Search results matching tag 'Reserve Bank of Australia'

Oil spikes up in global confidence.

ChuckButler — Tue, 03 Aug 2010 13:39:07 GMT

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................................................
In This Issue..

* Oil surges to a three month high...
* Bernanke is confident US consumers will spend again...
* RBA keeps rates on hold...
* Silver outshines Gold...

And Now... Today's Pfennig!

Oil spikes up in global confidence.

Good day... When you have been in this business as long as I have, certain patterns become apparent; and one of those patterns showed back up yesterday. In the 20+ years that I have been working with Chuck, it always seemed the currencies rally whenever Chuck spends a week or two away from the desk. We call it 'Chuck's vacation rally'. Yesterday we saw the dollar drop and the currencies bounce back up beginning what looks like another leg in the long term trend.

The biggest gainer in the currency market yesterday was the Norwegian krone, which shot up nearly 2% vs. the US$. The krone got help from oil prices which rose for a third day in a row and moved through $81 for the first time since May. Signs that the global economic recovery is progressing have increased demand expectations, while the upcoming hurricane season and increasing tensions with Iran have traders worried about supply. The Energy department will release their crude oil supply report later today; but a Bloomberg survey indicates that oil supplies fell by 1.5 million barrels last week.

Higher oil prices will benefit Norway's economy, adding to their already strong economic fundamentals. The Norwegian krone continues to be one my favorite currencies, with very strong underlying fundamentals and increasing demand for their commodity exports.

Another country which benefits from higher oil prices is the UK; and the pound sterling increased 1.26% vs. the US$ over the past 24 hours. The increase put the pound at the highest level vs. the dollar in almost six months. A report showed UK manufacturing expanded in July a bit faster than most expected. Another factor which boosted the pound was the announcement that the govt. owned lender Northern Rock Asset Management Plc turned its first profit, boosting confidence in the UK recovery.

Technical analysts at Commerzbank predicted the pound could reach $1.597 if it breaches a key technical level. The strong move overnight saw the pound push above $1.59, and it certainly seems to be well on its way to test the $1.60 figure.

But long term I am still bearish on the Pound sterling. The reason is all of the quantitative easing which the UK has used, and the tremendous amount of liquidity this has unleashed into the markets. While inflation has remained in check for now, I just don't believe the Bank of England will be able to successfully drain all of this liquidity from the markets when the time comes. I think we are in for a volatile time in the UK, and the US is probably right behind.

But a lot of very smart people are actually calling for additional QE programs here in the US. Our own St. Louis Fed President James Bullard was all over the news wires the last few days after suggesting the FOMC should be doing much more to stimulate the economy. Mr. Bullard had been considered a centrist, and was traditionally one who kept a keen eye on the inflationary threat. But his recent comments clearly put him over into the camp of San Francisco Fed President Janet Yellen who continues to call for additional QE spending. This makes the August FOMC meeting a bit more interesting, as there are real possibilities that the Fed will tilt their words toward the risk of deflation, and away from their more traditional tough talk on inflation.

Ben Bernanke was in the news again yesterday, after taking a back seat to his predecessor over the weekend. The current Fed Chairman sounded a bit more upbeat on the economic prospects than Big Al Greenspan. Bernanke is convinced rising wages will probably spur household spending in the next few quarters. I think Bernanke may be holding his employment graph upside down! From my view in the cheap seats, employment isn't picking up here in the US, and looks to be a continued drag on the economy. With an expected period of high unemployment, I just don't see where Bernanke is seeing the possibility of rising wages.

As I said earlier, there is obviously a split among members of the FOMC, with some suggesting the US economy is spiraling into a deflationary spiral while Bernanke is saying he expects rising wages and more consumer spending. The divide will most likely keep the FOMC from making any kind of move, and rates will stay where they are for an extended period; waiting for additional signs the US economy is moving one way or the other.

The RBA kept rates on hold for a third month after slower inflation and a recovery in Asia made it prudent to just keep rates where they are. The non-move was expected by all of the economists surveyed, so it really didn't have much of an impact on the Aussie dollar. The RBA is still leaning toward higher rates, and we expect another couple of increases before year end, which should give the Aussie dollar another push up toward parity with the US$.

The NZD dollar or kiwi as it is know in the currency markets, has had a nice run up in the past month, as investors have moved back into the higher yielding currencies. The kiwi held steady above .73 yesterday and seems to be forming a nice base for another move higher. With the global recovery well established in Asia (the biggest export market for NZD) the kiwi is well positioned and could be an attractive alternative to the lower yields found in Europe.

And Gold held fairly stable yesterday, while Silver had a nice run higher. As usual, the press has been focused on Gold as the precious metal of choice, but Silver has been making a nice run higher recently. Silver has moved nearly 3 percent higher during the month of July, while gold has sold off by just over 2 percent. On a year to date basis, Silver is up over 9% while Gold is about 1% behind with an 8% appreciation. We always encourage investors to keep a well diversified portfolio, and that goes for your precious metals holdings as well as currencies. Many investors shy away from silver because of the costs involved in holding it, but our unallocated accounts are a perfect way for you to hold silver at minimal costs.

Another great alternative for those looking for good diversification in the metals is our current MarketSafe CD which is evenly distributed between Gold, Silver, and Platinum.

To recap: Oil surged to a 3 month high and pulled the NOK and GBP with it. Bernanke is confident in the ability of the US consumer to spend our way out of trouble. The RBA keeps rates unchanged, but leans toward further tightening, and Silver has outshone gold recently.

Currencies today 8/3/10: American Style: A$ .9123, kiwi .7338, C$ .9771, euro 1.3249, sterling 1.5957, Swiss .9654, ... European Style: rand 7.2802, krone 5.952, SEK 7.0619, forint 212.69, zloty 3.0141, koruna 18.6356, RUB 29.73, yen 85.83, sing 1.3510, HKD 7.7623, INR 46.16, China 6.7734, pesos 12.587, BRL 1.752, dollar index 80.506, Oil $81.77, 10-year 2.91%, Silver $18.42, and Gold... $1,186.56

That's it for today... It was a hectic day on the desk yesterday, as computer problems gave us a late start and Monday mornings are always one of our busiest times. But Jennifer pulled together the trading with help of Christine and Lori and the rest of the team handled all of the phone calls. I was in meetings most of the day, so I wasn't able to be much help. I sure will be happy once we get this new computer system tested and installed, so I can get back out to the desk! Kristin brought in a surprise this morning, this Starbucks is just what I needed today! Hope everyone has a Terrific Tuesday!!

Chris Gaffney, CFA
Vice President
EverBank World Markets
1-800-926-4922
1-314-647-3837

Employment Disappoints...

ChuckButler — Tue, 06 Jul 2010 13:51:28 GMT

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

In This Issue..

* Fundamentals creep back into markets...
* Dollar gets sold...
* RBA keeps rates unchanged...
* U.K. makes right moves...

And Now... Today's Pfennig!

Jobs Disappoint...

Good day... And a Terrific Tuesday to you! Did you have a grand Independence Day Holiday Weekend? I sure did! I got to see two ballgames, one very bad, one good. Spend time with the kids, friends, and relax a little... WOW! Now that I think of it, the weekend was more grand than I first thought!

The currencies traded yesterday, but in very tight ranges, as the U.S. was on holiday. This morning, the bias is to sell dollars, much like it was on Friday before the liquidity of Europe went to the pubs... Let's go back now, and revisit Friday's action...

Well... More proof that the double dip is coming on Friday...

The Jobs Jamboree was pitiful... As the "real" numbers (non census workers) added just 83,000 jobs in June... (with the census workers, 125,000 jobs were lost!) That's just not the kind of job creation an economy like the U.S. needs to push the economy along...

But the real proof in the pudding came from Factory Orders, which fell 1.4% in May... And... Factory earnings were down for the month and up only 1.7% annualized. Add this to the long and getting longer list of economic data that's nowhere near "recovery status"!

We sure didn't see the politicians on the cable news stations, pound their chests, and claiming that their stimulus was working and job creation is the proof, now did we?

And here's something from Friday's letter... A reader was quite upset with me because after talking about the bad economy I said, "we've got that going for us"... Well, I explained that I was not rooting against the U.S. that it was simply a facetious comment... Long time readers know...

So... In a blast from the past, the currencies rallied and the dollar was sold on the bad data... WOW! It was just like olden, golden times! Now, that was the way currencies should react to bad economic news in a country. Why? Because, if a country is printing bad economic news, the next step for that country is to lower interest rates, which is debasing their currency.

In recent times, it's been the opposite for bad data prints... So hopefully this is a step in the right direction... And I'm not just talking about the bad economics in the U.S... If, say Australia, prints a bad labor number, the A$ should be sold, that... Would put us back under the fundamentals flag... Yes, I would love to run that flag up the pole and leave it there for a long time!

The euro traded all the way to 1.26 on Friday morning after the U.S. Jobs Jamboree, but once the liquidity of Europe went to the pubs, and beer halls, the dollar staged a mini-come back. Yesterday, I checked in the light trading, and noticed that the dollar had continued to gain... But that all changed overnight, and the dollar is back on the selling block this morning.

I saw a report yesterday that the euro could very well go back to 1.30 on technical moves... I then saw a report saying that the euro was going to go back to parity...

That's quite a wide swing from 1.30 to 1, eh? So... I guess it all depends on your outlook on which way it goes... Will you pin your colors to the 1.30 mast? Or, the 1 mast?

I'm on the fence... Personally, I think that the euro is fine where it's at for now... And if the 1-trillion euro aid package works, then the euro can move higher... If it doesn't, then it should move lower... But, even if the euro moves higher, it's not out of the woods by any stretch of the imagination, folks...

The Canadian dollar / loonie, which had been dancing in the same conga line as the Swiss franc lately, has run into a roadblock, and here this is a good example of what I was talking about above. The loonie had been on rally tracks because of the good economic data, and a rate hike from the first G-7 nation. But in the past week, Canada has seen some softer economic reports, and an oil price which has plummeted, and those things have dampened the thoughts on future rate hikes... So, the loonie sees weakness... That's what fundamentals are all about!

