A Little Of Nothing For Everyone.

* 1st QTR GDP on 0.2%.
* BCB hikes rates 50 Basis Points!.
* CBR cuts rates 150 Basis Points!.
* RBNZ puts lid on rate hike thoughts.

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

Good day.. And a Tub Thumpin’ Thursday to you! Well, the currencies were really doing some Tub Thumpin’ yesterday. They were singing.. I get knocked down, but I get up again, you’re never gonna keep me down. At one point in the day, the beaten and beleaguered euro was up nearly 2-cents on the day! Gold and the other precious metals were about the only currencies to not post big gains VS the dollar on the day. And yes, for you new to the Pfennig I consider Gold, Silver, Platinum and Palladium as currencies. Especially Gold & Silver.

I’m greeted this morning by A-ha, and their song: Take Me On. An 80’s classic, that I know my good friend Rick will smile about when he reads the Pfennig this morning.. Well, there were two things moving the currencies yesterday. The first was the awful print of 1st QTR GDP, which I said would be 1% after all revisions, but earlier this week told you that it was already being pushed down to 1% in the surveys, so it could end up being even lower. Well, it was. printing at only 0.2%… That’s right 0.2%… This had to send shivers down the spines of the Fed members, who had gone all-in on the economy recovering enough to warrant a rate hike in June. What we have to do now is wait for the revisions. this could end up being a negative quarter very easily, and would have been from the 1st print if the Gov’t hadn’t added up to 3% of stuff like Research & Development to the GDP calculation last year because they didn’t like the looks of the GDP prints.

This is important to break out folks, because. I would argue that things like R&D don’t do anything to add to the economy, but then the Gov’t saw that it did, so they added it to the calc. Now I heard lots of economists and the Gov’t come out and say that this is just like last year, when the 1st QTR GDP was negative, but the rest of the year showed growth. And I would say yes that’s true, but. we have to look back to the drop in the 4th QTR from the 3rd QTR. For those of you that need the numbers, 3rd QTR GDP was a hot 5%, and 4th QTR fell to 2.2%, so the slippery slope has a foundation folks. And don’t forget, that the recent data for April has all been weak.

So, that very weak print, got the currencies moving, and like I said above, the moves were HUGE. But then along came the end of the FOMC Meeting, in which the rate hike campers were looking for clues to keep their hopes alive for a June rate hike, and the campers that were doubtful of a rate hike, were looking for clues that no rate hike was in the cards. And in the end, I don’t think either of them got what they wanted!

Reading through the transcripts, I find it interesting that the Fed members said that they would have to see more encouraging data before it considers raising interest rates. But then later they said that they thought the deep dive of economic activity was “transitory” and they expect growth to rebound. So, you see, no real stance, but instead a straddle of the fence. And that’s where I have a real problem with the Fed, other than the usual stuff, like how they were created in secrecy (see the book Creature from Jekyll Island), and a whole litany of stuff that I can’t get into here, but ask me on the Butler Patio some time..

So, enough of all that! With all the other stuff I have to deal with, health-wise, I certainly don’t need red wrists. So, the currencies kind of shuffled backwards after the Fed balancing act on the fence came about. For sure there was profit taking, I mean, short time traders were looking at huge gains in the past couple of days. But this morning, we’re back to a softer dollar, and the currencies, for the most part are looking better.

Two currencies bucking the softer dollar this morning: the Aussie dollar (A$) and N.Z. dollar/ kiwi. Both are getting slammed. Profit taking has to be a part of this, but there’s more, and with kiwi there is. I told you yesterday that the Reserve Bank of New Zealand (RBNZ) would have their OCR meeting last night. And while the RBNZ left rates unchanged, which should have given kiwi some love, there was also a statement following in which, the RBNZ Gov. Wheeler, who takes every opportunity to diss kiwi, said that “Lower fuel prices, coming on top of the high exchange rate and low global inflation, lowered annual CPI inflation to .1% in March QTR. Underlying inflation remains low and is expected to pick up gradually. Monetary policy will focus on the medium term trend in inflation. The Bank expects to keep monetary policy stimulatory, and is not currently considering any increase in interest rates.”

