Daily Pfennig : trading, Currencies

Italy Successfully Auctions Bills.

Chuck Butler — Thu, 10 Nov 2011 15:48:00 GMT

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

Announcing EverBank Wealth Management, Inc.

It's another great day for the EverBank family of services. We're delighted to announce the launch of a new wealth management company offering global investment advice through a personalized approach.

Led by you. Guided by experience.(sm)

EverBank Wealth Management brings together a team highly experienced in the global marketplace that will listen, evaluate and then advise you to create a plan to meet your goals. Our team uniquely understands how you view the marketplace. We offer comprehensive and unbiased institutional grade investment advice based on what you have and what you want to accomplish.

It all starts with a conversation...877-613-EVER (3837)

http://www.EverBankWealthManagement.com

EverBank Wealth Management is an investment adviser registered with the Securities and Exchange Commission. It is not a bank. Investment solutions offered through EverBank Wealth Management are: NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE.

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

In This Issue.

* Rollercoaster trading in the euro.

* Japan to follow the Swiss?

* Largest U.S. municipality bankruptcy!

* More rot for the housing sector.

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

Italy Successfully Auctions Bills.

Good day. And a Tub Thumpin' Thursday to you! Back in the Saddle again today. Sorry, I couldn't answer the bell yesterday, but thanks to Mike & Chris for getting the letter out to you. There will be trials and tribulations as I go down this road of recovery, so hopefully that's the last time that happens!

Well. Mike told you yesterday about how the euro had over 2-cents in the overnight markets, on fears that Italy, which is a much larger economy than Greece, is the next to visit the bailout doctor. The euro went up, when it was announced that the budget vote had passed, and it went down when it was announced that Berlusconi no longer had a majority government, and then it went right back up when it was announced that Berlusconi had stepped down. But that "relief rally" didn't last long, as everyone began to imagine what it would cost to bailout Italy.

This morning, the euro has gapped up 1-cent after it was announced that Italy had successfully auctioned off 5 Billion (euros) of Bills. (at the highest rate in a month of Sundays) But since I came in, the euro has slowed dropped again, thus wiping out most of that 1-cent gain earlier. Up and down, Up and down. Reminds me of that classic song by the Ohio Players, Love Rollercoaster.

You give me that funny feeling in my tummy....

Aww, sh.., yeah, that's right huh

Rollercoaster of Love say what Rollercoaster yeah (oohh oohh oohh)...

Oh baby you know what I'm talking about

But in the end folks. the euro will continue to lose ground, as long as the markets and media carry on about the Eurozone debt. That's not to say that I don't think it's not bad. for it is. But as bad as our debt? Hardly! Oh.. to give you a sample of what I'm talking about.

How many people heard about the largest municipal bankruptcy in U.S. history that took place yesterday? That's right. Jefferson County, Alabama, declared bankruptcy after failing to gain support for a deal to reduce their debt. Now, here's a classic statement by the County Commissioner, and one that will be repeated here in the U.S. on a national platform one day.

"We've reached the last resort. We could continue and keep kicking this can down the road, but I think the people of Jefferson County have had enough."

But for now. The markets and media want to focus on the Eurozone. They flip flop though, as you may recall just last summer when the focus was on U.S. debt 24/7. And personally, (this is my conspiracy hat, so if don't want to go through this, skip ahead) I feel the media is directed by the Gov't. So. as I've told you many, many times before, the U.S. needs to have a cheaper dollar so that they can repay debt interest with cheaper dollars. But. they can't have the dollar fall off a cliff. So, when things begin to get a little too much in dollar strength, oddly, the media and thus the markets begin to focus on U.S. debt again, and the dollar loses ground until. it looks like the dollar is ready to fall off that cliff, then oddly, the media and markets focus on Eurozone debt.

OK. glad you stayed along for the ride. or if you skipped ahead, I'm ready to carry on my wayward son!

