Boo!

* 3rd QTR GDP drops to 1.5%
* BOJ & CBR leave everything unchanged.
* Dollar buying turns to dollar selling!.
* Chuck shares his Jokes for Trick-or-Treaters with you!

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

Good day. And a Happy Friday to one and all! There is a young cowboy who lives on the range. His horse and his cattle are his only companions. Guess what song greets me this morning? That’s right, Sweet Baby James, by James Taylor. Goodnight you moonlight ladies, rockabye sweet baby James. What a great morning song! I remember when I could play my guitar to just about every song James Taylor did. I haven’t pulled my guitar out of its case in about a year now. That’s a long time. At this point, I doubt I recall playing anything!

We’re going to start today with a review of the U.S. Data Cupboard from yesterday, because. Well, it tells us a story about what we should see going forward. So, with no further ado.

The U.S Data Cupboard had the first look, that’s when I swallowed the hook, in my. first look.. No wait! Jimmy Buffett can come later, but yesterday we had the 1st print of 3rd QTR GDP, recall that I told you that the consensus was for a 1.7% growth rate, but my tracking had it at 1.5%… And 1.5% it was! I saw the news blurb come across the screen, and I gave it the old “nailed it!” I waited until the afternoon, and then I checked the Pfennig Replies box, and only one reader gave me a shout out for “nailing it”! And it was our own, Chris Gaffney! But that’s not what I’m here to collect, so move along Chuck! So, we were saying yesterday that the markets had thought the Fed carved into stone, a rate hike for December. With GDP at 1.5%? Really? How’s that scratching out the carving in the stone going for ya’ll? I thought so, a little tough. But not to worry, you know, the next time, they give you the I swear on my mother’s grave bit about hiking rates, you can just ignore
them. .The markets have finally come to that stance with the Bank of England, so it won’t be difficult for them to learn this new trick!

So.In a delayed reaction to the very weak 3rd QTR GDP print, the currencies have rebounded in the overnight and morning sessions, as the hand over fist dollar buying came to an end abruptly after the print yesterday morning, but it took traders a while to get used to the fact that the U.S. economy is weak, and how could the Fed hike rates with a weak economy? Unfortunately, Gold did not participate in the consolidating going on yesterday. It was on of “those days” for Gold, which saw its value stripped away by $24. What, wait? How could that be? Did those Gold traders not see the weak 1.5% GDP figure in the U.S.? Oh. that’s right! When we see huge moves like this in Gold, it’s not Gold traders, it’s those “funny trades” that seem to slip through the back door and they’re all on paper.

But this morning, Gold is attempting to recover. But it has a long way to go, to get back to where it was earlier this week. Alrighty then. We have the rest of our “stuff” from Monday to talk about, starting with the Bank of Japan (BOJ) meeting last night. The BOJ didn’t take my suggestion to use all the goings on this past week as cover for their latest addition to stimulus, and instead chose to leave things unchanged. Good for them! Too bad they didn’t have that thought 20 years ago!

And moving West. The Eurozone CPI (consumer inflation) rose out of the ashes of negative territory in Rocktober, and rose to 0.0% from -0.1%… While that’s a relief, it’s actually a rounding error from remaining negative, so I doubt that European Central Bank (ECB) Gov Mario Draghi, is going to be celebrating this 0.0% print. He wants 2% inflation, and he’s on record as saying that he’ll do whatever it takes to get inflation to the target. But for now, 0.0% CPI looks better than a negative number.. The euro has climbed back to a 1.10 handle, after getting whacked earlier this week down to 1.0925.

So, that leaves us with Canadian August GDP, which will print this morning, but after the Pfennig is out the door. I already told you earlier this week, that I look for August to carry on with the strong reports from June and July. So, we can look for that, but given all the other data this week, look to be disappointed. But hey! Maybe, Canada can be the star performer this week!

Well, it sure looks like December is shaping up to be one heck of a month this year. We’ve already booked the FOMC rate announcement, The ECB additional stimulus announcement, and both Reserve Banks of Australia and New Zealand with rate decisions. And I’m sure we’ll add more as we go along in November. My most despised month! But December might take the cake this year, given all these Central Bank meetings that could upset the usual happy times applecart during December.

I’ll wait until we actually get to November to diss it. Right now, we’re still rockin’ in Rocktober! And we need to get have fun on Halloween first! Little Delaney Grace, who is 8 now (can you believe that?) wrote a story as a part of her homework, and she talked about how I sit on the front porch in the same chair, in the same place every year for Halloween, and give out the candy, because I love to see the little ones. As I said the other day, the weather people are calling for rain tomorrow, so that will not help with the number of kids that come to our door! UGH! But bless that little Delaney Grace for thinking of me, and writing about me. She’s so darling!

OK. The Central Bank of Russia (CBR) was also on our docket this week, and they met overnight (for us), and decided that inflation is too strong for them to cut their internal rate, so they left them unchanged, which is what I thought they would do, and told you that on Monday this week! The ruble is stronger today, after looking sickly most of the week. But, I would think this has more to do with the overall dollar selling going on right now, than the decision by the CBR to leave rates unchanged.

So. there have been some heavy hitters VS the dollar overnight. Kiwi, renminbi, rubles, rand, and reals. But I can tell you that one currency is bucking the trading patter today of selling dollars. And that is the Indian rupee. The rupee just can’t seem to find any wind for its sails lately, but remember what the Bloomberg story told us the other day. Sell rupees when things look good for the currencies and buy rupees when things look bad. I know, I know, and if you recall me telling you this, you’ll recall that I was chastising this thought, because it has no fundamental basis. But it is what it is, right? And all the currencies are rallying this morning, except rupees.

