In This Issue.

*  Currencies rally after FOMCMM.
*  BOE meets today, no biggie.
*  The BRICS currencies on the rally tracks!
*  Rand enjoys 3 consecutive days of rallies.

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

Fed Members Discuss The Stronger Dollar.

Good Day! .  And a Tub Thumpin' Thursday to you! I'm greeted this morning with the song that my darling daughter, Dawn,  and I danced to at her wedding. Frank Sinatra. The Way You Look Tonight. I nice change of pace to start the morning.  Speaking of a change of pace, there were no baseball games last night. UGH! I sat out on the deck watching the moon rise ( it's a phrase) on the ocean, such a beautiful sight. The sky was patchy clouds, so we didn't get the full-on effect of a full moon, but it was cool anyway.

Well, when I turned on the currency screens this morning, I was quite surprised by the positive move in the currencies overnight in which they added on to their gains of yesterday. I was surprised because I thought I had heard all the shouting going on from the rooftops, that the Fed was going to begin their rate hike cycle earlier than expected, and therefore the dollar was bought up by the truckload. I guess these rooftop shouters got a little ahead of themselves, eh? And it appears that all those dollar long positions that the IMM Futures Positions were reporting being held, are now being reduced. I love it when the markets get sand kicked in their faces for being wrong (because they are never wrong, right? )  

The Fed's FOMC Meeting Minutes (FOMCMM) were the catalyst to this rally in the currencies and the change of heart from the rooftop shouters. And get this. The Fed members had a lively discussion about the strength in the dollar. Yes, they are concerned with it. You see, they didn't do 4 rounds of games people play with monitory policy to get the dollar weaker, remember, that was one of the Fed's goals in QE, per St. Louis Fed President, James Bullard, to have it all wiped out with a dollar rally now.

The Fed members argue that a stronger dollar, makes imports into the U.S .cheaper, thus fueling deflation. And that's what the Fed members have been running from since 2009.  So, the fed members made darn sure that there was a discussion about the stronger dollar, so the markets could read them and make adjustments. Mission accomplished ,well that is for yesterday afternoon and today so far!  On Monday this week, I told you about how ugly the day was on Friday for the currencies. Well, the dollar is having a day of getting hit with the ugly stick, but last Friday, the currencies were hit with the whole forest, so the dollar has a lot of selling to do, if it is to make up for last Friday's assault on the currencies.

I just don't know how long this can last, for the rooftop shouters have been very strong in their commitment to driving the dollar higher. But when you finally realize that while you might be right, you may be too early, you get a little embarrassed for being so vocal about everything. And so, if that happens, this could be much like changing horses in the middle of the stream for the rooftop shouters. I don't know how long the reversal in dollar longs will go on, but at least we're not seeing the all-out assault on the currencies and metals like we saw last Friday

The euro is leading the currencies in their reversal against the dollar this morning ,and has gained1full cent since yesterday morning.. The Canadian dollar / loonie is back to 90-cents, after never really falling too far out of touch with the 90-cent figure, but 90-cents next to your currency symbol looks much better than 89-cents, eh?  Even the two beaten and beleaguered currencies of Norway and Sweden are on the rally tracks this morning, so, in essence, it's a broad reversal in dollar longs against all currencies. Shoot Rudy, even the Japanese yen!

The Bank of England (BOE) is meeting while I type away this morning, I don't expect any earth-shattering news from the meeting, but it's being held, so I feel compelled to talk about it. The pound sterling has bounced higher but I doubt it's about the BOE meeting, more about what the Fed had to say about their concern with the stronger dollar.

In China overnight, the renminbi / yuan was allowed to appreciate, which was then followed by plans to allow citizens to invest in overseas stocks and property as well as let Chinese companies sell renminbi/ yuan denominated shares abroad. The markets immediately saw this for what it is, another move by the Chinese to widen the distribution of their currency.  This is an easing of the Capital Controls on the Chinese too, which is the first step in opening up the Capital Markets to one and all. I've said this before many times, but I'll say it again, the Chinese have really stepped up their moves to get the renminbi / yuan ready for prime time. I think the Chinese are telling us something, folks. I think the Chinese leaders see a big problem coming and they want to have all their ducks in a row to take over the reserve currency status from the dollar. They've got the Gold. and now, according to the IMF, they have surpassed the U.S. and Eurozone in size of economy.

Hold the phone! You didn't think you were going to just throw that last sentence out there and move on did you Chuck? No. but I did need a break, so I just paused a minute, give me a break!

OK, according to a story on the businessinsider.com site. the IMF says that China has surpassed the U.S. and Eurozone as the largest economy on the planet.  the IMF uses a different method of getting to this result, than just measuring the gross national product of each country. You see the IMF realizes that prices aren't the same in each country: A shirt will cost you less in Shanghai than in San Francisco, so it's not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have.

So the IMF measures both GDP in market-exchange terms and in terms of purchasing power, and using these measures, the IMF says China will make up 16.48% of the world's economy by the end of this year. And the U.S. will make up 16.28%… Thus moving China to the head of the class economy-size-wise.

