Search results matching tags 'Euro', 'Employment', and 'China'

Retail Sales Disappoint! – 7/15/10

ChuckButler — Thu, 15 Jul 2010 14:22:06 GMT

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In This Issue..

* China's GDP moderates...
* Spain has successful bond auction...
* Fed's FOMC minutes disappoint...
* euro returns to 1.28!

And Now... Today's Pfennig!

Retail Sales Disappoint!

Good day... And a Tub Thumpin' Thursday to you! It's July the 15th, so the month is already half-over... Unbelievable! Day 80-something with the Oil leak... I know the Russian scientists' claims about the Gulf sea bed being damaged are pretty scary and unfounded at this point, but, when the plans to put a cap on the well get delayed, you have to wonder a bit, eh?

OK... No need to spend a day on that! Hey! The currencies are in rally mode again this morning, after a strong, but not a as strong GDP report from China last night. Chinese 2nd QTR GDP printed at 10.3%, which is quite a drop from the 11.9% they printed in the 1st QTR of this year... But, I've got two things to say about this...

1. This is exactly what the Chinese Gov't was attempting to do with their rate hikes, and reining in of bank reserves? There was also a printing of their latest inflation report, which showed a decline from 3.3% to 2.9%... AGAIN, this is what the Chinese Gov't was attempting to do! So... All those people that said China's economy was going to overheat and collapse... Well... They are plain wrong!

2. 10.3% from 11.9% is what I call "moderating", not "collapsing"... When you're talking about numbers this large, a 1.6% move isn't that big of a deal, compared with smaller numbers falling 1.6%! I prefer to look at China's GDP like this... For the first half of 2010, it grew 11.1%!!!!!

OK... So, I'm somewhat surprised by the reaction by the markets to the Chinese GDP number... So far, it's been positive! WOW! Maybe, they get it! Of course we have the boys and girls here in the U.S. this morning to impress, and you never know what direction they will go!

The euro has traded over 1.28 this morning on the Chinese GDP news, and... A successful bond sale in Spain this morning. The Spanish bond sale attracted greater demand, and the markets have taken that as an indication that the countries like Spain, in the Eurozone, might not have problems funding their deficits...

The European currencies are all hanging on to the euro's coat tails this morning, while the Asian and Pan-Asian currencies are softer... Aussie and kiwi are softer this morning, but Norway is screaming higher.

Yesterday... The currencies got a lift, and wasn't it nice to see a fundamental reaction to the data?, when U.S. Retail Sales disappointed, and the Fed's FOMC minutes were even more disappointing... Here are my thoughts on these two...

Well... The BHI (Butler Household Index) was bang on again for the June print of Retail Sales... Here's what I said yesterday in case you missed class... "Here's the skinny on how I see Retail Sales printing this morning... The BHI (Butler household Index) tells me the report will be weak.... And will not reverse the -1.2% decline in May that printed last month."

Retail Sales for June showed a decline of -.5%... The second quarter was still positive, but given the -1.1% decline in May, and the -.5% in June, I would have to say that things just are not as "rosy" as the Gov't would have you believe. Maybe... Just maybe, the labor problems are beginning to show up in Retail Sales... I say that because, the biggest loser for May was vehicle sales, and gasoline stations.... Building material stores also were negative for the month... No money for a car, or the gas to put in the old car, and no money to make home renovations... It's just not a very good thing folks, and I don't like the trend.

Well... I participated in a planning call for my "paid subscriber newsletter" The Currency Capitalist, yesterday. And while talking to the other participants, I explained my thoughts about a double dip, and soon we would hear the Fed talking about additional stimulus... And about 20 minutes after the call was over, the Fed's FOMC meeting minutes printed, and guess what?

Let me read the words of the Wall Street Journal... "Federal Reserve policy makers raised the possibility at last month's rate-setting meeting that further monetary stimulus may be needed if the economy shows more serious signs of slowing, according to meeting minutes.

Meanwhile, Fed officials rolled back their U.S. economic outlook for the first time in more than a year, saying a soft job market will restrain growth."

Now... I bet you are sitting there saying to yourself, "self... How did Chuck know that we were going to need more stimulus when the Gov't and President kept telling us how good were doing?"

Well... I knew because I don't believe the Gov't's lies, and cooked books! All you have to do is look around, and see what's really happening...

Ok... As if that's not enough to make you lock the drawer that contains the sharp objects... Here's something that probably will!

Basically... It's like this... You know, I've said over and over again this dance is gonna be a drag, no wait... No, you wait, Chuck! That old song plays well with what I'm going to talk about... And that is... I've said over and over again that home prices are going to drop another 10% this year, and that the housing meltdown is not over... Well check this out... The total number of vacant dwellings in the U.S. increased to a record 19 million in the first quarter of the year, up from 18.9 million in the fourth quarter of 2009. As new homes continued to be constructed, inventory rose last year by 1.14 million to 130.9 million.

And demand for homes? It has circled the bowl folks... Absent the Gov't's tax credit, the demand has gone away and can't be found. Do you know what "shadow inventory" is? After a lender forecloses on a home, they now own it. But they don't always list a newly foreclosed home for sale immediately... That home is now a part of the lenders "shadow inventory"... There are estimates out there that say shadow inventory could reach 7 Million homes...

So... There you have it... It's not a pretty picture, and the rot on housing's vine goes deeper than what I just told you about... And people question by call that we'll see a double dip... Pretty amazing!

Well, it's Thursday, so that means we'll see the color of the Weekly Initial Jobless Claims this morning... In addition, PPI for June will print, and then two of my faves, Industrial Production and Capacity Utilization. These two faves have shown some nice increases in recent months, unfortunately, I believe that June's numbers won't be so kind to them, as the writing on the economy's wall began to show up in June...

Then there was this... Just about the time you think I can't bring you any additional gloomy news, there was this story in the USA TODAY... Keep in mind that I only tell you these things to point our useless Gov't spending...

"U.S. spending on unemployment benefits soared to an annual rate of $145 billion in the first quarter, more than double what was spent in any previous recession, a USA TODAY analysis found. Despite this level of spending, more than 3 million workers could lose their benefits by the end of the month."

Chuck again... Don't get me wrong here folks... I was unemployed at one time, and I called it my retirement. I understand the problems of being unemployed, but having the Gov't go 2 years and still be paying unemployment benefits? That's another story... And don't let all this gloomy stuff get you down... If you've been a Pfennig reader for a while then you know that I've been telling you all that these kinds of things would happen as the "wall of debt" hangs over us like the Sword of Damocles!

To recap... China's GDP moderated in the 2nd QTR to 10.3%, but the markets' reaction has been positive, as it should have been! Spain had a successful bond auction this morning, and those two things have the euro hopping higher past 1.28 this morning. Retail Sales and the Fed's FOMC minutes disappointed yesterday, and the fundamental reaction to that was bang on for a change... The dollar got sold!

Currencies today 7/15/10: American Style: A$ .8820, kiwi .7225, C$ .9705, euro 1.2815, sterling 1.5360, Swiss .9560, ... European Style: rand 7.57, krone 6.1910, SEK 7.3485, forint 218, zloty 3.1730, koruna 19.8660, RUB 30.52, yen 88, sing 1.3730, HKD 7.7710, INR 46.61, China 6.7775, pesos 12.67, BRL 1.7620, dollar index 82.92, Oil $77.37, 10-year 3.05%, Silver $18.47, and Gold... $1,214

That's it for today... Well, it's a hot one... Like 7 inches from the mid day sun! The baseball season picks back up today, and that's a good thing as far as I'm concerned! My beloved Cardinals will have to defy history this year, as they've only gone on to win a pennant after being in second place at the All-Star break, 1 time in their history... That 1 year was a great one though... 1964... Beating the Yankees... My mom let me stay home from school to watch Game 7, now THAT was a treat! I'm still working on my presentations for next week's Vancouver Wealth Symposium... You would think I would be finished and rehearsing by now, eh? OK... Time to go... I sure hope you have a Tub Thumpin' Thursday!

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

Aussie Job Creation Soars Again!

ChuckButler — Thu, 08 Jul 2010 13:28:20 GMT

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In This Issue..

* Currencies rally on Wednesday...
* And hold on to gains overnight!
* Loonies outperform on the day...
* More "an inconvenient debt"...

And Now... Today's Pfennig!

Aussie Job Creation Soars!

Good day... And a Tub Thumpin' Thursday to you! It sure has been a Tub Thumpin' Thursday so far, as the Asian and European markets are hopping, and in Australia, the jobs just keep coming! All that and more on this Tub Thumpin' Thursday, that, as our little Christine would tell me is "my Friday"!

OK... Front and Center this morning, yesterday I told you, well, let's just go to the archives and see what I told you word for word... Pfennig 7/7/10: "Today, we'll see the latest labor report from Australia. In recent months, the jobs data has consistently surprised to the upside each month, so it's not like going out on a limb to say that I expect the job creation to be better than the +15,000 that's forecast."

Well... June employment in Australia showed an increase of 45,900 jobs (see above the forecast was for +15,000), So... Once again, Australia pushed the envelope on job creation. Australia now has more people in paid employment than at any other time in its history!

What's driving this job creation in Australia, when here in the U.S. we can't catch a break with job creation, except if you are one of those that like to count the census workers? Well, remember back in the 90's when the U.S. economy was cooking with gas, and they would say, "it's the economy stupid"... Well, we could twist that to say about Australia's job creation, "it's China stupid"... OK... I'm not calling anyone "stupid"... Maybe CPI, but that's not a "someone"!

I would have to say that this strong employment report will raise the rate hike flag for the markets once again, and we can see that with a 1-cent gain in the Aussie dollar (A$) already this morning. Of course, I was ahead of the markets who are now jumping on my rate hike for August band wagon!

