In This Issue.
* Euro leads most currencies lower.
* Indian rupee still rallying!
* Groundhog Day again for Gold.
* Data void in U.S. is strange.
And Now. Today's A Pfennig For Your Thoughts.
German IFO Prints Weak.
Good Day! . And a Happy Friday to one and all! Well, our little Christine worked magic yesterday, but bringing in the iced cake donut cure for me! I have no idea what it is, maybe the icing, whatever, but I was about to raise the white flag and go home, when I tried the cure, and voila I was a new man! Or, maybe it's all in my head. But let me tell you something, in hopes that you never, ever, have to deal with it, but when chemo is in your body, and you begin to feel sick, there's no amount of mind games that can turn that around. Trust me on that one!
OK. So, it's Friday. and it's the Friday before a 3-day Holiday Weekend! Memorial Day. The unofficial start to summer (calendar start is a month away), the pools all open this weekend, and it's time to get out the board shorts, bikinis, fire up the backyard barbeque, and blare some surfer-dude or Jimmy Buffett music! Jimmy Buffett is actually singing about changes in latitude, changes in attitude, which truer words have not been spoken in a song! It may be time for all of that, but Memorial Day is NOT what that all that stuff is about. I'll talk more about it all in the Big Finish today, but first let's talk about the currencies, metals, economies and twits.
Well, we're starting the day, which will basically end at around noon for heavy volume, and liquidity in the markets today, with the dollar in control of the proceedings. The euro is at its low level for the week, which means the Dollar Index is at a high for the week! A weak German Business Climate report as measured by the think tank IFO, really pushed the euro down this morning. But I've got something else in the German Data Cupboard that, if I were King would have more weight than the IFO.. And that is: Capital Investment for the 1st QTR which was up 3.2% VS a consensus of 2.1% and VS the previous quarter last year, of .7%!
Look, I've explained this Capital Investment stuff to you all many times before, so you already know how important, I feel this data is. But the markets are so tied to the think tanks of IFO and ZEW, when it comes to checking the pulse of the largest economy in the Eurozone, Germany. Exports for Germany showed some weakness in April, but I wouldn't go so far as to say this is a trending problem as a result of a strong euro. It probably had more to do with the fact that Easter was sort of in the middle of April. I say that, because if you look at the imports data from Germany, you see a big increase in April. It doesn't take a super sleuth to figure this stuff out, but it sure seems the markets need someone to direct them to the stuff that matters, and away from the stuff that doesn't!
So, with the Big Dog euro being sent to the doghouse, the rest of the currencies are finding it difficult to find a bid. The one currency that seems to be oblivious to this euro weakness this morning is the Indian rupee, which is rallying in spite of a cautious tone taken in the rest of Asia, due to the coup in Thailand that I told you about yesterday.
Apparently, this weekend, will hold an extra special event in the Eurozone, as on Sunday the results of the European Parliamentary elections will be announced. And The European Central Bank (ECB) will hold their equivalent of the Fed's Jackson Hole boondoggle, in Portugal this weekend, and with ECB President, Draghi, giving the opening speech at the boondoggle, the markets seem to think he'll give them some hints as to what he's thinking, as far as stimulus measures that he will implement at the June meeting.
So, with the U.S. and U.K. closed on Monday, the markets will deal with whatever Draghi said or didn't without the two large money center markets open. So, when we come in on the next Tom Terrific Tuesday, we could very well see things looking pretty ugly. And with that in mind, I would have to think that traders here in the U.S. and in the U.K. will be squaring up their books before they head to the Hamptons and pubs respectively. Book squaring can lead to dollar strength, given that most are probably short dollars in the background.
