Lack Of Fundamentals In Currencies Drives Chuck Crazy!
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In This Issue.

* Singapore 3rd QTR GDP gets revised up!.

* Norway's GDP forecasts get revised upward! .

* The Data Cupboard is open for business today!.

* Platinum is best performer overnight!.

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

Lack Of Fundamentals In Currencies Drives Chuck Crazy!

Good Day!... And a Tom Terrific Tuesday to you! Well, the announcement of the Grand Jury's decision to no indict the police officer in Ferguson came down last night, and things have not gone peacefully, as hoped, but not anticipated. Apparently other cities are seeing demonstrations and general destruction of property too, so it's not just confined to Ferguson.. I was the "lead scout" for the office this morning. If I arrived here and found that I could not gain access to the parking garage or the street was blocked, etc. I was to start the phone tree that would alert everyone to the disaster plan we have in place. But no worries, no signs of problems here, so, here I am, and it's time to get going!

Well, after starting the week with no data, we get the mother lode of data today, and as I told you yesterday, tomorrow too. And some hard data prints are what the markets are looking for, to give them some direction. The stocks, bonds, currencies, commodities, all were range bound yesterday, and remain that way this morning, ahead of the Data Cupboard emptying out its contents later this morning. I guess the Big News around the Globe today is the upcoming OPEC meeting. The price of Oil has stabilized recently, and you have to wonder just what these guys have on their collective minds. I've read all about how Saudi Arabia has been trying to break the U.S. Shale Oil Producers' backs, with this drop in the price of Oil. Now, how's that for a conspiracy thought! But it makes sense doesn't it? Competition, which the Saudis have not experienced before, can make people do strange things.

The other Big News is that the West has agreed to a 7-month extension in the Iran Nuclear talks. Talk, Talk, Talk, everybody loves to talk. I would rather see actual decisions / agreements made, but I guess you have to do all that talking before you reach a decision / agreement, eh? Silly me, to think that you could meet once, and be done with the talking!

So, that's, that! Steely Dan is playing: Kid Charlemagne on the iPod this morning. Is there gas in the car? Yes, there's gas in the car! Sorry, but I'm reaching for straws this morning, and not finding any. There was pretty interesting news / data from Singapore overnight, so let's go there first this morning. Get this, I don't see how this big of revision is possible, but it happened in Singapore, as 3rd QTR GDP was revised up to +3.1% from the initial print of +1.2%... Singapore also saw an upward revision to their Manufacturing sector, so, all-in-all, a pretty good night for Singapore. Unfortunately, the Sing dollar couldn't find any wind for its sails, and is weaker by a bit this morning. These are the things in the currencies that drive me up a wall and cause me to be surrounded by men in white coats, as they attempt to talk me down from the wall. But, "back in the day" when fundamentals ruled in currencies, this kind of data from a country would lead to a rally in the currency. Oh, I long for those good old days. Old days, Good times I remember, Fun Days, Filled with simple pleasure. -Chicago.

And here's another one. In Norway overnight, Norway's GDP forecasts were all revised upward. Hmmm. Leading to a rally in the krone, one might think? Ahhh, think again! The krone is weaker this morning. I shake my head in disgust. For what's bad is good and what's good is bad. I hope you had the opportunity to read our Sunday Pfennig a couple of days ago, not only did Chuck, Frank, Chris, Mike and Tim all go through the things we are thankful for ahead of Thanksgiving, but Chuck also goes through the Bullard Put, and all the things that are on my mind these days.

This Bullard Put, is a real thing folks. and it was already given a test run on the markets a month or so ago. If you missed the Sunday Pfennig, I urge you to and read it, but if you don't have the time, and you're here and you want to know more about the Bullard Put, here's what I had to say in the Sunday Pfennig. Remember the days when the markets would talk about the "Greenspan put?" That was the card that, when played by the former Fed Chairman, would cut interest rates in order to "save the stock market." Well, now we all know that there is no more interest to cut, so what could this Bullard put be? About a month before the end of QE, U.S. stocks were looking like they were ready for the all-out correction that everybody and their brother had been looking for, and then along came Fed St. Louis President James Bullard who gave us a sample of the Bullard put, when he said, "The Fed could extend QE." So, it's all games to everyone these days. The games people play now, every night and every day now, never meaning what they say, never saying what they mean. Ah, the words of Joe South, they sure do play out these days when we talk about the markets, eh?

