Fed To Hold Closed Door Meeting Today.

* Williams talks rate hikes and spurs dollar rally!
* The dollar swings its mighty hammer.
* Eurozone flash PMI’s are encouraging!
* What are these currency traders thinking?

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

Good day. And a Marvelous Monday to you! Well, I’m going to skip the song stuff to start the day today, because I received an email with a link to an article on www.zerohedge.com which turns out to be quite the scary article. That is if you read the tea leaves like I try to do… Here you go. “The Fed is Going to Hold a Closed Door expedited meeting today”.

” It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 AM on Monday November 23, 2015, will be held under expedited procedures as set forth in section 26b.7 of the Board’s Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th Street and C Streets N.W. Washington D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting. 1. Review and determination by the Board of Governors of the advance and discount rates to be charged the Federal Reserve Banks. ”

WOW! So. one wonders just what the heck is going on here? Are the Fed members meeting to hike rates ahead of December, so it’s out of the way, and doesn’t ruin everyone’s Christmas? Could be. Or. Are they gathering everyone together to begin to get the stories straight, as to how they will announce to the markets on December 16th that they aren’t hiking rates? What’s it gonna be boys and girls?

So, that’s the news to start your day. Now let’s go back and review what happened on Friday. Nothing. absolutely nothing, say it again! Alrighty then, let’s move along, no reason for us to dawdle in the past!

Fed Member, Williams, spoke on Saturday, and told his audience how likely it is that the Fed will be hiking rates in December. (Maybe he didn’t get the memo about the closed door meeting today?) There’s no surprise here, as Williams is a hawk, and has wanted rates to go higher for some time now. He did also try to get the markets to understand that there will be no “mechanical path” to future rate hikes, so don’t listen to the Fed members. Really that’s about what he said! He told the audience that maybe everyone will finally see that the Fed is “data dependent”. Hmmm, Really? What, what? If that’s so, why the heck are you still talking about rate hikes?

But. I guess his words were enough to put the dollar front and center on the buying table this morning, as the dollar is swinging its mighty hammer and there isn’t a currency or metal in sight that is avoiding getting whacked by the dollar’s mighty hammer! OK, OK, I get it! The markets have heard enough Fed talk about a rate hike, that they have no other choice but to price the markets accordingly. Last week we stood at 66% priced in. Judging from today’s price action, I don’t see how we’re not 100% priced in! Or. Have the markets already decided that they aren’t going to listen to the Fed’s words about there “not being a mechanical path toward further rate hikes” and have gone all-in on future rate hikes?

Let’s step back a minute and think about that last question. Are they that mentally challenged that they don’t see what’s wrong with thinking the Fed is going to hike rates and then keep hiking them to be the only G-10 country with a rate hike cycle going full bore? The U.S.? We’re going to have rates at 5% when the rest of the world is already at zero, going to zero, or Lord have mercy, have negative rates! I just don’t see it working that way, and I think that if traders stopped for just a minute and thought about this like I do, then we would have a different price action today.

So, if the Fed is going to be so darn “data dependent” like Fed Member Williams said. They’ll get a kick out of this data. Last Thursday, The Baltic Dry Shipping Index fell to an all-time record low of 504. Not even during the darkest hours of the last financial meltdown, did this index drop this low. Think about that Fed Members! Now I don’t know about anyone else’s thoughts, I have problems corralling my own at times, but how can someone look at this data, which is a pulse of the Global Economy, and not think, “Oh My, the world’s economy is circling the bowl”? And our Central Bank is going to hike rates not because of the data, but because of them needing to prove to the markets that they can be trusted when they say they are going to do something.

OK, Chuck, move along here, before you go DEFCON 1! OK, I’ll be alright, here. Just gathering up some small things and heading back to do more reading. Thank you for coming today, you’ve been a great audience, and I’ll see you the next time I come to your town. Good bye!

Last week I kept highlighting a different currency each day as the “best performer” of the day, but with today’s price action, I have to do a 180, and tell you about the worst performer overnight. The Russian ruble. All last week the ruble was hitting singles and even a double here and there, a real solid #2 hitter. But that was last week, the dollar was getting sold on the thoughts that the rate hike was pretty much priced in, and there had been enough of that going on. But this week is different, or at least it’s starting out different after the Williams speech on Saturday. And when the dollar gets to swinging its mighty hammer, well, you don’t want to be a country that is bordering on recession, has economic sanctions held over its head like the Sword of Damocles, and has seen its #1 product’s price plummet in the past year. And that describes Russia and the ruble.

