Search results matching tag 'Manufacturing'

Bank of Canada Softens Tightening Bias.

ChuckButler — Thu, 24 Jan 2013 18:56:47 GMT

In This Issue.

* Bias to buy dollars emerges.

* China prints strong manufacturing index.

* Eurozone manufacturing improves.

* Back to selling yen.

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

Bank of Canada Softens Tightening Bias.

Good day. And a Tub Thumpin' Thursday to you! A very long day in the office for me yesterday, and then out to Alex's wrestling meet, has left me draggin' the line this morning, but. I don't feel bad right now, so I've got that going for me! One of my fave economists, Nouriel Roubini, is talking on the Bloomberg TV channel from Davos this morning. From what I can make out of what he's saying, I don't think he's a fan of kicking the can down the road. But, he points out. until the markets say no more, the can will continue to be kicked.

And let's see. The Gov't bailed the markets out in 2008, so. they "owe" the Gov't one, right? And that's why I believe the markets, bond vigilantes and so on, are letting the Gov't go Ollie, Ollie Oxen Free right now.. Hey! That's just how I see it, doesn't mean it's the gospel!

So. the currencies and metals once again traded in tight ranges, with slippage in the morning, and a recovery in the afternoon, which made two consecutive days of that pattern. But, we've seen a change in the pattern in the overnight markets, with the bias slipping back to buy dollars, and most of the currencies and especially the metals have backed off their levels of the past two days.

I would like to think that this is just normal trading, for the euro hasn't succumbed to the bias to buy dollars so far this morning. But, I'm afraid that we've slipped back into that darn Risk On / Risk Off load of bull-dookie that we stepped in over 4 years ago. The reason I say that about the slipping back to Risk On/ Risk Off is that the only thing I can find that points to the bias changing is the earnings report by Apple last night. Apparently Apple reported their weakest earnings growth since 2003, and their weakest sales increase in 14 quarters.

Stocks all over the world are seeing problems, and so, in my opinion, we've slipped back into the Risk Off fun and games. I hope this is just a one-off relapse, and that this Risk Off trading is quickly exited, for we had seen all the signs that we were back to trading on fundamentals, and not willy nilly sentiment of traders to throw all asset classes into a barrel and trade them.

The U.S. dollar SHOULD be getting taken to the woodshed, given the decision yesterday by our leaders in the House of Representatives to suspend enforcement of the U.S. debt limit until May 18. Have we now become Comfortably Numb on the debt limit too? Sure looks like it to me. and therefore the dollar should be getting taken to the woodshed, but it's not. and that's what's going on today.

I had to stop and smile when I saw this quote by Axel Weber former Bundesbank President, and now Chairman of UBS. "While European Gov't's approach fiscal curbs by looking to pullback, the U.S. runs into its limits by squabbling how to increase them."

Another thing that should be driving nails in the dollar's coffin are the Fed's meeting details that get released 5 years after the meeting took place. This is where Bill Fleckenstein got a lot of his information on what former Fed Chairman, Big Al Greenspan, was doing behind the scenes. I've mentioned Bill's book quite a few times in the past, but if you still haven't picked it up to read it, you should, just so you understand what the Fed is doing to us. You can find it on Amazon, it's called: Greenspan's Bubbles: The Age of Ignorance at the Fed by Bill Fleckenstein.

You can see in the notes that 5 years ago, the Fed still didn't see the smoke from the fires in the economy. So. if they didn't see it then, what makes anyone believe they would see it this time? Any way. The Fed's FOMC will meet next week, and I'm sure they will tell us that the economy is not out of the woods, and there is still a need for stimulus. Yesterday, Morgan Stanley's chief, Gorman, basically said that the economy is still in need of stimulus.

Of course, long time Pfennig readers know that I've said for some time now that the U.S. economy has gotten addicted to stimulus. to break the economy from this addiction is going to be very painful.

One of my fave writers, Caroline Baum, wrote a piece titled: "How Fed Learned to Stop Worrying and Love Zero" - This is a great snippet: "Color me skeptical. When I read the 82-word sentence outlining conditions to be met before the Fed would start raising rates, all I could think of was Winton Churchill's description of the Soviet Union: "a riddle, wrapped in a mystery, inside an enigma." I doubt the Fed will unwrap it when it meets next week."

Well the two-day respite that Japanese yen was getting ended overnight. I told you yesterday that I didn't think those that were buying yen because the Bank of Japan (BOJ) was delaying their next round of stimulus were allowing the elevator to go to their top floor. I just put together some notes for one of my presentations next week at the Orlando Money Show, and in doing so, I noticed that Japanese yen has dropped 12% in the past 6-months. I don't think the losses will stop there. but that's just my opinion, and I've said the same thing about yen for the past year.

Hey. HSBC Holdings Plc printed their version of Chinese manufacturing last night. (recall, I've explained that there are two manufacturing index prints in China, one by HSBC and the other by the Chinese Gov't). Usually, the HSBC print is not as lofty, albeit by small numbers, as the Gov't report. So. when the HSBC version printed and showed a gain in the index from 51.5 to 51.9 for this month, I got a little giddy.

This data should have been manna from heaven for the Aussie dollar (A$), but. I think the Apple earnings news was just too much to get past for the risk assets, this morning. The A$ has slipped back below $1.05 this morning, but it's not from the Chinese data. That's why I'm thinking that this slippage below $1.05 this morning is an opportunity to buy at a cheaper level. Of course, that's just my opinion, and I could be wrong.

Speaking of manufacturing reports. The Eurozone, continues to show signs of recovery, as their Manufacturing Index for the 17-nation union climbed to 48.2 in January from 47.2 in December. Still below 50, the line in the sand between expansion and contraction, but an improvement nonetheless.

The Canadian dollar / loonie slipped below parity after the Bank of Canada (BOC) hung the currency out on a line. The BOC left rates unchanged, as expected. but then surprised the markets by softening their tightening bias. The BOC said that "any change is likely to come further in the future than was previously thought."

Uh-oh! You think the markets were upset with the fact that the BOC never carried through with their bias to tighten? They are really upset by this softening, which they didn't see coming. And the loonie gets taken to the woodshed. My initial thought was that this was a temporary move, but the more I look at this, a lot of capital was gained on the thought that the BOC was going to raise rates soon. The loonie could be in for an elongated trip to the woodshed. But. still remain relatively strong, folks. What am I talking about?

Well. 10 years ago, the loonie was 65-cents. so. even if the loonie slips now to 95-cents, that still relatively strong VS 10 years ago, eh?

Then There Was This. You all have heard me talk about China's hoarding of Gold to use as a backing for their currency when they decide to float the renminbi/ yuan for a couple of years now, so I always enjoy seeing someone else jump on my bandwagon. This time it's the long-time, well respected money manager - Stephen Leeb. Here are a couple of snippets of a recent interview with Stephen talking about China and their Gold.

"I see the Chinese plan in terms of what they want to do, I see their economy turning around, and most important their push into gold.

I know KWN published a piece last night which said the World Gold Council is saying that China does plan to back up their yuan with gold. Of course that's what they are going to do. They clearly want the world's reserve currency. They yuan is constantly increasing in use in Asian (business) dealings. There is no doubt that's going to continue to grow. China could (already) have the second largest gold reserves in the world, even ahead of Germany. What is confirmed by everything you can see is they are importing as much (gold) as they can without trying to disturb the price of gold. You won't believe what's going to happen (with the price of gold). I'm telling you in 3 years people will not believe the price of gold." - Stephen Leeb

Chuck again. great stuff. more and more, people are jumping on my China and the gold backing to their currency bandwagon. Come on. there's more room!

To recap. The two-day trading pattern of tight trading ranges for the currencies and metals gave way to a bias to buy dollars overnight. Apple had some weak earnings news, that catapulted the risk assets back into the Risk On/ Risk Off trading arena. China saw a strong manufacturing print, and the Eurozone saw an improving manufacturing index. The Bank of Canada hung the loonie out on a line by softening their tightening bias, and the Japanese yen gets back to losing ground.

Currencies today 1/24/13. American Style: A$ $1.0490, kiwi .8410, C$ .9990, euro 1.3335, sterling 1.5825, Swiss $1.0760, . European Style: rand 9.0420, krone 5.5635, SEK 6.5180, forint 221.25, zloty 3.1425, koruna 19.1830, RUB 30.12, yen 89.60, sing 1.2280, HKD 7.7530, INR 53.68, China 6.2197, pesos 12.69, BRL 2.0355, Dollar Index 80.03, Oil $95.51, 10-year 1.81%, Silver $31.85, and Gold. $1,677.50

That's it for today. I was gone last week, when my younger brother, Mike, celebrated a birthday, so Happy belated birthday! Mike was born when I was in High School, so. that means he's getting old! I received a call from an old high school classmate last night, she informed me that a group of classmates are putting together a 40-year high school reunion. YIKES! Not the dreaded 40-year HSR! It will be this year. UGH! I bet no one will recognize me! I don't keep in touch with many people from my high school years, and the last reunion we had was 15-years ago. oh well. I hope you have a Tub Thumpin' Thursday!

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

Where Will the Jobs Come From?

JohnMauldin — Tue, 20 Nov 2012 03:18:00 GMT

The Next Bubble
A Hollow Powerhouse?
We’ve Seen This (Manufacturing) Movie Before
A Manufacturing Renaissance
Bismarck, Scandinavia, Greece, Geneva, and Writing Schedule

For the last year, as I travel around, it seems a main topic of conversation is “Where will my kids find jobs?” It is a topic I am all too familiar with. Where indeed? Youth unemployment in the US is 17.1%. If you are in Europe the problem is even more pronounced. The basket case that is Greece has youth unemployment of 58%, and Spain is close at 55%. Portugal is at 36% and in Italy it’s 35%. France is over 25%. Is this just a cyclical symptom of the credit crisis? Much of it clearly is, but I think there is something deeper at work here, an underlying tectonic shift in the foundation of employment. And that means that before we see a true recovery in the unemployment rate, there must be a shift in how we think about work and training for the future of employment. This week is the first of what will be occasional letters over the coming months with an emphasis on employment. (This letter will print a little longer, as there are a lot of charts.)

But first, the staff at Mauldin Economics is furiously putting the finishing touches on your free Post-Election Economic Summit webinar, which will air tomorrow at 2 pm Eastern. They are distilling multiple hours of discussion into a fast-paced, thoughtful (and often lively) conversation about what is in store in our economic future. Panelists and guests include Mohamed El-Erian, James Bianco, Barry Ritholtz, Gary Shilling, Barry Habib, and Rich Yamarone. We also have a truly unique interview with the chiefs of staff of Majority Leader Harry Reid and Senator Rob Portman. While we excerpted part of that interview for the webinar, the entire interview will be made available. If you want to get a true feel for what is going on in Washington, I suggest you listen in. You can sign up to listen here. Now, let’s think about employment.

The Next Bubble

Let’s look at a few facts put forth by the Young Entrepreneur Council from their list of 43 (available here):

· 1 out of 2 college grads – about 1.5 million, or about 53.6 percent, of bachelor’s degree holders age 25 or younger – were unemployed or underemployed in 2011.
· For high school grads (age 17-20), the unemployment rate was 31.1 percent from April 2011-March 2012; underemployment was 54 percent.
· For young college grads (age 21-24), unemployment was 9.4 percent last year, while underemployment was 19.1 percent.
· According to some researchers, up to 95 percent of job positions lost occurred in low-tech, middle-income jobs like bank tellers. Gains in jobs are going to workers at the top or the bottom, not in the middle.
· More college graduates are getting low-level jobs, period. U.S. bachelor’s degree holders are more likely to wait tables, tend bar or become food-service helpers than to be employed as engineers, physicists, chemists or mathematicians combined – 100,000 versus 90,000.
· According to new U.S. government projections, only three of the 30 occupations with the largest projected number of job openings in the next eight years will require a bachelor’s degree or higher. Most job openings by 2020 will be in low-wage professions like retail sales, fast food and truck driving.

