Heeeeeee’s Baaaaaaccccckkkk!

* Dollar weakness turns to mini-trend
* G-20 drops protectionism language.
* RBNZ meets this week!
* Gold recovers! .

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And now. Today’s A Pfennig For Your Thoughts.

Good Day. And a Marvelous Monday to you! I know I’m just back from a week away, but next week I actually go on vacation! My annual spring vacation! Now, for last week.. First I want to thank Frank, Mike and Dane for getting the Pfennig out to you all week. Last Sunday 3/12, I checked myself into the hospital. Now you all know that I kept complaining about the steroids I had been taking for over 6 months, and that I felt like the Staypuff Marshmallow Man.. Well, I’m off the steroids now, but that wasn’t before I had grown so large, that I couldn’t walk 10 feet without being out of breath. So, I checked into the hospital, and they found all sorts of things wrong with me. First of all and the most important of all, is that I had done damage to my heart. Congenital Heart Disease.. And I had a another new diagnosis of A-Fib.. Boy had I gone down the wrong rabbit hole! And 10 years of being on some sort of chemo wasn’t helping, along with the fact that with only one kidney, it couldn’t get the water weight out of me fast enough.. The good news is that these things can be corrected, and I’m already working on that. I thank Mike for not getting into what was going on with me last week, because as the diagnosis were being made it could have sounded pretty scary! So.. I have to change my eating habits. I’ve always said that eating food was just an excuse to have salt and butter. Well, that has to change, along with quite a few other things.. I’m not stupid, I understand what the doctors say, and I take it all in, and then put it to good use! So, it looks like you’re stuck with me for years to come! The Turtles greet us today with their song: Happy Together, which is appropriate since you, dear reader and I are back together!

It was just like the “old days” last week, when Chuck would be away at a conference, or on vacation, and the currencies would rally! But a look at Tim Smith’s currency chart for 2/10 through 3/17, showed all the currencies, that we follow, except the Hong Kong Dollar in the green.. So, it’s not just a “Chuck was away” phenomenon, it appears that we have a mini-trend going on, and if my suspicions prove to be correct, this is just the beginning of what could possibly be the next weak dollar trend.

There are several things that bring this suspicion to mind for me, but none so much as the fact that the U.S. has raised their Fed Funds rate two times in the last 4 months, and the dollar didn’t rally on the news either time. And now we have the Trump Administration pushing their agenda at the G-20 meeting this past weekend.. Didn’t hear about that one? Well, the G-20 communique dropped the language that it previously contained that protection language that was added last year. The thought at G-20 is that the Trump Administration is pursuing an “America First” trade agenda, and could set off global trade conflicts.. And according to the WSJ. “Instead of hammering out a compromise that allayed those fears, finance ministers and central bankers from the Group of 20 largest economies ended two days of negotiations in stalemate. Their keenly anticipated joint statement papered over differences on trade and largely reiterated a series of longstanding promises to boost growth, avoid currency devaluations and ward off threats to the global economy.”

I’ve explained this trade/ protectionism stuff before to you so I’ll just touch on it here.. The currency markets have a long history of taking currencies from countries that implement protectionism measures, to the woodshed. And they don’t let them out for a long time either! We would have to go back to the early 2000’s when the new President, Bush, implemented tariffs on Japanese steel. When I read that new the morning it was announced, I immediately got on my soap box, and shouted to the world that a weak dollar trend was coming. And so it did. So, right now this is just talk of protectionism measures, but you can feel the foundation of the strong dollar trend shaking.

Mike left you last Friday, with the currencies holding to their previously won gains, and last night, the dollar continued to drift lower. And this is a Data Cupboard-Light week so the dollar will have to get its direction from the bevy of Fed member speakers that are on the docket for this week, including Fed Chair Janet Yellen on the 23rd. There are things going on around the world, and well, I guess I had better talk about them or you’ll all jump ship and leave me for some other newsletter! I kid here, for you all are the most loyal readers on earth!

First up is the Reserve Bank of Australia (RBA) meeting notes that will print tonight from their last meeting when the RBA Gov. sounded quite upbeat in his press conference that followed the meeting.. So, if the minutes are as upbeat as the Gov. sounded at the time, the A$ could find some more room to move higher..

While we’re “down under” the Reserve Bank of New Zealand (RBNZ) meets this week (Wednesday afternoon for us, Thursday morning for them). Now, there’s a slight chance, and I mean slight, that the RBNZ hikes rates this week. But instead the overwhelming chances are for no move, and an upbeat press conference. But one can always dream, right? What I don’t want to hear is that the RBNZ is questioning the Tent Revival in Global Growth that I’ve talked about for over a month now. Questioning Global Growth would be kiwi-negative, and talking upbeat would be kiwi-positive.. At least that’s how I see it!

The Eurozone will print their latest PMI’s this week, both manufacturing and Servicing, so this should give us additional intel on how the Eurozone economy is continuing to recover. The 2016 4th QTR PMI’s showed significant strength for the Eurozone, and I would have to think that we could very well see a leveling off of the PMI’s for the 1st QTR. of course we’ll have to wait-n-see, but those PMI reports will print on Friday this week, so before I head out the door on vacation.. we’ll see the color of Eurozone PMI’s.

