Finding Another Can To Kick Down The Road
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In This Issue.

* Currencies & metals try to find terra firma.

* Gold paper trades hurt its price.

* Foreclosures turn to short sales.

* ECB & BOE meet today.

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

Finding Another Can To Kick Down The Road

Good day. And a Tub Thumpin' Thursday to you! Yes, it's me. I bet some of you thought, "geez he's finally stopped writing and crying wolf" Well, sorry. but I'm here to cry wolf even louder! At least when I began crying wolf, most of what I was ranting about has come true. better than the crying of wolf by the U.S. Gov't on the Sequestration. Of course, you'll only have to deal with me for 3 days, and then I'm gone again. Last week was hell week for me, health wise, and that's all I'll say about that. but, much better now, and as Chicago used sing, "feeling stronger every day"!

Before we get into the currencies and metals, economies and whatnot. Front and Center, you should know in case you missed the news last night, that U.S. lawmakers found another can to kick down the road. Recall I warned you a few months ago about the March 27 deadline to come up with measures to keep funding the Gov't. The House on Wednesday took the first step to avoid a Gov't shutdown by approving a bill to provide $982 Billion in funding for the second half of this fiscal year (Sept 30). I was sort of hoping that this would get right down and dirty. I love it when the lawmakers have sweat rolling down their foreheads, like people that actually work for a living! But. I digress. the can has been kicked.

In my best Andy Rooney voice. Ever wonder where the lawmakers got that $982 Billion to fund the Gov't? You and me. Always remember, the Gov't doesn't make money. they steal it from us, no wait. they tax us. I'm sure the legal beagles will be sweating over that statement!

Ok. turning the page.

Well, the stock market continues to soar. good for it! Haven't we seen this before? It was just over 13 years ago, folks. I know that in time pain goes away, but that pain was too devastating to forget! The Fed's Beige Book printed yesterday, and in it, 2 of the 12 Fed districts said their economic activity was "slow". The previous report showed that all 12, had showed "moderate" growth. Now, wouldn't it be nice if we knew which two were "slow"? Because if it's any combination of California, Illinois, New York, or Texas, that would not be good! So, let's just forget about the two "slow" districts, and say that the rest of the districts see "moderate:" growth. Does "moderate" growth, indicate a soaring stock market to you? It doesn't to me, but oh well, it is what it is, right?

The currencies, for the most part, stronger this morning, than yesterday afternoon. The euro fell to a 3-month low below the 1.30 level, but it is back up above that level this morning. The European Central Bank (ECB) is meeting this morning, and traders are now removing the short euro trades on fears that the ECB would cut rates today. Of course, all they had to do was to ask me, and I would have saved them the trouble! HA! Seriously, though, why would the ECB cut rates now? Sure Italy is a mess again, but their mess is political (isn't it always?) Spain's bond auction this morning went off without problems, and yields dropped, thus showing faith in that bond auction.

I read a report on the Bloomie last night about how European shoppers are out in force these days. So, that's not what brings about rate cuts, folks.

The British pound sterling dropped below 1.50 overnight. The Bank of England (BOE) is also meeting today, and while there's no expectations of anything happening, there is a rumor going round that someone's underground, and. no wait! The rumors going around in England is that Chancellor Osborne, is about to hand over more powers to the new incoming BOE Gov. Mark Carney. I think that the markets see this as a move to implement "fiscal conservatism and monetary activism". OK, that's central bank parlance for: Carney is going to be more active in the markets to meet his objectives. Which probably means more bond purchases.

The Aussie dollar (A$) has rebounded overnight from its lows yesterday. The Australian Trade Deficit printed and showed a widening of the deficit that was greater than expected, and that news saw many short A$ trades unwound, as traders are coming around to the "Chuck thought on the need for rate cuts in Australia". Which is, in case you've missed class too many times and might have to repeat your current grade, that there is no need for additional rate cuts in Australia. The Reserve Bank of Australia (RBA) cut rates by 175 Basis Points (1.75%) last year, and those rate cuts have yet to push fully through the economy. But. if the Trade Deficit is widening, one would think that the domestic demand is stronger. so no need for a rate cut!

The Japanese yen, which saw another pause for the cause last week, is back on the slippery slope downward this morning, reaching the 94 handle and moving past it. Seems the new Bank of Japan (BOJ) Gov. Kuroda, is feeding the sharks. Kuroda said that "so-called bank-note rule isn't a standard among central banks." He said that because he wants to rip the doors open on bond purchasing, and right now he has a limit on bond purchases. And I don't think he can get the markets to go along with his plan to weaken the yen, without a huge bond purchase program. You know, like the one we have here in the U.S. It's done a great job of doing damage to the dollar.. Monkey see, monkey do. eh?

I was doing some reading yesterday, and came across a story that said China was not happy with Japan's yen weakening. China's Sov. Wealth Fund, sent a warning to Japan about the currency wars. So. great, just what that region needs is more tension between Japan and China. Geez Louise!

