Swiss Franc At All-Time High VS Dollar!
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In This Issue.

* Bias to sell dollars.

* Commodities beat stocks & bonds!

* Delinquent borrowers.

* Ted Butler on CFTC.

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

Swiss Franc At All-Time High VS Dollar!

Good day... And a Terrific Tuesday to you! Another trading day around the holiday's heading into Year-End, and another trading day of tight ranges, with low volume of trades.. I told you yesterday that I thought we would see more of that and we did. I'll say one thing about these tight ranges, with little movement. When I was a younger man, with some hair, and quite a few pounds lighter, this is the way currencies traded most of the time. No wild swings like we've seen since 2008. If a currency trended higher or lower, it moved Steady Eddie, with not as much volatility. But since trading platforms reached U.S. consumers, and ETF's came on the scene, and a host of other things, that's all changed. Except for last week and this week, so far!

The bias to sell dollars this morning is prevalent though. not a strong bias, just a bias, with the Commodity Currencies still carrying the flag for the currencies VS the U.S. dollar. The stories I've read already this morning, say that the bias to sell dollars is being fueled by the fears that the S&P/CaseShiller Home Price Index will print today showing that home prices declined. If that were the case, and home prices did decline in October, (and I agree this is awfully backward looking!) , then the thought is that the Cartel/ Bernank would be keeping interest rates near zero in order to keep mortgage rates in check.

Well. That's the traders' story this morning, and they are sticking to it! But what happens if the Home Price Index doesn't decline? I would have to think that the bias to sell dollars fades very quickly. So. I guess we'll have to wait-n-see what prints at 8 (CT) this morning. But to me, I've said all along that Home Prices would decline at least 10% more, and we've already seen some of that decline in previous months. Zillow believes that Home Prices have another 5% to 7% more to fall, which would play well with my call from nearly a year ago.

The Consumer Confidence report for December will also print this morning, and like I said yesterday, it is expected to be stronger, which leaves your correspondent very confused as to what people are so darn confident about. But, then that's just me.

I noticed this morning that Gold is up $10, to $1,395. again, that has to be a result of the near zero interest rates remaining in place. I saw a report on the Bloomie this morning that Tom Kendall, the most accurate forecaster for 2010, (he works at Credit Suisse Group in London) believes that Gold could very well trade as high as $1,630 an ounce next year. according to Kendall, and I must admit he sounds like a Pfennig reader, "We're still in an era of unusual financial market instability and stress. We're going to stay with very low to negative interest rates in real terms and that's also very supportive for Gold. In China there's increasing imports of Gold and a real boom in retail investment in physical Gold, and Inflation is definitely playing into the market."

Good stuff! But for my money. I like the prospects for another outstanding year, where Silver outperforms Gold on a percentage return basis. In the old days this would be the part where I go out on a fat limb and make a call on that percentage gain for Silver next year, but the legal beagles won't let me do that anymore. But, if I say "This is just a guess on my part, I don't know any more than anyone else", then I could say +35%... But, again, that's just me. I could be as wrong as two left shoes.

Speaking of Silver. and other Commodities. ganged up on the other investment assets again this year. Commodities beat stocks and bonds for a second year in 2010.

Well. the heat is back on Chinese renminbi forwards. Now that the Chinese have raised interest rates (recall I told you yesterday that rates were hiked by 25 Basis points), they now have a wide yield differential to other Asian currencies, and therefore the calls for greater appreciation of the renminbi are pushing renminbi forward prices higher once again. This always seems to happen at the end of each month. But this time could very well take hold throughout the month of January and beyond.

Speaking of prices getting pushed higher. The Swiss franc, has reached an all-time record high VS the dollar this morning. I think back to 2010, and the top stories in currencies, and the Swiss franc has to be near the top of any of those lists! Think back to earlier this year. The Swiss National Bank (SNB) was intervening in the currency markets, selling francs, in attempt to stem their gains VS euros. I told you at that time that the intervention might work in the short term, but eventually the markets would win out, IF, the markets wanted to take the franc higher. Well. that's exactly what happened, and eventually, the SNB stopped trying to hold the franc down. The franc not only regularly booked all-time record highs VS the euro, but now has reached an all-time record high VS the dollar.

A couple of weeks ago, I gave an interview and when asked about the Swiss franc, I said, that "I believe the franc may have just about reached as high as it was going to VS the dollar". Well, looks like I put on those two left shoes here, because the franc has gained 2-cents since then!

