The Markets Have Chosen Their Poison.
Daily Pfennig

Blog Subscription Form


    .........But First, A Word From Our Sponsor..........



    5-year MarketSafe® Evolving Economies(SM) CD Act by October 9 for this final shot at the CD

    Back by popular demand, don't miss out on this second and final running of this CD. It's a limited time opportunity to safely pursue(1) the full upside potential of four emerging market currencies, including the Colombian peso, Turkish lira, Mexican peso and Indian rupee.(2)


    -Gain exposure to four emerging market currencies in one CD -Earn a 15% minimum upside payment if the currency indices outperform the dollar -Seek unlimited upside potential -Get back 100% of deposited principal(1) if the currencies lose to the dollar

    Be sure to act soon to lock in your chance at this innovative financial growth opportunity. CDs must be opened and funded by October 9.

    Call 904.343.0556 to open an account

    Learn more and view IMPORTANT DISCLOSURES >

    EverBank is an Equal Housing Lender and Member FDIC © 2013 EverBank. All rights reserved. 13ACQ0058.17 ......................................................

    In This Issue.

    * Currencies can't hold their lofty figures.

    * Neither can Gold.

    * Congress cuts Food Stamp payments.

    * And Chuck puts on his conspiracy hat again!

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

    The Markets Have Chosen Their Poison.

    Good day. And a Happy Friday to one and all! I quickly recovered yesterday morning from my dragging the line feeling as I signed off. Our little Christine brought us breakfast sandwiches, which really was a "pick-me-up" for me. And so the rest of the morning went along nicely for me! Unfortunately, I was up most of last night with stomach problems, so talk about really dragging the line today! No worries, I'll be fine. I really have a lot to say today about a number of things, so I had better get going on this!

    Well, the lofty figures for the currencies just couldn't hold yesterday, as there had to be a ton of profit taking in the asset class. When I left for home (mid-day) the euro was still up on the day, but had given back about ¼-cent of its earlier gains, and the Aussie dollar (A$) spent the rest of the day in the red. Gold flip-flopped all day, going from negative to positive and back to negative to positive, as it appeared the Gold traders just couldn't figure out which way they wanted to take the shiny metal.

    I told you yesterday, that from here on out to the end of the year, that the markets will be "data dependent" and will look to the economic data reports to determine that day's direction. I find this to be a grave mistake that the markets are making, for the economic data, is all garbage in my opinion. My friend, and eternal optimist, with whom I have difference of opinions on many things, John Mauldin, had this quote at the beginning of his letter last week. "It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong." - Thomas Sowell

    But that's what the markets have chosen to be their poison, and there's nothing you or I can do about it. All we can do is hope that the economic data isn't overcooked. For I believe that going forward, we will continue to have weak labor markets, weak consumer demand, little in Corporate Capital expenditures, and a debt load hanging over us like the Sword of Damocles.

    And speaking of data. The U.S. data cupboard gave us some data yesterday. And once again, for the second week in a row, 2 states didn't file claims from the previous week because of computer upgrade problems. Are you kidding me? Hey! Did they turn it off and turn it back on? HA! That's the answer our computer whiz used to give us back in the 90's when PC's first showed up on everyone's desks. In the end folks, all the data dependent folks in the markets have to be scratching their heads, because every darn piece of data is cooked, massaged, and rolled out to please the consumers, it means little in the way of giving us direction for trading!

    We did see Existing Home Sales offset the weak New Home Sales data, and we could very well see a rebound in housing now that it appears that mortgage rates won't be headed higher for awhile that is.. And Leading Indicators were up, which normally is a good sign for the economy, looking forward that is. But this data has been so wrong lately, that I wouldn't hang my hat on its results. The U.S. data cupboard is empty today, so I don't know where the markets will get their direction today, let's hope they don't just make something up!

    It appears that the currencies are still being looked at as an asset class that moved too far, too fast the other day, with most currencies taking on water this morning, along with Gold, which is down $8 as I write.

