FOMC Meeting Minutes, SHMOMC Meeting Minutes!
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In This Issue.

* All eyes turn to FOMC Meeting Minutes.

* Bias to sell dollars turns around.

* Turkey hikes rates, with more to come!.

* The price of beer gets manipulated too? Heavens to Murgatroid! .

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

FOMC Meeting Minutes, SHMOMC Meeting Minutes!

Good day. And a Wonderful Wednesday to you! Hey Sally, do you know what day of the week it is? Come on, you know, it's hump day! HA! I have no idea why, but that commercial with the camel just cracks me up! I give huge credit to the folks at GEICO and ATT for they have the best commercials on TV. Pink Floyd's great song, Comfortably Numb is playing on the IPod as I begin to write today. Pretty apropos for all that's going on these days, eh?

Well, yesterday morning saw the euro fly past 1.34, the Aussie dollar (A$) gain back some of its losses, and Gold move into positive territory after spending most of the European session in the red. The other day, I questioned why we were seeing euro strength, when the markets were calling for a September beginning to tapering of QE. For if the Fed was going to taper, the dollar should rally, and the offset to the dollar, the euro, should lose ground. But what I wasn't considering, and am now, is that with all the selling going on in the Emerging Markets currencies, the flight to safety is including euros and francs. That's quite a change in the markets' mentality considering that just a year ago, there were still calls for a collapse of the Eurozone and euro!

This selling of the Emerging Markets Currencies has really picked up a lot of steam this week, and the Indian rupee isn't the only currency seeing all-time record lows. Just last week I talked about how Turkey had held off hiking rates this month, but would pick it back up next month, but the Turkish Central Bank decided that waiting until next month may be too risky, and that they needed to defend the lira, so they made a rate hike of 50 Basis Points.

Recall my earlier talk about Turkish interest rates, where I said that we could expect to see 125 to 175 Basis Points in rate hikes in the next year. Well, this 50 Basis Points hike doesn't appear that it will be enough to hold off the sellers right now, so Turkey is going to have to come back to the rate hike table with a sizeable hike sooner than they probably expected.

But that was yesterday. This morning, all eyes and focus has switched to the this afternoon's printing of the FOMC meeting minutes, and with that switch, the dollar has rebounded from yesterday's losses, with the euro falling back below 1.34, and the Aussie dollar (A$) losing another 1/2-cent. Gold too is in the red this morning, by a few bucks, and the way I'm looking at this is simply that I doubt the FOMC meeting minutes have any clear indication as to when tapering will begin, and that won't be dollar friendly. So, the dollar rebound this morning could very well be a small object in our rear view mirror by late this afternoon if the FOMC meeting minutes are what I believe them to be. no great shakes!

The euro's rise yesterday to 1.3450 was impressive indeed, but as usual with the euro, it can't stand prosperity, and soon there were comments from German Finance Minister, Schaeuble, regarding Greece that deep sixed the euro. Basically, the markets misunderstood what Schaeuble was saying, as he talked about a third Greek bailout. But what he was really talking about is any funds going to Greece would be from the European Union structural funds and amount to grants and not further loans, which would actually reduce Greece's debt burden. So, maybe this can get all ironed out today, and the euro can get back on the rally tracks.

In fact, I think the recovery is already happening, as the euro has gained 1/4-cent back to 1.34, since I came in this morning. The Commodity Currencies of A$, Canadian dollar / loonie, and New Zealand dollar / kiwi, are all trading at two-week lows this morning. I think the selling this week has been centered on the thought that the FOMC Meeting Minutes are going to provide clues as to when the Fed will begin to taper. But as I said earlier, I think the markets are barking up the wrong tree here, and the Minutes will NOT contain any clues. So, the risk with these currencies is already priced in, the way I see it. Of course this is just my opinion, and I could be wrong, and the FOMC meeting minutes do contain clues as to when the tapering will begin, and the dollar gets the spotlight shined on it . Choose one side. You're either with me, or with the markets that think the Minutes will be the cure to all that ails them!