The Reserve Bank of Australia (RBA) issued their most recent policy statement last night, after leaving their interest rates unchanged.... The policy statement though, had a different tone to it than one would expect, given the unchanged rates... The RBA acknowledged in their statement that consumer spending and business investment are expanding...

In other news, Australia printed a very strong Trade Balance in May, with a large upward revision to April's number... Here are the numbers... May Trade Surplus of A$ 1.645 Billion, and April revised from A$ 134 Million to A$ 1.123 Billion! WOW! Now that's a nice upward revision, eh?

My two cents on this is that the RBA wants to raise rates, but are waiting right now, to see what unfolds globally... Remember, their rate hikes were fast and furious 6 months ago. And... Remember that I told you that I thought the RBA would wait to hike rates again until their meeting in August... So, that's still my thought, and it's out there on the table for people to shoot holes in...

Speaking of holes... You'll have to figure this one out folks... The Swiss franc is still dancing in the conga line, even if the loonie had to sit out for a song or two. The franc has seen some Swiss National Bank (SNB) intervention to keep the franc from getting too far out of whack with the euro. But now that the euro has gained back some lost ground in the past week, the SNB can take a break. For those of you new to class, the SNB sells francs against euros to bring that "pair" in line...

Long time readers know that I've thrown the U.K. under the same bus as the U.S. was thrown under... But, I've got to back off some of that now, as the U.K. has announced some very strong austerity measures, and deficit reducing plans that I like... Now, I'm not saying that all's well there, and we should look to buy pound sterling again right now... But... For those that are what you call, "contrarian" investors, this is what they would do...

And Gold... It was a tough row to hoe for Gold last week... But think about this for a minute if you're a conspiracy nut like me... It was month end / quarter end, and according to the GATA people (the Gold antitrust people that are trying to sue the major banks for manipulating the price of Gold), the major Banks have HUGE short positions in Gold... So, my conspiracy mind was racing so fast, and it came up with this thought... The major Banks manipulated the price of Gold down, at Quarter end so their books didn't look so bad... Hey! It's a thought... Why do you think Gold fell so hard at quarter end?

I would think that with a lot of the bearishness in the euro pushed to the roadside at this point (except for the guys calling for it to go to parity!), that would point to more dollar weakness, and that "should" be good for Gold...

I actually believe that since Gold hit $1,265 in June, and then slipped back to near $1200, that these could be looked at as "dips", and good entry points... But then, that's me, and I've said before that there's never a "bad time" to buy Gold, as long as you're buying it to hold...

The data cupboard is pretty bare this week after printing all that data last week, that culminated in the Jobs Jamboree on Friday. We will see the ISM non-manufacturing (Service) Index today, but no biggie... I would suspect that the Services sector would show the same type of slowdown that the Manufacturing sector showed last week.

Then there was this... As reported in the USA Today... "The next big setback for the U.S. job market might come as layoffs by state and local governments, under pressure to slash their payroll to narrow their budget deficit. As many as 400,000 workers could lose their jobs during the next year, said Mark Zandi, chief economist for Moody's Economy.com. Together, states are confronting a $140 billion budget shortfall for fiscal 2011. Meanwhile, federal aid is shrinking. Money for states from the economic stimulus is expected to fall by $55 billion, says the National Governors Association. And the Senate last week failed to pass a measure to provide states $16 billion for extra Medicaid funding, an initiative that would have extended benefits from last year's stimulus. The House approved $25 billion in enhanced Medicaid funding.

"The downturn has gone on so long, all the low-hanging fruit has been taken," says Scott Pattison, head of the state budget officers group."

Chuck again... I shake my head, and wonder...

To recap... The Jobs Jamboree last Friday for May was very soft with only 83,000 jobs created, and the net jobs counting census workers was negative! The markets reacted the way fundamentals would dictate for once, and the dollar was sold. The selling continued last night, after a brief rally in the dollar. The RBA left rates unchanged today, but their policy statement was hawkish... And Gold attempts to recover from last week's sell off.

Currencies today 7/6/10: American Style: A$ .8485, kiwi .6925, C$ .9445, euro 1.2580, sterling 1.5185, Swiss .9310,.. European Style: rand 7.6965, krone 6.4175, SEK 7.6560, forint 226.85, zloty 3.2620, koruna 20.2770, RUB 31.11, yen 87.90, sing 1.39, HKD 7.7885, INR 46.90, China 6.7801, pesos 13, BRL 1.7765, dollar index 84.35, Oil $72.88, 10-year 2.97%, Silver $17.87, and Gold... $1,210.60

That's it for today... Did you see the finish of that Uruguay / Ghana game on Friday afternoon? WOW! Then Germany dismantling Argentina on Saturday... Should be a good final four beginning this afternoon. I totally forgot to wish my long time colleague and friend, Jen's son, Drew a Happy Birthday Friday. He turned 4... UGH! 5 Cardinals make the All-Star game! WOW! Too bad that didn't happen last year, when the All-Star Game was in St. Louis! Our little Christine is on vacation this week, but we welcome a new person to the trading desk. Lori Mucho joins us today. Lori is the technician for my videos I do for the Sovereign Society. And that's it! Time to go, as Monday stuff gets shifted to Tuesday when there's a holiday, and that makes Tuesday tough! I hope you have a Terrific Tuesday!

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

Waiting On The RBNZ...

ChuckButler — Wed, 09 Jun 2010 13:27:00 GMT

........But first a word from our sponsor.......
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EverBank is an Equal Housing Lender and Member FDIC.
................................................

In This Issue..

* Currencies trade in a tight range...
* Fed to keep rates unchanged till 2011?
* Brazil GDP soars 9%!
* Another glut of Treasuries to auction...

And Now... Today's Pfennig!

Waiting On The RBNZ...

Good day... And a Wonderful Wednesday to you! I had a first today on the way to work... I hit every green light! Now... I'm sure you are wondering why I would even have green lights at this hour of the morning... Me too! But they are there! And it was smooth sailing into work today... YAHOO!

OK... Let's get serious, serious... The currencies traded in a tight range yesterday, with a brief mini-rally in euros, as the single unit rallied to 1.20, but that was short-lived. The rumor going around was that the Swiss National Bank (SNB) was intervening...

Do you remember last week, when I told you how the Swiss franc was trading at an all-time high VS the euro? Well, the SNB said, "enough"! And according to the rumors, they sold francs and bought euros...

Now, that would explain the quick run-up to 1.20 for the euro, but if the SNB was selling francs, it sure wasn't being seen in the price of francs, as francs rallied too!

And the Swiss franc has really been the belle of the ball lately (outside of dollars and yen)... I told you about a week ago how the Swiss franc was viewed as a "safe haven" currency too, and now, we're seeing the currency participants "buy into that thought"...

You know... I've noticed quite a few economists and pundits are jumping on my bandwagon that the Fed can't and won't raise interest rates this year... I was reading last night about how the Fed sees no inflation in their near future, and with the persistent unemployment problem here in the U.S. the Fed sees no other choice but to keep interest rates at historical lows... In addition, I think the Fed's decision to keep rates unchanged will be more tied to the fact that they are sitting on a mountain of toxic waste bonds that would get even uglier should rates in the U.S. go higher...

However, having said all that... Fed Head, Hoenig, was speaking yesterday, and said that interest rates should reach 1% by September... Let's see if he actually votes that way!

While we're walking in these circles... This week the Treasury will auction $ 36 Billion 3-year notes, $21 Billion 10-yr notes, and $13 Billion 30-year bonds raising $56 Billion in new cash. There have been some calls recently for the U.S. to go further out on the yield curve and lock in some of these low yields... But, think about that for a minute... Sure the U.S. would want to do that... But, are the buyers of the Treasuries on board with locking in low yields for 30 years? I don't think so! And thus, the Treasury has to continue issuing shorter term Treasuries to satisfy the buyers demands...

Did you see Marc Faber addressing the Mises Institute?

He takes on the "deficits don't matter" nonsense by saying, something like, "Well if deficits don't matter, then why do we have to have taxes? We can just borrow all the money."

Thanks to a reader who sent me that info... Marc hit the nail on the head there, eh?

OK... Reserve Bank of Australia (RBA) Gov. Stevens spoke last night, following a weak print of Consumer Confidence, and once again warned Australians to not return to the spending levels of past years... Stevens also talked about Australia's strong fiscal position and sound banking system. And then finished with a little ditty about how Aussie interest rates are not really that high compared to the past decade or two...

Sounds like a good speech by a Central Banker, eh? Unfortunately, the speech did little to support the Aussie dollar (A$)... The A$ was the worst performer overnight, but again, we're talking about tight ranges for the currencies.

Tonight, the Reserve Bank of New Zealand (RBNZ) meets to discuss rates... And since I've been calling for a rate hike by the RBNZ for a couple of months now, the actual news of the rate hike will be a non-event for me... I expect though, that the RBNZ will issue a statement following the rate hike, and try to water down the hike... They'll probably tell us something like that the rate hike cycle they are now entering will not be hot and heavy, so don't look for rate hikes at every subsequent meeting...

Just trying to keep the sharks from circling, folks... That's all the RBNZ will be doing this afternoon... We'll have to see if the markets believe them or not!

Guess what the Washington Post is reporting this morning about Greece? Or... Guess what country, that has a HUGE war chest of reserves, is swooping in to help Greece? That's right... China! So, while everyone else has jammed the exit door with bodies trying to get out of Greece, the Chinese are "helping out"... Hmmm... Sounds like a good plan for the Chinese to me!

Well... The data cupboard will begin to open up all over the map today... And Brazil kicked it off with a very strong 1st QTR GDP print of 9%! WOW! That's the strongest quarter of economic growth for Brazil in more than a decade! The Brazilian real got a nice boost from this print, as it should have! I suspect this will get the Brazilian National Bank back to the rate hike table very soon...

I saw last night the Estonia was approved for acceptance to the euro... This makes 17 countries now a party of the euro... I remember 8 years ago or so, writing about how I believed there would eventually be 25 members of the euro, and they would have combined economies larger than the U.S. Well... The "membership drive" has slowed in recent times... For instance, I thought 8 years ago, that Hungary, Poland and the Czech Republic would have been "members" by now, for they were thought to be on the "fast track" to euro acceptance... I still believe the euro will continue to expand its membership, but with the sovereign debt thing going on we'll have to be patient... Very patient!

