Chuck Butler’s: It’s A FOMC Day!

Chuck Butler’s: A Pfennig For Your Thoughts

December 13, 2017

* What will Yellen say today?
* Dollar backs off for a day…
* Chuck wants to be a reporter?

Good Day… And a Wonderful Wednesday to you! Well, looky here! The Pfennig at the normal time! YAHOO! Well, close to normal time that is… I figured that since this is the last Pfennig this week, that I had better get it out closer to normal time, to leave that thought on your mind as we go to the weekend.. HA! Yes, tomorrow is an infusion day, and it’s scheduled quite early in the morning, so no Pfennig tomorrow or Friday, on infusion confusion day… Tyrone Davis greets me this morning with his song: Can I Change My Mind…

The Fed members will put away the board games today and get down to brass tacks regarding the rate hike that everyone and their brother expects this afternoon. I would think that the rate hike is already all price in, but what isn’t priced in is the press conference that outgoing Fed Chair, Janet Yellen will hold following the rate announcement…

Man would I love to be a member of the press that got to cover the press conference, as I would be the only one brave enough to stand up and ask her, “Why did you think it was prudent to hike rates again when your inflation target hasn’t been met, and the country is in peril regarding the possibility of a government shutdown next week?” I would then sit down and probably hear her say…

“thank you for your questions, but we continue to see inflation rising and want to be ahead of the curve with these rate hikes. And the Fed can’t be held hostage by what the lawmakers do or don’t do, they’ve made life difficult for Fed members with their deficit spending, but have you ever heard us complain?” And the markets would all give her a standing ovation, because, well, they are star struck with the Fed… And I would just sit there shaking my head in disbelief of this scenario…

OK, let’s get back to reality here… The dollar has taken another breather, and the currencies were able to hold steady Eddie, albeit at lower levels yesterday, and through the overnight markets… And that’s the reason I believe the Fed rate hike is all priced in… But if Yellen decides to go all hawkish in her last press conference as Fed Chair, and talk about multiple rate hikes in 2018, the dollar could very easily get back on the rally horse this afternoon…

The European Central Bank (ECB) meets tomorrow, and I really think that soon the focus on Central Bank meetings is going to shift to the ECB meetings, for in 2018, there will be major moves in monetary policy coming from the ECB, as the Eurozone economy continues to improve for all parties and not just for Germany. In the FWIW section today, I have a Bloomberg article about why the Big Banks are calling for another bad year for the dollar, based on this thought about the ECB and the Eurozone economy… So, you won’t want to miss that!

The other three Central Banks that I told you on Monday would meet this week, the Bank of England (BOE), Norway’s Norges Bank, and the Bank of Japan (BOJ) will follow the ECB’s lead tomorrow and let everyone know that they too are remaining steady Eddie with their policies for now… As I said on Monday the wild card here is the ECB, as ECB President Draghi could either go all RAMBO on us with hawkish talk about monetary policy, or he would be a real lamb, and talk about the need to keep things steady Eddie just a bit longer, which is what I think he’ll do…

The antipodean currencies of Australia and New Zealand always seem to be able to carve out some small gains whenever the dollar backs off and yesterday was no different for the two. Makes you get all warm and fuzzy inside thinking about how these two could potentially take off for higher ground when the strong dollar trend finally gives up…

I saw and article yesterday that Lola aka Goldman Sachs were really touting commodities… That pretty much tells you that commodities will rally, given that whatever Lola wants, Lola gets, right? Hey! I have no problems with this call by Lola, for I too believe that commodities are gearing up for a nice bull run in 2018, as inflation returns to the countries of the world… Shoot Rudy! We might even see inflation rise in Japan in 2018! Now that would be something to see, right

Well, Gold didn’t lose ground yesterday, and the shiny metal had that going for it… My friend, Ed Steer, continues to have website troubles, but for those of us who paid attention to my calls in the past and signed up with Ed Steer, you get his daily email and don’t need to go to the website! Well, I very rarely quote Ed, so I thought for today’s discussion on Gold, his thoughts this morning would be great! So, here’s Ed! “Gold finished the Tuesday session in New York at $1,244.00 spot — and up $2.40 on the day. For the second day in a row we’ve had either a new intraday low set, or new low close for this move down — and net volume has been relatively quiet. That was the case again yesterday, as it checked in at something under 206,000 contracts.” – Ed

The U.S. Data Cupboard had the November PPI (wholesale inflation) which I told you yesterday that I thought we would see a rise in, and we did as Nov. PPI printed at 0.4%, the fastest monthly rise in a month of Sundays. The Federal Budget / Deficit was greater than expected… What else is new? And now we’re going to pass a tax bill that adds $1.8 Trillion to the national debt? When will all this madness stop? Oh, I know the answer, please call on me Mr. Kotter

Today’s Data Cupboard has the stupid CPI and of course the FOMC rate announcement this afternoon… I love it though, that the stupid CPI will print this morning, and show inflation below the Fed’s target rate, and then this afternoon the Fed will ignore that, and hike rates…

To recap… It’s all about the Fed rate announcement this afternoon, and the press conference that will follow the rate announcement… What will Janet Yellen say? The markets are waiting with anticipation like kids on Christmas Eve… The dollar has taken a breather, and it will all depend on what Yellen says that decides whether the dollar gets back on the rally horse this afternoon, or not…

For What It’s Worth… Well this was pre-billed above so with no further ado, here the article on Bloomberg regarding the dollar’s outlook for 2018… https://www.bloomberg.com/news/articles/2017-12-12/after-stunning-rout-traders-see-no-end-to-dollar-pain-in-2018

Or, here’s your snippet: “For the almighty dollar, 2017 has been nothing short of abysmal, 2018 might be even worse.”

Chuck again… Sorry but the cut-n-paste feature won’t work with Bloomberg articles, so you have to click on the link above to read the article… Crazy technology… Sometimes I wish things wouldn’t change…

Currencies today 12/13/17… American Style: A$ .7567, kiwi .6946, C$ .7777, euro 1.1740, sterling 1.3357, Swiss $1.0082, … European Style: rand 13.6193, krone 8.36, SEK 8.4433, forint 267.65, zloty 3.59, koruna 21.8410, RUB 58.99, yen 113.30, sing 1.3525, HKD 7.8058, INR 64.41, China 6.6189, peso 19.17, BRL 3.3096, Dollar Index 94.03, Oil $57.45, 10yr 2.41%, Silver $15.72, Platinum $876.06, Palladium $1,011.13, and Gold… $1,243.30

That’ it for today… and this week… Friday will mark my sister, Terri’s, birthday… December 15th, used to be the day each year that my dad would bring home the Christmas Tree… great memories! The injury bug has hit our Blues, and the names on the injured list are some of the best players we have, so it was not a surprise to see them lose last night… The St. Louis U Billikens stopped their losing streak with a win VS Murray State in basketball last night… Well… I’m halfway through the 6 weeks of this pain of antibiotics every 6 hours… I told someone that it was like having a baby in the house again, getting up every 3-4 hours… UGH! But, like I said I’m halfway through, so I’ve got that going for me! No college football this weekend, I guess I’ll have to switch to college basketball… The late, Great, Leon Russell takes us to the finish line today with his song: Back To The Island… Listen to that one, and you’ll fall in love with his music… And with that, I hope you have Wonderful Wednesday, and Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

1) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.

Chuck Butler recently joined the Aden Research Group, a research center led by writers and market analysts Pamela and Mary Anne Aden. The Aden Research Group publishes three newsletters:
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