A Pfennig for Your Thoughts 5/3/2017

Good day. And a Wonderful Wednesday to you! I feel like I’ve been cut off from the rest of the world this morning, as our internet connection, for email, wireless and TV have been shut down because of the flood waters, and won’t be back up and running until the waters recede, which from what I heard last night, won’t be soon.. The Flood officials have upped the forecast for the level of the crest today, but on top of that Mother Nature has decided to rub our noses in all of this, by sending thunderstorms our way today that will bring another 3 to 4 inches of rain, so a second crest in a couple of days is expected. UGH! I’m at wits end here. The Great Carlos Santana greets me this morning with his instrumental song: Samba Pa Ti.

Well, from what I can see this morning, the dollar has wrestled the conn away from the currencies again this morning, and is really taking shots at the Petrol Currencies and the Commodity Currencies. The euro traded up to 1.0940 overnight, but has dropped back to 1.0910 as I write. The French Presidential Candidate Le Pen, told everyone again yesterday that she’s prepared to take France out of the euro if elected.. She’s behind in the polls, but we know how reliable the polls have been in recent elections, eh? So, the euro took a bit of a dip on these comments, but traders need to remember that the French people overwhelmingly want to stay in the euro.

The Swiss franc has really lost some ground overnight, as has Japanese yen. The price of Oil dropped through the $49 handle in the past 24 hours and is looking vulnerable to me. And that has the Petrol Currencies that include the Norwegian krone, Canadian dollar, Brazilian real, and Russian ruble, with the Mexican peso and U.K. pound participating to a lessor degree, all looking at losses this morning VS the dollar.

The Commodity currencies of Australia (A$), New Zealand / kiwi, Canadian dollar / loonies, and S. African rand are all getting taken to the woodshed this morning. I think that all the weak data that’s getting printed here in the U.S. and most recently in China, is taking its toll on commodities, and that leads to the selling of the Commodity Currencies. The U.S. and China have the world’s two largest economies, and when they have problems, well. you know the saying. about catching a cold.. which is what it appears I’ve done! I’ve been up most of the night coughing, and now I just want to sleep!

Gold only added 60-cents to its price of the previous day yesterday, and is down $2 in the early morning trading today. And Silver was pushed through the $17 handle on the downside that is.. UGH! Platinum and Palladium followed the leaders. I talked yesterday about the strong physical demand from China, India and Russia, of Gold. And I guess I ticked the Gold Bullion dealers off so they decided to show me! Geez Louise, how I wish that were funny.

In my never ending attempt to show the Fed members that we have a weakening economy. I came across this yesterday in my own local newspaper, no less! First, remember when car sales were hitting new records each month, and I would say, at some point everyone that wanted a new car got one and this can’t go on forever? Well, guess what? For the 4th consecutive month, car sales dropped 17 percent last month, the most pronounced slowdown of the year and a strong indication that 2017 will put an end to seven straight years of growth! The car executives are saying that it’s no time to panic. But I beg to differ with them. The U.S. consumer is “tapped out”

The U.S. Data Cupboard yesterday was basically empty, and today’s Cupboard has a lot of “stuff” in it, but I’ll fish through all the “stuff” to find the things we really want to focus on. First, the Fed’s FOMC 2-day meeting ends this afternoon, and it we’ll most likely see no change in rates, and the Fed Chair, Janet Yellen, continuing her cheerleading for the U.S. economy, and greasing the tracks for a rate hike in 6 weeks when they meet again in June. There’s also the ADP Employment Report that we’ll see the color of this morning. This report is supposed to be a good indication of what the BLS will try to pull over our eyes on Friday. And finally, the EIA petroleum supply weekly report. We don’t normally pay too much attention to this report, but. given the fact that the price of Oil has plummeted recently on supply concerns, this report becomes more important to us, who follow the price of Oil.

To recap. Chuck’s preparing for the onslaught of water today and the rest of the week. The dollar has wrestled the conn away from the currencies again, and is really taking shots at the petrol currencies and commodity currencies this morning. Le Pen is doing her best Chicken Little but I don’t think it’s going to help her in the election. Gold was basically flat yesterday, and is down $2 in the early morning trading today. Silver got whacked and taken below $17. do, the markets really think the Fed is going to hike rates today? And Auto Sales drop for the 4th consecutive month.

For What It’s Worth.. I’m of the opinion that the economy is weakening, but yet stocks keep rallying. So, when I saw this headline on MarketWatch I earmarked it for the FWIW section today. You can read it all here: http://www.marketwatch.com/story/wall-street-fear-gauge-tanks-stocks-and-bonds-soarsomethings-gotta-give-2017-05-02?dist=markets

Or, here’s your snippet: “Curious moves in asset prices are raising eyebrows on Wall Street. Of particular note is the sustained and simultaneous rally in government bonds and stocks. Meanwhile, Wall Street’s “fear gauge” just touched a 10-year low, as other measures of market volatility hover at the lowest levels in decades. What gives?

It is hard to say but the market’s recent moves have been offering mixed signals about the outlook for the economy, raising questions about the ability of the run-ups in stocks and bonds to persist. Perhaps the odd correlation between stock and bond prices has drawn the most attention. Typically, assets considered risky like stocks shouldn’t climb at the same time as havens like Treasurys are being bid higher. But that is exactly what has happened in recent trade. The 10-year Treasury benchmark TMUBMUSD10Y, +0.87% for example, is offering a yield of 2.29%, just off a recent low of 2.17% hit April 18, according to FactSet data. That implies that investors continue to scoop up bonds, pushing yields, which move inversely to prices, lower. ”

Chuck again.. Yes, I too find this all a bit strange, and just keep waiting for that Minsky Moment.
Currencies today 5/3/17. American Style: A$ .7472, kiwi .6917, C$ .7285, euro 1.0910, sterling 1.2911, Swiss $ .9896, . European Style: rand 13.3608, krone 8.6044, SEK 8.8242, forint 286.21, zloty 3.8550, koruna 24.6014, RUB 56.98, yen 112.20, sing 1.3955, HKD 7.7811, INR 64.14, China 6.8949, peso 18.83, BRL 3.1699, Dollar Index 99.08, Oil $48.07, 10-year 2.30%, Silver $16.83, Platinum $919.02, Palladium $808.07 and Gold $1,254.70 (sorry no SGE Gold price today!)

That’s it for today. Well here comes the rain. again. UGH! Our Blues have dug themselves into a hole, and are now down 3-1 in the best of 7 series with Nashville. Double UGH! I’m having to use my personal spot to make a connection this morning, as everything is out! We still have electricity though! Thank goodness for that! I need to get this out the door, so.. Alvin Lee and 10 years After take us to the finish line today with their song: I’d Love to Change The World. Which is exactly what I would like to do. First I would throw all the, no wait! No sense in going there Chuck, because that’s never going to be! Alrighty then, I hope you have a Wonderful Wednesday. And Be Good To Yourself!

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