In This Issue.

*  Dollar's all-out assault on currencies is back!
*  Wheeler, Stevens, Draghi diss their currencies!
*  Canada tries to woo China.
*  Gold nears cost of production.

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

Throwing One's Currency Under A Bus! .

Good Day! .  And a Tub Thumpin' Thursday to you! The Neon Trees had a song a couple of years ago called, “Everybody Talks”. And that certainly seems to be the theme this week, as just about every Fed member is out talking about this, that, or the other thing, but none of them have a hoola-hoop for the economy. Or their quest for Full employment, or higher inflation. But the Good Lord knows that they sure are attempting to be all things to all people.

I started the letter this morning with that discussion, because I read this in the 5 Minute Forecast yesterday. The “5” had asked for suggestions from readers on different things, and this reader sent this in, followed by my friend, Addison Wiggin's response. Check it out. “If the Fed is so keen on stoking inflation,” one reader queries, “why artificially suppress the number by excluding fuel and food? Why don't they just go back to reporting inflation the old-fashioned way (i.e., how ShadowStats reports it)? That number is way over 2.2% — problem solved!”

The 5: Interesting suggestion. That would probably require an admission of error on their part, something the government is usually remiss to do. Better to full steam ahead it to oblivion than turnabout midstream.”

Chuck again. Simple solution right? I think it certainly is! But simple solutions aren't what the Fed or the Paul Krugmans of the world seem to think up for the economy. OK. I had better stop there before I get to involved in exposing the harm that has been done to our economy and our future. Shoot Rudy, I have to have things to talk about every day, I have to save some of these thoughts for days when the news is dry.

Well, The breather that the dollar was taking the past two days, is a thing of the past now, as the all-out assault on the currencies and metals is back en vogue this morning. It all began yesterday around midday, I searched and searched and couldn't find a clue anywhere that would lead me to the reason the dollar suddenly took off like it did.  But overnight, there was plenty of stuff that kicked sand in the face of the currencies, so let's stop beating around the bush and get to that!

Overnight, Reserve Bank of New Zealand (RBNZ) Gov. Wheeler, got things started by giving a speech that ripped the heart right out of the New Zealand dollar / kiwi. Wheeler said the “level of kiwi is unjustified and unsustainable, and that previous times in the past that kiwi reached unjustified and unsustainable levels, it led to intervention to correct that”  Of course that isn't an all-out confession that the RBNZ will use intervention right now, but it was to the markets, and kiwi's battleship was sunk, losing over 1-cent, and the 80-cent handle. I don't get what Wheeler is trying to do here. except do an end-run around the defense to score big time in the Currency Wars. If that's the game he's playing, then, I'm going to punt here.

Not wanting to let Wheeler get the upper hand in Currency debasement, The Reserve Bank of Australia (RBA) Gov. Stevens also gave a speech, and talked about ways to cool the housing market. Of course one of those tools would be a rate hike, but somehow Stevens didn't talk about that. Noooooooo, he wanted to focus on the use of Macroprudential measures, whatever the hell that as! So, the A$ sold off too.

Then when the overnight market books were turned over to Europe, European Central Bank (ECB) President, Draghi, took his turn at the microphone, and gave a speech about “Single Market, Single Currency, Common Future”. The speech was filled with blah, blah, blah, but no mention that credit dynamics of the Eurozone are picking up. Hmmm. Just a simple mention of that would have given the euro some love, but somehow Draghi, didn't mention it.  So, I guess you could say that all three of these Central Bank chiefs threw their currencies under a bus!

Hey, I understand forgetting to mention something when giving a speech/ presentation. Just last week, I was assigned two tasks to include in my presentation, I remembered one announcement, but simply forgot to mention that we were pleased to announce the introduction of a new MarketSafe CD. You can read about it in the ad section at the top. But silly me, what a dolt! I even had extra time to talk and still forgot it! So. these things can happen, eh?