Well, all the BRICS are on the rally tracks this morning.. Brazilian real is still basking in the love the markets are giving it on the prospects of a Rousseff ouster in a couple of weeks.And Shoot Rudy, look even the Russian ruble is carving out a gain today VS the dollar.The S. African rand has had a 3-day rally run this week, which is the first time I've been able to say that in a month of Sundays, We already talked about Chinese renminbi / yuan, so that leaves us with the Indian rupee. And the rupee is marking gains this morning too. the news from China about the easing of Capital Controls has the Emerging markets all excited like kids at Christmas, and rightly so, I would add!

Gold is also on the rebound folks. As another day of gains after falling near the production cost figure last week is in the cards for Gold this morning.  Reporting on Gold's gains is like walking on egg shells you never know when it's all going to go to hell in a hand basket..  This is where the price manipulator naysayers come back and say, “why are the manipulators allowing this rally?”  I would tell them, but they won't listen, that the price manipulators go both ways. they take profits on both sides.. 

In Ed Steer's letter today which can be found at www.caseyresearch.com , he has an article about the London Gold Fixing, and how Australian researchers submitted an article in the Journal of Futures Markets this month that details their claims that they have proof that the fixing was manipulated by the bullion banks.    OK. this is not new news, but just a confirmation of earlier findings. We all know that the “fixing” is small fish compared to the open market manipulation.  That's where the body is buried folks.

The U.S. Data Cupboard is back to having minor prints today. And tomorrow's cupboard will only have the Monthly Budget Statement, which the markets have become comfortably numb with over the years, so, it's ability to move the markets has gone the way of the pet rock!

For What It's Worth. Well, did you get up early yesterday morning to view the Blood Moon? I was up, but writing and forgot to look outside. UGH! But my friends Dave and Addison over at the 5-Minute Forecast, ran a great picture of the Blood Moon in their letter yesterday, which I wish I could show you. But given the restrictions I write and post thing under, by the time I got the approval to show the picture, it would be a forgotten thing. UGH! Oh well, I carry on anyway! 

Speaking of carrying on.. here's what Dave and Addison had to say about the Blood Moon.

“For a while yesterday, stock traders might have thought they were seeing every buy and sell in the world, all at once. Mostly sells.

As it happens, we find ourselves smack in the middle of an astronomical/market phenomenon known as a “Puetz window.” In the early 1990s, researcher Steve Puetz looked into eight epic market crashes — starting with Holland's tulip mania of the 17th century, ending with Japan's meltdown in 1990 and including the U.S. crashes of 1929 and 1987.

Turns out every one of them took place within a few days of a full moon/lunar eclipse. And each time, that lunar eclipse took place within six weeks of a solar eclipse. (We'll spare you the suspense: A solar eclipse is coming up on Oct. 23.)

Puetz ran the numbers and concluded the odds of these circumstances being sheer coincidence were 127,000-to-1.

We leave it to others to debate the validity of the “Puetz window” as a useful forecasting tool. We'll note here the current one continues through the end of the week. We'll note further that while epic crashes tend to occur during Puetz windows, not every Puetz window results in a crash.

The next Puetz window, you wonder? Early next April. About six months from now.”

Chuck again. Let's see now.. 6 months from now plays well with what I was talking about above with China suddenly moving so quickly. I'm just saying. Sometimes you have to connect the dots. And maybe they have nothing to do with each other.

To recap.. The dollar is in a broad sell off this morning, and the selling started yesterday afternoon, after the FOMC Meeting Minutes (FOMCMM) printed, and showed a lively discussion about the stronger dollar.. .Notice  I DIDN'T say “strong dollar” for it isn't “strong” it's simply stronger than it was, but in all reality, the dollar has had sand kicked in its face for 12 years now, and has fought back a few times only to be put back in its proper place. So until that all changes, I refuse to say the dollar is “strong”! 

Currencies today 10/9/14. American Style: A$ .8880, kiwi .7955, C$ .9005, euro 1.2770, sterling 1.6215, Swiss $1.0545, . European Style: rand 10.9720, krone 6.405, SEK 7.7550, forint 239.60, zloty 3.2675, koruna 21.5025, RUB 39.90, yen 107.65, sing 1.2690, HKD 7.7550, INR 61.02, China 6.1461, pesos 13.28, BRL 2.3766, Dollar Index 85.00, Oil $87.21, 10-year 2.28%,  Silver $17.66, Platinum $1,288.50, Palladium $ 808.50, and Gold.. $1,229.82

That's it for today. The crazy stuff going on at Wal-Mart with them dropping the insurance coverage for 30,000 employees that work under 30 hours a week, is just another way the Gov't gets to have control over us folks. think about that. Well, there were lots of stories to read regarding the Cardinals NLS win and their 4th consecutive trip to the NLCS yesterday. I love reading about all that stuff! Hey, the first half of the 90's there was no winning baseball, so that was no fun. This is fun!  The NLCS will begin on Saturday, I'll still be out of town, so I'll have to be content to watch them on TV, instead of getting an opportunity to see the games live! Oh well there's no sign of “autumn” here I n the deep south, and I love that!  Don Henley's song: The Heart of the Matter is playing on the IPod right now.  I got to see Don Henley at the Fabulous Fox years ago, and we sat in the 3rd row. He was great!  Have you seen the Eagles Documentary that keeps getting aired on Cable TV? It's pretty good, and takes me back to when I was a struggling to be found musician in S. California. OK. I'll get out of your hair for today, folks. Have a Tub Thumpin' Thursday!

Chuck Butler
President
EverBank World Markets