Hmmm. Well, kiwi got whacked on that statement, for there were still quite a few traders and observers like me, who thought there was at least one more rate hike needed to squelch a Housing Boom in Auckland, but that now looks like a pipe dream. And kiwi got punished. which apparently spilled over to A$’s, which were trading well above 80-cents yesterday at one point, but has lost all that ground and more overnight.

There were two more Central Bank meetings overnight. First the Brazilian Central Bank (BCB) hike rates by 50 Basis Points (1/2%) to an internal rate of 13.25%… The real has been on a stealth-like rally and this should do nothing to bring the rally to a halt. The other meeting saw the Central Bank of Russia (CBR) cut rates by HUGE margin, 150 Basis Points (1.5%) bringing their internal rate to 12%… The CBR pointed to inflation slowing down and stabilizing as the reason they could go so big on the rate cut. Remember that interest rates were moved up to 17% at one point to defend the ruble.

Speaking of the ruble. While the ruble is getting sold a bit this morning on the interest rate cut news, the currency will still end April with its best month of performance since 1993! Just for fun, I went to look at the top hits from 1993, to give us some idea how long ago that was, and the Billboard 100 singles of 1993, shows that Whitney Houston’s song: I will always love you, was the at the top of the list. I said to myself, that can’t be right. Where is Nirvana? Soul Asylum? The Black Crows? And a Whole list of other Rockers?

So, the ruble is off by 1.8% in the trading since the rate cut announcement, and that’s what the size of the rate cut was all about, stemming the rubles rise, which has been very strong. the Ruble has appreciated 24.4% since January. So, that’s a HUGE move that needed to be slowed down, but. As I said last week, what makes everyone so scared of a ruble at 51, when a year ago it was trading at 35, and no one complained it was too strong then?

And you know what currency is also having their best month this time since 2013? It’s amazing to me too, for I just like last summer, I don’t see the reasons for the move, but it’s the British pound sterling / pound. There’s an election coming in the England, and right now it’s a toss-up as to who will win, and those questions usually lead traders to shy away from a currency. So, I would throw caution here, to be careful and not get caught up in the euphoria of a pound rally. There are just too many questions hanging over the pound like the Sword of Damocles right now.

The euro is adding to its rally yesterday in the overnight trading, and is right now within spittin’ distance of 1.12.. Pretty amazing don’t you think, given that just two weeks ago, I was thinking that the euro was heading to parity. Are you familiar with the 60’s group, The Walker Brothers? Well, I’m sitting here listening to them sing: The Sun Ain’t Gonna Shine Anymore, and I was just taken away from writing. What a great song!

But the euro’s rise is not about the Eurozone. I’ve explained this many times before, but this time it’s really illustrated for our enjoyment. The Eurozone is in heated negotiations with Greece over future loans that will allow Greece to not default, and remain in the euro. I would think that this type of heavy weight on its shoulders would bring the euro down. But instead it’s rising nicely I might add. Why? Because more and more traders are seeing the rot on the vine of the U.S. economy, and the hopes for a rate hike. So, the dollar gets sold, and since the euro is the offset currency to the dollar, the euro rises.

Wish I could say the same about Gold. It should be reacting the same way as the euro VS the dollar, but it isn’t. WTI Oil saw a $2 jump yesterday, finally leaving the $56 handle to trade with a $58 handle, but Gold is still hung up around $1,200. Looks like we’ll be hanging out here for a while, pull up a chair, and relax.

There’s a story on the Bloomberg this morning that’s says “SNB Suffers Record $32 Billion Quarterly Loss After Franc Surge”. I don’t even have to read the story, I know what it’s all about, and I said to myself, “it couldn’t have happened to a more deserving Central Bank!) Yes, the SNB, (Swiss National Bank) played with fire, and you know what happens when you play with fire. You get burned. I would like to think that Central Banks around the world watched the SNB the past two years and learned something. But then they probably didn’t learn a thing!

