The Lost Decade.
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In This Issue.

* Commodity Currencies show optimism.

* PBO injects most liquidity since 2008..

* Ted Butler on Silver.

* NFL Refs are back!.

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

The Lost Decade.

Good day. And a Tub Thumpin' Thursday to you! More time to reflect on things for your truly yesterday. A visit from good friend, Rick. And of course, markets stuff to talk about today. I'm writing from home, so I don't have the advantage of all the screens that surround my desk at work, but. who needs those stinking screens? I've got what's in my head to write about! No, wait, I had better refer to the watered down screens I have here.

Well, yesterday, we saw a reversal of the mini-rally from Tuesday, but from the time I hit the send button to the end of the day, the currencies didn't move much more and in the overnight markets they have attempted to rally, but the underlying bias to buy dollars right now is too strong. The markets seem to be waiting for Spain's 2013 budget so they can shoot holes in it I guess. A package of reform measures is to be presented today by the Spanish Economy Minister, which is one day ahead of the results of the Independent audit of Spanish banks. It is thought that the audit will show that the largest Spanish banks are doing OK, and that the rest of the banks will need about 60 Billion euros to recapitalize.

Remember, that this recapitalization has all been previously funded and approved. You might also recall me telling you a few months ago, that the calls for a collapse of the Spanish banks was going to be proved to be wrong, and that the banks would need less than 100 Billion to recapitalize. Oh, and Italy auctioned 5.65 Billion of euro bonds this morning, and a slightly less yield than the previous auction. So, that's a good a thing for them.

The Commodity Currencies were the best movers overnight.. there doesn't seem to be any major cause of this move by the Commodity Currencies, and don't get too lathered up, just because they were the best movers overnight doesn't mean the moves were HUGE! But, optimism is showing its face this morning, optimism that global growth isn't dead. Chris told you about the stronger results in China earlier this week, and while they weren't like previous China growth figures, at least there was a heartbeat, a pulse for global growth.

None of that optimism for global growth comes from the U.S. Yesterday, we saw some sobering news on Housing, which was previously thought by the markets that it had turned a corner, only to see August New Home Sales slide by .3%... the median sales price for new homes was actually 17% above its year ago level. WOW! So, apparently, the cheap prices are a thing of the past. and that probably had more to do with the slide in sales than anything else, eh?

Today's data cupboard has the usual Thursday fare of Weekly Initial Jobless Claims. Added to that are today's specials of Durable Goods Orders, which I think will show a significant drop in August. and a final revision of 2nd QTR GDP. These revisions of GDP really begin to get pretty long in the tooth before they put them to bed. Look, we're about ready to end the 3rd QTR and we're still "revising 2nd QTR GDP". Well, I doubt that even the Gov't can cook the books much more than to show that the 2nd QTR GDP was only 1.7%...

The Peoples Bank of China (PBOC) announced last night that it had added more liquidity to the money markets this week, than any other week since 2008. Now, come to think of it.. This probably was the impetus behind the Commodity Currency move overnight. It's going to take me a bit before I'm all over this stuff like a cheap suit again. I'm really trying to get into analyst shape while on the job! HA!

Did you see the roller coaster ride that Gold went on yesterday? Strange moves, folks. something that the CFTC should be looking into, but won't. Gold rallied in the early morning, then got slapped down by $10 in a matter of 5 minutes, then went about trying to recover the lost ground the rest of the day, only to see another round of selling, pushing it down about $7 on the day. Silver's moves were more subdued. I get so hot under the collar about these apparent "take downs" of Gold & Silver when they happen, and just can't reconcile in my mind how this just blows past everyone, without people taking to the streets demanding answers. The media, just doesn't get it, or refuses to get it. there's got to be a recognized journalist out there that would take this job. where are you?

Silver guru, Ted Butler (no relation that I know of), believes that he's seeing pension and hedge funds beginning to take on large positions of Silver. Here's a snippet from Ted Butler. "Let's face it these super sharp investors have missed the Silver boat to date. It is highly unlikely that they will miss it forever." He went on to talk about how he believes that when hedge funds learn how simple it will be to take down the manipulators by just buying metal, that they will be excited to do so.

Yes, it would be nice to have the hedge funds on our side for once! I saw a story on the internet that quotes Bank of America and Deutsche Bank on where they see the price of Gold heading. Now, always, always I tell you, be yourself. no wait! I always tell you to take these things with a however many grains of salt that you wish, but they should be tempered in that you never really know what their intentions are in making statements on prices. They could be long the asset and hope to whip up the lather so that there's a flurry of buying. anyway, with that disclosure out of the way. Bank of America believes that they can make a case for moving their previous target price of Gold from $2,400 to $3,000. WOW! $2,400 was lofty enough, eh? And Deutsche Bank sees $2,000 for Gold's price "soon". And Citi says $2,500 in 6 months.

