* Dollar still sits on top of the hill!..
* Oil slips below $50.
* ECB has a surprise for the markets.
* Bill Gross chimes in.. .
And now. Today’s A Pfennig For Your Thoughts.
Good Day. And a Happy Friday to one and all! I woke up in the middle of the night feeling as though I had a fever, but after a couple of hours that feeling was gone, and I was able to go back to sleep! I head home today for my sister’s Memorial Service tomorrow. It will be good to see my kids and grandkids, my siblings, and friends. And I get back in time for what they tell me will be an accumulation of snow tomorrow! UGH! That’s what I left St. Louis to get away from, and now I’m heading back into it! UGH! OH, well, Johnny Rivers greets me this morning with his song: Summer Rain. I’ve always been a faraway fan of Johnny Rivers..
Another day, another day of dollar strength, and once again the Japanese yen is the currency that takes the brunt of the dollar strength in the Dollar Index. The dollar is getting help in the past 24 hours by plunge of the price of Oil, which is really led to a whacking of the Petrol Currencies. The euro, however, has rallied to trade over the 1.06 handle, more on that in a bit, and the India rupee continues maintain its value VS the dollar, inching higher with each passing week.
OK. Let’s start with Oil.. UGH! Disrupting the calmest period for the price of Oil in over 2 years, the markets digested the latest report from International Energy folks that showed a larger than expected buildup of Oil supplies, and that brought about the questions of whether or not the OPEC production cuts will be enough to stabilize the price of Oil.. And so the price of Oil slid below $50.. The WSJ said it was the first time since Dec 7th.. But I don’t recall that, I was thinking it was longer ago that the price of Oil slid below $50..
So, not only did the Petrol Currencies, led by the Russian ruble, have the pressure of the strong dollar bearing down on them, now they had added pressure from the plunge of the price of Oil, and the Petrol Currencies look even worse this morning.. Just last week I was singing the praises of the way the BRICS currencies were maintaining their values in the face of dollar strength, and now a week later, only the Indian rupee is maintaining its value VS the dollar.
Now, the euro. Well, I told you earlier in the week that the European Central Bank (ECB) meeting on Thursday was the only Central Bank meeting this week that could have a surprise in it.. And I think saying yesterday was a surprise, would not be doing the word right.. You had to be attentive, and paying attention to what ECB President, Mario Draghi, was saying, for the changes to the statement were subtle, but apparently the markets go the message, and began to buy euros, driving the price higher..
From what I could get from the statement, the ECB was acknowledging that they were optimistic about the Eurozone economy. This was HUGE folks, because even though I kept pointing out that “this was better, and that was better” Draghi just kept saying that it wasn’t time to remove accommodation, and while he didn’t remove accommodation yesterday, leaving rates unchanged and bond buying amounts unchanged. The optimism wasn’t just in the statement following the rate announcement, you had to look for it, but there it was! In the forward guidance.. Recall, that at the end of this month, that the euro 60 Billion per month in bonds that the ECB is purchasing will be reduced.. .
Now this isn’t the kind of stuff that will support the euro after 24 hours or so. So, to see the euro fall back to the 1.0560 level with all this dollar strength going on around the single until, wouldn’t surprise me one iota.
Well, today is a Jobs Jamboree here in the U.S. and looky there, it took me nearly the length of the letter today, to even mention it! That’s because I just don’t care about what the BLS has to say about jobs.. it’s all malarkey in my opinion.. The forecasters aren’t being swayed by that blow-out number that the ADP report printed on Wednesday (298,000!) and instead have opted for a still very strong number of 221,000.. And a lower Unemployment Rate of 4.7% from 4.8%.. I’m just on board with these numbers, because of how they are put together. Just a friendly neighborhood Spider Man reminder that the real pieces of the Jobs Jamboree come in the form of the Avg. Hourly Earnings, the Avg work week hours, and the Labor Participation rate.
And looky there if I didn’t know better I would think the Gov’t was trying to fly the Federal Budget numbers under the radar by printing them on the say day as the Jobs Jamboree.No worries, I’ll track them!