Gold is down about $2.50 this morning. I still shake my head in disgust almost every morning that I look at the Gold price. The disgust is over the ability of the bullion banks to continue to push down the price of Gold & Silver with their short positions. Physical demand of Gold & Silver remain strong. take for instance the latest news from S. Korea, where they added 20 tons of Gold last month.. And that wasn't a one and done thing. that was the fifth purchase since July 2011, and has raised S. Korea's Gold holdings to 104.4 tons! Hopefully, S. Korea was smart enough to demand delivery of those purchases.

Did you happen to catch CNBC's Rick Santelli's rant on paper Gold trades the other day? In addition, did you see that the U.S. Gov't has asked CFTC Chairman, Gensler to remain at the CFTC. Hmmm. Well, I have lots to say about that, but I know for certain it won't clear the legal approval. So, like that old Peter, Paul and Mary song. "I think I could say somethin' if you know what I mean. But if I really say it, the radio won't play it"

A story in the Wall Street Journal (WSJ) the other day made me shiver. "the number of American homes that end up in foreclosure has started to decline, a welcome development that partly reflects an improving housing market. But a look a the data that tracks distressed home sales reveals another reason why foreclosures are becoming less prevalent: More homeowners are turning to so-called short sales - where they sell their homes for less than what they own in mortgage debt and the bank typically eats the difference."

So, while I think this is far better than foreclosing, it does skew the numbers in home sales, etc. doesn't it? Somebody is taking a loss, folks. and before you say, "hey, if it's the bank, they deserve it", you better stop and think about what happens to losses.

The U.S. data cupboard has some data, not really market moving data for us today. the usual Tub Thumpin' Thursday fare of Weekly Initial Jobless Claims which continue to have some ugly streaks on its face. In addition, the Trade Balance which expected to widen from the previous month's deficit of $38.5 Billion, to around $43 Billion. And then the Challenger Job Cuts report, which will hopefully be an indicator of the Jobs Jamboree that will take place tomorrow!

Then There was This. my good friend, Rick sent me some data the other day, that he said, "as soon as I saw it I thought of you". It's a "then and now" thing. the "then" was 2008, start of financial meltdown. so here you go, it's not pretty. Since the financial meltdown to now.

Dow Jones Industrial Average: Then 14164.5; Now 14164.5 Regular Gas Price: Then $2.75; Now $3.73 GDP Growth: Then +2.5%; Now +1.6% ;Americans Unemployed (in Labor Force): Then 6.7 million Now 13.2 million; Americans On Food Stamps: Then 26.9 million Now 47.69 million; Size of Fed's Balance Sheet: Then $0.89 trillion Now $3.01 trillion; US Debt as a Percentage of GDP: Then ~38%; Now 74.2%( I know it to be 95%) Total US Debt Outstanding: Then $9.008 trillion; Now $16.43 trillion; US Household Debt: Then $13.5 trillion; Now 12.87 trillion; Labor Force Participation Rate: Then 65.8% Now 63.6% Consumer Confidence: Then 99.5; Now 69.6; S&P Rating of the US: Then AAA Now AA+; 10 Year Treasury Yield: Then 4.64% Now 1.89% USDJPY: Then 117; Now 94; EURUSD: Then 1.4145; Now 1.3050 Gold: Then $748 Now $1583 NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares .

Chuck again. It's a sad day in Mudville..

To recap. the U.S. lawmakers have found another can to kick down the road. The BOE and ECB are both meeting this morning, but no rate movements will come from the meeting. The euro dropped below 1.30 yesterday, but has rebounded back above the figure on a good Spanish bond auction and no rate cut expectations. The pound sterling fell below 1.50, and looks to be in trouble.

Currencies today 3/7/13. American Style: A$ $1.0265, kiwi .8295, C$ .9705, euro 1.3020, sterling 1.4995, Swiss $1.0465, . European Style: rand 9.1660, krone 5.6995, SEK 6.3725, forint 229.95, zloty 3.1850, koruna 19.6090, RUB 30.75, yen 94.15, sing 1.2470, HKD 7.7570, INR 54.56, China 6.2201, pesos 12.78, BRL 1.9650, Dollar Index 82.40, Oil $90.75, 10-year 1.92%, Silver $28.95, and Gold.. $1,582.90

That's it for today. too bad for our St. Louis Billikens who had a chance to insure their first league championship in 40 something years last night, but couldn't win at Xavier. They can still go for a share of the league championship on Saturday. I just packed Alex's lunch, and sent him out the door. He goes and lifts weights early on Tuesday and Thursdays. He's one strong kid. he reminds me of me when I was his age. He's much smarter than I was for sure! He stays up late every night doing homework, and I used to stay up late every night working as busboy at Trader Vic's! One of these days, I'll feel comfortable talking with you about last week, but not now. Let's just focus on the fact that here I am, writing as usual, full of you know what and vinegar! So, with that. I hope you have a Tub Thumpin' Thursday!

Chuck Butler
EverBank World Markets

Posted 03-07-2013 1:45 PM by Chuck Butler