The Big Dog euro hit a 6-week high overnight of 1.2670... Again, I truly don't think this rally that has brought the euro from 1.18, to this 6-week high, has strong legs... The euro is NOT out of the woods by any stretch of the imagination... But having said that, I have to admit that I'm impressed with the Big Dog's ability to rally in the face of those calling for the euro to return to parity with the dollar.

If all things were equal... And the European debt got treated the same as the U.S. debt, I would say that I believe the euro would end this year back at 1.30... But... And that's a Big But! (ok no jokes about me here!) all things are NOT treated the same... And so, the Big Dog remains on the tenterhooks...

Speaking of the Big Dog... I have to laugh, because when I go to Busch Stadium, there's a beer vender that calls me the "big dog" and always fist pumps me, and says, "who else is drinking with the king?" Pretty funny stuff!

But also speaking of the Big Dog... The European Central Bank (ECB) is meeting this morning... This will be a non-event, even with the statement following the no change in rates announcement. I expect ECB President, Trichet, to be asked about bond purchases and things like that, but I suspect Trichet to play this close to the vest, and attempt to veer the focus toward the upcoming bank stress tests...

Yesterday, I pointed out that Canadian dollars / loonies and Swiss francs were trading at the same level VS the dollar... (.9440) Well... These two went in different directions yesterday... And for the first time in a couple of weeks, the loonie was the better performer on the day. The franc was not chopped liver... But, the loonie outperformed the franc on the day. The loonie got a boost from a small rise in the price of Oil, and a return to $1,200 for Gold!

In my continuing story of "an inconvenient debt", today, the U.S. will announce their latest funding needs with the auction amounts in 3, 10, and 30 year Treasuries... I suspect the amounts will be close to: $35 Billion in 3-year Treasuries, $21 Billion in 10-year Treasuries, and $13 Billion in 30-year Treasuries... That's a total of $69 Billion... That's just awful folks... I know the dolts of the world don't believe this is any big deal, that the U.S. can just continue to issue Treasuries and the world will buy them forever...

Whenever I hear that, I think of that famous line by Margaret Thatcher, "The problem with Socialism is that you eventually run out of other people's money"...

OK.. Back to the auctions for a minute... The 10-year yield is 2.97% this morning, so buyers of that note will get for their fun and enjoyment less than 3% for the next 10-years... (I'm sure that in 3 years yields will be so high, that these people will be so sorry they bought these notes)

While in Australia... They issued $1 Billion of a 4.75% Aussie Gov't Bond due in 2016... And their 10-year has a yield of over 5%! Now... Tell me... Knowing the U.S.'s funding problems, and their future debt problems with the unfunded liabilities, doesn't an Aussie Gov't bond make more sense?

Ok... I could go on for days and weeks and months and years, no wait! I have gone on for days and weeks and months and years talking about the accumulating debt in the U.S.!

I was in a meeting yesterday and the "really Big Boss" in Jacksonville, asked me about the story about China buying a ton of Japanese bonds recently... I said that, "I don't think this is a big deal, in that, this money would probably have bought Eurozone bonds, but with all the fluctuations of the euro recently, the Chinese probably just bought Japanese bonds to keep away from the euro right now." I should have gone on to say that this is probably a big reason the Japanese yen has been so strong recently... Central Bank buying is always good for a currency, as long as it's not the "home team" Central Bank doing the buying!

While we're kicking around the cobble stones in Asia, I heard our Tim Smith, talking to a customer yesterday, about Singapore dollars... I thought, "Chuck, you haven't talked about Sing dollars for a long time, you should do that tomorrow." So... Here I am, rock you like a Hurricane!

Sing dollars are one of my fave countries to talk about when having "cocktail conversations"... The only fly in the ointment with Sing dollars is that the Monetary Authority, which monitors the movements of the sing dollar, has its hands tied to the rest of Asia. You see, these countries are all in competition with each other regarding their exports. So... Not one country can allow their currency to get too strong and out of whack with the other Asian currencies, or else their exports will suffer.

Now... Having said that... The export biz for Asia, has slowed quite a bit since the U.S. depression began in 2008. And these Asian countries have had to learn to generate domestic demand, and have the ability to export to neighboring Asian countries... But they are doing it, and thus the growth in Asia, without the U.S. and Europe!

That brings me to China once again... I know I've been the Lone Ranger when it comes to believing that China was NOT going to collapse, as most analysts keep saying. I think I'll be proven correct once again, regarding China in the near future, but until then, I suggest you not pay attention to these guys running around like Chicken Little regarding China...

Now, I'm not there (in China), so how could I know that I'm right and they will be proven wrong? Well... I just rely in the history here... For over 8 years, economists and analysts have predicted or forecast a collapse in China and that would decimate the rallies in commodities and the Commodity Currencies, only to be proven wrong as time went by. I suggest that this time will be no different...

That... And the fact that a trading partner in China via Australia, sent me a note that the negativity in China has been vastly overstated. They expect China's economy to continue to expand, but at a moderated pace...

And isn't a "moderated pace" better than the hyped up economy that China has experienced in the past? And... At a "moderated pace" the need to raise rates in China will dissipate... Thus allowing the economy to grow without a governor...

The Bank of England (BOE) met this morning, and kept rates unchanged... There was a grassroots/ whispering campaign that was getting some notice from economists that were calling for a rate hike... Look... Inflation in the U.K. is going to take off sooner or later, might as well nip that in the bud, eh?

And that brings me to the U.S.... We've followed the U.K. for the past couple of years, why would that change now? So... When inflation begins to show up in the U.K. it won't be too long before we see it here in the U.S. and when it begins here in the U.S. it won't be of the garden variety... The Fed will be slow to recognize it, and it will take off like "Rockin' Rollercoaster" at Disney World! 0-60 in a matter of seconds!

Then there was this... From the Washington Post... Look for more stimulus to come our way... "The U.S. Federal Reserve is considering taking a stronger role in boosting economic growth, with Congress deadlocked on how to cope with a troubling slowdown. Options being weighed include buying more mortgage securities and cutting interest paid to banks that are putting funds on deposit with the central bank from 0.25% to zero, giving financial institutions more incentive to loan."

Chuck again... Oh Boy! I read that and thought of the famous quote from Ronald Reagan when he said that the scariest words are: "I'm from the Government, and I'm here to help"

To recap... The currencies held on to gains from yesterday in the overnight sessions, and the Big Dog, euro, hit a 6-week high overnight. Aussie job creation was better than forecast as I suspected, and the A$ has rallied 1-cent. The ECB meets today, and the BOE already met today and kept rates unchanged. The Canadian dollar rallied on a firming of Oil prices and a return to $1,200 in Gold.

Currencies today 7/8/10: American Style: A$ .8740, kiwi .7065, C$ .9560, euro 1.2655, sterling 1.5150, Swiss .95, ... European Style: rand 7.58, krone 6.3785, SEK 7.5535, forint 222.70, zloty 3.23, koruna 20.0865, RUB 30.93, yen 88.10, sing 1.3820, HKD 7.7885, INR 46.84, China 6.7761, pesos 12.84, BRL 1.7665, dollar index 83.92, Oil $74.67, 10-year 2.97%, Silver $18.07, and Gold... $1,200

That's it for today... And for this week... As I said at the top, this is my Friday! Chris Gaffney will have the conn on the Pfennig tomorrow. Chris has been so swamped working on our new system. I felt bad handing him the conn, but... I had to! The Big Boss, Frank Trotter, is in Las Vegas this week for the Freedom Fest, that's put on by well respected analyst, Mark Skousen. If you're at the Freedom Fest, stop by to say hi to the Big Boss! In two weeks, it will be my day to speak at the Agora Vancouver Wealth Symposium. This is a great conference in a great city... Cardinals blow another game in Colorado last night... UGH! Today is the Big Day for the LeBron James sweepstakes... Not that I care where he plays, it's just a big deal on ESPN this morning. And with that, I'll begin to have a Tub Thumpin' Thursday and hope you do too! Have a great weekend too! Bye...

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

Counting Flowers On The Wall...

ChuckButler — Thu, 22 Apr 2010 14:42:26 GMT

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In This Issue..

* A non-movement day in currencies...
* Euro gets hit again by Greek debt levels...
* Asia is bellwether for global growth...
* Gold rallies!

And Now... Today's Pfennig!

Counting Flowers On The Wall...

Good day... And a Thunderin' Thursday to you! I hear that the "rains" are coming today, and will be around until next Tuesday! We'll be water logged, eh? I want to thank everyone who sent along the "welcome back" notes yesterday. I need to make something clear... I'm not at the office... Not yet, they won't let me... So, I'm writing from home, and I have to pat myself on the back because I didn't complain one iota about writing from home yesterday! HA!

Talk about counting flowers on the wall, playing solitaire till dawn with a deck of 51, and all those other things that fall under the category of being bored, and dull... That was the day in currencies yesterday...

The euro continued to have pressure applied from Greece, and the Canadian dollar / loonie remained above parity all day long! And other than that... I was smoking cigarettes and watching Captain Kangaroo, now don't tell me... I've got nothing to do!

In the overnight markets, risk assets were sold off in Asia, and then bought in Europe, leaving them trading in the same clothes as yesterday.. The Canadian loonie did slip back below parity overnight, but really the move is miniscule.

Gold really mounted a charge during the day. And I know that we really only care about how Gold does VS the dollar, since the majority of us are dollar based investors... But the real move by Gold yesterday came VS the euro... Which makes sense given the decline of the euro in recent months.

A rise in commodities and risk taking is going on folks... Are you a part of it?

The boys and girls over at Morgan Stanley reported that their risk taking in commodities increased by 17% in the 1st QTR... And the boys and girls over at Goldman Sachs reported that their risking in commodities increased by 29%...

Many times over the past 10 years, I've talked to you about the Commodities Bull Market, and how in Jim Rogers' book he explained how in the recorded history of Commodity Bull Markets, the average length of them were 17-22 years... We've only been on this road of a bull market in Commodities for 10 years folks... Sure, they back off at times... But doesn't that mean it's a great time to buy more, because when they are cheaper you can buy more!

