Fitch Downgrades Japan’s Rating.

* Currencies are mostly flat to down a bit.
* Central Bank meetings all round this week.
* Jim Cramer talks about Gold!.
* In the court of the Crimson King! .

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

Good day.. And a Marvelous Monday to you! Whew! What a turn down day it was on Saturday, but you know what they say. April showers bring May flowers. And I’ve pulled this one on longtime readers for a long time, but for those of you new to class, What do May Flowers bring? . Pilgrims! HA! April Showers is what I call our little April Mosely, who also is our IRA guru here in the office. It’s her month! I’ve got a killer cold right now, which is always as much fun as a barrel of monkeys (NOT!) when you are already not feeling like a million bucks to start with! UGH! But, it’s just a common cold, two weeks and I should be good. or maybe not “good”, but reasonable!

Well.. Reasonable is not what the Greeks and Eurogroup were this past weekend, as their meeting which began on Thursday ended on Saturday, with no agreement. I told you that they would probably opt for drama, which this is all going to come down to, and we’ll probably see an 11th hour deal, but they’ve got a few days before that all comes to a head. The euro, in the meantime, gets to deal with all this stuff, and that’s not a good thing for the euro. I will say this, though, and most likely it will be the kiss of death for the euro, but, it does appear that the deep dive to parity for the euro has backed off. for now at least!

I think the Quantitative Easing/ bond buying is helping the euro, if you can buy into that idea. Really, look at the stock market performances of the markets around the world, and if you think the U.S. stock market is hot, you’re barking up the wrong tree! The DAX is up 21% YTD, (German stock Market) and the overall Euro Stoxx is up 18% YTD. So, think about that, sure.. a large portion of that buying is domestic, but. and here’s what helps the euro, a large portion is also foreign buying, and when they buy, they have to convert dollars or yen, or whatever, to euros to settle the trade. Hey! It worked in the U.S. with stocks, it’s working in Japan, so why not the Eurozone?

Well, the Big News over the weekend other than the no agreement status with Greece, was that the ratings agency, Fitch, downgraded Japan’s credit rating from A+ to A, to be even Steven with Moodys rating, and S&P is still a notch higher. But, yen is not getting whacked due to the downgrade. Yes, yen is weaker this morning, but by a small margin, and nothing like I would have expected to see when I heard the news this weekend. In my mind, I can’t even believe that Japan is still holding a rating that high.

I see on the docket for this week, that we have a few Central Bank meetings around the globe including a FOMC Meeting on Wednesday. Boy, there’s a ton of talk about what the Fed could say this week. I even read a dealer’s research and they thought the data had improved since the last meeting. Ahem. I don’t think so! In fact since the last meeting we had that awful jobs print, on top of weak Retail Sales, Industrial Production, Durable Goods, Capital spending, and so on. But to each his own, maybe there was something that was good, and that’s what they are focusing on.

On a side bar. I read an interesting article in our local weekend paper yesterday. The article was about two guys that have designed programs that will analyze words. So, for instance, Remember the last FOMC meeting when the markets thought Janet Yellen said one thing, but then realized that wasn’t the case later? Well, their “system” will take what she says today, and come up with a call of either “dovish” or “hawkish”. Their rating system starts at zero, so a negative number leans toward dovish, and the further away from zero it goes, the more dovish the Fed is, based on their words. And the opposite for a rating above zero. So. it will be interesting to see what their “system” says about the FOMC meeting this week!

So, back to the Central Bank meetings. Japan, New Zealand, Russia, and Sweden will join the U.S. with Central Bank meetings this week. You know, I’m not sure the Reserve Bank of New Zealand (RBNZ), could say anything that could hurt kiwi as much as the McDermott speech last week did, but they probably will find a way. So, in other words, I would be very careful with kiwi this week, there are just too many potholes in the street for kiwi to navigate through this week..

I think that we could see a huge cut in interest rates from the Central Bank of Russia (CBR), maybe as much as 100 Basis Points (1%) And I don’t really have a problem with that, given that rates were pushed to 17% to protect the ruble, which no longer appears to be in a grace situation.

I was out at the desk on Friday, talking to Tim Smith and Ty Keough, about currencies, metals, Jim Cramer, (more on him in a minute) and the no longer “loveable” Kansas City Royals, and I mentioned that I was beginning to see some good movements from the currencies, and Ty said that he had just been looking at the month to data returns in the currencies, and pointed out that the ruble was up 13.97%, the real up 7.9%, the loonie up 4.27%, krone 3.67%, and even the euro was up in April to date 1.36%… So, I guess what he was saying was that “you’re right Chuck, you have seen some good movements in the currencies this month!”

Of course we need to see these add on to their gains so far the last 4 days of this month so to end up the month on a strong positive note! I think the reason we’ve seen some of these moves in the currencies is that more and more economists, analysts and so on, are jumping on Chuck’s no rate hike in June bandwagon.

I talked about the stealth-like move that the Brazilian real has made in recent weeks on Friday, and usually we would see the currency turn around when I say something nice about it, but that wasn’t the case on Friday, as the real continued to push the currency appreciation envelope. This move has been long overdue, and the somewhat stabilization of the price of Oil has certainly helped.

The currencies are mostly flat to down a smidgen this morning, except the Chinese renminbi/ yuan which was allowed to appreciate overnight. And Gold! I’ve got something that should interest most, especially Gold holders so I’m itching to get it to you, so I will not delay an further.

