Moody's & JoJo the Monkey.
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In This Issue.

* Euro remains on rally tracks..

* Gold & Silver are soaring again!

* Oil pushes the loonie to $1.03

* Aussies & kiwis on the mend.

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

Moody's & JoJo the Monkey.

Good day. And a Marvelous Monday to you! It will be a tough day for Chris, as today is his father's wake, with the burial / mass tomorrow. It was an interesting weekend for yours truly, and I'll get into that in the Big Finish. I'm writing from home this morning, as my beautiful bride is already in Florida (I get there on Thursday!) , which means I had to write the letter, get ready for work, make Alex his breakfast, and lunch, and get him to school by 6:30 for jazz rehearsal. Not looking for any accolades here, just pointing out that a "guy" can get all these things done!

Well. I was off a bit on my call for a disappointing Jobs Jamboree. Recall, that the "experts" said 200,000 jobs were created in January, and I told you about the downside risks to that number saying 175,000, would be the top. Well, it wasn't 200,000. and it wasn't 175,000 either. it was 192,000. I've been through all the explanations about who gets counted, and so on, the ghost jobs, and the fall in the unemployment rates, so I won't bore you with those details again. I'll just say, that 192,000 is better than a sharp stick in the eye, like the 300,000 monthly job losses we saw a couple of years ago. but it's not enough to fuel a strong economy.

When I signed off on Friday morning, before taking a quick tour of EverBank Field, and then boarding a plane for home. The currencies had backed off their lofty overnight levels, but were in still "rally mode" VS the dollar. And they remained like that the rest of the day. Silver was the best performer of the day, gaining 1.76% to nearly $36!!!!! Gold touched a new record high of $1,440. And the price of Oil hit $105. which has really pushed the Canadian dollar/ loonie to $1.03!

I read a story this past weekend, about Fed Heads calling for an abrupt end to the QE2 bond purchases. Well. I guess their calls are falling on deaf ears, because the CABAL will make purchases of about $25 Billion this week. So. neener, neener, neener. You're not the boss of me, you can't tell me what to do! I'm laughing loudly right now, because I'm thinking that Big Ben Bernanke is the one sounding like a 7-year old with the Fed Heads. HA!

So. this morning. well, the euro briefly fell below 1.40 on news that Moody's downgraded Greek debt by 3 grades! Whoa there partner! I've never seen that before! 3 grades, and didn't stop there, they also hang a "negative outlook" for Greek debt. I have to chuckle a bit here, because, JoJo the monkey, who performs tricks at the children's zoo, probably already believed that Greek debt had a "negative outlook"! But, a year later, Moody's comes along to do the trick. UGH!

But my trusty, "Bloomberg Anywhere" tells me that the euro has shaken the affects of that downgrade to one of its "outlaw states" (Greece), and is back to pushing higher VS the dollar, and yen this morning.

Other than Silver.. The best performing currency last week was the Brazilian real, and the worst performing currency last week was the New Zealand dollar / kiwi. Well, the real, saw a 50 Basis Point internal rate hike to push it higher, and kiwi heard all the calls for a rate cut to help the country deal with the aftermath of an earthquake. The Brazilian Gov't continues their assault on a strong real, by buying dollars and selling real, by the truckload about once a week, but it hasn't stopped the real from gaining 7.5% in the past year VS the dollar. and when you take into consideration the interest earned on the real, the overall return is nearly 14%.... Not too shabby, for a "diversification hedge" , eh? But, here's where I pop the balloon on this seashells and balloons talk about reals. Don't forget that Brazil is still considered to be an "emerging market", which says simply that the volatility can be quite wild sometimes.

I say, look at kiwi like this. If the Reserve Bank of New Zealand (RBNZ) does decide to cut rates, in an effort to assist the country, the cut has already been priced in. (unless the RBNZ says something like, this is the first of many cuts to come, which I don't think they will). and therefore, the level we're seeing for kiwi, could. and I mean to emphasize, "could" represent a contrarian's view of an opportunity to buy a cheap asset.. The rebuilding of New Zealand is already beginning, as Home-Building approvals increased the most since 2009, last month. And yes, before everyone fires off emails to me telling me about Hazlitt's broken window, and so on. This rebuilding is a good thing for New Zealand's economy.

The job advertisements were very strong in Australia last month. So. the Aussies and kiwis are on the mend..

The Chinese renminbi continues to move higher VS the dollar, in baby steps, but still it's a one-way move these days. Now, that's not to say the renminbi can't lose ground VS the dollar, I'm just saying that recently the move has been one-way. I believe I'll be talking to a reporter tomorrow about the Chinese renminbi. And for those of you that plan on attending the Las Vegas Money Show at the end of April, I'll be talking about how I believe the renminbi is going to be the next reserve currency of the world. And no, I don't mean in the next year, or two years, or even three years. But eventually, as these things take time to wind through.