Gold took another trip to the woodshed for another whacking yesterday, losing another $7.20 on the day to close at $1,200.80, and is already down $4 in the early morning trading. So, as of right now, Gold is priced below $1,200 .. 196,000 contracts were traded yesterday. That’s crazy folks! “the Paper Boys” are going overboard with their volume don’t you think? Oh, well, that’s what they do, they pass around the paper trades, and that’s all I have to say about that!
To recap.. Another day another day of dollar strength, this time the dollar was helped by a plunge in the price of Oil to add to the Petrol Currencies’ problems. The ECB brought about a hint of optimism in both the statement and the forward guidance, and that helped the euro buck the trend of currencies losing ground to the dollar. The Indian rupee is also bucking the trend for now.. Of the two of these I would think the rupee has a better chance of maintaining its value. It’s a Jobs jamboree Friday, for what it’s worth!
For What It’s Worth.. I found this going through my emails this morning.. it’s the Bond King, Bill Gross talking about another credit crisis, and the whole article can be found here: http://www.marketwatch.com/story/bill-gross-says-another-credit-crisis-could-be-just-around-the-corner-2017-03-09?link=MW_popular
Or, here’s your snippet: “Gross’s ultimate point is this: Another Lehman-type situation could soon befall the global economy if it doesn’t rein in what Gross considers rampant credit creation.
The U.S. economy has created more credit relative to gross domestic product than existed during the run-up to the financial crisis. Many experts cite Lehman’s decision to file for bankruptcy on Sept. 15, 2008, as the spark that ignited the crisis. In China, the situation is even more dire: The world’s second largest economy has added $24 trillion worth of debt to its collective balance sheet since 2007, swelling its total debt ratio to 300% of GDP.
Central banks attempt to ward off disaster by walking a fine line: Keeping the cost of credit low enough so it doesn’t choke borrowers, but high enough to help retirees and other savers meet their liabilities.
But despite their best efforts, the U.S.’s highly leveraged financial system is like a truckload of nitro glycerin on a bumpy road. One mistake can set off another credit implosion, leaving the Fed in an undesirable situation.”
Chuck again. Sounds like Bill Gross has been reading James Rickards.. I’m just saying..
Currencies today 3/10/17.. American Style: A$ .7523, kiwi .6918, C$ .7408, euro 1.0613, sterling 1.2160, Swiss $.9882, .. European Style: rand 13.2874, krone 8.6060, SEK 9.0160, forint 293.89, zloty 4.0763, koruna 25.4587, RUB 59.05, yen 115.40, sing 1.4181, HKD 7.7657, INR 66.52, China 6.9124, peso 19.78, BRL 3.1690, Dollar Index 101.80, Oil $49.48, 10yr 2.60%, Silver $16.91, Platinum $939.48, Palladium $745.58, Gold $1,196.20, and SGE Gold $1,222.99
That’s it today.. But not before I wish my good friend, Rick Baur, Happy Birthday! I used to have Rick out to the office on his birthday, for salad and a Grassi’s veggie pizza! What a great lunch! Rick is a quite a bit younger than I am, but we’ve become great friends nonetheless. So Happy Birthday, pal! ( you’re catching up with me, I think! HA!) I want to thank everyone again for their kind words, thoughts and prayers during this time for me.. I’m not looking forward to tomorrow.. Well, the awful season for my beloved Missouri Tigers Basketball team came to an end yesterday in the 2nd round of the SEC Tournament, and it was a beautiful day at the ballpark yesterday, but I watched the Cardinals lose. UGH! Jackson Browne takes us to the finish line today with his song: These Days, of which I’ll share a line with you. These days I sit on cornerstones, and count the time in quartertones to ten, my friend. Don’t confront me with my failures, I had not forgotten them.. And with that, I need to get packed, so I hope you have a Fantastico Friday, and wonderful weekend.! Be Good To Yourself!
EverBank Global Markets
Editor of A Pfennig For Your Thoughts