Well... Gold didn't hold on to its gains that took the shiny metal to a new all-time high yesterday... I would have to think it was profit taking... And a lot of it! I saw an interview with a hedge manager, and he was asked about Gold, and why he was buying it... He answered that he was buying Gold because of his fear that paper currencies were in trouble, with all the debt problems of the world, and no real "plan" to correct the problem...

And finally, Big Ben Bernanke will speak to the Budget Committee today... I'm looking for Big Ben to "let it rip" and tell the lawmakers that their ideas of a budget are wrong, and that they had better get their financial house in order, fast! I guess we'll have to wait-n-see what he says, eh?

Then there was this... Ok... Remember a few months ago, the President announced that he was forming a commission to address the deficit? Well, guess what? The commission that was formed to figure out how to cut the budget is over budget! YES! They've already spent the money that was allocated to them and more! Now, that's funny, I don't care who you are! It's also sad... Sort of like the "comedy / tragedy masks"

To recap... The currencies traded in a tight range with a brief mini-rally in the euro that was rumored to be SNB intervention to break the strength of the franc VS the euro... The rally didn't last long, and we're back to the same levels as yesterday. Brazilian 1st QTR GDP was 9%! China is stepping in to help Greece. The RBNZ will meet this afternoon and hike rates. And the Treasury has a boat load of debt to auction again this week...

Currencies today 6/9/10: American Style: A$ .8280, kiwi .6685, C$ .9560, euro 1.1965, sterling 1.45, Swiss .87, ... European Style: rand 7.7340, krone 6.6610, SEK 8.0510, forint 236.15, zloty 3.4440, koruna 21.7050, RUB 31.80, yen 91.40, sing 1.4135, HKD 7.80, INR 47, China 6.8275, pesos 12.85, BRL 1.8535, dollar index 88.08, Oil $72.82, 10-year 3.20%, Silver $18.30, and Gold... $1,234.80

That's it for today... Don't know what's going on out on the West Coast with my Cardinals, but they've forgotten how to hit! They wasted a great performance by Chris Carpenter last night. Not that I was awake to see it! A Happy Birthday to a good friend, Laura Baur today! I just looked at the screens one more time before signing off, and saw the euro at 1.973, for a second... 37 years ago... I had graduated from high school, and was already on the road playing my guitar from a VW micro-bus all across the country... WOW! 37 years ago! Oh well, time goes on, and doesn't wait for no one... I hope you have a Wonderful Wednesday!

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

Risk Aversion Is Back!

ChuckButler — Tue, 01 Jun 2010 12:59:00 GMT

........But first a word from our sponsor.......
Strike while the metal's hot and the market risk none

100% deposited principal protection and a low minimum $1,500 deposit. Just what the smart investor looks for: high upside potential with no market risk.

Find out if this precious metals CD is right for you and apply for one today. Go to: http://www.everbank.com/001CertificatesMSDiversifiedMetals.aspx?referid=11808

EverBank is an Equal Housing Lender and Member FDIC.
................................................

In This Issue..

* Euro bashing is back!
* Canadian GDP jumps to 6.1%!
* RBA keeps rates unchanged
* 7-U.S. cities have "junk debt"...

And Now... Today's Pfennig!

Risk Aversion Is Back!

Good day... And a Terrific Tuesday to you! And welcome to June! As Pfennig tradition would have it... June is busting out all over, all over the meadows and the hill! Buds're bustin' outta bushes, And the rompin' river pushes, Ev'ry little wheel that wheels beside the mill! And you thought I was just a "rock-n-roller!"

Well... Yesterday while we were honoring the fallen soldiers of today and yesteryear, the Europeans were knocking the stuffing out of the euro once again... This time, it was a story that spread like wildfire regarding the Eurozone economy not being able to have strong growth, because of all their austerity measures... Now... Come on boys! First you slam the euro's fingers in the door (OUCH!) for not cutting deficit spending in a few countries, and when they do show a willingness to cut deficit spending, you the ruler out and smack the euro right across the wrist!

This time, though, the euro is heading to 1.21 with a bullet! So.. All the euphoria last week that we could return to fundamentally focusing on the deficit spending in the U.S. which is a far greater number than the Eurozone states, looks to be all over... Which also means the other currencies have backed off against the dollar.

The other hang nail for the euro this morning is a story in Der Spiegel (Germany) that the European Central Bank (ECB) is buying bad debt (bonds) not from Greece, not from Spain, or not from the other GIIPS, but from France! Uh-Oh! And then to add insult to injury... Germany's Chancellor, Angela Merkel, whom we've admired from afar for her staunch support of strong fiscal measures, seems to be losing her political capital...

Yesterday, while the grill were getting hot, and the smell of charcoal filled the neighborhoods, Canada printed their 1st QTR GDP number... And boy was it something! Canadian GDP rose an annualized 6.1% in the 1st QTR, following an already robust 4.9% growth in the 4th QTR of 2009! I would say that it's almost a "done deal" that the Bank of Canada (BOC) will now hike rates at their meeting tomorrow. This would be quite significant, for Canada would be the first G-7 country to raise rates... And it would also be quite significant that the BOC breaks rank with the Fed... Hmmm...

It's not like the BOC is going to raise rates 2% or anything like it... They will slowly remove their hands from the stimulus lever with a 25 BPS (1/4%) rate hike taking their internal rate to a whopping .50%! But... It's a start, eh? I personally think they should hike rates 50 to 75 BPS... Do it all in one shot! Get it over with, and don't let inflation get its foot in the door!

Speaking of inflation... I read a very interesting story online last night regarding the Fed and how they view "full employment" which would signal rate hikes... Here's the skinny...

The Fed thinks that around 5% unemployment is equal to "full employment" (now, ask yourself this question is that an oxy-moron?, you know like "jumbo-shrimp" or "rap-music") Ok, back to the story... So, according to researchers, they believe that the Fed wouldn't begin to raise interest rates to fight inflation until unemployment neared "full employment"

However, a group of economists now believe that because of the financial meltdown the so-called "full-employment" rate has been pushed to between 6.3 and 7.5%... And if the Fed waits until the unemployment rate falls to around 5%, it will be too late, and inflation will have a strong grip on our economy...

Ahem... As I clear my voice so that you are sure to read this clearly (HA!) I will point out that "wage inflation" which is what we're talking about here, is non-existent right now, and probably for some time... Because even the Gov't with all their "ghost jobs" and hedonic adjustments have unemployment at 9.7%... And if we counted all the beans the way they should be counted it would be much higher... I can always count on John Williams over at Shadow Stats to give them the "real numbers"... And according to John, real unemployment in this country is around 22%!!!!!!

And here's another nail in the U.S. recovery dreams... Economic growth, which we already know is trumped up by Gov't spending, is slowing again... And soon it will be heading toward the double dip that I've talked about for 6 months now...

And a reader just sent me a story that appeared on Money.cnn.com ... It goes like this... "Think Greece and Spain are drowning in debt? Look a little closer to home. Seven U.S. cities recently had their municipal bonds downgraded below investment grade. Their debt is now, junk, considered more worthless than that of the so-called PIIGS."

For a list of the cities... Read the whole story here: http://money.cnn.com/2010/06/01/news/economy/junkiest_cities/index.htm

Let's move on from this point to other things, eh? Like... The Reserve Bank of Australia (RBA) leaving rates unchanged at their meeting last night. I didn't expect the RBA to raise rates at this meeting, due to the "events" in Europe since their last rate hike. RBA Gov. Stevens, said that "monetary policy was appropriate for the near term"...

So... The Aussie dollar (A$) lost ground after the RBA announcement, and then slipped further when China's purchasing managers (manufacturing) Index fell to 53.9 from 55.7 in April. Could be a "blip" for China, and one-off month, or could be what a lot of people have been talking about, and that is a collapse of the Chinese economy. I'm still in the camp that it will be the former thought...

Ok... So... This morning, to start the month off, the ISM Manufacturing report for May will print, along with April Construction spending... I expect both to be "softer" than previous months, which would play along well with my "double-dip" scenario...

And then there was this... I heard the news today oh boy... No wait! Actually I heard the news yesterday morning, that there were some tensions being raise in the Middle-East (again!)... I immediately went to my computer to check out what Gold was doing... The shiny metal did add $7 to its value yesterday, but that's not what I was looking for... I was looking for an Albert Pujols, Waveland Ave Moon Shot for Gold... But, Hey! $7 gain is better than nothing!

To recap... The pressure is back on the euro this morning, as it hit a new "cycle" low of 1.2110... The markets are punishing the euro for the austerity measures, that just a couple of weeks ago, the markets had demanded! UGH! There are rumors that France is getting help, and Germany's Chancellor, Merkel, is losing her political capital. It all adds up to a bad day for the euro. Canada's GDP was a robust 6.1% in the 1st QTR, which should lead to a rate hike tomorrow, and the RBA left rates unchanged yesterday.

Currencies today 6/1/10: American Style: A$ .8340, kiwi .6745, C$ .9525, euro 1.2170, sterling 1.46, Swiss .8575... European Style: rand 7.7145, krone 6.5285, SEK 7.8965, forint 227.20, zloty 3.3770, koruna 21.03, RUB 31.28, yen 91, sing 1.4125, HKD 7.7910, INR 47.15, China 6.8306, pesos 12.95, BRL 1.82, dollar index 87.17, Oil $72.10, 10-year 3.26%, Silver $18.39, and Gold... 1,222.00

That's it for today... Well... Friday, the local St. Louis Business Journal ran a story on me, with a big picture of me (you need a full page to photograph me!)... It was a great article, with a lot of nice things said about me. It was a great way to send me off to the Memorial Day Holiday! It was a great weekend at our house too! Lots of grilling, lots of swimming, and enjoying the very warm days... Family, friends, teen agers, and then little Delaney Grace, who is just so darn cute! Good weekend in Chicago for the Cardinals, who are back in first place... Happy Birthday to my darling daughter Dawn's husband, Jerry... He has waited and waited for the day his name would appear in the Pfennig! Ok... I'm running late, this morning, for some reason, I can't put my finger on... But it is what it is, and therefore I'm ending this here, and getting to work! I hope you have a Terrific Tuesday, and welcome to June!