While there may not be a bubble in education, there is definitely a growing debt bubble in student loans. More than 1/3 of young Americans of college age went back to school because of the economy, and in doing so have contributed to the $1 trillion in student loans. People are clearly going back to school and taking out loans as a way to make ends meet. The average college graduate has $25,000 in debt. Default rates are up 31% in the last two years. Student loans are relatively easy to get. They are like the old NINJA subprime mortgage loans available toward the end of the housing bubble: “No income, no job, no assets.” And they are just as likely to end up in default. But Congress recently passed new bankruptcy laws, and unlike housing loans, student loans cannot be discharged in a bankruptcy. The law of compound interest means that borrowers, mostly young, will be paying back this debt for many, many years.

We have told our children that education is their ticket to a better life. And the data still shows that there is a clear advantage to having a college degree. But our recent experience suggests that not all college degrees are created equal.

Tom Friedman, writing in this weekend’s New York Times, highlights the problem of education and jobs. He quotes Traci Tapani, who with her sister runs a sheet metal company in Wyoming with 55 employees.

“About 2009,” she explained, “when the economy was collapsing and there was a lot of unemployment, we were working with a company that got a contract to armor Humvees,” so her 55-person company “had to hire a lot of people. I was in the market looking for 10 welders. I had lots and lots of applicants, but they did not have enough skill to meet the standard for armoring Humvees. Many years ago, people learned to weld in a high school shop class or in a family business or farm, and they came up through the ranks and capped out at a certain skill level. They did not know the science behind welding,” so could not meet the new standards of the U.S. military and aerospace industry.

“They could make beautiful welds,” she said, “but they did not understand metallurgy, modern cleaning and brushing techniques” and how different metals and gases, pressures and temperatures had to be combined. Moreover, in small manufacturing businesses like hers, explained Tapani, “unlike a Chinese firm that does high-volume, low-tech jobs, we do a lot of low-volume, high-tech jobs, and each one has its own design drawings. So a welder has to be able to read and understand five different design drawings in a single day.”

[She ended up training her new potential employees and eventually was able to train someone to train welders.] But even getting the right raw recruits is not easy. Welding “is a $20-an-hour job with health care, paid vacations and full benefits,” said Tapani, “but you have to have science and math. I can’t think of any job in my sheet metal fabrication company where math is not important. If you work in a manufacturing facility, you use math every day; you need to compute angles and understand what happens to a piece of metal when it’s bent to a certain angle.”

Who knew? Welding is now a STEM job – that is, a job that requires knowledge of science, technology, engineering and math.

Employers across America will tell you similar stories. It’s one reason we have three million open jobs around the country but 8 percent unemployment. We’re in the midst of a perfect storm: a Great Recession that has caused a sharp increase in unemployment and a Great Inflection – a merger of the information technology revolution and globalization that is simultaneously wiping out many decent-wage, middle-skilled jobs, which were the foundation of our middle class, and replacing them with decent-wage, high-skilled jobs. Every decent-paying job today takes more skill and more education, but too many Americans aren’t ready. This problem awaits us after the “fiscal cliff.’”

A Hollow Powerhouse

There is a continual complaint that US manufacturing has been “hollowed out.” Where manufacturing jobs once were tickets to the middle-class lifestyle, there are now fewer and fewer such jobs available. Indeed, the next chart shows that manufacturing jobs are down almost 40% from the peak in 1978 and back to roughly where they were during World War II.

Yet the number of manufacturing employees doesn’t tell the whole story. The US is still the number one manufacturing country in the world. We are an export powerhouse. Indeed, the growth of exports in the last 20 years has been nothing short of phenomenal. Exports have doubled and then doubled again. Total manufacturing in the US has almost come back to where it was prior to the Great Recession. Productivity in the last 20 years is up over 50%. We are producing as much as or more than we did in the past but with far fewer people. Taken alone, US manufacturing would be the ninth largest economy in the world. See the next three charts:

The chart below shows the average growth in productivity over various periods during the last 65 years. Note that after the postwar boom productivity growth fell and then began to increase again, up until the Great Recession. Greenspan was right to call it the Productivity Miracle.

We’ve Seen This (Manufacturing) Movie Before

At the dawn of the 19^th century, farmworkers were somewhere between 75% and 80% of the entire labor force (http://www.nber.org/chapters/c8007.pdf). That number was still over 50% in 1860. It was not just the Industrial Revolution that increased the number of manufacturing workers in the US, it was an agricultural productivity revolution that allowed more food to be produced by fewer people. Even so, productivity growth was not all that exceptional in the first 60 years of the 19^th century.

But that was then and this is now. Today the percentage of the labor force employed in agriculture is less than 2%. Agricultural productivity is up some 16 times since 1880, but we barely have more than two million people working on the farm, about the number working in agriculture in 1820. Take a look at the charts below:

This latter chart is from http://www.springer.com/economics/agricultural+economics/book/978-1-4419-0657-1

The Industrial Revolution and the shift to a manufacturing economy was clearly disruptive to employment. Yet who would advocate going back even 40 years to when the farm labor force was three times the relative size it is today? Especially if you had to be the farm labor? Been there, done that. Not interested in hoeing spuds.

A Manufacturing Renaissance

Just as agricultural output per worker has increased dramatically over time, I think that in the next 40 to 50 years we will see massive gains in manufacturing output without an accompanying large increase in manufacturing jobs. Companies are beginning to bring manufacturing back to the US because automation, robotics, and other new technology make it cheaper to manufacture products locally than to use inexpensive labor in other countries. I am told that Foxconn (in China) is beginning to use robotic manufacturing lines. When Foxconn is turning to robots rather than cheap labor, you know there is a revolution in the offing.

Yet even the manufacturing jobs that are left will not demand a “college degree.” They will require serious skills and technical know-how, but that is different from the typical college degree. That is not to say college education will not be useful, but it is increasingly going to have to be an education that has a focus and goal of a marketable skill.

What is going to be needed is the creation of brand-new industries, as well as the unleashing of the entrepreneurial skills of the younger generation. Small business is the engine of growth for jobs. It seems that all politicians can do is talk about the need to create jobs, yet the reality is that government doesn’t create jobs. It can create the conditions in which jobs are created, but it is up to the individual businessman (or, increasingly, businesswoman) to make a decision to hire additional workers.

My friend Bill Dunkelberg is the chief economist for the National Federation of Independent Businesses. He’s been doing regular surveys since at least 1974. His latest monthly survey shows that businesses are not terribly optimistic in terms of their plans to increase employment, which should be no surprise. The number one problem? Uncertainty.

Let’s hope that our political leaders can give us a little more certainty and that it will not be the certainty of a recession. David Krone (Senate Majority Leader Reid’s chief of staff) felt, in our interview for the Summit tomorrow, that it was only 50-50 that a deal would be done to avert the fiscal cliff. He was rather adamant that they would rather go over the cliff than kick the can down the road on the deficit. Not that it couldn’t be fixed later – but I suggest you listen to at least that part of the interview we’ll post tomorrow. I should note that both congressional chiefs of staff acknowledged they have been working for weeks prior to the election to come up with solutions to the cliff. These are the guys (along with their counterparts) responsible for much of the detail that will come out of the negotiations. They don’t get interviewed often, and that is a shame. It makes you feel better about the country to know there are people who care enough about our future to work with each other responsibly, even if they don’t agree on the path we must take.

A final scheduling note: On December 4 I will be doing a special live conversation with Dr. Lacy Hunt and my partner Jon Sundt of Altegris. Lacy is expecting a recession next year. The question now is how deep a recession – and what can investors do about it? Lacy and I both anticipate a bumpy few years ahead as we stare into the teeth of a rolling global deleveraging recession – the Endgame, as I’ve called it. The decisions that we make in the next couple of years about how to handle our budget deficits – here in the US, in Europe, in China, in Japan, and elsewhere – are going to be absolutely crucial. If you are an accredited investor or a financial professional and have already registered with the Mauldin Circle (and are in the US), you will shortly be receiving an invitation to attend. If you have not, I invite you to go to www.mauldincircle.com and register today, so you can hear Lacy, Jon, and me discuss the direction of the economy, the Endgame, and ways for investors to navigate the landscape in 2013. (In this regard, I am president and a registered representative of Millennium Wave Securities, LLC, member FINRA.) Thanks.

Bismarck, Scandinavia, Greece, Geneva, and Writing Schedule

It is time to hit the send button. It is going to be a busy week, as I have so much stacked up in my “inbox.” And of course Thanksgiving will be here in a few days, and that means an afternoon of going to the local fresh food market to purchase all the needed victuals and spending the next day cooking and getting ready. Thankfully, none of my culinary creations call for Twinkies, so I don’t have to worry about the shelves being empty. It is rather sad to note that 18,000 people will be losing their jobs this season as Hostess shuts down. That means we need to create at least 4,000 new small businesses to make up for those lost jobs.

I have read numerous reports about the bankruptcy of Hostess and was planning to comment on that debacle, but there is not enough space and time. Both sides of that argument can share the blame. One of the ironies is that the unions are vilifying the private-equity company that owned Hostess, and yet the owner of the PE firm is a certified big-time Democrat and sought out opportunities to find unionized companies to buy. And while the unions seemed to have a death wish, management simply had no clue. They were in a shrinking business (even if they made you personally fatter) and did not adapt. Side bet: Someone will buy them, move them to a non-union state, and produce the same amount of goods with fewer workers. Not that the people at Hostess didn’t work hard; they just had crazy rules and hundreds of conflicting contracts no sane business could compete with. Management so loaded the company up with debt that there was no money to advertise or create new (and healthier) product lines. It was truly bizarre.

Note: This was one of those times when a private-equity firm simply lost money. They bought the company out of bankruptcy, and it was already laden with debt. Then commodity prices soared, and unfunded pensions that exceeded the total assets of the company were a drag. Pensions like that cannot possibly make their targets when the Fed is keeping rates so low, and that means companies go deeper in the hole. Now, the pensions of the union members of Hostess will have to be taken over by the Pension Benefit Guaranty Corporation, which is itself massively underfunded. Union members will only get a fraction of what they think they should get. And we taxpayers get to fund the PBGC losses. Sigh.

I do have a few personal flights to make in the next month, but other than a speaking engagement in Bismarck, North Dakota, I will mostly be home until I leave for Copenhagen, Oslo, and Stockholm in early January, to speak for Skagen Funds. I have to be in Geneva a week later, so I will stay in Europe. I plan to visit Greece and perhaps one other country, to try to get a feel for the mood on the ground and what is likely to happen. It was not so long ago when we were “All Greece, All the Time.”

I will be working with Bill Dunkelberg on a book on the future of employment over the next few months, hoping to finish it shortly after the first of the year.

As luck would have it, the Mavericks are playing three games this week while I am home. I really do enjoy watching NBA basketball and have had season tickets for almost 30 years. My first tickets were $2 a game on the very top row in the corner at the old Reunion Arena. It was all we could afford back then. Times have changed, and my seats are now much better, as over the years I have been able to move over and down. Given that the Mavericks are not likely to overawe me this season (though I have this dream that Dirk will come back better than ever), I just enjoy watching B-ball. I will admit to not having the same patience for the Cowboys. If they aren’t winning, I’m not watching.

Have a great week. I will do my own part for the employment numbers this week and make a job offer to a new potential associate.

Your trying hard to imagine the future analyst,

John Mauldin

subscribers@mauldineconomics.com

Talk of a Spanish rescue heats up...

ChuckButler — Fri, 21 Sep 2012 15:36:52 GMT

* European and Chinese manufacturing slows...

* Is a Spanish bailout on the doorstep...

* Jobless claims remain higher...

* Kiwi pulls out a rabbit...

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

Talk of a Spanish rescue heats up...

Good day.and welcome to Friday morning. I didn't realize it at first glance of the calendar, but tomorrow is the first day of fall. I'm glad to see that we still have well over a month before we lose the daylight savings, but I can definitely tell the sun is making its annual retreat. I think Chris will be back in the driver's seat on Monday, so we have that on the agenda for now but we're all hoping Chuck is able to make the return which he was hoping for earlier this week. It's been a long week for yours truly, so I'm looking forward to recharging the batteries over the weekend.

The jubilation over additional stimulus from the Fed had faded away like a nice summer tan yesterday as concerns about global growth have steadily risen to the surface during the course of the week. The markets began the week thinking the Fed fired the silver bullet that would thwart away the demons, but more and more negative data around the world has acted as a strong counter measure. I think the market mentality equated the various forms of stimulus to higher growth but soon came to the realization that aggressive central bank actions meant that things are getting worse in a hurry. As much as governments around the world try and sugar coat the situation, additional measures wouldn't be needed if things were heading in the right direction.

