In This Issue

* Fed drops “considerable time” phrase.
* Where were the negative prints hiding?
* RBNZ moves to a neutral bias.
* India to have a Current Account Surplus?

And Now. Today's A Pfennig For Your Thoughts

Cheap Oil Helps India!

Good Day!…  And a Tub Thumpin' Thursday to you! I'm hoping for a Tub Thumpin' Thursday for me here, but we'll have to see how that goes.. I forwarded all the messages to Chris regarding Happy Birthday wishes from dear readers yesterday, I hear he was treated like a king in the office. Hmmm.  I'm never in the office when my birthday comes along, as I spend that time in Florida attending spring training games.  I have had birthday cakes made for me when I return though, so that's always fun!  The FOMC met yesterday, talk about a letdown.  (for me that is!) And other than that, the currencies and metals markets didn't know what to do, so everything went flat on the day

With the FOMC Meeting hogging all the media and the markets attention yesterday, we might as well talk about it, Front and Center today,  but it won't take us long! The Federal Open Market Committee (FOMC) made no changes to their Fed Funds rate, and removed the reference of the fed funds rate being held at a the current range for “a considerable time following the end of QE”. And they replaced it with. Talk that they (the Fed) can be patient about hiking rates, and that rates will NOT be raised in March or April. and June could be the earliest.   OK. who wants to take the bet that June passes us by, and rates don't get hiked?  I want all the action! Because I don't believe rates will be raised in June. But that's 5 months away. let's not get ahead of ourselves

The reason, I say that is simply that, by the time June rolls around, the economic data is going to tell a completely different story on the economy, that the Fed sounded so upbeat about yesterday. I guess all those negative prints lately were pushed under a pile of papers so that the Fed didn't see them.  Yeah, that's the ticket! And my first wife was a young Elizabeth Taylor, yeah, that's it, that's the ticket!

So, that was yesterday. (I'm sure there's a song there, but can't think of any right now.. HA!) Today, the currencies and metals are once again a mixed bag-o-nuts, and the euro ekes out a gain, but the Aussie dollar (A$) sees a small loss. The Chinese renminbi was weakened overnight, and Gold is down another day, booking a $7 loss as I type. The Beatles song, All You Need Is love greeted me this morning. And how apropos, eh? That's all the currencies and metals need is Love.  Gold was receiving some love on a daily basis the first 3 weeks of this year, but Gold's lover has left. Let's hope Gold's lover is feeling guilty, and comes back soon!

The Reserve Bank of New Zealand (RBNZ) met overnight and while they kept their rates unchanged they did, as I told you they probably would, change their bias to neutral, from tightening. RBNZ Gov. Wheeler, said that he expects the RBNZ to keep the OCR (official cash rate) on hold for some time. And then hung the chances of any future rate hikes on the economic data. That's the usual MO for Central Bankers. tell everyone that rate hikes depend on economic data, which could very easily be looked at differently by two different people! That way, the Central Bank gets to cherry pick what data they want to point out. I find this method to be the Chicken Hawk way of doing things. Boy! I Think I saw a Chicken Hawk!

The N.Z. dollar/ kiwi wasn't treated too kindly after Wheeler's announcement and subsequent statement about moving his bias to neutral. Longtime readers know that I do not hold RBNZ Gov. Wheeler in high esteem, and I'm sure he doesn't lose any sleep over this. 

The euro has eked out a gain this morning, and is trading above 1.13. Yesterday, the euro was well into the 1.13 handle, and the single unit held that position until the overnight session, where Greece was the subject on most traders' minds, and when that happens, the euro suffers. But then this morning, things changed, and the euro pushed back. I'm expecting to see the first run of consumer inflation from Germany this morning. I'm not expecting it to be good either. So, this pushing back of the euro, might soon turn to the euro getting shoved around again

Well, while I was typing, Gold's loss of $7 has turned to a loss of $16 this morning.. UGH! That's crazy stuff folks. The conflict in Ukraine has picked up intensity, but Gold loses ground? The Greeks elect a rogue party that ran on a platform of no austerity, or leave the euro, and Gold loses ground? I hope when I grow up, I fully understand how this can be. you know sort of like when I grew up and found out that there was no.  No wait! That can't be!  Please tell me that what the kids said at school isn't true! Whew! I was scared to death that I might get crossed off his list, if I said I didn't believe!