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

The Twilight Zone...

ChuckButler — Tue, 18 May 2010 15:38:16 GMT

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In This Issue..

* Euro bounces off 4-year low...
* Gold Sells off again!
* Greek receives first installment...
* RBA to take a summer vacation...

And Now... Today's Pfennig!

The Twilight Zone...

Good day... And a Terrific Tuesday to you! I think the rain has stopped, for now at least! I feel like someone picked up St. Louis, and moved it to Seattle! Hey! It rains there a lot, but they know it is going to do so! Me? I begin to feel like I have cabin fever, not having the sunshine... So... Hopefully today, eh?

OK... The price action in the euro yesterday, which has dominated the currency trading for a month now, was something out of the Twilight Zone... Help I'm slipping into the Twilight Zone, The place is a madhouse, feels like being cloned... Yes... That Twilight Zone... While the other currencies from Norway and Australia, were getting hammered, for no apparent reason I must add, the euro rallied in the early morning to near 1.24... Then turned on a dime, and by the time my turkey sandwich on wheat arrived at my desk, the single unit was back to trading below 1.23... But... Then, by the time I packed up to go home, the euro was back to 1.24... The strange thing about this swing, was that there was nothing, nada, zero, zilch, a big goose egg of news, data, or official slant to trade off of...

So... As I turn on the screens today, the euro has remained above 1.24 in the overnight trading... A lot of the euro's selling came last week based on fears that while Greece may have been promised funding, they might not ever see it... Well, those fears were thrown to the road side this morning, as Greece received a 14.5 Billion euro ($18 Billion worth) payment this morning, which kept Greece from defaulting on debt / bonds... Greece is also set to receive 5.5 Billion euros from the IMF... ( I told you last week, about who the major funding comes from for the IMF, so I won't go into a tizzy again about the fact that you, me, and the guy down the street that cuts his grass with his shirt off, are the major financiers!)

The euro started last week with the euphoria of an aid package, and a level of 1.30, only to see selling the rest of the week based on the fears of no payments would be made... Well, now that this has been settled, one would think that the bounce for the single unit would be more than we've seen so far this morning... But... Just goes to show you that "bailouts" aren't all they are made out to be...

They should have asked us here in the U.S.... No wait, they should have asked me, not the President or VP or Treasury Sec. or Fed Chairman, for they would have all told them to get the bailouts on the books, for they greatly helped the U.S. Now, me on the other hand, would have told them not to bother unless they wanted to begin a spending pattern close to what's going on here in the U.S. Growth at what cost? Take away the Government spending, and we have no economic growth, and are still saddled with near 17% unemployment (when real numbers are used) and the really sad part... Our national debt is out of control!

OK... Enough of all that... The euro, and the Eurozone is not out of the woods by any stretch of the imagination folks...

The Global demand for U.S. assets (Treasuries and other things) rose to a record level in March... So, you didn't believe me that the flight to the so-called Safety of Treasuries was going on? Think again... The yield of the 10-year Treasury has fallen to 3.47% after rising to above 3.80%... (remember, bond pricing is a inverse relationship between price and yield... When yield goes up, the price goes down, and vice-versa)

So... The nasty circle of buying so-called safe Treasuries is "on" again... Grab your Treasuries, it's on! (sorry Southwest!) Oooh... Where do I sign up for this trade? NOT!

Chuck, Chuck, Chuck... Go on from here, don't go down that road of explaining how everyone lost money in the last round of "flight to safety"... If they didn't learn then, well, they will never learn!

Today, we will see the color of the latest Housing Starts, and Building Permits data... The experts have forecast that both of these reports will show a strengthening Housing market... But remember, folks... These are "new buildings"... Do we really need more new buildings when we already have a glut of inventory in this country?

Oh well... Hey! I see the sun rising! YAHOO!

OK... Gold got smacked with a two by four yesterday right across the chops! And the selling is still going on this morning... The payment to the Greeks, probably caused this morning's selling, as the "uncertainty" of the payment was wiped out. But, this certainly looks like a "dip" to me... Very much cheaper than last week!

I noticed something last week, that Kristin confirmed, and that is, that Silver has been performing better than Gold in recent days... Gold, Silver... Either one provides a store of wealth... You pick the one that makes you happy!

That's the beauty of our EverBank Diversified Metals MarketSafe CD... You get Gold, Silver and Platinum all in one CD, with 100% principal protection, and 100% of the upside to 50%... I've been highlighting it at the top for weeks now... We're going to do a second issue, so if you missed the first issue, you've got a "second-chance"!

I know, some people don't like it when I go into products in this letter... But, Shoot Rudy, If I can't do it in my own letter, then when could I do it?

OK... A reader sent me a note that made me chuckle, but only because he's learned well, grasshopper... The subject of the note was not funny, only his statement that "his walls need earplugs" was funny...

Here's the skinny... The Treasury Department said Monday it will lose $1.6 Billion on a loan made to Chrysler in early 2009. Taxpayer losses from bailing out Chrysler and General Motors are expected to rise as high as $34 Billion, congressional auditors have said.

Hmmm... You don't hear the Gov't officials running around pounding their chests and spouting off about this news now do you? They just sweep it under the rug...

Earlier in the letter today, I told you that Aussie dollars got hammered yesterday for no apparent reason that I could find... Well... Last night I couldn't deal with not knowing, so I researched and researched until I found the news I was looking for... Moody's (there they are again taking shots a smaller fish, instead of dealing with U.S. debt) made comments that the mining profits tax that has been proposed may cut earnings by 33%... Now, that may be true, but the tax hasn't even been passed yet by parliament!

On the brighter side, the Reserve Bank of Australia (RBA) minutes revealed that the RBA members believe that the impact of Greece on Australia was considered to be small... The RBA then went on to mention something interesting that I think the markets have missed altogether... The RBA said that "over the next couple of years it was likely that inflation would not be much below the top of the target range"... That's Central Bank Parlance for "there could be more rate hikes in the future"...

I personally think that the RBA will take a summer vacation on the rate hikes, and not come back to the rate hike table until early fall.

Then there was this... Twelve months after federal regulators seized BankUnited FSB, the Federal Deposit Insurance Corp. says the Coral Gables bank's failure will cost $815 million more than originally forecast.

The bank failure will now cost the FDIC an estimated $5.72 billion, a 16.6 percent jump from last year's estimate of $4.9 billion, according to new estimates released by FDIC. It is the second-costliest bank failure in FDIC history.

FDIC spokesman David Barr said the change in estimated cost is a natural development in the aftermath of a bank failure.

Funny, I didn't see this news on any cable news stations, did you?

To recap... The euro had a turn on Mr. Toad's Wild Ride yesterday, but by day's end was stronger. The first installment payment to Greece was made this morning. Aussie and Norway saw their currencies get hammered yesterday, along with Gold... All providing "dips" in my opinion! And U.S. Treasury are popular once again, let's see how it works out for the buyers this go-around...

Currencies today 5/18/10: American Style: A$ .8760, kiwi .7015, C$ .9735, euro 1.2415, sterling 1.4455, Swiss .8855, ... European Style: rand 7.5455, krone 6.2265, SEK 7.7045, forint 223.55, zloty 3.2245, koruna 20.5090, RUB 30.32, yen 92.75, sing 1.3870, HKD 7.7950, INR 45.58, China 6.8273, pesos 12.54, BRL 1.80, dollar index 86.09, Oil $71.68, 10-year 3.47%, Silver $18.73, and Gold... $1,209.60

That's it for today... Thanks for the notes about my darling daughter, Dawn's announcement... Happy Birthday today to our colleague, Keith Rigdon... Keith is a products guru! This Thursday... The Jazz Education Network (JEN) Conference is being held here in St. Louis... There will be free performances during the day, and headline jazz musicians playing at night that a fee will be charged to get in. The cool thing is that the Sperring Middle School jazz band, that Alex plays guitar with, is one of only two Middle Schools in the country that were invited to play! Alex will strap on his guitar to play before judges, and professional jazz musicians on Thursday! This will be his last Middle School concert, as Alex heads to High School next year! WOW! How did that happen? I'm getting old I guess... But not too old to wish you a Terrific Tuesday!

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

RBA raises interest rates...

ChuckButler — Tue, 06 Apr 2010 13:44:54 GMT

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In This Issue..

* RBA raises rates...

* Higher oil prices drive CAD$ toward parity...

* PIMCO favors commodity currencies...

* Geithner delays report on China...

And Now... Today's Pfennig!

RBA raises rates...

Good day, Chuck's eye is still giving him problems, so you get another Chris Gaffney edition of the Pfennig. Thanks to Mike for covering while I was out on vacation. He puts a lot of pressure on me, as his Pfennigs are typically longer, and go out a bit earlier than when I am writing. Today I will do my best not to get distracted and will hopefully get this out the door at the usual time.

The currency markets were pretty quiet yesterday, with the dollar drifting higher vs. most of the major currencies. Two pieces of data were released here in the US, and both indicated the US recovery may be getting a bit more broad based than previously thought. First, the ISM non-manufacturing composite numbers were released, which is an indication of the health of the services industry here in the US. The index was expected to show a slight increase from February's 53 reading, but instead showed a pretty major jump to a reading of 55.4. This is the fastest pace of service industry expansion since May of 2006. Service sector jobs make up 90 percent of the US economy, so economists were encouraged by this strong increase.

And the good news just kept on rolling in for the US yesterday, as Pending home sales jumped by the most since 2001. Pending home sales were expected to be flat during the month of February, but instead jumped 8.2% compared to pending sales in January. The YOY number was even more impressive, increasing 17.3%. This was the second biggest gain on record, and the largest monthly gain since October of 2001. The homebuyer tax credit was the reason for the big uptick, as purchasers scrambled to get homes under contract before the deadline.

As I turned on the currency screens this morning, the dominant story on the screens was Australia's interest rate increase. Yes, the RBA went ahead and increased rates another .25% yesterday, and indicated that further increases were likely. This was the fifth increase in the past six central bank meetings, and all indications are that rates will continue to rise. Governor Glenn Stevens said the move was a 'further step' toward returning interest rates to average levels. He is trying to cool a housing market which continues to look as if it is in danger of overheating. "Interest rates to most borrowers nonetheless have been somewhat lower than average," the governor said in today's statement. "With growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average."

