In This Issue Dollar is in same position as y

first_imgIn This Issue. * Dollar is in same position as yesterday. * But there are a couple of bright spots today! * Aussie Trade deficit drops significantly! * China to stimulate their economy. And Now. Today’s A Pfennig For Your Thoughts. Oil Plunges Below $50! Good Day!…  And a Tom Terrific Tuesday to you! The Spinners song: I’ll be around, greets me this morning. Talk about a song with a beat, rhythm, and you can dance to! (sounds like I’m on Bandstand, HA!)  Well day one away from the desk, was interesting, when I encountered technical problems and the Pfennig had a delayed departure. These were not your normal, everyday technical problems, we had to call in the guys from Jacksonville to look into the problem! But all is well now, and everything worked like a charm all day yesterday, so getting the Pfennig out on time this morning should be a lay-up. Well, this morning is much like yesterday morning in that the dollar still has the conn. But there are a couple of bright spots this morning, and one really dark spot. let’s start with the really dark spot. The Russian ruble is plunging again, and is back above 60 (at 63 and change).  The price of Oil dropped below $50 yesterday, and that was the catalyst to the ruble plunge. Yes, the other petrol currencies are also doing the rope a dope, but the dollar is pounding them all, just not as badly as the ruble is getting pounded this morning. So. Let’s spend a minute with this latest drop in the price of Oil. $48. WOW!  It’s quite a phenomenon, how quickly this price dropped, don’t you think? Those out there that have far greater gray masses than I, think that this drop has come because of a supply glut. Really? From $100 to $48, because of a supply glut? I guess in this day and age, anything is possible, eh? But I prefer to think of this as something that has happened because of outside forces. I’m not able to talk about the conspiracy thought I have, so I’ll just leave it at that!  There is a supply glut, though, I’ll admit to that, but that can’t be the single factor here. Not with that kind of fall. I see that another 17 Oil rigs closed down here in the U.S. last week. Recall last week I told you about how closing Oil rigs was a sign that the price of Oil had gotten too cheap, and that we would probably see the closing of Oil rigs continue. My good friend, and author that everyone should read, Dennis Miller, told me that you can’t really associate the Oil industry having problems with Oil rigs closing, and then he went on to explain why. I truly appreciated his contribution.  So, apparently, I’m barking at the wrong tree here. But you know me, I’m so darn hard-headed, I’m going to keep barking until the squirrel gives up and comes down! So, all along I’ve been telling you about countries that are enjoying the price drop of Oil. And you can add Australia to that list! The Aussie November Trade Deficit fell to A$925 Million, VS an estimate of A$1.6 Billion.  Exports rose 1% from Rocktober, along with imports. Of course the cheaper A$ gets some credit for this nice looking report. But if the Aussie Trade Deficit can print as pretty as this in November, imagine what the December print will look like!   So the two of the bright spots in the currencies today are the Aussie dollar (A$) and N.Z. dollar/ kiwi. The A$ got things moving in the right direction when the Trade data printed, but then really got on the rally horse when it was announced that China was going to inject $1 Trillion in stimulus into their economy. Now, let’s see, what does Chuck have to say about this meddling in the economy, for he has been so darn tough on the U.S., Japan, U.K. and Eurozone for their meddling. Hmmm. Well, this is what I think. Front and Center the thing to think about here is that there’s a MAJOR difference between China and those other countries that meddled and are still meddling in their economies, and that is China has the Treasure Chest of reserves / cash that they can dig into and not upset the applecart with debt.  the other countries simply added to their debt, so that future generations will have to deal with. But I’m no fan of meddling in economies, but if you have to meddle, and all countries and their Central Banks these days think they know better and that they have “to do something”, then I would rather it came from money that was saved for a rainy day, than from future generations’ taxes and liberties. Kiwi joined the A$ in rallying on the news of the good Trade data and the Chinese $1 Trillion of stimulus. I just have to wonder if this love for these two is a one-day and done thing, which has been the MO lately.  The news in the early part of 2014 was all about the rate hikes in N.Z. and eventually it will return here this year, but problem not until the 2nd half of the year. Gold has found its way above $1,200 again. , I see where the great Porter Stansberry believes that Gold has hit its bottom and is ready to take off again. I’ve always held Porter in high regard, and his calls have been bang on in the past few years, so much so that I’m telling you this now. Now I can’t say stuff like that, but Porter can, and I can tell you that he said it, so heed his words folks. He’s so darn smart! Another guy that I believe is quite intelligent, James Rickards, says that investors should buy their Gold now while they can, because he feels that when it begins to soar, that obtaining physical Gold will be difficult.   