All this dollar strength today has me singing this song. So make way for the Cheater. Make way for the fool hearted clown. Make way for the Cheater, he’s going build you up, just to let you down. Alrighty then. no checking on Google, what band made that song famous, and here’s a hint, the band is from St. Louis!

Well, there’s nowhere to run, nowhere to hide, for the Chinese renminbi these days. It’s quite sad to watch this, once considered a ONE-WAY STREET by traders, currency fall on difficult times. I told you all already how I thought that China will use the devaluation of the renminbi as a tool to combat the Fed’s rate hike. As I look around, I see more and more of the BIG TIME analysts and hedge fund managers , names like David Tepper, and John Burbank, all jumping on the devaluation bandwagon. The difference here though, is that these Johnny-come-latelys, think that China is going to have to devalue their currency because of the hard landing their economy is going to take. I still don’t see the hard landing happening in China, and I still see the devaluation tool being used to combat the Fed’s rate hike.

Remember, I explained this, but let me do it again. China has strong export partners in the Eurozone and Japan, and China doesn’t want to see the currencies from those export partners dropping any more than they already have, but with a U.S. rate hike, they will most undoubtedly fall more in value, and what that does on the crosses is makes the renminbi too expensive to compete for export business. And China’s NOT going to let that happen!

The renminbi is going to be used as a tool, unfortunately. Which means we will see more and more renminbi weakness. Does that water down my thoughts on the renminbi being The currency in the future? No. not by one iota! But what it does do, is give investors an opportunity to buy at cheaper levels.

The Eurozone saw a flash PMI this morning for the region, and the print was very encouraging, in that the Manufacturing Index (PMI) rose to 52.8 from 52.3 the previous month. But even this encouraging data isn’t enough to offset being struck by the dollar’s mighty hammer, and the euro is once again looking vulnerable.

I was somewhat wrong above when I said that every currency was getting hit by the dollar’s mighty hammer. The Norwegian krone and Swedish krona have carved out some very tiny gains VS the dollar this morning. But hey! At least they aren’t succumbing to the dollar’s strength! The only thing I can see that’s helping the krone carve out a gain this morning, was the latest GDP forecast for 2015, which came in at 1.3%… Not too shabby for a country that depends on the sale of Oil.. eh? Compare that to the U.S. which you can’t really do, because the size of the countries are so different, but let’s not let that get in the way of this comparison. The U.S. 2015 GDP is running around 2%, but, let’s not forget that up to 3% of that number was added to the calculation last year, because no one liked what they were seeing from the old way of calculating GDP. So, me, being me, I like to take that 3% out, because it wasn’t that long ago, that the GDP Calculation included the 3%… So, taking out the 3% ,the U.S. growth is negative this year. Hmmm, Norway’s 1.3% figure doesn’t look so bad now, eh?

I told you on Friday last week that this week the U.S. Data Cupboard will be stocked to the edges with data prints, they want to get in before everyone packs up and leaves for grandma’s house on Wednesday. But today is not one of those days. Monday’s Data Cupboard has Existing Home Sales, and the Markit U.S. Manufacturing Index. I guess it will be interesting to see if Existing Home Sales for Rocktober plummet like the New Home Sales did.. (printed last week), and the Markit Manufacturing Index isn’t the National ISM report, but carries some weight, and I don’t expect to see anything, but a continuation of the drop in the index number.

Well, I do believe I’m beginning to sound like a broken record, scratched CD, or corrupted MP3, here. But here goes. The precious metals are down again today. Gold, which was down $9 earlier this morning is now down $6, and Silver, hit a 6-year low this morning, as it fell below $14 to $13.96, but has since recovered back to above $14. It’s all about the dollar and the rate hike folks. And price manipulation, but who needs that right now, when U.S. investors are selling their Gold, Silver, Platinum and Palladium like funnel cakes at a State Fair, because soon they are going to get paid for their money to be in a bank.

I’ve got new for these investors that have treated the precious metals like a rental. Just how long do you think the banks will take before they add interest to your deposits? I would wait-n-see if I were you. But then that’s just me, and the me I know wouldn’t be selling his precious metals!