Well, the U.S. Data Cupboard has two of my fave prints today: Personal Income and Spending for March, so still the first QTR. the Personal Consumption data for March will also print, along with some other 3rd tier reports that won’t move the markets. the Personal Spending component will be scrutinized thoroughly today for signs that consumers are spending that case they’re gaining by the lower gas prices. So far, that’s not been the case.

To recap. The 1st QTR GDP was only 0.2% here in the U.S. and that sent the currencies on a huge move upward VS the dollar, only to have some of that taken away after the Fed’s FOMC meeting produced nothing for either side of the rate decision camp. The RBNZ left rates unchanged, but pretty much put a lid on an future rate hikes, and that caused kiwi to melt. The Brazilian Central Bank (BCB) hiked rates 50 Basis Points, which should help the real’s stealth-like gains continue, and the Central Bank of Russia (CBR) cut rates 150 Basis Points in an attempt to stem the rubles rise. it worked overnight.

For What It’s Worth. Well, I was working on something yesterday for a future Sunday Pfennig, and came across an article that was in the Telegraph by Evans Ambrose-Pritchard that I found to be very interesting, I hope you do too! You can find the whole article here: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/5160120/A-Copper-Standard-for-the-worlds-currency-system.html

“Zhou Xiaochuan, the Chinese central bank governor, piqued the interest of metal buffs last month by calling for a world currency modelled on the “Bancor”, floated by John Maynard Keynes at Bretton Woods in 1944.

The Bancor was to anchored by 30 Commodities – a broader base than the Gold Standard, which has caused so much grief in the 1930’s. Zhou said, ” such a currency would prevent the sort of “credit-based” excess that has brought the global finance to its knees.”

Chuck again. I love that idea! And guess what? China is also hoarding, not only Gold, but. Copper, aluminum, zinc, nickel, titanium, indium, rhodium, and praseodymium, which if you can tell me what this is, without Googling it or any other search engine, you win a Gold Star today! The answer will be found below.

Currencies today 4/30/15. American Style: A$ .7925, kiwi .7615, C$ .8320, euro 1.1210, sterling 1.5425, Swiss $1.0690, . European Style: rand 11.8005, krone 7.4810, SEK 8.3115, forint 269.90, zloty 3.5965, koruna 24.5220, RUB 51.45, yen 119.00, sing 1.3210, HKD 7.7505, INR 63.42, China 6.1137, pesos 15.23, BRL 2.9575, Dollar Index 94.69, Oil $58.84, 10-year 2.04%, Silver $16.60, Platinum $1,154.50, Palladium $782.75, and Gold. $1,202.96

That’s it for today. Another well pitched game for the Cardinals last night, and a day game today, that once again I’ll have to take a rain check on, as I’m still under the weather with this darn cold! We’ve got the NFL Draft tonight, and the HUGE boxing match between Mayweather and Pacquiao tonight in Las Vegas. Our Rams have the 10th pick. They should get a very good player at #10. I’m hoping for an offensive lineman that will play for the next 10 years without missing time for knee injuries. Is that hoping for a lot? Not really. How about another Dan Dierdorf? Well, it’s supposed to be a bit warmer for us here this weekend. I’ll take it! Warm weather. Vitamin D. better moods! I love being outside, but not when it’s cold or even chilly, I’m not into coats, jackets, sweaters, sweatshirts, hoodies. Lately I’ve had to wear either my Blues, or Rams hoodie around the house, because we were so smart and turned the heat off. Of course I could always turn it back on, but I’d rather complain about it! HAHAHAHA! Our little Christine will be a happy camper today, as Buffalo Wild Wings is on the menu today. And with that, I’ve got to go! I hope you have a Tub Thumpin’ Thursday!

Oh! And the answer is. Glass!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts