In This Issue.
* Softer tone remains with dollar today.
* Opening up the Chinese Capital Markets.
* RBA Asst Gov. sends A$ on wild.
* I'm a Bill
And Now. Today's A Pfennig For Your Thoughts.
Big News From China, Even If No One Else Thinks So!
Good Day!… And a Tub Thumpin' Thursday to you! I'm in no mood to be doing any Tub Thumpin' this morning, and I'll just leave it at that! It's not that I don't want to join you in our usual Thursday Tub Thumpin', it's just that I don't have what it takes to Tub Thump this morning. The Allman Brothers are greeting me this morning with their song: Midnight Rider. I've always liked the Allman Brothers Band, especially when I'm feeling the blues.
Well, another day, another day of no data, no real news to move markets, except what's going on in China, and according to the major media outlets, news from China doesn't rank as important to U.S. citizens. I'll get to the major news, according to Chuck, from China in a minute. First I have to tell you that the dollar is once again trading with a softer tone this morning, the euro is flat, but the A$, kiwi, krone, krona, loonie, and a few others have carved out gains VS the dollar this morning, while the ruble, rupee, renminbi, (the three R's) like the three R's from the old days. you know: Readin', Ritin', and Rithmatic. (funny, spell check didn't care for those three R's!) But the new Three R's are finding life difficult as the dollar is carving out gains VS these three.
Well, first things first, and the Big News from China is that November 17th, (you know next week!) for the first time ever. Investors around the world, will be allowed to buy Chinese stocks on the new Shanghai-Hong Kong stock exchange. THIS IS HUGE NEWS folks, and in my opinion, will be a HUGE gain for Chinese stocks/ Companies. But that's stock stuff, of which, while I am licensed to talk about, I don't care to, for it keeps me out of trouble! Besides the stock stuff, to me, this is simply another step in China's march toward removal of the dollar reserve system.
Remember when I told you that China needed to open up their Capital Markets to the outside world before they could lay claim on the reserve currency. This is just one of the requirements that will be needed to achieve their goal, but let's take a look at the scorecard. 1. The needed to gain a wider distribution of their currency. done! 2. They need to have a free floating currency. working toward that. 3. They need to have very deep pockets. done!, and 4. The need to open up their capital markets to the outside world. ETA on completion. 4 days!
Of course there's more, but these are the highlights, that once they have these nailed down, it won't be long, yeah, yeah, yeah, yeah, it won't be long yeah, yeah, yeah, yeah, it won't be long yeah, till the renminbi comes home to be the reserve currency. Oh, it might still take a few more years. How many of you remember me standing in front of crowds back in 2010, and telling you that by the end of this decade, the dollar would no longer be the reserve currency of the world? But with China stepping up the pace, as we've chronicled in these pages from time to time, it certainly looks to me that 2017, could be the year that we, here in the U.S. find out that “debt really does matter”.
OK. Now that I'm stepping down from my soapbox, let me tell you about the Aussie dollar (A$) overnight. First last night we had the Assistant Gov. of the Reserve Bank of Australia (RBA) give a speech that threw the A$ right under an oncoming bus. He made a comment on intervention, that led the markets to believe that he was greasing the tracks to sell the A$, and the markets decided to do the heavy lifting for him and whacked the A$ by over ½-cent. But then calmer heads prevailed, and the A$ recovered those losses and went on to book gains on the night! A wild swing for sure, and I'm glad I was sleeping through it, for if I were one of those guys that trade currencies on tiny pip moves I would have gone crazy with this wild swing!
Well, I guess the news here in the U.S. might dominate the next couple of days, and I'm not talking about the new polar vortex that has a grip on most of the country! No, instead, I'm talking about the vote that will take place today or tomorrow in the U.S. House on the Keystone XL pipeline. In the great way we do things here in the U.S., I mean why don't we just put it to a vote / referendum like they do in Switzerland, where they have dozens of referendums a year to vote on? But, not here, we elect representatives to vote for us. (I would have to say that the people that represent me, haven't voted my preferences for years now!) And then one side of the Gov't has to send it to the other side for approval, and then to the President to either accept or veto, and then if he vetoes the bill, it goes back to the Senate where it has to obtain 2/3's of the vote. this has been a public service announcement.
