In This Issue.

*  Aussie CPI slips, sends A$'s to woodshed.
*  Chinese PMI ticks up, remains under 50.
*  Eurozone flash PMI's tick higher.
*  A 12-month report card.

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

Feeling Stronger Every Day.

Good Day! . And a Wonderful Wednesday to you! Well, today is starting out good for me. Yesterday, I had to pack up and leave in a moment's notice as it was if I ran smack dab into a wall. An afternoon of sleep, got me back on track, and here I am!  I woke up just in time to head out to Alex's water polo game, that was being played in the “we're better than you are” West County area of St. Louis. I love it when poor old public schools beat the private schools in sports.. OK. I guess I have issues, eh? HA!

Speaking of having issues. Traders are showing that they have issues with the latest Aussie inflation report, and have marked down the Aussie dollar ($) as their outlet! Australia's 1st QTR CPI printed at +2.9%, which was softer than the 3.2% that was expected.  On a month-on-month basis, inflation rose .8%…  It was a double whammy for the A$ last night, as the soft CPI got the A$ headed downward, and then the Chinese printed a “still below 50” manufacturing report for April, that really deep sixed the A$.

The Chinese PMI (manufacturing Index) as measured by HSBC ticked higher in April, but remained below the line in the sand that sits at 50. And this news caused the A$ to really lose ground on the night. But why? The way I see it, this HSBC manufacturing report is just proof in the pudding for me, that the Chinese economy troughed in the first quarter. I don't understand why the markets don't see things the way I do, for if they did, this would be a much happier place to live! HA!

The Chinese report also sent the price of Oil down by $3! The way the markets see this is simple. They see this still in contraction, Chinese manufacturing report as a sign that global growth is in trouble, and with global growth in trouble, assets that are associated with global growth get sent to the woodshed.  Again, that's not how I see how this should be playing out. Someone with some intestinal fortitude should stand up and say, “Hey! The Chinese manufacturing index ticked up, and that's a good thing!”

The euro, however, is stronger this morning. Here, the “flash PMI's” for the Eurozone in April were stronger, proving once again that what the band Chicago sang about 40 years ago, is in play here. Feeling stronger every day. OK, “flash PMI's” is a sexy way of saying the initial look at the manufacturing index. And here, some things were as expected, with Germany stronger, and France weaker, but overall, the Eurozone showed an increase to 54 in the index number, from 53 last month. As I've been saying for a couple of years now. the broad based recovery of the Eurozone is in place, and as long as the relative calm remains cast over the Union, the recovery should continue.

Well. the peaceful solution, that I thought was near, last week in Ukraine, has dissipated and for once in what seems to be a long time, Gold has caught a bid on the news. But the bid isn't exactly a Herculean effort! With the shiny metal gaining $2 this morning, we all know that the $2 gain could be wiped away in a NY Minute!  But it's there nonetheless this morning, and I'm happy for all small wins!

For those of you who live under rocks or have otherwise not paid attention to the news from Ukraine, I'll say that I think that we should all remember that on April 17th, Russia, Ukraine, the European Union, and the U.S. all signed an agreement in Geneva that called for a de-escalation of the conflict, and that all unlawful militants be disarmed, all unlawfully seized buildings be vacated, and all will be exonerated from prosecution unless they did a serious crime.  Obviously, this Geneva accord is being ignored. So, what good was it to get together, see some sawdust fall to the floor, and sign an agreement?

I saw a report on the tariff standoff between the U.S. and Asia, and my mind immediately shifted to 2002, when then President Bush, signed tariffs on Japanese steel.  Need I remind you that this was the straw that stirred the weak dollar trend, drink?  So, what now? Apparently a trade deal between the U.S. and Asia is being held hostage by the inability of negotiators of an agreement on tariffs on beef, pork and dairy products.  Well, the U.S. President is in Asia right now, maybe he can drop in on the negotiations and get this all ironed out?

Well, everyone might be back in the places with bright smiling faces, but the clear direction of currencies is still up in the air.  The U.S. dollar Index is down 1.1% in the past year, the euro is up 6.5% in the past year, but the Aussie dollar (A$) is down 9.5%, and so on. The results are a mixed bag-o-nuts. But for those of you keeping score at home. of the major currencies: Pounds, francs, euros, Danish krone, New Zealand dollar, Swedish krona and Chinese renminbi have posted gains VS the dollar, while the: Canadian dollar, Aussie dollar, Brazilian real, Indian rupee, and S. African rand are in the red.

That's all for the last 12 months of trading activity. So, see what I mean about a mixed bag-o-nuts?  And what I'm talking about with no clear direction?  When there's a clear direction, the dollar index drops like a rock, and the majors, for the most part, take a place at the taking liberties with the dollar table. But not so, for the past 12 months. So, it becomes a real test of one's abilities to find the currencies that fundamentally make sense.

In 2002 through 2004, you could throw a dart at the list of major currencies and find one that was gaining VS the dollar.. Same for 2006-2007, 2009-2011.  The key to all of it though, was seeing the writing on the wall that the dollar would head into a multi-year weak trend. And there are only a few of us on the planet that can claim that!