Well, more stale data printed yesterday, this time in Mexico.  But this time the data wasn't too bad, in fact it was actually good, which hasn't happened a lot in Mexico in recent years.  Mexico's GDP grew at .4% for July VS June, and put the annual GDP on a pace to hit 2.5%… That's a good start for the 3rd QTR for Mexico, and to go along with this small rise in economic activity, Mexican CPI (consumer inflation ) also printed and showed a slight, and I mean slight increase in inflation for the first two weeks of September, CPI grew .32%…  So, we have some growth and some inflation in Mexico. The reforms of new president, Nieto, are taking shape, I expect things to continue to look brighter here going forward, but that doesn't mean the peso will take off! As I've explained before, the peso will be held down as long as there is no “risk premium” in a high interest rates to be paid.

The Canadian dollar / loonie is holding on, tightly I might add,  to the 90-cent handle this morning, as the loonie tries to remain resilient in the face of the U.S. dollar / green/peachback's rally. Canadian Consumer Net Worth keeps climbing higher, folks. This is a good sign for the Canadian economy. I have some potential exciting news for Canada in the FWIW section today, so be sure not to miss that!

The Chinese renminbi, Indian rupee, and Russian ruble all gave back their previous two day's gains overnight. Not a good day for the BRICS currencies, but then that makes it all too easier to pick them up at cheaper prices, right?

Well, yesterday's Data Cupboard had the August New Home Sales data for us to view. Recall yesterday I said it would be interesting to see if this data lined up with the article I recently read that Homebuilder Confidence was soaring. And it did. New Home Sales in August were up 18% from July.   But then right above that data, there was the weekly mortgage applications, which fell -4.1% last week.

I then married that up with an article I read on the David Stockman website, that said that mortgage applications at the Big Banks were following up the awful first quarter result of down over 70%  from a year ago,  with a fall of 60% in the 2nd QTR.  So, the question I would have is this.  Home builders are confident, New Homes were up 18%, but who's buying without mortgage? Oh, I hear from a guy in the back row, he says that large corporations and hedge funds and the like with deep pockets are buying with cash. Hmmm. So, American Consumers are the buyers? 

Today's Data Cupboard has the Durable Goods Orders data that will give us the reversal of the previous month's big aircraft order. The thing that caught my eye last month was that when you took the aircraft orders out of the data, Durable Goods Orders were a negative for the month. This month they should show a positive after taking out the loss on the aircraft orders. I know, clear as mud right? Well, to make it simple, just don't pay attention to it, and it will go away!

Gold is down again this morning, and in real danger of losing the $1,200 handle. You might recall how Gold fell below $1,200 at the end of last year (2013). $1,183 was the low, and from there it bounced to $1,374, in three months. the cost to get Gold out of the ground is around $1,200. So, either we get another bounce, or the price of Gold falls below it cost to produce, which would make it not worth the time and effort to mine it. Then supplies grow thin, and considering that demand of physical Gold is still strong, especially in China, India, Russia and Turkey, this would be good for the price of Gold.  Of course you have those guys out there that think that Gold is going to $1,000. They seem to act like they know what they are talking about. So, you can't dismiss them that easily.

Before I head to the Big Finish today, Chris sent me a link to story on Reuters that talks about how Fed Member, Plosser, a hawk, is going to step away from the Fed next month. Now that announcement alone would be enough to begin to question the direction of the Fed. But when you add in the impending retirement of Dallas Fed President, Fisher, who like Plosser is one of the Fed's most vocal inflation hawks, then you definitely have a dovish tone to the Fed. So, think about that when the calendar turns to 2015, and the markets begin to really believe that a rate hike is right around the corner. But will it be?

For What It's Worth. Colleague Ty Keough, sent me a link to a story on MarketWatch on Tuesday, that I finally got around to reading yesterday. The article talked about how Canada was working to become the first North American trading hub for the Chinese renminbi.

Given the state of the U.S. and how Mexico has a checkered past dealing with foreign deposits, Canada seems to be the only choice left. But, there are plenty of reasons for China to view Canada as a strong country ready to become a hub for renminbi trading.  I've chronicled all of these things about Canada in the past, but for new readers.