Silver is in the same boat as its kissin' cousin, Gold. I read on Google+ last night that India alone, imported 7,063 tonnes of Silver in 2014. That's up 15% VS the previous year. And India was out of the importing metals game for a few months in 2014, which makes this result even that more impressive! But the same thing holds true here. Truckloads of physical buying going on in both Silver and Gold, but they are searching for terra firma. I shake my head in disgust, and know of no other thing I can do to change/ rectify this

Speaking of the conflict in Ukraine. This fighting surprises me, in that I thought that in the dead of winter, there would not be the will to keep fighting. And just to give you proof that the fighting has intensified, the Russian ruble is getting a daily whacking once again, and has fallen to a 69 handle, with a lot of that loss coming in the past 10 days.  Two weeks ago, there was talk that Europe was ready to drop their sanctions against Russia, (trust me when I tell you that these sanctions are hurting Europe more than they are hurting Russia),  and things were looking as though we could all take our guns and tanks and go home for the winter. And then things heated up again

Well.. A longtime reader sent me a note yesterday of an article written by Gary North. You know, I've never met Gary North, but he's been a respected analyst and writer for longer than I've been writing a letter. leading up to Y2K, Gary warned everyone to be self-sufficient for he feared the worst would happen with Y2K. of course none of that bad stuff happened, and a lot of critics talked bad about Gary, calling him “scary Gary”, and they said he was so wrong about Y2K. Well, that might be, but was he wrong to bring it to everyone's attention? To get them to think about what might happen? To be prepared? No. he wasn't. and for that he should be hailed for bringing this Corporations' attention so they could make the programing changes they needed to make ahead of Y2K!

Well, that wasn't the article. What the longtime readers sent me was an article where Gary talks about the renminbi not having a chance to replace the dollar as the reserve currency. Uh-Oh. Now thems fightin words!  Well, not really, I'm not a fighter, any longer, although in my younger days, I was known to participate in fisticuffs from time to time. As I recall, they usually took place at a drinking establishment!  Ok, enough about my youth!  What I wanted to point out is that there was someone saying something opposite of what I'm saying. And to be fair and balanced, I talked about it right here!  How about that?

I was going to talk about the Aussie dollar (A$) and the band, Midnight Oil came on the iPod, playing their song: Beds Are Burning. Talk about great timing!  Well, yesterday, I told you about the risks that the next Reserve Bank of Australia (RBA) meeting would carry, and then I made a major faux pas by saying that “the RBA meets tonight, I think”.  Well, I didn't think clearly! The RBA meets on Mondays and I know that! I guess I was all caught up in the “risks”  and knew the RBNZ was meeting last night, and well, the sun was in my eyes, I tripped on a rock, and my glove had a hole in it!  Excuses never won a ballgame for anybody, as the old football coach used to tell us. So no excuses, I was just ahead of myself. The RBA meets next Monday. So, keep those “risks” in mind

The A$ can't find any terra firma for more than 24 hours these days. And if my fears of what the RBA might say next week come to fruition, then the A$ might find that it's in the middle of the sea, and finding terra firma is impossible! 

And in India, things just keeping looking brighter with the help of cheaper Oil. I read a report yesterday that talked about India possibly booking a Current Account Surplus if the price of Oil remained low. WOW! I didn't think that in my remaining lifetime I would see India with a Current Account Surplus! The rupee isn't feeling too much like celebrating this morning, but I think that has more to do with the fact that the Chinese renminbi weakened overnight. I told you the other day how the cheaper Oil was allowing PM Modi the opportunity to finally implement some of his reforms that hopefully unlock the Indian economy. So, I would tell the rupee. the same thing Charlotte told Wilbur. Chin up!