I saw an interview with Minneapolis Fed president Kocherlakota yesterday who was advocating the current stimulus measures but also trying to set targets as to how far things should progress. He basically said the Fed should keep interest rates near zero until unemployment crosses the threshold below 5.5% and went on to say that could take at least four years. For someone who just six months ago was talking about initiating an exit strategy at the end of the year, this stance is a complete 180 degree turn and one of the more dovish statements that we've seen. I think this is a good example of how quickly not only the conditions of the domestic economy but also the global economy have changed in a relatively short period of time.

If we take a look at the economic data from yesterday, we'll see the basis of these global slowdown concerns. We first had more disappointment in Europe as we saw euro zone services and manufacturing output in September fall to over a three year low. The Markit PMI index fell to 45.9 from the already dismal August figure of 46.3, so many economists see things moving in the direction of negative third quarter growth which would put the region into recession. This report was expected to show slight growth but disappointed instead.

We also saw euro zone consumer confidence in September fall to its lowest level since May 2009, even with action from the ECB at the beginning of the month. Obviously austerity measures have a significant impact on all facets of the economy but it's a necessity in order to rise from the ashes at some point. There are only so many things that can be swept under the rug and spending without concern about future consequences is a dangerous game, so I truly hope the Fed and US government come to this realization before it's too late. Anyway, investors are now looking at the ECB and expecting a rate reduction in October to 0.5%.

I also saw where the Financial Times said steps were under way for an official rescue of Spain where instead of strict austerity measures, its expected European officials will work on economic reforms instead of tax hikes and severe spending cuts. Since Spain is one of the larger euro zone economies, they want to tread somewhat lighter as to not cause total economic disruption. It's going to be a fine line to walk, but the article is calling for this to be announced on September 27. If slowing European manufacturing wasn't enough, investors also took it on the chin as a Chinese manufacturing gauge also moved in the wrong direction.

The outcome from US data yesterday didn't help to calm any fears. Starting with initial jobless claims, we didn't see the type of improvement that was originally expected. Those filing for unemployment came in at 382k, which was higher than the estimate of 375k, but the previous week's data was revised upward by 3k to 385k. I think that many companies and businesses are on hold at least until the fiscal cliff has been addressed and since nothing on the horizon points toward some type of resolution, we may see the claims number hovering in this range.

To drive the point home, the states who were impacted by Isaac didn't see any resulting rise in claims and Illinois didn't indicate the teachers strike added to any filings either, so it looks more and more likely we could see a hiring freeze until taxes and spending cuts get ironed out. I'm not taking into account part time seasonal help, but instead, full time jobs when I refer to the reluctancy of business hiring since the cost of benefits is a major expense. I couldn't find much in the way of details, but the number of continuing claims decreased so I don't exactly know if those falling off the books were the main contributor. Since the national jobs numbers aren't exactly stellar, I would have to assume many of those have exhausted their benefits.

The same Markit manufacturing report that we saw in China, which has stirred up talk about more stimulus in Asia, showed things stalled out in the US during September. The report held at 51.5, which is on the right side of the fence, but the report that really matters won't be out for another couple of weeks. The other manufacturing report, the Philly Fed index, was in negative territory for a fifth straight month in September. With that said, it did show improvement as it came in at -1.9 compared to the August reading of -7.1, but it's the same story of lower sales and concerns over the employment picture.

Here I go with my dissection again, but the gauge of new orders showed some improvement while the measure of shipments fell to the lowest level since April 2009. The results of this report and the New York report are used as a barometer for the National ISM number, but with nearly half of those surveyed calling for lower production in the third quarter as compared to the second, it's not looking too bright. In a related report, we saw leading economic indicators come in as expected at -0.1%, which was primarily due to a fall in manufacturing new orders.

In fact, only four of the components had increased while six of the ten lost ground in the month of August. The economy as a whole hasn't displayed any promise so far this month, so I don't expect September's report to show much in the way of change since consumer weakness and the labor market remain under pressure. The last report from yesterday was another consumer comfort measure that revealed more confidence in the economic outlook. As with most confidence reports, the direction of the stock market has significant pull so read what you want, but I don't see where the need for QE3 earlier in the month translates into confidence running at a four month high. Again, if the current environment warrants additional government action, I wouldn't exactly call that a positive scenario.

Looking ahead to next week, we have decent volume in the way of economic reports, but there aren't too many game changers. We'll see another round of housing data as new home sales are out on Wednesday and pending home sales on the following day. It looks like Thursday will be a big day as we get the final revision to second quarter GDP, which is expected to remain at 1.7%, along with personal consumption and durable goods orders. Then on Friday, we see the results of August personal income and spending. If we look even further out, I think investors are starting to hold their breath for the September jobs report two Fridays from today.

Moving on to the currency market, it wasn't what you would call a very currency friendly day with all of the global slowdown talk. The euro and all of the euro equivalents took the brunt of the action as they finished out the day with just over 0.5% losses. I already went over the reasons for the drop, but it wasn't a total wash out. The Brazilian real, New Zealand dollar, and Japanese yen were able to find their way in the black yesterday while all of the other non-European currencies finished the day with fractional losses. When I was writing yesterday morning, it wasn't looking good but things at least stabilized as the day wore on. In fact, the trend this week, while muted at best, has been a recovery during US trading.

As I looked at the currency charts around 9am following the US data, a majority of the currencies had anywhere between 0.75% and 1% losses but cooler heads prevailed. The New Zealand dollar jockeyed itself into first place with just over a 0.25% gain as second quarter growth took the markets by surprise. GDP rose at the fastest pace in two years by climbing 2.6%. Its close relative, the Australian dollar, got caught up in the Chinese story so it wasn't able to join in on the fun. Not only that, uncertainty surrounding what the RBA will do with interest rates has put a governor on its move as of late.

I know these next two currencies were lumped in the euro's move, but we heard from government officials in both cases. Norway's central bank governor alluded to in an interview that direct intervention in the markets won't take place unless we see things move significantly out of line according to fundamentals. There was talk about a year ago of similar action employed by the Swiss taking place in Norway, but its depreciation to the euro had eased those fears. The next question becomes what course of action Norges will take with rates in October since a rate cut isn't really conducive given their housing market. He went on to say that if the only bit of info to consider was inflation, interest rates would probably be at zero, but they have other things to contend with that doesn't make that scenario possible.

Speaking of the Swiss, a SNB member said that despite a certain easing of the exchange rate situation over the past week, challenges of a strong franc haven't been diffused. He went on to say the expected depreciation of the franc hasn't materialized yet, so based on that, it's clear the SNB will maintain its minimum exchange rate with the euro at 1.20. In other words, they are going to stay the course and have no intentions of letting up any time soon. Other than that, I pretty much covered everything. I did forget to mention that a UK manufacturing index rose more than forecast as factory orders increased, but it still remained in negative territory.

As I came in this morning, the tide has definitely turned as the markets are now embracing the rescue efforts from the various central banks, but the likelihood of a Spanish bailout next week is really picking up steam. A successful bond auction in Spain definitely helps the situation. So, we have the beginnings of a risk on trading day and with nothing in the data department today, I would expect to end the week on a positive note but most currencies will still conclude the week in the red. All of this back and forth market movement may get some sea sick, but that's what we have to deal with and I don't think the markets know what they want anymore.

Then there was this.I saw this from our friends over at the 5 Minute Forecast. According to American Banker, the percentage of corporate cash in bank accounts in May stood at 51%. Comparing that to 42% last year, and 23% in 2006, we think something might be brewing here.

"According to the FDIC," Doug continues, "noninterest-bearing deposits for the top five banks have swelled by over 100% since 2008, when the FDIC put TAG in place. You can get an idea of the shift by looking at the demand deposits at commercial banks generally.

To recap..the warm and fuzzy feelings about QE3 have given way as the week has progressed since we not only saw other central banks inject stimulus, but economic data has been disappointing for the most part. European and Chinese manufacturing showed weakness and euro zone consumer confidence fell to its lowest level since May 2009. The results of US economic data didn't help as initial jobless claims were more than expected and leading indicators fell negative. As a result, the euro and euro equivalents had a rough day but the New Zealand dollar squeezed out a gain since second quarter GDP rose more than expected.

Currencies today 9/21/12. American Style: A$ $1.0502, kiwi .8322, C$ $1.0264, euro 1.3017, sterling 1.6278, Swiss $1.0751. European Style: rand 8.2736, krone 5.7018, SEK 6.5167, forint 216.68, zloty 3.1703, koruna 19.0620, RUB 30.9893, yen 78.17, sing 1.2236, HKD 7.7518, INR 53.3887, China 6.3054, pesos 12.8182, BRL 2.0214, Dollar Index 79.15, Oil $93.08, 10-year 1.78%, Silver $34.78, Gold $1,774.50, and Platinum $1,634.75

That's it for today.I'm looking forward to this weekend as I'll be taking a road trip up to Chicago for a friend's wedding, so I'll be heading there right after work today. I'm hoping that I'll be able to catch some of the Mizzou game on Saturday afternoon as they travel to Columbia, SC. They will have played two top 10 teams in the past three weeks, so hopefully we can put something together. The Cardinals swept the Houston series, which is what you're supposed to do with a team that's 43 games out of first place, but we're still not out of the woods for a wild card spot. Well, thanks for reading this week and until next time, Have a Great Day!

Mike Meyer

Assistant Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Where's The Plan?

ChuckButler — Mon, 24 Oct 2011 15:41:00 GMT

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In This Issue.

* 4-day euro rally gets stopped this morning.

* Eurozone Crisis meeting asks for an extension..

* Chinese manufacturing rebounds this month!

* Thoughts on Gold.

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

Where's The Plan?

Good day. And a Marvelous Monday to you! The white flag has been raised.. I've surrendered, and will remain home for this last week of treatments. My neighbor Paul, stopped by to see how I was doing yesterday, and told me I didn't look too good. And he's right. I look and feel like (*$&, so I'll write from home this week, complain about it, but remain here and nap between treatments. Like I said, this is the last week, so hopefully when we get to the second week of November, I'll be back to normal.

After a night where the Cardinals scored 16 runs, they were shut out! Talk about contrasting games! And talk about contrasting trading days. The euro has snapped a 4-day rally this morning, much like I said I thought would happen, when Eurozone leaders failed to produce an effective response to the Eurozone debt crisis. After reaching for the stars on Friday and trading at 1.3955, the euro has backed off about 1-cent to 1.3865, as I write, and Def Leppard is Bringing on the Heartbreak! (that's what's playing right now)

The euro is also having to deal with the fact that Eurozone services and manufacturing output fell this month at the fastest pace in 2 years! I would say that this is a very good indication that the Eurozone is heading to a recession. Ahhh.. but inflation is still around 3%... Oh, what an awful thing for the Eurozone to have to deal with. slow growth, and inflation. I wonder if we still have any of those buttons that Gerald Ford was so proud of, that had WIN on them.. (whip inflation now).. Yes, somehow someone in his administration thought that would get the job done. HA!

But if we've got a few crates of those sitting around in the basement of the White House, we should ship them over to the Eurozone. Seriously though. this is going to be a real drag for new European Central Bank (ECB) President, Mario Draghi. His Maastricht Treaty mandates that he (the ECB) provide price stability. on the other hand, the economy is going to be screaming for rate cuts. Who will win?

OK. getting back to the currencies. So, with the euro losing about 1-cent this morning, the rest of the currencies have also backed off.. For instance, the Aussie dollar (A$), which was well over $1.04, has fallen back below that lofty picture. Oh, those of little faith... Why are ye fearful of a little faith? I told you all that it was going to be a period of dollar strength and we would need to batten down the hatches. But so many of little faith, blew out of their currency positions. they attempted to catch a falling knife, only to get cut, and then watch the A$ climb back to parity and beyond. All I'm really saying here, is that if you feel the need to "get out". sell into strength, not weakness.

