Oops Did We Say That Out Loud?
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In This Issue.

* Another dollar rout on Fed Minutes.

* Time to board the Love Train.

* Gold reaches 2014 high! .

* Consumer Debt an unintended consequence.

And Now. Today's A Pfennig For Your Thoughts.

Oops Did We Say That Out Loud?

Good Day! . And a Tub Thumpin' Thursday to you! These allergies are driving me bananas! This is what I get for all those younger years when I would think that people that had allergies were weak, for I had none, nada, nil, zero, zilch! But not any longer! As you get older, like I'm doing, thank goodness, your immune system weakens, and then all kinds of bad things can happen. But not to worry, I have a feeling that this spring, not that it has really "sprung" yet, is not going to last very long, and the summer dry air will replace it before we know it. At least that's what I'm hoping for!

Well, the currencies and metals all have some lofty levels this morning from the latest rout on the dollar that began yesterday afternoon with the printing of the Fed's FOMC Meeting Minutes, and then carried over to the overnight markets, that have kept the pressure on the dollar. So, what did the Meeting Minutes say that got the markets all lathered up? Ahhh grasshopper, that's what you come to this letter for, right? All the tidbits you won't find elsewhere, with honesty, no hiding behind the pillars, and song lyrics that bring back the memories. So, with no further ado, here we go!

The FOMC Meeting Minutes (The Minutes) spelled it out plain and clear for everyone even the market participant with the thickest of heads, that their forecasts OVERSTATED THE RATE RISE PACE! That's right, just like I tried to tell you that the Fed Heads can't hike rates, not yet, anyway. And not in the next year either! It was as if the Fed Heads said, "Oops did we say that out loud? This news hit the markets running, and the dollar was sent to the woodshed Immediately! Look, if all the media and markets didn't get so hyped up by a smartless comment by Janet Yellen in the first place, they wouldn't have to reverse all the dollar buying they made then, now! But, it is what it is. And since the currencies and Gold got sold like funnel cakes at a state fair when Yellen OVERSTATED THE RATE RISE PACE!

So, it's only fair that the markets return the favor to the dollar, and sell the dollar like funnel cakes at a state fair! So, that's what we have going on this morning, and probably throughout the day, as there's not much else going on to change this course. Of course there's always the PPT in the shadows, but so far no sign of anyone defending the dollar.

One of the better performing currencies this morning is the Norwegian krone. Norway printed their latest inflation report this morning, and opposite of what happened with Sweden's inflation report, which lost ground, this one from Norway ticked higher to 2.6% (2.5% was the forecast), and once again, the rate hike campers came out the walls to buy krones. Sweden's inflation report is concerning, and has pushed the chance of a rate hike in Sweden this year to the back burner, but Norway's chances of a rate cut get pushed to the front burner.

The euro is stronger this morning, and is now well entrenched in the 1.38 handle, trading this morning at 1.3870. It's all about dollar weakness that's pushing the euro higher.. And it's not liked by everyone in the Eurozone. Well. Let's see here. Yesterday, I saw some comments from the Eurozone that were interesting to me, and to any euro holder. the first one was from Bundesbank (Germany's Central Bank) President, Weidmann, who said that the "risk of deflation in the euro area is low, the that the ECB is ready to take further measures to effectively counter a period of low inflation that continues for too long." Nothing new here, just reaffirmation of that ECB President Draghi has said 100 times before. The thing that interested me was that the Bundesbank chimed in, and basically game Draghi the green light to more stimulus should the region need it.

The other item was from the Bank of France Gov. Noyer, who said, "Nobody wants a strong euro and that it would be desirable from every point of view for it to be a little weaker." Same old stuff from the Bank of France. They just don't get it! I really don't have any idea what his agenda is, other than to introduce some additional inflation to the Eurozone. But come on Noyer! Not EVERYONE wants a weaker euro! And when will you learn that a strong currency is a reflection on your country?