Yesterday, only Japanese yen and Chinese renminbi were able to post gains VS the dollar. Today, most currencies are seeing some sunshine VS the dollar with the euro up slightly at this point. Gold is down $5 this morning. which is odd to me. again this is just Chuck's opinion, but I think that any time it looks like the risk assets are going to have a bad day, the price manipulators take that time as an excuse to bring Gold down again. For, if Gold was trading on fundamentals only. The shiny metal would be shining even brighter during times like this, because there is so much uncertainty in the Eurozone right now. But it's not. so what does that tell you? I told you what it tells me.

Of course those of you who go with the "flow" would say right off the bat that Gold is down because the dollar is up. But there's more to it than that, I'm afraid. And to that. I have this note from Kingworld (you can find the whole story there). here's a snippet. "Geopolitical analyst James G. Rickards, who spoke at GATA's Gold Rush 2011 conference in London in August, told King World News yesterday that a second but secret London Gold Pool is being operated by Western central banks to suppress gold's price...and that he doesn't expect it to survive more than two more years."

Speaking of Japanese yen. it appears that the Bank of Japan (BOJ) has intervened at least 3 times since Halloween last week. The poor manufacturing sector of Japan has really taken the brunt of the 50% gain of yen in the past 5 years, right on the chin. They've seen China overtake them as the World's second-largest economy, and now the latest blow to Japan is being seen by carmakers that are moving more and more production overseas. I know it's probably not seen as a safe idea right now, but fundamentally, Japan is a mess, and the yen should not be as strong as it currently is. But, it is what it is. I would just say, that buying yen at these current prices isn't on terra firma in my opinion.

The Swiss have already gone so far as to clamp the franc's rise, that too was not fundamentally supported, by placing a ceiling on it VS its biggest trading partner, the Eurozone's euro. Will Japan be next? I think that it would be a toward the end type thing if they did, but Japan could very well follow Switzerland here.

In Australia overnight, they printed a jobs report that no one noticed, because of all the focus on the Eurozone. But, I did. so, now you will! HA! Australia created 10,100 jobs in October. Not the kind of job growth they had there a few months ago, but still positive, and nothing to ignore for the island nation. Unfortunately, with all the focus on the Eurozone, the Aussie dollar (A$) was not able to rally on the employment report. UGH!

So. if all the focus is on the Eurozone, we may as well head back there to see what else we can talk about. I saw this quote and thought it made sense. Jean-Claude Juncker, head of the Eurogroup, said that while some Eurozone countries are struggling with a sovereign-debt crisis, the currency is not in trouble. "The euro is not in crisis," Juncker said. "I become filled with rage when people say the euro is in crisis. We have a crisis of public debt in certain Eurozone members, and one in particular, but the euro is not at stake."

Then there was this. yesterday Mike told you about the rot that's still on Housing's vine. to follow that up, we have a story on Adivsorone.com about loan delinquencies. here's a snippet from that story. "Loan delinquencies are on the rise again for the first time since the end of 2009, an ominous sign for a housing market that has yet to gain its footing in a battered economy. News of the 5.88% increase in delinquencies at the end of the third quarter came as a surprise to TransUnion, which compiles the data. The downturn spells more trouble for Fannie Mae and Freddie Mac.

The Chicago-based credit information provider said the housing market reversal came after six consecutive quarters in which the number of consumers making timely mortgage payments increased-a trend TransUnion executive Tim Martin expected to continue.

Martin blames economic shocks for the change in trend; in a TransUnion release issued Tuesday he cited "the U.S. credit rating downgrade, stock price declines, European debt concerns, stubbornly high unemployment, more downward pressure on home values and low consumer confidence. All of this affects a borrower's net worth and desire, or ability, to continue making house payments-especially if they are facing negative equity in their homes due to price depreciation."

It is estimated that more than one-quarter of all households hold mortgages worth more than their houses. The TransUnion third quarter report shows that mortgage delinquencies rose in 40 states and in 64% of U.S. metropolitan areas. Just 21% of U.S. metropolitan regions saw an increase in delinquencies in the second quarter, a difference TransUnion called "significant."