The news this morning regarding Greece just continues to get worse... Greek debt levels for last year are now forecast to exceed 14% of GDP... The last forecast was 12.7%...

Of course, if we counted the beans correctly here in the U.S. our debt level to GDP would be something to behold, and not in a good way! And that's just the Budget Deficit... Which leads to a higher national debt, but shoot Rudy, why would we need to be concerned about that now? We're just passing the 56th floor, and so far... So good...

In case you're new to the Pfennig, that last line is a funny story I tell about how the people that say deficits don't matter, remind me a guy that decides to jump off the Empire State Building, as he passes the 56th floor, he says... So far... So good!

OK... Yesterday, there was news from 1/2 of the BRIC's... Brazil and India issued a statement that said they agreed with the U.S. in regards to the need for an upward revaluation of the Chinese renminbi... Hmmm... I found that to be quite interesting in that, these two have been all snuggly with China, but then say something that might rattle China's cage...

Meanwhile back at the ranch, grandma is holding off the Indians! What I mean here is that all the while, these two currencies from India and Brazil, continue to gain VS the dollar... So, you could see why these two countries, that have a ton of trade with China, would like to see the renminbi keep in step with their own appreciation...

Speaking of India... Yesterday, I mentioned that the rupee had been Asia's best performer... The currency has been stealth like in its move higher in recent months... I mean the daily move is so small that no one seems to notice, and then before you know it... Wham! You have a nice gain... The thing that I have in the back of my mind now, is simply that in the past 5 years, whenever the rupee got to this kind of appreciation VS the dollar, the Reserve Bank of India (RBI) would step in and intervene, taking the rupee lower...

Asia continues to be the bellwether for global growth... We've seen strong economic expansion, fueled by consumer spending and investment in China and India. And then, we had the upward revaluation in Singapore... So, it's natural that the thoughts should be centered on a Chinese revaluation...

But... The Chinese are the Chinese, and they will NOT be told, coerced, or even "nudged" toward a revaluation, especially if it looks like they did it because of outside influence! So, in my opinion, you should resign to looking for a return to slow, daily, appreciation of the renminbi, like we used to see before the financial meltdown...

As I get ready to head to the Big Finish, I notice that the euro is in somewhat of a tailspin from the Greek news this morning...

Today, we get some data on PPI (wholesale inflation), and Existing Home Sales, along with the Weekly Initial Jobless Claims... Now somewhere in the black mountain hills of Dakota... Behind the curtain, in hopes that no one notices... The Treasury will announce their next funding amounts for 2, 5, and 7 year T-Notes... This should be interesting folks, and the beat goes on...

To recap... The currencies didn't move much yesterday, while Gold did, especially VS the euro. The overnight markets sold risk assets, and the European markets bought risk assets, but, the euro is getting smacked around because Greek debt levels are being revised higher, and we get the funding announcement today by the Treasury...

Currencies today 4/22/10: American Style: A$.9265, kiwi .7115, C$ .9995, euro 1.3350, sterling 1.54, Swiss .9320, European Style: rand 7.4750, krone 5.9210, SEK 7.2050, forint 198.10, zloty 2.9060, koruna 19, RUB 29.16, yen 92.90, sing 1.3725, HKD 7.7615, INR 44.54, China 6.8264, pesos 12.22, BRL 1.75, dollar index 81.37, Oil $82.92, 10-year 3.73%, Silver $17.93, and Gold... $1,143

That's it for today... Happy Earth Day! I remember when I was a young man, going to Forest Park here in St. Louis for these HUGE Earth Day celebrations, but then it was a "hippie thing"... Everyone had on their "earth shoes", their tie dye shirts, and cut off jean shorts, or jorts, as we used to call them... Day two of this experiment of me getting up early to write from home is in the books. My eye socket is healing, I can tell, the itching is driving me nuts! But now that I no longer have that piercing pain I can keep my right eye open, and hopefully I'll get to drive again... For, I can see clearly now, the pain is gone... It's a Great Day! So... I hope your Thursday is Thunderin' and you stay out of the rain!

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

Merkel throws Greece under the bus...

ChuckButler — Thu, 18 Mar 2010 14:26:53 GMT

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In This Issue..

* Merkel throws Greece under the bus...

* Canadian dollar moves higher...

* China policy causes carry reversal...

* Jobs data to move the markets...

And Now... Today's Pfennig!

Merkel throws Greece under the bus...

Good day... And good morning to all of you. I arrived in the 'sunshine' state only to find rain and cold. It is actually a bit colder here than back home in St. Louis, but the trip down went well, I got to do my run on the beach, and I had a great dinner with a large group of EverBankers last night; so I'm not going to let the weather get me down.

The German's broke rank with the rest of the EU and suggested Greece should turn to the IMF for support. The euro had rallied over the past couple of days after it seemed the EU finance ministers had agreed on a loan facility to back the Greek government. But Germany's Angela Merkel threw a cat among the pigeons today when she said Greece should not look to the EU but should turn to the IMF if it needs aid. So traders immediately started selling the euro again as the black cloud of a possible Greek default fell hung back over the market.

I have to question the German Chancellor's timing on this announcement. Could it be that she is simply trying to bring the value of the euro down a bit? After all, Germany's economy is dependent on exports, and a lower euro is a big plus for the German economy which continues to pull out of recession. We already knew where she stood on the Greek crisis; as she has made it clear in the past few weeks that she is not supportive of an EU bailout. But the markets had started to move past this, convinced that the two day summit of finance ministers held at the beginning of the week had produced a good plan to deal with the Greek debt problem. If euro stability is what she wanted, Merkel could have simply stayed quiet, knowing she could oppose funding any loans if/when they became necessary.

Just the appearance of backing by the EU had helped calm the markets, and brought down the cost of refinancing for Greece. Investors had assumed the EU would be supportive, and had begun to return to investments in the euro. But Merkel has blown away investor confidence with her statement.

The Greek Prime Minister is trying to hold things together and assure the markets that the spending cuts will be successful in bringing down their deficits. He is still claiming that no actual 'bailout' will be needed, and says he just wants the 'political' support of the EU. But the markets are still convinced that someone will have to step up and loan funds to the beleaguered country and continue to sell the euro. Could this be just what Merkel wanted?

The Canadian dollar continues to move closer to parity, as investors are expecting interest rates to move higher soon in order to combat rising inflation. Inflation data will be released tomorrow in Canada, and they are expected to show prices in Canada are moving up faster than here in the US. The BOC said earlier this month that inflation and economic output were higher than expected, a signal that policy makers would likely be raising rates sooner than Ben Bernanke and his compatriots on the FOMC.

Speaking of our Fed Chairman, I got a chance to watch a bit of Ben Bernanke's testimony regarding the Dodd Financial Reform bill yesterday in the airport. Bernanke and former Fed Chairman Paul Volcker were in front of a Senate committee to argue against what has been termed the 'Dodd Bill' for financial reform. The main thing Bernanke is opposed to is the stripping Fed oversight of all but the largest banks. The bill would basically make the Fed only responsible for regulating the 'too big to fail' banks, and move the regulation of smaller financial firms to the FDIC. Both regulators were asleep during the latest financial crisis, so does it really matter who gets to be in charge of the medium and smaller banks? While this bill will have a major impact on the US financial system, it won't really impact the currency markets, the dollar will continue its long term slide lower no matter who is in charge of regulating the banks.

China was in the news again overnight as it was reported that the government has banned loans to developers hoarding land to wait for higher prices. I guess that is how the communist regime has decided to deal with the real estate bubble, simply choke off the financing to the speculators it feels are driving the prices higher. This has sent shock waves through the Asian markets as they are totally dependent on a strong Chinese economy.

This news will likely weigh on the Aussie dollar and kiwi as investors move into a more defensive position. The big benefactor of the news overnight has been the Japanese yen which is again being touted as a 'safe haven' parking spot for cash. I have a bit of a problem looking at the yen as a 'safe haven' and believe the move higher by the yen is not because investors feel safer in the yen, but rather it is due to reversals of the carry trade. As investors worry about the global economy, they move out of higher yielding assets and reverse the leverage which enabled them to make these investments. The funding currency of many of these carry trades is the Japanese yen; so the yen moves higher as these investors purchase the currency to pay down their loans. This carry trade continues to have a major impact on the currency markets.

The data released in the US yesterday morning showed the PPI moved down a bit in February. The producer price inflation fell .6%, roughly double the forecast of economists. This was the biggest decline since July, and was brought down my lower energy costs. This plays right into the FOMC's announcement earlier this week, as price increases appear to be non-existent. But the year over year figure shows prices are rising, as PPI was up 4.4% in the last 12 months.

Today is a big data day here in the US, with the release of CPI, the Current Account balance, Leading indicators, along with the weekly jobs data. CPI is expected to show consumer prices are stable, so the markets will likely focus on the jobs numbers. The weekly numbers have remained stubbornly high, remaining above 460k. Last week the data showed claims moved down a bit, but not enough to keep the four week average from moving higher. Economists expect this morning's numbers to show claims moved down to 455k, seven thousand less than last week's 462k.

This data is being closely watched since the FOMC has made it apparent that they will not be moving on interest rates until some progress can be made on the jobs front. The 4 week moving average of job loss peaked in April of last year, and steadily declined through January of this year, but has been moving back up since. Another weak jobs report should be negative for the US$, as it will help tear down the argument that the FOMC will be moving rates higher sometime soon.

