Changing When To Whether.

* Currencies are flat this morning.
* Gold gets whacked again! .
* German ZEW prints strong!
* Smells like Negative Rates to me! .

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

Good Day. And a Wonderful Wednesday to you! Well, it was nice to return home yesterday, and find that the A/C was fixed and we were back in the cool zone! Crosby and Nash greet me this morning with their song to save the whales: Wind on the Water. I saw these two iconic rock performers at the Mississippi River Festival many years ago, with seats in the first 5 rows! And the first two games in Chicago at historic Wrigley Field for my Beloved Cardinals have gone their way, one more today, and it’s a day game! We’re all just waiting for the results of the BREXIT vote.. I heard a different take on this yesterday.. Instead of BREXIT, we could end up with BREMAIN! HA!

There’s a calm in the markets this morning that began overnight, mainly because there were no new BREXIT polls. I’m almost afraid to fire up the laptop on Friday morning though. The trading could be wild and crazy, and you won’t want to get caught up in all of that, should it come to fruition. I actually read one writer’s description for what could come in the overnight markets and early morning Friday trading, and he called it a “Trading Bonanza”.. I prefer to call it wild and crazy. Or we could wake up on Friday morning to find that all is calm and we can go back to sleep, which is what I wish I could do right now!

The other reason the markets are quite calm this morning is that Fed Chair Janet Yellen didn’t throw any cats among the pigeons yesterday with her talk to lawmakers over in the Senate. She will repeat her talk today over in the House, and since she’s going to talk about the same things she talked about yesterday, their won’t be any surprises here. But, she will hold a Q&A press conference afterward, and this is the only chance for a surprise quote or statement.

So, what did Janet Yellen have to say yesterday? Fed Chair Janet Yellen gave the first of her back-to-back, belly-to-belly, I don’t give a dang ’cause I’m stone dead already, back-to-back, belly-to-bell, the zombie jamboree, talks to lawmakers about the status of the economy. And she did make a subtle little change to her outlook less than a week ago. See if you can pick out what I did here. Yellen said that she and her colleagues were on watch for whether, rather than when, the U.S. economy would show clear signs of improvement. Did you see what she did? She was very sly, and tried to slip that in, but she said that the Fed members are now wondering if the economy is going to grow, rather than thinking that it would be growing by now. Do you think she’s a Pfennig Reader? Did she get my message the other day that there’s a BIG difference between hoping something will happen, and knowing it will happen? Sure looks like it to me! And so that’s all I need! I’m going to say, that Janet Yellen listened to me, and took my advice! HAHAHAHAHA!

She went on and on about other stuff, but this was the important part if you ask me. And her comments plays well in the sandbox with the Bullard remarks the other day. So, the question is simply. Has the Fed finally realized that all their ZIRP, QE, and additional money printing hasn’t turned the economy around? It sure appears that way to me! How about you?

Ok, enough on all of that! The euro got whacked yesterday, and I went searching for answers, because the euro traders sure weren’t in any mood to get excited by a surprisingly good ZEW report on Expectations and current situations in Germany yesterday. Yes, the economic expectations for Germany, the Eurozone’s largest economy, and Current Situation easily beat the consensus for the two indexes. The expectations beat the consensus of 4.8 with a print of 19.2, and Current Situation beat the consensus of 53, with a print of 54.5. Both give an indication that not only are German consumers and investors happy with what’s going on now, but also with what’s expected the next 6 months.

But I think the BREXIT fears got to the euro yesterday. Recall I told you that should the BREXIT vote win, the euro & sterling will most likely get sold like funnel cakes at a State Fair. But to reiterate what I said yesterday, I don’t believe that , in the end, Britain will leave the EU. So, all these “BREXIT fears” are really not worth their time and effort. A dear reader on the Pfennig Web site: sent me a note and told me of another story regarding a public vote / referendum, and the voice of the voters were ignored by the Gov’t. He told me of a vote for casinos that was defeated, the voted again, and defeated, and finally passed. I just shake my head in disgust over this stuff..

It reminds me a story that John Williams over at Shadow Stats ( ) tells of President Lyndon B. Johnson (LBJ) and how he was known to receive GDP reports and if he didn’t like what he saw, he sent them back, and this went on until he received a report that he liked. Now, I don’t know if that really happened, but John Williams said it did, so I’ll go with that.

Japanese yen remains well bid in the 104 handle level. Again, I just don’t see it. (my wife claims I can’t see anything so it would not be any news to her! HAHAHAHA!) Dear Readers Bob sent me a note from where they point out that Japanese exports fell 11.3% in May, Vs a year ago, which marked the 8th consecutive month that exports have fallen according to Bloomberg. I told you yesterday that the IMF said that Japan needed to reload Abenomics. I would like to take this time to point out that Central Banks are completely out of control, and now the IMF is telling Japan that they should penalize companies that make money if they don’t raise wages by 3%… I love the comment on this, they said, “If central planning hadn’t jumped the shark tank a long time ago, we’d submit that this would be that point”.

I’ve always loved using that phrase, “jumping the shark tank” , and it always reminds me of where it came from. Remember “The Fonz”? Heavens to Murgatroid spellchecker didn’t like the Fonz! I wonder if it will like: Gee Whillikers? Or Jumping Jehoshaphat? No.. I had to tell it to accept those words that are long gone from our vocabulary. Like when was the last time you heard someone say they drove a “jalopy”? Or that someone was a nincompoop? Or said the phrase, “Not for all the tea in China”?