Chuck again. boy that was a long TTWT this morning. but, important stuff!

To recap. The euro has bounced around overnight, first rising 1-cent on the news that Italy had a successful bill auction, but then retreating when it was learned that Italy had to pay the highest rate in a month of Sundays on those bills. Focus right now is all about the Eurozone debt, but did anyone else see that the largest municipal bankruptcy in U.S. history took place yesterday? Jefferson Co. Alabama, decided to stop kicking the can down the road. When will that happen on a national stage?

Currencies today 11/10/11. American Style: A$ 1.0160, kiwi .78, C$ .9795, euro 1.3615, sterling 1.5935, Swiss $1.1065, . European Style: rand 7.9925, krone 5.6825, SEK 6.6550, forint 227.15, zloty 3.2190, koruna 18.6725, RUB 30.45, yen 77.60, sing 1.2880, HKD 7.7825, INR 50.17, China 6.3460, pesos 13.55, BRL 1.7630, dollar index 77.60, Oil $96.57, 10-year 2.01%, Silver $33.85, and Gold. $1,770.75. And since this is the last Pfennig this week, here's the U.S. debt clock, where you can see numbers like I gave you on Tuesday. click here: www.usdebtclock.org/index.html

That's it for today. and this week! Tomorrow is Veteran's Day, which means banks, and mail and everything else like that will be closed, as we observe and thank Veteran's here and gone. My dad was a veteran of WWII, I think I'll go visit his gravesite tomorrow. It's been about a year since I lost my younger brother, David. I have a great picture of me, my dad, and David, when David was about 3, and I was about 12 pinned up on the board at my computer desk at home. So I think of both of them every time I sit down to work at home. The three of us are sitting on our back porch, with a transistor radio, probably listening to the Cardinals game. I miss them both. OK. let's go out and have a Tub Thumpin' Thursday, OK? A 3-day weekend for some of us. And last year, I gave you this Veteran's Day poem, so I brought it out again today. Bye for now.

When I See an Eagle

Marie Frankson

When I see an eagle, I see a great nation which has been founded on the principles of equality and freedom for all.

When I see an eagle, I see our flag flying high.

I see happy children playing and smiling and laughing and singing.

When I see an eagle, I see a melting pot of blacks and Hispanics, Italians and Indians, Native American and Irish which make up our country.

When I see an eagle, I see no more bondage, no more terrorism, ethnocentrism, racism, and hate.

When I see an eagle, I see our troops fighting for what is right, fighting to keep us free.

When I see an eagle, I see America standing tall and strong and proud behind her servicemen and women.

When I see an eagle, I salute and say a silent prayer of thanks for the troops who protect us.

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

2nd QTR GDP Really Disappoints!

Chuck Butler — Mon, 30 Aug 2010 15:34:36 GMT

........But first a word from our sponsor.......

Hello currency trading. So long market risk.

Discover the latest MarketSafe® CD from EverBank. It was created to help shield you from the volatility associated with currency trading. So now, for a limited time only, you have the unique opportunity to seek growth on the foreign exchange market without the fear of loss of principal.

The new CD has a funding deadline of September 16, 2010, so you must act soon.

More key details about the CD:

*Earnings tied to the performance of a specific currency index *100% protection of deposited principal when held to maturity *$1,500 minimum deposit *4-year term *No account maintenance fees

Don't miss the September 16 funding deadline. Apply online now at: http://www.everbank.com/001CertificatesMSCurrencyReturns.aspx?referid=11808

EverBank is an Equal Housing Lender and Member FDIC.

...........

In This Issue..

* A flat trading day in currencies...

* Bullard says that Fed needs to be "disciplined."

* After 15 years, Japan is still "stimulating the economy"

* Treasury yields rise... Is it a sign?

And Now... Today's Pfennig!

2nd QTR GDP Really Disappoints!

Good day... And a Marvelous Monday to you! The last Monday of August! What a Wonderful Weekend, weather wise, and yes, I did realize that I strung together 4 consecutive words that began with "W"!

