A Data Report Card. BORING!

* U.S. Data continues to print weak.
* Dollar is a bit softer today.
* Not against euro, as traders remember 12/3.
* What’s up with the real?.

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

Good day. And a Wonderful Wednesday to you! It’s the day before the Great Pumpkin arrives! No wait! It’s the day before Thanksgiving! Yes, I’m quite aware of the fact that the real first Thanksgiving was nothing like what my friend, Dave Janda, calls it, “the theater production” we learned in school. But, you know, just like I explained on Columbus Day, these are old stories, that have passed through the years, and to me, there’s always room for tradition.. And with that said.

Pfennig Tradition says that we start today’s letter with the Turkey Song by Adam Sandler. Turkey for me, Turkey for you, Let’s eat Turkey in my big brown shoe. Love to eat Turkey, at the table, I once saw a movie with Betty Grable. Have you ever seen Adam Sandler perform that song live? I think it cracks him up more than the audience! He’s such a fun loving comedian. I remember when he first showed up on TV, on the MTV show called Remote Control. Colin Quinn and Dennis Leary also got their starts there. Or at least that’s how I remember it! I absolutely loved that show! My kind of humor for sure!

Today’s letter is going to bounce around to different things, as I try to get everything that’s on my mind in the letter today, before I head off for a 4-day weekend. So. first off, we have the currencies today. And it looks like the dollar is a bit softer again this morning. The moves aren’t anything to write home about, so let’s just leave it at that. More time has come between now and the Fed Member, Williams’, speech last Saturday. And I heard a comedian once say that the difference between tragedy and comedy is time. And so we can apply that here. We had the tragedy of the Williams speech on Saturday, and Sunday night the dollar began its all-out assault on the currencies and metals, but as each day has gone by since that initial tragedy, things have calmed down, and the difference? Time. that’s all. There’s been no speeches to offset the Williams speech, it’s only time. And I bet you thought I was going to point out something on a chart, as the reason for the sof tness in the dollar since Monday! HA!

Well, as I was going through the items in the U.S. Data Cupboard yesterday, I completely missed the PCE data, as it must have been hiding behind the Mrs. Butterworth syrup. But we did have the Personal Consumption Expenditures print for the 3rd QTR. You may recall that the PCE is the preferred inflation calculator for the Fed, so it makes sense that we look at this and see what’s going on here. Unfortunately, for the rate hike campers, 3rd QTR PCE remained at 1.3%, VS the previous QTR.. I don’t think I need to remind you that 1.3% is nowhere near the Fed’s target for inflation at 2%, and that Janet Yellen herself in a speech a few months ago in Maryland I do believe, told us that the inflation target was one of the 3 things the Fed would need to see meet their goals before hiking rates. And don’t forget that Fed member Williams reminded us this past weekend that the “fed is data dependent” So. How do you like those apples Mr. Williams? If the Fed is really “data dependent” have you been keeping a ledger of the data prints? I sure hope so, because they are all 90lb weaklings.

I know I keep coming back to the quote from Williams last Saturday, regarding how he wanted everyone to know that the “Fed was data dependent”. So. there I was yesterday, on my Tom Terrific Tuesday, sitting at my writing desk, and along came a spider and sat down beside me. The spider said, “Chuck, you keep harping about all the weak data, but from month to month, we dear readers forget about the old stuff, so why don’t you give us a report card?” And the lightbulb came on over my head, you know just like in the cartoons, and I said, ” Now that’s Brilliant! Brilliant I tell you, simply Brilliant!” (and of course I said with and English accent, like the old beer commercials! Ty Keough loved those commercials!) So. I know this is going to bore the heck out of some of you, but here’s the last three months of data, on the key pieces, in my opinion, that make the economy go hummmmm.

Data August September Rocktober

Retail Sales 0.0% 0.0% 0.1%
Factory Orders 0.2% -2.1% -1.0%
ISM Mfg. Index 51.1 50.2 50.1
Industrial Production .09% -0.21% -0.15%
Capacity Utilization 78.02% 77.74% 77.53%
Personal income 0.4% 0.4% 0.1%
Personal Spending 0.3% 0.3% 0.1%
Durable Goods Orders -2.9% -1.2%
Capital Goods Orders -1.4% -0.1%

Now of course we all know that the jobs numbers have been good, according to the BLS, but we know the games people play there, and how “Bread-winner jobs” are still going away, so, all things considered; we’ve got an economy that’s barely got a pulse. Most of the data prints these days, miss the expectations, or even worse, they print negative numbers! So, there you have it in a nutshell, data dependent Fed Reserve! What will you do about it?

