Good day… and a Wonderful Wednesday to you! I’m looking for something crunchy in the pantry again this morning! I think the infusions have caught up with me. Yesterday I took an afternoon nap, I hadn’t don’t that since adapting to the CPAP machine! But like I said last Friday, “infusions beat CPAP”… Crosby, Stills and Nash greet me this morning with their iconic song… Ohio…
As you all saw yesterday, the Pfennig is BACK! Well, in email form that is… I’ve been writing the daily and posting it to the website www.dailypfennig.com… I want to thank the following for all their help in making this happen: Nuria Pujol, Joe Grandall, Lesly Foster, Frank Trotter, and of course Mary Anne and Pamela Aden..
Well, I can’t go too far into the letter this morning, without pointing out that the currencies, led by the Big Dog, euro, are chasing the dollar down the street…
Yesterday was a good day for the euro, as it not only flew through the 1.12 handle, it climbed steadily throughout the day in the 1.13 handle.. 1.13 had been the glass ceiling if you will, for the euro so it will be interesting to see if it can continue to gain momentum today and tomorrow, and the next day and so on… Back in 2003, when the euro finally got going, and I mean really got going, not just 1 or 2 cents, Mike!, the currency gained nearly every day. Every day we saw a new record level for the currency… OK, I’m sure there were some profit taking days and that, but for the most part, it was rally on Wayne, rally on Garth, for the euro in 2003… I mention this because I’m getting that rainy day feeling again… No wait! The only rain on a parade is going to come down on the dollar’s parade! But, just to remind everyone, late in 2002, I wrote a white paper titled: 2003: The Year of the Euro… And it sure turned out to be just that! I have no plans on writing a new white paper, but if I did, I would call it: 2017: the return of the euro!
The antipodean currencies of Australia and New Zealand saw some profit taking yesterday after hitting 76 and 73-cents respectively… Now these two have to gather themselves, and get back up, to mount a charge toward those two levels again.
The Reserve Bank of New Zealand (RBNZ) issued their Statement of Intent for 2017 (SOI) and in it RBNZ Gov. Wheeler had this to say, “The outlook for New Zealand’s economic growth remains positive, albeit with considerable uncertainty remaining, especially internationally. We are working to deepen the Bank’s understanding of the evolving conditions affecting the New Zealand economy and their implications for monetary policy.”
I’m all about kiwi these days, folks… euros and kiwi are my two fave currencies these days… Let’s see how far they can run!
I say it was “profit taking” with full confidence, because other than Swiss francs and these two antipodean currencies, the rest of the currencies have added something to their levels, as witnessed by the Dollar Index which has fallen to 96.27, when just last week it was 97.70… Part of what’s weighing on the dollar this morning, is the news that the IMF had downgraded their forecast for U.S. growth… let’s listen in to the IMF to their reasons for doing so..
“The world’s biggest economy will probably have a hard time hitting Trump’s target of 3% growth, as it’s faced with problems ranging from an aging population to low productivity growth, and with a labor market already at full employment.”
Wait! What? There’s no mention of a weakening economy? No mention of exploding debt concerns? No mention of a Central Bank that is shooting itself in the foot? Come on, IMF, get some intestinal fortitude, and call the U.S. economy what it is… Heading to recessionville!
Well, the price of Oil has bounced back and is trading above the $44 handle this morning… And the Petrol Currencies that include the Russian ruble, Brazilian real, Norwegian krone, and others, are breathing a sigh of relief once again… Of course $44 is not $60, which is where the OPEC members thought they would see the price of Oil once they cut Oil production late last year… Of course, our friends over at OPEC, NOT! forgot all about the U.S. shale producers, and their ability to ramp up production on the drop of a hat… And once the price of Oil rose above $50, those U.S. shale producers ramped up production, so much that we have Oil supplies coming out our ears, and when supplies are that rich, what happens to price? It falls… And that’s where we are with the price of Oil..
There’s an article on MarketWatch this morning that’s calling for a “crash in the shale Oil production”… So, I guess the folks at OPEC needn’t worry too much… You should check this article out regarding the U.S. Oil producers… http://www.marketwatch.com/story/opec-have-no-fear-the-us-oil-shale-output-crash-is-here-2017-06-27?link=MW_popular
Boy, were there so stories about the “fat finger” trader that sold 1.8 Million ounces of Gold in one minute on Monday morning! The more I read about this, I change my mind about the whole thing… While I still believe it was an “engineered” sell off, I can’t help but think that some junior trader mistook Ounces for lots… But that was Monday, and yesterday, Gold was up $5 in the early morning trading, but that gain didn’t last, and by the time the after hours trades went through, Gold ended up gaining only $2.20 on the day to end up at $1,246.70…
The shiny metal is up another $5 this morning, but like yesterday, the question arises of whether or not “da boyz” as Ed Steer calls them, allow that gain to grow, or they hit Gold hard with another blitz of short paper trades… One of these days, these short paper traders will get what’s coming to them, but until then, we have to deal with them… UGH!