Gold is back above $1,200 this morning, but barely, and not with enough fluff to keep the price manipulators from driving it back below the figure without breaking a sweat. I've got a real treat for you in the FWIW section today regarding Gold. The only problem is that I wish I could give you more of what the guy has to say, but. that wouldn't be kosher. So, I'll give you a couple of snippets, but it's well worth your time, so make sure you stick around for that today!

The euro is basically flat this morning, leaning downward, but flat nonetheless. I see that yields on Eurozone Gov't bonds are trending downward again. That's all good for the issuing country, but for attracting investors to their bonds and the euro. well, that's not so good. But, it is what it is, and I guess the overall good of the Eurozone countries is the most important thing, for if they stabilize, the euro can stabilize, it's that simple.

The Aussie dollar (A$) And N.Z. dollar/ kiwi, are both getting sold again today. Last night it was a Deputy Dawg, of the Reserve Bank of Australia (RBA), Lowe, who threw the A$ under the bus, and then caused kiwi to follow, when he said, " if exchange rate is to play its important stabilizing role, it needs to go down when the terms of trade and investment are declining. Some adjustment has taken place, but if RBA's assessment of the fundamentals is correct, we would expect to see more in time."

OK. That's just Central Bank parlance for, "we think the A$ hasn't gone down enough, to match our thoughts of the economy".. And so the markets kindly obliged the RBA and saw to it that the A$ dropped more. Again, I shake my head in disgust, because what these Central Bankers don't understand is more than I know! But I do know that debasing your currency using monetary policy and jawboning, never brought a country to prosperity. But that doesn't stop these mental giants (NOT!) from continuing this practice! And like I said earlier, kiwi went along for the ride on the slippery slope for the A$, like two peas in a pack. I hear you saying, "Pack, Chuck? It should be Pod". Ahhh, grasshopper, not according to Elvis! If you'll scratch my back, Then I'll scratch your back, Like two peas in a pack, Let's get rid of our itch together!

The one day appreciation, next day weakening pattern that the Chinese are playing around with their currency is back on the table this morning. The renminbi / yuan was allowed to appreciate last night, about the same amount it was weakened the night before! I find this daily movement back and forth to be entertaining, because I know what's going on here.. It's all fun and games until somebody loses an eye, right? Well, it seems like the renminbi / yuan is not going anywhere, and then you look up the currency returns at the end of the year, and you see that the renminbi/ yuan returned a 3% gain on the year. No big shakes, but. after 10 years, they have gained 30% VS the dollar, and if you are a U.S. consumer, and buying Chinese goods, guess what? You've lost 30% purchasing power in the past 10 years.

The 6 day rally in Russian rubles ended overnight. I was beginning to think that the markets were willing to overlook the conflict with Ukraine, and get back to fundamentals. But I guess I should have known better, given the drives of the wall and all that! But the 6 day rally in rubles did garner a strong move from 48.62 to 44.85, before giving back some of that gain this morning and moving back to 45.29. Remember, the ruble is a European priced currency, so as the price of the currency goes down, the greater the return in dollars.

The number one question I've been asked through the years is: Are you available? HAHAHAHAHA! Seriously, the number one question is: Why are there two pricing conventions in currencies? Well, basically, there's the American Style, and the European Style, or as some people refer to them as Direct and Indirect. And how a currency falls into one or the other originally was based on the country in which the trader lived. The euro threw that one rule a curve, but I digress. So. the European and Asian currencies are based on their home currencies being the direct quote. And the same for the American, U.K., Euro, A$, and kiwi currencies. So. there. And to answer the first question. I'm not available! HA! When people ask me if I'm free, I always respond. No, but I'm reasonable!

The U.S Data Cupboard gets restocked for today, and will have the second revision to 3rd QTR GDP (expect a downward revision, I still say it should be 2.8%), in addition, we'll see the September S&P/ CaseShiller Home Price Index data, and later this morning we'll see the Consumer Confidence report for November. Consumer Confidence is a joke report, for all it has become is a pulse of the stock market, and we all know how goosed up that is! As I told you yesterday, the meat and potatoes of the data will print tomorrow with Durable Goods and so on. But the markets put a lot of stock into the GDP reports, so we'll have to see what they think about a downward revision today.

I mentioned Gold above, but the big mover overnight is Platinum, which is up $15, as I write this morning! Gold and Platinum have seemed to be tied to each other lately, so it's nice to see Platinum move out of that knot!

For What It's Worth. I want to thank my friend, Doc. Dave Janda, for sending me this article from Bill Holter. Who has written a very good piece with great research and data on Gold & Silver prices. Let's listen in to a snippet to see what he has come up with.