To go one step further. I keep harping about this inventory buildup going on. but let me share with you this little ditty that I ran across yesterday. The last four inventory cycles saw profit growth go from rising +18% year on year on average at the inventory peak, to contracting -5% year on year at its lows. Uh-Oh. But you have to wonder why little old me (that’s funny even saying that for those of you who have met me), and a few others out there that think correctly, are pointing this black cloud on the horizon out. Auntie Em, Auntie Em, Uncle Henry, I can’t make it to the storm cellar! OH My!

And then there was this line from my newly rediscovered fave writer, Grant Williams, who wrote this line and I thought that it rings so true, so true. “The fact that only a handful of bright people recognize something as being wicked most assuredly does not prevent it from this way coming.”

Brilliant, simply Brilliant! I do mean it this time! For the longest time, I’ve been going out on limbs with things far before they come to fruition, but while we waited did it mean I had been wrong? Hardly. Think about that Grant Williams quote some more, and apply it to the Pfennig.

The euro isn’t seeing the soft side of the dollar though this morning. Traders seemed to have come back to the thought that the European Central Bank (ECB) will be adding to stimulus measures at their next meeting on December 3. Recall that last week I outlined how BIG the days of December 3 & 4 are going to be with the ECB meeting, Janet Yellen on Capitol Hill, and the Jobs Jamboree all coming together for those two days. That should be a doozy of a couple of days, but today, the euro is getting sacked for holding the ball too long in the pocket. HA! With a Big Football day tomorrow, I thought I would use a football term!

As I look out on the currencies now, a couple of hours from when I began to work on the letter, the dollar isn’t so soft any longer. Hmmm. One currency that WAS on the rally tracks but has been derailed for the time being, is the Aussie dollar (A$). Last night Reserve Bank of Australia (RBA) Gov. Stevens said some things that I actually like. let’s check it out. “I’m more than content to lower it (interest rate) if that actually helps but is that the best thing to do at any particular time? We’ve got Christmas .We should chill out, come back and see what the data says.” – Glen Stevens.

Chill out! Chill baby! There was a band in the 70’s I think it was, called Chilliwack. Well, we fly at night, it’s like a rocket flight, and baby that’s just what it’s for. yeah, that band. They went soft-side up on us in the early 80’s, but I was thinking that this is the band for Glen Stevens. Seriously though, I think Stevens is onto something here. We’ve got Christmas and all that going on coming up, and it’s no time to be dealing with rate talk, the rates can remain where they are for now, and then let’s come back in February and take a look to see if there’s something that needs to be done. I love it! That’s not only sound advice for the RBA, but for the Fed. I wrote about that already a couple of weeks ago.

One of the better performing currencies in the past month climbing over 3.6% VS the dollar, is the Brazilian real. Now, don’t get all lathered up thinking that the real was getting ready to reclaim its once held crown of best performing currency of the year. this country is such a mess, right now. We’ve got inflation still rising, A Central Bank that seems to have run out of the will to hike rates to combat that inflation, albeit internal rates (Selic Rate) are abnormally high right now. We have a president that’s ducking for cover from impeachment, and economy that tries over and over again to pull itself off the canvas, and it’s Brazil, need I say more? But the Olympics will be held here next year, there’s still plenty of infrastructure that needs built, and so the spotlight will be on Brazil in the coming months. Having the Olympics has historically been good for the host country’s currency. Shoot even the Greek drachma had its day in the sun during the Olympics in Greece a few years ago! And the Spanish peseta also saw life on a different plane when the Olympics were in Spain. So, I just wanted to remind everyone about the history there, and to point out that the real, despite all its problems has carved out a gain VS the dollar in the past month. Not today it isn’t, but the last month it has!

Gold is getting sold this morning.. And it’s down a few bucks, $3 at the moment. Are you still mystified as to why Gold hasn’t taken off for higher ground with the geopolitical pressures that exist right now? And have existed ever since, oh, let’s say shock and awe? Remember that? 2003, I do believe that began. I don’t have anything else for you regarding Gold & Silver this morning.. .I’ve beaten the Gold accumulation by the Chinese, Russians and Indians story to death (no animals were hurt here) and I’m just growing tired, of basically saying the same thing every day regarding Gold not catching any wind in its sails. So, I’m going to move along here and hope for better days to come with Gold & Silver.