So. the euro is trading off by 1-cent, and the A$ is off about 1/2-cent.. the difference here, is that the A$ is getting underpinned this morning by a preliminary report out of China that showed the Chinese manufacturing index rebounded from 49.9 in September, to 51.1 this month.. remember, 50 is the line in the sand that indicates contraction or expansion, with anything above 50 representing expansion and anything below 50 representing contraction..

And as we've seen in recent years. good news like this from China, plays well with a stronger A$. There are those that are still calling for rate cuts in Australia, but again, I've said it before, and I'll say it again. I'm not buying it. Doesn't make sense to me one iota!

OK. what else is going on with the currencies I hear you asking. First let me get back to the euro for a minute. Yes, the Eurozone leaders meeting is still going on, so it's not fair to say that they haven't presented a plan yet. It just seems unlikely at this point, and I see the markets' reasons for selling the euro at this point. Eurozone leaders pledged they would have something concrete today. And today is slipping away. Like the great Clarence Carter song. or Paul Simon's slip sliding away.

There have been some ideas leaking out of the "meeting room".. . But just like I told you on Friday, that I would bet that the Eurozone leaders ask for more time, has occurred. And the final decision will be due on Wednesday now. And every hour the leaders go past the original Monday deadline, the euro will get punished. the institutional momentum had built up for a Monday print. So. this time, I agree with the markets reaction and their selling of the euro this morning.

What I never seem to get a grip on, or my arms around, is why strong, fundamentally sound countries, like Norway, get tarred with the same brush as the euro.. One day that will change.. but for now, it is what it is.

The other two dollar offsets (the euro is the main offset currency to the dollar), Chinese renminbi and Gold, are stronger this morning though, so, traders aren't "all-in" on dollar buying today. the renminbi was allowed to get stronger VS the dollar for the first time in about a week, as I'm sure the Chinese officials were sending a message to the U.S. lawmakers regarding the Senate's passing of the bill to punish Chinese exports.

And Gold, got a boost, when the Eurozone leaders didn't produce their plan today as previously discussed.

The Canadian dollar / loonie, continues to be highly influenced by the price of Oil. And with that in mind, you'll understand why the loonie has rallied in the past week. the price of Oil has rallied higher. The Russian ruble too has rallied on the rising Oil price.

Another petrol currency, the Brazilian real, which has seen so much volatility it would make your head do a Lind Blair impersonation, also has seen the currency gain as the price of Oil rises. I found this to be extraordinary given the fact that the Brazilian Central Bank cut rates 1/2% last week! Always, always I tell you tutor turtle, make sure that you only use the speculative money in your portfolio to buy reals. the volatility will make your head spin.

And the Japanese yen reached a post WWII high VS the dollar on Friday. and then traders all looked over their collective shoulders to see if the Bank of Japan was looking. I've told you all how the Japanese Gov't has increased the "intervention fund" that the Bank of Japan (BOJ) has at its disposal to keep something like this from happening. So. the fear of BOJ intervention, brought the yen back to 76 and change after trading well into the 75 handle on Friday.

You know me, I'm not a fan of intervention. but. here's the thing with the Japanese. the yen is overvalued and they know it, but the markets don't seem to care, so. the Japanese built this huge pile of cash to help the markets see the light. Japan's fundamentals are awful, except they are a country of savers. but that country of savers is getting old, and the young people aren't so hell-bent on saving. I just think that this 76 level in yen is outrageously high. when I began my career in foreign bonds, I could buy yen at 225. That's right 225! While that was undervalued, 76 is overvalued, by a wide margin!

And then, getting back to Gold for a minute. everything I read about shipments, receipts, holdings, and demand all lead me to believe that the price of Gold (& Silver) is being held down artificially. The deliveries to the Comex approved vaults continue to be at record levels. And the deliveries of that Gold & Silver are for holding of someone's metal. That's right. someone owns that metal, which means it has been bought, and if the deliveries are at record levels that means the buying is at record levels! And. that's just 1/2 of it, folks. the other 1/2 is shipped directly to people to want to bury it in coffee cans in the back yard.

Just kidding. but it's true.. 1/2 gets shipped, 1/2 gets safe kept in a vault with the owners name on it. So, the demand continues to be very strong, folks. so what's keeping the price of Gold suppressed in the $1,600 handle? Well.. you know what I think, for I've gone through this over and over again, until I'm blue in the face. Today, I'm just kind of red and green. with a fat lip that's turned white!

So. when will the regulators, or the Gov't for that matter look into this? Never is the answer, folks. You see, if you asked me out on the patio in the backyard I would tell you that it's the Gov't that's behind all this, for they can't have people losing their faith in the dollar. Now, I'm not smart enough to think of that myself. I read it in the Wikileaks memo that I gave you the link to a few months ago. But, like I said, I don't think I can say that here, but out on the patio I can!

Big Gold's commander, Jeff Clark, whom I've met, and talked to several times, said that "we are approaching a "back up the truck" moment for the gold sector. Now, Jeff is mainly talking about gold stocks here. but, I personally would say the same thing for physical Gold! But that's just little old me. HA, now that's funny, saying "little old me".

Then there was this. I had to laugh when I read this morning, that Merkel and Sarkozy (Germany & France), ordered Italian Prime Minister, Silvio Berlusconi to promptly reform Italy's economy and bring down its staggering debt and implement austerity measures. The Economist magazine's response to this was, "rarely has a member of the Eurozone, and a founding member of the European integration project been chastised so publicly"

I personally would side with Merkel and Sarkozy on this one, and my comment to Italy would have been more along the lines of. get your, you know what, in gear!

Of course, that's the same thing I would say to U.S. lawmakers! But they're too busy working on getting re-elected. and I'll stop there before I say something that would get me into trouble again! But first, I did see what would be a very funny comment if it weren't true. Spinning President Kennedy's famous speech when said, "Ask not what your country can do for you".. And then. an accountant says. because. we're broke!

To recap. the 4 day euro rally has ended this morning, as no plan for dealing with the Eurozone debt crisis was presented as pledged, instead they've asked for an extension to Wednesday. Gold takes this inability of the Eurozone leaders to come up with a plan, as a reason to rally. Chinese manufacturing rebounded this month, and the Chinese leaders allowed the renminbi to gain for the first time in a week.

Currencies today 10/24/11. American Style: A$ 1.0395, kiwi .8050, C$ .9935, euro 1.3855, sterling 1.5945, Swiss $1.1280, . European Style: rand 8.0255, krone 5.5555, SEK 6.5760, forint 214.55, zloty 3.1565, koruna 18.0245, RUB 30.83, yen 76.15, sing 1.2690, HKD 7.7785, INR 49.83, China 6.3755, pesos 13.64, BRL 1.7795, dollar index 76.41, Oil $87.92, 10-year 2.18%, Silver $31.51, and Gold. $1,656.25

That's it for today. A little later than usual, as I had to stop to make Alex breakfast, and lunch. Well, it was an ugly weekend for me.. outside it was beautiful, but for me, I didn't have a good time. I did get a smile, that hurts to do, when Albert Pujols hit 3 home runs in a World Series Game tying him with Babe Ruth, and Reggie Jackson. And. an even bigger smile, when my darling daughter, Dawn sent me pictures of Delaney in her tinkerbell costume, and Everett in his Peter Pan costume. she made them, and the kids looked so darn cute! You should see them! My Missouri Tigers got whacked by OSU. OK. I've been up for a while now, and I'm ready for nap. so.. I'll get out of your hair for today. And thank you for reading the Pfennig. Now go out and have a Marvelous Monday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Flies In The Ointment.

ChuckButler — Tue, 06 Sep 2011 14:57:00 GMT

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In This Issue.

* Jobs see Zero growth!

* SNB hammers the franc lower!

* German court to rule on bailouts.

* Chinese Manufacturing remains healthy.

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

Flies In The Ointment.

Good day. And a Tom Terrific Tuesday to you! What a great weekend! We had a couple little rain showers on Saturday (other parts of the country saw downpours) and that was it! The weather was so chamber of commerce like, that if it continued like that, it would cost much more to live here! HA! (Ty reminded me that I hadn't said that in a while last week!)

OK. I know you all want to get to the "meat" of the letter, (I'm sure some of you would reenact the two old ladies saying, "Where's the beef"? ) but first I was all prepared to bring this alert to you on Friday morning, and plum forgot. another senior moment I guess, as it was all queued up and I left it right there, and forgot about it. So. with no further delay in getting this alert to you.

There's a fly in the ointment folks. the ointment being the bailouts of Greece, Ireland, & Portugal . A German court is going to rule on the constitutionality or legality of Germany's participation in the bailouts, and this ruling is expected tomorrow, Sept. 7th!

This like here in the U.S. where we just circumvent the Constitution, and it takes a ruling by the Supreme Court to overrule something that should never have started. Well. apparently, Germany's participation in the bailouts is considered to be against the law of the land. Germany's Chancellor, Angela Merkel, has tried to sneak the sun past the rooster here, and now, we'll see if the German Court will look the other way or not.

If they declare the actions illegal, you can only imagine the problems for Greece, Ireland and Portugal. And if they declare the actions illegal you can only imagine the euro getting taken to the woodshed for sure! I talked briefly about this on Friday, and it's where I was supposed to paste this discussion that was all queued up. But, the euro has problems. the currency is only worth more than the dollar because the dollar's problems are worse. But, they will get to a more even playing field should the German Court declare the actions illegal. The ruling can always be appealed, and daisy chain this thing out for months. But, I wanted to bring this to your attention now. I thank reader Tom for pointing me to this last week.

Well. Friday's Jobs Jamboree was very disappointing, folks. the overall net number of jobs created was a big fat ZERO! And that included 87,000 jobs added by the birth / death model, where the BLS continues to believe that with 400,000+ people still filing for unemployment claims each week, and with a Fed that is discussing options for stimulating an economy, that there are still more new companies started each month and ones that closed their doors. Yes, there were 46,000 Verizon workers that were on strike, but even still. 46,000 give or take plus or minus depending on who you believe is not going to keep up with the population growth!

My friend, John Mauldin, did a great job of going through the prospects for job growth here in his letter last Friday. www.2000wave.com The part I found really interesting is the increase of workers that are 55 and older in the workforce. It means that either people want to work when they should be retiring or that they HAVE to work. Either way, those are jobs that would normally turn over to younger people. and they are not! Interesting stuff.

So. the Jobs Jamboree was absolutely awful. and it sent Gold to the moon! At one point on Friday, Gold was up $50 on the day. And then yesterday, with the U.S. markets closed, Gold soared past $1,900 once again, reaching for the stars at $1,921, before that turned around and the profit taking began to pile up. and this morning the shiny metal sits within spitting' distance of $,1900 at $1,898.

But, with Gold soaring, the rest of the risk assets were sold off. Thus one more time, I'll point out that Gold has become more than just a commodity, it's real money. and money that doesn't have creditors, liens against it, it can't be run through a printing press, and I could go on. but you've heard it all from me before.

OK. this morning. something big has happened to the Swiss franc in the overnight trading. The Swiss National Bank (SNB) has stepped into the currency markets BIG TIME, folks.. and this time it's not just intervention, which has shown to be non-effective to stem the franc's rise. This time the SNB has stepped outside the lines. They have basically taken the franc off the "list of free floating currencies". The SNB announced that they had set a maximum amount the franc would rise to at 1.20 francs to euros. The franc immediately dropped 6.7% VS the euro. and over on the franc to dollars cross, it lost another 6%... You see, the SNB's manipulation of the franc is mainly against the euro, but, because of all the crosses in currencies. if francs are getting sold against euros, they'll also get sold against dollars, and yen, and every other currency cross.

Now. you may recall that a couple of years ago, the SNB said they wanted to defend the franc / euro cross at 1.50. And that was impossible to do for the SNB to defend, because at that point the franc was still considered weak. Now.. the SNB has picked a rate that still represents franc strength. and the SNB hopes this doesn't upset the markets too much. The SNB has announced that they will defend the level by buying large quantities of other currencies, which in this case would be euros.

But there's that fly in the ointment again. if the German court upsets the applecart tomorrow, will the SNB really want to be buying a sinking euro? They'll have to or admit defeat again.