You know, like where I learned it. on Schoolhouse Rock! HA! I'm just a Bill. But, the real reason I brought this all up, is that the Canadian dollar / loonie could be held hostage by the goings on with this bill. Today, the loonie is carving out a gain VS the dollar, and should the Bill pass in the House, which is expected, the loonie will carve out further gains VS the dollar, and then we'll move on to the Senate, and so on.. So, watch for the outcome of the votes on this.
Yesterday, I told you that Japanese PM, Abe, had denied that he was ready to dissolve the Japanese Parliament, and that had led to a short-term recovery of the yen. Well, now the rumors are really swirling about in Japan that Abe has told the Parliament members to prepare for an election. If those rumors become fact, then the yen will be right back on the slippery slope, folks. And if I were a betting man, of which I'm not, I would bet on the rumors becoming fact.
The euro is basically flat this morning. Tomorrow we'll finally see some data that could move markets. The Eurozone 3rd QTR GDP will print. This will be an ugly print folks, but how ugly will determine if the euro gets treated fairly, or not. I just finished putting the December R&F together yesterday, and in it I go through my thoughts on what the Eurozone and euro are going through, and how they need to stick to austerity plans. Or, was that what I said in yesterday's Pfennig? I forget, and I apologize, as it seems all I've ever doing is typing away on this laptop for something! That reminds me I have the Sunday Pfennig I need to get together before tomorrow! UGH!
Well. You might want to pay attention to this, and then again, you might not want to! But. Recall yesterday when I told you that this weekend's G20 meeting in Australia, will be China's Xi, an opportunity to make a new announcement? Well, I had that in my back pocket yesterday when I came across an email from a friend of mine (Doc Dave) and got my conspiracy blood boiling. According to a story on zerohedge.com, On Sunday in Brisbane Australia, the G20 will announce that money is dead. OK, There's no way this is going down this weekend, in my opinion, but I think it's an interesting read. so here's the link to the story. http://www.zerohedge.com/news/2014-11-12/russell-napier-declares-november-16-2014-day-money-dies
So, like I said above, the U.S. Data Cupboard is still basically empty.. We will get the usual Weekly Initial Jobless Claims this morning, but that's it for today. There are a couple of Fed speakers on the road today (Dudley and Kocherlakota). Dudley is usually goof for a sound bit that will get the markets hopped up for a minute or two. Tomorrow is the new poster boy for the stock jockeys.. James Bullard, St. Louis Fed president, will be speaking, and the stock jockeys will be wishin' and hopin' and thinkin' and prayin' , that he has some more of that talk that saved stocks last month in his notes.
Well. there's a story on the Bloomberg this morning regarding China and their slumping demand for Gold. The World Gold Council is reporting that demand for Gold in China slumped 37% so far this year. They point to the anti-graft drive in China as the reason for this slump. But let me remind you that the World Gold Council's numbers have been proven to be way off by Gold researcher, Koos Jansen. And I would pin my colors to Koos Jansen's Mast long before I would do so with the World Gold Council.
The Cure's song: Lullaby is playing on the IPod, and I swear, it almost put me asleep! My eyes got heavy, I yawned real big, and the then my head was in my hands. This song is so hypnotic!
OK. Back to Gold. the shiny metal is basically flat this morning, as it was yesterday. That news alone should tell you what's going on in the markets these past two days is akin to the Ram's Offense in the 2nd Half of games. there's nothing going on! But I do have a rant on Gold in the FWIW section today, so you won't want to miss that!
