Waiting On Trichet.
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In This Issue.

* The lender of last resort to the World!

* ECB press conference is key for euro today.

* Spain's bond auction is well received.

* Australia posts Trade Surplus for October!

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

Waiting On Trichet.

Good day... And a Tub Thumpin' Thursday to you! I need to have some Tub Thumpin' around me this morning to get me going! I'm dragging the line this morning, but not to worry. I'll find the energy to get through the day, and then it's off to nap time in my big black recliner chair!

Well. The Cartel / Bernank pull the curtain back and let everyone see just who they loaned $3.3 Trillion dollars to during the financial meltdown of 2008. You know, it's 2 years later, and it's all water under the bridge now, but it's interesting, don't you think to know that the Cartel / Bernank loaned more to a foreign bank (UBS) than it did to any other institution? I could be real snotty here and say something like UBS must have had a ton of dealings with Goldman Sachs, but if I said something like that I would get into trouble. OOPS! I guess I just did! OK, get your wrists ready for a good smacking, Chuck! I'm not "saying" that's what happened. I'm just imagining. Yeah, that's the ticket! That's my story and I'm sticking to it!

And Barclays Plc also received a ton of money. Hmmm. looks like the Bernank was the "Central Bank of the World" back in September of 2008, eh? Yes, I know, I've heard all the stories about how the Fed saved the world. and how things would have been worse if they hadn't lent to foreigners. Shoot, the tables were reversed, for it's been foreigners loaning us money for years! But, when you really think about the Cartel / Bernank lending money. Who's money were they lending? And where did they get it? Oh! That's right. they printed it. and in the end, it's the U.S. taxpayer that was the so-called "lender of last resort" right?

But that's not all. the Bernank loaned money to household names that include Caterpillar, General Electric, Harley-Davidson, Toyota Motor and Verizon. The Fed also poured money into U.S. banks' subsidiaries in Canada, Europe and East Asia. So, not only were we the lender of last resort to the world, we expanded the list of financial institutions that the Bernank covered, to Corporations. Hmmm.

OK. enough of that, there's enough in that story about the Cartel / Bernank, that I'll save some for other days when the news is slow! HA!

Well. you're 5 minutes into this, and I haven't even told you about the currencies or precious metals yet. Well, that's all going to change right here, right now! (there is no other place I'd rather be!)

The relief rally that began yesterday morning, hit speed bumps, and backed off only to see them take runs at the speed bumps again. this went on all day, with the currencies, led by the beleaguered Big Dog, euro, would gain VS the dollar, and then fall back. Or as they say in lines at the stadium. "Fire and fall back"! HA! The precious metals of Gold and Silver did the same, with Gold trading near $1,400, and then in a wink of an eye, falling back to $1,390.

The risk assets traders couldn't make up their minds. and from what I've seen so far this morning, we're in store for more of the same today. When I came in the euro was 1.3215, and now 20 minutes later, the single unit has slipped back below the 1.32 handle. Apparently, Spain's auction of bonds this morning saw increased demand, which is a good thing for the euro, and so, the euro has that going for it today!

But I think a lot hangs in the balance of the European Central Bank (ECB) meeting going on as my fat fingers pound out this letter to you! And if yesterday's comments by ECB President, Trichet, are any indication of what the ECB will say after meeting today, one would think that they will be pleasantly surprised by the ECB's credibility, and willingness to set things right in the Eurozone.

Speaking of Trichet's comments yesterday. The ECB President had a couple of things to say, like: "the markets are underestimating the determination of European Gov't's to solve the situation, and that he didn't think that financial stability in the Eurozone could be called into question."

When you have the credibility of the ECB, saying things like that can go a long way toward soothing the fears the markets have about things getting worse in the Eurozone. And that will happen long after I hit the send button on the Pfennig today. So. we wait for Trichet.

The Aussie dollar (A$) is pretty much flat this morning, as traders attempt to figure out what's going on in Australia after another soft data report printed overnight. Aussie retail sales fell 1.1% in October. That data was offset by data that's far more important to me, and that is that Australia posted a Trade Surplus in October at A$ 2.6 Billion! But, basically, that's just me. not too many currency guys and gals are into Trade Balances as a value for a currency.. The mainstream boys and girls focus on rate hikes. and if the data comes in soft, like Retail Sales, then they turn their collective noses up and go on to a different currency.

But not to worry. they'll be back, for like I said the other day. I expect the Reserve Bank of Australia (RBA) to come back to the rate hike table in 2011. Until then, holders of A$'s will have to "suffer" through owning one of the highest yielding currencies in the world! Oh the Humanity!

