Eurozone 1st QTR GDP Beats U.S. and U.K.!

* A$ gets a life from Hedge Funds & Strategists.
* Euro leads currencies higher VS dollar.
* Wheeler tries to deep six kiwi.
* Chinese Retail Sales grow 10%!

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

Good day.. And a Wonderful Wednesday to you! Well, once again this morning, I’ve arrived later than usual, not by much, but what makes things worse for me, is that I begin to go through my email, and start to reply to emails, and then I remember, “Chuck, you dolt!, you’re supposed to be getting things together to write a letter this morning, the email can wait!” The Beach Boys are serenading me this morning with their song: I Get Around. Talk about a song that will get the blood flowing, and the fingers typing away!

Front and Center this morning, we have the Eurozone 1st QTR Flash GDP print, and it was better than expected! For the first time since the first half of 2010, all four of the Eurozone’s largest economies recorded growth, and for the first time since the first QTR of 2011, the Eurozone’s economy grew at a faster pace than both the U.S. and the U.K.! Now that sounds pretty good, eh? Well, for those of you keeping score at home, you might want to record this one. On an annualized basis, the Eurozone economy grew at 1.6% in the 1st QTR. And the euro is on the rally tracks this morning. Ahem. Chuck, you might want to tell your dear readers that while the euro is on the rally tracks this morning, that the rally isn’t really moving down the tracks very far right now. Oh! Yes! Of course I was going to go there, what makes you think I wasn’t going to go there, I was going to go there! HA! And the euro’s value has fallen from where it was when I first turned on the currency screens this morning. UGH!

The Aussie dollar (A$) is up about ½-cent this morning in a good move forward. The A$ is getting some love this morning, from the news that Hedge Funds erased bets on the A$ decline, and strategists boosted forecasts for the A$ for the first time in months! All this followed the statement by the Reserve Bank of Australia (RBA) last week, where they didn’t mention whether they would keep cutting rates or not. I guess the Hedge Funds and Strategists, read something into this “omission” by the RBA last week. Seems sketchy to me, but the results are that the A$ is back above 80-cents this morning.

Australia’s kissin’ Cousin across the Tasman, New Zealand, saw their central bank the Reserve Bank of New Zealand (RBNZ) print their Financial Stability Review (FSR) , and failed to repeat something that has been in their communiques for some time now. That the “level of the New Zealand dollar/ kiwi is unjustified. And kiwi took off for higher ground, only to see a roadblock in the form of RBNZ Gov. Wheeler, who I reminded you yesterday, never missed an opportunity to deep six kiwi. Wheeler decided when the politicians were around to pull that rabbit out of his hat, and tell them that the current level of kiwi is unjustified. And that took the wind out of kiwi’s sails, but not all of it, and the currency is still sitting with a ¾-cent gain this morning.

Both Norway and Sweden are seeing their currencies rally side-by-side this morning, lock step with each other.. Sweden will print their latest inflation number today, and the expectations are that it will show a small up-tick. And in Norway, the price of Oil has jumped higher again. WTI Oil is above $61 this morning, and Brent Oil is higher too. There are some interesting thoughts going around about Oil and I think this is a good place to get off the bus, sit on the bench, and discuss them.

Seems to me that the price of Oil is in a pickle as my grandma used to say to describe a tough situation. The price of Oil rallies on news that production and supplies are falling, but if it rallies too much, it spurs more production and that brings the price of Oil back down. Right now, the stockpiles of Oil are falling. Last week at Cushing, OK, the delivery point for WTI contracts and the largest Oil-storage hub in the U.S., stockpiles fell by 827,000 Barrels. So, I talked about our latest poll on the price of Oil, and what OPEC had to say about the future price of Oil. So, this really has be thinking that Oil has nowhere to run with regards to its price. Sure it can rally, but only be brought back down when the rising price spurs new production.