Well. looky here! The boys and girls over at Morgan Stanley, have removed their bearish outlook for the euro (VS the dollar), and now believe that the euro will end 2011 at 1.45.

In my opinion, that's all fine and dandy, except for the debt solution resolution that I've been talking about, that hangs over the euro like the Sword of Damocles! Last Friday, I said that the euro needed to beware of the Ides of March, and that thought remains, and the Eurozone leaders have this month to come up with their solution.. If they don't, I don't care who removes their bearish outlook for the euro, the single unit will get hammered. But, then. if the response to a crisis can be solved. then look out, because here comes the Big Dog! The European Central Bank (ECB) is going to hike rates soon, and it will be "game on" (Wayne and Garth style!) for the euro!

I had someone ask me to explain, "Risk On". So, here goes. basically, when the markets are buying up "risk assets" like currencies, stocks and commodities, the "risk aversion" has been removed from the markets, and therefore I call it a "Risk On" day, which simply means that it's all seashells and balloons for the risk assets.

Well, the data cupboard here in the U.S. is pretty bare for the first 3 days of this week, but then about the time I'm boarding a plane for spring training on Thursday, the data begins to come in strong! Data prints like: the Trade Deficit, Weekly Jobless Claims, and Retail Sales. I won't be around when the Retail Sales prints, but I can tell you that the Butler Household Index (BHI) tells me that it should be a strong report. Retail Sales are going to reflect a huge surge in car sales in February. Of which I participated!

Then there was this. "Utah took its first step Friday toward bringing back the gold standard when the state House passed a bill that would recognize gold and silver coins issued by the federal government as legal currency. The legislation now heads to the state Senate, where a vote is expected next week.

Under the bill, the coins would not replace the current paper currency but would be used and accepted voluntarily as an alternative.

If the bill passes, Utah would become the first of 13 states that have proposed similar measures. The others states are Colorado, Georgia, Montana, Missouri, Indiana, Iowa, New Hampshire, Oklahoma, South Carolina, Tennessee, Vermont and Washington."

Chuck again. that's pretty interesting stuff, eh? Talk about sending a message to the rest of the country and out the leaders charged with providing a strong currency. WOW!

To recap. The carryover of the news from Thursday that the ECB is preparing to hike rates, has put some wind in the euro's sails, and it carried over the 1.40 level. there's been some slippage on the news that Moody's downgraded Greek debt by 3 grades, but, as I get ready to hit "send" the euro is back on the rally tracks VS the dollar and yen. The Canadian dollar / loonie is $1.03, as the price of Oil picks up steam and is over $105! The Brazilian real was the best performing currency (excluding silver) last week, and the New Zealand dollar / kiwi was the worst performing.

Currencies today 3/7/11. American Style: A$ $ 1.0160, kiwi .7385,C$ $1.03, euro 1.4020, sterling 1.6320, Swiss $1.08 (WOW!), . European Style: rand 6.8780, krone 5.5525, SEK 6.33, forint 193.70, zloty 2.8385, koruna 17.2920, RUB 28.07, yen 82.10, sing 1.2645, HKD 7.7870, INR 45.06, China 6.5630, pesos 12.01, BRL 1.6545, dollar index 76.20, Oil $106.20, 10-year 3.51%, Silver $36.48, and Gold. $1,438.00

That's it for today. I'm doing good on time this morning, so I can stop racing around on the keyboard! Cat Stevens' song Morning has broken is playing, but it's still pitch black outside! So. I got to go to the Missouri Valley Championship game yesterday (Thanks Rick!) but Missouri State couldn't win. UGH! (Not that I have an axe to grind, but they did represent the state!) Saturday night, I hosted a small get together for Alex and his friends. 13 - 15-year olds. I was glad when that was over! Dawn and Jerry came over to help chaperone, which meant I got to see Delaney Grace, and Everett the EverBaby! He's getting to be real pudgy, which is always so cute on babies, but not adults like me! As I always tell audiences that I talk to. I take it real personal, when I hear people blaming "fat bankers' for their problems! HA! It was great to see EverBankers last week. especially, the mortgage guys that I learned all read the Pfennig! They called me, "Mr. Butler" that cracked me up! A special mention to three of them that asked to me mentioned in the Pfennig: Bryson Bede, Matt Suresly, and Michael Smith. OK! Let's get this out the door. I hope you have a Marvelous Monday, and stay strong Chris!

Chuck Butler


EverBank World Markets



Posted 03-07-2011 9:44 AM by Chuck Butler
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