Of course these are guys that might have vested interest in telling you to buy Gold now. and then they might just want to help you so they can make tons of money in the future the next time they tell you to do something!  Whatever the reason, these are just opinions by these guys, and they could end up being wrong, right? I’m interested in the Gold / Oil ratio.. It has caught my attention. Just another thing for me to keep track of, and I’m not sure it tells me anything. but I’m intrigued and think it just may tell me something if I study it long enough! HA!  Anyway, the Gold / Oil ratio yesterday was 1 oz. of Gold cost 23.9 Barrels of West Texas Intermediate (WTI) Oil.  Just for grins I went back in history and found that in 1973, the ratio was 1 oz. to 41.4 Barrels of WTI.  Now, I’m not saying that the ratio is going to go back to 1973 levels. NO WAY! I’m not saying that! I’m just saying for it to get there, the price of Oil would have to drop more.  So, can anyone guess why I picked 1973?  At the same time, another fellow that I believe is smarter than the average bear, (way smarter actually!) Mike “Mish” Shedlock, has posted some nasty things to say about the Chinese renminbi becoming the next reserve currency.  I’ve always held what Mish had to say in high regard, but I do believe that either he didn’t understand what was asked, or something was misunderstood, period.  Because, you long time dear Pfennig readers know that I’ve said that by the end of this decade, which is now 5 years from now that the renminbi would be the reserve currency, not now, not next year!  They, the Chinese, still have tons of work to do, of which, Mish pointed out in his rant, but one has to step back and take note of all the changes the Chinese have made to date that are going to allow their currency to become the reserve currency, and the promises they’ve made to make the remaining ones. Remember, the Chinese were the ones that said that , “It’s time for an end to the dollar standard”.. not me, not anyone else in the West, but the Chinese, and if I’ve learned one thing from my years of studying the Chinese, they don’t say stuff just to impress people! The only say things when they mean to do something about them! So, the so-called safe havens are back on the front page of the newspaper this morning. Japanese yen, if you can get past the heavy, belly laughing, is rallying. U.S. Treasuries, again, if you can get past the laughing, are below 2% (10-year) and when you count inflation they are negative, and Gold. well, this one finally makes sense, are all stronger this morning.  I don’t know if you noticed one long-time upstanding member of this so-called safe haven club, is missing. The Swiss franc. The franc is weaker again this morning, and once again the cross with the euro is getting dangerously close to the 1.20 floor the Swiss National Bank (SNB) set for the cross a few years ago.  (1.2014, as I write). Remember what I told you the SNB would have to do to defend this cross, and going to negative rates won’t really do the trick for too long. The SNB would have to sell francs and buy euros. And who would want to own euros right now? Speaking of Treasuries. the Treasury bubble just keeps getting air pumped into it. I don’t know any other way to explain this. The Treasury bubble should have popped 5 years ago, but it’s still floating around the room avoiding the pins. The 10-year has a 1.99% yield today. And like I just said, when you factor in inflation, the 10-year yield is negative. OK, so let me get this straight, for 10-years you get to have the U.S. Gov’t use your money, and you pay them?  Oooooh, where do I sign up for that? Here? Oh, thank you kind sir, you have been so helpful with my money. To whom do I make this check that represents my life savings to? . What? You don’t think that scenario doesn’t play out? Better think again my friend. The euro just slipped below 1.19. When I turned on the screens this morning, the euro was trading in yesterday’s clothes, but has just slipped below 1.19. The poor beleaguered single unit has had to endure a lot lately. Greece, Draghi’s love affair with all-out QE, recessions all around. Speaking of negative yields on Gov’t bonds. the German Gov’t bond, called bunds, is trading with a negative yield. OUCH! Now that’s going to leave a mark!  What does these bond moves indicate to us? Well, if you ask the bond king, Bill Gross, he would tell you that it means that the Fed won’t hike rates until late in 2015, and maybe not then either!  Speaking of Bill Gross, have you seen the massive withdrawals from the PIMCO bond funds follow Gross to Janus Funds?  