Japan Sees Inflation Jump Higher!
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In This Issue.

* After roller coaster ride yesterday.

* Currencies & metals move higher today.

* U.S. Durable Goods & Capital Expenditures are good.

* Richard Russell speaks his mind.

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

Japan Sees Inflation Jump Higher!

Good Day! . And a Happy Friday to one and all! I'm touch and go this morning, but right now, it's a go. So. I have that going for me! Spent last night at a charity function with Chris & Tina Gaffney. The band was great! A great mix of music which, as you dear reader know from my talking about what's playing on my IPod in the morning, is important to me. It was a stormy night, and the rain coming down on my bald head, was cold. That's cold Willis! But, no animals were hurt, and I made it home just fine!

Well, the currencies are ending the week with a perky look. It's been a long week of range trading that really begins to bore me, and probably you, but we have to remain diligent in searching for a clear direction, and not take our bats and balls and go home. Diversification is not sexy, folks. And that's all I'll say about that!

On a sidebar, I just saw something that you have to put under the category of: You Can't Make This Stuff Up. U.N. has put Iran in charge of women's rights.

So. the euro is stronger this morning on some good positive ratings announcements. Fitch revised Italy's outlook from negative to stable. S&P affirmed France's AA rating with a stable outlook, and gave a AAA rating to the European Financial Stability Fund (EFSF). I'm not sure I take what ratings agencies say any longer as proof in the pudding, but this has good undertones for the euro going forward, and somewhat confirms that the relative calm that I've been talking about for two years, is entrenched in the Eurozone.

Last night, Japan printed their annual CPI (consumer inflation) number, and it was a shocker! Are you ready for this? Are you sure, because I'm not sure you are! You are? Ok. Japanese Annual CPI jumped from 1.3% to 2.9% this month. Sure, this is just one month of data, but when was the last time we saw Japanese inflation around 3%? Yen rallied on the data, but the move was watered down, as traders see what I see. And that is, it was just one month of data, we need to see a trend of higher inflation in Japan before we can confirm that inflation is alive and well in Japan.

Speaking of inflation and how countries calculate it. Last Week, Fed Reserve Chair, Janet Yellen, seemed to come around to Chuck's way of thinking, that the way we calculate inflation doesn't work. Yellen said, "The Fed has to watch carefully to see if inflation rises as the central bank projects, and "hopes", during the next few years. She expressed concern that the standard models central banks use to forecast inflation may be broken. Well, I know that the inflation calc, and the model used to forecast inflation are two different things, but they are closely related, folks, and if you're going to fix the mode to forecast inflation, you might as well, fix the calc that is used to report inflation.

There's a long story, that if you're ever on the Butler patio, I'll tell you the gory details of, that explains how CPI got so convoluted. I don't have the room here, but. I can tell you that you don't have to make a special trip the Butler patio for an explanation, you can find it in a book by Bill Fleckenstein, called: Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve. I've read this book about 3 times to make certain I have all the facts when I speak.

Ok. well, it appears that the whacking that the Aussie dollar (A$) had to endure this week, after printing a soft inflation number, has been overdone. I've been waiting for this, but the markets wanted to take every ounce of flesh they could from the A$'s price this week, and apparently they are finished now, because the A$ is up nicely this morning. I would caution the traders on this one, just like I did with Japan. This was one month's data. not a trend, not yet. and until a trend is established you are setting yourself up for embarrassment! I would bet a dollar to a Krispy Kreme that next month we'll be talking about how inflation in Australia rebounded!

What a roller coaster ride in the currencies and metals yesterday. One minute they're down for the count and the next minute their raising their arms in victory, and then back down for the count, and so on. Take Gold. right after I hit the "send button" on the Pfennig yesterday, Gold, which had been down $5 fell to down $11, then down $15, and it looked like it was going to be "one of those days" for the shiny metal. But then on a dime, Gold shot up to flat, then up $10, and then back down to up $5. The "day traders" were a bunch of happy campers!

I couldn't really find anything out there to explain the big swing, except that Gold had traded through a line of resistance on the downside.. But to cause that big of a swing, it would have needed to be something bigger than that! So put it down to: Only The Shadow Knows!

Gold is flat to up $1 this morning, but at least the bleeding in the shiny metal was stopped yesterday. Gold has to climb back above $1,300 and then go looking for higher levels. Until then, it's just wallowing around in the mud. Silver too. Silver hasn't seen the other side of $20 in over a week.

And I don't know what it will take for these two to get out of the mud and move forward again, for the geopolitical problems of Ukraine and Russia, and China and Japan just don't seem to be enough right now.

Speaking of China. A recent report by the U.S. Treasury, has the markets thinking that China is back to exporting deflation worldwide by driving down the renminbi / yuan. The U.S. Treasury clearly suspects that the Chinese authorities have gone back to their mercantilist tricks, driving down the exchange rate to keep struggling exporters afloat. The Treasury also accused China of trying to impede the market by boosting foreign reserves by $510 Billion last year to $3.8 Trillion, which Treasury calls: "excessive by any measure".

Ok. I detect a bit of jealousy in that "excessive by any measure" comment by U.S. Treasury, for they (Treasury) wish they could boast of reserves of any amount, much less $3.8 Trillion worth! And Treasury may be correct here, but I still contend that China is merely teaching the markets a lesson about making assumptions of One-Way Street currencies. Once they feel the lesson has been learned, they'll get back to appreciations of the currency. But until then we'll go through a lot of Wax on, Wax off.

For the record, the Chinese allowed the renminbi / yuan to appreciate last night, marking two consecutive nights of appreciation, which hadn't happened in a blue moon. So, maybe the markets have learned their lesson, Mr. Mayagi!