Well, it was Groundhog Day for Gold again yesterday. Shortly after I sent out the Pfennig, Gold shot up $10 (it was up $6, as I wrote) but as the morning went along, soon all those gains disappeared. And it wasn't the data that got it sold, for The Weekly Initial Jobless Claims added 28,000 to last week's figure of 298,000 (total was 326,000 this week). The Leading Index report for April was bang on expectations of .4%, (no reason to celebrate), and Existing Home Sales didn't meet expectations and were only up 1.3% VS 2.2% expected. So, pray tell, what could have been the reason Gold fell in price during the morning. do, do, dodo, do, do, do. (hum or whistle along to the theme from Jeopardy)
But Gold's problems didn't stop Platinum or Palladium from adding to their gains on the day! I find this to be a very interesting way for investors to own a precious metal that not only is in demand but with supply limitations, but as an alternative to dollars. Gold has become so manipulated that looking elsewhere was in order, and using these two metals gives investors that alternative that's not subjected to manipulation, at least not yet, as far as I can see!
Well, the time is running out on the funding period for out MarketSafe Treasury CD. I saw a story on Google+ last night that highlighted what they thought Fed Chair Janet Yellen was saying, that interest rates may remain low for years. To that, I say HOGWASH! Maybe for the next year, but beyond that who knows? And it's the question mark. I think those that don't believe interest rates will rise in the next 5 years, will be crying 96 Tears. (anyone catch the association between Question Mark and 96 Tears?)
Did you see where Barclays was fined $43.9 million for failings related to the London Gold Fix? Yes, the U.K.'s Financial Conduct Authority (FCA) said that Barclays failed to adequately manage conflicts of interest. and a trader was banned and fined. That's all good and such, but it's not where the bodies are buried with price manipulation, folks! But at least they're finding problems with the fixing, which in my opinion should have been trashed years ago!
On a sidebar here. I looked up to one of our TV screens yesterday and saw something that tells me a lot about what's going on here. The message said that GM had recalled more cars than they had made last year. I'm shaking my head in disgust.
OK, back to other stuff! I told you above that the Indian rupee was one of the few currencies rallying VS the dollar this morning, and by doing so, the rupee will mark its 4th consecutive week of weekly gains, which would be the first time in over a year that we've seen that happen! The euphoria of the election last week, is holding steady Eddie in India, as it was the clearest election in three decades! And the new party in power holds the first single-party parliamentary majority since 1984, which means the PM Modi, will have the power to take whatever steps he sees necessary to revive the Indian economy. That type of information is very valuable for currency traders, and thus one of the main reasons the rupee is kicking tail and taking names later!
The Aussie dollar (A$) is flat this morning, so at least it's not taking on water like most of the other currencies. But a lot of the damage to the A$ has already been done this week, as traders and investors started to believe that their hopes of a rate hike by the Reserve Bank of Australia (RBA) later this year, have faded. I think that it's far too early to come to a conclusion like that, Shoot Rudy, it wasn't THAT long ago that these same people were thinking the RBA would CUT rates. I talked them all down from the ledge on that, and hopefully they are on terra firma now. So, come on, people! It's far too soon to make that call!
The A$'s kissin' Cousin across the Tasman, the New Zealand dollar / kiwi, has seen a steady flow of selling this week, but to me it's all profit taking, as I'm still calling for two more rate hikes this year from the Reserve Bank of New Zealand (RBNZ). So.. to me, I would look at the weaker kiwi this week as an opportunity to buy at cheaper levels. But then, that's just me.
The weak euro this morning has the British pound sterling and Swiss franc and the Danish krone all on their heels. So, it's not a good day in Europe, in and out of the Eurozone. And in Asia, the yen, renminbi, Sing $, and Honker are all weaker, but the Indian rupee is stronger. Other than that, we've got the Brazilian real and Mexican pesos, which are both weaker to end the week.
I already gave you a rundown on the data from the U.S. Data Cupboard yesterday, above. And today's data will only see New Home Sales for April. So not much, in the Cupboard for us today, as we end the week with little to no data that has been printed. It just feels strange when that happens, but next week when we return from the 3-Day Holiday Weekend, the Data Cupboard has a ton of stuff for us to review. Durable Goods and Capital Goods. I'll give you a hint right now about those two. They are going to show negative for the month of April. and we won't hear about bad weather either!
For What It's Worth. Well, I have my usual Friday treat for you today. Some words from the great Richard Russell. He's fired up in this morning's read, and he asks the question of: who will tell the truth? Well, I attempt to tell the truth, but there are many things that end up with the sawdust on the floor. And besides when I point out the truth, it's just me. not FOX, CNBC, MSNBC, CBS, CNN, etc. It's not the Wall Street Journal or even USA Today! Oh well, I try. Here's Richard Russell.
