In This Issue…

* Spain & France have successful auctions…
* Aussies show job losses in December…
* China to consider relaxing capital requirements…
* No more Kodachrome…

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

A Risk Asset Rally… For now!

Good day… And a Tub Thumpin’ Thursday to you! First it was: Mamma don’t take my Kodachrome away, and they did… Now, it’s bankruptcy for Kodak… That’s sad folks. The Company that introduced the Brownie camera for $1 more than a century ago proves that you have to go with the times… I remember my mom had one of those box cameras that you had to look down into the camera to see what you wanted to take a picture of… black & white pictures, because color was too expensive! As time goes by…

Well… it looks like the risk assets have caught a bid this morning, the euro has just touched 1.29, and Gold is up another $5 this morning. We’ll start with the euro, which continues to be in trouble due to the ongoing debt problems of the peripheral countries of the Eurozone. However, the past two days have brought some wind the euro’s sails… With the euro being the offset currency to the dollar, any time the euro gains or slips, the opposite can be seen in the dollar’s value. So… I spend a ton of time talking about the euro. It gets old, I know… but, somebody has to do it! And tell the truth and facts about what’s happening there, not just the stories the media brings you that are “filler for them”…

So… this morning, the euro, as I said above, has touched 1.29, and seems to be on its way to higher ground this morning. The push came from the latest news on Eurozone country bond auctions… For instance, Spain was able to sell 6.1 Billion euros in various maturities. The good part of this news was that Spain had a target of $4.5 Billion euros, so they more than covered their auction and then some! And yields did not have to go through the roof to get these auctions done!

France also had a successful auction, without having to get jiggy with rates… Once again, what has brought investors to buy these bonds from countries that have had their ratings cut?

I had a reader send me a note, asking me if I knew who was buying these Eurozone peripheral country bonds… Was it the U.S. he asked? Hmmm… I can tell you this… Investors worldwide are always in search of yield, and yes these bonds come with some “risk”, but, as it stands right now, the center is holding, so investors worldwide take on some risk… but with yield! Regarding the U.S. buying these bonds… I wouldn’t put it past them… You see, the U.S. knows the “game”, and if Europe fails, it not only bleeds on the U.S. but, it halts exports from China to Europe, and if China loses that market, they don’t have enough money to buy U.S. debt… Uh-Oh!

So… you see, we’re all one Big Happy Family!

Moving along… The Aussie dollar (A$) backed off its $1.04 figure yesterday, and again overnight when the latest Australian jobs report showed a loss of jobs in December. The jobs market in Australia took a hit in December with a loss of 29,300 jobs. The Unemployment rate remained at 5.2%, but the loss of jobs was enough to push the A$ lower throughout the night. But, this morning, calmer heads have prevailed, and the successful auctions in Spain and France, have pushed the A$ back over $1.04, as I write.

I don’t think that the Reserve Bank of Australia (RBA) is going to have a knee-jerk reaction to this data, and go cut rates… But, that doesn’t stop bond traders from making bets that the RBA will cut rates… and we all know what happened in November when the markets pushed on the RBA for a rate cut… The RBA caved in and gave them one! I personally don’t see the need, but then if I were an Aussie bond holder, I would too be calling for a rate cut, for that would make my bond more valuable! So… you see, not everyone is looking out for you like me!

But we’ll know soon enough what’s on the minds of the RBA members… If I were a betting man, and I’m not even your last choice of someone to take to Vegas, I would bet the RBA does cut, because of the bond market pressure… So, we’ll have to see if the currency guys are still cool with cutting rates to promote growth…

Well… did you see the news yesterday that the U.S. president rejected a permit for TransCanada Corp.’s Keystone XL oil pipeline? OK, I’m sure he had his reasons, and I haven’t had a chance to look into this… The point I’m getting to is this… our friends in Canada, will probably turn to China for their oil exports… Does this make sense? Not to the U.S. but yes for Canada… What this rejection did was open their eyes to see the need for them to seek other buyers for their Oil. Right now 99% of Canada’s oil exports go to the U.S. And did you know that Canada accounts for more than 90% of all proven oil reserves outside of OPEC?

So… here we have a good friend, close neighbor with the Oil we need, and we turn them away? OK… to be fair, like I said, I haven’t had a chance to get into this completely, so there must be something here that I’m not seeing… So, let me look into this….

You know, one more person decided to try and point out that I write politics and I’m have written anti-Obama stuff… I say HOGWASH! And quite frankly, I’ve come to the point where I’ll just come right out and say this… if you think I really do that, unsubscribe! The letter is free! Please, feel free to unsubscribe, which leaves me with the people that have been with me long enough to know that I called out the previous President for his spending problems that started all this…

OK… I needed to get that off my chest… Hey! There’s more news from China that is another reason why the risk assets are catching a bid this morning… And that is… China is considering a plan to relax capital requirements for lenders… Again, along with the reserve ratio requirements getting lowered, these things are like rate cuts…

Get this though… The Chinese are concerned about the fact that their economy expanded at the slowest pace in the last 10 quarters at +8.9%! OMG! You’ve got to be kidding me? Oh well, this news gets the tracks greased for more economic expansion, which will continue to help the likes of Australia, New Zealand, and Singapore…

Then there was this… I sure did like how the internet responded to the anti-piracy bill yesterday, by going “dark”… Clever, indeed! And it brought attention to everyone visiting sites that had gone dark with a message to call your representative and tell them to vote no on the bill… Apparently, it worked, because nine co-sponsors of the bill aimed at fighting copyright violations on the internet withdrew their support yesterday… Google alone collect 4.5 million signatures for their anti-SOPA petition… I find this to be very refreshing to me…

And pride in my fellow Americans that saw this SOPA bill as a real threat to our internet as it is, and joined together to do something about it!

Now… if we could just get behind the end of deficit spending! Now that would be tre’ cool! Remember… it’s We The People… not, We the lawmakers…

To recap… Spain and France had successful bond auctions without having to get jiggy with yields, China is considering relaxing their capital requirements for lenders, and the latest news from the Eurozone continues to show that the center is holding, all leads to a risk asset rally this morning. Aussie jobs losses in December put a damper on the A$ for a brief time overnight, before the risk asset rally pushes the A$ higher. And Chuck explains why the U.S. is interested in keeping the Eurozone afloat…

Currencies today 1/19/12… American Style: A$ $1.0410, kiwi .8010, C$ .9910, euro 1.29, sterling 1.5445, Swiss $1.0675, … European Style: rand 7.9450, krone 5.9270, SEK 6.7870, forint 234.30, zloty 3.3570, koruna 19.6550, RUB 31.45, yen 76.85, sing 1.2755, INR 50.23, China 6.3156, pesos 13.28, BRL 1.7640, Dollar Index 80.30, Oil $101.62, 10-year 1.89%, Silver $30.77, and Gold… $1,664.10

That’s it for today… sitting here singing along with the great Beatles song, When I’m 64 this morning… Grandchildren on my knee, Delaney, Everett, and Braden! Well, I finally finished Currency Wars by James Rickards… Not too much different than the stuff I’ve told you for years, but with a twist… If you want history on currencies and what moved them, this is an excellent read! I’ve got a stack of books still to read, so onto my next one! I’ve got to get working on my presentations for the Orlando Money Show… if you haven’t signed up yet for this free Show, you still have time, just Google Orlando Money Show 2012… And with that… I’ll get out of your hair for today… now go make this a Tub Thumpin’ Thursday!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837
www.everbank.com