It's All About The Currencies Today
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In This Issue.

* Spain & Italy PMI's beat expectations ...

* UK Services push sterling to 4-year high!.

* RBA leaves rates and hawkish statement unchanged.

* Silver is stuck in the mud.

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

It's All About The Currencies Today.

Good Day! . And a Tom Terrific Tuesday to you! I couldn't believe my ears this morning when the alarm went off, for it wouldn't register in my mind that it was time to get up, and I kept saying to myself, that's a false alarm, go back to sleep! But. Returning to sleep mode was not in the cards, as I soon figured out, that it was not a dream, and it was time to get up! UGH! I look forward to the day, I say, "Forget it, I'm going back to sleep!"

It appears that the markets have finally figured that out, and decided not to go back to sleep this morning, and therefore carry through the overnight rally in the currencies. Of course some good data prints from the Eurozone, can be quite the help in that regard! Gold is flat today, after pushing past $1,300 on Friday, and staying there yesterday. I've got a few things to talk about today, and some housecleaning to do, so as the Michael Stanley Band played many years ago, "Let's get this show on the road".

Front and Center this morning, the Eurozone peripheral countries such as Spain and Italy printed strong PMI's (manufacturing indexes) to start the month off on a good foot. Spain's PMI actually was an acceleration of the previous strong report. For those of you keeping score at home, Spain's PMI for April hit a 3 year high of 56.5, and marked the 5th consecutive month that it beat not only the expectations but the U.S.'s PMI figure. Italy printed a PMI of 51.1, and beat the expectations also. Given the strength of these two PMI's going into the European Central Bank (ECB) meeting on Thursday, I think what I said yesterday about how there will be no drama at this ECB meeting, is becoming even more accepted in the markets.

This has the euro on the rally tracks this morning, folks. The euro is just a couple of ticks away from the March high of 1.3932. Remember, though, the last time the euro got this high, and looked like it wanted to take out 1.40, that the rug got pulled out from under the euro, by something. Quite Frankly I don't recall what it was, as I was actually in S. Florida watching either the sea come crashing into the beach, or my beloved Cardinals. But I'm sure it was something smartless, and pushed the euro back down.

You know, I've said this many times through the years of this weak dollar trend, and that is: the ECB and Eurozone manufacturers don't want to see the euro this strong. (remember when it was 1.50 before the financial meltdown, and looked like it might never fall?) The Eurozone leaders would prefer to see the euro between 1.20 and 1.30. But, as I've also said before, I don't think the ECB is interested in currency wars, or selling the euro to weaken it. So, jawboning the euro in the direction the ECB feels to be right, is their tool of choice.

Late last year when the euro was around 1.28-1.30, I told you all that I saw the euro returning to 1.50 this year.. Of course that was all centered around the idea that I had for the U.S. Fed, and their Tapering of Quantitative Easing / bond buying/ money printing/ cheap Japanese imitation. I'm still of the belief that later this year, we're going to be looking at a very weak economy, and the Fed will have no other choice but to add to their "signature bond buying program" and therefor throw the remaining credibility that they have out the window. And that won't be good for the dollar, and with the euro the offset currency to the dollar, the euro then gets pushed higher and higher, whether the ECB wants it or not!

I mean, come on, you probably thought I had gone quacky, lost my marbles, and all those other nice things they say when someone has their saneness questioned, when I said that about the euro, but think about that. the euro has gained 10-cents since then, did you think that was possible back when I said that? So, the open course has been set for the euro. And it's not uncharted waters. been there, done that, bought the T-Shirt.

The Reserve Bank of Australia (RBA) met last night, and left their internal rate unchanged at 2.5%... There were no major changes to the accompanying statement, and the minor ones were at least positive, with the RBA acknowledging that there has been some improvement in indicators of the labor market. Tonight will see the March and 1st QTR Retail Sales reports from Australia, and later this week, we'll see the latest labor report. All this good news and thoughts for things to print still this week, has the Aussie dollar (A$) on the rally tracks this morning, and has passed 93-cents once again.

The New Zealand dollar / kiwi, is also on the rally tracks, but for no apparent reason other than to grab onto the A$'s coat tails and go for a ride! Kiwi has traded past 87-cents this morning, which is pretty thin air for the currency. I would say this, about the moves in A$'s and kiwi overnight, I would be careful here. Should anything hit the markets to upset the applecart, these two will get hit the hardest, because they have rallied the most! And these days, I just can't ever feel like it's all seashells and balloons when there are so many things to worry about that could upset the applecart in a NY Minute!

