Search results matching tag 'Chuck Butler'

Ghost jobs’ help US payrolls jump up...

ChuckButler — Mon, 09 May 2011 15:41:00 GMT

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In This Issue.

* US Payrolls jump, but what is the real story?
* Euro falls on Greek concerns, but recovers on good data
* Nordic currencies shine
* Geithner to push China on rates

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

‘Ghost jobs’ help US payrolls jump up...

Good day. We had a beautiful weekend here in St. Louis, and I took advantage of the nice weather to get a jump on some yard work which I’ve been putting off. After a nice mother’s day brunch with my family I headed out back with a chainsaw. Before the end of the day I had cleared out a number of ‘scrub trees’ from our property line and one very large box elm which my wife had wanted to get rid of. My back is a bit sore this morning, but my wife is happy, and that is all that matters around our house.

The currencies continued to drop on Friday like that big elm tree in my back yard (you knew I was going there). The US payroll numbers came in much better than expected on Friday, helping the dollar continue its rebound vs. most of the currencies. American employers added 244,000 jobs in April according to the Labor Department, exceeding last month’s revised 221,000 jobs and easily beating economists projections. But a separate report showed the jobless rate climbed to 9 percent, the first increase since November of last year. Chuck was scratching his head after the release of the jobs data on Friday morning, and sent me this to include in this morning’s Pfennig:

From Chuck:
Well.. brother! Was I wrong about the Jobs last Friday! But to my defense, all the signs pointed to a weak number… Don’t know why, I didn’t take into consideration the ghost jobs… but I didn’t… 175,000 jobs of the 244,000 reported were added by the BLS through their hedonic adjustment Birth / Death Model… that I’ve explained many times in the past… But, in essence, they are jobs that are added out of thin air, much like our money supply…

Thanks to Chuck for shedding a bit of light on what he believes is behind the surprise increase in the US jobs numbers. Another report released Friday showed US consumer credit increased, but March’s $6.016 billion jump was slightly less than Feb’s increase of 7.553 billion. US consumers are definitely starting to borrow again, and the ‘officials’ are pointing to this increase in debt as a good sign the US economy is recovering. I even read a couple of news stories which equated the jump in payrolls with the increase in consumer debt (I guess the “Ghosts” have credit cards!!). These guys just don’t get it. They really believe that debt is good, and get excited when US consumers are going deeper in debt, as it means they are spending more. But perhaps US consumers are going deeper in debt because they can’t afford to pay cash for a $100 tank of gas. The increase in US consumer credit is not, in my opinion a good sign for the long term recovery of the US economy.

This week is a light one as far as US data. We don’t have any data releases today, and just wholesale inventories tomorrow. Wednesday will bring the Trade data for the month of March and on Thursday we get the weekly jobs data along with the retail sales numbers. The end of the week brings will also give us Washington’s view on prices with the PPI data for April released on Thursday followed by the Consumer Price data on Friday. As Chuck has pointed out in the Pfennig for years, the inflation data is even more manipulated than the employment data, so these ‘official’ numbers don’t carry much credibility on the desk, but the markets do watch them so we have to also.

The euro was hit hard last week, dropping over 3.5% vs. the US$. Friday it continued to slide, dropping the most in a year against the dollar on speculation Greece would be forced to exit the common currency. Der Spiegel magazine broke the story that the European Commission had called a meeting to discuss the situation, but Pfennig readers shouldn’t have been surprised by this news, as Chuck has been talking about this possibility for months. Leaving the Euro would give weaker members like Greece or Portugal just what they think they need, the ability to devalue their currencies in order to deal with their debt. Exiting the euro would give them the opportunity to turn up the printing presses, and create more currency to pay down their debt (this is exactly how the US is dealing with our huge debt levels). You can read the full story from Friday’s Der Spiegel here http://www.spiegel.de/international/europe/0,1518,761201,00.html We have been expecting the sovereign debt crisis to raise its head again, and the story of the clandestine meetings certainly gets the conspiracy theories going. The Euro had been getting a bit to strong, and the news on Friday certainly took a bit of the shine off the common currency.

But Greece rejected the report, and the euro has recovered in early European trading. The meeting Der Spiegel exposed did take place, but Greece is not dropping the Euro (yet) and this morning’s stories report about an apparent agreement on another restructuring of the Greek bailout plan. The Euro has moved higher on this news, and was helped by data released Friday and this morning which showed Germany’s economy continues to recover at a faster pace than economists had predicted. Reports on Friday showed German industrial output rose for a third month in March, increasing .7% from the previous month. And data released this morning showed German exports surged last month to the highest monthly total ever recorded. Exports jumped 7.3% from February, making a mockery of economists’ predictions of a 1.1% increase. The German economy is definitely powering the European economic recovery, and the higher value of the Euro apparently isn’t having much of an impact on the recovery. Traders have stopped selling the euro on this better than expected data, and the 1.43 handle is looking like a bottom.