    Well. I don't know what kind of fight that dog has in it at this point, but. Did you hear that the House Republicans are going to tie raising the Debt Ceiling to defunding the Affordable Care Act? Talk about throwing the White House a curve! The President and Chief of Staff have been pounding their respective chests, and saying there wouldn't be any negotiating the Debt Ceiling. But they thought, the negotiations would be over spending cuts. (yes, the ACA would be a spending cut, but one that has yet to fully make an impression on deficit spending ledger). Look. I don't care to get all involved in what gets cuts, but rather than something gets cut, for we can't continue to just deficit spend. But then, I've been saying this, for over 12 years now. And where has that gotten us? Just Deeper into Debt. And, what has that done to your Purchasing Power in the dollar?

    Then This news hit the wires and I thought, what the heck is going on here? Have we finally decided that we can't afford to be spending money willy-nilly? Here's the skinny from the WSJ.

    "The House on Thursday narrowly passed a bill curtailing spending on food stamps, setting up a battle with the Senate, which backs far smaller cuts. The vote was 217-210.

    The bill would cut nearly $40 billion over a decade, or about 5% in expected spending, from Supplemental Nutrition Assistance Programs. The Senate has called for a cut of about $4 billion to the programs. About 48 million Americans received food-stamp benefits last year. "

    I don't think that news is going to sit very well once everyone finds out that their orange card has less to spend on it.

    Yesterday, I told you about my talk with the TV guy who was talking about the so-called "eventual end of QE". Then I had a conversation with a dealer friend of mine at a large firm. And she mentioned how "this all has to end sometime", and I surprised her, by saying, why? What's to stop the next Fed Head from continuing the bond buying, ZIRP, and cuddling of the markets? I've come to a new thought of mind. I used to think that Big Ben would want to start tapering before he left office. But now I think more along the lines of: Maybe he wants to leave the chairman's seat without starting tapering, and that way, if the next Fed Chair wants to start tapering and it all blows up in their face like I still believe it will, then he can sit back and say, "When I left the Fed, everything was going smoothly!" And then he gets to wash his hands of this mess!

    OK.. enough on Big Ben. Those are all just "Chuck's thoughts" as to what might happen. Now I'm going put my conspiracy hat on, so for all of you who think I'm nuts when I do that, go ahead and skip to the next paragraph. OK, for all that stayed, here's my latest conspiracy thought. Let's say that maybe the Gold / Silver manipulators were given the wink and nod of no tapering ahead of time, I mean a couple of weeks ahead of time. And they began to short the hell out of the metals, taking the prices way down. But doing so, knowing that they would soar once everyone else heard about no tapering. Then they began to cover their short trades minutes before the announcement (that is a fact that huge buy orders were filling the screens right before the announcement, I talked about this yesterday). And not just cover their shorts at profits, but go long. watch the price of Gold soar, while they're holding long positions at prices before the announcement. Don't think that could have happened? Well, I've got a bridge I need to sell you.

    Germany goes to the polls in federal elections on Sunday. The polls are inconclusive as to whether Angela Merkel will continue to head the majority party, or in a coalition with other parties. I know that the German on the street is not happy that Germany bailed out Greece, but one thing he can't be unhappy with is the trade picture in Germany and what that means for business. Germany remains the model country for the Eurozone, and its largest economy, at least Merkel didn't kill the Goose that lays the Golden eggs.

    OK, for all of you who skipped over that, welcome back. I've got a special treat today for the FWIW section. So, let's not beat around the bush!

    For What It's Worth. I've told you all for many years now that I really enjoy reading what my friend, Bill Bonner has to say each day. Sometimes what he has to say is so good, that I have to steal some of it so that everyone can enjoy it. Well, today's note has info that isn't what we would consider to be "enjoyable", but knowing the difference between the stuff the Gov't tries to tell us, and reality, counts for something important! So, here's Bill. He wrote a letter to a Senator after she had an article in USA Today earlier this week about how she helped save the U.S. economy. (I won't name the person, I'm sure you can figure it out)

    "I'm here in Baltimore enjoying your native city. The weather's real nice, thank you.