Moving on. The Reserve Bank of Australia (RBA) met last night, and left their OCR (Official Cash Rate) unchanged, and then went on to deliver a balanced statement with a bias toward tightening rates, but leaning pretty much toward a neutral bias. That had to tick those guys off that were all screaming from the rooftops that the RBA would cut interest rates at this meeting. You were wrong! So go away, don't go away mad, just go away!

The recent data from Sweden isn't exactly giving me a warm and fuzzy feeling about more rate hikes from the Riksbank. Most recently, Consumer and Industrial Confidence were down sharply. So. unless the euro is going to push higher, the krona will have a difficult time finding terra firma, going forward. Things have turned on a dime here. pretty amazing.

Next door, Norway continues to be the best fiscal / monetary balance sheet country in the world. They've recently discovered a new source of oil, so their future looks so bright they have to wear shades. The krone though, continues to get tarred with the same brush as the euro. One of these days that will break, when the markets figure out that the krone isn't the euro or anything like the euro, but instead what I've always called it the euro alternative! But for now. that's not what goes on.

The changes the Brazilian Central Bank made last week, have really thrown a spanner in the real's rise. In case you forgot, the BCB, cut rates by 1/2% and sent out a message that more cuts were on the way. The real has lost about 4% since then. This may be the thing the Gov't has been looking for folks, as they have long wanted to stem the real's rise. But, has the Gov't forgotten the reason their interest rates were so high? Inflation was so darn high! And it still is! So. the Gov't has torn a page out of the Fed's book on promoting growth while ignoring the inflation risks. We'll have to see if it works. I doubt it will!

On Friday, were waiting for the Chinese Manufacturing report to print. and it finally did over the weekend. The Chinese manufacturing index slipped a bit from July, but August's number was still a healthy 57.6. (remember, anything above 50 represents expansion) So. the global growth campers do have a pulse, folks. but I do believe that it all resides in Asia and the South Pacific. Can they continue to grow without the U.S. and Europe? Don't forget, that China has done a magnificent job of turning their economy toward domestic driven instead of export driven. Exports still rule, but not by as large a margin.

Then there was this. From the WSJ. " The government on Friday sued 17 financial firms, including the largest U.S. banks, for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.

The lawsuits were filed by the Federal Housing Finance Agency. It oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.

The total price tag for the mortgage-backed securities sold to Fannie and Freddie by the firms named in the lawsuits: $196 billion.

The government didn't say how much it is seeking in damages. It said it wants to have the securities sales canceled and wants to be compensated for lost principal, interest payments as well as for attorney fees.

The government action is a big blow to the banks, many of which have seen their stock prices fall to levels not seen since the financial crisis in 2008 and 2009. Until now, the stocks have been undermined mostly by unrelated worries about the U.S. and European economies."

Chuck again. I removed the names of the banks mentioned in the story, because I don't want it to look as if I'm picking on a particular bank or banks. But you can read the story on the WSJ if you have subscription like I do!

To recap. the Jobs Jamboree was absolutely awful, and propelled Gold to a $50 gain on Friday, with more gains yesterday, while we enjoyed the Holiday. Gold soared past $1,900 yesterday, but then saw profit taking. The SNB announced a floor for the franc VS the euro, and will not allow it to be stronger than 1.20 (like 1.19 would be stronger given the way it is priced in European terms) . As I get ready to close the letter Gold has slipped back $15. I guess the NY boys and girls are arriving at their desks. and then a BIG story for tomorrow, as a German court is going to decide if the bailouts given to Greece, Ireland and Portugal were legal. The repercussions of a negative decision here run very deep.

Currencies today 9/6/11. American Style: A$ $1.0565, kiwi .8315, C$ $ 1.0095, euro 1.4165, sterling 1.6080, Swiss $1.1760, . European Style: rand 7.1145, krone 5.42, SEK 6.4480, forint 195.50, zloty 2.99, koruna 17.25, RUB 29.47, yen 77.25, sing 1.2065, HKD 7.7933, INR 46.07, China 6.3898, pesos 12.53, BRL 1.6450, dollar index 75.22, Oil $84.58, 10-year 1.98% (can you believe this? ) Silver $41.92, and Gold. $1,884.85

That's it for today. My beloved Missouri Tigers got the season started in the right direction with a win on Saturday. It wasn't pretty, but they weren't playing a cupcake team either! The annual Butler Labor Day Barbeque was a blast this past weekend. There were so many little kids! Did you hear about the bank robbery in St. Louis on Friday? Traffic was stopped on a major highway, and then the people began finding money on the road! It was as if it was dropped from a helicopter! HAHAHAHAHA! A rough weekend for my Cardinals, and they can start playing the AAA guys now, as they are out of the race. And with that. Chris will have the conn on the Pfennig tomorrow morning. and I thank you for reading the Pfennig! Now go out and have a Tom Terrific Tuesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

A Jobs Jamboree Friday!

ChuckButler — Fri, 02 Sep 2011 18:02:00 GMT

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

In This Issue.

* Currencies trade in tight ranges.

* Except for francs which surge higher!

* Gold rallies $27.

* Waiting on Chinese manufacturing.

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

A Jobs Jamboree Friday!

Good day. And a Happy Friday to one and all! I'm feeling much better this morning, so let's go ahead and call this a Fantastico Friday! I mean, what the heck! We've got a 3-day Holiday Weekend to celebrate, and we will close early today, just like the Big Boys on Wall Street! HA! So, let's get going, and working toward what should be a Super-duper Weekend! My beloved Missouri Tigers have their first football game of the year tomorrow too. WOW!

Well. front and center this morning, the currencies are looking very much like they did yesterday morning. Gold however, has taken a flyer to a higher ground, and is up $27 as I write. The currencies did seem to gather some momentum yesterday during the day, but that didn't last. The U.S. data wasn't "as bad" as forecast, so the global growth campers still have a pulse.

Speaking of still having a pulse. We're waiting for China to print their August Manufacturing Index report. It should have been out by now, but a quick check on the Bloomberg shows me the report has not printed yet. The Chinese Manufacturing index saw some weakness in July, so it will be important for the global growth campers to see the report holding steady Eddie. I guess we will all have to wait till this weekend to see the report, when everyone's backyards will have the aromas of smoked meat, charcoal, and barbeque sauce. In other words. this report will fly right under the radar, until all the boys and girls return to their places with bright shiny faces on Tuesday!

And OH! Today is a Jobs Jamboree Friday! How could I go this long into the letter without mentioning that? Well. first of all, the ADP Report that printed yesterday showed jobs created at +91,000, which was weaker than forecast. This report, which is supposed to be a good indicator for the Jobs Jamboree, usually doesn't give us many good clues. Could it be because the BLS cooks the books? Well. of course!

The Jobs Jamboree should be a real BIG Event this morning. Because, with the Fed Heads already discussion "options" to stimulate the economy, those options could be dialed up very quickly, should this jobs report pull a stinkeroo! For the record, the "experts" believe the total jobs created will be 68,000, which should be enough on its own to push the Fed Heads toward more stimulus. I have to think that the risks here are to the downside. As my trader friend at Morgan Stanley told me yesterday, the ADP report didn't count the impact of the Verizon strike, which could affect about 45,000 jobs. So. here's my take on the report. The actual numbers are difficult to nail down, given the "adjustments" the BLS makes. but even with their meddling, I believe the report will be disappointing to the degree that the Fed Heads dial up one of those "options" they've discussed.

So. that's why the currencies are trading in a tight range this morning, as traders don't want to make a trade in either direction until they see the color of the Jobs Jamboree. So, really two heavyweights to report today. U.S. Jobs, and Chinese Manufacturing. Talk about a day that could see some wild swings! Good thing the markets will close down around noon today, so that the boys and girls in NY can head to the Hamptons.

Yesterday, I told you about the "surprise" rate cut by Brazil. I thought about this quite a bit yesterday. The new president there, is willing to bet that GDP gains will make people forget inflation. I think she's playing with fire, here folks. And you know what happens when you play with fire don't you? Yes, you get burned! And I truly believe that's what's going to happen to Brazil's President. But, we'll have to wait-n-see. The other thing to think about, is that even if Brazil cuts their internal rate by 3% (which is rumored for next year), their internal rates will still be double those found around the world. So, the flow of investment into the country will only have the doubts on the currency as a speed bump.

And all this talk of a disappointing Jobs Jamboree has the Swiss franc surging higher this morning. Yes, much stronger than just a couple of days ago, when it was $1.23. this morning the franc is $1.28! I've explained this many times in the past, but let me go through this once again. The Swiss franc, is viewed as a safe haven currency, because.. Investors around the world still view the franc as being backed by Gold. So, this misconception leads to Gold's status as a Safe Haven currency. it IS a tiny country, with a tiny economy, folks. but, the markets aren't wrong, and francs get bought. Of course, I believe in the franc as a safe haven currency more than I do, the dollar or yen! But, if we really got down to the brass knuckles of this, I would say that the Chinese renminbi should be a safe haven currency, with Australia, and Canada as the alternatives.

It was 104 degrees here yesterday, which means this office is like a sauna this morning. Good thing I'm one cool cat to deal with it! HAHAHAHAHAHA!

Speaking of Japan. well, the new Prime Minister (PM) Noda, announced his cabinet, and in the new cabinet a new Finance Minister was named. And get this. the guy named as FM is a former journalist, with no parliament experience! What the heck is going on here? Oh. I know. Noda, who was the FM, is going to continue to have his hands on the controls of the Finance Ministry. Which means, nothing changes here folks. New Cabinet, same-o policies. And boy those policies have really worked out well for the Japanese eh?

Well.. the Aussie dollar (A$) saw the bright side of $1.07 for most of the day yesterday, but has slipped back to just below the figure this morning. At this point, I would have to say that all those writers, economists, and mostly the traders that swallowed the thought of a rate cut hook, line and sinker. have egg all over their collective faces after this week. They were wrong. and now they have to pay the price, as the A$ trades at $1.07. will it keep going from here? Difficult to say for sure, but here's something to keep in mind. If the Chinese manufacturing report is strong, then that will play well with the A$ being underpinned by the Chinese economy.

And our renminbi -alternative, the Singapore dollar (S$) is seeing its first weekly loss in five months this week. but don't panic, the loss is negligible. And the S$'s direction is also tied to what goes on in China. So, take a break from the barbeque pit this weekend, and take a look to see what the color of the Chinese manufacturing report was.

Ok. yesterday's data here in the U.S., as I said, was not as bad as forecast. The U.S. manufacturing index (ISM) expanded in August, but not as much as it did the previous month. The report showed the index remained above the 50 level that is the demarcation line between expansion and contraction, and printed at 50.6. So, hanging on by a thread, folks.

And the Weekly Initial Jobless claims held to above 400,000 at 409,000, falling from 421,000 the previous week. But remaining above 400,000 is the important thing that weighs on the U.S. economy week, after week. That was yesterday, and today, is the Jobs Jamboree!

Then there was this. from Reuters. "The White House lowered its forecast for 2011 gross domestic product growth to 1.7%, compared with 2.7% in February. Unemployment will hold at 9.1% this year and decline to 9% in 2012, according to a budget review."

Chuck again. 1.7%? Ahem. have you seen the recent reports on GDP? 1% is what we grew in the 2nd QTR. Oh! That's right, the White House budget people must subscribe to the Fed Reserve forecast for a strong rebound in the economy in the 2nd half of this year. The White House budget people are also not of the belief that there is a chance for a double-dip recession. And yes, the shipment of rose colored glasses for them did arrive in time for this report!

To recap. well. it's a Jobs Jamboree Friday! need I say more? The currencies are trading in the same clothes as yesterday, except for the Swiss franc, which is surging higher and higher, Sly Stone style this morning. Gold is also surging gaining $27 already this morning. And we're waiting on the Chinese Manufacturing report which is due today.