The Carry Trade is BACK! Pulled from the ashes and embers of burned investors of the past, the Carry Trade is picking up the pieces and coming back strong! Here's the skinny. The Carry Trade is the name that's placed on a trade where a low yielding currency, like yen or dollars, are sold short, and the funds produced are used to buy a high yielding currency, like real, rand, Aussie dollars (A$), and so on. I truly believe that this kind of trading is what is lifting the Brazilian real from the junk pile. And it's what's pushing the envelope of dollar weakness.

This trade works as long as there isn't price volatility of either currency. for if the dollar rallies while you're holding it short, that's a bad thing, and if the real loses ground while you're long, that's a bad thing. A few years ago, the Carry Trade was Big in this particular pair, and then the Brazilian Gov't said that they had seen enough real strength and saw to it that the real weakened by a landslide, thus causing all those outstanding Carry Trades to unwind with big losses.

The Japanese house wives became famous with their version of the Carry Trade pre 2008, selling yen and buying A$'s or New Zealand dollars / kiwi. If this sector of investors come back to the markets, watch out! Yen will get blistered, and A$' & kiwi will be back on the love train. People all over the world, Join hands, Start a Love Train, love train. And let this train keep on riding, riding on through. Gotta love it when you can inject the O'Jays into the Pfennig!

Well.When will the U.S. ever learn when dealing with China that it's far better to keep your mouth shut and let people think you are a fool than to open it and remove all doubt? Yesterday, Treasury Sec. Jack Lew, decided to urge China to show more commitment to pursue a floating currency. And you know what China did in response? The pushed the renminbi/ yuan weaker in their daily fixing as if to say. This is how we do it, got a problem with that? This is how we do it, all hands in the air, and wave them from here to there! HA!

The Bank of England (BOE) is meeting as I type my fat fingers to the bone here. On a sidebar, do you know what you get when you work your fingers to the bone? Yes, that's right, you get.. Bony Fingers! HA! Back to the BOE. expect nothing, and you won't be disappointed. BOE Gov. Carney still has his bag-o-promises that he never reaches into. And that will continue. But for today, pound sterling is stronger, but only as a result of dollar weakness.

Here in the U.S. things are getting pretty ugly on the consumer debt side once again. Last week, I think it was, I told you about how on the brokerage side, margin debt had surpassed the levels that existed before the financial meltdown. You see, when you blow Bubbles, like the Fed does, you get unintended consequences. So, stocks were going strong because of what my friend Steve Sjuggerud, calls the Bernanke Asset Bubble. And investors wanted to buy more, more we want more! And their friendly broker tells them about buying on margin. You can buy twice the amount for the same money. Never mind that you don't own the shares outright, you are borrowing the other 50%... So, not only did the Bernanke Asset Bubble push investors to stocks, but their zero rate policy (zirp) also allowed them to run up debts and buy more stock!

Well, what I'm getting at here, is that this has gotten out of hand, BIG TIME! And then there was this data that is so scary. Consumers took on an additional $18.9 billion (up 10.1% annualized) in personal debt during February for items such as cars, mobile homes, boats, trailers, vacations and education. The additional debt amount does not included mortgages or credit card debt according to the latest Consumer Credit Report (G-19) released this week by the Federal Reserve.

I get it folks. Borrowing rates are low, so people are backing up the truck. I don't see this ending well. But, on the other hand, if things get really ugly for the borrowers, the Gov't will probably allow them to walk away from the debt, or give them better terms to pay back. Oh, Chuck there you go again, being cynical! Moi? HA!

Moving on. because that consumer debt stuff will begin to give you a rash if you stay on it too long, I'll move along to something else going on here in the U.S. that's going to cause problems for the economy. Florida's Orange Production is declining. The U.S. Dept. of Agriculture released their latest report yesterday, and it looks like if the Orange crop doesn't decline further, when the harvesting year ends in June, it will show that they barely exceeded 110.2 million orange boxes harvested, which was the level harvested in 1989-90, that followed the worst freeze in Florida citrus history. Apparently, there's a deadly bacteria that's infecting the trees that's to blame. That will not be any help for the economy, folks.