I know this is a bit shorter than usual, but my internet has been very spotty, and I want to end it there to take advantage of a good connection to get this out. First the currency update:

Currencies today 3/19/10: American Style: A$ .9216, kiwi .7137, C$ .9896, euro 1.3735, sterling 1.5324, Swiss .9483, European Style: rand 7.3075, krone 5.8239, SEK 7.0774, forint 190.217, zloty 2.8146, koruna 18.488, RUB 29.136, yen 90.391, sing 1.3933, HKD 7.7613, INR 45.355, China 6.8259, pesos 12.456, BRL 1.767, dollar index n/a, Oil $81.64, 10-year 3.625%, Silver $17.495, and Gold... $1,126.00

That's it for today...... The weather here is supposed to be a bit warmer today, but the sun is still supposed to be a no show today. Thanks to all the readers who sent me St. Patrick's day wishes, your notes really made my day. I want to thank EverBank mortgage guru Stacy Blair for letting me tag along with he and his crew of All Stars last night. Stacy, Steve Wittmeyer, John Ryan, and Mike Harrell helped Tim Smith and I celebrate St. Patrick's Day in good style. Time to get over to breakfast and then on to meetings and hopefully a not too Thunderin Thursday. Hope your day is great!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Germany & France Post 3rd QTR Growth...

ChuckButler — Fri, 13 Nov 2009 15:31:01 GMT

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In This Issue..

* Risk Aversion fuels dollar rally yesterday...
* Eurozone growth may stop the Risk Aversion...
* Budget Deficit is a record $176.4 Billion!
* Euro, Swiss, Aussie, Norway, all cheaper today!

And Now... Today's Pfennig!

Germany & France Post 3rd QTR Growth...

Good day... And a Happy Friday to one and all! Let's try to make this a Fantastico Friday as well! The Risk Aversion that was creeping into the currency markets yesterday really took hold in the U.S. trading session, which meant the dollar was being bought once more, along with Japanese yen...

It just makes me laugh out loud, when I write that the "safe haven currencies" during Risk Aversion trading are the dollar and yen... These two countries have debt up to their eyeballs, pay no interest on their deposits, and have a leadership deficiency... (ok, before every begins to think that I'm ripping the president again, I'm not... I'm talking about the Central Bank, and lawmakers of each country)

There was good news out of the Eurozone this morning... Both Germany and France followed their previous quarter's growth, with stronger growth in the 3rd QTR... The Eurozone's two largest economies continued to recover from recession in the 3rd QTR, as exports boosted both German and French gross domestic products. I say that, and I want to spit out a raspberry to all those that claim the European Union will collapse because of the strong euro! Neener, neener, neener... The largest economies of the Eurozone can grow, with strong exports even with a strong euro!

OK Chuck, no need to be childish here, let's get back to the growth... Germany's GDP rose 0.7% in the three months to Sept. 30. In France, GDP also grew for the second consecutive quarter, rising 0.3%.

So... Of course this data from the Eurozone put a floor under the euro's decline from yesterday... It will be interesting to see how the U.S. guys look at these growth numbers... The European guys liked them... The U.S. traders though can be very fickle...

And more than that though, I think this might be the thing to put the Risk Aversion to bed... Recent history tells me that whenever Risk Aversion has crept into the markets, any sign that Global growth is back on track, and will lead investors to higher yielding assets, the Risk Aversion ends abruptly... Let's hope that's the case today with these two growth reports from the Eurozone!

Yesterday's data in the U.S. showed that the Weekly Initial Jobless Claims remain above 500,000 per week, and that the Budget Deficit was even worse than the forecast $160 Billion! The Budget Deficit for October totaled $176.4 Billion, which annualized puts us over $2.1 TRILLION! OMG! That awful folks! And you should be writing, calling, or making your way to your representative's next meeting and demanding that they STOP SPENDING MONEY THEY DON'T HAVE!

You know that letter that I said I was going to write to my darling granddaughter, Delaney Grace, apologizing for the lack of freedom and tax burdens that were left to her generation to deal with? Well, I started writing it the other night... What this and the previous administration is doing has no morals, when it comes to leaving the debt to be dealt with by future generations...

OK, it's a Friday, I need to try to remain calm here, and be upbeat! Hmmm... Usually, that means that I pull out a story on Gold... But yesterday was not a good day for the shiny metal, after reaching a new all-time record level of $1,118, it fell more than $10 in the aftermath of the Risk Aversion... See how stupid the Risk Aversion people are? I mean, if you wanted to avert risk, wouldn't you buy Gold?

Any way, colleague, Don Ries, sent me a story that he came across regarding Gold that I thought was quite interesting... The Telegraph in the U.K. printed a story about how Barrick Gold believes we may have reached "peak" Gold already... And by that "peak" I'm talking about the mining of the shiny metal!

"Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10% as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run. There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London."

WOW! Did you get the one line that was in there about how this lack of mining implies that the roaring bull market of the last eight years may have further to run? I think that's putting it conservatively for sure! "may have further to run?" I would say it stronger... But I can't... Or I'm not supposed to! ( our legal beagles read the Pfennig each day!)

OK... That put me back on track to be more upbeat for this Fantastico Friday! Today's data cupboard will yield the Monthly Trade Deficit data, and the U. of Michigan Consumer Confidence index... The Trade Deficit overhang continues to be a problem for the U.S., obviously not as bad as a problem as it was during the go-go days for the consumer...

Traders have become "comfortably numb" with the deficit figures in the U.S. which is a bad thing folks... Traders need to make a stand, and not allow this stuff to just slip under the door, thus allowing larger and larger deficits in the future!

I see the President is in China... I bet he thinks his presence will be the thing that will move the Chinese to allow greater currency flexibility... I just don't see the Chinese getting caught up in the "show" to give in and allow flexibility in their currency, just because the President of the U.S. showed up...

The currencies are rallying this morning VS the dollar. Since I came in and began writing, the euro has climbed higher, albeit a small move higher, it's still moving higher, and thus has stopped the bleeding, that began yesterday morning...

I'm surprised the Aussie dollar isn't really hitting on all 8 this morning, considering the growth numbers in the Eurozone... But I think we might have to wait for the U.S. traders to come in to see the rally in the A$ this morning... It is Saturday in Australia!

The Swiss franc got caught up in the Risk Aversion trading yesterday, and has backed off its ascent to parity... The franc is trading around .9855 this morning, which is more than 1-cent lower than yesterday morning... Wink, wink...

And a country / currency that I drop the ball on all the time, when it comes to talking about it in the Pfennig, is the Norwegian krone... Long time readers know that I truly like Norway, for their fiscal and monetary surplus prowess... And most recently, for their absence from the rolls of those countries that got involved in sub-prime and bad lending practices. Earlier this month, Norway's central bank, the Norges Bank, hiked rates 25 BPS, and is expected to raise them again in a month or two... So, now we have a country that has a strong fiscal and monetary position, no bad banks or loans, and a strong positive interest rate differential to the U.S.... Hmmm...

And then there was this... Neil Barofsky, the special inspector general for the $700 Billion TARP bailout said the program will "almost certainly result in a loss to taxpayers"... "We need to temper or be realistic about our expectations, a dollar-for-dollar return is just highly unrealistic." Barofsky also said that he's conducting 65 investigations of possible fraud...

OH MY! You're telling me that with the $700 Billion TARP funds that there could have been some fraud involved? I wouldn't have believed it! .... NOT! I bet you thought I had gone softy on you! The whole TARP was fraud to begin with! So, with all the corruption and scandals that have gone in before, the thought that there could be some fraud, should have been a belief that there "would be fraud for sure" when the TARP was issued!

Currencies today 11/13/09: American Style: A$ .9285, kiwi .7370, C$ .9495, euro 1.4890, sterling 1.6685, Swiss .9860, European Style: rand 7.4410, krone 5.62, SEK 6.8660, forint 180.80, zloty 2.76, koruna 17.10, RUB 28.83, yen 89.70, sing 1.3860, HKD 7.75, INR 46.34, China 6.8263, pesos 13.16, BRL 1.73, dollar index 75.39, Oil $77.45, 10-year 3.44%, Silver $17.36, and Gold... $1,109.30

That's it for today... Yes, today is a Friday the 13th... I don't get into that stuff, but if you do, be careful today! We're supposed to have another nice weekend here in St. Louis, weather wise, so we have that going for us! No football game this weekend though for my little buddy, Alex. I saw Chris Gaffney and his son Brendan on TV at the Blues game last night. The Blues lost the game though. UGH! Another week, and well be talking about Thanksgiving getting here so fast! The radio station that plays Christmas music every year, began broadcasting the Christmas music a couple of weeks ago! They used to at least wait until Thanksgiving came and went! Well... Let's get working on having a Fantastico Friday! And a Wonderful Weekend!

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

Heeeeeeee's Baaaaaacccckkkkk...

ChuckButler — Mon, 03 Aug 2009 16:25:15 GMT

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In This Issue..

* A strong currency move on Friday...
* Data Cupboard gets a work out this week...
* U.K. and ECB meet this week...
* RBA to move to neutral tonight?

And Now... Today's Pfennig!

Heeeeeeee's Baaaaaacccckkkkk...

Good day... And a Marvelous Monday to you! Heeeeeeee's Baaaaaacccckkkkk... Oh no! Just when you thought it was safe to open the Daily Pfennig and not get lectured on deficit spending... He's back! Oh well, It's been over two weeks, first to Vancouver, then on vacation. We've got a lot of catching up to do, eh? Mike and Chris did a Fantastico job of taking the conn on the Pfennig in my absence... So thanks to them... But it's back to me, and besides a couple of days in San Francisco later this month, I'm all yours! (I bet that just makes you smile like a Cheshire Cat... NOT!)

OK... Rather than beat around the bush this morning, Chris left me this note from Friday's price action, so let's go to the Friday round up and then onto today! Here's Chris!

The currency markets were fairly calm Friday morning, but at around 9:00 the dollar index fell off a cliff! The big data released this morning was 2nd Quarter GDP which showed only a 1% contraction vs. an expected 1.5% contraction. But the 1st quarters number was revised down to 6.4% from the original report of 5.5%. I guess traders needed some time to digest the information, as the report came out at 7:30 but the dollar didn't start its freefall until just after 9:00. But when they finally decided to take the dollar lower, the move was pretty dramatic with the Euro moving up a 1.5 cents in about 2 1/2 hours. The markets settled down around noon, and traded sideways until the close.