To recap. it’s all about the dollar today folks. However, there was BIG News this weekend that the Fed is going to hold a closed door meeting this morning. What’s that about? Come on give us a clue, throw us a bone here! I would just say this. If everything is so peachy here in the U.S. this meeting had better be about how they want to hike rates ahead of the December meeting! Otherwise, Houston, we have a problem here. The dollar is swinging its mighty hammer this morning and it sure doesn’t pay to stand in the way, as the currencies, except krone and krona, are all taking hits from the dollar’s mighty hammer. Eurozone flash PMI’s were stronger and very encouraging, but not enough to outweigh the dollar’s move today.

For What It’s Worth. Well, did you hear about the changes to Social Security and Medicare that were in the Budget that was signed by the President about 10 days ago? You didn’t? Well, pull up a chair and let me tell you about some changes. First of all. Married couples are losing the File and Suspend option of Social Security. That’s where one spouse that was the higher earner, files but then suspends his payment so that their benefits will grow 8% per year, and they can get the higher benefit later in life, but while waiting, collect the spouse’s benefit. that option ends May, 2016, so you still have time to get in under the wire, if you so desire. And then there was a change to Medicare, that is tricky, but I’ll try to be clear here. 52% or 17 Million retirees, will receive a break and pay less starting next year. that’s pretty cool. But they will have to pay $3 a month to help pay off a loan the Gov’t gave to Medicare because it was out of money.

Hmmm. Tell me how that works. Out of money, but drop the premiums.. Oh, and here’s the one thing I wanted to really talk about. The Social Security Disability trust was on pace to run out money next year and, as a result, millions of Americans were going to receive an automatic 19% reduction in their disability benefits in the fourth quarter of 2016. The new law fixes that by shifting payroll tax revenue from one Social Security trust fund – the Old-Age and Survivors Insurance Trust fund – to another, the Disability Insurance Trust fund. The games people play now, every night and every day now. Brother! Serenity Now!

Chuck again. I have to be careful here, because I know that there are millions and millions of people truly disabled and in need of assistance, and I have no problem with that. But get this. The number of Americans receiving disability payments has now surpassed the total population of Greece! 10,962,532, people now receive payments. No wonder the fund ran out of money!

Before we head to the Big Finish today. Did you hear about the Concert this weekend in San Francisco that was held to protest the manipulation of Silver? Bix Weir, the editor of the Road to Roota, is a newsletter writer, and an accomplished musician, and on Sunday he held a concert, to protest the manipulation of Silver. Needless to say, all the usual suspects were in attendance. You know those that have been pointing out the Silver price manipulation for years now. I’m really a “Johnny come lately” to the price manipulation party, in the whole scheme of things, although I do believe I’ve been at it far too long, for it to be still being carried out! I just thought holding a concert to protest the price manipulation of Silver was interesting.

Currencies today 11/23/15.American Style: A$ .7195, kiwi .6510, C$ .7485, euro 1.0635, sterling 1.5140, Swiss $.9800, . European Style: rand 14.0115, krone 8.6250, SEK 8.6960, forint 292.65, zloty 3.9870, koruna 25.4180, RUB 65.34, yen 123.15, sing 1.4180, HKD 7.7500, INR 66.47, China 6.3867, pesos 16.56, BRL 3.7280, Dollar Index 99.72, Oil $40.42, 10year 2.28%, Silver $14.02, Platinum $849.86, Palladium $550.83, and Gold. $1,171.09

That’s it for today. Well, it’s Turkey Week! People that know me, know that I love to cook, but I’m not one of those people that can just take stuff in the fridge and whip up something. I follow directions to the “T”. But Thanksgiving is a day when I stay out of the kitchen, except to cut up the potatoes, and then to carve the multiple turkeys that we have. I love the aromas that come from the kitchen and they filter through the house, so I don’t have to be in “there”! Stevie Wonder is singing his song: My Cherie Amour right now, so I’m going to join him for I love this song.. OK. I’m back now. Kathy just came down to say hello, as she was gone this past weekend, and arrived home about 1 A.M last night. So, did you get a chance to read the Sunday Thanksgiving Week Pfennig yesterday? If you missed it, or deleted it in error, (I won’t ask questions) you can read it here: www.dailypfennig.com It’s a good one, if I can say so myself! Our Rams found another way to lose a game yesterday. This has truly been one of worst football seasons around here in years! My Tigers lost their last home game this year on Saturday night. How can you lose the last home game for the seniors and the coach who’s retiring? They would be better to not even show up for the game Friday VS Arkansas. Ok.. I must be late. so, I sure hope you can make this Marvelous Monday!

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