Yellen Talks Additional Stimulus.
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In This Issue.

* Currency & metals rally cools off..

* A$ soars on great jobs report!

* Jim O'Neil on the euro/ franc cross

* Richard Russell on a Thursday.

And, Now, Today's Pfennig For Your Thoughts!

Yellen Talks Additional Stimulus.

Good day. And a Tub Thumpin' Thursday to you! I should know better. Yesterday, I talked glowingly about the Cardinals great start, and then they proceed to go out and blow a 3-run lead and lose! UGH! Oh well, they'll lose quite a few more this year, so no use in getting upset over one game! It has cooled off here, after a couple of weeks of abnormal warm weather. It's back to normal now, which is good, because I was afraid that we had missed spring!

The currency and metals rally from Tuesday cooled off too yesterday. They didn't really lose ground, but failed to add to their gains. In fact the trading ranges for both asset classes was as tight as the seal on Tupperware! The 6 different Eurozone countries got their bond auctions of debt over with yesterday without any major problems. And the yields didn't have to rise significantly for the bonds to get sold either, so that was all good news for the euro.

The BIG mover overnight was the Australian dollar (A$). The A$ got a HUGE boost from the latest employment report, which showed that Aussie employers added almost 7 times the number of workers in March than forecast! WOW! OK. only 6,500 jobs were forecast, so. almost 7 times gets us to 44,000 jobs created. but for the island nation of Australia, this is a very good number, and in fact, if we use "Chuck's number for the U.S. in March" of 30,000. Oh, you see where I'm going there, without me saying it.

The reason the A$ got all lathered up over the jobs report, is that a jobs report this strong has got to resonate at the Reserve Bank of Australia (RBA), and make them think twice about cutting interest rates. reminds me a of a great song by Poco. You better think twice. Which is what the markets are thinking the RBA is doing and making the call that this jobs report WILL be enough to stop the rate cut at the next RBA meeting.

Canada also posted a very strong piece of data yesterday. Canadian housing starts rose 5% in March to an annualized pace of 215,600. This represents the fastest pace of new home construction since October 2008.

But let me point out something here. Just like the U.S. has been doing, Canadian housing starts consist mainly, these days, of multiple family buildings. Renting has become quite popular not only in the U.S. but Canada.

But, the Canadian dollar / loonie has given back its gains to parity with the U.S. dollar this week, and just can't seem to find a bid to move it past parity for good!

Well. U.S. officials won't like seeing the data from China this morning. China posted their March month-end foreign exchange reserves, and they beat the estimates. the total in U.S. dollar terms was $3.305 Trillion. that beat the estimate which was $3.2 Trillion.

And while I'm talking about China. "Mom, they're doing it again". China continues to take the baby steps toward their goal of removing the dollar standard. China's Central Bank is putting together a global payment system for cross-border transactions in renminbi, aiming to expand the currency's use in international trade and reduce the reliance on the U.S. dollar. This means that Banks worldwide would be free to use the China International payment system.

I saw an interesting piece yesterday that was an interview with Jim O'Neil, the chairman of Goldman Sachs Asset Management. First. O'Neil's thoughts on currencies over the years have been pretty good, so when he talks about them, I usually stop to listen. and so it was yesterday.

O'Neil chimed in on the euro/ franc cross that I've talked about almost daily for the past two weeks. O'Neil believes that if the market pressures continue to mount on the cross, which as you know is not supposed to gain past 1.20, that the Swiss National Bank (SNB) may even up the ante by shifting the target from 1.20 to 1.35.

"The franc remains clearly over-valued and as their Finance and Economy Ministers have both said, a level around 1.35 to 1.40 would be more consistent. If the markets won't take it there because of the European crisis, the policymakers are likely to further undertake steps to adjust it.", said O'Neil.

OK. Chuck again. remember what I told you would be the way the SNB would get the franc weaker on that cross to the euro. They would sell francs and buy euros. It sounds like Jim O'Neil sure thinks the SNB is about to do something. and that's all I can say about that, without getting my wrists slapped.

The Fed's Beige Book printed yesterday. and the Fed Heads all sound giddy about the economy and its future. I guess these guys don't fill their own gas tanks, or do their own grocery shopping, or realize the unusually warm weather this past winter allowed the economy to get a ahead, and now what does it do for an encore?