The price of Oil jumped up to $50 again in the past 24 hours. The Russian ruble is the only Petrol Currency taking advantage of this Oil price jump. I was about to talk about the Russian economic sanctions, and then I recalled that I talked about them yesterday! UGH! But a dear reader tells me that he’s reading a note about how France would like to drop the sanctions on Russia. That’s a start!

Everyone sees the closing price of Gold yesterday and sees it lost $22 on the day. But what that doesn’t show you is that at one time during the day Gold was up to $1,297.40, but then got whacked down to close at $1,267.70. I get it, BREXIT is losing momentum, and Gold needs to back out some of the gains from BREXIT fears, but that much? I did warn you the other day though, that the price manipulators could see this orderly unwinding of BREXIT fears trades, and make it very unorderly! And so the realization of that thought comes around.

Oh, well, I always look at these whackings by the price manipulators as opportunities to buy cheaper than it was previous to the whacking. Buy on the dips, is my thing, especially when it comes to Gold & Silver.

Before I go the Big Finish today, I have one more thing from Janet Yellen’s testimony yesterday. In the Q&A session following the testimony, Yellen was asked whether the Fed has concluded if it has the legal authority to pursue negative interest rates. This came about because back in February when Japan implemented negative rates, many in the investment world thought the Fed may not have the legal basis to pursue negative rates. Why? Because in a FED memo from August 2010, the Fed explicitly said “that it may not have the legal authority to set negative interest rates in the U.S”

So, now skip ahead to yesterday and when Yellen was asked the above question, she responded. “We do have legal basis to pursue negative rates”. OK. I was never a whiz at math, not like my two sons, but I can put two and two together. And the two I’m putting together here is: The Fed changing their wording to whether the economy will show significant strength, from when it would show significant strength. And her quick and firm response that the Fed does have the legal basis to pursue negative rates… I know, this smells a lot like conspiracy, and I say that’s just throwing you off the scent of what I’ve been saying for months now, and that is that the Fed will have to reverse any rate hikes made.

The U.S. Data Cupboard is still lacking any real data, with the latest Existing Home Sales report the only thing on the docket besides the Yellen testimony, and a speech by Fed member Stanley Fischer. We begin to slowly get back on the Data Cupboard horse tomorrow, but I think most of that stuff will be overlooked as everyone’s focus will be on the BREXIT exit polls. Yes, tomorrow is the date the referendum will take place.

To recap. the markets are calm today ahead of the BREXIT referendum tomorrow, and no data to give direction. The euro got whacked yesterday in the face of a surprisingly strong ZEW report, due to BREXIT fears. Again, I’ll rinse and repeat, I don’t think Britain is going to leave the EU. So, all these BREXIT fears are a waste of time and effort. Japanese yen is still well bid in the 104 level. Yellen’s testimony to the Senate yesterday brought about a subtle little change in her stance from less than a week ago, and now she admits that the Fed members are now watching for “whether” rather than “when” the U.S. economy would show clear signs of improvement. She also mentioned that the Fed did have the legal basis to pursue negative interest rates.

For What It’s Worth. I mentioned above that France was wanting to drop the sanctions on Russia, and then Ed Steer had an article in his letter this morning from Reuters, that talks about that very thing! You can read the whole article here:

Or Here’s your snippet: “As the European Union squabbled over refugees, Greek bailouts and austerity in past years, it showed striking unity in another area: its resolve to punish Russia for the annexation of Crimea and support of separatists in eastern Ukraine.

That consensus was possible because German Chancellor Angela Merkel was able to keep Russia-friendly members of her own government on-side and convince skeptical EU states like Slovakia, Hungary and Italy to back extensions of the bloc’s economic and financial sanctions against Moscow.

Another six month extension seems likely to be agreed on Tuesday. But that cannot hide the fact that the mood in Berlin is shifting. And with that shift, the first real cracks are emerging in the European consensus on how to deal with Russian President Vladimir Putin.

Chuck again. I’m not convinced that German Chancellor Angela Merkel is behind any removal of the sanctions on Russia, but if the Russia-friendly countries in the EU could amount a strong enough push, maybe this could come to an end.

Currencies today 6/22/16.American Style: A$ .7499, kiwi .7170, C$ .7830, euro 1.1295, sterling 1.4685, Swiss $1.0432, . European Style: rand 14.6905, krone 8.2863, SEK 8.26, forint 278.86, zloty 3.88, koruna 23.9715, RUB 63.98, yen 104.63, sing 1.34, HKD 7.7574, INR 67.45, China 6.5779, peso 18.65, BRL 3.4133, Dollar Index 93.75, Oil $50.16, 10-year 1.70%, Silver $17.23, Platinum $982.50, Palladium $556.63, and Gold. $1,268.10

That’s it for today. I had a nice visit yesterday from good friend, and the retirementor, Dennis Miller. Thanks to Dennis for making the drive to St. Louis from Indiana! Cardinals lose every game they played at home last week, and then go on the road and win the first two in Chicago. strange year for the birds. Maybe they can put it together, and then maybe they won’t! Little Braden was at the house yesterday when I got home, and wanted to play, but I had to take a nap right then, right there, and when I awoke, he was gone. Going back to the 80’s this morning, with Modern English, who sends us to the finish line with their song: I Melt With You. Sorry for the late delivery this morning, I had difficulty getting prices. Tomorrow is BREXIT referendum day. So get ready for that, and be on your way to a Wonderful Wednesday. Be Good To Yourself!

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