“I've been thinking about the whole idea of the Federal Reserve and the government openly lying to the American people. It's unbelievable that our representatives would have the unmitigated gall to feed us obvious lies. In the end the truth will come out, and the liars will (I hope) pay the price.
We have been fed lies about the US economy for months on end. We've listened to lies about inflation; we've been told lies about our “healthy economy.” As far as I'm concerned, manipulation of the markets is tantamount to lying. Manipulating the markets (as per QE) is forcing the markets to behave in an unnatural way, thereby destroying the normal action of free markets and thwarting the forces of supply and demand. And I ask myself, what's behind these endless lies?
It's always a matter of money, position, and power. Thousands of men and women depend for their livelihood on employment at the Federal Reserve. They live in fear of losing their jobs. So naturally, one of their objectives is to preserve or endure their jobs. This means keeping the Fed alive at all costs. Underlying all this is fear. The fear in this case is that Congress may, one day, vote the Fed out of existence. So fear is really behind the lies, and thus the system perpetuates itself. Who, I ask, dares to tell the truth? The truth-teller in the end is too often squashed, and the lies go on.”
Chuck again. Well, I said it all above, so no need to carry on further here.
To recap. The German IFO was weak this morning and has really pushed the euro down thus causing most other currencies to feel the selling pressure this morning, which should see book squaring ahead of the 3-day Holiday Weekend in the U.S. and U.K. The Indian rupee is one of the few currencies gaining on the day, thus marking the first time in more than a year, that the rupee has posted a weekly gain for 4 consecutive weeks! It was Groundhog Day for Gold again yesterday, but that didn't stop Platinum and Palladium from gaining VS the dollar.
Currencies today 5/23/14. American Style: A$ .9225, kiwi .8540, C$ .9170, euro 1.3625, sterling 1.6835, Swiss $1.1160, . European Style: rand 10.3680, krone 5.9665, SEK 6.6475, forint 222.70, zloty 3.0535, koruna 20.1385, RUB 34.27, yen 101.90, sing 1.2530, HKD 7.7540, INR 58.48, China 6.1681, pesos 12.89, BRL 2.2145, Dollar Index 80.42, Oil $103.85, 10-year 2.54%, Silver $19.44, Platinum $1,479.25, Palladium $832.50, and Gold. $1,292.82
And on Memorial Day. Well, the REAL Memorial Day is May 30th, but in 1968, Congress passed the uniform Monday Holiday Act. And so now it's the last Monday in May. And the REAL reason for Memorial Day is it is to commemorate the Union and Confederate soldiers who died in the Civil War. Later in the 20th century, it was changed to honor all Americans who have died while in the military service. So. If you know of someone that served, and died, please put a flag on their grave. I'll be visiting my dad's grave this weekend, and bring him my annual flag. So. we can have fun and barbeque and swim and stuff, but please remember those military people.
That's it for today. Well, it's my grandson Braden Charles Butler's Birthday! He's a whopping 3 years old today. He's such a funny kid. He's a the house when I come home every Wednesday, and he's always ready to talk to me. He's smart, knows a lot of words at 3, and makes me laugh a lot! So, Happy Birthday, Buddy! And tomorrow is our colleague, Peter Mason's birthday, so Happy Birthday Pete! Well, the Cardinals were finally able to use the brooms they brought to the game yesterday, as they completed their first sweep of a series this year. They had 4 previous chances this year and failed in the last game. Memorial Day is a traditional checkpoint on the baseball season. And my beloved Cardinals are finally starting to play some good baseball! YAY! This weekend, I'll see a lot of our friends, but not at a barbeque, or pool party, but at a wedding! One of the neighborhood girls grew up I guess, and is getting married. Good Luck Maureen! She must have gotten older, while I didn't! HA! And with that I hope you have a Fantastico Friday, and a wild and crazy 3-Day Holiday Memorial Day Weekend!
EverBank World Markets