For What It's Worth. A dear Pfennig Reader, (Bob) sent me this link to the story here, and I have to agree that this is the same stuff I've been telling you over and over again these past two years, while Gold suffered in price, when it seemed that the fundamentals were pointing to a higher price. this is from the website; ainsliebullion.com.au
“The accumulation of unsustainable government debt is one of the key reasons people buy gold and silver. The chart below clearly illustrates just how insane this has become as governments print money (accumulating debt on central bank balance sheets) to run continual deficits to remain elected and keep markets artificially buoyant and depress their respective currencies against the other to globally compete (which becomes a death spiral when everyone does it..). Last year we saw the gold price deviate from its historic trend of protecting wealth against this debt binge. Many believe this was brought about by orchestrated shorting of paper derivatives and defies global (particularly Eastern) demand. That East and West dynamic has seen 2 distinctly different approaches. China has played the debt game too but has bought things of intrinsic value like gold (at the low prices) in epic amounts and built infrastructure (even derided for its 'ghost cities'). The US has (simplistically) bought shares at very high PE's and which have repeatedly shown can lose 50-80% in value over night. The disconnect depicted below looks set to reverse. As a reminder $16t is $16,000,000,000,000..”
Chuck again. A quick look at the Debt Clock at: http://www.usdebtclock.org/index.html, reveals that this must be an older rant, because the U.S. national debt is $17.930 Trillion this morning. yes, that's right, homing in on $18 Trillion! And the Unfunded Liabilities are $115.525 Trillion! And don't forget that Professor Lawrence Kotlikoff says that the U.S. total debt including the Unfunded Liabilities is north of $200 Trillion!
So, like the Capital One commercials that ask, “What's in your wallet?” I'll ask you, “what's in your investment portfolio?”
To recap. Another day of not much going on.. There's Big news from China, well, Big news to Chuck, and apparently not the major media outlets. But starting 11/17, investors around the world will be allowed to buy Chinese stocks on the Shanghai exchange! Opening up its capital markets, just another step toward China's goal of replacing the dollar reserve system. The Asst Gov. of the RBA scared the bejeebers out of the A$ traders overnight, but soon calmer heads prevailed and the A$ recovered its losses and moved on to gain overnight. No data to speak of today, and a few fed speakers today and tomorrow to brighten the day for us! And Gold is basically flat again today, marking two days of being stuck in the mud, which is better than losing ground I guess!
Currencies today 11/13/14. American Style: A$ .8750, kiwi .7915, C$ .8845, euro 1.2465, sterling 1.5750, Swiss $1.0370, . European Style: rand 11.2025, krone 6.7755, SEK 7.4055, forint 245.52, zloty 3.3865, koruna 22.1650, RUB 46.67, yen 115.55, sing 1.2915, HKD 7.7550, INR 61.56, China 6.1418, pesos 13.56, BRL 2.5710, Dollar Index 87.70, Oil $76.75, 10-yr 2.37%, Silver $ 15.67, Platinum $1,203.88, Palladium $777.44, and Gold. $1,160.00
That's it for today. Well, it's now turning to our little Christine's fave time of year. (NOT!) Basketball Season is upon us.. Can you believe that one? Football is just now in the middle of their season, and here comes basketball! When I was a young man, and even an adult, I played a ton of basketball. I wasn't very good, but I played! The college game is where it's at for me. My beloved Missouri Tigers have a new basketball coach this year, an ex-Tiger player, Kim Anderson. I wish him luck and a long storied career at Mizzou! Well, I got up, began to get ready to go into the office today, and then spent the next hour not having a very good time. So, here I am at home again. UGH! If it's not one thing, it's another with me! Little Everett was at the house the other day, and I asked him if he knew the song, Over the River and through the woods, and he said no. So I sang it to him, and then he went about correcting me on the words to the song! I said, “I thought you said you didn't know it” and he just gave me his Popeye look and smiled. what a stinker! Well, my stomach has settled down now, thanks to some medicine, and the thought that there's nothing left in my stomach to be upset with now! I could go on to work. but, with all I've been through this week, I'll just stay put today. It's time to get off this bus today. I hope you have a Tub Thumpin' Thursday!
EverBank World Markets