Will Yellen Confirm The March Rate Hike?

* Dollar swings a mighty hammer again..
* Yellen to speak this afternoon..
* Oil and Gold have bad days..
* Italy& Spain print strong PMI’s

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

Good Day. And a Happy Friday to one and all! Well, I’m not good this morning.. My eyes have swollen shut from something, probably allergies, so I can barely see the words I’m typing, which means I’m going to have to shut this down so that I just close them and hope they go back down! The Allman Brothers greet me this morning with their song: Rambling Man.. which was their first “hit” song. When I’m in the mood, I can listen to the Allman Brothers for hours!

Well, from what I can tell the dollar has swung its mighty hammer through yesterday’s trading and the Asian session, but.. it appears that the swinging is over for now, as we could very well have gotten to the point where the March rate hike is finally all priced in. However, this afternoon, Fed Chair, Janet Yellen will be speaking, and she could very well wind up the dollar bugs to swing the dollar’s mighty hammer once again. And I hear you saying, “But, Chuck, you just told us that the rate hike could be all priced in, how can Yellen add to what’s already priced in?” Ahhh grasshopper.. things can go overboard, right? They can get overpriced, right?, and they can get completely out of hand with regards to fundamentals, right? Well, just pick one for this potential additional dollar strength today.

So, finally, just about everyone is on board with the thought that the Fed will hike rates in a couple of weeks. Are you? I am, and have been for some times now. OK, the price of Oil slipped almost $2 in the past 24 hours, as supply is growing again. And Gold had a bad day yesterday, losing $15, and things aren’t starting out so rosy for Gold this morning, as it is already down $5.50 in the early morning trading today. Gold closed yesterday at $1,234.80 on the day.. China loves this drop in price, for they will watch for an institution to panic and sell and China will be there at their doorstep, with a briefcase full of cash! Oh, I know that’s not how trades get done, but I had to make it interesting or else you wouldn’t read it!

Earlier this morning, Spain and Italy posted their latest Composite PMI (services and manufacturing), and both were better than expected, with the Services sector side of the report showing strong growth, and the manufacturing sector remaining at expansionary levels. Spain’s Composite PMI was 57, and Italy’s was 54. But the euro isn’t getting any love from these reports.

The U.S. Data Cupboard has our version of a PMI today, we call it the ISM and it will print today.. .. Other than that, there’s not a lot of data today. We do have the Janet Yellen speech, ,and she’ll also see her right hand man at the Fed, Stanley Fischer, talking today too. And after these two speak the “blackout period” will begin, which means that no Fed member is allowed to give a speech.

I’ll remind you that the Fed meets on March 14 & 15.. And the 15th of March should be a doozy, with the debt ceiling hard stop and the Fed rate hike =. Monday morning following all that stuff on Friday should be, like I said, a doozy.. I recall the great sell off of stocks in October 1987? This reminds me of that scenario, we had a bunch of things happen during the week, and to end the week, on Friday, stocks sold off and I came home and told Kathy, it’s a good thing we don’t have stocks right now, because today’s selling was nothing compared to what we’ll see Monday.. I helped out in the execution room of Mark Twain Brokerage, along with Tony G. and Sheila K. It’s difficult for me to think that this Rocktober it will be 30 years since that crash..

To recap.. The dollar swung its mighty hammer throughout the day yesterday and through the Asian session, but has stopped in the European session. The dollar sure had to get tired, and besides it looks to Chuck as though the March rate hike is finally all priced in. The price of Oil dropped nearly $2, and Gold lost $15 yesterday and another $5 in early morning trading today, and the euro gets no love from strong PMI’s from Spain and Italy.

For What It’s Worth.. I pulled this from Bloomberg this morning, and I think it’s important to follow this stuff, and it’s about the French election that will take place this year, and this is Marine Le Pen , who is the leader of the “leave the euro” party.. You can read it all here: https://www.bloomberg.com/politics/articles/2017-03-02/to-le-pen-question-is-not-if-to-leave-euro-but-when-and-how

Or, here’s your snippet: “She said the euro had led to a hollowing out of industry in France, Italy and Spain, and it was time for a “friendly separation.” She also said the country’s sovereignty is at risk because 65 percent of French government debt is held outside the country.
“The euro is a corpse that still moves,” Le Pen said. “It’s not a question of if we’ll leave the euro but when.”
Le Pen pledged to put the central bank under government control, nationalize toll roads, and make the public sector buy French goods. “My job isn’t to create jobs in China,” she said. She reiterated her call for a 35 percent import tax on products made by French companies overseas. She also said she’d force multinational companies to pay more taxes in France.
Polls show that Le Pen will win the most votes in the April 23 first round of the French election, but lose heavily to independent Emmanuel Macron in the May 7 run-off.”

Chuck again. I think that one should not pay attention to the polls..

Currencies today 3/3/17.. American Style/// A$ .7555, kiwi .7027, C4 .7455, euro 1.0540, sterling 1.2223, Swiss $ .9673, . European style: rand 13.12, krone 8.4837, SEK 9.0530, forint 294.54, zloty 4.0969, koruna 25.68, RUB 47, yen 114.28, sing 1.4142, HKD 7.7644, INR 66.67, China 6.8847, peso 19.93, BRL 3.1056, Dollar Index 102.11, Oil $52.66, 10-year 2.48%, Silver $17.76, Platinum $988.85, Palladium $766.02, Gold $1,227.30, and SGE Gold.. $1,256.27

That’s it for today.. no birthdays to announce, nothing funny happened to me yesterday, nothing’s going on with my family, and everything at the office has been quiet. I did watch my Cardinals beat the Braves yesterday, but the Braves didn’t bring most of their regulars along on the trip, so I got to watch a lot of their prospects! Oh well, it was baseball, and that’s all I care about! The Electric Light Orchestra (ELO) takes us to the finish line today, with the live version of their song: Telephone Line.. And with that I’m going to get off this bus today, and head to ballpark later today, where I know I’ll have a Fantastico Friday! It’s up to you if you have one too! 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