When I was going through this exercise of tracking currencies for the past 12 months, (thank you Bloomberg for making that easy!) I noticed that the Polish zloty, and euro-wannabe, was in the top currency performers for the past 12 months. We've been in and out of the zloty during the past year over in the managed currency portfolio, of which I'm on the investment committee for. I like what's going on in Poland, economy and fiscally wise, and with the relative calm cast over the Eurozone for over a year now, I think that it might behoove Poland to be considering a move to the euro again.

OK. Not that I would ever be considered to be even on your list of people that know a lot about stocks, but what I would like to be considered as is simply someone that sees things and tries to make sense of them, like no one else.  Take for instance, the earning reports that have been coming in. Dow, and P&G both announced that they beat the estimates for the 1st QTR. But wait? Wasn't the 1st QTR racked with bad weather? How could people get out and buy these goods?  Weren't Retail Sales in the dumps in the 1st QTR? And every other data print for the 1st QTR complained of bad weather. So.. here's my question for the day. What happed to the bad weather excuse?

And to play along with what I was just talking about, I found this on “What a better way to celebrate the rigged markets that are telegraphing a “durable” recovery, than with a Credit Suisse report showing, beyond a reasonable doubt, that when it comes to traditional bricks and mortar retailers, who have now closed more stores, or over 2,400 units, so far in 2014 and well double the total amount of storefront closures in 2013, this year has been the worst year for conventional discretionary spending since the start of the great financial crisis?”

Brother! I sure know how to rain on a parade! Just when the glee club was about to sing about Happy Days being here again, here comes Chuck, to rain on the parade.  But when you read that distressed retailers and bankruptcies have reached a 3-year peak, so far this year, you begin to get the willies, and then your mind starts racing and thinking about what this all means. Well, at least that's how it is for me!

And then to throw more cold water on the sunshine and lollipops crowd, The U.S. Data Cupboard had a little ditty for us yesterday that the media tried to sweep under the rug. U.S. Existing Home Sales fell to their lowest level in more than 1 ½-years during March. And get this. Here's what they are saying about Existing Home Sales. “Unseasonably cold weather dampened an anticipated resurgence of housing market activity in March” .  OK. So, when it makes sense for them to pull the “bad weather” card out and play it, they do. But when it doesn't makes sense, you put the card away.

Reminds me of these lyrics. Your black cards can make you money. So you hide them when you're able. In the land of milk and honey. You must put them on the table.

For What It's Worth. I had a couple of readers send me this story that appeared in the NY Times. But the first one came from my old friend, and one time mentor, Ed Bonawitz.  Ed is an incredibly intelligent man, and often argues the other side of the argument with me, just to play Devil's advocate. So, let's see what Ed thinks is important.

“The American middle class, long the most affluent in the world, has lost that distinction.

While the wealthiest Americans are outpacing many of their global peers, a New York Times analysis shows that across the lower- and middle-income tiers, citizens of other advanced countries have received considerably larger raises over the last three decades.

After-tax middle-class incomes in Canada – substantially behind in 2000 – now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.

The numbers, based on surveys conducted over the past 35 years, offer some of the most detailed publicly available comparisons for different income groups in different countries over time. They suggest that most American families are paying a steep price for high and rising income inequality.”

Chuck again. Yes. as Ed put it in his note to me: “American worker productivity has never been more robust, yet personal income declines.”   This is the type of stuff a candidate should take and tackle, then take to the people. Come on, someone, be a Ronald Reagan here!

To recap. We have a mixed bag-o-nuts in the currencies this morning, and that has been the case for the past 12 months, as Chuck show us the report card. No clear direction leads us to be complacent, but instead we need to diligent and active! Aussie CPI edged lower in the 1st QTR and got the A$ thrown to the wolves, which Chinese manufacturing ticked up but remained in the contraction area below the index number 50. Traders just need to see things like Chuck does, then we would have a happier place!

Currencies today 4/23/14. American Style: A$ .9290, kiwi .8590, C$ .9065, euro 1.3840, sterling 1.6805, Swiss $1.1345, . European Style: rand 10.5945, krone 5.9790, SEK 6.5640, forint 222.25, zloty 3.0280, koruna 19.8360, RUB 35.71, yen 102.25, sing 1.2565, HKD 7.7530, INR 61.08, China 6.1599, pesos 13.02, BRL 2.2370, Dollar Index 79.74, Oil $101.27, 10-year 2.71%, Silver $19.50, Platinum $1,405.13, Palladium $786.75, and Gold. $1,287.29

That's it for today. Have you seen the video of the TSA agents patting down two children, like ages 2 & 6? What have we, as a country become?  Oh, I'll stop there, no worries, no meltdown or anything like that! So, the Cardinals have to worry this morning. Their ace pitcher, Adam Wainwright hyper-extended his knee last night, everyone is holding their breaths waiting to see how he feels after a night's sleep. 9 games into their 11-game road trip, the Cardinals barely have their heads above water. Win the last two, and it becomes a good road trip! Blues and Blackhawks again tonight. What happened in the Saturday game should never happen in games, and the Blackhawk player should be suspended for a much longer time than 3 games for what he did.  And I was very pleased with Alex last night, as a kid on the other team threw a punch at him in the water.. The look Alex gave this kid probably scared the bejeebers out of him, for he didn't mark Alex in the water again for the rest of the game. Maybe the score of 11-3 made things worse. Well, I hope to make the day here last longer today than I did yesterday! And with that I'll get out of your hair for today, now go make this a Wonderful Wednesday!

Chuck Butler
EverBank World Markets