The two best performing currencies vs. the US$ over the weekend have been the Nordic currencies of Sweden and Norway. Both currencies climbed just under 1% vs. the US$ in the past day, reversing a five day slide. The Swedish economy is dependent on manufacturing, so the good news on German exports also probably boosted interest in the krona. Heavy machinery exports to Asia where the economies continue to grow have helped stabilize the Swedish economy, and expectations on interest rates are also in favor of the Swedish krona. Norway’s economy continues to be one of the strongest in the world, and oil prices hovering around $100 have certainly helped. The Norwegian krone is one of the favorite currencies on the desk. While neither currency is considered a ‘high yielder’, both central banks are getting aggressive battling inflation, and interest rates will definitely go higher this year. Either would be a good alternative to investors looking to shed the volatility of the euro.

Commodity prices finally stabilized on Friday, and both Gold and Silver have actually rallied a bit. Gold moved back above $1,500 this morning, and silver was up over 3% on Friday. But the metals were still down on the week, with Silver dropping a whopping 18.65% last week. But this latest little rally sure looks like a dead cat bounce, and the apparent ‘bubble’ which had been inflated in Silver looks like it has a bit more air left in it. Chuck let the desk know that one of his chartist friends believes Silver will rally a bit before dropping further to $27. From there Silver is projected to shoot back up, and personally I am going to start buying back into Silver once if/when it gets below $30.

The end of the free fall for commodities helped to stabilize the commodity currencies of the Aussie, New Zealand, and Canadian dollars along with the South African rand. The Australian dollar rose before a Chinese report tomorrow which is predicted to show Chinese imports rose in April. China is the largest importer of Australian raw materials, so good news for China is also good news for the Aussie dollar. Reserve Bank of Australia Governor Glenn Stevens is a favorite of the desk, and continues to keep a lid on Australian inflation. Stevens held interest rates steady on May 3, but policy makers said they will likely need to raise interest rates ‘at some point’ to keep inflation from accelerating. Australian Treasurer Wayne Swan is set to deliver the budget to Parliament tomorrow, but he indicated yesterday that the govt.s deficit will widen this year and next before moving back over to a surplus in 2012-2013. Rising interest rates, continued growth in China, and a projected budget surplus in the next 3 years should continue to keep the Australian dollar as one of the best performing currencies vs. the US$.

US Treasury Secretary Geithner will be a busy man the next two days, as Washington hosts the annual Strategic and Economic Dialogue. Secretary Geithner is expected to push China to raise interest rates in order to help boost the Renminbi vs. the US$. Geithner will be pushing China to relax controls on their financial system and give foreign banks and insurers more access according to officials at the Treasury department. The Chinese renminbi has been pegged a bit higher today, in preparation for the meetings. China traditionally lets the renminbi appreciate slightly before and after meeting with US officials. But China’s currency won’t be the only topic discussed. China’s Vice Finance Minister Zhu Guangyao raised concerns with the overall level of debt in the US. China is the biggest foreign holder of US Treasury notes, so there concerns over our ability to pay this debt back is definitely warranted. “We are paying close attention to the domestic discussion in the US on debt and deficits,” Zhu told reporters in Beijing today. “We hope the US can take effective measures toward fiscal reorganization just as President Obama suggested.”

The key word in that statement is ‘EFFECTIVE’. While both parties have proposed cuts in spending, these cuts will need to be much deeper in order to be effective. As Chuck likes to say during his presentations, the spending cuts which have been proposed by both parties when added together still don’t amount to much more than a bucket of sand on the beach. China continues, for now, to finance our debts and deficits, but unless they are stupid (and I don’t think they are) they will become more aggressive in their plans to diversify out of their US Treasury holdings. This isn’t good news for the long term prospects of the US dollar.

To recap: Ghost jobs helped boost the monthly jobs data here in the US, but the overall rate ticks back up to 9%. Greece was rumored to be leaving the euro, but good data from Germany along with another change to the Greek bailout package stopped the euro’s slide. The Nordic currencies were the best performers over the past 24 hours, with both the NOK and SEK rallying 1% vs. the US$. Silver finally ended its freefall, but could this just be a dead cat bounce? And US Treasury Secretary Geithner will be pushing China to raise interest rates as a way of strengthening the Renminbi.

Currencies today 5/4/11. American Style: A$ $1.0752, kiwi .7918, C$ $1.0369, euro 1.4395, sterling 1.6375, Swiss $1.1408, . European Style: rand 6.725, krone 5.4688, SEK 6.2397, forint 183.7, zloty 2.735, koruna 16.8013, RUB 27.847, yen 80.77, sing 1.2329, HKD 7.7724, INR 44.715, China 6.4942, pesos 11.6056, BRL 1.6105, dollar index 74.597, Oil $99.76, 10-year 3.18%, Silver $37.02, and Gold $1,503.70

That's it for today. As I said in the opening paragraph, we had perfect weather this weekend here in St. Louis. I started my weekend with a great Cardinal game Friday night, and spent Saturday outside at my kids soccer and baseball games. Yesterday started with a Mother’s day brunch followed by a ton of yard work. My 15 year old son got another ‘life lesson’ and cut his first tree down with a chainsaw. He worked hard clearing up the brush, and can look forward to another life lesson next weekend when he learns to lay sod! I know this is a lot later than you are all used to, so I will shut up and hit the send button. Hope everyone has a Marvelous Monday and a great start to your week.

Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922 begin_of_the_skype_highlighting 1-800-926-4922 end_of_the_skype_highlighting
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www.everbank.com

Chinese Renminbi Gains Acceptance

ChuckButler — Wed, 04 May 2011 15:16:00 GMT

Good day. Chuck is sleeping in a bit this morning, as he was out late at a Jimmy Buffet concert last night, so I get to share my thoughts and views with everyone this morning. And what a beautiful morning it is! The sun is finally shining after what feels like 40 days of rain. It is a bit cool for a May morning, but it is absolutely perfect running weather. The sun is just cresting over the downtown skyline, and it looks like it is going to be a great day!

It was another ‘risk off’ day yesterday as investors moved out of higher yielding currencies and back into the safe haven of Swiss francs which was the best performer. The Japanese yen also ticked up a bit vs. the US$ yesterday with the Australian and New Zealand both dropping. The US dollar pushed higher throughout the trading day, but reversed course and began to drift lower in overnight trading. As I turn the trading screens back on this morning I see the dollar has given back most of its gains from yesterday, and is back around 73.

I enjoyed my time down in Panama last week, and got to address the crowds 4 times with 2 general session talks and two workshops. The first of my general session presentations was titled ‘The coming regime change in currencies’ and I shared my thoughts on the fragile status of the US$ as the globe’s reserve currency. With all of the debt and deficits which we have accumulated, the reserve status of the US$ is definitely in danger. One of the obvious alternatives to the US$ is the Chinese Renminbi. The Chinese economy continues to grow, and is now predicted to overtake the US and become the globes largest economy within the next 5 years. The Chinese automobile market is now the largest, and their growing middle class now has as many members as the entire population of the US.

But in the short term I don’t see how the Chinese currency can replace the dollar as the reserve currency, as the Chinese financial system is still nascent. But Chuck has mentioned several times, China is trying to gain a wider acceptance of the Renminbi in international trade. They have arranged swap agreements with some of their largest trading partners, avoiding the use of US$. They have also begun to allow the trading of fixed income securities denominated in Renminbi on the Hong Kong markets. These bonds are called ‘Dim Sum’ and have been rallying dramatically as investors push their prices higher.

All of these efforts by the Chinese government to gain a wider acceptance of the Renminbi seem to be paying off. A report released by HSBC overnight suggested the Renminbi will overtake the British pound this year to become the world’s third most popular trade-settlement currency. HSBC conducted a survey of small and medium sized trading companies and more respondents chose the Chinese renminbi as their primary currency than selected the pound for the first time since the survey began. The US$ and Euro are still the two top currencies used for international trade, but the Chinese currency is now number three. The emerging markets are driving much of the growth of the use of the Renminbi, and with good growth expectations continuing in these markets, the acceptance of the Chinese renminbi will undoubtedly grow. The next step China needs to take is to ease back on their control of the Renminbi. Again, I don’t think this is going to be a quick decision, but will take some time. China will continue their ‘slow and steady’ release of the renminbi, but I do think that over time the renminbi will become free floating. Once this happens, the renminbi will be in a place to become the next global reserve currency.

Until then, I think we will see a growing dependence on Special Drawing Rights (SDRs) which were created by the IMF in 1969 during Bretton Woods. SDRs are currently a basket of 4 different currencies (USD, EUR, GBP and JPY) but the basket is re-evaluated every 5 years and the Chinese Renminbi will undoubtedly be added eventually. I believe the SDRs are what will become the globes next reserve currency, decreasing the importance of the US$ on global trade. This is just another nail in the coffin of the US$, and we will continue to see its value slide in the coming years.

But enough with the lecturing, you all want to hear about today’s currency markets. The euro is moving a bit higher this morning as investors raise bets that the ECB will take a more hawkish tone in their rate statement. While Ben Bernanke has made it clear the US will keep rates near zero for the near future, the ECB will probably signal they are ready to begin raising rates in Europe. A report released this morning showed the growth in European services and manufacturing accelerated in April led by factory output. The index rose from 57.6 to 57.8, and any reading above 50 indicates expansion. Prices in Europe are also on the rise, with factory gate prices jumping 6.7% from a year earlier, the fastest pace since September of 2008. Inflation fears are expected to force the ECB to sound a hawkish tone after their meeting tomorrow. Higher interest rates will undoubtedly push the Euro higher, in spite of the continuing sovereign debt crisis.

Speaking of the European sovereign debt crisis, Portugal agreed to a $116 billion bailout. The three year plan sets goals for a budget deficit of 5.9% of GDP for 2011, and a reduction to 4.5% in 2012 and 3% in 2013. These deficits are slightly higher than previous targets, and is seen to be attainable. It looks like Portugal has dodged the bullet, and the focus of the ‘bond vigilantes’ will now move on to the next European victim. Could it be Spain?, Italy?, or will it be one of the big boys like France? We will have to wait and see, but I can pretty much assure you that the Sovereign debt crisis is not over, and we will see another victim sometime in the near future (probably as the euro pushes past $1.50).

The commodities continue to slip with Silver making the biggest move down nearly 14% in the past 5 days. The fall in silver was somewhat expected, as it had been moving much to fast in the other direction. And looking at the other precious metals, both Gold and Platinum are actually up slightly in the past 5 days. I still think commodities are in a long term bull market, as the growth in the number of consumers in China and Asia will push demand higher.

But the recent fall has weighed on the commodity driven currencies of Australia, New Zealand, and South Africa. The Australian dollar was also pushed down by rising expectations that the RBA will extend its pause in raising rates after leaving them unchanged at their rate meeting. In spite of rising inflation pressures, the RBA said it feels inflation will remain near its target for the coming year. Traders lowered bets that the RBA will be moving interest rates higher after the AUD moved higher vs. the US$. Governor Glenn Stevens is still sounding pretty hawkish though, and a move up by the RBA is still possible. The kiwi had the largest drop vs. the US$ after a government report showed private sector wages grew at a slower pace than some expected.

The Canadian dollar didn’t participate in the slide of the commodity currencies, and actually moved a bit higher vs. the US$. The election results which gave Prime Minister Stephen Harper’s conservative party the first majority in seven years was good news for the loonie. Harper has pledged to eliminate Canada’s budget deficit by 2014 and cut corporate taxes and spending, and his decisive win certainly looks like a stamp of approval for these policy choices. The election is being seen as a mandate for Harper to continue to cut government spending, and continued growth of the Canadian economy combined with a strengthening fiscal position should help bolster the Canadian dollar in the global markets.

India’s central bank raised benchmark interest rates by a more than estimated 50 basis points today. The central bank expects inflation will remain at ‘elevated levels’ until at least September. Inflation in India is the second highest among the BRIC nations (Russia’s is higher) led by food and energy price increases. The central bank hopes that the higher rates will slow the economy enough to bring inflation below their target of 6% within the year. The Indian rupee really hasn’t moved vs. the US$ this year, and if the central bank continues to increase interest rates it could be a good alternative for investors looking for Asian exposure with a decent interest rate. The Indian rupee CDs are currently the second highest paying after CDs in South African Rand.

To recap. China is predicted to overtake the Pound Sterling and become the globe’s third most popular currency for trade (behind the US$ and euro). The ECB is expected to push rates higher, and Portugal has agreed to a bailout. Commodities slipped, pulling the commodity currencies down with them. Harpers big election victory helped push the loonie higher in spite of the commodity drop. And finally, India has raised their rates another 50 basis points and is now one of the highest yielders we offer.

Currencies today 5/4/11. American Style: A$ $1.0834, kiwi .7918, C$ $1.0483, euro 1.4855, sterling 1.6509, Swiss $1.1597, . European Style: rand 6.6367, krone 5.2947, SEK 6.062, forint 178.51, zloty 2.6498, koruna 16.3116, RUB 27.26, yen 81.13, sing 1.2285, HKD 7.7693, INR 44.485, China 6.4931, pesos 11.57, BRL 1.5876, dollar index 73.05, Oil $110.70, 10-year 3.25%, Silver $40.42, and Gold. $1,531.86

That's it for today. As Chuck told all of you, we spent the past week down in Panama. It was what I would call a very successful trip, as we got to ‘spread the word’ regarding EverBank and met a number of potential customers. But I also enjoyed being able to listen to a number of really good speakers, many of whom sang the praises of EverBank. It was good to hear so many ‘smart’ people talk about how EverBank has so many great products and people. Chuck is here and brought breakfast sandwiches, and Ty just asked when the Pfennig is going out, so I better hit the send button now. Hope everyone has a Wonderful Wednesday!!

