Dollar Gets Sold Like Funnel Cakes At A State Fair!
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In This Issue.

* Tapering is "all priced-in".

* Summers says thanks but no-thanks.

* Retail Sales disappoint in the U.S.

* Gold manipulation whistleblowers .

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

Dollar Gets Sold Like Funnel Cakes At A State Fair!

Good day. And a Marvelous Monday to you! What a wonderful weather-wise weekend (how about that poetic use of alliteration so early in the morning!) for us here in St. Louis this past weekend! We had our "block party" in the subdivision that I live in, so that was a good time, and the grandkids had a "dance party" at the house Friday night, so darn cute!

Well, I came in this morning, turned on the currency screens, and what to my surprise! A currency rally! 2 days before the Fed will announce tapering to boot! So, what gives? Why would the dollar be getting sold now? Ahhh grasshopper, come, sit, and listen to a tale of what they call in the markets of an event being "priced in". Apparently, traders came to the realization last night that the Fed's tapering, is already "priced in", and the only thing left is for the Fed to disappoint them, with the announcement of a small amount of pull-back, or a delay.

So, the dollar is getting sold like funnel cakes at a state fair this morning. The other item that's weighing on the dollar was the announcement this weekend that Lawrence Summers has withdrawn his name from the list of those wishing to be the next Fed Chairman. OK. there are three things here that come to mind as to why Mr. Summers decided to pull out ahead of the nomination process. 1. He could have skeletons in his closet, and the confirmation process would expose those. 2. He got a glimpse of the Fed's balance sheet, and decided that he didn't want to be the one who's name was attached to that mess. or 3. He read the Pfennig last week, and got scared. So, actually, I think he took what was behind door #2, with #3 coming in close!

So, here's the skinny on why this news is bad for the dollar. You see, Summers was thought to have been a Fed Chairman that would favor tightening at a much quicker pace, and higher interest rates in the U.S. is what a lot of traders were looking forward to. On the other hand, Janet Yellen, the other person close to the nomination is thought to be "pro-growth", which means interest rates would remain near zero longer. And, before we go any further, you all know that I'm just having some fun with his reasons for withdrawing his name, right?

So, there you go! Two reasons for the currency rally and dollar selling this morning! Let's review very quickly. The markets came to the realization that they had already priced-in the Fed tapering this week, too far. and 2. Summers grabs his hat from the Fed Chairman ring.

On a side bar. Wouldn't it be something if Janet Yellen also withdrew her name as a Fed Chairman possibility? Then NY Fed Head Dudley would be next, and then he said thanks, but no thanks? I doubt that will happen, as these Fed Heads are pretty egotistic, and probably believe that they "have the plan to save the world". And when they announce that plan to save the world, you might want to make plans to take a long vacation.

The Emerging Markets took the Summers news as a sign that they too should rally, and rally they did! The Indian rupee surged higher, and the Turkish lira made its strongest move in 2 years! These wild swings is one of the reasons people get squeamish when it comes to investing in the Emerging Markets, which is why it makes sense to go into them with Principal protection, like that' s afforded to the holders of our Evolving Markets MarketSafe CD, which by the way, we've brought back for another round. So, if you couldn't pull the trigger on the first one, this is your last chance saloon.

The best performing currency overnight is the Aussie dollar (A$) which is up over 1-cent this morning. Knowing that the U.S. rates will be anchored for some time to come, is good news for the currencies like the A$, kiwi, and even the Brazilian real, for those interest rate differentials are really making a comeback as a key fundamental. And that puts a smile on my face. Reminds me a dentist's card I saw many years ago. It had printed on the card: "Smile, it improves your face value".

Gold just can't seem to catch a bid these days, and is down $10 this morning. Did you see the report last week from Goldman Sachs, that said they see the risk of Gold going below $1,000? OK. Quick Quiz. What have I told you in the past about Big Brokerage Houses' Calls for assets? That they very well could be trading their book, or their future needs. In this case, the brokerage firm could be short the asset, and needing to buy it back at cheaper levels, So, they issue a letter to their clients and tell them what they see, in hopes of getting everyone to sell, thus cheapening the price of the asset, and then the firm can go in a buy cover their shorts, at cheaper prices. Now, I'm not saying this is what this firm is doing right now. I'm just saying that we need to take these calls with a grain of salt, and see them for what they could possibly be.

It's funny, I saw this news story on the Bloomberg Friday morning, and the story below this one was one from HSBC (Hong Kong Shanghai Banking Corp.) "HSBC Lifts 2013 Gold Price Forecast on Higher Physical Demand". So, which one of these stories are you going to hang your hat on? Me? I think I'll just keep a steady Eddie focus on owning Gold as a store of wealth, and not get caught up in forecasts!

OK. The euro is much stronger to start the week at 1.3350 this morning. The German Federal Elections are next Sunday, and the only thing out there that could hurt the euro in these elections is IF the anti-euro party (AFD) wins 5% of the vote, and makes it into parliament. Right now the polls have then at 4%, which is where they will need to stay to keep the euro well bid next week. If the 5% level is achieved, I would think that the euro would take a hit.

