* Currencies rally in the morning.
* Dollar rallies in the afternoon!.
* Fed speakers in force today..
* Lots of Q4 GDP reports today.. ..
And now. Today’s A Pfennig For Your Thoughts.
Good Day. And a Tom Terrific Tuesday to you! And a GREAT BIG HAPPY BIRTHDAY TO MY SISTER BARBARA! Happy Birthday Barbie doll, hope your day is grand! It’s also what us Irish people call, Shrove Tuesday. Or Fat Tuesday for the rest of you! HA! What is a shrove you ask? Well, for as long as I’ve been writing this letter, I’ve been explaining Shrove Tuesday to readers. Shrove is a pancake. and since lent begins tomorrow, and some fasting is observed by the Catholics, the tradition is to load up on shroves, so go ahead get the pancake mix out, and load up! Back in the office today, they’re having a Cajun cook off, which sounds like fun.. But me? I’ll be loading up with a high stack of shroves! The Doobie Brothers greet me this morning with their song: Jesus is Just Alright.
Well, I visited the doctor for my aching back yesterday, and right before I left to go to that appointment, I was looking at the currencies mount a morning rally. The euro traded above 1.06, and the Aussie dollar (A$) was knock, knock, knocking on the door to 77-cents again. There really wasn’t much to move the currencies in this direction, and so with nothing fundamental to drive them higher, the gains were easily reversed in the afternoon session. So, we ended the day about where we started. The overnight markets haven’t given any direction to the currencies, so we’re back to square one this morning.
Today, doesn’t seem to have much to offer either.. 3 Fed speakers, Williams, Harker, and Bullard will all take the microphone, and speak their minds. Williams and Harker are usually middle of the road kind of guys, easily swayed to be either a hawk or dove, and Bullard is the well-known hawk.. So, depending on what memo Williams and Harker received from Fed Chair, Janet Yellen, will determine what coat they wear today..
I can tell you just by the look and feel of the markets this morning, that the market participants are looking for clues so they can feel 100% sure that the Fed is going to hike rates in a couple of weeks.. If they get that, then I see the dollar with the conn today.. If they don’t get that, then I see the currencies with the conn today. Pretty sad, well it is to me, that we’ve come to this, that the markets live and die on Fed comments.. I remember when you didn’t even know who the Fed members were, sure you knew the Chairman, Burns, Volcker, Greenspan, and so on But the other members were mysteries, and we sure didn’t hear them speaking all the time.. But you know who started all this? Big Al Greenspan.. The media made him out to be “the Maestro” a rock star, and market mover. All I’ll say about that is you should read either or both, of the books by Bill Fleckenstein, or the book by Frederick Sheehan..
I’m currently reading the new book by one of my fave economists/ analysts: Danielle Di Martino Booth, and the book is titled: Fed Up, and is about her time at the Dallas Fed and other things.. It’s pretty good so far, but I’m not 100 pages into it yet.. My book reading has been interrupted by baseball games! And that’s an interruption I certainly don’t mind one iota!
Gold didn’t get to participate in the morning currency rally, and then when the dollar fought back in the afternoon, Gold got caught up in the currency selling.. so, overall, it wasn’t a good day for Gold. But 199,000 contracts were traded, which tells me there was a lot of two-way buying and selling going on. Gold closed yesterday at $,1252.10 down $4.80 on the day. That was some FWIW story yesterday wasn’t it? That Koos Jansen is some Gold researcher, and realized that he needed a large sum of cash to pay for the audit report on U.S. Gold reserves, so he basically created a “fund me” website, and he got a ton of people making contributions, and then he paid the fee, received the report, and it has been redacted, with pages missing, and incorrect. He then complained and the U.S. Mint told him to return the report and they would return the cash, which he did, and then distributed it out to the people that had funded this operation.
I’m surprised, and then I’m not surprised, that no one outside of Bullion Star, the GATA folks, and Chuck are the only ones to report on this.. This is HUGE news as far as I’m concerned, and some up and coming journalist ought to take this project on..
The price of Oil slipped back below $54 in the past 24 hours. And the Russian ruble gave up some ground, dragging the krone, real, loonie and other Petrol Currencies along for the day.. Speaking of the loonie.. I told you yesterday that the Bank of Canada (BOC) will meet tomorrow, and that meeting is still seen as a non-event, which throws risk on it, in that maybe the BOC does something radical, then things would go crazy folks, go crazy! And I would be doing my very best Jack Buck, saying, ” I, don’t, believe, what I just saw”!
The Big Event tonight will be President Trump’s address to a joint assembly of Congress, where it is expected that he’ll talk about repealing the ACA (affordable Care Act) and reforming the tax code. Lay out his plan for taxes and see where that takes us. And again, the markets will be looking for signs of inflation in these talks, which if they find the signs, then that would lead them to believe that interest rates are going higher, which would be good for the dollar.
In Australia tonight, they will print their 4th QTR GDP, so we’ll have to kick around tomorrow.. Slow down you move too fast, you’ve got to make the morning last, just kicking down the cobblestones, look at the fun in feeling groovy! Hey! I just thought since we were going to be kicking something around, we might as well have some music playing while we do our kicking! HA! Look for a 4th QTR GDP print of around 0.7%, and an annualized rate of around 2.5%, which is pretty darn good, considering Australia’s “go-to” trading partner, China, has been in a prolonged economic funk.
Yesterday, I told you how the Chinese renminbi had been allowed to appreciate recently, and then this morning I was looking over the currency levels, and noticed that the Sing dollar (S$), had really been puttin’ on the Ritz lately! And then I did the old V-8 head slap, and said, “Chuck you dolt! You’re the one that first pointed out this relationship between these two currencies” If the renminbi is up 3% VS the dollar in a year, then you can bet your sweet bippie that the S$ is up around 3% Vs the dollar too.. So, with the renminbi being allowed to appreciate, the S$ is right there too.