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

QE Light...

ChuckButler — Wed, 11 Aug 2010 14:41:00 GMT

EverBank World Markets
A Pfennig For Your Thoughts
Wednesday, August 11, 2010

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In This Issue….

* Dollar flies high on FOMC...
* FOMC puts $2 Trillion floor down...
* Bailing out the states...
* Aussie Consumer Confidence soars!

And Now... Today's Pfennig!

QE Light...

Good day... And a Wonderful Wednesday to you! Well... The FOMC set off some fireworks yesterday, and so did the Cardinals & Reds, more on the latter later! But first, we have to go to the tape and see what the Fed Heads said to trigger the fireworks in the markets... And let me tell you, it's back to square one for a few things this morning...

OK... The dollar is flying high this morning, as the knee jerk reaction to the FOMC announcement yesterday, didn't last long. Let me explain... The FOMC statement was full of things that could be taken two different ways, but the first way it was taken was that the Cartel would exit their reversal plans and implement a form of Quantitative Easing (QE)... I call it QE Light... Less filling...

Now... I told you what would happen if the Cartel decided to implement QE, and that's exactly what happened, with the dollar getting sold, and currencies along with Gold rallied... Shoot Rudy, the stock market here in the U.S., recovered almost all of its 100 point loss for the day, in a matter of minutes following the FOMC announcement...

But, then, the markets got a real good look at the statement, and in the end, the cartel had not announced a new round of QE (not yet!) instead, they had basically placed a floor on their balance sheet of $2 Trillion, and decided to keep its bond holdings level to support an economic recovery. They also announced that maturing bonds would be reinvested into longer dated Treasuries, to keep rates low for the mortgage sector.

The Cartel also assessed that in the near term, the recovery proved to be "more modest" than they had anticipated. Shoot, if they had only been Pfennig Readers 6 months ago when they made those statements about a growing economy... They would not have opened mouth and inserted foot!

So... As I turn on the currency screens today, I see the euro holding on to the 1.30 handle by the skin of its teeth, and Gold down $7... Quite a bit different looking than yesterday afternoon, right after the FOMC statement! So... Just put that down as a knee-jerk reaction, and the trading now, as a return to the "flight to safety" dookie we've seen off and for two years now.

The FOMC averted a HUGE dollar sell-off yesterday by wording what they were doing differently than the markets had seen before... But in the end, isn't it the same stuff? I mean, if they aren't going to reverse their previous bond holding plans, then they are continuing on with the current environment to hold toxic waste bonds, and keep interest rates a historic lows... Thus further inflating what will end up being the biggest bubble of all time... Treasuries...

Speaking of Treasuries... The 10-year is now at a 2.71% yield... Talk about measly yields! But, that's not as bad as a 1-year Treasury Bill... Get this... A 1-year T-Bill currently yields .23%... Now... If you buy that from a broker, and they charge you a commission, you're now negative... And... If your money manager buys it for you, you're still negative, because of their management fees! Why in the world would any one buy a T-Bill?

OK... I've got to go on to other things here... I can feel my blood pressure rising! Of course, sitting here, sweating, waiting for the A/C to turn on, isn't exactly helping me keep calm either! UGH!

Well... On Monday, the price of Oil was $2 higher than it is today... And, while I like to see cheaper gas, I have to wonder just what's going on... Of course the Cartel telling everyone that our economy is stuck in the mud, isn't going to make any one think that U.S. consumers will be out buying gas!

Speaking of U.S. Consumers and our economy, I'm going to share with you an observation I made last week, that falls right into the "economics" that I use to help me make the calls I make...

I've been camping about the same time of the year with my family for many years. (except the 2007,2008) Shoot, I used to go with my beautiful bride's family before we were married! And years ago, the campgrounds would be full, especially on the weekends, and there would be lots of boats in the lake. But since 2000, the campers dwindled, along with the boats in the lake... There was one year, that besides my family, there was only one other family in the campground!

But this year, it was very reminiscent of years before 2000... I thought to myself, Self... I see this as a sign of the economic times... Instead of going to Rome this summer, these people stayed close to home, and camped for their vacation... A sign of poor economic times if you ask me!

And what about the labor crisis here? What's the Cartel doing about that? Oh, they are failing miserably once again, at this, that, and anything else they do!

I see where the President signed a $26 Billion Bill to give emergency aid to states... Didn't I tell you this was coming? And I doubt that $26 Billion is going to be near the amount that will be needed by the states... But stop right there and think about what he just did... He took $26 Billion of your tax dollars and spent them without your authorization... Once again!