The Australian dollar has been steadily marching toward parity with the US$ since hitting a year to date low of .86 in early February. This latest move puts the Aussie dollar back into the trading range we saw it settle into during the last quarter of 2009, but a move above .94 would break it out of this range. A climb through .94 would be a strong indication that parity for the Aussie and US dollars is coming soon.

Mike Meyer knew I was getting in after trading hours had ended yesterday, so he sent me a note to try and give me the 'feel' of the currency markets yesterday. Here is what Mike had to say about Monday's trading action:

"For the most part, there wasn't much in the way of fluctuation in the market as most currencies traded in a very tight range today. I would have expected a bit more action since both reports released this morning surprised on the upside by leaps and bounds, but that wasn't the case. The big movers and shakers today were the Canadian dollar, gold, silver, and oil.

Crude oil has jumped to a year and a half high today and was trading just under $87 as it topped out at $86.90. Oil has traded in a range between $68 and $84 a barrel over the past 6 months, so it looks like the whole economic recovery story has gained momentum and is putting upward pressure on all commodities. It seems like oil jumped up almost stealth like as it has traded a few dollars on either side of $80 for the past couple of months and sort of lulled us to sleep. As traders are starting to jump all over the latest data reports here in the US, let's hope that triple digit prices aren't on the horizon."

With the global recovery chugging along, oil prices have been slowly moving higher. With a recovery taking hold in the US, and oil prices moving higher, the Canadian dollar rose to the highest level since it hit parity with the US$ in July of 2008. The Canadian dollar is the second best performer vs. the US$ this year, increasing over 5% vs. the $ over the first 3 months of the year. The best performing currency for the year is the Mexican pesos, which is up almost 7% during the same time period.

Both country's economies are tied to crude oil, as it is their biggest export. And most of this crude oil is shipped into the US, where the recovery is driving demand higher. The latest data showing the US economic recovery is taking hold will continue to help these two currencies, with the only risk being the possibility of a double dip recession in the US.

The folks over at PIMCO, who run the world's biggest mutual fund, seem to agree with our own Chuck Butler and his calls for commodity based currencies to outperform. Pimco fund manager Paul McCulley suggested investors look at the currencies of Brazil, Canada, and Australia along with China. He agrees with our thoughts that a sustained recovery in China will push commodity prices higher and support the currencies of those countries who can supply China with raw materials. According to McCulley, the Federal Reserve will hold interest rates at a record low into next year as inflation and economic growth in the US remain subdued. However, developing economies will continue to expand at a respectable pace.

We certainly agree with McCulley, as Chuck has been writing about these commodity producing countries for some time now. He created our Global Power Shift CD last year in anticipation of the continued growth of these currencies. This basket CD combines the currencies of Australia, Brazil, Canada, and Norway. While McCulley didn't mention the Norwegian currency in his report, we feel the krone matches many of the positive traits of the currencies he is suggesting and also has excellent underlying fundamentals. If investors are looking for a way to benefit from the improving global economy, the Global Power Shift basket certainly looks like an excellent investment choice.

There was a whole lot in Pimco's report which I agreed with, in fact, it seemed like McCulley is probably a Pfennig reader! We agree with his thoughts that China will continue to drive the global recovery as increased internal demand take up some of the slack from a slower recovery in the US and Europe. The emergence of consumer consumption in China's huge economy will allow them to slowly adjust their currency higher, with less risk to their exporters.

Treasury Secretary Timothy Geithner was put into a very difficult position with China by some aggressive talk from the US congress. In what has become very typical for our US politicians and decision makers when faced with a tough decision; Secretary Geitner decided to delay. He announced a couple of days ago that he would not release the annual review of China's currency policy on the stated deadline of April 15th. Geithner was being pressured by members of Congress to label China a 'currency manipulator' in this annual review; a move which could spark a trade war. Instead, Geithner said he would hold a series of meetings with China over the next three months to try and bring policy changes to China which would lead to a stronger 'more balanced' global economy.

I have to think Geithner know's who really holds all the cards in the global poker game. Without China to purchase our debt, rates in the US would increase substantially, stalling what is just starting to look like a recovery. He will continue to do whatever he can to keep the Chinese buying our debt, but needs to appear to be playing hardball with them. As we have written several times in the Pfennig, the Chinese will just go back to their slow appreciation of the Renminbi, letting it run up 5 to 7% vs. the US$. Just enough to quiet US lawmakers, but still not enough to have a major impact on their exporters. But over time, this slow and steady appreciation will bring the value of the Renminbi in line.

I'm not as early as I wanted to be, so I better head to the currency wrap up now:

Currencies today 4/6/10: American Style: A$ .9244, kiwi .6999, C$ .9997, euro 1.3408, sterling 1.5162, Swiss .9362, European Style: rand 7.2642, krone 5.9796, SEK 7.2043, forint 197.97, zloty 2.8591, koruna 18.8575, RUB 29.3025, yen 93.94, sing 1.3973, HKD 7.7657, INR 44.525, China 6.8257, pesos 12.2659, BRL 1.7618, dollar index 81.385, Oil $86.43, 10-year 3.95%, Silver $17.9275, and Gold... $1,124.70

That's it for today...It is great to be back in St. Louis. I had a wonderful Easter weekend with my family, but it is always great to get back home. I got to catch bits and pieces of the Cardinals game yesterday, it looks like they won't have any problem scoring runs this year. It was great to see Pujols hit one out on his first at bat of the regular season! My son, Brendan, finally got to see a Blues home win, as we made it back in time to watch the Blues notch an overtime win at home. They are statistically still in the playoff race, but their chances are pretty slim. And Duke pulled it out last night, beating a very good Butler team. I had Duke in our office NCAA pool, so that means I get to buy everyone lunch. Unfortunately the winnings don't usually cover the cost of lunch, but it is still fun to win!! Hope everyone has a terrific Tuesday!

Chris Gaffney, CFA

Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

First week of April...

ChuckButler — Mon, 05 Apr 2010 14:07:24 GMT

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. Australian dollar

. Brazilian real

. Norwegian krone

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In This Issue..

* Jobs come in higher...

* This week in data...

* Will the RBA raise...

* Is China sold on global recovery...

And Now... Today's Pfennig!

First week of April...

Good day...And welcome to the first week of April. Hopefully everybody was able to enjoy the weekend...I know I sure did. Chuck is feeling under the weather today and Chris is still on vacation so I've been called from the bench to Pfill in today. It's always tough to get going on a Monday morning so it will probably be short and sweet today. So, on that note...let's jump right in.

As Chuck mentioned Friday, we finally saw the color of the March employment figures and, as expected, we saw the jump most were looking for. Although the actual number of 162k was lower than the expected 184k gain, March represented the highest figure in 3 years. All three of the employment categories were in positive territory and each had revisions to the upside from last month's results.

Included in the March expansion were 48k temporary workers hired for the census. This is expected to have a greater impact on the jobs numbers from April through June when most of these hirings are supposed to take place, so many economists will be focusing on employment excluding government. The unemployment rate remained unchanged at 9.7% for a 3rd straight month, however, the underemployment rate, which includes part timers and those who want to work but have given up looking, increased to 16.9% from 16.8%.

The employment data also showed that average earnings per hour dropped and those who have resorted to part time jobs because they couldn't find full time work increased. Don't get me wrong, I want to see the jobs market climb out of its hole because this will be what ultimately brings sustainability to any type of recovery. Before I start jumping up and down, I need to see much more in the way of consistent growth. A report of 162k additions is certainly a starting point, but we have a long way to go before we make up the millions of jobs lost since the wheels fell off the cart.

Manufacturing, which has been one of the few bright spots, added jobs for a third straight month. Just to expand on my thoughts from Thursday when I touched on higher efficiency taking some jobs out of the market, investment in new equipment advanced 19% annually in the 4th quarter of 2009 when, at the same time, they also shed 269k jobs. In other words, companies were willing to spend money on technology instead of personnel in an attempt to do more with less people. Makes sense to me from a business perspective...this type of environment is when every penny is scrutinized and questioned as to whether it's a necessity.

Last week, Bernanke told Congress the unemployment situation is still very weak and 40% of the unemployed have been out of work for a long time. The pledge to keep rates exceptionally low was also reiterated so the employment picture looks to remain very fragile. In respect to historic standards, this is just a drop in the bucket but relative to the recent trend, the latest report is certainly a start. I think I've rambled on way too long here so I'll move on to what's in the closet for this week in data.

Its shaping up to be a fairly quiet week in the data department. This morning brings us the ISM non-manufacturing index along with pending home sales for February. The service industries are expected to show expansion as well. Traction in non-manufacturing businesses will hopefully catch wind from the manufacturing trickle down as 90% of the economy relies upon the service industry. Pending sales of previously owned homes is expected to see yet another contraction in February. Housing, which hasn't seen any type of sustained rebound, is expected to see another 1% hit after the 7.6% drop in January.

Tuesday will bring us the minutes of the last Fed meeting and should give us their general assessment of the economy, which doesn't expect to provide much in the way of anything that we don't already know. Unless they saw something that we didn't or remove the exceptionally low rate verbiage, it should pretty much be a non-event. We also get another consumer confidence report, so that rounds out Tuesday.

Wednesday gives us mortgage applications from last week and a gauge of consumer borrowing during February. We could see another rise in mortgage apps as buyers try to take advantage of the incentives before they expire, but the real estate market just hasn't caught that spark yet. Consumer credit is expected to see another increase, coming off of the first rise in a year from January, as car and student loans should be the catalyst. This figure tracks credit card and non-revolving loans and speaking of student loans, its expected that its proportion will increase as frustrated job seekers go back to school until the labor market improves.

Thursday has the typical weekly jobless and continuing claims, which are both expected to inch a little better, and a measure of retail sales. We then round out the week on Friday with wholesale inventories from February. We're expected to see a rise for the first time in 3 months, so I would think the increase in manufacturing would be supportive of the .4% expected rise.

Taking a look outside the US, we also have several rate decisions in store for this week. The Bank of Japan meets Tuesday and both the ECB and Bank of England meet on Thursday, with no surprises expected. The only thing that should impact the market would be any commentary released afterwards. The only action we could see is from Australia, as the RBA meets today.