Before I headed home on 3/10, I wrote about how the Indian rupee had been stealth like in its moves against the dollar, and that the moves had been very small.. Well, with the rest of the currencies on the rally tracks VS the dollar, the rupee was able to stretch out its legs a little further, and that brings me to another thought I had last week, when I did so much reading my head was about to explode! Could we be finally getting back to fundamentals in the currencies and metals? I mean look at the price of Oil at $48 and change, and it’s doing the Petrol Currencies no favors, but, the Petrol Currencies that have a yield advantage like the Russian ruble, are ignoring the price of oil drop, and trading instead on the interest rate/ yield advantage the hold over the likes of the dollar, yen, euro, sterling and a host of others!

So, I’ve come back with two thoughts for you today. 1. Is this the beginning of a new weak dollar trend? 2. Are currencies and metals finally returning to trade under fundamentals?

Those are two HUGE questions that I think I covered with thoughts that they both will come to reality.. Of course that’s my opinion and I could be wrong. But talk about Happy Days being here again, the skies above are blue again, So let’s sing a song of cheer again, Happy Days are here again! Should I be bang on with these thoughts, eh?

Gold sure has bounced back and opened the door for the other Precious metals to participate in the rally. Gold is up $2 and change in the early morning trading today, and looking like it wants to add more as the day goes on. Gold only added $3 to its total, thus closing at $1,228.80 on Friday. Silver always seems to outperform Gold in percentage moves VS the dollar, and so I truly expect for Silver to appreciate both in dollar terms and against Gold IF this metals rally continues. I’ve been talking about a shortage of Silver for a couple of years now, and sooner or later it’s going to show up folks.. And when it does, Silver will look to once again outperform Gold.

The U.S. Data Cupboard on Friday was a mess with Industrial Production for Feb printing 0% growth when it was expected to grow by .3%.. Do you know when Industrial Production (IP) peaked in the U.S.? Nov. 2014. When bad data prints like this begin to get factored into the pricing of the dollar, then we will know for sure that fundamentals have returned in earnest.

Today’s Data Cupboard is basically empty, with only a Chicago regional activity report on the docket. So, look for the dollar to continue to drift lower today, unless “someone” says something to move the markets..

To recap. Chuck’s back! And so full of thoughts his head is ready to explode! One of those thoughts is that we could be seeing the beginning of a new weak dollar trend. The mini-trend is now about a weak dollar, and with the thought that maybe fundamentals are also returning for the currencies and metals that things like talking about protectionism measures at G-20 could be enough to send the dollar to the woodshed. The RBNZ meets this week, Chuck’s hoping for an upbeat report. The RBA meeting minutes print tonight, and could give the A$ another lift should they be as upbeat as the press conference was a month ago. And U.S. Industrial Production gave us another disappointment with economic data, printing flat for Feb..

For What It’s Worth.. Longtime readers know how much I love it when I write something over and over again, and eventually someone else decides to write about it too! This time it was MarketWatch and it’s about how rate hikes could lead to a recession. And it can be found here: http://www.marketwatch.com/story/fed-rate-hikes-low-growth-recession-says-stock-market-strategist-2017-03-15

Or, here’s your snippet: “The Federal Reserve on Wednesday lifted benchmark interest rates for only the third time in about a decade, and that has caused trepidation among some market participants.

Lance Roberts, chief investment strategist at Clarity Financial, makes the case in one chart that raising interest rates off ultralow levels during a period of tepid economic growth coincides with recessions in the following three to nine months

“Outside of inflated asset prices, there is little evidence of real economic growth, as witnessed by an average annual GDP growth rate of just 1.3% since 2008, which by the way is the lowest in history since.well, ever”, said Roberts..

Roberts told MarketWatch in a recent interview that the “Fed lifts interest rates to slow economic growth and quell inflationary pressures.” He argues that outside of a stock market that has been mostly zooming higher, “economic growth is weak”

Chuck again. All things that I’ve said over and over again, but between you and me dear reader, oh, I guess we need to include the NSA.. (Hi guys!) HA!

Currencies today 3/20/17. American Style: A$ .7725, kiwi .7038, C$.7490, euro 1.0755, sterling 1.2415, Swiss $.9978, . European Style: rand 12.6727, krone 8.4695, SEK 8.8225, forint 287, zloty 3.9788, koruna 25.1095, RUB 57.18, yen 112.72, sing 1.3976, HKD 7.7662, INR 65.22, China 6.8968, peso 19.13, BRL 3.0895, Dollar Index 100.25, Oil $48.08, 10yr 2.50%, Silver $17.92, Platinum $966.25, Palladium $776.34, Gold $1,232.80, and SGE Gold.. $1,243.52

That’s it for today.. Well, Rock Legend, Chuck Berry passed away over the weekend.. He was 90.. I saw Chuck Berry live at the Fabulous Fox here in St. Louis a few years ago, he could still entertain that’s for sure! Well, how’s your NCAA Basketball Bracket? I’m sure that quite a few have been torn up and thrown in the trash by now, with so many highly ranked teams losing. At least most of the games have been good ones to watch! Well, I came home from the hospital on Friday, with quite a few new holes from needles, in me.. the technicians couldn’t find my veins because of how swollen I was all over, and the stuck and stuck and stuck.. I had 6 holes in my right arm for two IV’s.. OUCH! And then they started on my left arm! I’m not being a big baby here! Alrighty then.. Melvin and the Blue Notes take us to the finish line today with their song: If You Don’t Know Me By Now.. And with that, it’s time to get this out the door! I hope you have a Marvelous Monday, and Be Good To Yourself!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts
1-800-926-4922
https://www.everbank.com