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In This Issue.

* Waiting on Big Ben.

* WSJ& FT say tapering is still on for December!.

* Norwegian krone soars on strong data! .

* U.S. Retail Sales disappoint .

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


Good day. And a Wonderful Wednesday to you! Well, it's backs up to the wall time for my beloved Cardinals tonight in Boston. They will send their rookie sensation to the mound, in hopes of shutting down the Sox, while the Cardinals hitters attempt to fill the holes in their bats. For the baseball fans in St. Louis and Boston, this is what's important today. For everyone else, the FOMC 2-day meeting conclusion is what's important today. So, I guess I'll have to spend my time talking about that! UGH!

The Wall Street Journal (WSJ) and the Financial Times (FT) are still of the opinion that the Fed is going to begin their tapering of Quantitative Easing (QE) in December. The rest of the world's market participants believe it to be next March are April. Society Generale, thinks that the Fed Heads will announce today that they are increasing QE! WOW! Now, that's what I call going out on a limb! But think about it for a minute. Yesterday we had a downright and dirty awful Retail Sales print (more on that below), and the other data that has printed has been down and dirty recently. And now we have the disruptions to the economy from earlier this month, the Fed Heads would have all the ammunition they need to do a "one-off" increase.

Fed Head Fisher said yesterday that, "it would be hard to taper in light of the fiscal shenanigans." That tells me that the Fed Heads are not going to do anything rash this afternoon, so, the Taper Capers get pushed off to December's FOMC meeting. The dollar has been stronger the past 3 days on fears that the WSJ and FT will be correct, but the move hasn't exactly been decisive in any stretch of the imagination, so the markets just aren't sure what they think.

OK, enough of spending time on the FOMC. The currencies are attempting to rebound this morning, the euro is up a bit on news that Spain's economy expanded for the first time in more than two years! Yes, the gain was a modest .1% in the third QTR, but it's a start, and I'm of the opinion that the Spanish economy is turning around. And this is a good indication of that thought.

In Canada yesterday, the Bank of Canada (BOC) Gov. Poloz, decided to talk to the press about his dropping of the tightening bias last week. (we talked about this here, when it happened) I have to say that he's being very coy about this folks. But I know that he's a wolf in a sheep's coat. I've told you ever since he was named Gov. of the BOC that his background was on the Trade side of the economy, and we all know what those trade (exporters) are always crying about. a strong currency. So, it was my initial thought that Poloz would eventually get around to doing things to weaken the Canadian dollar / loonie. But he would have to be very stealth-like in doing so in order to keep his true identity from being exposed. And now this simple gesture of dropping the tightening bias because he thought inflation was too low, is a very poor excuse, and one that leads me to believe that he's on his way now to pushing the envelope of loonie weakness.

Of course, the markets will have a lot to say about how much he gets away with. But all this talk of inflation being too low, and the Central Bank's insistence that they know better and have to get their hands in there to mix things up, is all too familiar. We saw it first in Japan 15 years ago, then in the U.S., then in Brazil, and so on. None of these have worked out for the respective Central Bank or the respective currency. So. while history might not repeat itself exactly, it does rhyme.

Speaking of Japan. The Bank of Japan (BOJ) will meet tonight (tomorrow for them) and announce their latest rate decision. Anyone out there think that the BOJ will announce something different than they have, regarding rates, for the last 10 years? I didn't think so!

Well, it appears that I was thrown a curve by the Reserve Bank of India (RBI), who gave all indications that they would be hiking rates but decided to keep them unchanged instead at their meeting earlier this week. The rupee got taken to the woodshed for this non-move by the RBI. I'm telling you that I saw the signs and the markets saw the signs of a rate hike, and then nothing! No wonder the rupee got the snot knocked out of it! But don't despair! The rupee has rebounded like a super ball! I guess the markets thought about it more and decided that the RBI didn't rule out a rate hike, so they reversed the trip to the woodshed, and now it's all seashells and balloons!