The survey at this point is calling for a .25% rise to 4.25%, but economists are essentially split 50-50 on whether we'll see a 5th hike in the last six meetings. While RBA governor Stevens last week said home prices are getting too high and continued to express that rates need to get to more normal levels, other recent figures such as building approvals and retail sales have taken breathers as of late.

If we didn't see the falloff in those two figures, I would say April is all but a sure thing, but its looking like they may hold off in April and let more data come in before coming back in May. The housing market is the obvious risk but banks have been raising mortgage rates in step helping to provide some containment, however, employment is getting a jump start. As a mining boom is getting closer, employers are gearing up so inflation pressures are becoming a topic of discussion. Rates are going to continue rising here but the question remains how much and when.

The markets were fairly thin Friday so there wasn't too much action and when I stopped by the office yesterday afternoon, everything was pretty much spot on the prices Chuck gave us on Friday morning. I guess we'll get the reaction to the jobs report from all of the stock jockeys and senior traders that took Friday off so that could set the direction for the rest of the week. The only currency that really sold off last week was the Japanese yen, so if the risk takers feel comfortable with the employment picture, we'll see that trend continue as well as providing the support to the high yielders.

The People's Bank of China released reports on their web site Friday that they feel the US dollar would only have a limited scope if it were to appreciate this year due to our high deficits and desire to keep rates very low. They also expressed concern that asset bubbles are starting to appear and may pop unless supported by real economic fundamentals. They're basically saying that the rise in asset markets have been primarily the result of loose monetary policy and stimulus rather than macroeconomic fundamentals. So it sounds to me they aren't totally sold on the idea that we are out of the woods at this point, which I would tend to agree with.

As I came in this morning and turned on the screens, I see where the dollar has gained a bit in overnight trading. The Asian markets were thinner than normal as some enjoy a Monday holiday but it seems Friday's job euphoria has carried over into today and propped the dollar a bit. It also looks like we're seeing dollar support on the back of today's Fed Board of Governor's meeting to discuss the discount rate. The discount window is rarely used anymore and really has no economic impact but if it does get adjusted upward, we might see traders trying to parlay that into a Fed funds hike sooner rather than later. I guess so much for short and sweet...so lets get wrap it up and head to the big finish...

Currencies today 3/31/10: American Style: A$ ..9202, kiwi .7041, C$ .9941, euro 1.3474, sterling 1.5234, Swiss .9403, European Style: rand 7.2650, krone 5.9482, SEK 7.1904, forint 196.67, zloty 2.8504, koruna 18.8136, RUB 29.1911, yen 94.51, sing 1.3986, HKD 7.7674, INR 44.5750, China 6.8257, pesos 12.2880, BRL 1.7646, dollar index 81.235, Oil $85.31, 10-year 3.95%, Silver $17.9275, and Gold... $1,126.45

That's it for today...I enjoyed the weekend with family and friends and got to see a rare home win by our St. Louis Blues. Although our playoff chances are over with, it was still a good game. I'm excited to see the big Butler and Duke gain tonight and the Cardinals season opener. Monday's are always busy so I have a million and two thing to get done before we turn the phones on this morning, so I should probably let you go for today. Hopefully I didn't wander around aimlessly today...on that note, have a great day.

Mike Meyer

Assistant Vice President

EverBank World Markets

1-800-926-4922

1-314-647-3837

U.S. States In Deep Trouble!

ChuckButler — Wed, 03 Mar 2010 14:18:48 GMT

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

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. Australian dollar

. Brazilian real

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EverBank is an Equal Housing Lender and member FDIC.

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

In This Issue..

* A long history of dollar moves...

* Canadian GDP jumps 5%...

* U.S. Traders didn't like the Greece package...

* Getting out of Dodge...

And Now... Today's Pfennig!

U.S. States In Deep Trouble!

Good day... A Wonderful Wednesday to you! I hope your Tuesday was Terrific! Day one with just my little buddy Alex and me at home went off without a hitch... I took him to the jazz guitar teacher, and he sounded great! He auditions for the high school jazz band on Thursday. He'll be just a freshman, so it will be quite the uphill battle for him to make the band in his first try... But... He's so darn good!

Well... I have to say front and center this morning, that while it may have taken the currency traders 1/2 day to realize that Australia had raised rates, to finally begin to push the A$ higher VS the green/peachback... I was beginning to think yesterday that I was going to have to have egg all over my face again, when the A$ didn't respond right away... But it was all right on the night, so it's no egg on the face for me!

I had someone send me a note yesterday that was a little confused about the statement I made about the euro getting dragged through the same mud as pound sterling on the crosses... For anyone else that's thinking that this didn't make sense... Here's the skinny... If traders are beating up sterling through the sterling / dollar pair... Then the dollar is getting bought... But for those that have euro/ dollar pairs, they get caught in the crosshairs of the sterling / dollar pair... It doesn't have anything to do with the fact that sterling isn't a part of the euro, etc. it's in the crosses... If there's so much dollar buying VS sterling, the dollar buying will carry over to euro, and other currencies... It's not a one for one thing... And it takes a lot for a currency like the euro to buck the trend when the dollar is so strong VS sterling...

So... Just when I talked about that yesterday, sterling began to rally VS the dollar! HA! I said to myself...

I read some research reports yesterday that suggest that the short positions with euro are beginning to fade... Hmmm... That brings me to something that I referred to yesterday on my writer rage... Recall when I told you about how George Soros had said that he believed Gold to be the ultimate bubble, but then it was revealed that his fund had been buying Gold?

Yes, get you all to sell your Gold, so he can buy it cheaper... Well, that's exactly what was going through my mind when I read the story about him calling for the collapse of the euro... I wouldn't trust that guy, if he was swearing on a stack of bibles! So... Any way... The research I read was a shot in the arm for yours truly who had been feeling a bit beaten and left for dead with all the bad stuff written about the euro... Shoot Rudy! Yes, the euro deserved to take some losses due to the debt problems there... But again, put into the proper perspective, these losses should have been held to a minimum when compared to the debt problems here, and in Japan!

Sooooooooo.... I see where the U.S. Gov't is telling hedge funds to not destroy trading records on euro bets... This all stems back to the thing I told you about with Goldman Sachs, where they helped Greece pull the wool over the eyes of the Eurozone with their derivatives on debt, and then created a company on the other side that shorts the euro, knowing that eventually the toxic stuff they sold to Greece would explode... Hey! I don't make this stuff up, folks, it was reported all over the place!

Now, though... The U.S. Gov't is going to stick their hands in there acting like they know what's going on... This ought to be good...

So, to continue on with Greece... It looks like the "chicken Littles" are returning to the roost regarding Greece's debt, as not only is the 34 Billion euros package helping, but Greece itself has announced some spending cuts that are of size, so at least they are taking this battle to heart, eh?

More good economic news in Australia last night, following up on the Reserve Bank of Australia's (RBA) rate hike, we saw the color of the 4th QTR GDP, which climbed 0.9 percent from the third quarter, when it gained a revised 0.3 percent. I know that this isn't near the red hot Canadian GDP which gained 5% in the 4th QTR... But... It's now not a question of whether the economy will grow this year, but rather how strong it will be! And... Shows that the RBA's 4 rate hikes so far in the past 6 months are warranted! There's no longer a need to stimulate the economy, I would think, eh?

Let's move north from the South Pacific to Japan, where there was some startling news on wages... Let's go to the tape! Japan experienced the first gain in monthly wages in 20 months last quarter! Does this mean that Japan could really, truly, and undeniably leave deflation behind? NO... Not yet... We've seen these "signs" before, only to be disappointed the following month... But... For now, at least, it sure looks like things are getting better for Japan's deflationary economy...

Well... How about that Canadian dollar / loonie? The markets took the hawkish sounding words by the Bank of Canada (BOC) yesterday and ran the loonie higher and higher VS the U.S. dollar... Imagine there's no U.S. debt problem, it isn't hard to do, imagine there's no toxic waste on the Fed's books through and through, imagine all the people, making things difficult for the loonie to rise... But it does any way!

Somebody asked me the other day, why I include Illinois with California when I talk about the states in the U.S. that have debt problems greater than the PIIGS (Portugal, Italy, Ireland, Greece, Spain)... Well, it just so happens that our bond guru, Don Ries, sent me a note yesterday from the Telegraph in the U.K. where you'll usually find the most excellent writer, Ambrose Evans-Pritchard.. Let's hear what mister Pritchard had to say about Illinois...

"Barack Obama's home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13 Billion hole in a $28 Billion budget."

"The state has been paying bills with unfunded vouchers since October. A fifth of buses have stopped. Libraries, owed $400m (£263m), are closing one day a week. Schools are owed $725m. Unable to pay teachers, they are preparing mass lay-offs. "It's a catastrophe", said the Schools Superintendent.

In Alexander County, the sheriff's patrol cars have been repossessed; three-quarters of his officers are laid off; the local prison has refused to take county inmates until debts are paid.

Bad news: we're back to 1931. Good news: it's not 1933 yet Ben Bernanke warns more is needed to help stabilize the financial system $800 Billion boost for flagging US economies in Florida, Arizona, Michigan, New Jersey, Pennsylvania and New York are all facing crises. California has cut teachers salaries by 5%, and imposed a 5% levy on pension fees.

The Economic Policy Institute says states face a shortfall of $156 Billion in fiscal 2010. Most are banned by law from running deficits, so they must retrench."

OK back to Chuck... That's all scary stuff folks, and things we should be concerned with, not whether or not Greece meets the Maastricht budget deficit target!

Well... Since I woke up this morning, until right now, the currencies were looking stronger VS the dollar, but after all my reading, research, and typing, they have gotten softer... That's what you get when you fall in love... No wait, that's what you get when you take so much time to write!

Gold sure had a great performance yesterday, adding $18 to its figure... As I said on Monday, Gold was the number one pick of the presenters at the FX University Conference last week, with Norwegian krone coming in second. Of course, I was a bit different than the rest of the presenters, as usual... I said that we could look for gains in Aussie, Canada, and Norway, along with Gold and Silver...

And here's one of the reasons for Gold's move yesterday...

Then there was this... The U.S. Postal Service projected $238 Billion in losses over the next decade. Postmaster General John E. Potter plans to press lawmakers and the Postal Regulatory Commission in the coming weeks to eliminate Saturday mail deliveries and allow the mail agency to raise prices beyond the rate of inflation, if necessary.

Can you believe that? Another Gov't owned business running in the red... I can see it costing us a buck to mail a letter at some point in the future! OUCH!

But... This is just another brick in the wall... We don't need no austerity measures... We don't need no cost controls... All in all it's just... Another brick in the wall... The debt wall, that keeps going higher and higher...

To recap... It took a while for it to settle in, but the Aussie dollar finally began to get some wind in its sails after raising rates a 4th time in the past 6 months. Greece announced some austerity measures that will reduce spending, and the shorts on the euro have begun to fade... The U.S. states that are in deficit trouble continue to grow...

Ok... I've got to mention this before I head to the Big Finish... One reader sent me a note yesterday and told me that "maybe I wouldn't get so upset with people that send me nasty emails if I were so "full of myself"... Hmmm... I had to stop and think about that for a minute... Full of myself? I doubt it... I have my beautiful bride to keep my ego in check! Besides, I'm just a poor middle class kid from South St. Louis, that keeps my head on straight...

Currencies today 3/3/10: American Style: A$ .9020, kiwi .6920, C$ .9655, euro 1.3625, sterling 1.5035, Swiss .9315, European Style: rand 7.5920, krone 5.93, SEK 7.1945, forint 195.55, zloty 2.8775, koruna 18.9325, RUB 29.85, yen 88.85, sing 1.4020, HKD 7.7625, INR 46.01, China 6.8258, pesos 12.72, BRL 1.7925, dollar index 80.38, Oil $78.15, 10-year 3.62%, Silver $17.12, and Gold... $1,135.20

That's it for today... Well... It was a good night for sports in Missouri, as our Blues won their first hockey game back from the Olympics, and my beloved Missouri Tigers won their basketball game in overtime! Well, March sure did come in like a lion, as my mother used to say... Let's hope it goes out like a lamb too! And that means for everyone, not just yours truly who will be in South Florida! That's right... It's just 7 days away now... YAHOO! I hear that we're going to be making some changes to how the Pfennig is presented each day... No worries, same old me in it, just a different format... Change is good... I've been sending the Pfennig out in a text email for a long time now, so it's time for an upgrade... Of course this doesn't mean today, or tomorrow, just wanted to give you a heads up... Speaking of heads up... Let's hold those heads up high, and have a Wonderful Wednesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

RBA Hikes Rates!

ChuckButler — Tue, 02 Mar 2010 15:27:10 GMT

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

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. Australian dollar

. Brazilian real

. Norwegian krone

. Canadian dollar

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EverBank is an Equal Housing Lender and member FDIC.

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

In This Issue..

* A long history of dollar moves...

* Canadian GDP jumps 5%...

* U.S. Traders didn't like the Greece package...

* Getting out of Dodge...

And Now... Today's Pfennig!

RBA Hikes Rates!

Good day... Well... I'm back in the saddle! And a Terrific Tuesday to you! It didn't take long for me to get the emails started telling me how wrong I am again... WOW! Of course, I wonder where these people have been the last 9 years, as when 9 years ago I was the first writer to issue a white paper calling for the long term down trend for the dollar... Or, in 2002, when everyone was writing off the euro, I wrote the white paper, "The Year of The euro"... Or in, 2005, when everyone called for the collapse of the euro... But not me... Or, in 2008, when everyone called for the collapse of the euro... But not me...

Is this time different? I doubt it... Lose value for 6 more months? In my opinion yes... But then returning to the underlying weak dollar trend. Look folks, if you really think that by sending me emails telling me I'm wrong, and I'm stupid, and everything else, that I'm going to change my mind on this... Then you might as well stop! Or... Start writing that great American, NOT! George Soros, and tell him how great he is...

Here's the thing... The U.S. dollar entered the long weak dollar trend in 2002, after posting a deficit of 4.5% of GDP, which historically meant that the country posting such a deficit would experience a currency crisis... THIS WAS A FUNDAMENTAL REASON FOR THE WEAK DOLLAR TREND! And guess what the CBO told us about 10 days ago? That's right... That the U.S. deficit is going to average 4.5% of GDP for the next 10 years! Where's the cleaning out of the fundamental reason for the weak dollar trend?

I told many people last week, that "Yes, the dollar can rally... But these are merely circuit breakers so that the dollar's direction isn't a one-way street, for if it were to become a one-way street, then... Everyone would head for the exits at the same time!"

Ok... Sorry, but sitting at home yesterday, reading those notes, just got my temper raging, and I experienced "writer rage"!

Well... The Reserve Bank of Australia (RBA) did, as I said they would, hike rates yesterday... Adding another 25 BPS to their internal rate to 4%, the RBA made a statement that leads me to believe they are nowhere near an end to the rate hike cycle. The RBA's statement ended with this... "Interest rates to most borrowers nonetheless remain lower than average and it is appropriate for interest rates to be closer to average". Sounds like more rate hikes are on the way to me!

Australia also printed a strong Retail Sales figure for January of +1.2%... Tomorrow, we'll see the color of 4th QTR GDP, which will really tell us for sure if the rate hike cycle continues higher...

Yesterday morning I told you about how I expected Canada's 4th QTR GDP to show a greater than 4% figure... Well, 4% was conservative! 4th QTR GDP actually printed at 5%... And, the recession officially ended earlier than thought, as the 3rd QTR GDP was revised up to .9%! This 5% print of GDP was greater than the experts and the Bank of Canada (BOC) were forecasting... (3.3%)... So, as I said yesterday, maybe this moves the BOC to raise rates earlier than they stated they would... But raise them now, or next week, or next month? I don't think so, but before the summer sun is hot, and the tall colorful cold drinks with umbrellas are prevalent around the pools... I do think so!

The data in the U.S. yesterday was, as Yogi Berra says, déjà vu all over again! What am I talking about here? Well... Personal Spending far outpaced Personal Income... So, what does that remind you of? Yes, of course the go-go days that helped fuel this financial mess we're in... We can't continue to spend more than we make folks... When will this become part of our inner thoughts?

Hey! John Williams, over at Shadow Stats, confirmed my belief that we have greater than 20% unemployment, as he printed a greater than 21% figure for his latest reports... And yes, I know, the Gov't is doing everything it can to keep those unemployment benefits going, but their motives are dark, as they want to get money in your hands to spend, not save, or pay down debts...

The data cupboard is pretty bare today with only Vehicle Sales for February to print...

I have to tell you that what I'm seeing in pound sterling is really a driving force for the euro weakness... I've explained all this before, but for those of you new to class... The FX market is made of currency pairs... Since we're mostly dollar based investors, we care about dollar / whatever currency... But all currencies are tied together with these pairs... And if there's a ton of selling of pound sterling VS dollar, that would carry over to dollar / euro, and dollar/ krone, etc.

The thought in the U.K. these days is that the economy is facing the risk of a double dip recession... Well... If they get one, you can bet your sweet bippie that we'll get one here in the U.S. because... It seems that for the last two years, whatever happens in the U.K. carries over to the U.S. Short positions in sterling are piling up, and I doubt there's anything that can save the currency from bigger declines at this point...

OK... Yesterday, I told you that I would give you something different to think about rather than all the destruction and loss of life in Chile... This is very similar in theory about what I wrote after the Tsunami in Thailand a few years ago...

First of all... This is a well-managed economy and they have enough policy flexibility to deal with this devastation. There may well be selling of Chilean pesos in a knee jerk reaction to the earth quake, but I doubt that will continue. You see, Chile has a $11.3 Billion savings fund will stabilize the peso... And, while copper mining is put on hold right now, the Government will The government will likely tap the $11.3 Billion fund, stockpiled with copper revenue, to finance reconstruction projects... And the rebuilding of their infrastructure will regenerate their economy... You see bridges falling down, and roads buckled... I see the need for new bridges and roads that will require jobs, equipment, etc.

So... That different than the stuff you see on TV, eh?

You can always get the "different slant" on things from me, which is what so many people at last week's conference would say to me when they would stop by to shake my hand and tell me how much they enjoyed the Pfennig...

Yesterday, I said we would have to wait to see the U.S. reaction to the news that a 34 Billion euros package had been put together to help Greece... Apparently the U.S. traders didn't like it... Of course it was different when the U.S. financial institutions were getting bailed out... I wonder if it will remain different when California has to be bailed out... Or Illinois... Or Michigan... Or New York...

And I could sit here all day telling them they are forgetting about the U.S. states nearing default... But it doesn't do me any good, for they have their focus on Greece and the euro right now... I have to say that yesterday, I woke up from a nap, and right there on my TV, on the Glenn Beck show, they were talking about Greece and California, and all the things I've been saying to you for over a month now! Maybe, there's a Pfennig Reader over at Fox...

Then there was this... Talk about getting out of Dodge before sundown... Fed Reserve Vice-Chairman Donald Kohn, announced that he will retire from the Fed... They say... That Kohn was a very close friend, and advisor to both Greenspan and now Bernanke... Given what we now know about Greenspan, thanks to Bill Fleckenstein, and his book, "The Age of Ignorance at the Federal Reserve", knowing that Kohn was a close advisor is probably not a good thing on a resume, eh? Now, the President has to find 3 new Fed Heads... This is going to be pretty interesting to see who he picks...

To recap... The RBA did indeed hike rates by 25 BPS, and gave a statement that leads one to believe more rate hikes are coming. Canada posted a strong 5% figure for 4th QTR GDP, but rate hikes there will have to wait a month or two. Pound sterling crosses are hurting euro, krone and other currencies, and the Chile earth quake will provide infrastructure rebuilding projects...

Currencies today 3/2/10: American Style: A$ .9040, kiwi .6980, C$ .9665, euro 1.3550, sterling 1.4980, Swiss .9265, European Style: rand 7.5860, krone 5.9435, SEK 7.1650, forint 197.10, zloty 2.89, koruna 19, RUB 29.90, yen 89, sing 1.4030, HKD 7.7640, INR 46, China 6.8266, pesos 12.71, BRL 1.7880, dollar index 80.75, Oil $79.09, 10-year 3.63%, Silver $16.60, and Gold... $1,121.70

That's it for today... Good to be back today... Like I said the FXU Conference was very good, and tiring! My beautiful bride leaves today for Florida, leaving the "boys" at home, which normally means lots of pizza, for that's what my little buddy Alex, likes! Chris' wife is gone too, and Kristin's husband is gone, so we all have child drop off, pick up, take to weight lifting, guitar, and other activities to do this week... This could be our first year of "cooler" weather in Florida where the Cardinals have spring training... That had better change by the time I get there! And... My fave TV show, 24, is going really good right now... And our Blues begin play again after the Olympics break... Hope you have a Terrific Tuesday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837

A 34 Billion Euros Package For Greece!

ChuckButler — Mon, 01 Mar 2010 15:20:00 GMT

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

Countries poised to benefit from rising commodity prices: combined into one CD

. Australian dollar

. Brazilian real

. Norwegian krone

. Canadian dollar

CD features: 3 and 6 month terms, no monthly account fees and $20K minimum to open. Apply or learn more at http://www.everbank.com/001CurrencyCDBasketGlobalPowerShift.aspx?referid=11808

EverBank is an Equal Housing Lender and member FDIC.

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

In This Issue..

* Currencies trade up, then back down...

* RBA to hike rates this week?

* Jamie Dimon on California VS Greece...

* Fannie needs another $15 Billion!

And Now... Today's Pfennig!

A 34 Billion Euros Package For Greece!

Good day... And a Marvelous Monday to you! And Welcome to March! My fave month! Yes, it's me this morning... You were under the impression that it would be Chris this morning, and back to me tomorrow... But here I am... I'll rock you like a hurricane! HA! Chris had some fatherly duties this morning, so I took the conn back one day early... I'll still rest today after a long, difficult week last week in Scottsdale, and will be back in the saddle tomorrow, as planned.

Well... What have we here? News broke on this past Saturday, that a package of 30 Billion euros was going to be provided to Greece from German and French state banks, and investors... The amount then turned to $34 Billion... Now... You know me... And I'm not in favor of "bail outs"... Throwing good money at bad... And all that, but... This looks like it's what the markets wanted to see, for the currencies, especially the higher yielding currencies are receiving a bias to buy this morning...

Of course, now that I've said that, I notice that the euro just dropped 20 pips! UGH! Oh well... Timing is everything, eh? I was going to talk glowingly about the currency rally VS the dollar, but... I have to switch gears and talk about something else now! (see how flexible I am? HA!)

One more thing on the euro / Eurozone before I move on... European manufacturing, which accounts for about a quarter of the economy, grew for a fifth month in February as reviving global demand boosted orders. That's good news for the Eurozone economy, folks...

The FXU Conference in Scottsdale, Arizona, last week was quite good... I spoke a total of 7 times in 3 days... At my last workshop, I asked the audience if they had grown tired of hearing from me yet! I was surprised to hear them say no! I kicked the conference off on Thursday with the first speech/ presentation... Someone said to me afterward that the Sovereign Society must really like me, putting me first, and I said, "well, I thought so too, until I saw that they put me on a panel at 8:30 am on Saturday morning!"

But that's not what I began to talk to you about... What I wanted to say was the conference went well, and there were lots of ideas presented, along with education of course! Overall, I thought it was great!

OK... Back to the currencies... I had a long conversation with other editors about what's going to happen to Greece and the euro... They all seemed to believe that in the short term, the prospects for the euro aren't good... Of course, you knew that I would take the other side of that argument, right? And I did! But only in the length of how long this dollar rally will last... I said 3-6 months longer...

However, a 34- Billion euro package to Greece could get this party started a little earlier... According to The Royal Bank of Scotland Group Plc... "The euro may strengthen to $1.40 as European officials work on a rescue package for Greece, easing concern of "default and contagion."

Hmmm.... Now that would be fine with me... To see some semblance of reality hitting the markets for once... What am I talking about here? I'm talking about how the markets have basically attacked the European Union / euro for the debt problems of the PIIGS (Portugal, Ireland, Italy, Greece, Spain) and totally forgotten about the debt problems of California, Illinois, Michigan and New York... If you add the total GDP's of each of these groups, the U.S. states group more than doubles the PIIGS... So... Tell me, tell me, tell me true, who should be getting taking to the woodshed?

I had a reader send me along a note yesterday regarding this.... It said, "Finally somebody besides Chuck Butler is talking about California being a greater risk than Greece.." and then he attached a link to an interview with Jamie Dimon, chairman of JP Morgan Chase, where he has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.

To read the whole story click here: http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7326772/California-is-a-greater-risk-than-Greece-warns-JP-Morgan-chief.html

OK... I think I got my point across there... I'll go on from here...

Today, Canada will print their 4th QTR GDP, and from the looks of it, Canada will have exited their recession in the 4th QTR with a better than 4% GDP in the last quarter of 2009! The Bank of Canada (BOC) meets tomorrow to discuss rates, but I doubt this better than 4% print of GDP is going to move the BOC Gov. Carney to raise rates just yet... Recall, that Carney made a foolish statement last year, stating that he wouldn't move rates higher before June of this year? Well... Now we're within 3 months of that time-line, and... He's got GDP growing at better than 4%... I would have to think that Carney might have to move that time-line up a month or so given all the signals we've seen with the Canadian economy heating up...

Yes, I'm aware that Canada normally follows the cartel, I mean the Fed... But... Things have got to change some time, eh?

The Reserve Bank of Australia (RBA), European Central Bank (ECB), Bank of England (BOE) and the aforementioned Bank of Canada (BOC) all meet this week to discuss interest rates... The only one that I see with a chance of changing rates is the RBA... More on that in a bit...

I wanted to make note of the rot that's really being exposed on the pound sterling's vine in recent days... The pound is really taking on water, which to me finally makes sense... I kept getting email after email, asking me why the pound was so strong... It just didn't make sense to those people and didn't makes sense to me either! So... Just like when bubbles are getting blown larger and larger, when they pop, the damage is ugly... And that pretty much describes pound sterling in the past week, especially overnight last night!

Now... Back to the RBA... I heard someone last week talk about the "pause" in rate hikes by the RBA and said that it was a sign that the RBA saw weakness in global growth... And I said back to them... But what happens when the RBA hikes rates next week? And, silence... Nothing but crickets... And so, that leads me to the RBA meeting this week... You know me, I've long been a fan of the RBA, as an inflation hawk, providing price stability... So, when the RBA Gov. Stevens says, "the RBA is likely to continue to move back to a more normal setting for rates." Then I've got to believe that interest rates there are going higher this week!

Add to that the latest housing data from Australia, where New Home Sales for January increased by 9.5%, which was the largest increase since last August... And stop there for a minute, and think about this... Since August, we've seen note one, but three rate hikes in Australia... So, they have higher mortgage rates right? And they post that kind of increase? That's a strong economy folks... And one that is in need of higher rates immediately!

Here's a quick hit from Japan that's got me wondering, where have I heard this before? Japanese Finance Minister, Kan said "he wants deflation beaten this year, not over 2-3 years."

OH! That's right... I've heard that from nearly every Japanese Finance Minister in the past 20 years! So... That would be great if he can succeed... But the history there isn't going to be so kind to him...

Back in this country there's more rot on the housing sector's vine this morning as it is being reported that Fannie Mae is in trouble again... Let's go to the tape... Fannie Mae reported a $16.3 Billion fourth-quarter loss, its 10th straight quarterly loss, and will seek $15.3 Billion from the U.S. Treasury Department. "Our financial results for 2009 reflected the continued adverse impact of the weak economy and housing market, which has resulted in record mortgage delinquencies and contributed to our recording significant credit-related expenses and net losses during each quarter of the year," Fannie Mae said in a filing with the Securities and Exchange Commission.

That's just awful folks... But... Now that Fannie and Freddie were nationalized, and given a bottomless pit of financing... All they have to do is say... Hey Tim Geithner... We need $15 Billion dollars, would you please wire it over, and not send us a check!

Then there was this... Well... The clear choice as a winner for a currency that people should be buying, at last week's FXU conference, as Gold... Followed by Norwegian krone... It was as if everyone has now jumped on Chuck's bandwagon... The question was asked about if I thought Gold had reached "mainstream" yet... My answer... No! Next question, please!

Oh... And the big earthquake in Chile... Tremendous loss there... Tomorrow I'll talk about what I think will be good for Chile..

To recap... A $34 Billion euro package to Greece has been announced, with German and French state banks putting up the money. The feeling initially, in the markets was this would be good... But there's some wavering now... We'll have to see what the U.S. markets think about this news when they arrive at their desks in an hour or so... We have 4 Central Bank meetings this week, with only the RBA having a chance of raising rates...

Currencies today 3/1/10: American Style: A$ .8950, kiwi .6950, C$ .9485, euro 1.3550, sterling 1.4885, Swiss .9255, European Style: rand 7.6970, krone 5.9550, SEK 7.2050, forint 198.90, zloty 2.9090, koruna 19.1250, RUB 29.94, yen 89.20, sing 1.4065, HKD 7.7630, INR 46.08, China 6.8264, pesos 12.74, BRL 1.8075, dollar index 80.53, Oil $78.03, 10-year 3.62%, Silver $16.55, and Gold... $1,115.00

That's it for today... The Phoenix Open was being held at the TPC which is all around the Hotel we were in last week, so roads were closed, everything was packed, it was quite the mess... Especially leaving yesterday. The airport was a madhouse, and I actually feared that some of us might not make our flights! But we all did... Whew! OK... It's March! The first Spring Training game for my beloved Cardinals is only 3 days, 4 hours and 57 minutes away! I'm now down to 10 days before I leave for Spring Training! YAHOO! Congrats to Canada on winning the Gold medal in both men's and women's ice hockey... That was a good game yesterday, until the end... My little buddy, Alex, was in Chicago over the weekend as the jazz ensemble he plays in was there for a competition... They received very high marks, but no cigar / trophy... I'm sure it was fun for the kids! OK... Time to get this out the door, go back get my feet up and rest! I hope you have a Marvelous Monday!

Chuck Butler

President

EverBank World Markets

1-800-926-4922

1-314-647-3837