In This Issue.

*  Currencies eke out small gains.
*  Eurozone AQR results on Sunday.
*  Brazilian election on Sunday, finally!
*  China's Gold demand in 2013 reaches 2,199 tonnes!

And Now. Today's A Pfennig For Your Thoughts.

A Good Data-Wise Week For China.

Good Day!…  And a Happy Friday to one and all! What a grand evening at the EverBank Art Show and Open House last evening! WOW! I got to see lots of old friends, and meet some new ones! People would come up to me, and say, Hi Chuck, but I would have to look at their name tag to see who they were, and then they would explain to me that they are Pfennig Readers, and they feel like they knew me already. Pretty cool, eh? There's another Ebola case, this time in N.Y. But for the most part, the hysteria over this virus, has calmed down a bit, and that's good, because I was really beginning have the bejeebers scared out of me!

The Currencies seem to be stuck in the mud again, as they really haven't moved much, except kiwi, the past 3 days. The moves have been quite small, but at least they are positive moves. I can't say that for Gold though. The headlines stories on Bloomberg suggest that Gold is suffering because investors are taking a positive view of the U.S. economy. Really? That's all they can come up with? And IF investors are taking a positive view of the U.S. economy they certainly must be using those rose colored glasses the Gov't keeps passing out. UGH! But that's fine! You would think that lessons would have been learned a few times, but apparently, these investors don't subscribe to the saying that lessons learned are like bridges burned, you only need to cross them but once.

Hey! I just saw a thing on the TV, I didn't catch all of it, but it was a report that showed that after 60, people should continue to have a drink or two to improve the memory. Well, let's see, next March I'll turn 60. But I've always subscribed to the Cliff Clavin theory that it's like the slowest Buffalo thing. You know, the slowest Buffalo gets killed, and it makes the herd faster. You have a drinks and it kills off the slowest brain cells, making the rest of the cells smarter!  Well, that's my story and I'm sticking to it! HA!

Nothing like a little Cliff from Cheers on a Friday to start our day, especially since I was getting so hot and heavy right from the get-go this morning on stupid thoughts by investors. I hear that 3M,IBM, McDonalds, and quite a few other Big U.S. Businesses with overseas operations are feeling the sting of the dollar rally that we've seen going on for a couple of months now. Not that I give two hoots about Big Businesses and their earnings, but this dollar rally brings about a lot of problems. There are always unintended consequences of things, and this is one of the unintended consequences of having a dollar rally. Imagine the whining you would be subjected to hearing should the pundits that are calling for a multi-year rally in the dollar, have their wishes come true. YIKES!

Alrighty then. Yesterday, I was asked by Chris Gaffney about the stress tests in the Eurozone, and I had read some reports on the subject, and made a comment that was baseless. UGH! You see, the reports, after going back and reading them again, were talking about “what ifs” and I didn't catch that the first time. So, here's what's really going on for those of you keeping score at home.

The Eurozone Bank Stress Tests called AQR (Asset Quality Review) results are going to be printed this Sunday, 10/26. I think the ECB picked this day in hopes that the AQR could get lost in the shuffle of a weekend, and the Brazilian election. Basically, I think that the AQR will be OK. The problem I see for the AQR and the euro is that IF the AQR shows a lot of rot on the Eurozone banks' vines, the euro will get hurt, but IF the AQR is OK.. the euro won't benefit from the OK results. The markets are simply set on the “hurt the euro” setting. I sure hope they don't “set it and forget it”! HA!

Speaking of stress tests. The Fed announced yesterday that they will examine how exposed the largest U.S. Banks are to “risky corporate borrowers” in their next stress test in 2015. I don't think you should look at things that you don't want to see. I think the Fed will not like what they see when they do that examination. But nothing is going to happen because of the findings. Nothing, absolutely Nothing, say it again!

So, it's all been about very tight ranges but remaining positive for the currencies since Wednesday this week, and it appears we'll close the week in this trading pattern. Most of this has been because there's been little to nothing in the U.S. Data Cupboard, and no news about the anything else. The Cable News Stations are dying right now, searching for news, which is always interesting when they start putting tractor pulls, and church sermons on the air. 

We did have some economic data from China earlier in the week, but by now everyone has forgotten that China surprised on the upside of CPI, IP, PMI's, and a couple of other prints. It was a good week for China and Global Growth, but as I just said, that's in the rear view mirror now, except for dolts like me that keep dragging it out for everyone to see!  But I don't want investors to forget about the strong data week from China.  Of course that didn't help the renminbi / yuan, as the Chinese leaders decided to end the week with the currency weaker than when the week began. UGH!