So... My time away was much like the "old days" that you could almost make trades on the trading pattern of when Chuck was away, the currencies rallied...

OK... So as I turn on the currency screens this morning, I see that the euro is trading up towards 1.43, and the Aussie dollar is trading with an 84-cent handle! So, those are some good looking numbers for the currencies. The GDP data that Chris talks about above, was interesting in that it gives the risk takers some rope... Yes, that old saying about getting enough rope to hang yourself, comes to mind here. Not that the risk takers will hang themselves, but to illustrate that they have some room to take risk assets higher.

When you look at the proxy currency for commodities and global growth, the Aussie dollar, and it's trading at the highest level we've seen this year, you've got to think that the traders, and others are thinking that the worst of the global recession is in the rear view mirror. Now, I think that's putting a little like putting the horse before the cart, as we just don't have enough data that hasn't been massaged and cooked to prove that we're coming out of the global recession... But hey! If the traders, hedge funds dudes, and currency participants want to play Sly Stone, and take currencies higher, then I suggest we not stand in front of that bus!

One of my fave economists, Nouriel Roubini, believes that "there is now potentially light a the end of the tunnel." And... That "Commodity prices may extend their rally into 2010 as the global recession abates."

Now... That's a horse of a different color, eh? When someone like Nouriel Roubini, who was one of the first to call out the collapse of the global economies, sees a potential light, then the markets sit up and take notes... And begin to buy at cheaper levels, just in case that light is the sun... And not the light of a run-away train heading straight for us!

Well... Somehow, U.S. stocks essentially made it through the earnings reports season unscathed. Pretty amazing if you ask me, but I never claimed to be a stock jockey, so that pretty much explains my inaccurate prognostications that 2nd QTR earnings would be a real drag on stock values... Which scared the bejeebers out of me, for stocks, currencies and commodities have been all rolled up in a great big "risk assets" ball for months now, and if stock values were going to get taken to the woodshed then so would currencies and commodities... But that didn't happen... Hmmmm....

OK, with the earnings season basically over, we can get back to watching regular data that makes more sense to me... And this WILL be a week that's cock-full-o-data, beginning with the ISM Index (manufacturing) for July today, along with Vehicle Sales. Tomorrow we'll see the color of two of my faves, Personal Income and Spending. Wednesday is the ADP Challenger employment report for July... Thursday, we'll get Central Banks meetings in the U.K. and Eurozone. And Friday is the BIG KAHUNA, as the Jobs Jamboree for July gets printed. Right now, the economists surveyed are looking for a HUGE drop in job losses for July. June's BLS massaged number of 467,000 job losses is being forecast to drop to 325,000..

I'll believe that when I see it, although it would be nice if that was the "real" number, eh?

If job losses drop by that much in July, it would certainly keep the fire burning for thought that the global recession is recovering, and that would certainly keep the fire burning for currencies and commodities!

Well... Don't look now (made you look, made you look! HA) but pound sterling is the best performing currency overnight! The pound is 1.6840, with a bullet! (yes, it had a good beat, and was easy to dance to) Stranger things have happened in currencies over the years, but this is one that really moves to the top 10... The U.K. with all their problems, and sterling posting a better than 15% gain VS the dollar in 2009... Like I said, stranger things have happened, but this one really is a puzzle... Riddle me this Batman... How can a currency from a country that is deep in debt, has interest rates near zero, has a housing problem not unlike that in the U.S., has political problems, and has implemented Quantitative Easing, post a +15% gain?

Ours is not to question why or how... Just know that the calls for the greater use of SDR's (Special Drawing Rights) by China is probably a good reason, for the SDR's would contain sterling....

Speaking of SDR's, and the IMF issuing them... And recall when the current President called for greater authority for the IMF? Well, I'm reading a book right now, that will put shivers down your spine regarding all of this, and it was written about 10 years ago! The name of the book is: The Creature From Jekyll Island... The Creature is the Federal Reserve System, and what it was created to do... Not the stuff you learn in economics 101... What it was "really" created to do... This book is over 500 pages, so it's a long one... But well worth the read, especially to those that don't believe we're being driven to socialism...

OK... Enough of that! I'm really trying to steer clear of that stuff, for I've had to deal with quite a few people that just want to shove stuff in front of me that I'm not going to read! Of course this in response to my direction before I went on vacation... But that's all behind me now... It's on to the perils of Deficit Spending, and... How to protect yourself from the eventual devaluing of the dollar due to the Deficit Spending!

Back to Australia... The Reserve Bank of Australia (RBA) meets tonight, and while I don't expect the RBA to raise rates... I do expect them to move from an easing bias to neutral, which in essence would be very much like a rate hike! And... Would really stoke the fire burning for the A$... Especially if in their Monetary Policy statement, the RBA upgrades their growth forecasts... For if they do that, that's just like telling the markets that rates are going higher here before they go back down...

I heard, but did not see obviously since I was not around any TV's, laptops, or cell phones last week, that there was a woman that finally took the media to the wood shed for their mamby pamby ways of dealing with the news, and playing patsy with the politicians, etc. Michelle Malkin is her name... And I give her kudos for calling into question the credibility of the media and in this case NBC... (yes, I hold a grudge, BIG TIME, and NBC / CNBC)

I saw the euro hit 1.43 a minute or so ago, but immediately fall back below the figure... I would suspect this to repeat itself a few times before finally moving over 1.43... If not, then look for a fall back... But right now, the bias seems to be to sell dollars...

Currencies today 8/3/09: A$ .8390, kiwi .6655, C$ .9340, euro 1.4290, sterling 1.6826, Swiss .9375, rand 7.7415, krone 6.0825, SEK 7.20, forint 185.60, zloty 2.8725, koruna 17.93, yen 95, sing 1.4340, HKD 7.75, INR 47.67, China 6.8308, pesos 13.18, BRL 1.8645, dollar index 78.12, Oil $70.81, 10-year 3.55%, Silver $14.31, and Gold... $956.60

That's it for today... Vancouver was great... The Agora Financial Wealth Symposium was very well attended, and I thought my presentation to them went quite well. The attendees were so kind to me, coming up and asking how my health was... And then asking to see a picture of Delaney Grace! Then on to vacation! A great time was had by all, but especially me, as I was surrounded by my kids all week. I know it will be difficult for me to not have little Delaney Grace around me all day this week! I just loved when I would ask, where's Delaney, and she would pat her chest and say "I right here!" So cute! We dropped my little buddy, Alex, off at Camp where he'll be the next two weeks. His Camp is just across the lake from our campsite! This will be a long week, settling back into the saddle and all, so I had better get this out the door and to your computer screens! I hope you have a Marvelous Monday!

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

Desperately Seeking Yield...

ChuckButler — Fri, 26 Jun 2009 15:27:32 GMT

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In This Issue..

* Currencies rally...
* More on the BRIC's...
* New Zealand's GDP contracts..
* Bernanke gets grilled!

And Now... Today's Pfennig!

Desperately Seeking Yield...

Good day... And a Happy Friday to one and all! The end of what seemed to be a very long week... The last weekend in June, can you believe that? Next week, we'll be getting ready for the 4th of July celebrations! WOW!

Well... What a volatile week it has been in the currencies! Up, down, all around, and settling back to levels that we saw before the Fed's FOMC meeting earlier this week. Suddenly, investors are looking for yield again... Looks like they are "Desperately Seeking (not Susan) Yield! And why not? The Fed, and the Bank of Canada (BOC) have come out and said that there will be no interest rate hikes until we've turned quite a few pages on the 2010 calendar.

So, with investors clamoring for yield, the dollar gets taken to the woodshed... As I said earlier this week, one of these probes above 1.40, need to take hold of the figure and build on it, otherwise we're doomed to remain in the 1.35-1.40 range, and range trading is for the birds! Talk about counting flowers on the wall, and watching paint dry! UGH!

I was shocked yesterday to see but a few emails asking me more about the SDR's story that I talked about... Men, women, boys and girls, all... This is important stuff! Don't take it lightly! There's a movement underway that could end up costing you dearly, if you do not take the diversification steps...

I think it is important to know that the BRIC countries (Brazil, Russia, India, and China) are serious about replacing the dollar with a "global currency" i.e. the IMF's SDR's... And... That the BRIC's want more power on the World's stage... And why not? These countries currently have almost 3 Trillion in foreign reserves... And... A very large piece of the world's population... (Thanks for that fodder, Kevin!)

OH! And guess who was banging the drum for a "super-sovereign" currency overnight? China, that's who! So... They're Baaaaaaaaccccckkkkk! OK... This was the People's Bank of China (the Central Bank), that made this statement, along with a call for the IMF to manage part of member's foreign exchange reserves... Hmmm... OK, I just said that China wants more power on the world stage, and here they are saying that their puppet will be the IMF! OK, I took some liberty with that, but it's the way I see it!

OK... Back to what's going on in the currencies today... Hmmm... The dollar is getting taken to the woodshed to end the week, that's what's happening! And the currency leading the pack with regards to performance VS the dollar, drum roll please.... The Brazilian real... A 3 day "winning streak" has the real back to levels it saw before the Brazilian Central Bank (BCB) cut rates about 10 days ago...

The way I see it, and long time readers know this will be interesting in the least, is that investors want to invest in the BRIC countries, but there's very little liquidity there in each of those currencies, along with very little yield, except... In Brazil... Liquidity isn't what the majors enjoy, in fact it's still traded on what's called a "non-deliverable forward", which means it can only settle in dollars, with no deliverability, but... It's traded easier and less costly than the other BRIC's and... It has the highest interest rate available... So... You can see why investors are buying reals...

Having said that though... You must know about the volatility... Look at what happened this week... On Monday, we started the week with the real at 1.9750, only to see it rocket to 2.0326 in one day's trading, a near 3% move / loss in one day! Then we saw it rally back to 1.9795 the next day, and after 3 days of gains the real sits at 1.9420 this morning, thus generating a "gain" for the week! And... The other thing, is that Brazil is considered an Emerging Market... And long time readers have learned over the years that when one Emerging Market gets slammed, they all get taken to the woodshed... So... Be careful out there!

