseball has thought up has brought about a lot of interest as many teams were eligible until the last week, but. as a baseball purist, I prefer that we don't start acting like Basketball, and hockey, where you have to be a pretty bad team to miss the playoffs! Well. there's more going on today than this, sorry to have bored you, but this stuff is important to me!

Well. it looks like it's going to be a Risk Off Day, and a risk-negative feeling has cast its net over the markets this morning. Front and Center, China printed a much weaker than expected services component of their PMI, and Australia's Trade Deficit widened, which is a turnaround from the recent narrowing we've seen in this trade balance. These two things have pretty much put the brakes on any risk taking, and so it is that we begin our Wednesday, October 3rd, 2012.

Gold & Silver are bucking the Risk-negative feeling this morning, posting gains, albeit very small ones. Yesterday, Gold & Silver tried several times to move higher, but couldn't remove the governor that was placed on them. I brought you some quotes from the bond king, Bill Gross, yesterday, but this one was missed by me and since it refers to Gold, then it fits right here! "The latest round of quantitative easing made Gold even more attractive, and owning the metal should be considered as part of a diversified portfolio. Only Gold and real assets would thrive in a "ring of fire" of U.S. fiscal problems" - Bill Gross

Yes, I find myself continually explaining to people that don't own Gold (or Silver) that it's not a useless, barbaric relic that people that don't own Gold like to refer to it is as. But once investors own Gold (or Silver) they see what all the hub-bub is about. They see what countries around the world are doing to their respective currencies, and if there is a financial catastrophe then Gold is the only asset that can offer protection. I tell people that owning Gold (or Silver) is like an insurance policy for your wealth. and just like any insurance policy, you hope you never have to really use it, but if you do have to use it, you're happier than a lark that you had the insurance!

Have you noticed how the media really isn't talking about the "fiscal cliff" for the U.S. that's coming when we turn the calendar to 2013? In case you've been living under a rock, the "fiscal cliff" is what economists have referred to the combination of personal tax rates being raised, and $1.2 Trillion of discretionary spending cuts being implemented. (OK, that's watered down a bit because the $1.2 Trillion is spread out over 10 years), but spending cuts are going to be forced on the U.S. economy along with much higher tax rates, at a time when the U.S. economy is teetering.

I was reading a story on the Bloomberg this morning, that really made me think. The title of the story is: Employment Rise On Restaurants in U.S. Doing Quick Service. In the story the writers state that restaurants and bars are heading toward their strongest year of job growth since 2004, led by fast food and quick service outlets. Chuck again. So, we're supposed to be happy because we're becoming a burger flipping economy? Is this what we sent our kids to college for? Yes, at least they are working, but come-on! I can't believe this is happening.

And here's some data that will make you scratch your head and wonder how employment is rising in these areas. Total restaurant traffic remains in pre-recession levels. Americans stepped out to eat 61 Billion times in the past 12 months, down 62 Billion visits from 4 years ago. Hmmm.

The first Presidential Debate takes place tonight. I don't really get into these things, but I have to wonder if this is the place and time when the challenger begins to hammer on the debt, and offer some solutions. I've long said that this is where the ball finally gets volleyed over to the U.S. and the pressure on the dollar returns, for, let me ask you this, and believe me now, and hear me later, I'm not being political here. but let me ask you this, if you were running for President, wouldn't the debt be on the top of your agenda? It would be mine, and I'm not even running for class president!

Ok. onto other things. I told you above that the Australian Trade Deficit widened in August from 1.5 Billion to 2 Billion (A$'s) Exports proved to be the main culprit for this widening. Commodities exports were slower and the prices were lower, that's a bad combination, folks. If this continues we could very well see more rate cuts. I believe that the Reserve Bank of Australia (RBA) is finished for 2012, but going into 2013, we could very well see another 50 Basis Points of rate cuts, bringing their internal rate to 2.75%... As long as the RBA doesn't surprise the markets with rate cuts, the Aussie dollar (A$) can deal with the rate cuts, albeit in a lower value environment. The A$ lost the $1.03 handle on this Trade data. and is looking vulnerable to any further weak data.

The euro holds on to 1.29 for now. Spain hasn't made its formal request for assistance, and Italy had a successful bond auction. Today we will see the final manufacturing index data from the major countries of the Eurozone. I expect sharp declines in Spain and Italy, as they begin to make cuts in deficit spending, France will also not look to rosy, and Germany will begin to show the rot on the vine of being connected to all these countries that are weak. So, 1.29 in the euro may not hold today, if the markets are in the mood to mark it down when the weak data prints.