And. these giddy Fed Heads, didn't know at the time they put their thoughts on paper, that the March labor report would be so disappointing.

Speaking of Fed Heads. The Fed's Vice Chair, Janet Yellen, was speaking yesterday, and she was not bashful about telling her audience that "the outlook for the U.S. economy remains highly uncertain and the central bank is quite willing to implement new measures if the recovery weakens. " Yellen went on to add, "In particular, further easing actions could be warranted if the recovery proceeds at a slower-than-expected pace."

And I don't have to tell you, because unlike the Fed Heads who don't fill their own gas tanks, you and I do. and we know how the price of gas pinches us, which takes money away from other things that it could be spent on. and that in a nutshell could be the straw that breaks the recovery's back.

As I said above, Gold traded in a tight range yesterday, closing down $2 on the day. I saw this story on Gold and chuckled. It seems the IMF issued a report talking about the growing shortage of safe assets, and how this is a threat to the global financial stability. Let's listen in.

"Sovereign debt crises are reducing the number of governments that investor trust to issue "risk free" bonds just as financial regulations are increasing demand for safe securities from banks." According to the IMF, potentially safe assets include Gold.

Funny, isn't it? Didn't the IMF sell all their Gold a few years ago? So. they are telling you to do as they say, not as they did.

Then There Was This. from King World. but first, I would like to say that I truly enjoy reading anything that Richard Russell puts out. But this one scared me, even though, on the patio, I've explained this to anyone that wants to hear it. It scared me because, it's moved from the patio to the hallowed pages of Richard Russell. So. here goes, folks.

"Save some cash, load up with Gold and Silver, and be patient. Get ready for a crime wave, a large segment of the population will do whatever it has to in order to obtain food. Hungry men and women can be desperate and lawless. If the Government does not supply any additional stimulus, but it does supply additional massive QE's, this will be a long, drawn out situation, probably not becoming toxic until the years 2015 to 2017. This period will ultimately see pressure on the dollar with an accompanying collapse of stocks and bonds.

For ultimate safety over the long pull, buy and own bullion Gold, Silver and gem quality diamonds as well as collectible treasures. If you don't believe me on collectibles, check the prices they are going for at auctions. I have posted a daily chart of weapons-maker Sturm Ruger. I think this bullish chart is telling us something, and what's it's saying is rather disquieting" - Richard Russell.

Chuck again. crazy times. for sure! I think what Richard is telling us is that Gold, Silver, Diamonds and guns are his choices. But that's just me reading into what he's saying. but scary nonetheless, eh?

To recap. The currency and metals rally cooled off yesterday, and trade in a very tight range. The Aussie dollar (A$) was the Top Performer overnight after Australia posted a jobs report that printed 7 times the forecast for jobs created in March! That should at least put the RBA on its heels regarding a rate cut. Jim O'Neil chimes in on how he views what the SNB will do about the euro/ franc cross.

Currencies today 4/12/12. American Style: A$ $1.0395, kiwi .8210, C$ $1.00, euro 1.3140, sterling 1.5955, Swiss $1.0925, . European Style: rand 7.9450, krone 5.7950, SEK 6.7725, forint 226.20, zloty 3.18, koruna 18.8585, RUB 29.50, yen 80.95, sing 1.2545, HKD 7.7635, INR 51.52, China 6.3071, pesos 13.098, BRL 1.8350, Dollar Index 79.56, Oil $101.98, 10-year 2.02%, Silver $31.55, and Gold. $1,654.75

That's it for today. Let's all wish our little Christine good luck today, as she will have a C-section for the arrival of a new baby! I'm really surprised she made it to her day, She really was moving around the office quite slow last week, and looked ready! So. thoughts to Christine on a successful day, and a healthy baby! And good luck to Lori (I call her Gidget) who has to pick up Christine's work. The last time Christine had a baby and was out, Linda Dile came to the desk . Linda? Are you ready to come back? HA! Linda has moved upward and onward. No Water Polo games this week for Alex, which has got to be tough. you would always rather play a game than practice! Opening Day in St. Louis tomorrow, the town will be dressed in red. can't wait! And with that, I thank you for reading the Pfennig, and hope you have a Tub Thumpin' Thursday!

Chuck Butler


EverBank World Markets



Posted 04-12-2012 11:46 AM by Chuck Butler
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