Well... Recall, last Friday, we were waiting for the 2nd QTR GDP print, and to see if any of the Fed Heads at the Jackson Hole boondoggle, would comment on what I expected to see, which was GDP falling to 1.5%...

Well... I should have booked a flight to Vegas on Friday, as I darn near hit the GDP downward revision bang on! The actual number, that is if you even believe that this number is really the "actual number", was 1.6% for the 2nd QTR. But, I don't gamble, except for my annual World Series bet on the Cardinals, and an occasional neighborhood, nickel, dime poker game, so... I'll stick to writing...

The thing about GDP is that it is so backwards looking, and if we had turned the corner already with regards to the economy, then you would just write this data off, and say it was water under the bridge... Unfortunately, that's not the case, and at this point I can't help but think that the final revision of 2nd QTR GDP will be revised even lower, thus leading into the 3rd QTR, which, as far as I can see with one eye, nothing has gotten better, things have only gotten worse... UGH!

And as far as the Fed Heads commenting on the HUGE downward revision... I didn't hear any "real sound bites"... But... I had to laugh on Friday morning when a story headline flashed across the Bloomie... The title read: Bullard says, "if Fed needs to do more stimulus, it should be disciplined."

Hmmm... Makes you think, or at least it did me, that what the FOMC has done previously was NOT disciplined! HA!

And Big Ben did have something to say in his speech... Big Ben said on Friday that "the pace of economic recovery is likely to be more modest in the near term than had been anticipated."

Just 2 months ago he said, "the economic recovery is proceeding and that the labor market is improving gradually. The pace of economic recovery is likely to be moderate for a time."

Yes, I don't make this stuff up folks... You all can read the FOMC statements just like I do, they're all on the internet!

And I understand that forecasting economic activity is a tough job... But if little old me, here in St. Louis, Mo. Can see the writing on the wall, why can't 12 Fed Heads, or whatever the number is, and all their research "lackeys"?

So... The currency reaction to this data was interesting, for there were those that wanted to hide in the shadows of love, I mean Treasuries, and there were those that took to selling the dollar... At the end of the day, currencies had not gained nor lost ground on the day. Same for Gold... I watched it pop up $5 and then lose it, and go negative $3, and then come back... It was a very volatile day, but well within a small range.

The Commodity Currencies faired a bit better on the day, with their moves higher not being erased with profit taking. The Aussie dollar (A$) is closing in on 90-cents again, and kiwi is back to 71-cents this morning.

Well... The Japanese yen is back below 85 this morning, rally again VS the dollar, as there has been not one follow up word or action by the Finance Ministry or Bank of Japan (BOJ) with regards to intervention to stem yen's rise VS the dollar. The BOJ did announce that they were adding 10 Trillion yen ($118 Billion dollars worth) in liquidity injections...

I find this all to be like rearranging the deck chairs on the Titanic... Monetary Policy isn't going to stop this yen strength... Even "bad" monetary policy like this!

Long time readers know all too well, that I've said that the U.S. was following Japan for years now... Recall the Vapors' song, I'm turning Japanese, yes, I really think so... The reason I bring this up again, is the that you see Japan 15 years after their meltdown, and 15 years of economic doldrums, still attempting to "stimulate the economy"... Is that a glimpse into our future?

I don't know the answer to that, all I know is that everything Japan has done for the past 15 years, is being duplicated by the U.S.

One thing that really caught my eye from Jackson Hole was a presentation by Carmen Reinhart of the University of Maryland. She said that in the decade after a severe financial crisis, the median employment rate was 5 percentage points higher than normal in advanced countries. Following 10 of the 15 crises she studied, unemployment never fell back to its pre-crisis level...

And ECB President, Trichet said that, "the debt overhang bears the ultimate responsibility for slowing down the economic recovery."...

Think about that folks... Japan ran their national debt to levels not seen before, and their economy never has fully recovered... The U.S. has run their national debt to levels not seen before in this country... Will that be a drag on any economic recovery? You bet your sweet bippie it will!

Come on Chuck, talk about something else, this is beginning to give you a rash!