Ok. you know I'm being facetious there. Just wanted to make sure, because sometimes when I leave things like that, I get a ton of emails asking what I'm smoking. HA!

The Swiss franc is back to parity with the dollar this morning, as the franc got a bump from Swiss 3rd QTR GDP, which came in +.7%, which was far greater than the forecasts. You know. the Swiss franc has enjoyed a nice run VS the dollar and euro this past year. And while I'm afraid that the franc's run is about over, you always have these Geo-Political things underpinning it.

I guess the good results of the Spanish bond auction this morning, will be short-lived for the euro, as it continues to slip from the level it traded at when I came in an hour ago. UGH!

As I look at the currency screens now. most of the currency levels are not doing well this morning, as the currency prices that should be green are red, and those that should be red are green. I know, it's tricky, but stick with me here. HA!

The data prints here in the U.S. were mixed yesterday. Manufacturing, as measured by the ISM Index, slipped slightly in November, but Vehicle Sales were stronger. The ADP Employment Change saw 93,000 jobs created in November, so that's a peed at the Jobs Jamboree which will print tomorrow morning. and the Fed's Beige Book saw mixed results from the different regions.

Today, in the U.S., we'll see the color of the Weekly Initial Jobless Claims, which last week fell by quite a bit. I have to say that this week's will look goofy too. we have to get past the shortened Thanksgiving week, before we see a report that isn't skewed by the holiday.

Then there was this. The emergency measures by the Fed helped swell the country's deficit, something that was labeled on Wednesday as the greatest threat to America's prosperity and security.

The National Commission on Fiscal Responsibility and Reform made the warning as it recommended sweeping cuts in government spending and an overhaul of the tax system.

The commission, which was appointed by the President in February, laid out a plan to cut the U.S. budget deficit to 2.3% of gross domestic product by 2015 from 9% this year. "Savings need to be found across all departments, including defense and healthcare programs such as Medicaid", the commission said.

All I know folks is what I've been telling you for years now. the Deficit is out of control, and while I applaud the Debt Commission on their gutsy calls, it's now up to the Gov't to see if there's political will to implement these changes. I don't believe there will be, because of the threat of insurgency in this country. In any case though, I keep telling you that taxes will eventually be going higher.

My friend and former colleague, David Galland had this to say about taxes. "you may want to consider converting your IRA to a Roth, because the chances that taxes are going to be lower than they are today at any future point in time are slim indeed."

I can always depend on David Galland to put what I want to say, eloquently, and to the point!

To recap. the Cartel / Bernank pulled the curtain back and revealed to everyone just who and how much they loaned money to during the financial crisis of 2008. A total of $3.3 Trillion was loaned out during the financial crisis, and not just to U.S. institutions. The Bernank became the lender of last resort to the world! Spain saw good demand at their bond auction this morning, and briefly, that news pushed the euro past the 1.32 handle, but the single unit has slipped back below that figure. The Swiss franc is back to parity. Geo-Political fears continue to underpin the franc.

Currencies today 12/2/10: American Style: A$ .9670, kiwi .75, C$ .9870, euro 1.3165, sterling 1.5590, Swiss $1.00, . European Style: rand 6.9940, krone 6.1365, SEK 6.96, forint 211.30, zloty 3.0415, koruna 18.9510, RUB 31.42, yen 84.20, sing 1.3115, HKD 7.7690, INR 45.29, China 6.6613, pesos 12.37, BRL 1.7025, dollar index 80.53, Oil $86.79, 10-year 2.98% (could we actually see 3% in 10-year Treasuries again soon?) Silver $28.56, and Gold. $1,390.90

That's it for today. Well, I must be bad luck for the Blues, as they've lost every game I've been to this year, which thank goodness for the team is only 3! The Blues threw everything but the kitchen sink at the Washington Capitals goalie (some Russian name) but he stood on his head and won the game for his team. Thanks to Chris Gaffney who has the best seats in the arena, for the tickets. Chris has held season tickets to the Blues ever since I've known him, so long that the two seats he has have his name on one seat and his son Brendan's name on the other one. WOW! Alex has his first wrestling match of the year tonight. My beautiful bride, doesn't care for wrestling, and I have to admit it's tough watching if your son is losing the match! I was a wrestler in high school. Man was I in shape then! What the heck happened? HA! Ok. Suzy Q is here, that's my sign to get this out the door, so go out there and have a Tub Thumpin' Thursday! Bye!

Chuck Butler


EverBank World Markets



Posted 12-02-2010 10:02 AM by Chuck Butler