But having said all that, these moves higher are very welcomed by currency holders, and should be viewed as proof that what I've been saying all along is coming to fruition, in that the dollar would return to the underlying weak trend. I find all this dollar weakness interesting in that it comes at a time when the "flight to safety" deriving from the problems in Ukraine, should be enough to keep the dollar from falling like it has. But it hasn't been.

Speaking of Ukraine. Things there seem to be really getting ugly, which should be a heavy weight for the euro to shoulder.. But then maybe the markets see this Ukraine problem, like my friend Jim Powell, called it. "a passing storm". In fact, Jim starts his latest letter with this note: "The biggest obstacles to peace and prosperity today aren't the threats that dominate the news. Slow economic growth, high unemployment, uprisings in the Middle East, and North Africa, Russia's annexation of Crimea and so on, are passing storms."

Should you be interested in reading Jim Powell's Changes & Opportunities Report each month, and I must say I look forward to receiving mine each month, you can click here to check out subscribing to the letter.

OK. Yesterday, I made a statement about the Cinco de Mayo celebrations being something along the lines of celebrating their independence. And I think I make that same error just about every year that 5/5 is on a workday! Of course I really didn't say it was their "independence Day", which happens to be Sept 16. But it did gain them independence from the French at a battle of Puebla. So, I apologize to anyone that was offended by me not stating all that correctly!

The British Pound sterling is kicking rear and taking names later again this morning. Pound sterling hit a 4-year high this morning at 1.6953, on the back of a better than the average bear Services report, and the fact that the Big Dog euro is off the porch this morning, chasing the dollar down the street!

Canada printed a nice trade SURPLUS for February of C$290 Million, the largest monthly surplus since December 2011. The March report is expected to add to the C$290 Million, and put another notch in their belt of positive reports. The Canadian dollar / loonie is up in value this morning to $.9140. Or, as it is quoted on the street, 1.0940. This has been a strong move below 1.10 for the loonie, and one that is welcome, as I feel the loonie has been held back artificially.

Speaking of Trade Balances. The U.S. Data Cupboard will print the March Trade Balance, read. Deficit. this morning. Should be around $40 Billion in the red. And that's it, other than the IBD/TIPP Economic Optimism Index. Something that will fly completely out of the market's radar today.

As I said above, Gold was flat when I came in, but is down $2 right now, so still pretty flat on the day. I'm going to talk about Silver more today though. I read a report on Bloomberg that got me thinking about Silver. The Bloomberg report said, "While makers of everything from jewelry to solar panels are buying the most silver in nine years, price are languishing. Investors are dismissing industrial demand and instead focusing on the waning appeal of precious metals as a haven, with the Federal Reserve paring economic stimulus measures, inflation muted and equities rallying."

Hmmm. I have to say that while that explains why Silver can't seem to get out of the mud at $19 dollars and change, it just doesn't play well in the sandbox with what Chuck thinks should be pushing Silver higher. Ukraine, Chuck's thoughts on tapering, inflation is not muted, go buy some beef, are all reasons for Silver to rally. And the equities rally? Well, I'll repeat something I told my audience at the Orlando Money Show. "Everyone is interested in stocks again. Well, good for them! The last time this happened, it didn't turn out too good for stock holders now did it? And all the time the stocks were heading higher, currencies and metals were left to drift in an ocean of red. But all good things must come to an end, right?

And that's all I have to say about that! . Now, before I head to the Big Finish this morning, I have this to say. OK. I see that I piqued a lot of interest from you dear readers regarding our new MarketSafe CD. Look, I know it's not the sexiest MarketSafe CD we've ever issued, and I know it won't light up the night when it's all said and done, and maybe, interest rates don't rise in the next 5 years, so on, and so on.

But those are not reasons to complain about it, but, think about this.. Most people like things simple. Simple to use, simple to understand. They don't want to have to need an engineer's degree to understand the latest investment vehicle, put together by the quants at a Big Brokerage House.

This MarketSafe was put together from a simple idea. That interest rates will go higher in the next 5 years. How high, is the question, but Shoot Rudy, wouldn't you be kicking yourself if interest rates skyrocketed like they did in the late 70's, early 80's, and you didn't have an investment to reward you for this increase in rates? Now, I'm not saying they will skyrocket, I'm just saying, what happens if they do?