Well, bust my buttons! A mainstream investment guy was on TV touting a diversified portfolio that included an allocation to Gold. And not ETF’s, Physical Gold! Who was this guy? Well, it was none other than. drum roll please. Jim Cramer! Ok, either I’ve lost all my marbles and I just dreamed he said that, or. it’s time to get as far away from Gold as possible! WAIT! I’m just kidding there! I’m sure I’ve lost my marbles but I’m also sure that he said that! Shoot Rudy, you can even go here and see him say it: http://video.cnbc.com/gallery/?video=3000372493&play=1

Ok. now that I’ve gotten that out of the way. (I still can’t believe I heard him talk about physical Gold!) it’s time to talk really serious about Gold, and China. Now, Longtime readers know that I put a lot of stock into what Gold researcher, Koos Jansen, says about how much Gold China actually holds. Remember, they haven’t officially told anyone what they hold since 2009. We do know however, that they’re the largest Gold producer each and every year, and they don’t sell the Gold they produce, so even if you don’t count the imports of Gold, which can be subject to double counting, the way they come through Hong Kong, China has far more Gold than they stated in 2009, and when you do the research that Koos Jansen does, you add in the proper amount of imports and you come up with a very large Gold position, that we may well find out what it truly is soon.

You see, China, as I’ve told you, is attempting to get their currency, the renminbi /yuan, included in the basket of currencies that make up the IMF’s Special Drawing Rights (SDRS), which currently include: dollars, yen, euros, and pounds, and they can really light up their entry by showing their true reserves, of not just currencies from other countries (mostly dollars) but by adding in their Gold holdings into their reserves. I think once the investment world knows for sure what China owns in Gold. the price of Gold will move accordingly. higher. of course that’s my opinion and I could be wrong.

And while I had no intention of making today’s letter strictly about China and Gold, I think all this stuff is important not only for the renminbi but also Gold. So, here’s another thought that I find very interesting. Think about the BRICS Development Bank that the BRICS nations started a few months ago. They started this bank to compete with the World Bank and IMF. So, what’s to stop them from eventually having their own SDR? And that could be a Gold backed SDR. And by doing this it changed all the member countries in the BRICS Development Bank to have Gold backed currencies, and then they could institute their own Bretton Woods-like agreement.

Of course none of this is in writing from China or any of the other BRICS nations, but why would they play their cards so early in the game? This is just Chuck, putting on his thinking cap, which he has far more time to do these days, shuffling the deck and seeing what cards to play.

And no. it’s not conspiracy. It’s simply a thought of what could happen going forward with China and Gold.

Well, the U.S. Data Cupboard on Friday, gave us the Durable Goods Orders and the Capital Goods Orders. First let me remind you that Capital expenditures or orders is a good indicator of whether or not an economy is moving toward strong or not. And while it was nice to see Durable Goods Order rise 4% in March, the Capital Goods Orders dropped -.5%, when they were supposed to be positive. And the Durable Goods were pumped up with Aircraft Orders, which is fine, but you don’t have Aircraft Orders every month, so next month should wipe out this 4% gain, because. when you take out the transportation component, Durable Goods were negative -.2%.. So, I guess you can count Durables on the positive side, but Capital Goods on the negative side. So, a 50/50 day.

The U.S. Data Cupboard will be busy this week, but not so much today. But on Wednesday, we’re going to see the first print of 1st QTR GDP. Now, I told you previously that I thought that once all the revisions had been made that U.S. 1st GDP would be 1%… Well, the economists that Bloomberg surveys think that 1st QTR GDP will be 1% on the first print! 4th QTR GDP was only 2.2%, and now the 1st QTR is going to drop to 1% or even lower? And tell me again, that the U.S. economy is storming ahead to higher rates?

Friday will be May Day! But the Jobs Jamboree won’t print, as it is scheduled to print the following Friday. I have to wonder what that’s all about, given that the first Friday of each month is always Jobs Jamboree Friday. But, it is what it is.

To recap. The currencies for the most part are flat to down a bit VS the dollar this morning. There are a ton of Central Bank meetings this week and the CBR could be the one Central Bank to move rates this week. Fitch downgraded Japan one notch from A+ to A, but the yen just shrugged it off, Gold is up $5 this morning, and Jim Cramer says you need to have an allocation of physical Gold for your investment portfolio. What? What? Yes, you can hear him say that in the link I provide you today!

Currencies today 4/27/15. American Style: A$ .7815, kiwi .7600, C$ .8225, euro 1.0835, sterling 1.5120, Swiss $1.0455, . European Style: rand 12.1075, krone 7.7840, SEK 8.6375, forint 278.25, zloty 3.7040, koruna 25.3240, RUB 51.60, yen 119.35, sing 1.3335, HKD 7.7510, INR 63.48, China 6.1220, pesos 15.38, BRL 2.9505, Dollar Index 97.20, Oil $56.77, 10-year 1.91%, Silver $15.87, Platinum $1,127.50, Palladium $777.70, and Gold $1,186.90

That’s it for today. Well, so much for my thought that this was going to be “the year” for our Blues. The old saying still holds true, that the playoffs are to the Blues what kryptonite is to Superman. My beloved Cardinals come home after winning 4 of 6 on the road, but they come home with really bad news. Our Ace pitcher, Adam Wainwright, is probably out for the year. UGH! Well, we won in 2011 without him, as he was out with Tommy John surgery, but we had Chris Carpenter.. Who’s going to step up and be Chris Carpenter now? One of my all-time fave songs is playing on the iPod and I have it cranked up! In the Court of the Crimson King, by King Crimson. It’s a rock and roll classic. No Robin Meade on TV this morning, makes for a morning that’s lacking! The pictures from Nepal where an earthquake has taken lives (3,800+) and destroyed buildings are just awful and sad. Well, I had a very quiet and somber weekend, no kids, no grandkids, no wife, just little old me, and my cold. And with that. I had better let you go for today, as I’m attempting to type while having a coughing fit! I hope you have a Marvelous Monday!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts
1-800-926-4922
https://www.everbank.com