Yesterday, I told you what I thought Russia was up to, with their Gold accumulation. I have a great picture of the rise of Russian Central Bank Gold Holdings but can't use it here, for this is text only. And apparently, I can't use it on the Pfennig's blog site, due to "problems". So, you'll have to take my word on it, that it's quite the illustration of the rise of Russian Central Bank Gold Holdings! Oh, and speaking of the Russian Central Bank (actually called the Central Bank of Russia or CBR) they hiked their internal interest rate this morning. The ruble though is still being taken to the woodshed for Russia's involvement in Ukraine.

And in Switzerland, a country that I don't talk about much, because. There's not a lot to talk about, the Swiss National Bank (SNB) President, Jordan, was trying his hand at verbal intervention overnight.. Jordan said, " An appreciation of the Swiss franc would entail a threat of deflation." The markets didn't pay attention to him though, and the franc is stronger this morning. You know, I think people should pay attention to this guy, Jordan, he has to be a Pfennig Reader after saying this, "The global environment continues to present considerable uncertainties for Switzerland."

Well, the U.S. Data Cupboard printed a strong Durable Goods Orders report for March (wasn't there bad weather in March?) up 2.6% from Feb's 2.2% level. And in something that I think the markets miss every month, and the media doesn't have a clue with. Capital Goods Orders were up 2.2% in March, thus reversing the -1.4% print in Feb. Capital expenditures are very important to an economy, and while this was good, it really just reversed out the negative previous month, so we're starting at square 1. let's see what April prints here. then we can make a call on the direction of the economy..

In other data from yesterday, the Weekly Jobless Claims shot up to 329,000 from the previous week's 305,000. And the Kansas City regional manufacturing index slipped this month.

Hey! Looky there! Gold just ticked up to $1,300! Let's see now if it stand its own prosperity!

For What It's Worth. I'm feeling good right now, because I have the great Richard Russell to talk to us today. This was, as usual, found on Kingworld.com and is Richard talking about Gold, U.S. data, and more. So, with no further ado.. Here's Richard Russell!

"The action of the gold universe last Tuesday, I thought, was really informative. The price of gold metal was down by .74, but all the gold mining stocks (and silver) closed higher. I took this as an example of where the Fed or the gold-haters manipulated the price of gold bullion lower.

They can manipulate the price of gold, but can't control the price of all the gold miners. Interestingly, with the price of gold bullion lower, GDX was up .28 on the day and GDXJ closed up .96. This "strange" action led me to believe that something in gold or the dollar is going on.

I just read economist John William's latest comments (Shadow Statistics). John is certain that we face a hyperinflationary depression.

Isn't it really outrageous and disgusting that we are lied to -- concerning the economy? Don't the Fed and the US government have any decency -- any sense of shame? Actually, I believe the great American public is finally beginning to recognize that they are being told lies. Everybody now knows that inflation is running around 10% rather than the less than 2% that the Labor Dept. tells us. Just as importantly, the US public is rapidly learning that silver and gold are their protection against the Fed's machinations. Daily I see advertisements for the precious metals, and even the ads educate the public regarding the inflationary course the government is taking.

This is the age of communications, so it is increasingly more difficult for the Fed and the US government to keep the people in the dark. You know the Hollywood slogan that "Nobody knows anything." Well the new slogan for the nation could be, "Everybody knows everything." Thus, inflation and precious metals are now an open secret, and before it's all over there'll be hell to pay. How do these creeps who are lying to the American people sleep at night? Frankly, I hope they don't.

Fed pressure on gold may discourage Americans from buying gold, but it's a gift to the Chinese who are accumulating gold -- big time." - Richard Russell

To recap. After watching the currencies and metals take a ride on the Screaming Eagle, they are moving higher overnight. Gold has finally climbed back to $1,300, (we'll see how long that lasts!). The euro is stronger overnight on good ratings announcements for the Eurozone. And it appears the whacking the A$ was taking for printing a soft inflation report is over with. SNB President, Jordan, appears to be a Pfennig Reader, and more.

Currencies today 4/25/14. American Style A$ .9290, kiwi .8590, C$ .9070, euro 1.3840, sterling 1.6815, Swiss $1.1345, . European Style: rand 10.6345, krone 5.9905, SEK 6.5755, forint 223.75, zloty 3.0380, koruna 19.8450, RUB 36.01, yen 102.10, sing 1.2570, HKD 7.7530, INR 60.63, China 6.1576, pesos 13.11, BRL 2.2135, Dollar Index 79.70, Oil $101.30, 10-year 2.67%, Silver $19.73, Platinum $1,419.56, Palladium $805.30, and Gold. $1,300.70

That's it for today. Well, tonight will be a BIG Night in downtown St. Louis, as both the Cardinals and Blues come home to play! The Blues will play Game 5 on home ice. My dad taught me many years ago, that the odd games of a 7 game series are the important ones. and the last time I looked 5 was an odd number. The Cardinals come limping home from a 5-6 road trip that started out so promising. They couldn't find their missing bats while on the road, so hopefully some home cooking will help! Today marks the 3-year anniversary of our colleague Antione Lawrence. Antione wears a couple different hats for us here. I'm glad he's here! So, Alex's prom is tomorrow night. I remember my senior prom. The next morning, I had to get up early and drive to Louisville, to play my guitar at the Kentucky Bluegrass Festival. And no, I didn't play Bluegrass music. They had rock bands there too! So, actually I don't remember much of the prom, other than how beautiful my date was. Yes, it was Kathy. We were high school sweethearts, something right out of the 50's or 60's. Cheerleader meets football star (HA!, as if!) . OK. enough of all that. Go Cardinals and Blues! And I hope you have a Fantastico Friday!

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





Posted 04-25-2014 12:26 PM by Chuck Butler