For What It's Worth. Have you ever heard of G. Edwin Griffin? Yes, he's the author of the great book: The Creature from Jekyll Island, which chronicles the story of the beginning of the Fed, and how it was done in secrecy so as to not get the U.S. citizens all up in arms about a banking cabal. Well, G. Edwin Griffin has an amazing story to his life, folks. A former CIA operative, etc. Well, he has an email service that he sends out, called "unfiltered news". And that's where I found this story. You're going to love this one!

"Late last week, a bill to legalize gold and silver as legal tender was passed through the Oklahoma state house. The vote was 74-12.

Senate Bill 862 (SB862), was introduced by Sen. Clark Jolley and Rep. Gary Banz, with cosponsorship from Sen. Natham Dahm. It reads, in part:

Gold and silver coins issued by the United States government are legal tender in the State of Oklahoma. No person may compel another person to tender or accept gold or silver coins that are issued by the United States government, except as agreed upon by contract.

The bill also provides a state-level tax exemption to Oklahoma residents exchanging their precious metals for another medium of change:

For taxable years beginning on or after January 1, 2015, there shall be exempt from Oklahoma taxable income, or in the case of an individual, the Oklahoma adjusted gross income, any amount of net capital gains, as defined in 26 U.S.C.A., Section 1222 of the Internal Revenue Code and included in the federal income tax return, which result from the sale or exchange of gold or silver for another form of legal tender.

Oklahoma is now slated to become the second state to recognize gold and silver as legal tender authorized for payments of debts and taxes. Earlier this year, the Arizona senate also passed a similar bill by a vote of 18-12. But that bill has stalled in the state house.

Currently all debts and taxes in Oklahoma and the rest of the United States are either paid with Federal Reserve Notes (dollars) which were authorized as legal tender by Congress, or with coins issued by the U.S. Treasury - very few of which have gold or silver in them."

Chuck again. Yes, let me remind each and every one of you that: The United States Constitution states in Article I, Section 10, "No State shall.make any Thing but gold and silver Coin a Tender in Payment of Debts."

To recap. It's a currency rally day, without Gold & Silver participating. At least right now they aren't! The euro got going in the right direction this morning, as Spain and Italy both printed PMI's (manufacturing indexes) that beat expectations, and in Spain's case marked the 5th consecutive month that their PMI was better than that in the U.S! The U.K. printed a strong services index number and the pound is at a 4-year high this morning. The RBA left rates unchanged and didn't make major changes to their previous hawkish statement, so the A$ is rallying and taking kiwi along for the ride this morning.

Currencies today 5/6/14. American Style: A$ .9340, kiwi .8750, C$ .9150, euro 1.3940, sterling 1.6975, Swiss $1.1450, . European Style: rand 10.5145, krone 5.9120, SEK 6.5040, forint 220.30, zloty 3.0160, koruna 19.6735, RUB 35.53, yen 101.75, sing 1.2475, HKD 7.7520, INR 60.11, China 6.1565, (a small mark down in renminbi overnight, very small) pesos 13.02, BRL 2.2425, Dollar Index 79.16, Oil $99.74, 10-year 2.62%, Silver $19.70, Platinum $1,448.25, Palladium $814.00, and Gold. $1,311.72

That's it for today. Let's see, what do I have in the bag of things to talk about today. Oh! Alex received two scholarships last night at the Senior Awards, of which he was one of the masters of ceremony. He's come a long way from the little boy that wouldn't look people in the eye when he talked to them. Cardinals find a way to win in Atlanta. And Chuck gets news on scans. I can tell you that the doctor says I'm stable, "and that's good" according to him. I on the other hand am not satisfied or happy with stable. So, the news was taken with a grain of salt for me. My wife says to be happy. The doctor says to be happy. Maybe I'll get there, eventually. I guess with all the metastasizing that I've had, there's something to be said for being told there's no new growths... Enough of that! That talk gives me the willies. Tonight is Senior Night at Alex's last home Water Polo game. The seedings came out for the State Tournament, and Lindbergh is seeded 4th. Which would be a HUGE triumph for my son, Andrew's public school team. To reach the final 4 would be HUGE! And if I were the Athletic Director at Lindbergh, I would give him a huge raise! HA! And with that. I'll get out of your hair today, and hope you have a Tom Terrific Tuesday!

Chuck Butler
EverBank World Markets

Posted 05-06-2014 1:36 PM by Chuck Butler
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