I did see though that the bill calls for a reduction of the food stamp program by $11.9 Billion... That's interesting isn't it? I mean, I'm all for ending a majority of the spending in these programs, but didn't I just tell you how the number of people on food stamps has grown yesterday? Strange happening as far as I'm concerned...

And did you see where the Pentagon is going to cut thousands of jobs? That's right, thousands... But again, I have to question the timing... Aren't we fighting two wars right now? But then, if there are thousands of people there that aren't needed, why have they waited until now to cut them?

OK... Let's talk about something other than the U.S. economy, I'm growing tired of it!

Let's talk about the Canadian economy... Today, we'll see the color of Canada's Trade Deficit for June... I'm expecting it to narrow, as I assume that the energy sector will have done enough to narrow the deficit here, which is small in nature, and manageable by all means. Canada's economic growth is solid, folks... No worries here...

And then we have Australia... One of the TV's we had on here yesterday had a spokesperson from Australia on to talk about the Aussie job creation sensation... He announced that there would be free 1-year work visas given to people 18-30 to come to Australia and work... Amazing!

That job creation shows up in Consumer Confidence for sure... And look what we have here! Aussie Consumer Confidence printed last night and showed a nice strong increase for the second consecutive month... +5.4% this month... Following +11.9% last month...

Then there was this... And this story that was in the Washington Post, just made me sick! But since I enjoyed it so much (NOT!) I thought I would give you a snippet of it and the link to the whole story, as long as you promise to put away the sharp objects first!

http://www.washingtonpost.com/wp-dyn/content/article/2010/08/10/AR2010081000138.html

It seems that there's a new way to escape house payments on a home that's underwater and many never recover... It's called, "buy and bail"... Where a home owner, acquires a new home before their credit rating is ruined by walking away from the old house that's underwater, or worth less than the mortgage...

So... In essence, the practice of "lie on your loan application" is continuing, even though Fannie and Freddie thought they had beefed up their standards to prevent this from happening...

I shake my head in disgust...

To recap... The FOMC did a QE sort of dance yesterday that caused a knee jerk reaction, pushing the currencies and Gold higher, but only for a short time before the markets realized it wasn't really any new QE, and the FOMC also downgraded the economy, thus throwing the markets into a "flight to safety" which has the dollar flying this morning.

Currencies today 8/11/10: American Style: A$ .9040, kiwi .7195, C$ .9635, euro 1.3010, sterling 1.5715, Swiss .9485,... European Style: rand 7.2825, krone 6.1550, SEK 7.30, forint 217, zloty 3.0850, koruna 19.10, RUB 30.28, yen 85, sing 1.3610, HKD 7.7655, INR 46.69, China 6.7750, pesos 12.72, BRL 1.7430, dollar index 81.66, Oil $79.38, 10-year 2.71%, Silver $18.16, and Gold... $1,197.50

That's it for today... Well... Did you see the "baseball brawl" in Cincinnati last night between the Cardinals and the Reds? I see nothing wrong with teams ironing out their differences... But do it like men... Not like one Reds player, who took to kicking his opponents in the back and face with his metal cleats... I don't know who taught him to fight... Cardinals and Reds play another game today, I'm sure a lot of people will be looking for more extra curricular activities from these two teams... Well, that's all I had to talk about today... I sure hope your Wednesday is Wonderful!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837
http://everbank.com/
PFENNIG DISCLOSURE

The BLS Attempts A Fast One...

ChuckButler — Mon, 08 Mar 2010 16:42:00 GMT

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In This Issue..

* Chuck in the Wall Street Journal!

* Feb Job losses -133,000

* Oil pushes Petrol currencies higher...

* Volcker believes euro to stay...

And Now... Today's Pfennig!

The BLS Attempts A Fast One...

Good day... And a Marvelous Monday to you! Was your weekend grand? The temps were below normal, but the sun filled a blue umbrella sky for most of the weekend, and for that I get a smile on my face... For those of you who don't like me going into personal stuff, and would much rather me stick to the facts, you'll want to skip ahead a few paragraphs, for I've got some very important personal stuff to talk about... If that's you... I'll see you in a bit... Otherwise, for the rest of us... Here goes!