The renminbi move is quite large this morning, and it is related to some BIG NEWS from China overnight. The renminbi move overnight is the largest one-night move since China originally broke the peg to the dollar in July of 2005! WOW! So tell, me tell me now, tell me true, what’s the Big News? Well, China announced that they are considering a trial program in the Shanghai Trade Zone allowing domestic individual investors to directly buy overseas assets. This would be removing Capital Controls, which would be another step at removing restrictions on capital flows and is something I’m sure they were told they needed to do, to have the IMF approve the renminbi as a reserve currency.

There were a couple of other things going on in China. So, here are A couple of housekeeping notes on China. 1. Did you see that China dropped their 1-child policy? Hmm. and 2. The Chinese renminbi / yuan slipped back to 5th place in terms of usage for global payments in September. I find this to be something that will end up being a fleeting message, and China will move forward on this front going into the future.

The U.S. Data Cupboard is going to be quite busy with data prints today. We start with two of my faves: Personal Income and Spending for September. then the Employment Cost Index (ECI), and Real Personal Spending, as if the other kind is made up! HA! Then the Personal Consumption Deflator (PCE) which is the Fed’s preferred inflation data. then the U. of Michigan Sentiment for the first two weeks of Rocktober. I guess the real important stuff as far as keeping track of what the Fed sees, would be the Personal Spending, and the PCE data. I don’t think the Fed is going to like the looks of either one. So, get your coffee, and watch the data begin to print at 7:30 CT.

I know, I know, I carried on about the Gold whacking yesterday that it looked too suspicious to me. But for those of you who don’t get into that line of thinking. the general thought is that Gold didn’t get whacked enough the previous day when the Fed said that a rate hike was back on the table for December, and so, there was more value taken from Gold yesterday on a carryover thought. I’m not buying either of those things.

I’m not buying that it was a carryover thought that whacked Gold so strongly. And I’m not buying the thought that the Fed is going to hike rates in December. I just don’t get how or why the markets have fallen into this trap that the Fed keeps setting, and then pulling it back. You know. Last night It’s The Great Pumpkin, Charlie Brown, was on TV. And when I saw Lucy keep fooling Charlie Brown and having him run to kick the football that Lucy is place holding, and the she pulls it up right when he goes to kick, and lands on his back! Well, that’s what the Fed keeps doing with interest rates and the markets are Charlie Brown!

To recap. Well, 3rd QTR GDP dropped to 1.5% in the first print of the data, and the currencies had a delayed reaction to the print, but overnight and this morning, they are all stronger, as the dollar buying is being reversed. Strong movers today are: renminbi, kiwi, reals, rubles, and rand. China announced that they will “consider” removing Capital Controls, and that they are eliminating their 1-child law.. Stepping closer to an open economy and financial markets folks, which is one of the last steps to having the IMF approve the renminbi as a reserve currency. The BOJ left everything unchanged, and Chuck thinks that it would have been good for them to have that thought 20 years ago! The CBR left Russian rates unchanged, and it was one of “those days” for Gold yesterday as it got whacked by $24.

Currencies today 10/30/15.American Style: A$ .7105, kiwi .6750, C$ .7605, euro 1.1005, sterling 1.5350, Swiss $1.0110, . European Style: rand 13.7690, krone 8.5590, SEK 8.5170, forint 281.50, zloty 3.8730, koruna 24.6120, RUB 64.17, yen 120.35, sing 1.3995, HKD 7.7500, INR 65.26, China 6.3495, pesos 16.53, BRL 3.8434, Dollar Index 96.99, Oil $45.87, 10-year 2.14%, Silver $15.62, Platinum $994.91, Palladium $680.80, and Gold. $1,148.85

That’s it for today. OK. I told you earlier this week I was going to have some Halloween jokes for you today. These are some of my faves through the years. And if you don’t care for this, then that’s it, so I hope you have a great day!

Q. Why don’t sharks eat clowns?
A. Because they taste funny.

Q. What did one fly say to the other fly?
A. Your man is open.

Q: What is the difference between a school teacher and a train?
A: The teacher says spit your gum out and the train says “chew chew chew”.

Q: Why did the cross-eyed teacher lose her job?
A: Because she couldn’t control her pupils?

Q: What do you call someone who is afraid of Santa?
A: A Clausterphobic

Q: What sound do porcupines make when they kiss?
A: Ouch

Q: Did you hear the joke about the roof?
A: Never mind, it’s over your head!

Q: Why didn’t the skeleton go to the dance?
A: Because he had no-body to go with.

Q: What do prisoners use to call each other?
A: Cell phones.

Q: Did you hear about the hairdresser?
A: She dyed.

Q: Did you hear about the Italian chef that died?
A: He pasta way.

Q: What do you call a very religious person that sleep walks?
A: a Roman Catholic

Now when one of your Trick-or-Treaters gives you one those lame jokes you can come back with one of your own! And here’s my all-time fave. now you may think it’s R-rated at first, but you have to finish the joke.

Q. What do you do with an Elephant that has three balls?
A. you walk him and pitch to the giraffe.

And with that, I’ll get off this bus today, and send you on your way to a Fantastico Friday, and hopefully a rain-free Halloween! Bye!

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