A Short-N-Sweet Friday!

In This Issue.

* Currencies drift, but yen rallies!.
* Gold remains well bid.
* CFTC adds two new regulators.
* Chuck wishes it was Saturday!

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

Good Day. And a Happy Friday to one and all! It was a late night for yours truly last night, so, when the alarm went off this morning, I was hoping that it was Saturday, for I normally don’t venture out on a “school night”, but I did, I had a blast, and now I’m here. I’m thinking this could be short-n-sweet today, but I never know, right? It is a holiday for the stock market, and thus brokerage houses today, and the bond market will close at noon. So. what the heck am I doing here? HA! Eddie Floyd greets me this morning with his classic 60’s song: Knock On Wood. That was one of the songs we played in my first band, and did the dance steps while playing, and wearing shiny Gold pants and shirts. The Soul Wonders Revue. That was 1967 & 68. A very long time ago!

Well, I told you yesterday, that it would be good if there were no geopolitical tensions on the day, so the currencies & metals could calm down. There were no “new” geopolitical tensions, but the U.S. did report that they had dropped the largest nonnuclear bomb on a tunnel system in Afghanistan, and the kept Treasuries well bid, along with Gold, and yen. I have to say that the rally in yen has me thinking that Japanese yen is now the proxy for geopolitical tensions.. For every time (or so it seems to me) that the tensions get ratcheted up, yen rallies.. Shoot Rudy, yen is trading with a 108 handle this morning. That’s crazy! But, it is what it is, right?

The euro continued to slide yesterday, not a big move, but slide nonetheless. But with the yen on the rally tracks, the Dollar Index was unable to gain with the euro sliding downward. Speaking of the euro.. I’m really surprised by the fading off into a distance that the problems of the Eurozone are being treated. It’s as if, there are no debt problems, for the markets are ignoring them right now, and the whole mess has been put on the back burner. That should be a good thing for the euro, but the single unit just can’t seem to walk without stepping on its own feet. But, I say that lovingly! HA! No, seriously, with any other currency having the baggage that the euro carries around, they would be slaughtered by the markets, but as I’ve said on more than one occasion through the years. The euro is resilient, if anything!

The rally of the last week in the price of Oil hit roadblock this week. The rally began with news that supplies of crude were dwindling, and the rally was stopped when a new report showed that production in the U.S. had climbed to the highest level in more than a year. We are coming into the summer driving season soon, and that should deplete supplies even more, so it will be important for production to remain ramped up. The Saudis really believed that when they put together the plan for the Oil producing countries (not U.S.) to cut production, that it would lead to a $60 price for Oil. Well, that hasn’t materialized, and so now I wonder just how long the OPEC and other Oil producing countries will remain true to the production cuts agreement.

Well, there were more than 221,000 contracts traded in Gold yesterday, and the shiny metal was able to close up $1.20 at $1,287.80. Gold is very close to a trend line that was established when Gold was trading above $1,900. $1,291 is the trend line that if breached could be a very good indicator that Gold is in a bull-market once again, and could be heading higher. $1,291 is more important than $1,300, folks, for the technical guys that is.

Now, before I begin to talk about the next subject, let me be perfectly clear. This is NOT conspiracy stuff. it’s all fact! And I’m not accusing anyone of anything underhanded, again, I’m just stating facts!

Well, in other news. I read yesterday where two new regulators have joined the CFTC. (you know the regulator for Commodities and Futures) There’s new director of the Enforcement Division, and the first chief officer of the newly-created Market Intelligence Unit. What’s the Big Deal? Well, both departments’ have a main mission to uncover and terminate fraud and manipulation, which happens to be the overall main mission of the CFTC itself. I suggest they look no further than the most recent COT (commitment of Traders) report for Silver futures, which showed the largest ever concentrated short position by the four largest traders, and a new record large total commercial net short position. The CFTC itself has said in the past that there’s nothing that suggests a possible market manipulation being in place than a large concentrated position. So. there are you are. Two newbies to the CFTC, and they get to cut their teeth on the largest ever concentrated short position in
Silver, by the four largest traders. Good luck, and may the force be with you!

The U.S. Data Cupboard yesterday had a survey on Consumer Sentiment, which ratcheted upward once again last month. But something here smells like yesterday’s fish. I told you yesterday that we’ll see the March Retail Sales report today, and it won’t be a good one. So, if that holds true, the Consumer Sentiment just doesn’t line up here. How could Consumer Sentiment be strong, but Retail Sales soft? I don’t get it. do you?

To recap. The currencies and metals didn’t really get a chance to calm down yesterday but they seem to be doing so this morning. Yen has moved front and center on claiming to be the proxy for geopolitical tensions, and rallies every time those tensions ratchet upward. Gold slowed down on its daily moves, but there were still 221,000 contracts traded yesterday, that’s a whole lot of action, folks. And Chuck is confused as to how Consumer Sentiment can be strong, when Retail Sales aren’t.

For What It’s Worth. Remember a year or two ago, when I first brought you the news of the pending problems for Puerto Rico? Then last year, Congress agreed to freeze creditor lawsuits against P.R. and that gave the country one year to work out its debt problems, and that one year deal expires May 1. So, this is a continuation of that saga, and can be found here: http://www.reuters.com/article/us-puertorico-debt-bankruptcy-analysis-idUSKBN17E0GN

Or, here’s your snippet: ”
Bankruptcy for Puerto Rico is looking ever more likely as the clock ticks down toward a May 1 deadline to restructure $70 billion in debt, ramping up uncertainty for anyone betting on returns from the island’s widely held U.S. municipal bonds.

When U.S. Congress last year passed the Puerto Rico rescue law dubbed PROMESA, it froze creditor lawsuits against the island so its federally appointed oversight board and creditors could negotiate out of court on the biggest debt restructuring in U.S. municipal history.

The freeze expires on May 1, however, and an extension by Congress is “not going to happen,” said a Republican aide to the House Committee on Natural Resources, which is in charge of territory matters.”

Chuck again. oh, what’s the worry here? We’re only talking about $70 Billion that P.R. can’t pay back! I just had a thought. Multiply that $70 Billion times 10, and you get the size of the TARP package that the U.S. created for bail outs during the Financial Crisis. I’m just saying..

Currencies today 4/14/17. American Style: A$ .7576, kiwi .70, C$.7512, euro 1.0622, sterling 1.2513, Swiss $ .9955, . European Style: rand 13.4380, krone 8.5697, SEK 9.0270, forint 294.44, zloty 3.9899, koruna 25.1039, RUB 56.46, yen 108.89, sing 1.3965, HKD 7.7729, INR 64.46, China 6.8853, peso 18.56, BRL 3.1275, Dollar Index 100.47, Oil $53.18, 10-year 2.24%, Silver $18.51, Platinum $ 973.15, Palladium $796.58, Gold $1,288.50, and SGE Gold. $1,295.46

That’s it for today. Well, what a great time I had last night with current friends, old friends, and family. It was a time to get together to celebrate, and it was held at my local watering hole! I hadn’t see the people in the office since December, so. there was some catching up to do! I know I thought this would be short-n-sweet this morning and I think it is, but it has taken me the same amount of time to write it! Our Blues get back on the ice tonight, hopefully they don’t have to depend so heavily on their goalie to win the game! And my beloved Cardinals are in NYC, the Bronx, to play the Yankees. Classic baseball, Cardinals and Yankees, folks. The great Todd Rundgren takes us to the finish line today with his song: I Saw The Light. And with that it’s time to get off this buss this week, and head out for what I hope will be a Wonderful Easter Sunday. But first let’s have a Fantastico Friday! Be Good To Yourself!

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