Some Calls For The Return of the King Dollar.
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In This Issue.

* U.S. jobs data blows out expectations.

* Bias to buy dollars is strong.

* RBNZ to go on kiwi bashing.

* RIP Alvin Lee.

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

Some Calls For The Return of the King Dollar.

Good day. And a Marvelous Monday to you! Geez Louise, I can't seem to catch a break here health-wise. I came down with a very nasty cold this weekend, one that keeps me up at night. But, it's just a cold, and in two weeks it'll be gone. I know all the tricks of the trade in making it shorter, so I've already started to implement them!

I think the weather Gods decided to make up for our lake of precipitation last year, all in one weekend, as we were pelted repeatedly with rain. But as my bride told me yesterday, as she sat in the warm sun of Florida at Roger Dean Stadium, "at least it's not snow".

OK. So, did you see the jobs report from Friday? WOW! The BLS says that we added 236,000 jobs in February. Good for us! Way to go! And all that stuff! I was so wrong on my thought that the number would be disappointing that I was almost right! (get it?) That's pretty wrong, folks. So I had to dig deeper. The BLS did add 102,000 jobs to their survey figures, so the number was trumped up a bit. and. the actual number of full time jobs decline by 77,000, offset somewhat by a rise in "part time jobs". And here's one tidbit you the major news people didn't tell you about. the number of multiple job-holders rose by 340,000! But let's not dwell on that. Let's say, Hey! Way to go! Now keep it growing!

The bias to buy dollars was very strong after the report last Friday. So, the dollar traded in a fundamental way. The way it should, when posting a strong jobs report. I do think though that the analysts out there are going gaga a little too much. There is talk already about a "king dollar" once again. Haven't we seen this before? 2005, 2008, and so on? I think before I begin to join the conga line, and do the bunny hop for the "king dollar" I'm going to sit out, and watch this all unfold a little more. I AM from Missouri!

The Japanese yen sure took one to the chin on Friday, with the bias to buy dollars so strong. The yen went through a whole figure, and ended the day at 96. In my last article I wrote for the World Money Analyst, I said that all those that thought the end of the yen's weakness was at hand, would be proved wrong. It has lost 3 whole figures since that article went out!

On Friday, I told you about the current slowdown from what I had thought was a rebound in the Chinese economy. Could just be a blip. and then it could be the beginning of another round of weakness for the Chinese economy. Either way, right now, the thought of a slowdown has really bit into the Aussie dollar (A$)'s strength. The markets are looking the other way, when reports get written about the strength of the Aussie economy and the renewed confidence of the people there.

For those of you keeping score at home, the Chinese data that printed this past weekend, had mixed reviews. inflation was stronger than expected, along with retail sales and industrial production, but weaker fixed asset investment. So, the markets didn't know what to make of the data, inflation had been a real bear to break for the Chinese last year, but the retail sales and industrial production were good, indicating good domestic demand, which is what the Chinese Gov't desperately want.

Speaking of renewed confidence. my long time friend and reader, Bernie, sent me an article from BNZ on New Zealand Confidence. it read, "our second monthly BNZ Confidence Survey for 2013 has found that in spite of the spreading drought, export-suppressing high exchange rate, and worries about housing affordability, sentiment regarding where the economy is heading has improved to the highest level since July 2011. A net 41% of businesses are confident about the year ahead compared with a net 32% in February."

So. maybe that's something that can underpin the New Zealand dollar/ kiwi. But then how many traders will see this report? Or how many will read the Pfennig? In reality, as I can play these games in my head about millions of Pfennig Readers, but that's what they are. mind games. Also, the Reserve Bank of New Zealand (RBNZ) meets this week. I don't have all my trusty screens here at home with me, so sometimes I have to generalize these things.

Anyway, the RBNZ will most likely keep rates unchanged, and here's the "in reality" comes in to play folks. While the RBNZ will keep rates unchanged, they will not miss the chance to diss on the currency's high exchange rate. So, get ready for the dovish overtones, and kiwi bashing.

Gold didn't seem too impressed with the U.S. jobs data from last week, and it traded in a very tight range. I was reading Ed Steer's letter this weekend, and he had an interview with a big shot at the Perth Mint, where over $3.5 Billion worth of vaulted metals are stored. The Perth Mint has this to say about the recent downward move in Gold. "On the depository side of the business.across the board we're not seeing any rush to buy with the price dropping down into the $1500 range-but nor are we seeing any selling. I think that's quite positive. It tells me that [they're] very much strong hands, and are not selling on this price weakness. They're not fazed by it.[so] from our clients we're not seeing any fear or selling action."

That's always nice to read. that a depository the size of the Perth Mint, isn't see a rush to sell Gold, or other metals for that matter. As I've said before, and will continue to say, until these guys go away, or go to jail. the paper trades, are dictating the price of Gold and other metals right now. When these guys aren't allowed to go short more ounces than has ever been minted, we'll see the true price of Gold again, that's dictated by supply and demand.