Currencies today 9/2/11. American Style: A$ $1.07, kiwi .8510, C$ $1.0230, euro 1.4255, sterling 1.6215, Swiss $1.2820, . European Style: rand 7.00, krone 5.3955, SEK 6.40, forint 193.60, zloty 2.93, koruna 17.0460, RUB 29.07, yen 76.75, sing 1.2030, HKD 7.7878, INR 45.93, China 6.3818, pesos 12.33, BRL 1.62, dollar index 74.50, Oil $88.15, 10-year 2.13%, Silver $42.26, and Gold. $1,852.35 and with it being a Friday, let's check on the debt clock. click here: www.usdebtclock.org/index.html

That's it for today. Well. the Jobs report will be out first thing this morning, and then traders will take positions and send things on a direction before they head out the door. I'll be heading out the door then too! I attended my first High School Swim Meet in 11 years last night. 11 years ago, my oldest son, Andrew was setting records at Lindbergh High School, where he now teaches and coaches. My youngest son, Alex, decided to swim this year, instead of playing football. He's a young swimmer, and I had to adjust the dial down from 11 years ago. but he swam fine, and improved his times, which is the most important thing. The whole family was there to watch. The grandkids were with us, which was quite a site walking in the pool, with me holding Everett, Kathy carrying Braden, and Delaney walking with us. I said, to Kathy. "I thought we were out of this business"! HA! OK. I'm carrying on too much. I hope you're Friday is Fantastico, and you're holiday weekend is just fabulosio! (I just made up that word!)

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Renewed Enthusiasm Meets Profit Taking.

ChuckButler — Wed, 02 Feb 2011 16:28:53 GMT

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In This Issue.

* Currencies & metals rally!

* Profit taking sets in

* S&P downgrades Ireland.

* U.S. Manufacturing grows stronger.

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

Renewed Enthusiasm Meets Profit Taking.

Good day... And a Wonderful Wednesday to you! I went home last night, letting valor have the better part of discretion, which isn't the way that's supposed to go! But, I have a vehicle that's made for snow... the problem was it was all sleet and frozen rain on the ground... And that turned out to be the right decision, as the "great amounts of snowfall" that they told us for a week that we would get, did not materialize for us in the St. Louis area.

Ok... after my long winded story about my "ice-capades" yesterday, I thought I would start off on a different note... this is to say that I went on and on yesterday about how rate differentials could be coming back as the top dog of currency valuations... But then a dealer friend sent me a note, and gave me something else to think about, and that is... currencies like the Aussie dollar, and Brazilian real, could very well be rallying, not on rate differentials alone, but also, just the renewed enthusiasm for risk assets... Hey, stocks went past 12,000 yesterday in the DOW, talk about a "risk asset"!

Well... I won't argue with that thought, that risk assets are really getting pumped up right now, like Hans and Franz... The reason I say that about the renewed enthusiasm for risk assets, is... Well, take Australia... they've just suffered through a summer of floods, and now a cyclone is bearing down on them that could be the strongest cyclone they've ever witnessed! But... the currency continues to plow though parity, onward and upward!

Whatever the reason or reasons... the currencies put on one of the strongest 1-day rallies that I've seen in a while, or maybe ever! The Aussie dollar was up nearly 2-cents on the day! The euro traded to and beyond 1.38... and the moves in Norwegian krone, and Swedish krona, were so strong, that I'm sure currency traders were not going to get in front of those buses!

So.. why all the renewed enthusiasm for risk? I mean, the unrest going on in the Middle East is very disturbing, and one has to wonder just what is going to come of all this, Tunisia, Egypt, Jordan, they've all been in the news... What the world needs now, is love, sweet love... that's the only thing, that's only thing there's just too little of...

Yes, and another thing that there's just too little of at the moment is food... the food riots are really beginning to grow in numbers... And it's not a food riot, like a food fight, like in Animal House... These people are rioting because there's not enough food. Hmmm... makes you wonder doesn't it, with all the deficits that we have in this country, and we have 43 million people on food stamps.... Nah... Chuck, don't go there, you'll only get yourself in trouble...

A couple of Canadian readers took me to the woodshed yesterday, because I was talking glowingly about their country, and they disputed that I said there had been no stimulus, no bail outs, no Quantitative Easing... They tell me there was some stimulus... and so on... but the idea here is that it's nowhere near the size of the waste we created with TARP, Stimulus, Bail Outs, And QE1, and QE2!

Speaking of QE2... I saw something yesterday, that plays well with my thought to you dear readers, that we'll probably see QE3, and then maybe QE4... CABAL Head, Hoenig, who normally is known as a "hawk", mentioned something yesterday, that the markets probably missed, but I caught, with my eye... Hoenig said, "QE3 may get discussed if data disappoints"... Well, pucker up Mr. Hoenig, and kiss QE3 right on the kisser, because... QE1 or QE2 are not going to create jobs... The only print money... cause people to get comfortably numb and begin to spend again, and then it all comes crashing down, because consumption does not create wealth!

So. I overslept this morning, something I rarely do. I guess it was the nighttime Nyquil I took last night! Hey! I'm just like the Gov't and today's youth, I have to blame it on someone or something, because it COULDN'T BE MY FAULT! OK. that's not where I was going with this. The point was I got here an hour later, which is still plenty of time before anyone else gets here, and when I did get here to turn on the currency screens, I saw selling going on. The euro which traded up to 1.3860 overnight, has fallen back below 1.38. And all the other currencies have come down from their lofty figures from the gains they made yesterday.

So. all the enthusiasm for risk assets that has prevailed the first two days of this week, is taking a breather today, and that's OK. trees don't grow to the moon, and rallies don't either! You have to have these give and takes, so that people / investors that want to get in, but drag their feet, get the chance to buy at decent levels. I searched all over the newswires to see what put the speed bump down on the road for the risk assets, but, could not find anything that made much sense..

OH! There it is! S&P downgraded Ireland's Credit Rating to A- from A. You just have to love those credit ratings guys, eh? Oh well, if this downgrade works like the one that Japan suffered last week, then there are no worries for the euro, as the Japanese yen has done nothing but rally since it saw a credit rating downgrade last week!

I saw that the Scandis (Norway, Sweden, Denmark) all saw profit taking after posting some very large gains yesterday VS the dollar. and, the euro! So, even Europeans got into the act of taking profits! The Asian currencies remained well bid overnight, and have not participated in the European session profit taking. Singapore dollars, Chinese renminbi and Japanese yen, are all stronger this morning, than they have been in some time.

One European currency bucking the trend of seeing profit taking, is the pound sterling/ pound/ Cable. The pound, as I prefer to call it, is really getting some wind in its sails this morning, on the news that the calls for a rate hike to combat their growing inflation pressures in the U.K. are getting louder and louder. One BOE member said, that "The longer we delay the more there is a risk that interest rate rises when they come will have to be larger." Which is Central Bank parlance for... Hike rates now before it gets too late... Or... if they were being "Chuck like" they would say, "hike rates now before it gets too late, like it get in the U.S. because the CABAL wouldn't know inflation if it was a hatchet stuck in their foreheads"

I see where the Egyptian army has told the protesters to "go home"... So far, no one is listening... That can't turn out too good... Please go home people!

I saw a Canadian banker on the Bloomie TV station this morning, talking about how strong Canadian Banks are... He mentioned that Canadian banks have not only weathered the financial crisis storm, but have gotten stronger while doing so. He said that their capital has doubled! WOW! That sounds a lot like a bank that I know, here in the states... Of course I'll get hammered from a few people for this, but, it sounds like the guy was talking about EverBank! You know for getting stronger the past 3 years... Oh well... there it is...

The reason I talk about these Canadian banks being so fundamentally strong, is that this is the foundation of an economy... Norway is in the same boat... You never heard one bad word about a Norwegian bank during the financial meltdown, when brand name banks in the U.S. had to be bailed out, either through the front door, or as we have now learned many were bailed out through the back door... Thanks to the CABAL...

Gold & Silver just can't seem to put two rally days together! They are both selling off again this morning... I saw a quote by the well respected precious metals guru, James Turk, yesterday regarding Gold & Silver... He said that "the selling of Gold & Silver are nearing an end." Hmmm... I sure hope so! I don't like talking about Gold & Silver selling off all the time, when I know in my heart of hearts that higher prices are coming...

Well... the U.S. Manufacturing Index (ISM) really took a leap higher in January... The ISM leaped from 58.5 to 60.8! WOW! That's a good sign for the U.S. economy folks... but one that's still very tepid... Here's a piece of the index data that rarely gets noticed but caught my eye yesterday... and that is the "prices paid" portion of the data... Prices Paid leapt too, going from 73.5 to 81.5... That's NOT a good sign folks... that means if the manufacturers are paying higher prices, guess who they are going to pass those prices on to?

Today's data cupboard has the Challenger Job Cuts data, which is a precursor to the Jobs Jamboree, which will make an appearance this Friday... The forecasts are still calling for 140K jobs created in January... Which is still far below the number needed to grow the economy.

Then there was this... from reader, Scott, who sends me stuff all the time... this is from the FT... The Federal Reserve has surpassed China as the leading holder of US Treasury securities even though it has yet to reach the halfway mark in its latest round of quantitative easing, according to official figures.

Chuck again... that's shameful on the CABAL's part... I guess we no longer have to worry about China owning so much of our debt, eh? OMG! Think about all this, folks! It's downright scary to know that we have monetized that much debt!

To recap... The currencies and metals had a very nice / strong performance yesterday, with a renewed enthusiasm toward risk assets... but the European currencies are backing off a bit this morning, except pound sterling, which is stronger on louder calls for a rate hike to combat inflation pressures. The Asian currencies rallied overnight, and are not participating in the profit taking going on in the European currencies this morning. Ireland's Credit Rating was downgraded by S&P.

Currencies today 2/2/11... American Style: A$ $1.0085, kiwi .7810, C$ $1.0115, euro 1.3795, sterling 1.62, Swiss $ 1.0680, ... European Style: rand 7.15, krone 5.7185, SEK 6.4275, forint 195.40, zloty 2.8360, koruna 17.4820, RUB 29.45, yen 81.45, sing 1.2720, HKD 7.7865, INR 45.62, China 6.5850, pesos 12.02, BRL 1.6650, dollar index 77.10, Oil $90.80, 10-year 3.42%, Silver $28.40, and Gold... $1,336.65

That's it for today... Thanks to Kathy Glowski for taking care of us yesterday with our lunches... Kathy and I have worked together on and off for a very long time... I look like it's been a long time, she doesn't! We have three "Florida guys" on the desk, that have moved to St. Louis... They are wondering now, if that move was a good one, considering the winter weather we've had this year! Next week, I'll be leaving for the Orlando Money Show, hopefully the airport will be working and the plane can leave! If I can't get back, so be it! I'll stay in Florida, and move even further south! HA! The following week I'm heading to Miami for 3 days, and then pitchers and catchers report to spring training! YAHOO! OK... this is late, because I was late... time to go... be careful out there, not all areas were as "lucky" as St. Louis with the amounts of snow received... stay warm, and have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Francs & Copper Trade At All-Time Record Highs!

ChuckButler — Thu, 30 Dec 2010 18:06:00 GMT

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

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-Individual research pages on all of the major currencies available at EverBank

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Start researching your opportunities. Go to: https://www.everbank.com/personal/currency-resources.aspx?referid=11808

EverBank is an Equal Housing Lender and Member FDIC.

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

In This Issue.

* Tight ranges, with bias to sell dollars.

* Euro recovers.

* China's manufacturing slows.

* Foreclosures soar! UGH!

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

Francs & Copper Trade At All-Time Record Highs!

Good day... And a Tub Thumpin' Thursday to you! Ever hear the song Sleepwalk, by Santo and Johnny? That's kind of what I felt I was doing on my way in this morning. Sleepwalking! But, I'm good to go now. I have a nice big cup of cold water to drink while I pound on the keyboard, so that should do the trick! Sleepwalk by Santo and Johnny is one of the greatest guitar songs ever! Brian Setzer did a great job of copying the song, but. there's nothing like the original!

Well. the Swiss franc is at it again this morning. The franc is trading at a new all-time record high VS the dollar! And on the Commodities side, Copper is also trading at an all-time record high VS the dollar! And the Aussie dollar (A$) is trading at levels that haven't been seen since 1982. yes, back in the day of Tommy Tutone (867-5309), the Cardinals were World Champions for the 9th time, and my son Andrew was born!

Shoot Rudy, even the euro is joining in on the dollar selling this morning. The single unit has gained back the ground it lost earlier this week. But still, no great shakes. I continue to hear pundits telling people that the euro is going to collapse. These are the same guys that said that in 2005, and it didn't happen. they said it again in 2008, and it didn't happen. they said it again last winter, and it didn't happen. Now. I'm not saying that it can't ever happen, all I'm saying is that these guys were all wrong many times before, not just once, but many times, so why listen to them now?