One of the things that has been supporting the euro since July, has been buying of peripheral debt by institutional money. I say July, because. that's when European Central Bank (ECB) President, Mario Draghi, said that the ECB would do "whatever it takes" to save the euro. And since then, yields have been dropping in the peripheral countries like Italy and Spain. I saw data that shows that the peripheral country bond rally has outperformed the U.S. Treasuries in recent times. I think this is good news for the euro and the peripheral countries. But, as fast as money from institutions comes in, it can go back out.

The New Zealand dollar / kiwi felt the tug from the A$ overnight, and followed its kissin' cousin across the Tasman down the slippery slope. Kiwi had been so resilient lately, but that resiliency proved to be not so strong once the A$ started down the slippery slope.

Today, we get the pre-Jobs Jamboree data from ADP. The folks at ADP always submit their employment data, and it very rarely associates with the BLS's version of Job creation. The markets don't pay too much attention to the ADP report, but for those of you keeping score at home ADP says that 140,000 jobs were created in September. Remember, that last month they reported 201,000 only to have the BLS version report 96,000.

I've given you all the "adjustments" that the BLS makes to the numbers each month, with the biggest one being the Birth /Death Model. For those of you new to class, the Birth/ Death Model, is an adjustment that the BLS uses in attempt to capture new business hiring that wouldn't be on the books just yet. Unfortunately, the BLS uses this as a catch-all, in my opinion. So, that's why I say each month that we'll have to see how many jobs the BLS adds to the number. It's all fun and games until somebody loses an eye! Hey! That's me! But. I didn't get to have fun and games! Oh well, the BLS gets to each and every month!

The Japanese yen has been stealth-like in its recent weakening. But we've seen this before, it looks like yen is about to decline like it should, given its fundamentals, and then it rallies again. But for the most part it has been stuck around 78 for some time now. Still very overvalued in my book!

The Asian currencies have been going back and forth in recent trading sessions. Take the Singapore Dollar (S$). One day it's booking gains and the next day it's booking losses. This is a dirty float currency, in that the Monetary Authority of Singapore (MAS) sets the trading band, but the markets move the S$ within the band. The MAS uses the S$ to help fight inflation, which EVERY Country should! And one of the reasons that I list Singapore, as one of the handful of currencies I tell people they should look to when diversifying with currencies.

Then There Was This. I know this has been "Bill Gross Week" in the Pfennig. But he has given so many great quotes this week, that I feel that you should all read what this man considered by many to be the greatest bond guy, ever. And let me explain that when you are a bond trader, you have to know economics. otherwise you would be taken advantage of very easily. So, here's more Bill Gross talking about what happens when the U.S. is no longer the first place to go to for safe investments.

"If that be the case, the U.S. would no longer be in the catbird's seat of global finance and there would be damage aplenty, not just to the U.S. but to the global financial system itself, a system which for 40 years has depended on the U.S. economy as the world's consummate consumer and the dollar as the global medium of exchange. If the fiscal gap isn't closed even ever so gradually over the next few years, then rating services, dollar reserve holding nations and bond managers embarrassed into being reborn as vigilantes may together force a resolution that ends in tears. It would be a scenario for the storybooks, that's for sure, but one which in this instance, investors would want to forget. The damage would likely be beyond repair." - Bill Gross

To recap. It's a Risk Off Day, as risk is a dirty word today after China printed a weaker than expected services component of their PMI, and Australia's Trade Deficit widened, as exports weakened. Gold is attempting to book some gains this morning, these recent attempts have been met with heavy selling by mid morning. The ADP jobs report prints today, giving us an indication of Friday's Jobs Jamboree.

Currencies today 10/3/12. American Style: A$ $1.0225, kiwi .8220, C$ $1.0145, euro 1.2915, sterling 1.6110, Swiss $1.0665, . European Style: rand 8.4275, krone 5.7390, SEK 6.6635, forint 221.20, zloty 3.1650, koruna 19.37, RUB 31.08, yen 78.45, sing 1.2305, HKD 7.7555, INR 52.16, China 6.3230, pesos 12.84, BRL 2.0255, Dollar Index 79.90, Oil $91.32, 10-year 1.60%, Silver $34.88, and Gold. $1,781.75

That's it for today. Well, I woke up in the middle of the night, and checked the scoreboard to see the Cardinals had lost, but so too had the Dodgers, which meant we had backed into the playoffs. Last regular season game is tonight. difficult for me to believe. Little Braden Charles was at the house yesterday, he's running now, and runs everywhere! I laugh so much at his antics. Everyone is arriving at the office now, as I'm really late, today. so. I had better cut this off here, and get it out the door! I hope you have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837