A high yield currency that far removed from the early days of trading like Brazil, but offers yield, is the New Zealand dollar / kiwi... And kiwi has been held back, although still posting a gain VS the dollar, overnight as 1st QTR GDP printed at a negative -1%, thus marking the 5th consecutive quarter of negative growth in New Zealand...

I'm probably out there on the big fat limb (to hold me up, of course!) by myself on this one, but... I personally believe that both the Reserve Bank of New Zealand (RBNZ) and the Reserve Bank of Australia (RBA) have seen the lows in their interest rates, and no further rate cuts will come from these respective Central Banks. I know, that last week, we were all hyped up about future rate hikes from the RBA in 2010, and we probably got a little ahead of ourselves with that thought... I'm probably ahead of the curve on the "end of rate cuts" talk... But that's where I like to be!

So... When the world's investors are looking for yield, they don't have to go to Brazil, or India... They can go to the old reliables... Australia and New Zealand, with a reduced fear of further rate cuts... At least that's they way I see it! And yes, I could be wrong...

And how about Gold and Silver this week? What a week on Mr. Toad's Wild Ride for precious metals... The main thing though is that they are finishing the week with a rally, and Gold which was trading at $922 on Monday, is $944.85!

And how about that grilling that Big Ben Bernanke received yesterday by legislators over the Fed's conduct in the Bank of America (BOA) takeover of Merrill Lynch... You may recall that BOA's CEO, Ken Lewis said he was "bullied" into taking over Merrill and not disclosing to his shareholder all of Merrill's losses that were on the books... Big Ben denies that he participated in any bullying... (doesn't that lead to Paulson then? Did Big Ben just throw Paulson under the bus?)... Any way... Big Ben did little to convince the legislators that the Fed didn't keep their hands out of the cookie jar... And that, my friends, may be the foot in the door that we've been looking for... Maybe, just maybe, because you never know, but with the legislators having questions about the Fed and Big Ben, they probably aren't in any mood to hand over the regulatory powers that the President wants to give them...

And... My old fave Central Banker, NOT! Big Al Greenspan was back in the news last night... I'm trying to figure out how he and I got on the same side of the ship... But, here was Big Al, my nemesis for years, talking about inflation being a concern... Let's listen in to Big Al... Alan Greenspan, former chairman of the Federal Reserve, said the threat of inflation needs to be confronted because it poses a threat to economic recovery. "Excess capacity is temporarily suppressing global prices. But I see inflation as the greater future challenge," Greenspan said. "If political pressures prevent central banks from reining in their inflated balance sheets in a timely manner, statistical analysis suggests the emergence of inflation by 2012."

Of course, I think inflation will be showing its ugly face next year, not 3 years from now!

And on the data front... The Weekly Initial Jobless Claims "surprised" economists by moving back up, after falling last week... 627,000 unemployed Americans filed for unemployment claims last week... No "green shoots" here! In fact... We need to see if we can use these so-called Green Shoots that the President and Big Ben keep talking about, for ethanol... They've got to be good for something! HAHAHAHAHAHAHAHA! I must say that a reader gave me that line!

And here's Warren Buffett on Green Shoots... "I had a cataract operation on my left eye about a month ago and I thought maybe now I'll be able to see green shoots. We're not seeing them. Whether it's retailing, manufacturing, wherever. We have a big utility operation. Industrial demand is down like we've never seen it for a simple thing like electricity. So it hasn't happened yet. It will happen. I want to emphasize that. But it hasn't happened yet."

And... Then... There was this... A good story to end the week and head to the Big Finish with...

Barclays Capital Inc. (Barclays) the world's third largest currency trader, have lowered their one-year forecast for the dollar, saying foreign investors will reduce their purchases of U.S. assets... Barclays referred to the dollar's status as "safe-haven paradise lost", due to the ballooning fiscal deficit and the printing of money by the Central Bank... Barclays believes that the euro will be trading at 1.50 in a year...

Hmmm... Nothing new there for Pfennig readers, but, I always find it to be good to see others with their BIG research departments, no divisions, yeah, divisions, that's bigger than a department! Wait, get back on track, here Chuck! Yes, the Big research divisions, that finally come around to what little old me has been saying for months now... Oh! And that "little old me" has just got to crack up any one that knows me, and have seen me lately!

And one more thing... Oil is back to $71 this morning, as there has been more problems in Nigeria... Let's hope these problems go away!

Currencies today 6/26/09: A$ .8055, kiwi .6450, C$ .8710, euro 1.4085, sterling 1.6490, Swiss .9210, rand 7.9680, krone 6.4250, SEK 7.8125, forint 196.20, zloty 3.1975, koruna 18.50, yen 95.40, sing 1.4540, HKD 7.75, INR 48.21, China 6.8338, pesos 13.18, BRL 1.9420, dollar index 79.86, Oil $71.07, 10-year 3.55%, Silver $14.25, and Gold... $945.65

That's it for today... Well... Today marks the 2-year anniversary of the surgery that removed my cancer ridden femur, and replaced it with a prosthetic. Quite an ordeal, but... Here I am! Rock you like a hurricane! Oops, sorry, got carried away there! I'm so happy that's behind me now! Well... Michael Jackson has died at 50 years old... When I think of Michael Jackson, I just remember my two oldest kids, playing that Thriller album over and over again. The heat wave over us continues, but is expected to back off next week... My little buddy, Alex, turns 14 on Sunday. WOW! We began a tradition when he was quite young, of the two of us going to breakfast on his birthday. Two years ago, when I was in the hospital, my darling daughter, Dawn, brought Alex to the hospital with breakfast, so we could continue the tradition. I hope I can continue celebrating with him for many years to come. So... Happy Birthday Alex! Real long time readers might recall when Alex was 3, and would sit on my lap as I wrote the Pfennig from home, and every once in awhile the text would look like this... 9087lkndy7, and I would say, "sorry, Alex is helping me again"... Alex has already made me aware that he can get his drivers permit next year... YIKES! OK, time to head off into the sunrise... (not sunset, as I'm writing at daybreak, HAHAHAHA) The currencies are having a Fantastico Friday, so why don't we joining them?

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

The Currency Rally Continues!

ChuckButler — Mon, 01 Jun 2009 15:35:40 GMT

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In This Issue..

* Euro trades past 1.42...
* Geithner make a promise to China...
* Central Bank meetings this week...
* Canada's Fin Min, speaks...

And Now... Today's Pfennig!

The Currency Rally Continues!

Good day... And a Marvelous Monday to you! And welcome to June... Tradition in the Pfennig means a quick rendition of: June is bustin' out all over... All over the meadow and the hill!
Buds're bustin' outta bushes... And the rompin' river pushes... Ev'ry little wheel that wheels beside the mill! And you thought I was a just an old Rock-n-roller!

Well, on Friday I left you with the story of a currency rally for the ages... And it didn't let up there! Although the rest of the day on Friday the bias was to sell dollars, the real chunk of the dollar wasn't taken until last night in Asia... Here's the deal folks, and this won't be the first time you've heard this from me either!

Fundamentals! The fundamentals are coming home to roost, and the rot on vine is being exposed... Just an example of what I'm talking about... G.M. will file for bankruptcy today... Soon, they will become the new GM... And not Government Motors... (a reader gave me that line!)

But more importantly is simply the fact that the thing that drove up the dollar's value beginning last July until March of this year, is simply Treasury buying... And now those Treasury purchases are showing HUGE losses for those holders that "thought" they were "safe"! And... As I kept telling you, once holders grew weary of paltry yields, or the losses, the reversal of those Treasury purchases would be as swift as the move to Treasuries last summer...

So... The move in the Big Dog, euro, overnight in Asia and now in the European session has produced yet another move through a line of resistance at 1.42... And we all know that when the Big Dog leaves the porch, all the other smaller dogs get to stretch their legs too... And so it is that Swiss francs are 94-cents, Aussie 81-cents, and so on...

And, as Hannibal Smith used to say... I Love It When A Plan Comes Together! Not that I'm cheering on the losses in Treasuries... I'm patting myself on the back for telling you over and over again that it would happen!

OK, so I see the our esteemed, diligent tax payer (NOT!), U.S. Treasury Sec. Geithner, was promising the Chinese that the U.S. "wants to shrink the budget deficit"... Hmmm... I doubt the Chinese believed him... Of course I'm not a Chinese official, so I don't really know what they are thinking... But having watched them smile and tell former U.S. Treasury Sec. (Mr. Bailout) Paulson that they were going to allow greater currency flexibility, and after he would board his plane, it would business as usual... Same thing for Graham and Schumer who thought their prestigious status as lawmakers would get them some place with the Chinese...

It all comes down to the fact that the U.S. needs China, more than the other way around... Sure it would have been sweet for China if the previous boom went on forever and ever... But that's not the way of the markets... Booms are followed by busts... And for all you youngsters out there, that didn't believe this could really happen, even though you might have spent 5-minutes on it in college... Booms really are followed by busts... The secret to not having them end up like this one, is to not allow the Boom to get out of control... Irrational exuberance, eh Big Al? I'm choking on that, because he's at the root of this problem!

And China? Well... As I boldly told you months ago, that the Chinese would be the first to come out of this economic malaise... The rest of the world has caught up and now the optimism for China is spreading... This is perception folks... And you are what you are perceived to be... And in China's case, they are perceived to be an economy on the mend, which means their strong growth might return... Well, when China's growth is strong, they have outrageous demands for commodities, raw materials, and the rest of the lot.

That's manna from heaven for Australia... And to a lesser degree, New Zealand and Canada... But when commodities get to rising, all the commodity currencies get to rise, because, besides Canada, they have higher than the average bear interest rates... And yield demand becomes the pet rock of the 70's, the cabbage patch doll of the 80's, and the tickle me Elmo of the 90's, everyone has just got to have it!