Over in the South Pacific, the New Zealand dollar / kiwi is up a bit this morning, but that's after a strong sell off on news from the ratings agency Moodys said that they had "considered downgrading New Zealand's AAA rating, but had decided against. The thought that Moodys might downgrade N.Z.'s credit rating to match S&P and Fitch with their AA rating for N.Z. was enough to scare the bejeebers out of kiwi holders. But, that didn't last long, and soon it was water under the bridge for kiwi.

I think that we shouldn't let this warning shot across New Zealand's bow go without putting it in our memory banks. I've long been a fan in most ways for New Zealand, but their Trade Deficit and Current Account deficit was always hanging over kiwi like the Sword of Damocles, and knowing that, I preferred the Aussie dollar (A$).

Besides, Australia is a much larger country, economy, population, etc. Not that bigger is always better, but it is when it comes to your wallet! HA! So, speaking of Australia. I read on the Bloomberg this morning that the markets have priced in a non-move in interest rates for the Reserve Bank of Australia (RBA) for the next 12 months! I think that's a bit too stable for rates in Australia. Look, RBA Gov. Stevens has cut or raised interest rates 26 times since he took over at the RBA in September 2006. So, Stevens is no slouch when it comes to tinkering with interest rates! Therefore, I doubt Stevens will let 12 months go by without tinkering with interest rates again. It's my thought that when we get into the hot days of 2014, the talk will be about a rate hike in Australia.

And then heading northwest from Australia, we'll go to where the cold is a norm. Norway. And Norway received some very good economic data this morning, that has the Norwegian krone soaring higher. First out of the gate is Norwegian Retail Sales for September, which rose higher than expected at +.7%, VS .5% expected. Then add to that good news, a strong August unemployment report, which came in at 3.5% VS 3.6% expected. These two pieces of data go hand in hand, for you can't really have strong Retail Sales if everyone is unemployed! And that's not the case in Norway, which I've told you for years has the best fundamentals, bar none, but continues to rely on the euro to rally before the krone can take off, but not today folks, and this is what I've said for many years. That one day, traders will wake up, smell the coffee, and realize that the krone is not the euro, and the Norwegian fundamentals are not those of the Eurozone! Maybe this is it. probably not, but it sure would be nice. Wouldn't it be nice if we were older, then we wouldn't have to wait so long. Ahhh. The Beach Boys on our Wonderful Wednesday!

Gold is trying to print green numbers this morning, which is another way of saying it's gaining! As of right here, right now, while I'm writing, Gold is up $5 this morning. We all know about the paper trades that dig into Gold's price all the time, so I'm always reserved in talking about the direction Gold should go on any given day, always knowing it could be wiped out, by the price manipulators.

Well, well. looky here! The BHI was bang on with its indication of what the Retail Sales data would give us. A disappointment! September Retail Sales "unexpectedly" (to the so-called "experts") fell -.1%... thus it reversed the .2% increase in August, which wasn't exactly anything to write home about. I'm not sure what the so-called "experts" were looking at, but I would like to suggest that they refer to the BHI from now on, for a more accurate idea of where Retail Sales will be! HA!

In addition yesterday, the data cupboard gave us September PPI (wholesale inflation), which also fell .1% for the month. The report focused on a drop in consumer food prices. I have to call their bluff on this one folks. IF wholesale prices are falling, then consumer prices would be falling. and while food prices might not be soaring higher, the sizes of the products are shrinking, thus giving you less for the same dollars. That's inflation, just not the normal kind. Sandwich sizes are shrinking, boxes of cereal are shrinking, and so on. it's all there before our eyes, should we want to stop and see what's happening.

Today's U.S. data cupboard will give us the ADP employment report for this month. A precursor to the eventual Jobs Jamboree, which I don't see on the economic data calendar for this Friday. The first Friday of each month is usually Jobs Jamboree day, but apparently not this month! I guess the disruptions earlier this month will be blamed. And the other economic data print today will be the STUPID CPI report! I'll say no more about CPI.

But it's all about the FOMC conclusion this afternoon. I'll be in a meeting when Big Ben steps to the microphone. For once in my life (sorry Stevie!), I'll be glad to be in a meeting! It's all show and no go for the FOMC today folks, mark my words, and let's move on with life, eh?