Leon Russell is singing: Back To the Island, right now. So I'm going to stop here, and be back in a minute. OK. I'm back now. check out these words. I hope you understand, I just had to go back to the island, and watch the sun go down, hear the sea roll in, But I'll be thinking of you, and how things might have been.

OK. Sorry for about that to all you that aren't fans of Leon Russell, or my dragging out song lyrics in this letter. But, as I've always said, it's my letter. 

I know I made an exception of kiwi above when talking about the currencies being positive VS the dollar this week, but stuck in the mud. But, kiwi is attempting to rebound this morning. Kiwi had better do an impression of Paul Silas, and do some major rebounding to recover its losses this week, that came initially from the drop in N.Z. CPI (consumer inflation) but after that was strictly technical in nature, as certain points were hit and so on. But, at least the tourniquet has been wrapped around kiwi this morning.

The latest polls show that a favorable outcome for incumbent Dilma Rousseff in Brazil. and that has the real on the skids again. This whole election process in Brazil has given me a rash, and I for one will be happy when it's all over with. And I'm not just saying that because Rousseff keeps winning! I don't like seeing the currency get all caught up in the goings on with the polls, voting and everything else. But it has, and brother, if Rousseff does win this  Sunday, as the polls suggest, I don't want to come in and see what the real looks like on Monday morning! The only thing the real can hope for is that most of the selling has already taken place with the polls. you know a selling the rumor buying the fact scenario. But we won't know until Monday gets here.

The news from Singapore is a tale of two components that make up Industrial Production (IP). I've been telling you about how Singapore's electronics production numbers were slipping each month, and Pharmaceuticals (Pharma) was offsetting the electronics decline.. Well, in September, we had a reversal of those two components, with Pharma falling sharply but being partially offset by recovery of electronics. Overall, IP fell -1.2% in Singapore, and I think that has a lot to do with the slowdown not only in Asia, but in the U.S.. You see, this is a very important component to what's going on in the U.S. economy, folks. You have to connect the dots, or at least you don't have to, you have to have me connect the dots!

The Chinese renminbi/ yuan closed the week with a weakening of the currency, but last night's weakening was very small. And with that small weakening, the Singapore dollar (S$) is weaker by a very small amount this morning. There are articles being written about how China has stated they that will not stimulate the economy this time around, but then you hear about the story I told you of earlier in the week about how China announced a $32 Billion injection into lenders. So, are they going to step in to even the economy out, or will they decide to stay out?  I think that if push comes to shove, and the Chinese GDP would begin to plunge, that the Gov't would step in BIG TIME.  But how this all relates to the renminbi/ yuan, is anyone's guess, as the Gov't continues to manage the currency to no one's call. I still think that in the end, the renminbi/ yuan will continue to book 3% gains per year.

The Canadian dollar / loonie has been one of the better performing currencies VS the dollar this  week, along with the S. African rand. The Bank of Canada (BOC) left rates and their bias all unchanged this week, but that hasn't stopped the loonie from pushing the currency appreciation envelope. I find this week's moves in the loonie interesting, in that earlier in the week I read a report from a Canadian Bank that was talking about the “swoon in the loon”, and the report said that quite a few Canadian banks were calling for more weakness in the loonie. But that's all based on the thought that the plunge in Oil prices could continue. As I've stated here twice this week, and now this makes 3. I don't believe the plunge will continue at the same pace, and it could very well be over with.

And I just mentioned it, but I can't get out of here this week, without mentioning that the S. African rand will finish this week, that is unless all hell breaks loose in the currencies today, with the 3rd consecutive week of gains VS the dollar.. Yes, it's been quite stealth-like, this move in the rand. And the news this week that the new budget was well received by the markets, really opened up Pandora's Box of currency rallies for the rand.  This is where I normally step in and say that the rand is very volatile, and when it's volatile bad, it's really bad.  That has been a public service announcement.

Gold is flat this morning, and lost a few bucks yesterday. I talked above about what the headline news are saying about Gold so I won't go there again, and get my dander up on a Friday morning. I already started down that road, and had to resort to quoting Cliff from Cheers to stop me from throwing things and yelling at the walls.

The thing that really gets me lathered up is the latest report from Koos Jansen. Let's listen to Koos reporting on Bullionstar.com and Google+. “We now have official confirmation from the China Gold Association (CGA) that Chinese wholesale Gold demand in 2013 reached 2,199 tonnes, in contrast to what all Western consultancy firms and new outlets have been reporting.” – Koos Jansen.  WOW! That's crazy man! Remember when we thought that China had really pushed the Gold demand envelope when it was first reported that their demand was 1,074 tonnes?  Well, in the end, it was more than twice that amount!  Hey, China isn't just adding to its currency reserves by the boat load every year for the fun of it folks. There's something going on here. I've told you over and over again that this dance is gonna be a drag, no wait! I've told you over and over again that I believe the Chinese and the Russians are going to back their currencies with Gold (at least some % of backing)  But, even if it's a case of having the countries of the world come together at the table to show how much Gold they have, China will win. The 2014 figures will be interesting don't you think?