The Chinese renminbi / yuan is much stronger this morning as the Chinese Gov't allowed a strong appreciation overnight. There was an article in the China Finance magazine that talked about how conditions in China have matured to further open Capital account. This is the stuff that I've been telling you was going to happen, folks. I love it when a plan comes together! But getting back to the renminbi movement. We saw these kinds of moves last spring too, when hot money flooded the Chinese markets, but then left when they got scared that China's economy was going to shut down. When that didn't happen, the hot money has begun to flow into China again. You see, interest rates "in China" are good, and we all know that interest rates sure aren't good in the U.S., Japan, or Eurozone!

And in Norway, the Norwegian August Trade Surplus narrowed to NK28.8 Billion from NK 35.3 in July. But this news wasn't seen as bad for the krone. This drop in the Surplus isn't new or surprising, as this data is very volatile. The chart on the Surplus looks like a chart for someone on a trampoline! I think the thing to keep in mind the most here is that Norway has a Trade Surplus, and that's something a lot of countries don't have. And they didn't need to weaken their currency to achieve this Surplus.

Well, the data from last week was interesting, I'll give it that! The Big Kahuna data print last Friday, the 13th I might add, was U.S. Retail Sales from August, which came in weaker than expected at +.2% (.5% was forecast). So, the Fed Heads have that on their minds as they begin to gather this week for a two-day meeting. The U. of Michigan Consumer Confidence report fell from 82.1 to 76.8. not a good thing. Today, we get my two faves. Industrial Production, and Capacity Utilization. Nothing that's going to turn the dollar around today.

For What It's Worth. JMR Doug, sent me this link to the story on King World News. So thanks JMR Doug! He said in his note to me, "Looks like the mainstream media will finally have to admit what you've been preaching for years Mr. Chuck."

So.. this was in King World News. Here's the link to the whole story: http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/9/13_Morgan_Whistleblowers_Confess_Bank_Manipulates_Gold_%26_Silver.html

And my snippet. In a stunning development, two JP Morgan whistleblowers have confessed that the bank manipulates the gold and silver markets. This is truly a shocking admission by the courageous JP Morgan whistleblowers. In a blockbuster King World News interview, London metals trader Andrew Maguire told KWN that the two JP Morgan employees came directly to him with hard evidence that the bank was actively manipulating the gold and silver markets.

This is a truly catastrophic event for JP Morgan, which up to now has denied manipulating these markets. Below Maguire takes KWN readers around the world on a trip down the rabbit hole as he discusses how he led the two JP Morgan employees to turn over the evidence to a law firm which specializes in high profile whistleblowers, and also to the CFTC. According to Maguire, the CFTC has virtually buried this information. Is this a cover up, or the next LIBOR scandal about to be exposed?

Chuck again. I like the fact that a major news outlet like King World News, ran this story. now, if the cable news stations would pick it up, we might get some traction. Other than that, this will die out again. But don't worry, we'll get plenty of coverage from the cable news stations on Miley Cyrus. Speaking of her, I saw a very funny cartoon last week, it was Dr. Brown from the Back to the Future movies sitting in the DeLorean talking to Marty and the quote was: "Marty, we have to go back in time to help Billy Ray Cyrus from getting into "trouble".. And make no mistake. I'm just reporting the story here.

To recap. The dollar is getting sold like funnel cakes at a state fair this morning, as the markets realize overnight that they have already priced in the Fed's Tapering, and the news that Lawrence Summers pulled his name from those being considered as the next Fed Chairman, thus leaving the nomination to Janet Yellen, who is a pro-growth Fed Head, and that means ZIRP remains in place longer, which is not good for the dollar.

Currencies 9/16/13. American Style: A$ .9380, kiwi .8210, C$ .9710, euro 1.3355, sterling 1.5930, Swiss $1.0790, . European Style: rand 9.7570, krone 5.9090, SEK 6.5105, forint 223.75, zloty 3.1430, koruna 19.2855, RUB 32.26, yen 98.90, sing 1.2595, HKD 7.7540, INR 62.83, China 6.1554, pesos 12.91, BRL 2.2795, Dollar Index 81.14, Oil $106.64, 10-year 2.81%, Silver $21.73, Platinum $1,444.43, Palladium $704.20, and Gold. $1,311.03

That's it for today. Lucky me! I came in this morning to find some chocolate chip cookies wrapped in foil that were left here for me from Kathy G, when she visited last week! What a sweetheart! My beloved Cardinals are hanging on, but need to get some separation from the Pirates and Reds. Markets could get pretty volatile this week with the Fed meeting, so be prepared to hunker down. Next week I'll be in Houston for a visit to the oncologist and the other doctors at MD Anderson Cancer Clinic. It's been a year, since my first visit there. I can't express my gratitude enough to my beautiful bride who insisted that I apply to MD Anderson. Now, the goal is to NOT have to visit them any longer! Wouldn't that be nice! And with that thought, I'll send you out to tackle this day and week. I hope you have a Marvelous Monday!

Chuck Butler
President
EverBank World Markets
1-800-926-4922
1-314-647-3837





Posted 09-16-2013 12:03 PM by Chuck Butler