The Commodity Currencies, as I've been reporting this week, are really trading with some strong wind in their sails. Yesterday, I mentioned the tight trading ranges, and Ty Keough told me that even kiwi was up 2% in the past week. So. yes, the trading ranges are tight each day, but each day the bias to sell dollars going into year-end, has picked up steam.

The thing that got the commodities and commodity currencies going overnight was a report out of China that showed Chinese manufacturing, while printing at the slowest rate of growth in 5 months, is still expanding at an index level of 54.4 (previous was 55.3). I think this report shows that the Chinese Gov't's attempts to slow their economy and keep it from overheating are working. And. Like I've said many times before. these attempts are to "slow" or "moderate" their economy, not collapse it, as many pundits told you was happening in 2010.

And with that revelation, that China's economy isn't going to collapse. the wagers on forward prices for the renminbi are soaring higher! In fact, the renminbi is now trading in the spot market at its highest level since 1993. (don't worry, I won't go into a recap of 1993).

The other thing going on here with the renminbi is the Chinese Gov't's willingness to allow a greater appreciation of the renminbi. If you ask me, this is long overdue. I've said many times in the past, that with rising inflation the Chinese Gov't would do well to allow the renminbi to appreciate, for a strong currency is as good as rate hikes, in fighting inflation. I think the Chinese Gov't sees this now, or maybe they saw it all along, I'm sure they are far beyond me in the brain power department! If you cut your import costs, you don't import other country's inflation... It's that simple.

Another country seeing this right now, is Brazil. The knuckleheads that run the Central Bank and Gov't here, have been fighting the rise of the Brazilian real, but if they just sat back and took a look around, they would have seen that the strong real was helping them in their fight against rising inflation. So much so, that now interest rate futures are no longer rising in Brazil, which means that maybe, the rate hike cycle is nearing an end. The propeller heads that figure these things out, with the interest rate futures see the currency's strength as an asset.

Well.. here in the U.S. we'll see the color of the latest Weekly Initial Jobless Claims, which has been falling lately, but remains above 400,000 each and every week! We'll also see the November Pending Home Sales data. You know, I've beat on Housing pretty much this week, so I see no reason to let up now! You all know about these loan modifications that the Gov't has ordered. Well, more and more, people aren't qualifying for these loan modifications. In fact, loan modifications declined as more delinquent homeowners lost their properties. The number of foreclosures and short sales, rose to 244,840 in the 3rd QTR, which is up 63% from a year earlier, and up 11% from the 2nd QTR.

I just don't see any silver linings for housing. I've said for some time now that the unemployment problem will throw gas on the Housing sector fire. and that's exactly what is happening. Do I want to see this happening? NO! But do investors need to know that it's happening? YES!

My friend, Addison Wiggin, of I.O.U.S.A. fame, and the Daily Reckoning (www.dailyreckoning.com) wrote a great piece in the Daily Reckoning the other day about how Municipal Bonds are the "son of subprime". He highlights the problems of cities, counties and states with falling tax receipts. I don't think the website has updated to include this story yet.

I've long feared these problems for the municipalities and states were coming, and have talked about the plights of states like California, New York, Michigan, Illinois, Arizona, and so on for some time now. In fact, at one point last year, I showed you how the top 4 in-debt states of the U.S. represented a larger portion of the U.S. GDP than the debts of the periphery states of the Eurozone represented.. But that didn't stop anyone from selling euros. Sometimes, traders and investors just don't see the Big Picture. I'm not saying I see it all the time. But I saw this one. and now the U.S. is going to have to deal with the cities and states. Can you say more bailouts? Can you say more Quantitative Easing?

I saw a great story in the USA Today, regarding the past decade's stock returns. John Waggoner, who is a very good writer, put this story together. "Stock investors will look back on the first decade of the 21st century with the same degree of nostalgia they have for their first root canal. How bad was this decade? The Standard & Poor's 500 stock index ended 2010 about 5% below its level 10 years earlier, only slightly better than the returns from 1930 through 1939, when the Great Depression devastated the economy. The Dow Jones industrial average was up about 7%."

And the decade for Gold? Silver? How about the Aussie dollar? Well, they all beat the stock market, by such a large margin that it's not fair to even throw out the figures.

And then one more thing before I go to the Big Finish. the guys over at PIMCO, the world's largest bond fund, sent out a report to their clients telling them that the dollar will remain the reserve currency in 2011. Hmmm.

Hey! I never said that the dollar would lose its reserve currency status in 2011, or 2012, or 2013. The nearest year I see this happening is 2014. But most likely it would be 2017. But then again, by then, the Gov't here in the U.S. could have reversed their deficit spending, and cut spending to a level that allows the dollar to remain the reserve currency. Yeah, and my first wife was a young Elizabeth Taylor. yeah, that's the ticket! HA

Then there was this. just a friendly reminder that: I will be on the radio this Sunday on: on WAAM Talk 1600 (www.waamannarbor.com) a weekly radio show, with Doctor Dave Janda, airing Sunday from 3-5pm. Doctor Dave Janda, has really taken to hosting this radio show each week, and has attracted quite a few "name" guests. I'm just filler. but that's fine with me, I always enjoy talking to Doctor Dave, for he truly understands what the Gov't is doing to our kids and grandkids' futures. So. if you're not living in the Ann Arbor area, you can get the streaming broadcast on the internet using that link above. And I bet you can guess what I'll be talking about!

Currencies today 12/30/10: American Style: A$ $1.0145, kiwi .7695, C$ .9990, euro 1.3250, sterling 1.5445, Swiss $ 1.0650, . European Style: rand 6.6320, krone 5.8950, SEK 6.7970, forint 211.30, zloty 2.9930, koruna 19.0670, RUB 30.70, yen 81.55, sing 1.29, HKD 7.7815, INR 44.96, China 6.6070, pesos 12.37, BRL 1.67, dollar index 79.70, Oil $91, 10-year 3.36%, Silver $30.73, and Gold. $1,411.90

That's it for today, this week, and this year! I'll have a special treat for you tomorrow, but it's already written, and in the docket for distribution tomorrow! Like I said, tomorrow is a BIG DAY at the Butler House. And so I'm not walking around at midnight, sleepwalking, I'll "sleep in" tomorrow, which means I'll still probably beat most people into the office here. It sure was depressing to watch the recording of the Mizzou bowl game that took place the previous night. They had the game won! Oh well. I'm singing along with Journey's I'll Be Alright this morning. So. I want to urge you all to have a safe New Year's Eve. Call the cab. or have a designated driver! I want you all back here next week! Judging from the replies I see in the Pfennig mail box, everyone liked our Christmas Card / picture of the group. I do have to admit that I am surrounded by a good looking group of people! And with that, I'll bid you farewell for 2010. I thank you for reading the Pfennig, and I thank everyone that sends along nice notes, and thoughts. I am blessed with wonderful readers, that I consider my friends! I do have a special treat for tomorrow, but there will be no update, no signing songs, no then there was this. You'll have to check your mailbox tomorrow for that special treat. Ok. I think I'm ready now, I've said my good byes, my thank yous, and my wishes for a safe New Year's Eve. Here's to a Happy, Healthy, Prosperous 2011! Now go out and have a Tub Thumpin' Thursday!

See you next year!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

Get ready for a volatile week in the markets...

ChuckButler — Mon, 01 Nov 2010 15:13:00 GMT

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In This Issue.

* Elections & Central Banks make for a volatile week...

* Chinese manufacturing drives emerging markets...

* Will the RBA take action???

* Brazil finally has a new President...

And Now... Today's Pfennig!

Get ready for a volatile week in the markets...

Good day... Chuck is getting on a plane bound for Mexico this morning, so I will be bringing you the Pfennig this week. As usual, Chuck left me a note to share with all the readers last night, so heeerrreees Chuck:

I just got off the phone with a radio station in Ann Arbor, Michigan, and what was going to be 15 minutes turned into 1 hour. the station just let me talk. it was amazing! The people of Ann Arbor, and anywhere else they tuned in on the internet, got to hear 1 hour of Chuck speak.

On Friday, we saw more healing in the currencies and metals, from the price action earlier in the week. Gold jumped up $15, and I have to think that some of that gain came from the heightened risk from the packages from Yemen. I tell you all the time that we have a ton of nut-jobs running around the world, wanting to blow this up, or wipe this country off the map, and Gold with Silver tagging along, will always be sought when geopolitical risks elevate.

So. welcome to November. I used to complain about November a lot, but the past couple of Novembers haven't been that bad, so I'll wait to complain. HA! This first week of November is going to be quite full of risks. with the FOMC meeting tomorrow, the pending announcement of QEII, and the Jobs Jamboree on Friday. I've already beaten the thoughts for QEII to death, so I'll let Chris take it from here!

I'm back now, and thanks again to Chuck for leaving me a little something to get the words flowing. As Chuck suggests, you all better fasten your seat belts, because this week is looking like it could be a doozy. I was paging through some research last night preparing for this morning and I couldn't help but get a bit worried about what the week will bring for the currency markets. The US elections, followed by announcements by all of the major central banks could form a 'perfect storm' in the currency markets with volatility pushing the dollar to extremes.

The week will start off fairly quiet as we will get Personal Income and Spending information for the US later this morning. Both income and spending is predicted to have risen a bit in September, with spending rising faster than incomes (no real surprise there!). We will also see the ISM Manufacturing data which will likely show a small decrease in US manufacturing activity last month. These data releases also include inflationary estimates, and both the PCE Deflator and ISM Prices Paid numbers are expected to show no inflationary pressures exist in the US markets. This is important, as Bernanke and his buddies need to be able to point to the inflation data to assure the markets that the US economy can handle another round of QE. As long as the data continue to show inflation is being held back, the FOMC will likely push more liquidity into the markets.

As Chuck pointed out in the opening paragraphs, the markets are pretty much ignoring tomorrow's US elections, and are instead focusing on the FOMC's announcement which should be released Wednesday afternoon. I for one can't wait to get these elections over with, as I have had enough of the negative ads and intrusive phone calls from both political parties each evening. It will be interesting to see just how many incumbents get the boot tomorrow. But it seems the markets either don't really care who is in charge of the House and Senate or maybe they realize that it doesn't really matter who has the helm of a rudderless boat! The debt burden which the US has accumulated is pushing us down a scary path, and our elected officials have little control over the direction we are heading. But we have to continue to try and take back control of this economy, and tomorrow's elections may be a start. Currency traders are looking past the elections and focusing on the 33 hours following during which all of the major central banks will be making rate announcements.

Central banks are locked in a 'race to the bottom' for their currencies, as both the Federal Reserve and Bank of Japan are expected to announce further measures to keep borrowing costs low in order to spur growth. With interest rates already as low as they can get them, both central banks are looking to perform another round of quantitative easing by purchasing debt, pumping fresh cash into the markets. With all of the QE talk pushing the dollar and yen lower, European central banks are working to make sure their currencies don't appreciate too quickly. The ECB is reminding the markets that the European sovereign debt crisis is still hanging around, an obvious attempt at 'jawbone' intervention. Recoveries in the major global economies have largely been based on exports, so these central bankers want to try and keep the value of their currencies down in order to keep exports up. But the currency markets are a 'zero sum' game, and while many believe all fiat currencies will eventually fall to their intrinsic value (the value of the paper they are printed on) for now if one currency is falling, another has to rise.

The race to the bottom by the US, Japan, and the ECB is benefitting the emerging markets and any country which is not looking to lower rates. In Europe, we have seen recent gains in the Pound Sterling which is trading at the highest level in 9 months vs. the US$. This strength comes on the back of data showing a jump in GDP and UK manufacturing growth. This recent strength has currency traders speculating that the Bank of England will refrain from joining the BOJ and FOMC in a new round of QE.

Chinese manufacturing data showed the fastest pace of appreciation in six months during the month of October. This data suggests the Chinese economy will continue to expand in spite of the recent interest rate increases and gains in the Renminbi. The good news for the Chinese economy was great news for the emerging market currencies as a strong Chinese economy is predicted to keep demand high for the commodities which many of these emerging markets are rich in. The currencies of both Australia and New Zealand also benefitted from the positive reports out of China. The Aussie dollar got within one cent of parity with the US$, and the kiwi hit a two year high. Interest rates and strong commodity prices continue to be a strong wind at the back of these currencies.