Hey. did you hear that there are 20 Banks that received TARP, which was taxpayer assistance, have repeatedly missed making their payments on that loan? And the list of banks that failed to make their payment last month was a total of 132? And. here's the real kicker for me, that is until there are more. 7 banks that received TARP, failed any way, which means a total loss of the taxpayer money. So. while the Big Banks and Companies that received TARP get all the press for paying back their loans. There are a ton of banks that fly under that radar, and apparently they aren't flying to high! Just for the record, and I can't say any more than this, but EverBank never took TARP, or any other backdoor loan.

And then the Treasury yield rise was halted yesterday, with the 10-year Treasury falling 12 Basis points to 3.33%... I'm sure the "Bat phone" started flashing at the Cartel / Bernank's office, alerting them that something needed to be done to halt the rise in Treasury yields. But one day's trading / manipulation, doesn't scare me. I still think the Treasury Bubble is about to pop.

Then there was this. Now, you all know that I've said for some time now that I believe the Gold & Silver prices are manipulated by big bullion banks. and I've brought you up to date with the goings on with the CFTC (Commodities, Futures Trading Commission) and their findings that they believe what I believe. Unfortunately, the CFTC's hands are getting tied, and they can't make the claims that I believe they truly want to make, which would rock the precious metals markets to the foundations, and probably be like an Oklahoma land rush for Gold & Silver prices. In other words, they would take off to higher ground!

Well. I saw this comment from the famous Silver analyst, Ted Butler, (no relation that I know of, but he must be a very smart and good looking man with that last name! HA) .. This is an open letter to Bart Chilton of the CFTC. So, here's Ted.

"While I understand Commissioner Chilton's reluctance to be openly adversarial to the CME over the issue of [silver] position limits, the CFTC's attempts to work co-operatively with the CME have yielded nothing to date. The CME has been working overtime to undermine position limits. That must be stopped. My advice to Chilton is not to bring a knife to a gunfight. It is time to lower the hammer on these SOB's. And this continuing worry... that trading will migrate to other exchanges if legitimate silver position limits are established... is pure nonsense. Let the short silver crooks go wherever they want to go; no one will follow them. Legitimate traders want to operate on legitimate exchanges and in legitimate markets. The only thing the regulators must do is to insure that the crooks dealing on foreign markets can't link their crooked trades back to our markets."

To recap. The "holiday trading" continues with only a small bias to sell dollars this morning, due to fears that the S&P/CaseShiller Home Price Index will decline, thus keeping interest rates near zero. These fears are also carrying over to Gold which is up $10 this morning. The Swiss franc has reached an all-time record high VS the dollar this morning, and Commodities outpaced stocks and bonds this year to mark the second consecutive year of doing so!

Currencies today 12/28/10: American Style: A$ $1.0150, kiwi .7575, C$ $1.00, euro 1.3270, sterling 1.55, Swiss $1.0575. European Style: rand 6.6525, krone 5.9010, SEK 6.7720, forint 210.20, zloty 3.00, koruna 19.0875, RUB 30.23, yen 81.90, sing 1.2960, HKD 7.7805, INR 45.09, China 6.6250, pesos 12.31, BRL 1.68, dollar index 79.63, Oil $91.15, 10-year 3.33% , Silver $29.62, and Gold. $1,397.90

That's it for today. Well. my beloved Missouri Tigers take on Iowa tonight in the Insight Bowl from Arizona. The game begins at my bed time, so. I'll have to record it, and watch it tomorrow when I get home. UGH! Trading desks in NY were even thinner than usual at this time of the year, with the blizzard keeping people at home yesterday. I have a new picture on my desk of Delaney Grace, and her new brother Everett, whom I call the EverBaby, and my darling daughter, Dawn, made him a shirt that has "EverBaby" stitched on it. both of them are so cute! Gas was $3.18 this morning when I filled up. I just saw a thing on TV that said gas could be $6 by 2012. UGH! Oh well. it is what it is or shall be. and with that. I'll get out of your hair this morning. Hey! This is the first warning. there won't be a Pfennig on Friday. I'll be sleeping a little later to be able to keep up with the party after Andrew & Rachel's wedding! So. be good, warm, and have a Terrific Tuesday!

Chuck Butler


EverBank World Markets



Posted 12-28-2010 12:21 PM by Chuck Butler