Well, the U.S. wasn't the only country to post a strong jobs report, albeit skewered a bit. Canada also posted a very strong jobs report last week. Canada's employment data showed that job increases soared in February by 50,700, which more than reversed the nearly 22,000 drop in January. But that's not all. (Ok, that sounded like one of those info- commercials) Canada also saw their housing starts rebound in February by a strong margin. The loonie's performance in recent weeks has been very disappointing, so maybe this can help in a retracement, even if it small, it would be welcome.

The currencies, for the most part, are pretty flat this morning, after Friday's dollar rally. Last night I checked the currencies, and the euro had fallen below 1.30, but this morning, it is back above the figure, albeit, barely. In Spain, they still haven't been able to form a Gov't, but the parliament convenes this week, so that should goose the process! That relative calm that had been over the Eurozone for the second half of 2012, has really been getting battered as we start 2013. Spain, Italy and Cyprus are all pushing the envelope against relative calm. Some things just never change folks. Before the Eurozone became a reality, I remember writing about Spain and Italy and calling the Club Med. Well, in those days, they were always blowing up and starting over.

Speaking of Italy. I saw that Fitch (the ratings agency) downgraded Italy to BBB. not good, but very much expected. Still, I think Fitch was being a little hard on the Beaver.

The U.S. data cupboard is bare today. the big data print this week will be Retail Sales for February. Since I've been home for over a week now, I can see all the packages that get delivered to the house, so that's been added to the BHI (Butler Household Index). And that tells me that Retail Sales should be quite strong in this print. Apparently, the payroll tax, hasn't had any effect on people's ability to spend. Hmmm. you know what the Gov't is going to say if this continues don't you? It'll go something like this. "well, the payroll tax didn't slowdown consumers, so let's begin to bump up the taxes some more. just a little at a time, so they don't notice." Sort of like the frog and the pot of boiling water. you know the old story..

Then There Was This. I read this story on the Bloomberg yesterday as I went into the office to just clean up some stuff before I leave on vacation. The story is about how Big Ben Bernanke asserted last month that the Federal Reserve doesn't ever have to sell assets, choosing to hold the trillions of bonds they hold until maturity. He believes this would stop yields from rising rapidly. But the chief economist at Barclays has a problem with this holding bonds to maturity. Let's listen in.

"Given that the Fed's total assets have reached an unprecedented level of more than $3 Trillion, leaving them untouched when the economy picks up may stoke inflation", according to Dean Maki , chief economist at Barclays Plc. He went on to say, "If the Fed doesn't withdraw quickly enough, there's a risk of overshooting. If the Fed gets rates back to a typical level and the economy is back to what's regarded as normal, does having an expanded balance sheet have a notable effect on the economy, on asset markets, even once rates are normalized? We haven't really had that situation in the U.S. before."

Chuck again. yes, and can you imagine the size of the Fed's balance sheet when the finally stop buying $85 Billion in mortgage backed bond and Treasuries each month? I know that a couple of Fed Heads recently questioned the continuation of this practice, but as I've told you for some time now. Big Ben Bernanke will get his way, and with Vice Fed Chairman, Yellen, singing from the same song sheet, as Bernanke, then you can count on these monthly purchases continuing through this year.

To recap. The Jobs Jamboree here in the U.S. was just that on Friday. A Jamboree! The BLS said that 236,000 jobs were created in February. WOW! Chuck finds some chinks in the BLS's armor, but, doesn't dwell on them. The jobs data gave the dollar a bias to be bought, and bought it was! Chinese data over the weekend was mixed, and not enough to take away the recent thoughts a slowdown returning to China.

Currencies today 3/11/13. American Style: A$ $1.0235, kiwi .8220, C$ .9720, euro 1.3005, sterling 1.4905, Swiss $1.0520, . European Style: rand 9.1370, krone 5.7230, SEK 6.4070, forint 232.90, zloty 3.1840, koruna 19.6490, RUB 30.75, yen 96.05, sing 1.2490, HKD 7.7570, INR 54.43, China 6.2185, pesos 12.63, BRL 1.9440, Dollar Index 82.73, Oil $91.70, 10-year, 2.04%, Silver $28.83, and Gold.. $1,576.70

That's it for today. and for awhile for me. As I head to Jupiter to get more stupider! HA! I'm hoping that the warm sun, the smell of fresh cut grass, the crack of the bat, and those beautiful Cardinals uniforms are enough to get me feeling better! Congrats to our St. Louis Billikens, who won the A-10 Basketball Championship this past weekend. The team's head coach, Rick Majerus, died in December, and the team didn't fold like a tent. They played inspirational basketball. Somewhere Rick Majerus, is smiling. My two boys have their first water polo game of the year tonight. Andrew coaching and Alex playing. I love it that that Alex plays for Andrew. I will sit in the stands, and be the proud father of these two. On a sad note, one of my fave guitar players, Alvin Lee died last week. He went into the hospital for a minor procedure and died. so sad. Ahhh, spring training, it's finally here. Of course the past two weeks haven't been the way I would have liked for them to have gone, but I have no control over what happened, so I'll just play through. And with that, I want to thank you for reading the Pfennig, and hope you have a Marvelous Monday. bye.

Chuck Butler
EverBank World Markets

Posted 03-11-2013 10:24 AM by Chuck Butler
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