Aussie and kiwi currencies are approaching 8-month highs... The difference here is that 8-months ago, these two were on the slippery slope down, and now their on the escalator going higher, and higher...

And the euro... The Big Dog's 3-month rally (recall I pointed out weeks ago that the turn happened around March 1st), is the steepest rally for a 3-month period in the last 7 years... The thing though that's really stuck out for everyone to see, is how the move in the past week has been really swift, and the momentum seems to be picking up steam... I made a bold forecast to the people on the desk the other day... And NO I can't share it with you, because that would be making a call on a currency, and the legal beagles won't let me do that any more! Let's just say the move to 1.42 and change is a move in the right direction!

And this rise in the euro, comes with the Eurozone economy in a recession... But for all those out there that think this "can't happen"... There is precedence here... Back in 2002-2003, German, the Eurozone's largest economy, was in a recession, and yet the euro posted large gains in those years of: 17.96% and 19.59% in those respective years... So there you go! And... As long as the euro is the "offset" currency to the dollar, it will retain this ability to gain in value even with the Eurozone's economy in a recession... The other title, besides "offset currency to the dollar" that the euro has picked up, is the one people are using currently, calling the euro the "anti-dollar"...

We have several Central Bank meetings this week... The Reserve Bank of Australia (RBA), Bank of England (BOE), European Central Bank (ECB), and Bank of Canada (BOC) all meet this week to discuss rates... I read this note and found it to be funny... OK, the BOC is meeting this week... And when asked about the recent rise in the Canadian dollar / loonie, the Finance Minister, Mr. Flaherty had this to say... "We're always concerned when there are fluctuations in the value of the Canadian dollar, and it has been relatively rapid in the past few weeks, and I know that the governor of the Bank of Canada is monitoring that as it's his job."

What's so funny about that? Well... I find it funny when people in power give ultimatums to others, in "not so many words"... In this case, Flaherty is telling Mark Carney (the Gov. of the BOC) that he needs to do something to halt the loonie's rise... Cut rates, would be his choice, but interest rates already near zero, I think he's giving Carney the "high sign" to implement Quantitative Easing... As you can see what that's done for the U.S. dollar!

The RBA is the only Central Bank that has "fat to cut"... It will be interesting to see if the RBA keeps their interest rate arrows in their quiver... I tend to believe they will hold on to them... But that's just a hunch...

The data cupboard will get a real work-out this week beginning today with two of my faves... Personal Income and Spending. The Big Banana today is the ISM Index (manufacturing)... Given the rot on the Chicago ISM's vine last week, one would think that the national (ISM) index would take a hit... But... I tend to think that the Chicago one was pushed lower by the goings on in Detroit, and that the national index will, while still being recessionary, be a bit stronger... And if it is stronger (42 is forecast VS 40 previously), I think the currencies will continue to take liberties with the dollar, as risk assets will ride on!

We end the week with the May Jobs Jamboree... After last month's hefty addition to jobs by the Bureau of Labor Statistics (BLS), it will be interesting to see how the BLS monkeys with the May number... One thing all their playing around with the numbers can't do is change the unemployment rate, which is expected to go to 9.2% in May...

I'm seeing what is probably profit taking as the NY trading desks come in and see the 1.42 handle in euros... The euro has backed off its level of 1.4235 from when I came in and turned on the screens... A couple of years ago, we had this game of give and take going on between the U.S. players and Asian players... Overnight, Asia would push the currencies higher and sell dollars, only to see that wiped out by the U.S. players... I sure hope we don't see a return bout of that game of give and take... It sure gave me a rash watching that each day!

Well... Before I head to the Big Finish... Gold & Silver have really jumped on the risk assets rally's bandwagon. Gold is $985 this morning... A mere hop, skip and a jump from $1,000... You know, maybe we'll get to talking about how buying Gold on the dips below $1,000, like I used to do with the dips below $900!

Currencies today 6/1/09: A$ .81, kiwi .6485, C$ .9230, euro 1.4215, sterling 1.6370, Swiss .94, rand 7.9660, krone 6.1880, SEK 7.4575, forint 197.40, zloty 3.1370, koruna 18.85, yen 94.80, sing 1.4370, HKD 7.7514, INR 46.96, China 6.8267, pesos 13.02, BRL 1.97, dollar index 78.79, Oil $67.85, Silver $15.90, and Gold... $985.35

That's it for today... An absolutely fabulous day yesterday here in St. Louis, the sky was so blue, and the sun was warm! And I had the pleasure of cooking for a family birthday party for my darling daughter's husband, Jerry... (he'll get a big kick out of being mentioned!) My beloved Cardinals had a not-so-good trip to one of my fave cities, San Francisco this past weekend. The Stanley Cup Finals are going on, and the Basketball Finals will start this week... So It's not like there's nothing on TV to watch! HA! Come on... It's gotta be better than watching a cable financial news station that I refuse to name! OK... Mike and Mary are here, so that means all good things must come to an end, and so I bid you farewell for today... I hope your Monday is absolutely Marvelous!

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

A Jobs Jamboree for Friday, May 8th!

ChuckButler — Fri, 08 May 2009 15:10:24 GMT

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In This Issue..

* Stress tests finally print!
* The Gov't wants you to "feel good"...
* Job losses decline on a weekly basis...
* Happy Mother's Day!

And Now... Today's Pfennig!

A Jobs Jamboree Friday!

Good day... And a Happy Friday to one and all! Let's make it a Fantastico Friday, eh? Why not! It's the Friday to kick off Mother's Day weekend! More on that later, but first, let's talk about the Stress Tests. Personally I could just as easily forget about them, because as I've said over and over again, The Gov't wasn't going to "spook" the markets with "true results"... This whole "exercise" is a just another effort to make us all "feel good"...

OK, the rumor mill has finally been shut down, and the facts, as the Gov't would let us know them to be, are out... Let's take a gander at the results!

The Wall Street Journal (WSJ) reported it like this: 10 of the 19 largest U.S. Financial Institutions will be required to raise a combined $75 Billion in new capital.

The Washington Post (WP) reported it like this: Nine of the 19 banks do not need any new capital at all.

It's all in the way you word it... Both of them are correct... The WSJ tells it like I think most people would want to hear it, while the WP, is for the Polly Annas of the world!

When it's all said and done... This feel good circus is now over, and we can get back to dealing with the financial meltdown, deficit spending, China, and other things that are easier for us to deal with, like the story that came across the screens yesterday regarding credit card charge offs, than a feel good circus! Yes, the credit card charge offs are up 44% VS last year... Now, isn't that one of those things that make you go, oooooooohhhhhh nooooooooo!

The currencies drifted most of the day yesterday waiting for the stress tests results, and then rallied at the end of the day with the euro pushing past 1.34 once again. The euro has fallen back below that figure again this morning, but remains close to the 1.34 figure.

Yesterday, the European Central Bank (ECB) did what I said would be the prudent thing to do, if you "had" to do it, and cut rates only 25 BPS, instead of the 50 BPS the markets were expecting. The euro had to deal with the dolts that think larger rate cuts are what values a currency... But, as I said before, the ECB wants to be able to come back to the rate cut table, if needed, and cut rates again.

Unfortunately for the euro going forward is the fact that ECB President Trichet, finally gave in to the "weak links" in the European Union, and announced that the ECB would begin to buy bonds to support the credit markets. This move was fiercely opposed by Germany's Central Bank, the Bundesbank and it's President, Axel Weber. I'm with the Bundesbank on this one... To bad Trichet "gave in"... This move now throws the European Union on the roster of nations employing Quantitative Easing... And you know where I stand with that!

Well... Today is the Jobs Jamboree for April... Yesterday, the Initial Jobless Claims fell from 635K the previous week to 601K... And, just like I said they would... The media was all over this move, pointing out that this is mostly likely an indication that the recession is coming to an end. Well... Today's Jobs Jamboree is expected to show a fall in jobs lost too... I guess they haven't polled Chrysler and GM workers... But any way, the "experts" believe April's figure will be right at 600,000, down from last month's 663,000... That's quite a ride down the slippery slope don't you think? I'm going to say that 600,000 is too "pie in the sky" and actual number will be disappointing compared to 600K. But, if it shows a figure below last month's 663K, then again, we'll hear about how all is right on the night, and happy days are here again...

That should boost risk assets... Should...

OK... About two months ago, I wrote to you all, and said I wanted to hear from the people that owned or worked at businesses that were doing well... I called them feel good stories, and this time "feel good" had a good connotation! First I was gone for March, then in April I kept forgetting to deal with it on a Friday... But not today! Today, I give you the first feel good story during this recession... A company that's doing well, despite all the rot on the vine in the economy...

So, here's how it will work... After the currency round-up, and final sign off, I'll tell you about this week's choice... So... Let's go to the Big Finish, and get this Fantastico Friday started!

Currencies today 5/8/09: A$ .7590, kiwi .5965, C$ .8610, euro 1.3405, sterling 1.5050, Swiss .8860, rand 8.4075, krone 6.4675, SEK 7.85, forint 208, zloty 3.25, koruna 19.88, yen 99.40, sing 1.4650, HKD 7.75, INR 49.34, China 6.8217, pesos 13.10, BRL 2.110, dollar index 83.78, Oil $57.71, Silver $13.96, and Gold... $916.80

That's it for today... An absolutely beautiful day at the ballpark yesterday, blue skies, bright sun, green grass, and a sea of red in the stands... If you don't know what I'm talking about, come to a game in St. Louis, everyone attending the game is in their Cardinals gear! Our munchkin... St. Louis' own Mickey Carroll who was a munchkin in my all time fave movie, The Wizard of Oz, died yesterday... And then finally, Sunday is Mother's Day... If you can, give your mother a great big hug, because... She's YOUR Mother! I lost my mom on New Year's Eve 1997, and miss her greatly, as she was always there for me when I was a youngster, and young adult... Always... And I mean Always... OK... I'll start getting sentimental here, so I'll just say, HAPPY MOTHER'S DAY to all the mothers out there... You are special! OK, let's have a Fantastico Friday, and don't forget the recessions feel good story follows! BYE!