Ok. At the top I talked about how Gold had recovered yesterday to trade in the black, and how it had given back some of those gains this morning. I had a reader send me a note overnight where he pointed out how a Large Investment House had issued a "sell Gold" campaign, but the GLD holdings may show that they could have increased their holdings by an astronomical amount. (I say "may" because I'm not sure if I'm reading the report correctly) If you have a Bloomberg, you can check it out yourself by entering: GLD (equity) PHDC1 And if I'm reading the report correctly, you'll see who sold and who added ounces.

I think this goes along with the stuff that I tell you all the time about how large Investment Houses make these calls to clients to buy or sell something, and I usually tell you to be careful, for you don't know if they have an agenda. I'm not going to go any further into this, because I'm afraid I've said too much already. But, I just want to make sure you see these "calls" for what they might be.

So, Gold is down $8 this morning. Having given back the $8 it gained yesterday. Hmmm. Up, down, all around. Back to back, belly to belly, the Zombie Jamboree! HA! That's how I feel when I watch the day to day trading in Gold. Yes, while I was gone, the shiny metal had a great run. And I suspect it has more of those moves in it, and I guess I'll have to wait for them!

I was thinking on the way to work this morning about the Japanese yen. I was thinking about my interview on the tomorrow afternoon, and recalled that earlier this summer in an interview with them, I said that I thought the euro, while stable and recovering would remain around 1.30 for the rest of the summer, and the Japanese yen would weaken to 110. Well, summer has another month to go, but it doesn't look as though that call is going to work out, as Japanese yen has proven to be a tough customer when it comes to trading past 100.. I think, as I said earlier today that the selling in the Emerging Markets was helping euros and francs, that the thought could be extended to Japanese yen too. Yen used to be considered a "safe haven", which always cracked me up, given their demographics, Gov't debt, and no growth economy.

Speaking of demographics I did read somewhere yesterday that Japan's fertility rate had increased for the first time in a very long time. That would be a good thing considering Japan's fertility rate had been on the decline for decades. And Japan is in need of young people for sure! But that's not going to help them for decades, so don't get all lathered up about this.

I looked up at one of the TV screens in the trading room, and saw that on Bloomberg TV they are discussing whether or not the Fed has "given up on the unemployed". I chuckled a little when I read it, because to me, the Fed has never done anything to help the unemployed. Yes, the Fed Heads believe that zero interest rates policy (ZIRP) and Quantitative Easing (QE) was going to help resolve the unemployment problem. But why would they think that? When they admit that QE has helped asset prices, lowered interest rates and debased the dollar? Yes, that's what the Fed Heads say when asked if QE worked. So, where in that does that help the unemployed?

I guess it's a good thing they didn't ask me to give my opinion on that show! I'm the not ready for prime time interview guest for sure! HA!

When I was at the oncologist's office last week before heading out the door to San Francisco, I grabbed a Tootsie Roll Pop (Orange) as I checked out. (yes, I was a good patient, so I got a sucker! HA!) And put it in my pocket and then forgot all about it. This morning I saw it on the counter, and now I get to enjoy my Orange Tootsie Roll Pop! I have no idea why I told you that, but it's so good! And in a round-about way, I'm now sharing it with you!

Getting back to Gold for a minute. The Central Bank of Russia (CBR) printed their monthly report on their Gold holdings, and in July, the CBR added 200,000 ounces of Gold and now hold a total through July of 32.2 million ounces. I told you all a long time ago that 1. I thought that China would back their currency with some percentage in Gold when it came time for them to allow the currency to trade freely in the markets, which would make the renminbi the most attractive currency in the world. 2. I also told you that Russia wasn't going to sit by idly and watch China get all the attention, that they too would eventually back the ruble with Gold.

I saw a story on the UK Telegraph that really got my dander up. OK, I've told you all about the manipulation in Gold, Silver, LIBOR, energy and other things, but now they really have my attention, for now it has been brought out that breweries have admitted to investigators that a number of firms arrange to raise prices of their premium beer brands. The Humanity! This has got to stop NOW!

And here's something else that should get all the Bitcoin lovers riled up that I also saw on the U.K. Telegraph. " The German Finance Ministry ruled that Bitcoin is a "unit of account", and therefore 'mining' them is a form of "money creation". This means that, like stocks or shares, any profit from them is subject to Germany's capital gains tax, at 25pc - unless they are held for more than a year, according to German newspaper Frankfurter Allgemeine Zeitung.