"The situation in gold has quietly become much worse than silver, there were 162,509 Dec. gold contracts open which represent over 16 million ounces of gold. The "registered" (deliverable) category at the COMEX inventory shows only 868,910 available to deliver! Do you see the problem here? There are only 4 days left until this contract goes into the delivery process, yet there are 20 ounces contracted for each ounce available! I have one other amusing thought for you, remember the 80 tons sold in 15 minutes last Wednesday? This was almost 2.8 million ounces compared to a deliverable inventory of just 869,000 ounces, in my opinion, "FRAUDULENT" in capital letters!

Yes I understand, there are still four days left for the open interest to bleed down and roll out to the next contract month but we now stand in totally uncharted territory. Never in the past has this much open interest been still outstanding with deliverable inventory as low as it is. It is also astounding that total open interest could have risen to these levels while the price dropped. For open interest to increase and the price to drop, the "initiation" to the opening of contracts has obviously been done by sellers. This is exactly what I have been saying all along, the dropping price has been dictated by paper sales of COMEX contracts ...but now there is a problem. So much paper has been sold to dictate the price that the contracts outstanding simply dwarf the available metal to deliver. Put another way, COMEX gold and silver look like they have been cornered! Let me rephrase this, COMEX gold and silver are now "very cornerable." We will know shortly if this is true and "who" did the cornering. I suspect we will find out that this has been a Chinese/Russian hand holding consortium and one that was carefully planned and done within legal bounds. I think we will find out they in fact did play by the West's rules and it was the "sellers" of nonexistent metal who fell into their own price fixing trap. It has been a financial war, one that was declared by the West and looks to have been possibly won by the East."

Chuck again. Yes, there is a long article that surrounds this snippet. But the point Bill Holter makes here is that what happens when the Chinese / Russians/ Indians stand up and demand delivery of their Gold on the paper trade they own? Uh-Oh! He believes that when this happens, it officially ends the dollar's run as the reserve currency. Crazy, eh? Crazy like a fox.

To recap. Not a lot going on this morning ahead of the first pieces of data in a couple of days here in the U.S. Singapore's 3rd QTR GDP was revised upward, but didn't bring about a rally in the S$, and that drove Chuck up the wall. Norway's GDP forecasts were all revised upward, and no rally in the krone either. Fundamentals just aren't what they used to be! Gold is back to $1,200 but for how long? RBA's Lowe disses the A$, and Kiwi goes on a ride with the A$ on the slippery slope. And the 6 day rally in Russian rubles ends overnight..

Currencies today 11/25/14. American Style: A$ .8535, kiwi .7785, C$ .8865, euro 1.2430, sterling 1.5675, Swiss $1.0335, . European Style: rand 11.0055, krone 6.8090, SEK 7.4595, forint 246.30, zloty 3.3735, koruna 22.1960, RUB 45.24, yen 118.10, sing 1.3035, HKD 7.7555, INR 61.86, China 6.1390, pesos 13.66, BRL 2.5270, Dollar Index 88.15, Oil $76.08, 10-year 2.29%, Silver $16.63, Platinum $1,219.00, Palladium $796.07, and Gold. $1,198.61

That's it for today. Well, Gold couldn't even hold $1,200 through the writing of the letter today. UGH! I tried to watch the Monday Night Football Game last night, but it couldn't hold my interest, besides I rarely see halftime come before I head to bed anyway! But remember when MNF was a big party every week? Bars would have specials and so on. Well, I guess it's better that MNF isn't so party-like any longer, as it made for a long week following the partying on Monday night! I get to go have "lunch" with grandson Everett this morning at his pre-school, as it is the traditional Thanksgiving "feast" with grandparents. the "feat" used to consist of a pumpkin muffin and popcorn, but I hear that there are no muffins this year. The kids then get on stage and sing songs for the grandparents, it's all cute. It's the same preschool that Andrew, Alex, and Delaney went to, and the one that Kathy used to teach preschoolers. So, that's my morning, after the letter, what do you have planned? HA! Tomorrow, I'll be writing from home, as I have to get another scan in the morning, and then on Friday, either Chris or Mike will draw the short straw to write the Pfennig, as I take my traditional day after Thanksgiving off. And No! I do not go shopping.. This year, I'll be glued to the TV watching my beloved Missouri Tigers play Arkansas, in yet another game that no one outside the state of Missouri thinks they can win! OK. running late today, sorry. Time to get out of your hair for today, and hope you have a Tom Terrific Tuesday!

Chuck Butler
EverBank World Markets

Posted 11-25-2014 3:49 PM by Chuck Butler
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