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>>>>> hope you liked it!

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

It's All About The Stress Tests...

ChuckButler — Thu, 07 May 2009 14:45:53 GMT

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In This Issue..

* Tired of reacting to rumors!
* Aussie dollar continues to rally...
* More on China...
* Bank of England keeps rates unchanged...

And Now... Today's Pfennig!

It's All About The Stress Tests...

Good day... And a Tub Thumpin' Thursday to you! We're stuck in a rainy pattern here in St. Louis, I just have to hope the rain stops long enough to get the day game at Busch in today!

Well... The Stress Tests get their public showing today... The rumors continue to be something strange... Strange in that, one it's Bank of America (BOA) needing to raise $10 Billion, the next day it's $35 Billion, and then later in the same day, BOA doesn't need to raise any capital! Talk about wild swings of emotion! WOW!

The rumor going around this morning, is that the banks are all right on the night, and not in major deep dookie any longer. Hmmmm... Didn't I tell you over a week ago that this was going to be the case? I said it because... I just don't believe the Gov't is going to "spook" the markets right now and release the "real results"... Of course I don't know that to be a fact, it's just my hunch. I could be all wet... But, at least I got the first part correct, if in fact the results print as rumored...

But then, Bloomberg printed a story last night that showed a handful of banks needing between $34 Billion and $2 Billion in additional capital... So... Let's see which set of books the Gov't reveals, eh?

OK... So the currencies all sold off on the news yesterday morning that the banks would need more capital, and then came back overnight on the latest rumor... As I said yesterday, the markets are all about the stress tests right now... Actually, I'm surprised the Gov't didn't delay them one more day so that the focus would be on the stress tests tomorrow, instead of the Jobs Jamboree!

Speaking of the Jobs Jamboree that will take place tomorrow... The ADP Challenger report printed yesterday and indicated that tomorrow's Jobs data will show less jobs lost, and a number below 600K for the first time in 5 months! ADP says the jobs lost were 491K... And believe me now and hear me later on this, the media will eat this up, and be all ecstatic about the fall from 600K to 491K... As if... 491K is a "good number"! Well, yes, it's better than 600K... But the reporting should all be balanced... Like... "Is this the turning point in job losses? Yes, their still almost 500,000 for the month, but that's a fall of over 100,000. While one monthly report does not make a trend, just like one swallow doesn't make a summer, this is good news, and we'll be watching for signs of further improvement in May."

I'm watching the Big Dog, euro, rally right now, from an overnight low of 1.3250, to its current level of 1.3330... As German March Manufacturing Orders surprised this morning with a rise of 3.3% in March. The European Central Bank (ECB) is meeting right now, and is expected to cut rates 25 BPS to 1.25%... I read a couple of stories yesterday regarding the ECB... The writers were saying how the Eurozone economy is in shambles and needs a larger than 25 BPS rate cut... But, I argue with that... The ECB wants to keep some rate cut arrows in their quiver, in case they need more rate cut stimulus in the coming months... They shouldn't shoot them all now! That's what the Fed did, and we know what that led to... Quantitative Easing!

But the Big Winner of yesterday and last night is the Aussie dollar (A$)... It's on a moon shot, since the Reserve Bank of Australia (RBA) left rates unchanged the night before, and issued a balanced statement afterward, with emphasis on waiting to see the affects of the previous rate cuts. The A$ got an additional boost this morning when it was reported that the unemployment rate in Australia fell for the first time in 8 months! The A$ is 75-cents and change this morning, heading to 76-cents... A 7-month high!

Some commodities have been rising in price recently... I've chronicled the rise in the Oil price, but here's one you don't hear about every day, except of course if you listen to our friend, Jim Rogers, every day! I can hear Jim Rogers talking about sugar as if he's sitting right here next to me... Sugar is heading to a 28-year high, as the crop in India fell short of expectations... And Wheat had gained 3 consecutive days now, on low yield estimates for the U.S. crop... I hear you Jim!

I would think that if the bank stress tests "somehow" show no insolvency risk, that risk taking will be back on the table, BIG TIME! So... I would think that if risk taking is back on the table, Gold, currencies and other commodities will be singing a different tune... A tune of Happy days are here again, The skies above are clear again, So let's sing a song of cheer again, Happy days are here again... OK, admit it, you after singing along with this, you had a vision of Bugs Bunny dancing with a cane singing the song! HA!

Speaking of India... Yesterday, I told you about how the currency was rallying, and how my Currency Capitalist colleague, Ashish Advani, gave the currency the thumbs up in last month's letter, and how Standard Chartered Plc was now bullish on rupees... Well, now add Society General (SOCGEN) to the list of rupee flag wavers! SOCGEN believes the rate cuts in India are a thing of the past, and it will be all seashells and balloons for the rupee going forward...

And while I'm talking about an Asian currency... I might as well head over to China and talk about how their stimulus continues to hit the nail on the head, and help to bring China's economy out of their slowdown and doldrums. The Peoples Bank of China (PBOC) issued a report yesterday saying that the economy performed "better than expected" in the 1st QTR. This improved performance is helping the "managed currency" (renminbi) to gain ground VS the dollar once more...

I had a reporter follow up with me yesterday on my thoughts toward what China had on their minds... The reported asked me if I thought the Chinese would be under more pressure to allow the renminbi to float, if they are really pursuing a "wider use of the renminbi"... I said... I thought the Chinese would receive pressure to allow the renminbi to float, but no more than what they received in the past from the combo of Paulson, Schumer and Graham... (the U.S.!)

The Bank of England (BOE) is also meeting this morning to discuss rates... I would think it is almost inevitable that the BOE would leave rates unchanged... This has been the prevalent thought in the markets for a week now, and has led to the pound sterling making a very auspicious rally to 1.5170! What I think the BOE needs to do now, is to sit down with the markets and tell them what direction their Quantitative Easing (QE) is going... Will they limit the purchases, or increase them, etc... Not that any QE is good, but to be honest and transparent with the markets would be a step in the right direction for a central bank!

Yesterday, Norway's Norges Bank lowered their internal rate 50 BPS to and internal rate of 1.5%. I was hoping they would only cut 25 BPS, but... This has all the makings of "the last rate cut"... You know, one big blow out to end the summer... Or... A star burns brightest right before it burns out... But, I now believe this will be the last cut in Norway...

Recall many moons ago I called this a "race to zero" regarding Central Banks around the world cutting interest rates? Well... It certainly has panned out that way, eh?

Have you ever heard of the book, "Black Swan"? The author Nassim Nicholas Taleb describes his theory of "Black Swan" as a large-impact, hard-to-predict, and rare event beyond the realm of normal expectations. Obviously we've had a few "Black Swans" in the past 2 years, eh? Any way, the thing I'm going for here is Mr. Taleb was speaking at a conference yesterday, and had this to say about commodities and Gold... "The global economy is heading into a big deflation though the risks of inflation are increasing as governments print more money. Gold and copper may rally massively as a result."

Speaking of Gold... It has rallied the past two days, but could be just waiting in the wings for confirmation of two things... 1. the bank stress tests don't show major problems... And 2. the Jobs Jamboree does show falling job losses... Silver has really gotten on the rally tracks too, outperforming Gold the past two days! Silver is back above $14... And that's good news... That is unless you've dilly dallied your days away, and not taken advantage of the cheaper prices that have been available for some time now!

Hey! Remember last year, when I was involved in the Sovereign Society's FX University and the Currency Tours? Well... We're not going to go city to city this year... Instead, we'll hold an FX University Currency Seminar for 3 days in Scottsdale AZ in Sept! So, if you missed the traveling troupe last year, we'll be doing it even bigger and better this year! Mark your calendars for Sept. 24-27. You can find out more by visiting www.sovereignsociety.com

No word from the BOE or ECB, so I'll just head to the Big Finish now... No wait! The BOE's decision just flashed across the screens... Let's see here... Oh, the BOE left rates unchanged (as expected, see above), and the announced that they will increase the size of their asset purchase program (Quantitative Easing) by 50 Billion sterling to 125 Billion sterling... Well... Let's see here, the pound sterling is taking on some water after this announcement, as it should! Too bad for the sterling rally... But increasing QE is not healthy for a currency!

The ECB decision will come in about 45 minutes... I'll be well on my way to figuring out my currency positions and trades needed by then... So, I'll just go to the Big Finish now, for real this time!

Currencies today 5/7/09: A$ .7565, kiwi .5935, C$ .8575, euro 1.3330, sterling 1.5085, Swiss .88, rand 8.3440, krone 6.4875, SEK 7.8525, forint 208.75, zloty 3.2325, koruna 19.9250, yen 99.20, sing 1.4675, HKD 7.75, INR 49.27, China 6.8215, pesos 13, BRL 2.1130, dollar index 84, Oil $57.91, Silver $14.11, and Gold... $921.30

That's it for today... How about that! They found that 3-year boy that's been missing here in Missouri! YAHOO! I see where the Somali pirates have seized another ship... This time it's a Dutch ship... We're all fans of "old school pirates" on the desk here, but NOT these new pirates! My little buddy Alex had a late game last night, but the game was suspended in the 3rd inning because of fog. Sometimes living near a river has its good points, as I was able to get to bed at a decent hour! Of course, those "good times" get wiped out when the river floods, as it looks like it's getting ready to do, after all the rain we've received, and will receive in the next week... UGH! I'm glad that we're not going to do the multi-city FX tour this year, that was just a tad taxing on me. Tomorrow's the jobs Jamboree, so start getting ready for that! OK... I've got to get this out of here, and get to work, I'm going to the day game today! Of course, you didn't think I would miss a day game would you? I hope your Thursday is Tub Thumpin'!

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