The Chinese renminbi / yuan was back on the appreciation tracks last night, after being derailed for one night. Chinese Retail Sales for April rose 10% Year on year, and Industrial Production rose 5.9% YOY. Both missed expectations by a small amount, but where strong nonetheless, thus allowing the Peoples Bank of China (PBOC) to put the renminbi back on the rally tracks.

I had a dear reader send me a note yesterday, asking me to do a piece on what will happen to the currencies when the IMF announces that the renminbi is a part of their SDR’s in October. Well, no one knows for certain what will happen to the currencies, but looking at it from the cheap seats where I sit, I would think that first, the renminbi would strengthen because at that point the renminbi should be floating. And all the Countries that belong to the IMF Club, Lucy! How many times do I have to tell you that you can’t go to the Club! No wait! You should have been here with me, as I broke into my best Ricky Ricardo voice. HA! But getting back to the serious stuff, the countries that belong to Club IMF, would have to adjust their holdings of SDR’s and buy renminbi, and sell, dollars, yen, euros and pounds. And far as the rest of the world’s investors, the psychological advantage for the renminbi would be HUGE! They would / should see this inclusion by the IMF as a sign that China is now considered to be on par with the U.S., and so on. I would think that would be good for the currencies. and Gold, which by the way we’ll probably find out for sure exactly how much Gold the Chinese have after all this, as I’m sure the Chinese will be more than happy to lay out all their Gold on that Olympic stadium floor, and invite the IMF to come and see it. I’m still betting that free undercoating that the Chinese will show more than 14,000 tonnes of Gold, when the time comes..

And Gold, is basically flat this morning, but up a buck or two in early morning trading. So, all three of the anti-dollar assets are showing gains VS the dollar this morning. Gold, Oil and the euro. I received a communiqué from the GATA folks last night, and in it they highlighted a guy that was ripping, what sounded like me, but the GATA folks took it personally. Let me tell you what the guy from said. “”The gold ‘permabulls’ have cost their followers a lot of money over the past 15 years. We all know who they are. Gold is supposed to go up every single day or it’s ‘proof’ of a conspiracy of the evil bullion banks that manipulate gold at every turn. … Gold, silver, and resource stocks are markets like all others” – Bob Moriarty

Well, I understand why he might think that, but let me take this from my point of view, if in fact he was pointing that at me, which I doubt, but just in case. I never, ever, even in my wildest dreams, said that I thought Gold should go up every single day and when it doesn’t it’s proof that the price manipulators are working overtime! I will point out from time to time when it appears that Gold has gotten whacked for no good reason. But it’s a commodity, it gets bought and sold just like all commodities, so it will go up and down. But what drives those buys and sells should be fundamentals, and when fundamentals are thrown to the side of the road, I have to point that out. So there!

The U.S. Data Cupboard has the Big Kahuna, Retail Sales for April this morning. I’ve already told you the last two days that the BHI indicates this print will be disappointing. And if that happens, where it’s a glaring disappointment, the dollar could be in for a long day. But what most likely will happen is that the report will be disappointing, but not by much, and prove nothing more than the fact that our economy just continues to wallow in the mud. Getting out of the mud to wash off every now and then, but getting right back in the mud.

There’s also Business Inventories to look at, and Import Prices. But neither of these are going to shake the tree today, so let’s just move along for these are not the droids we’re looking for..

To recap. It’s Retail Sales day for the Data Cupboard here in the U.S. but overnight, China’s Retail Sales grew 10% in April. I don’t think the U.S. Retail Sales will be anywhere close to that, as I expect the report to be disappointing. How disappointing will determine if it’s a long day for the dollar today. Aussie and N.Z. currencies are the best performers overnight, with kiwi even gaining in the face of an attempt to deep six it by RBNZ Gov. Wheeler. Norwegian and Swedish currencies are rallying in lock step with each other this morning, as Sweden’s inflation is expected to see an up-tick, and the price of Oil jumped back above $61 overnight, giving Norway some wind for its sails. The euro is a bit stronger this morning on some good 1st QTR GDP flash prints. And Gold is flat to up a buck or two, and Chuck responds to what he feels was an attack on him, but was probably directed to the folks at GATA..