Central Banks around the world are buying Gold & Silver. they have been for some time, ever since the money printing presses were turned on by the Fed. remember what I told you about what a wise man once told me about if Central Banks are buying an asset.

The Swiss National Bank (SNB) has been buying Eurozone bonds to help keep the 1.20 cross to the euro in place. But now the SNB has all these Eurozone bonds on their books. I told you long ago that to maintain the cross that the SNB would buy euros and sell francs. They went a step further by buying Eurozone bonds, which means they had to sell francs to buy euros to pay for the bonds. Well, at least they are getting some good interest rates to hold those bonds.

That's better than the stuff the U.S. Treasury keeps forcing on the markets. But then the Fed is a mission to own more and more of those debt issues. You have to wonder when the markets see this sensuous activity by the Fed as too much. Apparently 61% of the auction last year wasn't the number. so, the Fed will continue to push the envelope on this, just like a brat kid that just keeps pushing the envelope until the parent has had enough!

Not much else to talk about today. the NFL refs are going back to work. after what happened Monday night, you knew something would get resolved soon. That was real shame for the NFL.

Then There Was This. I read this on the Bloomberg this morning. "The 1990s were a lost decade for Japan. The 2000s delivered a lost decade to U.S. investors. Now, five years into the onset of the financial crisis, with stock and bond markets booming, housing resurgent, and even Detroit redeemed, it's savers who find themselves in a lost decade.

This runs counter to the lessons of the credit bubble. We were urged to spend less, save more, tell fewer lies on our mortgage applications. Problem is, the jumbo monetary response to that era's excesses-0 percent interest rates, followed by trillions in quantitative easing and a vow to keep rates this low until at least 2015-is bent on getting people and companies spending and investing (and out of cash) at pretty much any cost.

With the Fed having done everything in its power (and then some) to jackhammer down the Treasury curve, the average money-market fund yields 0.12 percent, which is bank boilerplate for nothing. A one-year CD offers 0.30 percent, and a 5-year certificate pays 1 percent. Your aforementioned 10 grand-no doubt dearer to you in this era of chronically high unemployment and uncertainty about retirement-huffs and puffs to produce a mere $100 in annual income. Back out taxes and inflation, and you're losing money in a bank account-however FDIC-insured it may be."

Chuck again. yes. the lost decade. Remember when I kept telling you that we were turning Japanese, yes I really think so? Well, the Japanese still haven't come out of that lost decade, that doesn't bode well for us, eh?

To recap. The currency sell off yesterday morning faded and in the overnight markets the Commodity Currencies rallied albeit a muted rally, on news that the Peoples Bank of China had injected more liquidity last week than any other week since 2008. Global growth isn't dead. It's just a faint heartbeat. but, at least the hear is still beating. Ted Butler gives us his thoughts on what will turn Silver around for good, and Chuck talks about the lost decade.

Currencies today 9/27/12. American Style: A$ $1.0415, kiwi .8285, C$ $1.0170, euro 1.2860, sterling 1.6205, Swiss $1.0645, . European Style: rand 8.2085, krone 5.7375, SEK 6.5680, forint 221.40, zloty 3.22, koruna 19.3375, RUB 31.15, yen 77.60, sing 1.23, HKD 7.7535, INR 53.01, China 6.3035, pesos 12.84, BRL 2.0420, Dollar Index 79.79, Oil $90.93, 10-year 1.64%, Silver $34.09, and Gold.. $1,757.80

That's it for today. thanks to all who sent welcome back notes yesterday. All were so nice, except one. The guy said "the big mouth is back, with his nonsense". I told him to get used to it, because even after I retire, I'll continue writing the Pfennig! HA! Cards take a tough loss last night, and come home for the final 6 games of the regular season. Can they hold on? I would have felt more secure about that if they had won last night! One more day at home, and I'll attempt to go to the office tomorrow. Mike Meyer heads out to his bachelor party weekend today. Hmmm, somehow my invitation to that got lost in the mail I guess! HA! Shoot Rudy, I'm too old to attend a young man's bachelor party! When son Andrew had his bachelor party, I went along until about 10 o'clock, then went home! And with that. I hope you have a Tub Thumpin' Thursday!

Chuck Butler


EverBank World Markets



Posted 09-27-2012 4:01 PM by Chuck Butler