No wonder they call him the bond king, the size of these moves were mega-massive! The U.S. Data Cupboard is back on board today, but first, yesterday’s Data Cupboard fare was vehicle sales for December, which were very nearly bang on with expectations, thus making it a real December to remember for car companies! (remember platinum and palladium should be beneficiaries of cars being built for sale). OK.. today’s cupboard has Factor Orders for November (that seems so long ago, right? ) Rocktober’s Factory Orders printed a negative -.5%, and the expectations for November are for another negative print.  I know it’s only Tom Terrific Tuesday, but, this Friday is a Jobs Jamboree Friday. It’s never too early to start thinking about this report and all the games the BLS plays with it. I say that facetiously, of course, but there is always a touch of seriousness with me when it comes to the BLS. For What It’s Worth. Well, I found this, and thought it played nicely in the sandbox with my call that Japan is a basket case. the whole article can be found here: http://www.zerohedge.com/news/2015-01-02/death-nation-japanese-births-drop-lowest-ever-deaths-hit-all-time-high   And here are a few snippets.. Supporters and opponents of Abenomics may debate the metaphorical death of Japanese society as a result of the terminal hyper-Keynesian, hyper-monetarist policies implemented by Abe and Kuroda for the past 2 years until they are blue in the face, but when it comes to the literal death of Japan, there is no debate: as the FT succinctly puts it “deaths outnumbered births in Japan last year by the widest margin on record, underscoring the scale of the challenge facing the government as it tries to ensure a dwindling pool of workers can support growing ranks of pensioners.” Indeed, while Japan may or may not survive the collapse in the Yen, which will send the Nikkei225 soaring although nobody will be able to enjoy this unprecedented paper wealth because nobody can afford to eat, drive or heat their house, and all Japanese companies will be long bankrupt, it now looks almost certain that the death of Japanese society will not be due to a runaway printer, but due to, well, death itself. As the Ministry of Health, Labor and Welfare reported earlier this week, while Japan recorded 1.001 million births in 2014, or the lowest number in recorded history, this was offset by 1.27 million deaths: also the highest on record. Chuck again, the article goes on to give you numbers and data on the how the drop in population will take place and when. You know, I’ve described this demographics problem in Japan several times in the past, and I keep telling you that Japan’s problems center around how they will not allow foreigners to take up residence in their country. They need them badly, but. it’s not going to happen in Japan, they would rather go down with the ship rather than fixing the hole in the floor of the boat! To recap. Much of the same dollar strength today as yesterday, but we are seeing a couple of bright spots in A$’s and kiwi, yen, and Gold.. the price of Oil has fallen below $50 and the latest plunge in black gold, Texas Tea, has caused another plunge of the Russian ruble. Aussie Trade data was better than expected, and China announced that they would spend some of their treasure chest cash in the amount of $1 Trillion to stimulate their economy, and Chuck describes the difference in meddling here. The 10-year U.S. Treasury has a yield below 2% again, making it actually negative when you factor in inflation. Where do I sign up for that?  Currencies today 1/6/15. American Style: A$.8125, kiwi .7730, C$ .8490, euro 1.1895, sterling 1.5200, Swiss $ .9900, . European Style: rand 11.7385, krone 7.7160, SEK 7.9260, forint 268.25, zloty 3.6190, koruna 23.2670, RUB 62.83, yen 119.30, sing 1.3360, HKD 7.7535, INR 63.57, China 6.1256, pesos 14.95, BRL 2.7125, Dollar Index 91.61, Oil $48.66, 10-year 1.99%, Silver $16.26, Platinum $1,214.38, Palladium $799.00, and Gold. $1,210.40 That’s it for today. Well, baseball will announce the newest Hall of Fame class today. Three pitchers, Randy Johnson, John Smoltz, and Pedro Martinez appear to be shoo-ins for the Hall, thus making this year’s class as strong as last year’s.  I’m a real stickler on the Hall of Fame, and I have problems with a lot of the players that get elected. They should all be held to the same on-field performances of the Babe, Stan the Man, Cy Young, and so on. if not, why are they getting in? Because they were the best of their era? That doesn’t cut it with me!  Oh well, it is what it is. Congrats to those that get elected today.  Football in St. Louis and Missouri is over, our college basketball teams are very good this year, hockey plays a couple games a week, and baseball is still a ways off. these are the dark days of winter for sports here. UGH!  Dionne Warwick is singing: Walk on by to me right now, I just melt when I hear her sing that song. It rained a little bit here yesterday, but not a big thing, and I was able to sit outside most of the day. I’m reading another James Patterson book right now. I’m hooked on this guy’s books, and he sure has a lot of them!  OK, I’ll get out of your hair for today. I hope you have a Tom Terrific Tuesday! Chuck Butler President EverBank World Marketslast_img

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