And, talking about Oranges, gets me thinking about Gold. I know, strange, but that' s how I do things! HA! And Gold is up $11 this morning, marking a higher for this year. The Fed's faux pas with interest rate talk and now their mea culpa has Gold pushing the envelope to higher levels, based on the fact that the deposit rate competition that cash has, is not going anywhere, which leaves Gold to the spotlight. Just wait for the 3 things I talked about yesterday to play their way through the markets, you think Gold has a spotlight today.

For What It's Worth. So. have you used the Wi-Fi on an airplane yet? Shoot Rudy if you're just looking for restaurants in the city you're going to, then you only have to worry about the Gov't knowing where you're going. But if you are getting into company files, etc. you may want to stop immediately. This is interesting and no markets info, so here you go!

Companies that provide Wi-Fi on US domestic flights are handing over their data to the NSA, adapting their technology to allow security services new powers to spy on passengers. In doing so, they may be in violation of privacy laws.

In a letter leaked to Wired, Gogo, the leading provider of inflight Wi-Fi in the US, admitted to violating the requirements of the Communications Assistance for Law Enforcement Act (CALEA). The act is part of a wiretapping law passed in 1994 that requires telecoms carriers to provide law enforcement with a backdoor in their systems to monitor telephone and broadband communications.

Gogo states in the letter to the Federal Communications Commission that it added new capabilities to its service that go beyond CALEA, at the behest of law enforcement agencies.

Gogo, which provides Wi-Fi services to the biggest US airlines, are not the only ones to adapt their services to enable spying. Panasonic Avionics also added "additional functionality" to their services as per an agreement with US law enforcement, according to a report published in December.

The deals with security services have civil liberties organizations up in arms. They have condemned the W-iFi providers' deals with authorities as scandalous."

Chuck again. I found that on rt.com. And knew as soon as a saw it that it needed to get in the FWIW sector! I can't believe that people aren't up in arms about this stuff. Instead of doing their best imitation of Alfred E. Newman!

To Recap. The FOMC Meeting Minutes proved Chuck right once again, as the Fed Heads admitted that they had overstated their rate rise pace, which means they aren't hike rates any time soon. That got the dollar sent to the woodshed, and the currencies and metals rallying. Chuck talks about the Carry Trade returning to the markets and how Norway's inflation ticked higher while Sweden's ticked lower, thus reversing the calls for interest rate policy for these two countries, and finally Chuck talks about debt. but not Gov't debt, Consumer debt.

Currencies today 4/10/14. American Style: A$ .9420, kiwi .8705, C$ .9175, euro 1.3870, sterling 1.6780, Swiss $1.1390, . European Style: rand 10.3730, krone 5.9235, SEK 6.5255, forint 219.85, zloty 3.0045, koruna 19.7680, RUB 35.44, yen 101.80, sing 1.2480, HKD 7.7535, INR 60.06, China 6.1510, pesos 12.97, BRL 2.1865, Dollar Index 79.48, Oil $103.49, 10-year 2.65%, Silver $20.23, Platinum $1.458.88, Palladium $789.78, and Gold. $1,322.85

That's it for today. My beloved Cardinals couldn't sweep the Reds, but took 2 of 3 once again VS the Reds. We had all three grandkids at the house for a while yesterday, all so darn cute! Kathy & Alex went to pick out a tux for Prom. Alex's senior year is coming to a close very quickly. Then the graduation parties begin! I'm all for a party, but these graduation parties have been getting a little extravagant for me. I mean, a kid is SUPPOSED to graduate high school, right? Let's not go overboard. Replaced a headlight on the Pilot that Alex drives last night. Why do they have to give you so little room for your hands to work in these cars? That should have been a 5 minute job, but turned into ½-hour of me cursing the carmaker! Well, the sun finally came out yesterday, and it turned out to be a beautiful day, and today is supposed to be even better! And with that thought, let's go make this a Tub Thumpin' Thursday!

Chuck Butler
EverBank World Markets

Posted 04-10-2014 4:57 PM by Chuck Butler
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