Canada's economy has performed admirably in the post financial meltdown. Remember, not one Canadian bank was in trouble during that period, that many countries' banks can't say. China is Canada's second largest trading partner, and according to the report from Bank of Montreal (BMO) “Canada boasts a stable and well-capitalized financial sector and the banking sector was rated as the soundest in the world for the past seven years by the World Economic Forum, and financial services have maintained a near 7% share of the economy for nearly a decade.”

So apparently, the folks at BMO think that China should make Canada their North American hub for trading the renminbi. I would think that China will think that too! 

Chuck again. as if I ever left you! HA!  But this would be HUGE for Canada, folks. And do I need to remind you of my call that China would seek a wider distribution for their currency about 5 years ago? As Hannibal Smith used to say. “I love it when a plan comes together!”

And don't look now, but now. but I have two FWIW articles for you today! This one plays well in the sandbox with what I've been talking about for 12 years now, and that is the debt creation and accumulation is turning the U.S. economy into a Ponzi Scheme.  check this out.

“The United States has evolved into a nation with a Ponzi economy, in which the continuous expansion of debt is the only thing that keeps prosperity alive, according to Federal Reserve critic John Hussman.

In his weekly commentary, Hussman, founder of the eponymous Hussman Funds family of mutual funds, said the U.S. economy appears fine on the surface, but that capital accumulation and labor force participation have buckled below – with dire prospects for the American future.

“Over time, growth in the standard of living is chained to and limited by growth in productivity,” he wrote.

“When the most persistent, most aggressive and most sizable actions of policymakers are those that discourage saving, promote debt-financed consumption and encourage the diversion of scarce savings to yield-seeking financial speculation rather than productive investment, the backbone that supports a rising standard of living is broken.”

Chuck again. The key words here are that the U.S. economy appears fine on the surface. I've been saying this for some time now, and now it appears that others see it too!  Debt is not always a bad thing, as long as it gets paid off. But Debt that just accumulates and accumulates will come back to haunt an economy. And when this zombie comes out to haunt us, it's going to get ugly! But you don't have to take my word/ opinion on that, you can choose to say there is no bogeyman for the economy and no bogeyman with debt, and go about your life happy as a clam. It's your choice.  And oh yeah, I found this here:

To recap. The dollar's two-day breather ended yesterday afternoon, and the all-out assault on the currencies and metals is back on this morning. Of course Misters Wheeler and Stevens of the RBNZ and RBA respectively, didn't do their currencies any favors overnight, so it's not all just investors buying dollars.  The ECB's Draghi, also decided to leave out some info in a speech that would have given the euro some love. UGH! Gold is falling again this morning, and getting oh, so close to its cost to produce. That was a line in the sand last winter, and Gold shot higher, let's see what happens this time.

Currencies today 9/25/14. American Style: A$ .8805, kiwi .7960, C$ .9005, euro 1.2720, sterling 1.6305, Swiss $1.0530, . European Style: rand 11.1935, krone 6.4050, SEK 7.2155, forint 244.05, zloty 3.2835, koruna 21.6510, RUB 38.45, yen 109.25, sing 1.2695, HKD 7.7540, INR 61.35, China 6.1497, pesos 13.28, BRL 2.3825, Dollar Index 85.41, Oil $92.71, 10-year 2.55%, Silver $17.52, Platinum $1,307.75, Palladium $801.50, and Gold. $1,209.04

That's it for today. Cardinals lose, but so did the Pirates, (thank goodness!) so the Cardinals magic # reduces to 3, with 3 games to play. It's still too tight of a pennant race for my taste! I treated myself to a banana malt from Steak-n-Shake last night, boy was I in seventh heaven sucking that down! See, it's the little things that make me happy! When I was having radiation on my mouth 3 years ago, (where'd those 3 years go?) malts and shakes, and smoothies were about the only thing I could tolerate in my mouth. Our lovely, and super sweet colleague, Kathy Glowski, used to go out and get me shakes nearly every day!  So, malts, shakes, smoothies have become a part of my routine! While in San Diego for the Currency Expo last year, I had a chocolate/ peanut butter shake. Talk about yummy!  OK, I have no idea why I started down this road, but I did, and now it's time to end it!  I hope you have a Tub Thumpin' Thursday!

Chuck Butler
EverBank World Markets