Well, the U.S. Data Cupboard is chock-full-o-data today. And I get a double dose of my faves. Personal Income and Spending, and Durable & Capital Goods Orders. the PCE Deflator prints today, and then there are a ton of Tier 2 & 3 data prints all on the docket today. It’s a “data day” here in the U.S. Party on Wayne, Party on Garth! Ok, I just had an idea. I can see the reviewers, the marketing people and everyone else that has a say in what I can say in this letter, squirming in their collective seats right now, as they have no idea where I’m going with this idea.

Well, I just thought that since I mentioned Wayne’s World above, that I would put in my fave conversation between Wayne and Garth, for entertainment purposes. if you’re not interested skip ahead to the recap. Let’s just say this takes the place of the FWIW section today, OK? Here’s Wayne and Garth discussing a girl that Wayne just met, her name is Cassandra.

Garth Algar: Sometimes I wish I could boldly go where no man has gone before… but I’ll probably stay in Aurora. What are you thinking about?
Wayne Campbell: Cassandra. She’s a fox. In French, she would be called “la renarde” and she would be hunted with only her cunning to protect her.
Garth Algar: She’s a babe.
Wayne Campbell: She’s a robo-babe. In Latin, she would be called “babia majora”.
Garth Algar: If she were a president, she would be Baberham Lincoln.
Garth Algar: Did you ever find Bugs Bunny attractive when he put on a dress and played a girl bunny?
Wayne Campbell: No.
[cracks up laughing]
Wayne Campbell: No.
Garth Algar: Neither did I. I was just asking.

To recap. Time has come between today and the Williams speech from Saturday, and in that time the dollar has backed off its all-out assault on the currencies and metals and has turned softer. Not against the euro this morning though. the euro never seems to be able to catch a break, it rallies, and then something or someone comes along to knock it back down. Today it’s a renewed thought by traders that the ECB will opt for more stimulus at their meeting on 12/3. Yes, it happens to be a Wednesday, November 25, 2015, and out of the blue Traders think about 12/3 and more stimulus. Hmmm. The RBA’s Glenn Stevens wants everyone to chill out and enjoy Christmas, and then come back in February and talk about rates. I’m beginning to warm up to that guy!

Before we head to the Big Finish today, I have this little bit of info from my friends over at the 5 Minute Forecast. “Corporate Debt Defaults in 2015 have already notched their highest total since 2009. and we still have 37 days remaining in the year. The total is 99 worldwide, including 62 in the U.S. Of the U.S. defaults, three out of every five are in the energy and natural resource sectors.”

Currencies today 11/25/15.American Style: A$ .7250, kiwi .6560, C$ .7510, euro 1.0602, sterling 1.5065, Swiss $ .9795, . European Style: rand 14.0665, krone 8.6545, SEK 8.7450, forint 294.25, zloty 4.0220, koruna 25.5070, RUB 65.73, yen 122.65, sing 1.4060, HKD 7.7505, INR 66.32, China 6.3877, pesos 16.53, BRL 3.7670, Dollar Index 100.01, Oil $42.27, 10-year 2.22%, Silver $14.13, Platinum $841.22, Palladium $540.75, and Gold. $1,073.26

That’s it for today. So, will you be going over the river and through the woods to grandmother’s house or will you be staying at home to host a family Thanksgiving? I was talking with my good friend Dennis Miller, the retirement guru, the other day about this, and I told him that ever since my mom and dad passed away, we’ve done Thanksgiving here. I even smoked a Turkey a couple of years ago. Friday will bring us what’s called “Black Friday”. I have to say that retailers are in big dookie this year, they had better pull a rabbit out of their collective hat this Christmas shopping season. Friday will also be Little Everett’s Birthday. he’s turning 5! Next year heading off to Kindergarten. Man, it sure seems that they grow up fast! He’s funny when you ask him how old he is going to be, he says, “I’m going to be 5, then 6, then 7, then 8, and then I will catch Dewaney” Which is how he pronounces his sister’s name, Delaney, who’s 8. I don’t think he gets it that she’ll be older too, just yet. So cute! This year, all the kids will be here. as both my older kids have spouses from the other side of the state, which means sometimes they are here, and sometimes they are there. It doesn’t bother me that they can’t be here, I only worry about the driving across the state with all the other travelers. But no worries this year for me! I’m going out in public today. first to the doctor’s office, and then out to meet the boys on the desk, whom I’ve not seen in about 6 weeks.. My face isn’t so deformed right now, so maybe that’s a good thing? And I’m able to eat more and more stuff, so my diet has expanded from soup and pudding, which is a good thing, considering tomorrow is Thanksgiving! And with that. it’s time to get out of your gravy for today, and I hope you have a Wonderful Weekend, and a very Blessed Thanksgiving!

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