Before I head to the Big Finish, I wanted to mention that the saber rattling is about to start between China and the U.S. folks, and I don’t like this one bit. It appears that the U.S. is considering using aircraft and Navy ships to directly contest Chinese territorial claims in the China Sea. And the Chinese immediately responded, saying, “Do you think we would support that move? We are severely concerned about relevant remarks made by the American side. We believe the American side needs to make clarification on that.” YIKES. did we step in a pile of dog doo here? I hope not!

For What It’s Worth. Once again, dear reader Bob G. has my attention this morning with a link he sent me to an article on regarding the number of Americans unemployed. Want to take a guess at how many Americans are Unemployed right now? Well, if you said, 93,194,000 you would be the winner of a year’s worth of Pfennigs! You can read the whole article here:

Or I have some snippets for you. “While the Obama administration was celebrating a 0.1% drop in the unemployment rate, the number of Americans not in the workforce clocks in at a staggering 93,194,000 – which is an all-time high, or low, depending on how you look at it.

The unemployment rate currently sits at 5.4%, according to jobs data released Friday by the Bureau of Labor Statistics. The participation rate, on the other hand, is just 62.8%.

The participation rate rose from 62.7% in March, which matches the lowest it has been since 1977. The gain was paced by 45-to-64 year-old Americans returning to the work force.

House Speaker John Boehner said the new figures prove that improvements to the economy are still necessary.

“While the economy continues to show some signs of improvement, too many middle-class families are struggling just to get by,” the Republican from Ohio said. “Too many Americans remain out of work, and too many are working harder only to lose ground to stagnant wages and rising costs. We can do better.”

Chuck again. You bet your sweet bippie we can do better! Unfortunately, we as a country wear rose colored glasses at all times, and prefer to listen to the cable news that highlights the Gov. and the Fed telling us that everything is OK. And one more thing that really highlights how dreadful this all is: According to the BLS (Bureau of Labor Statistics) “no one works in nearly 20% of U.S. Families. YIKES!

Currencies today 5/13/15. American Style: A$ .8050, kiwi .7460, C$ .8355, euro 1.1240, sterling 1.5645, Swiss $1.0785, . European Style: rand 11.9560, krone 7.4325, SEK 8.2950, forint 273.10, zloty 3.6345, koruna 24.3970, RUB 49.54, yen 119.70, sing 1.3285, HKD 7.7525, INR 64.00, China 6.1123, pesos 15.26, BRL 3.0190, Dollar Index 94.44, Oil $61.40, 10-year 2.23%, Silver $16.79, Platinum $1,138.35, Palladium $789.00, and Gold. $1,197.64

That’s it for today. Tuesday I did a no-no. I got home, relaxed in my recliner and began to read a book so I could stay awake for an interview I had in an hour. I fell asleep, and slept right through the interview time. UGH! When I attempted to apologize the next day, I was told that there was a confusion in the calling numbers anyway. Whew! I sure didn’t want to tick off the guy calling to do the interview! Another major earthquake in Nepal, and an Amtrak train derailment in Philly, are all over the news this morning. That train derailment looks nasty. An nice win last night for my beloved Cardinals in Cleveland, home of the Rock and Roll Hall of Fame! One of my favorite XM stations is Classic Vinyl, which comes from the Alan Freed Studio in the Rock & Roll HOF. Other faves are 60’s on 6, 70’s on 7 (when they are not playing disco), the Bridge, Deep Tracks, Lithium, and 1st Wave. XM radio was made for someone like me, that doesn’t want to hear people talk on the radio when I’m driving, I only want to hear music! Bob Seeger is singing his song: Turn the Page on the iPod. The live version, which I prefer with this artist. I just heard that it’s our colleague Aaron Stevenson’s Birthday. Happy Birthday Aaron! Alrighty then, I had better get out of your hair for today, and hope you have a Wonderful Wednesday!

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