However, the ruling may prove difficult to enforce, as Bitcoin are traded anonymously, and therefore cannot be traced.

In June, America's Internal Revenue Service (IRS) said it was examining the use of virtual currencies such as Bitcoins amid fears that Americans are using them to evade taxes."

For What It's Worth. Whenever I speak at conferences, and talk about the precious metals like Gold & Silver, I talk a lot about the limited supply of such metals. I talk about how a mining company can't just dig a hole anywhere and find Gold. And once the metal is found it has to be brought out of the ground.. In other words, Gold doesn't grow on trees. Well, I saw this in Ed Steer's letter this morning from Financial Sense, and it plays well with my talks on "limited Supply".

"The world's largest silver producer saw its production decline substantially in the first half of 2013. Many assume this decline came from Fresnillo, which is known as the largest primary silver miner in the world. However, it was recorded by Poland's KGHM Polska Miedź S.A., the largest by-product silver producer on the planet whose annual silver production was 41 million oz in 2012.

Silver production at KGHM Polska Miedź S.A. declined a whopping 17% from 653 tonnes in 1H 2012, to only 544 tonnes 1H 2013.

According to KGHM Polska Miedź S.A.'s 1H 2013 presentation, the decline in silver production was due to lower silver content in processed concentrate, lack of delivery of purchased concentrate with higher silver content and to a change in the schedule for the maintenance shutdown of the Precious Metal Plant.

The decline in silver production was not confined to just the second quarter, it also fell 17% during the first quarter of 2013."

Chuck again. Could this be the start of what we could call "peak Gold"? Remember, that I like to refer to the precious metals as "Gold" so that I don't have to say Gold, Silver, Platinum and Palladium.

To recap. The currencies were strong yesterday with the euro rising to 1.3450 and Gold gaining $8. But the focus has shifted to the FOMC Meeting Minutes that will print this afternoon, and the markets are thinking that they will see clues to when the QE tapering will begin in the Minutes, and that has been dollar friendly this morning. Chuck thinks that there will be no clues in the Minutes and the dollar bias could be turned around this afternoon. Turkey raised interest rates by 50 Basis Points in an effort to slow down the selling in the lira, that's gotten caught up in the Emerging Markets sell off.

Currencies today 8/21/13. American Style: A$ .9030, kiwi .7935, C$ .9590, euro 1.3390, sterling 1.5675, Swiss $1.0870, . European Style: rand 10.2285, krone 6.0150, SEK 6.5185, forint 223.80, zloty 3.1655, koruna 19.2460, RUB 33.01, yen 97.45, sing 1.2765, HKD 7.7545, INR 64.02, China 6.1675, pesos 13.04, BRL 2.3930, Dollar Index 81.10, Oil $104.64, 10-year 2.82%, Silver $22.98, Platinum $1,519.75, Palladium $747.40, and Gold. $1,364.67

That's it for today. We had a nice family dinner at a local restaurant to celebrate Dawn's birthday last night. Braden was loud, but good, and Everett didn't want to sit in his chair, or eat. 2 year olds. I can't wait for them to turn 3! Our pitcher forgot how to pitch in the 4th inning last night, and the Cardinals lose a game they should have won. UGH! Justin Haywood and John Lodge of Moody Blues fame, formed a band called the Blue Jays, and the music sounded just like Moody Blues music. But the album is awesome, and has one of my all time fave songs on it called I Dreamed Last Night. Well, right now the song "Maybe" is playing and I use lyrics from this song all the time. great stuff! Hard Rockers, like Mike Meyer, don't appreciate the softer rock stuff, but me. I like it all! I've had quite a few people over the past few years ask me to put my IPod playlist on the website. Well, my marketing guru, Jason Coots, has agreed to do that, so look for that announcement sometime soon! And with that. I had better skedaddle. I hope you have a Wonderful Wednesday!

Chuck Butler
EverBank World Markets

Posted 08-21-2013 12:27 PM by Chuck Butler
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