Well... It was a great weekend at my house... No, my beautiful bride was still in Florida... It was great because, after a couple of weeks of waiting, and wondering if it was going to print or not... There was a very nice feature article in the Wall Street Journal Saturday, that featured... Me! And my Pfennig! I'm sure that most of you missed it, as the Pfennig Box had very few emails about the article... So... If by chance, you would want to read what the Wall Street Journal writer, Jeff Opdyke, had to say about me, and the Pfennig... Then click here... I must say, that some browsers require you to subscribe to the article... Some don't... I believe we'll have the article, text and picture, on our website soon...

http://online.wsj.com/article/SB10001424052748704869304575103653627834216.html?mod=WSJ_business_LeftSecondHighlights

Ok... You're back now... Well, my beautiful bride didn't have a comeback for me this time when this story printed, so I guess even she was impressed! There were some very nice quotes from Pfennig readers in there, except one... Of course the writer had to make it "fair" and "balanced" right? So...

My two older children were left out of the article, so I want to make sure everyone is aware that I have 3 children... Dawn, Andrew, and Alex... Dawn teaches kindergarten, and Andrew teaches high school social studies / history/ law, and coaches water polo and swimming.

OK... The article did say that some people don't like me taking up space with talk about family and the Cardinals, they forgot to mention my beloved Missouri Tigers! So, on that note, I had better get to the currencies / economies of the world, eh? But first, I want to thank Jeff Opdyke, and the WSJ, for picking me as the subject of the story... I was quite proud to have a picture and story in the WSJ... And.. I don't think that means I'm full of myself!

Well... Welcome back to those that skipped ahead! Friday's Jobs Jamboree turned out to be very interesting, after looking under the hood... According to the Bureau of Labor Statistics (BLS) the U.S. lost 36,000 jobs in February, much less than what was expected (-68K), and the unemployment rate remained at 9.7%... Of course we all know that the "real unemployment rate" is 21%, it all comes back to the games people play now, every night and every day now... The most important piece of the Jobs Jamboree is the Avg. Hourly Earnings, which printed at 1.9% gain... So, those that are working are seeing some increases... Marginal increases, but still!

And... The BLS did add 97,000 jobs out of thin air, so the job losses were really -133,000... I also found it suspicious that the BLS waited some time on Friday, before posting that +97,000 adjustment... Before they did, the markets were led to believe that job losses were dwindling... Again... The games people play... It sure looks like they tried to pull a fast one on the markets... But, I'm sure it was just a technical thing... Right?

So... The dollar began to go into the tank shortly after the BLS adjustment, and traded down for the rest of the day on Friday, and the overnight markets of Asia and Europe have not reversed that move from Friday. In fact, the overnight markets have added to the gains by the currencies...

Recall on Friday I told you that Pending Home Sales had dropped 7.6% last month, and then that was followed up by a not so good Jobs Jamboree... The rate hike campers here in the U.S. are beginning to feel like a forgotten lover... There's just no love coming from the Fed regarding rate hikes, and with that thought falling over the markets, the high yielders took off, as rate differentials came back into play.

The other currencies that took off were the Petrol-currencies... You know them, you love them, here they are.... The currencies of: Norway, Canada, Mexico, and... Even the beaten and downtrodden, U.K. are gaining ground VS the dollar as the price of Oil nears $82!

OK... A Greece update is needed here I think... Basically, the Greek 10-year bond issue was taken down by dealers, but at a cost to the Greeks... This is exactly what I keep talking about regarding the U.S. debt and need to finance... If we keep kicking the deficit spending can down the road for someone else to deal with, we will run into a financing problem like Greece, and to take our bonds, the buyers will demand higher yields... Uh-Oh!

There was news over the weekend, that France was ready to give Greece some financial support... And former Federal Reserve Chairman, Paul Volcker, has this to say about the euro... "I'm still a believer in the euro, the lack of a unified government to back up the European Central Bank is a "structural crack" and maybe fortunately it's tested with a country as small as Greece, which doesn't present an insuperable financing problem."

I was typing that, and I just couldn't get the Monkees song, I'm a believer, out of my head! Then I saw her face, now I'm a believer!

OK... I'm back now... Looks like we have two Central Bank meetings this week, the Swiss National Bank (SNB) and the Reserve Bank of New Zealand (RBNZ)... Although the RBNZ has been talking hawkish lately, it might be too soon for them to hike rates this week, although they have to be feeling a bit behind their kissin' cousins across the Tasman, who have raised rates 4 times in the past 6 months!

The Swiss, will not, and can not raise rates at this time...

There will be two jobs reports this week from Australia and Canada... So, there's a few things on the plates of the countries we follow this week.

Here in the U.S. the data cupboard is pretty empty most of the week with some real data coming in Thursday and Friday... First we'll see the Monthly Budget Statement, and I have no idea why, but the expectations for Feb.'s deficit is $210 Billion! OUCH! Then the Trade Deficit prints for January, and then finally on Friday the Retail Sales for Feb... I don't think any of this is going to be rate hike positive, and therefore not dollar positive... But we'll have to wait-n-see, eh?