The Reserve Bank of Australia will be looking at rising employment and increasing inflation risks during their meeting tomorrow. The recent inflation data has convinced most of the economists that the RBA will leave rates unchanged. But there is still a chance they move rates up, and further rate increases are all but certain in the coming months. Investors will continue to move funds into Australia and New Zealand in order to take advantage of very nice interest rate differentials. Japanese investors have been finding these yields particularly attractive, and have formed a good base for both of these currencies. With US yields looking to stay low, and the global economic expansion continuing to gain a bit of steam, the Aussie dollar and NZ kiwi will continue to present some attractive investment opportunities.

The current global economic situation is really two very different stories: while the US is staring at the possibility of deflation, Asian markets are starting to have to deal with inflationary pressures. Both China and India have been moving their interest rates higher, in direct contradiction to what is happening in the West. While China has grabbed a majority of the spotlight in Asia, India has also been growing at a tremendous pace. India is poised to join China, Japan, and Taiwan as countries with over $300 billion in reserves. These higher reserves have pushed the value of the rupee up, with the largest two month gain in over a year. The rupee still hasn't matched the gains of the Japanese yen and Singapore dollar this year, so the recent moves could prove to be just the beginning of a sustained period of strength for the Indian currency.

And finally, the US isn't the only country which will be getting the results of national elections this week. Brazil's presidential election campaign ended yesterday with Dilma Rouseff securing the Presidential office. Ms. Rouseff was heavily favored, and was the choice of outgoing President Luiz Inacio Lula da Silva. She is expected to continue the policies of outgoing president, which will be good news for the long term prospects of the Brazilian real. Mr. Lula da Silva has kept interest rates high in order to control inflation, and has been successful in reducing government debt. Strong Chinese demand for commodities and a very large interest rate differential with the US should keep the Brazilian real as one of the best performing currencies in the coming year.

To recap, Chuck picked a doozy of a week to be away from the desk, as the US elections and Central bank announcements promise to increase volatility in the currency markets. The US, Japan, and ECB all look to try and keep their currencies down in order to stimulate their economies. Chinese data showed a large pick up boosting demand for commodity based currencies. RBA will likely keep rates unchanged, but there is still the possibility of an increase, and Brazil elects a new President.

Currencies today 11/1/10: American Style: A$ .9885, kiwi .7677, C$ .9811, euro 1.3948, sterling 1.6052, Swiss $1.0116, . European Style: rand 6.9840, krone 5.8395, SEK 6.6525, forint 194.12, zloty 2. 8465, koruna 17.625, RUB 30.858, yen 80.41, sing 1.2917, HKD 7.7522, China 6.6906, pesos 12.3507, BRL 1.6959, dollar index 77.02, Oil $82.18, 10-year 2.59%, Silver $24.97, and Gold.. $1,361.85

That's it for today. It was a beautiful weekend here in the Midwest, and I got to enjoy two beautiful sunrises up at my farm as it was the opening weekend of the duck hunting season here in Missouri. I was able to watch both the Rams and the Blues win home games this weekend. Too bad MIZZOU stumbled on their way to a national championship season, as they were unable to do much vs. cornhuskers up in Nebraska. We didn't have many kids last night trick or treating, I guess it must be a sign of the times, with most families choosing to go to 'organized' trick or treating parties instead of running through the neighborhoods. My two are a bit old for trick or treating, but they both went to friends houses leaving me and my wife to hand out the candy to the few kids who stopped by. The desk will be happy to hear we didn't have my kids stop by, as I always bring all of the leftover candy in to work. Hope everyone has a great start to this volatile week, and a Marvelous Monday.

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

RBA Disappoints...

ChuckButler — Tue, 05 Oct 2010 15:47:00 GMT

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In This Issue.

* Eurozone Manufacturing rises...

* Japan goes negative with rates!

* A$ gets hammered after RBA decision...

* Food prices are rising...

And Now... Today's Pfennig!

RBA Disappoints...

Good day... And a Terrific Tuesday to you! The grenade that economist Stiglitz threw from left field at the euro yesterday, was a one-day hit. You see... The euro is back to moving higher VS the dollar this morning. More on that, and the RBA leaving their powder dry is on the docket to talk about today, so let's go!

OK... I guess I have to crawl like a viper through these suburban streets, and try not to get hit with a shovel, as my tea leaves were all wrong on the RBA's rate decision... Recall, that originally, I said the RBA would not raise rates at this month's meeting, but then began to drink the Kool-Aid that was being served by the recent data coming from Australia, with the most important one being that inflation was above their target rate, and I said that I was 2/3rds in on a rate hike...

Well... The RBA left their interest rate powder dry last night. That disappointed the many that had bought the Aussie dollar (A$) and driven the price higher on the expectation that the RBA would hike rates. The A$ was sold BIG TIME after the no hike decision. Now, not all is lost here, as the RBA did retain their tightening bias, and hinted about a rate hike... So... Like I said yesterday, "Don't expect their OCR to go back to 7.25%... In the near future... But 4.5% is going higher, and if not tonight... The next time the RBA gets together!"

And so it is... I truly believe that the RBA, will hike rates at their November meeting, unless... Things go really south on them economic data wise...

Alrighty then... It appears that the Bank of Japan (BOJ) was in the markets again last night attempting to manipulate the yen lower. And get this! The BOJ announced a rate cut! I know, you're saying but aren't rates almost zero there? Yes, you would be correct, rates were .10%... But the BOJ cut them to -.10%!!! Negative interest rates! And... On top of that, the BOJ also announced that they were setting up a pool of funds for Quantitative Easing...

Talk about doing everything they can to introduce inflation to their economy! But, Shoot Rudy, the Japanese have been doing these types of things for years now... Hey! How do you think rates got to .10% in the first place? These guys are rearranging the deck chairs on the Titanic.

The currency guys and gals, weren't swayed into believing that they should back off their buying of the yen, and the so it is that Japanese yen is barely weaker this morning than it was yesterday before the BOJ did all these "wonderful, economically and fundamentally sound, creative moves"... ( I sure hope you understand that I'm being facetious with those descriptions, for in my real words, the BOJ did bonehead moves!)

Well, once again this morning, I came in and saw 1.38 in the euro, only to see that wiped out almost immediately after turning on the screens... Hey! Maybe if I don't come in tomorrow, and my screens don't get turned on, the euro will remain above 1.38? Hey, Frank... HA!

Any way... The euro got some wind in its sails overnight when Eurozone manufacturing reported a rise in September. The Eurozone manufacturing index (like our PMI), saw the index rise to 54.1 from 53.6.

The euro also saw some strong statements about the single unit from ECB members who were speaking around the Eurozone. The ECB members took the opportunity to follow up on the strong vote of confidence the Chinese Premier, Wen, gave the euro the previous night. (we talked about that yesterday)

The Irish Eyes are not smiling on the euro though... Just about every time the euro gets its legs under it, news from Ireland, cuts the euro's legs right out from under it! Last night it was the ratings agency (Geez, Louis, again with the ratings agencies! These guys have become persona non grata, with me!) Moodys, saying that Ireland's rating of Aa2 will "most likely" be downgraded... UGH!

And the price of Oil continues to rise, further underpinning the Canadian dollar / loonie... And the Swiss franc continues to push further past parity to the dollar... Pretty amazing move by the franc, folks...

And what do we have here? Gold is up $11 this morning to $1,326.90!!!! And Silver is following with a rise to $22.26 this morning! Oh! And the S&P agriculture Index is at a 2 year high, folks... Food prices are rising, which is inflation, whether the Gov't tells you this or not, you should know one of the reasons people / investors are rushing to protect their wealth with Gold and Silver...

So... Did you see where the final figure on the U.S. deficit for 2010 was... Drum roll please... $1,641,083,866,542.37 ... That's shameful... $1.6 Trillion added to our national debt, bringing it to... Drum roll please... $13.548 Trillion... And that doesn't even take into consideration the Unfunded Liabilities, but I can't even bring myself to type that number... But, if you want to promise me to put away all the sharp object first... Then go to: http://www.usdebtclock.org/index.html but don't go there if you don't want to get depressed!

Oh... A new feature of the Debt Clock is the U.S. Population data... In this data, you will see the thing that I talk about all the time... The "official Unemployed" totals: 15,166,627... But the "Actual Unemployed" totals: $26,204,754... And the total number of Food Stamp recipients is now: 42,762,385... Of course these numbers are real time, and change instantly, so when you go the link the numbers will be different than what I just recorded!

And why do I care about all this deficit stuff? Ahhh grasshopper... Deficits are the root of economic evils...

Hey! I see where Cartel Chairman, Big Ben Bernanke is thinking clearer these days... Big Ben called on lawmakers to consider rules limiting federal spending and deficits, and accumulated debt. Big Ben believes that by controlling these lawmakers can curtail the risk of a fiscal crisis...

Ahem... Hello? Can you hear me? OK... I'm a long time listener, but first time caller, and want to ask Big Ben just what he calls what we're in right now, if it isn't already a fiscal crisis? Thank you for taking my call, I'll hang up now, and listen for the answer...

OK... I can be a little hard on the Beaver... I mean Cartel Chairman... But, he did say something recently that's right up my alley of things I truly believe... Bernanke said, "that unless the U.S. makes a strong commitment to fiscal responsibility, the country in the long run will have neither economic growth nor fiscal stability"... Right Arm Ben!

Farm out Ben! Outta State Ben!

Then there was this... Well... The Bloomie had a great story this morning, that I'll give snippets of... But first... It seems that world renowned economists are coming over to the Chuck Butler way of thinking regarding Global Growth being able to be sustained even with the U.S. in recession...

"Just three years since America began dragging the world into its deepest recession in seven decades, Goldman Sachs Group Inc., Credit Suisse Holdings USA Inc. and BofA Merrill Lynch Global Research are forecasting that this time will be different. Goldman Sachs predicts worldwide growth will slow 0.2 percentage point to 4.6 percent in 2011, even as expansion in the U.S. falls to 1.8 percent from 2.6 percent.

Underpinning their analysis is the view that international reliance on U.S. trade has diminished and is too small to spread the lingering effects of America's housing bust. Providing the U.S. pain doesn't roil financial markets as it did in the credit crisis, Goldman Sachs expects a weakening dollar, higher bond yields outside the U.S. and stronger emerging-market equities."

Chuck again... This is the same stuff I've been telling people for months now... That as long as the financial meltdown doesn't occur, and the U.S. just continues to be swallowed by recession, that there will be global growth, thus proving that the reliance on the U.S. and the dollar for trade, is dwindling...

To recap... The BOJ intervened last night, announced more Quantitative Easing, and cut their interest rate to a negative -.10%! The RBA left rates unchanged, much to the dismay of traders and the A$ suffered big time from this disappoint of traders. Eurozone Manufacturing rose in Sept. pushing the euro higher.

Currencies today 10/5/10: American Style: A$ .9610, kiwi .7435, C$ .98, euro 1.3775, sterling 1.5880, Swiss $1.0325, ... European Style: rand 6.98, krone 5.84, SEK 6.7225, forint 198.25, zloty 2.8870, koruna 17.7885, RUB 30.28, yen 83.35, sing 1.3125, HKD 7.7560, INR 44.59, China 6.69, pesos 12.55, BRL 1.6975, dollar index 78.07, Oil $82.11, 10-year 2.46%, Silver $22.30, and Gold... $1,327

That's it for today... A couple of things that I've forgotten to mention the last couple of days... It was great seeing my old friend from Mark Twain Bank days, Ellie Williams the other day. Ellie is a breast cancer survivor! It was our newest members' birthday over the weekend. Dane Moody was 25! I've known Dane since he was about 5, so... I know, I'm getting old! And this is Jen's last week at work before maternity leave. And my two interviews yesterday went well, I think... One wanted to talk about Gold, and the other wanted to talk about Silver... And I'm bopping around in my chair right now, as the Turtles song, She'd Rather Be With Me is playing on my IPOD... I hope your Tuesday is Terrific!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837