The U.S. Data Cupboard is back to not much to offer today, with only New Home Sales data to print.. Yesterday, the Initial Jobless Claims for last week rose by 17,000, the Leading Index rebounded in September from August's 0% print, with a gain in September of .8%, but it's been back and forth for this data every month, so we can't get too excited about this one print, and the Markit U.S. PMI slipped to 56.2 from 57.5 the previous month. Still comfortably above the 50 level though.

Before I head to the Big Finish today, I found this on Zerohedge.com and thought it hits the nail on the head, it's a quote from Van Hoisington. “The U.S. economy continues to lose momentum despite the Federal Reserve's use of conventional techniques and numerous experimental measures to spur growth. As Kindleberger clearly stated, the process of excess liquidity fueling higher prices in the face of faltering fundamentals can run for a long time, a phase Kindleberger called “overtrading”. But eventually, this gives way to “discredit”, when the discerning few see the discrepancy between prices and fundamentals. Eventually, discredit yields to “revulsion”, when the crowd understands the imbalance, and markets correct.”

For What It's Worth. Today this will be a combination of me, and Dave Gonigam of Agora's “5 Minute Forecast” or just the “5” as I call it.  The other day Dave printed some very interesting stuff for people like me that have had cancer enter into their bodies. I'll let Dave take if from here for a snippet  and then I'll come back with my 2-cents. He's talking with Stephan Petranek, the 5's technology guy, talking about a cure for Cancer. yes that's right a cure, not a treatment, a cure!

“This new therapy is something else altogether. It works like this: Doctors take blood from a cancer patient and put it in an extremely high-tech version of a test tube. In the test tube, T cells are withdrawn from the blood and re-engineered so they can identify and attach to a specific kind of cancer that's growing in that patient.

“The new T cells are infused into the patient,” Stephen goes on, “where they multiply, proliferate and grow.” The process takes all of six days.”

Chuck again. I can't tell you how happy I was to read this info the other day. I've been waiting for something like this!  And yes, I know it's only in trials right now, but so far, 13 dire straits cancer patients have been treated and 8 are in remission. and the other 5 have seen good results.  Now, how long will it be before the FDA approves this?

To recap. The currencies seem to be stuck in the mud, but with positive gains, albeit very small this week. Hey! It's better than a sharp stick in the eye!  Or an all-out dollar assault. which is about the same thing to me.  It's been a good week data-wise for  China, but that's been no panacea for the renminbi / yuan.  the U.S. Data Cupboard has been pretty void of good data this week, and today is no different. And gold can't seem to find a bid again after pushing higher earlier in the week. Bloomberg says Gold gets shunned by investors who believe the U.S. economy is strong.

Currencies today 10/24/14. American Style: A$ .8785, kiwi .7855, C$ .8925, euro 1.2660, sterling 1.6055, Swiss $1.0495, . European Style: rand 10.9590, krone 6.5870, SEK 7.2590 forint 243.65, zloty 3.3375, koruna 21.8690, RUB 41.95, yen 108, sing 1.2765, HKD 7.7575, INR 61.27, China 6.1467, pesos 13.55, BRL 2.4885, Dollar Index 85.75, Oil $81.36, 10-year 2.25%, Silver $17.28, Platinum $1,257.13, Palladium $786.66, and Gold. $1,233.98

That's it for today.  It's Friday! Yahoo! It sure was nice to see my colleagues gussied up yesterday for the Art Show. Everyone acted like they were surprised to see me return for the gala affair. Oh well, better to surprise than depress.  I got a kick out of talking to my old friend, that wily veteran, Jack Milner last night. We used to play on the Mark Twain Bank Softball team which really just meant that we sat on the hill after the game sharing stories and throwing back a couple of cold ones. I got home last night and turned on the Blues game, and Vancouver scored a goal, putting them ahead 2-1, and I thought, “oh I was bad luck” and so I turned it off and went to bed!  The World Series gets going again tonight in S.F. My beloved Missouri Tigers return to Columbia Mo. For Homecoming weekend at Mizzou.The whole Homecoming tradition started at Mizzou, so we're famous for something! HA! I won't make it this year, but I talked to at least two guys last night that were heading down tonight for the House Decs tour, and the game tomorrow. Wish I was going, it's going to be a lovely day tomorrow! And with that. it's time to get off this bus today, and wish you a Fantastico Friday!  Bye~

Chuck Butler
President
EverBank World Markets