Well, today is a “breather day”, as I look at the data cupboards around the world, most of the economic prints will begin tomorrow and continue to Friday… Here in the U.S. the Data Cupboard will have the Case/Shiller Home Price Index for us today… this data is two months old, and therefore I usually forget about them, as they are stale… A lot can happen in two months folks… A Bear Stearns can get bought out and saved in one month, and a Lehman Brothers can be allowed to go bust in another month… Remember those days? I don’t think I’ll ever forget them…
Speaking of data… On Friday this week, we’ll get to see the color of Personal Income and Spending here in the U.S. And I think the economy’s direction will be on display here, for I fully expect for Personal Spending to have dropped like a rock in May… And with the U.S. economy so dependent on consumption (personal spending) this weak print will show the weakness in the economy…
But, mother should we trust the government? Who’s fingerprints will be all over the data print on Friday? My friend, and the office manager in my old office, Danielle Goodman, gave me a poster, years ago, from the Pink Floyd album: The Wall… And it asks this question: Mother should we trust the government? The Wall is the eleventh studio album by Pink Floyd. It was released as a double album on 30 November 1979, and one of the songs on the album is: Another Brick in the Wall.. and asks the question… Mother should we trust the government? And the question is just as appropriate to be asked today as it was in 1979!
To recap… the currencies, for the most part, are on the rally tracks today, led by the Big Dog, euro, that has run through the 1.12 handle, and is not taking on the 1.13 handle with ease… A$’s and kiwi saw some profit taking overnight after hitting 76& 73-cents respectively. Now they have to get back on their horses! The IMF lowered their forecast for U.S. economic growth yesterday… The did mention falling productivity and an aging population, but failed to mention, exploding debt, a weakening economy, and a central bank that’s lost its way…
For What it’s Worth… Well, I guess we can all sleep better at night now… No more worries! Blue sky, following me, nothing but blue skies do I see! Janet Yellen has told us that there will be no more financial crises! Yes, it’s all here folks… http://www.cnbc.com/2017/06/27/yellen-banks-very-much-stronger-another-financial-crisis-not-likely-in-our-lifetime.html
Or, here’s your snippet:”Fed Chair Janet Yellen said Tuesday that banks are “very much stronger” and another financial crisis is unlikely anytime soon.
Speaking during an exchange in London with British Academy President Lord Nicholas Stern, the central bank chief said the Fed has learned lessons from the financial crisis and has brought stability to the banking system.
She also made a bold prediction: that another financial crisis the likes of the one that exploded in 2008 was not likely “in our lifetime.” The crisis, which erupted in September 2008 with the implosion of Lehman Brothers but had been stewing for years, would have been “worse than the Great Depression” without the Fed’s intervention, Yellen said.”
Chuck again… Whew! And to think that I was worried about all the debt, derivatives, low productivity, aging population, and a Central Bank hiking rates into a weakening economy! It’s amazing, almost like one of those holistic healers… Janet Yellen has put her hand over the economy and said, “you are healed”!
On a sidebar… Those of you who have seen me talk in the past at conferences, etc. will recall this… I would always start my talk with a comment about being from St. Louis, the home of the 11 time World Series Champion Cardinals, and then talk about the Pfennig, asking to see a show of hands of those that received the letter already. Then I would say, that after hearing me talk, if you want to sign up for the Pfennig, just come down to the podium, I’ll place my hand over your head, and pronounce you to be a “pfennig reader”! HA! Those were good times, when I was speaking a lot… In 2006, the year before my cancer diagnosis, I spoke 35 times…
Currencies today 6/28/17… American Style: A$ .7591, kiwi .7260, C$ .7626, euro 1.1370, sterling 1.2823, Swiss $ .96, … European Style: rand 13.01, krone 8.4230, SEK 8.5916, HUF 272.39, zloty 3.7237, koruna 23.1237, RUB 59.02, yen 112.15, sing 1.3856, HKD 7.8035, INR 64.63, China 6.8205, peso 17.99, BRL 3.3058, Dollar Index 96.27, Oil $44.10, 10-year 2.25%, Silver $16.83, Platinum $921.40, Palladium $863.41, and Gold… $1,252.30
That’s it for today… Another 9th inning debacle for my beloved Cardinals last night, and another loss… UGH! And another beautiful day here in the St. Louis region… Darling daughter, Dawn, and kids, hosted some friends in our pool yesterday. I slept through most of it! It is fun to watch the kids as their confidence grows in the pool, and they can swim. I got some minor work on my car taken care of yesterday, it was long overdue! The mechanic told me that my car runs like a top.. Those are always good words to hear! Big Head Todd takes us to the finish line today with his song: Bittersweet… And with that, it’s time go! I hope you have a Wonderful Wednesday, and Be Good To Yourself!
Chuck Butler