    But I have a question. It relates to your article in Tuesday's USA Today. You pat yourself on the back so hard I was afraid you might have dislocated a shoulder. Hope you're alright.

    But since you think your efforts to rescue the US economy in 2008 were such a success, I thought you might like to respond to the front-page story of yesterday's Financial Times.

    It says the typical American family now earns less in real terms than in 1989 after family incomes fell for the fifth consecutive year.

    Here's my question: What kind of a recovery is it where family income goes down every single year? What kind of a recovery leaves family income lower than it was 24 years ago? And how does a consumer economy expect to grow when its consumers have less and less spending money?

    I know you're busy. So, I'll propose an answer. Isn't it possible that the US economy was in no danger of "failing" or disappearing? Isn't it possible that you were just writing down that huge mountain of debt that had been built up over the previous half a century?

    And isn't it possible that, by stopping the correction, you also stopped the healing process - leaving ordinary Americans with an economy burdened with too much debt. weak growth. few jobs. and little real prosperity?"

    Chuck again. The USA Today follows up on Bill's thoughts with an article yesterday on food stamp usage. "The contrast suggests just how far the USA still has to go to pull out of its economic malaise, and Census Bureau data released today confirm it: 13.6% of U.S. households received federal Supplemental Nutrition Assistance Program (SNAP) benefits last year, up from 13% in 2011 and only 8.6% in 2008 at the height of the recession. For many here and elsewhere, this is the Recovery That Wasn't."

    Thanks to Bill, who still is hoping to hear from the President, regarding Bill's request to be nominated for Fed Chairman. He would be my choice!

    To recap. The lofty figures in the currencies and Gold from the no taper trading on Wednesday and early Thursday has turned sour. And is now data dependent, which yesterday's data, albeit cooked, massaged and rolled out so consumers feel good, was better than the average bear, and that meant dollar strength.. Besides, the currencies and metals went too far, too fast the other day. Congress cuts Food Stamps payments, can you believe that one? And Chuck puts on his conspiracy hat again, this time, it's a real doozy, you won't want to have missed!

    Currencies today 9/20/13. American Style: A$ .9425, kiwi .8385, C$ .9720, euro 1.3545, sterling 1.6030, Swiss $1.0995, . European Style: rand 9.7515, krone 5.8805, SEK 6.3390, forint 220.45, zloty 3.1205, koruna 19.06, RUB 31.81, yen 99.40, sing 1.2480, HKD 7.7530, INR 62.37, China 6.1557, pesos 12.74, BRL 2.20, Dollar Index 80.33, Oil $106, 10-year 2.74%, Silver $22.76, Platinum $1,455.05, Palladium $724.23, and Gold. $1,357.88. And with all the talk this week about debts and deficits, let's take a peek at the U.S. Debt Clock, don't forget to put away the sharp objects before pulling the site and seeing the Unfunded Liabilities number. you can see it all by clicking here:

    That's it for today. And for me until next Thursday, as I'll be in Houston the first part of next week. I think I see a long conversation between me and my oncologist about all my stomach problems. Cardinals blow two late inning leads yesterday. UGH! We had Braden Charles with us at the swim meet last night, he was so cute pointing to the boys when they sounded the horn to start the race and would yell, "GO"! Braden's dad is the swim team coach, and his uncle Alex swims. Our Evolving Markets MarketSafe CD was brought back for a second and last issue that has a funding deadline of 10/9, I'm just saying. Are you watching all the announcements by large companies regarding their employees' health care? This is going to get very interesting. Next Thursday is the EverBank St. Louis Art Show, if you're in the area please stop by to say hi! And with that, I thank you for reading the Pfennig, and I hope you have a Fantastico Friday!

    Chuck Butler
    EverBank World Markets

    Posted 09-20-2013 1:17 PM by Chuck Butler
    Filed under: , ,
    Related Articles and Posts