Yes... Let's see... Ahhh... Swiss francs are back on the rally tracks, after having been derailed in May... The franc is back above 97-cents, which is the first time it has seen this lofty level since January! And wouldn't you know it, just about the time the franc gets rolling down the rally tracks, the engineer slows it down... The engineer in the case would be the Swiss National Bank (SNB), who sent out a communiqué saying that they were following the franc's exchange rate "closely"...

The SNB had been in the markets earlier this year to stem the franc's rise, especially VS the euro... But then they backed off the intervention, and said they no longer were concerned with the franc's level... So, this latest spanner in the works which was provided by the SNB, is a surprise to the markets...

HEY! When you get down the currency round-up, you'll see that the 10-year yield is 2.59%, still way to low for the risk, but about 15 BPS higher than the low of 2.45% we saw a week or so ago... Is this an indication that investors are bailing on the "flight to safety"? Sure looks like to me, but then we'll need to see this yield rise much more before we know for sure.

Well... Last week's data was just plain awful, but that was last week... This week, we start off with two of my faves, Personal Income and Spending... Tomorrow we'll see the color of the latest S&P/CaseShiller Home Price Index, and Consumer Confidence, which if it prints a gain to the index, thus signally an increase in consumer confidence, I'll probably jump out our 7th floor window! Well, not really, the windows don't open! Whew! And then on Friday, before the boys and girls head to the Hamptons for the Labor Day Holiday weekend, we'll have a Jobs Jamboree... And I don't have a good feeling about that report, folks... The weekly initial jobless claims have been ramping higher, and it doesn't look good for the labor picture.

Then there was this... This from the FT... U.S. Federal Reserve Chairman Ben Bernanke has made it clear that the central bank's problem isn't explaining the economy and what the bank plans to do about it, according to The Economist. The problem is figuring out what's going on and deciding how to respond. "The recovery has stumbled and the central bank isn't sure why," the magazine notes. There will be more quantitative easing when Bernanke decides it is essential, The Economist concludes.

Chuck again... Hmmm... I guess in the end the Fed's problem is policy, not communication... I'm laughing out loud right now, as IF that were the Fed's only problem!

To recap... 2nd QTR GDP was revised downward from 2.4% to 1.6%, with another revision due before we close the books on the 2nd QTR. Currencies and metals went back and forth all day after the report, in a tight range. There were some interesting quotes from the Fed's Jackson Hole boondoggle, and Japan is still attempting to stimulate the economy after 15 years... Is his our future?

Currencies today 8/30/10: American Style: A$ .8975, kiwi .71, C$ .9525, euro 1.2710, sterling 1.5560, Swiss .9725, ... European Style: rand 7.3070, krone 6.2635, SEK 7.3860, forint 223, zloty 3.1285, koruna 19.5050, RUB 30.68, yen 84.65, sing 1.3540, HKD 7.7795, INR 46.91, China 6.8028, pesos 13.02, BRL 1.75, dollar index 82.88, Oil $74.88, 10-year 2.59%, Silver $19.17, and Gold... $1,237.30

That's it for today... A great BIG Happy Birthday to my old latte' buddy, Michelle! Yes, in days past, Michelle and I would go for latte's on Friday mornings... That was before I got "sick", and we never really picked it up after that... So Happy Birthday Michelle! A simply awful weekend in Washington D.C. for my beloved St. Louis Cardinals... It looks like they will NOT make the playoffs this year... UGH! My buddy, Alex has his first freshman football game this Thursday, I think he's getting pretty excited about it, for it's time to stop hitting each other, and play someone else! And we head toward a Labor Day Holiday this week... The summer has flown by so quickly, and I'm not even a teacher! HA! I'm home for all of Sept. and have just two more trips to make before I cut them off for this year... Next month, I'll be in Toronto for the Money Show, and then a Sov. Society conference in Cabo... Then before you know it I'll be going to the Orlando Money Show in February! OK... I've carried on long enough today... I hope you have a Marvelous Monday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837