The U.S. Data Cupboard is basically empty today. We get the usual Weekly Initial Jobless Claims, and that's about it. So, from here on out, we get to hear all the rate hike campers shouting from the rooftops that the Fed is going to hike rates in June. Chuck says no way! But we might as well get ready for this onslaught of rate hike talk

I'm having connection problems again this morning. it comes and goes, very spotty. I have to look into a more reliable ISP/ wireless system. Unfortunately, the ISP comes with the building, so I doubt I can be a rogue tenant and opt for a different ISP. But maybe if I whine and complain enough, the current ISP will look into the problem. think that might happen?  Yeah, right, and I've got a bridge to sell

For What It's Worth. Well today, I have a special treat for you. I have a couple of snippets of an article that I found on  that features Ron Paul talking about the Fed and Gold. You can, and probably should read the whole article here:

“Over the last 100 years the Fed has had many mandates and policy changes in its pursuit of becoming the chief central economic planner for the United States. Not only has it pursued this utopian dream of planning the US economy and financing every boondoggle conceivable in the welfare/warfare state, it has become the manipulator of the premier world reserve currency

As Fed Chairman Ben Bernanke explained to me, the once profoundly successful world currency – gold – was no longer money. This meant that he believed, and the world has accepted, the fiat dollar as the most important currency of the world, and the US has the privilege and responsibility for managing it. He might even believe, along with his Fed colleagues, both past and present, that the fiat dollar will replace gold for millennia to come. I remain unconvinced

At its inception the Fed got its marching orders: to become the ultimate lender of last resort to banks and business interests. And to do that it needed an “elastic” currency.  The supporters of the new central bank in 1913 were well aware that commodity money did not “stretch” enough to satisfy the politician's appetite for welfare and war spending. A printing press and computer, along with the removal of the gold standard, would eventually provide the tools for a worldwide fiat currency. We've been there since 1971 and the results are not good

Many modifications of policy mandates occurred between 1913 and 1971, and the Fed continues today in a desperate effort to prevent the total unwinding and collapse of a monetary system built on sand. A storm is brewing and when it hits, it will reveal the fragility of the entire world financial system.” – Ron Paul

Chuck again. I always liked Ron Paul, as he was the ONLY Austrian economics trained politician in Washington D.C, but now he's retired, UGH! Well, we all deserve to retire while we can still have fun, right?

To recap. The FOMC left out the “considerable time” phrase but talked about being patient with regards to hiking rates. Chuck takes bets that the Fed won't raise rates in June. So, have all the negative economic prints been hidden under a pile of paper at the Fed?  Gold is getting whacked this morning, but why? And Silver follows right behind. the currencies are mixed again today, the euro has eked out a gain, while the A$ is down, along with the renminbi. And things keep getting brighter in India, with the help of cheap Oil

Currencies today 1/29/15. American Style: A$ .7790, kiwi .7290, C$ .7975, euro 1.1310, sterling 1.5135, Swiss  $1.0870, . European Style: rand 11.6290, krone 7.7905, SEK 8.2455, forint 276.05, zloty 3.7450, koruna 24.59, RUB 69.27, yen 118.15, sing 1.3535, HKD 7.7525, INR 61.87, China 6.1335, pesos 14.83, BRL 2.5960, Dollar Index 94.63, Oil $44.51, 10-year 1.72%, Silver $17.53, Platinum $1,245.50, Palladium $788.80, and Gold. $1,270.54

That's it for today. Well, the NHL finally gets back to work after 9 days off, our Blues will finally play again tonight. You know I missed a birthday earlier in the week. Colleague, and friend, Suzanne Lee, celebrated a birthday on Monday. She told me the other night that her birthday was the same as my sister's. I was confused at first as to how she would know when my sister's birthday was, but then I remembered, I talked about it in the Pfennig!  Well, while getting caught up in the hoopla of Chris Gaffney's birthday, and the FOMC meeting yesterday, I forgot to send along my condolences on the loss of our colleague's father in law. Aaron Stevenson's Wife, Diana, lost her father suddenly this past weekend. It's always sad when you lose someone, and so my thoughts and prayers go out to the Stevensons, as they deal with this loss. On a lighter note.. Grandson Everett, wanted to know why I didn't come home with his Mimi (Kathy) the other day. that didn't register with him that we weren't together. And with that, I'll get out of your hair for today. I hope you have a Tub Thumpin' Thursday!

Chuck Butler
EverBank World Markets