OK... Call me clairvoyant... Nah... I'm not that! I'm just a guy that sees things and thinks of ways to make them work better... In this case I'm talking about the announcement over the weekend of the European Monetary Fund... That's right! I did talk about the Eurozone creating this European Monetary Fund, a week ago, long before anyone even whispered it! Why did I think this? Because I knew that the European Central Bank (ECB) and the European Union was not going to go for any assistance to Greece by the IMF... So... I figured that it would be best to form their own IMF... And lo and behold look what they announced this past weekend!

"The European Monetary Fund, patterned after the International Monetary Fund, is a key part of an initiative backed by Germany and France to strengthen cooperation and surveillance of public finances across the Eurozone, government officials said. German Finance Minister Wolfgang Schäuble revealed details of the plan during the weekend."

OK... I'm going to have to come back down now... I was floating after hearing that announcement! I'm sort of like those Windows 7 commercials... The European Monetary Fund was my idea, and I'm a PC!

While I was looking around the Wall Street Journal this weekend, I saw a story that caught my eye... Here's a snippet from the WSJ... "Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and other lenders reported a large increase in the volume of troubled loans they bought back last year. Barclays Capital estimated that banks repurchased about $20 billion in such loans, with half of the total written off. "Most investors haven't really focused on this issue and are surprised on how much impact this could have, including on earnings," said Ajay Rajadhyaksha, head of U.S. fixed-income and securitized strategy at Barclays Capital."

Back to Chuck again... Doesn't that stuff scare the bejeebers out of you? Mortgage loans that were made in the past 6 years are toxic! Of course not all of them are... But isn't this all we every hear about are these mortgage loans going bad and having to be written off?

Well... China was in the news this weekend, talking about their shrinking Trade Surplus... The thought here is simply that if China's trade surplus continues to shrink, the pressure applied to the Chinese to allow the renminbi to float will be eased... For those of you keeping score at home, China's Trade Surplus was $44 Billion a year ago... Today, it is $8 Billion...

One of my fave economists, Nouriel Roubini, said that he believed the Chinese would "limit the renminbi's appreciation to 4% over the next 12 months because of a super cautious outlook on the global economy."

I personally think that China will allow more than that as we go along, starting with a 2% or so, gain by summer... But then, that's just me...

Then there was this... There was a good story in the USA Today regarding Gold this past week, that long time colleague Ed Bonawitz, sent along to me... Here's a snippet...

By John Waggoner, USA TODAY

"If you like to have your investments close at hand - say, buried 12 paces northeast of the old apple tree - then gold bullion is the kind of investment you'd like. But even if you're not worried that the dollar will plunge, owning gold isn't a bad idea.

You hear many people pushing gold these days, citing our nation's $12.4 trillion debt. Gold is the classic hedge against inflation. If the U.S. resorts to printing money to repay our debts, the value of paper dollars will fall, and gold prices will skyrocket."

To recap... The Jobs Jamboree was worse than printed by the BLS, and not dollar positive. The price of Oil is shooting higher again, and taking the Petrol-currencies of Norway, Canada, Mexico and even the U.K. higher VS the dollar. And recent data has the rate hike campers here in the U.S. feeling left out, and therefore the rate differentials kick in for Australia, Brazil, and South Africa... And... Oh yes! Chuck was in the Wall Street Journal Saturday!

Oh.. And one more thing to quote John Maynard Keynes... "when the facts change, I change my opinion... What do you do, sir?

Currencies today 3/8/10: American Style: A$ .9110, kiwi .7005, C$ .9725, euro 1.3650, sterling 1.5120, Swiss .9330, European Style: rand 7.3910, krone 5.8875, SEK 7.1025, forint 195.15, zloty 2.8355, koruna 18.7770, RUB 29.73, yen 90.30, sing 1.3990, HKD 7.7590, INR 45.53, China 6.8264, pesos 12.62, BRL 1.7720, dollar index 80.35, Oil $81.95, 10-year 3.69%, Silver $17.35, and Gold... $1,133.80

That's it for today... Got a chance to go to the Championship game of the Missouri Valley Conference yesterday with good friend Rick... I love to watch basketball live... Same with hockey... On TV? I can take it or leave it, but live... I'm all over that like a cheap suit! Down to the days I can count on my hand, before I leave for spring training... I don't think Chris has figured out yet that he'll have the conn on the Pfennig for 3 weeks... Shhhhh, don't tell him! HA! Thanks to all of you who sent me a note, or called me about the enlarged mass on my left eye, and my fight with cancer. You are all wonderful people, and although I don't know you, I feel that I do... I believe that I'll beat this like I did the other cancer, so let's move onward and upward from here! OK? Alright, my fingers are tired of typing, so it must be time to hit send! I hope you have a Marvelous Monday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837