Before I head to the Big Finish today, I thought I would lighten the mood a bit with a funny. From Jimmy Kimmel, who was talking about the NSA supposedly spying on German Chancellor, Angela Merkel.

"If the NSA agents are like most men they were probably only pretending to listen to what she was saying anyway.

For What It's Worth. This story that I found on Reuters, brings me back to 2009, when the U.S. Gov't bailed out General Motors. I recall writing about how this was so wrong to do, and then the money was used for all the wrong things. I'm actually surprised right now, that General Motors hasn't collapsed, given the Government's intervention. But that's now what this story on is about, so with no further adieu.

"The U.S. government has booked a loss of $9.7 billion on the nearly $50 billion bailout of U.S. automaker General Motors, according to a quarterly report to Congress on Tuesday.

In 2009, the U.S. Treasury extended $49.5 billion in loans to GM in exchange for $2.1 billion in preferred stock and a 60.8 percent equity stake.

Treasury has since whittled down its stake in GM through a series of stock sales. Those sales have all taken place below the price Treasury needed to break even on its GM investment, resulting in the loss, according to Tuesday's report from the Special Inspector General overseeing the $700 billion Troubled Asset Relief Program.

Treasury has sold its preferred stock and reduced its equity stake to 7.3 percent. Treasury owns 101.3 million GM shares as of September 26, the most recent date available.

The U.S. government has said it plans to sell its remaining GM shares by April 2014. Some analysts said Treasury could even unwind its position by year end.

The exit of Treasury will eliminate the stigma of government ownership that has hovered over the automaker since the bailout, which prompted some critics to dub the company "Government Motors."

Chuck again. That's "our money" folks. That's "our money" that was lost on this exercise. Doesn't that just make you want to go yell at the walls? It does that to me!

To recap. The dollar has been stronger for the past three days, as the markets wrestle with the stories in the WSJ and FT about the Fed beginning to taper in December. Most everyone else thinks the earliest that could happen is March or April 2014. But the FOMC concludes this afternoon, and that's what has the markets' attention today. Norway printed some strong economic data that has the krone soaring this morning, maybe a break from the euro's grips could be happening? BOC's Gov. Poloz shows his true colors, and Moodys throws a cat among the pigeons talking about a downgrade for New Zealand.

Currencies today 10/30/13. American Style: A$ .9510, kiwi .8280, C$ .9565, euro 1.3765, sterling 1.6070, Swiss $1.1145, . European Style: rand 9.8410, krone 5.8695, SEK 6.3720, forint 213.45, zloty 3.0380, koruna 18.70, RUB 31.98, yen 98.25, sing 1.2370, HKD 7.7530, INR 61.24, China 6.1412, pesos 12.89, BRL 2.1830, Dollar Index 79.55, Oil $97.57, 10-year 2.49%, Silver $22.75, Platinum $1,473.20, Palladium $749.00, and Gold. $1,350.69

That's it for today. Had to stop and sing along with the Strawbs song: Autumn. Talk about a classic rock song! But I'm back now! Hey! So far, so good this morning, which hasn't been the case the last two days, so maybe I'll be able to get through today. Someday, hopefully, this stuff will be a distant memory, a tiny spectacle in my rear view mirror. That's what I have to keep my mind fixated on. So. the World Series comes down to Game 6 tonight, somehow, someway, the Cardinals need to get it to Game 7. Back at the beginning of the new millennium the Cardinals ruined a young rookie pitcher's career, exposing him to a Series when he obviously wasn't ready for it. I hope that young Michael Wacha's makeup is different, for he appears to be a future 20-game winner! But for tonight, we just need him to win 1 more! The Cardinals were behind 3 games to 2 in 2011, and came back to win in 7, but those final two games were at home, this time they are on the road. A tough row to hoe for sure, but stranger things have happened, my friends. And with that. I hope you have a Wonderful Wednesday!

Chuck Butler
EverBank World Markets

Posted 10-30-2013 12:59 PM by Chuck Butler