In This Issue   Currencies continue to get sol

first_imgIn This Issue. *  Currencies continue to get sold on Syria fears. *  Gold & Silver & Oil move higher on Syria fears. *  Emerging Markets tank on Syria. *  Bloomberg on currency manipulation. And, Now, Today’s Pfennig For Your Thoughts! The War Drums Begin To Beat. Good day. And a Wonderful Wednesday to you! The Syria decision is still hanging over the currencies like the Sword of Damocles folks. Not much else got in the way of the trading yesterday. In fact, the tapering calls were being muted by the talk of U.S. intervention in Syria. First it’s tapering talk, now war drums are beating, could we just stop with all the outside noise and get back to basics with the currencies? I know the answer to that question, and so do you dear reader. OK. I’m not sure if the “top of the house” at EverBank is sending me a message this morning, but my badge won’t work, and I’m unable to get into the office. So, being the dedicated Pfennig writer that I am, I’m sitting at the guard’s desk in the lobby writing the Pfennig this morning, with hopes that a building person comes in soon, and can let me in. That is if they haven’t received a “memo” from the Management at EverBank alerting them to not let me in.  OK, I’m kidding, I think. I’m sure it’s just a technical glitch with the security system. Yeah, that’s the ticket! And my first wife was a young. Elizabeth Taylor.. Yeah. I even came in earlier than usual this morning, not for any particular reason other than I woke up early and decided to just get up and come in. So much for the plans of mice and men!  When I woke up 1/2-hour earlier than usual, I thought, Hey Chuck, why don’t you go ahead and get up and go in to see what the currencies are doing today. Well, I don’t have my usual “currency screens” going at the guard’s desk, but I do have the internet, thanks to my trusty IPhone’s hot spot! So. let’s get this show on the road babe. So, I told you at the top this morning that the talk of U.S. intervention in Syria is holding down the currencies. But the beating of the war drums is just the medicine that Gold needed to get it past $1,400, and then watch it continue to gain.  Silver also continues to rise in price. We’ve waited a long time to watch the metals rally again, so I’m savoring every cent of this rally, for I knew in my heart of hearts that the metals’ prices would rebound. Well. The more I think about the Syria stuff the more I think about conspiracy stuff. Call me crazy, that’s OK, I’ve been called worse, but the more I hear about the Chemical use in Syria, the more I think about the timing of that talk.  Haven’t there been rumors for the past couple of years that Assad was using Chemicals on the people? But now. a month before the debt ceiling talks come calling, we have “confirmed” the use of chemicals. Could be a co-inqui-dink  but then that wouldn’t be interesting to talk about, now would it? I could go on and on about why I feel these two things have lines connecting the dots, but then what good would that do? The media has swallowed the Gov’t’s story hook, line and sinker.  The thing that ties it back to our “inconvenient debt” is that if the U.S. is getting involved in Syria, then the whole debt ceiling process could get washed under the bridge. the Debt Ceiling raised again, and the U.S. goes happily down the road to $18 Trillion in debt. In media training it’s called deflection. when an interviewer goes down a line of questioning that you want to avoid, you simply deflect the conversation to a line that you would prefer to answer.  Deflection in this case would be to get everyone’s attention and focus off the debt ceiling and onto Syria.  I do believe that’s what will be done. And that brings me to my thought that Tapering would begin in September no matter what the economic data tell us.Now I’m having second thoughts.  What if, Big Ben doesn’t want to leave a mess that would be caused by tapering to the next Fed Chairman?  More and more, analysts are coming to the thought that Big Ben can’t begin to taper. That his hands are tied, and he’s painted himself into a corner with no way out without getting paint all over himself.  Stranger things have happened folks. The other Big story going around the markets is currency manipulation. As if long time Pfennig Readers didn’t already think that from the things I’ve said about the metals manipulation, carrying over to the dollar. The story first appeared on Bloomberg, and is gaining traction in reprints. Our Chief Credit officer, sent the Big Boss, Frank Trotter and me a note the other night, asking us our thoughts on the story, and here’s what Frank responded with. “The global forex market is both extremely large and over the counter.  With nearly $4 trillion traded a day I would be more shocked if there were not some bad players from time to time than surprised.  That said the market functions extremely efficiently for a vast majority of trading.  Is is a principal market where players buy and sell from their own inventory.  There is no question that it takes a certain amount of sophistication to trade large numbers in this marketplace, like any other.  As you know at EverBank we disclose our mark-up to clients – possibly the only bank on the planet to do so.  This places us in a position of strength for debating some of the allegations in the story. I would hope that articles like this don’t drive the liquidity providers to an exchange type of system, but that may be the case.” Chuck again. Yes, it’s a very large market, and one that I truly enjoy dealing in as an over-the-counter market.  If you want to read the entire story just go to, it’s the lead story this morning. The rout in the Emerging Markets Currencies continues, and that’s Ok with me for now. That’s a fundamental that’s driving these currencies down right now. But that doesn’t change my opinion of where the future of growth is going to come from. I’ve always been a forward looking person, just think back to the calls that I’ve made over the past 21 years of writing, most have been forward looking, and most have become reality. And with the all the talk of U.S. intervention in Syria guess what commodity is also seeing its price rise? Oil. Remember yesterday, when I said, “But remember,  the loonie has the underpin of raw materials, and Oil. And with the price of Oil hanging around $106, one would think the “drift” in loonies could be nearing an end.”   Well, guess what currency pulled itself up off the canvass to rally with the surging price of Oil as its underpinning overnight?  Well, aren’t we the SMRT one! The Canadian dollar / loonie rallied from a 7-week low yesterday, on the surge in Oil prices and. the increased talk of no tapering by the Fed. Aussie and New Zealand dollars are both feeling the pain of the war drums beating, and will continue to feel that pain until the drum beat stops. Unfortunately, it appears to me that once the U.S. Gov’t begins the process of beating on war drums, it usually too late to turn back. so, look for continued weakness here, until the markets feel as though the selling has been overdone. The euro turned around on Tuesday and headed higher throughout the day. It’s still range trading, but the direction was positive, and that’s always a good sign for the currency in that, you have to have positive movements or else, traders grow tired of waiting for a move. Sort of like Dieter, from Sprockets. “Your story has become tiresome, now is ze time on Sprockets when we dance”  HAHAHAHAHAHA! That skit on SNL still cracks me up today, just thinking about it! A story on the Bloomberg this morning tells of the Fed Heads at district banks saying that last month they saw “the U.S. expansion continue at a “modest to moderate” pace, while risks remained from the federal budget reductions and rising interest rates.”  I like it when the Fed Heads use terms like “modest to moderate pace”. and then don’t say if they are satisfied with that or not! I would have to think that they aren’t satisfied with it, because I’m  not!  Think about that for a minute. with ZIRP, and QE, going right now, the most our economy can muster is “modest to moderate pace”?   Take away the QE, and ZIRP and what do you have? A dear Pfennig Reader sent me a quick note yesterday saying that the, “Pacific Coast container shipments were basically flat. Small increases here, small drops there.”   Chuck again, I find that these shipping reports are pretty good in forward looking for the economy. I just don’t see them all the time. Today’s U.S. data cupboard has Pending Home Sales, and that’s about it. I looked at a chart this morning of the Pending Home Sales Index that went back to 9/2007. It sure doesn’t look like it’s been a nice smooth ride for Pending Home Sales. And given the rot on the New Home Sales data that printed last week, one wouldn’t be surprised to see this data go South on us. For What It’s Worth. So I was reading an article that my friend, Dennis Miller, sent along to me yesterday, titled: Detroitification – It’s The Government, Stupid. The article explains how the U.S. Gov’t had interfered with the creation of capital in U.S. businesses, and that’s the reason the U.S. economy hasn’t recovered.  No, it was the writer’s opinion, and it’s always been mine that the U.S. never left the “great recession”.   Other than going over all the stuff that I’ve highlighted over the years as to why the U.S. economy continues to struggle even with ZIRP and QE, I’ll get to the end of the article that goes like this: “For lack of a better term, the process the entire country is headed for is “Detroitification.” The term represents a declining if not dying economy. Higher interest rates, “slow growth,” lack of innovation, worldwide slowdown or many other variables will be used to rationalize what is coming. The tragedy results from one cause and one only – the idiocy of our federal government and its greed. At this stage, the damage is done and cannot be undone quickly enough to avoid this crisis. Even if there were time, there is no way that politicians would willingly address the problem.” Chuck again. Pretty harsh stuff, I know. but someone with some intestinal fortitude to say it. To recap. The war drums are beating, and that’s very unsettling for the currencies other than dollar, yen, francs and euros. The Emerging Markets Currencies continue to be dragged down by the war drums, but Gold & Silver are seeing a ton of buying. There’s a story out about Currency Manipulation, and our Big Boss Frank Trotter, responds. Currencies today 8/28/13. American Style: A$ .8925, kiwi .7755, C$ .9525, euro 1.3370, sterling 1.5480, Swiss $1.0885, . European Style: rand 10.4015, krone 6.0285, SEK 6.4940, forint 226.20, zloty 3.1975, koruna 19.2295, RUB 33.20, yen 97.35, sing 1.2815, HKD 7.7555, INR 68.11, China (can’t get the CNY fix without my currency screens) , pesos 13.31, BRL 2.3720, Dollar Index 81.31, Oil $110.04, 10-year 2.50%, Silver $24.86, Platinum $1,532.90, Palladium $744.90, and Gold. $1,425.71 That’s it for today. Well, I got the whole letter done sitting at the guard’s desk! A few of the people that work in other parts of the building have come in, and wondered what I was doing at the guard’s desk. In about 45 minutes, Mike Meyer usually comes in, I would hope I don’t have to wait that long to get into the office, that is, IF, I’m allowed to get into the office! I would hope the end for me at EverBank wouldn’t happen like this. I would at least expect a nice celebration, a gold watch, you know a “happy send-off”. HA!  It’s like Cat Stevens’ song: that I’ll change for this situation.  I’m being followed by a moon shadow, moon shadow, moon shadow. And if I ever lose my job, I won’t moan and I won’t beg, I also won’t get up before the farmers to come in to work, and I won’t feel bad when I’m away. whee, eee, eee, eee, whee, eee, eee, eee, I won’t have to work no more.  And with that. here we go, let’s get this out the door! I hope you have a Wonderful Wednesday! Chuck Butler President EverBank World Markets 1-800-926-4922 1-314-647-3837last_img