China’s PMI Beats Expectations!

Good day…

and a Happy Friday to one and all! I’m so ticked off right now that I could spit! I had written the whole letter this morning, and was ready to hit send, when it locked up, and told me it wasn’t responding, then my whole letter, vanished! Gone! I cursed a few words, threw something, and then realized that none of that was going to help me, for I had to sit down and rewrite the letter! So, in the original this morning I talked about how this year is the 50th anniversary of the Beatles iconic rock album: Sgt. Pepper’s Lonely Hearts Club Band, and the reason I mentioned that is because I was greeted this morning with two back-to-back songs from the album… She’s Leaving Home, and When I’m 64…

I also mentioned that in my next weekly article for the Dow Theory Letters website (www.dowtheoryletters.com) I talk bit about the 50th anniversary of the Summer of Love… Hippies on the corner of Haight and Ashbury in San Francisco and Sgt. Pepper’s was the soundtrack of their summer!

Well, the 3-day drop in the Dollar Index was stopped overnight, as the euro backed off its assault on the last line of defense of 1.1428, when their latest CPI for the Eurozone came in weaker than the previous month. Eurozone CPI for May was 1.3% VS 1.4% in April.  And with the traders perverse way they value currencies these days, that meant some profit taking was pushed on the euro.

Yesterday, I told you that the charts people has said that the last line of defense in the euro was 1.1428, and after that level was taken out, the next stop was 1.17… Well, the euro traded to 1.1435 yesterday afternoon, but that didn’t last long, and so I would have to say that the level wasn’t really taken out, yet, that is… I do fully expect it to be taken out, as I keep saying the sentiment toward the euro has changed, and traders are changing from dollars to euros…

Overnight, China printed a better than expected PMI (manufacturing index) and that has ramifications toward the Global Growth revival, the antipodean currencies, and the Chinese renminbi. The renminbi was allowed to appreciate near the max for one day’s move, and that has the renminbi among the best performing currencies overnight, and it’s not often I get to say that!

And the antipodean currencies of Australia and New Zealand, A$’s and kiwi respectively, were already firmly on the rally tracks, but this data from China has helped propel them further down the tracks! I’ve been impressed with these two, after seeing a drop and breather in their recent rally a couple of days ago, and I said that they needed to get off the canvas and get back to rallying, and that’s exactly what they’ve done!

The price of Oil continues its mini-rally, and is trading firmly within the $45 handle this morning. The weekly supplies report that printed on Wednesday did show that supplies had eased, and that was huge for the price of Oil, as the main contributor of its drop in price was the supply glut of Oil.

The Petrol Currencies are loving this mini-rally in Oil, and the fact that the Dollar Index is falling like a rock… And the Russian ruble was able to participate in the rally overnight. Yesterday, I had told you that the ruble wasn’t participating in the rally, but that got corrected overnight…

A Petrol Currency that is participating is the Canadian dollar / loonie… Some of you who were reading my posts to the website (www.dailypfennig.com) will recall me saying about 10 days ago that loonie traders were scratching their collective heads trying to figure out what was moving the loonie stronger. Well they don’t have to scratch any longer, as the min-rally in Oil, the Dollar index Drop, and the fact that Bank of Canada (BOC) Gov. Poloz actually mentioned that he was considering a rate hike, has really pushed the loonie to higher ground!

I have some friends from Canada that spend their winters in S. Florida, like I do. We’re condo neighbors. And last winter they were lamenting the weak loonie, which back then was about 70-cents, and each day I would report that the loonie was getting better, and by the time winter was over, the loonie was 72-cents… I wonder what they think of 77-cents now!

Of course 77-cents is not parity with the dollar, where the loonie traded a few years ago… But you have to step on each rung of a ladder to reach the roof, and the same goes for the loonie…

I don’t know if you’ve noticed or not, but the Swiss franc and Japanese yen haven’t been on many traders’ minds lately, except to sell them. That’s because everything is beautiful according to the Janet Yellen, and so there’s no need for “safe havens”…

Today, we’ll finally get another piece of “real economic data”… Personal Income and Spending will print today, with the Spending piece the one that really tells us the pulse of the economy, and like I’ve said I do expect that the Spending data will show a deep drop from the April print of .04…

Gold lost another $3.40 yesterday to close at 1.245.40, and is down another $3 in the early morning trading… I have to keep reminding myself that it’s summer…  Traditionally, the metals get the “summer doldrums” and trade like that during the summer… But the Dollar Index has seen 3 days of dropping like a rock, and usually that gives Gold a boost, but not this time, and the reason is, no wait, Chuck, don’t go there, just keep repeating, It’s the summer doldrums, over and over and over again…

I do want to point out that the physical demand by Central Banks continues to be off the charts! But this physical demand isn’t driving the price of Gold right now, the short Gold paper trades are…

At this point, I’m sure I had other things I talked about this morning, but don’t recall them right now, so I’m sorry, but rewriting something you just finished isn’t as fun as a barrel of monkeys…

Before I head to the Big Finish today, I HAVE to show you this… Simon Black is a financial newsletter writer that I follow regularly, and yesterday he was reporting that there’s a new Bill being introduced on the floor of the Senate and is titled: Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017…

This is getting pretty crazy folks… I can’t believe the people we send to Washington would come up with this stuff! But then when they meet us in their town halls, they don’t tell us what they have up their sleeves… Because they would be run out of town if they did! So, I suggest you look into this bill and then call or write your senators and tell them to stop this lunacy! Because there’s nothing new in money laundering that would need additional regulations. There’s nothing new in terrorist financing that would need additional regulations… And then there’s the counterfeiting… You don’t think they’re talking about the cryptocurrencies do you? I do!

And on top of that, there’s also a caveat in the bill that, well, I’ll let Simon Black tell you, because if I typed it out, I would get sick to my stomach… “Among the bill’s sweeping provisions, the government aims to greatly extend its authority to seize your assets through “Civil Asset Forfeiture”.

Civil Asset Forfeiture rules allow the government to take whatever they want from you, without a trial or any due process.

This new bill adds a laundry list of offenses for which they can legally seize your assets… all of which pertain to money laundering and other financial crimes.

Here’s the thing, though: they’ve also vastly expanded on the definition of such ‘financial crimes’, including failure to fill out a form if you happen to be transporting more than $10,000 worth of ‘monetary instruments’.” – Simon Black

Oh woe is me… and yesterday I asked the question about whether or not Americans were feeling as though their freedoms and liberties were being taken away from them… Had I seen this before I asked that question, I certainly wouldn’t have had to ask the question now would I?

To recap… The drop in the Dollar Index has held up for a breather overnight, after 3 days of dropping like a rock! Eurozone CPI was 1.3% VS 1.4% previously, and that brought the euro back from its high yesterday of 1.1435 to hang around the 1.14 figure this morning, but that could change once the U.S. data prints today. China posted a better than expected PMI for May, and that gave the renminbi, A$, and kiwi all a good reason to rally on the night!

I had a great For What It’s Worth article for you from Bloomberg, that highlighted how Goldman Sachs Commodity Analysts were asking the question of “how did we get this so wrong?” when talking about their call for Commodities to rally this year..  But it’s gone now, and I really don’t have time to find another one!   So… there you go! The article is here: https://www.bloomberg.com/news/articles/2017-06-29/goldman-s-commodity-analysts-ask-how-did-we-get-it-so-wrong

Currencies today 6/30/17… American Style: A$ .7684, kiwi .7328, C$ .7705, euro 1.1405, sterling 1.2969, Swiss $.9589, …. European Style: rand 13.0760, krone 8.3934, SEK 8.4537 (krona is catching up with krone!) HUF 271.16, zloty 3.7073, koruna 23.0174, RUB 59.21, yen 111.98, sing 1.3765, HKD 7.8050, INR 64.69, China 6.7832, peso 18.03, BRL 3.2890, Dollar Index 95.77, Oil $45.31, 10-year 2.38% (this yield has gained .22 in the past week… somethings going on here) Silver $16.59, Platinum $921.46, Palladium $841.76, and Gold… $1,242.50

That’s it for today…  well the bats came alive yesterday in the desert, so no 9th inning drama, as the Cardinals took 2 of 3 and should have swept, the D-Backs… OH! I have an announcement this morning… So get out your #2 pencils and a piece of paper and write this down… Chuck Butler is now on Twitter @ #ChuckOButlerjr go find me, click on follow, and from here on out, I’ll be sending out tweets during the day regarding intra-day moves in the markets… So, you can get it there first, before it hits the Pfennig the next day! I don’t promise to send out something daily, but every now and then when something happens mid-day that makes sense that people know about… Just another free service from me…   The Blue Jays (former members of the Moody Blues) takes us to the finish line today with their song: Saved By The Music…   Which is what it did for me, this morning after having to rewrite the letter! UGH   I hope you have a Fantastico Friday and Be Good To Yourself!

Chuck Butler

 

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