In the U.K. there seems to be some bad feeling toward the Gov’t.’s statistics.. Dear Reader Bob, sent me an article that talks about how citizens are growing very suspicious of the economic reports that the Gov’t. controls.. In the U.K. only 1 in 4 people trust the Government to present official statistics honestly.. So they have a similar problem as we have. Although I would doubt that here in the U.S., unless you read the Pfennig, you’re probably on board with the hedonically adjusted reports in the U.S. But only 1 in 4 believe the Government’s statistics.. I found this to be very interesting because for the longest time, what happens in the U.K. seems to come across the pod and end up here in the U.S. 6 months or so later.
In Sweden today, they too will print their 4th QT GDP, which should come in around 0.8% and confirm that they are the 2nd fastest growth countries behind New Zealand, but if this GDP print come in as forecast, it won’t help the krona get back below 9.00 because they still have negative deposit rates! Come on Riksbank, do something about that! You don’t need them any longer, but gone you evil negative deposit rates! Be gone I tell you!
The U.S. Data Cupboard yesterday had the Durable and Capital Goods Orders for January, and while the headline number for Durables looked very strong at 1.8% but the core durable goods orders fell the most since June and the shipments fell just as much. And once again Capital Goods Orders printed negative! (-0.6%)..Folks, and this goes to the members of the Fed too, you can use all your Phillips curves and whatever models you use, but until Corporate America begins to spend on capital expenditures (CAPEX), the economy is NOT going to turn around, and really begin to add to GDP.. I would almost be swayed , if not for my total dislike of Gov’t interference in the everything, period. But I would think that if the President really want that greater than 3% GDP he’s been talking about, he would make Corporations put “x” into CAPEX..
Today’s Data Cupboard has Consumer Confidence / Sentiment and the S&P / CaseShiller Home Price Index.. I’m sure Consumer Confidence will be the strong, given the stock market performance.. And why would home prices fall when mortgage rates are still to be had below 4%!
To recap. Well the currencies got a rally started yesterday morning, but it faded and reversed in the afternoon session, it was as if the NY boys and girls came back from lunch and decided to push the dollar index higher, and that was that! And the currencies have drifted since, not moving much in the overnight sessions of Asia and Europe. 3 Fed speakers today: Williams, Harker and Bullard.. And then this evening President Trump will speak to Congress and talk about repealing ACA and reforming the tax code. The markets are looking for signs that his plans would renew inflation pressures.. if they get those signs, the dollar wins, if they don’t the dollar loses.. Gold lost $4.80 yesterday and the price of Oil slipped back below $54.
For What It’s Worth.. Alrighty then.. there’s been a ton of Gloom and Doom about the stock market that’s printed every day.. But when the king of Gloom and Doom speaks, I listen! Marc Faber, of the Gloom & Doom Report decided to take on the stock market, and give his thoughts on where it’s going.. this whole article can be found here: http://www.cnbc.com/2017/02/26/when-selling-starts-in-markets-itll-trigger-an-avalanche-marc-faber-says.html
Or, here’s your snippet: “The man often hailed as the original ‘Dr. Doom’ is warning investors that the U.S. stock market is vulnerable to a seismic sell-off-one that could start any time in a very unassuming way.
Marc Faber, the editor of “The Gloom, Boom & Doom Report,” predicted the rally’s disruption won’t be caused by any single catalyst. His argument: Stocks are very overbought and sentiment is way too bullish for the so-called Trump rally to continue.
“Very simply, the market starts to go down. As it goes down, it will start triggering selling, and then it will be like an avalanche,” said Faber recently on “Futures Now.” “I would underweight U.S. stocks.”
One man alone, he cannot make ‘America great again.’ That you have to realize,” he said. “Trump, unlike Mr. Reagan, is facing huge, huge headwinds – including a debt to GDP that is gigantic, as it is in other countries.”
Faber lists interest rates going up, as well as earnings and margins at record levels, as additional risks to the historic rally.”
Chuck again.. Well, how about that? Of course you’ll always want to try to stay in the middle lane not too Gloom and doom, and not to Polly Anna either!
Currencies today 2/28/17.. American Style: A$. 7675, kiwi .7193, C$ .7587, euro 1.0593, sterling 1.2430, Swiss $.9945, .. European Style: rand 12.9978, krone 8.3718, SEK 9.0240, forint 290.35, zloty 4.0705, koruna 25.4984, RUB 57.97, yen 112.35, sing 1.3987, HKD 7.7612, INR 66.69, China 6.8722, peso 19.96, BRL 3.1083, Dollar Index 101.01, Oil $53.88, 10yr 2.36%, Silver $18.31, Platinum $1,029.48, Palladium $783.48, Gold $1,252.80 and SGE Gold $1,268.71
That’s it for today.. Since I was a teenager I called my 2 years older sister, Barbara, Barbie doll, because she was so darn much like doll to me.. Barb and I were in speech instruction classes when we were in elementary school.. If you’ve ever heard me speak, you would have no Idea that I use to talk like Elmer Fudd, but I graduated. Unfortunately Barbie doll didn’t and she still talks like Elmer Fudd, but it makes her even cuter! Barb and I were two years apart, but only 1 year in school, so we had a lot of the same friends growing up.. Happy Birthday Barbie doll! And don’t forget those shroves today! Gotta fatten up on shroves! Or pancakes for the rest of you who call it Fat Tuesday! The Michael Stanley Band takes us to the finish line today with their song: Let’s Get The Show On The Road.. So, now.. let’s go out and make this a Tom Terrific Tuesday! And remember to Be Good To Yourself!
EverBank Global Markets
Editor of A Pfennig For Your Thoughts