Focus Begins To Shift.

* Greek deal is finished except the encore .
* ZEW falls less than expected .
* Aussie Business Confidence rises..
* Petrol Currencies get whacked again..

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

Good day. And a Tom Terrific Tuesday to you! Well, the camping trip started out very badly, as the rain just poured and poured, and we found out that our camper, which we hadn’t used in 5 years, had developed a leak in the roof! UGH! But then the sun came out, and remained out for the next 3 days, and all was forgiven with mother nature. Chris told you about the Triathlon that Chris and Alex (my son) competed in over the weekend… You know, when Alex was a young boy, he was a little overweight, and loved to sit in front of a computer most of the day. One time in summer, during a baseball game, he refused to go out in the field, because it was “too hot”.. And then the other day, Chris sent me a text with a picture of him standing on the podium in his age group. And now he wants to train to win one!

Well, now that Greece has been given a bridge loan and they won’t be going anywhere (Grexit) and they will remain in the euro (funny, I told you months ago that this would be the end result, but the markets failed to listen). Can we now, finally get back to dealing with other things besides Greek Debt? I’m sure going to try! But first I can’t let it all go just like that yet. I read an article on Google+ the other day, that was quite interesting, in that it talked about how a former employee of the institution that helped Greece hide their debt, suggested to Greece that they start legal action against said institution.. The former employee says that the banking giant made as much as $500 Million from the transactions known as “swaps”. I found the article very interesting.

Oh, and say it ain’t so, Joe! But “it’s” not completely in the rear view mirror, just yet. But for now, we can say an agreement is in place and that’s a whole lot closer to the finish line than we’ve been in two months of negotiations, eh?

The most likely center of focusing will be on China now. The Chinese renminbi has bounced around a bit lately, up one day, down two days, and so on. The Chinese, I’m sure, are just attempting to show the IMF that the currency is stable, even in the face of an economic slowdown..

I’m confident that China will figure it all out, and a crash landing will not occur. Yes, I’m about as confident about that, as I was that there would eventually be an 11th hour deal on an agreement with Greece.

The euro has backed off the knee jerk reaction to the deal that brought it to 1.12 and change but has now slipped back to the 1.10 handle.. German Investor Confidence fell this month, as measured by the think tank ZEW, but. It didn’t fall as far as the consensus forecasts, and that was a good piece of news, you know sort of like being handed lemons, but making lemonade. For those of you keeping score at home the index fell from 31.5 to 29.7 (29 was the consensus). But the measure of current conditions actually rose! So, go figure! HA! But, I think all the while the Germans knew that the Greeks would eventually see the Big Picture, and bag their demands.

I’ve read some emails from readers, and some news stories suggesting that Germany was the “bad guy” here, that they could have thrown the Greeks a bone, to let them save face back home. I say Hog Wash! Double Hog Wash!

The other main focus is going to shift to the falling price of Oil again. For a short period of time there, we had a stable Oil price around $60. But that stability has given way to a new round of speculation that the price of Oil is going to continue to fall. Well, that’s not the way I saw this whole thing going, as I really expected the stable price of Oil to remain in place, as least through the summer.

And Gold is down $4 this morning, as one more of the geopolitical cracks in the global foundation were filled in, as it was announced overnight that a Nuclear Deal with Iran was in place. I’m going to keep my thoughts on that to myself. But as far as Gold is concerned, it’s one more geopolitical problems that have gone away. at least for now, that is.

The Aussie dollar (A$) is rallying this morning, after a very strong Business Confidence that rose from 7 in June to 11 in July. The only time this index has been higher was after the last election in Australia (2013) when the bums were thrown out, and the new soon-to-be-considered-to-be bums were voted in. Isn’t that like it is? You love these new guys until they start making life difficult for you, and then they become as bad as the previous bums! Sorry about that road I just went down, I really wanted to make a big deal out the A$ rally this morning, especially since it left the New Zealand dollar / kiwi at the starters blocks.

And looky there! No, not there. Over here! HA! But looky there, Bank of England (BOE) Gov. Carney, is back out on the newswires telling anyone that will listen, that “time for the first BOE rate increase is moving closer”. And the pound sterling is reacting to the comment by rallying this morning. I guess currency traders love to be fooled more than once. I mean Carney came along with his bag of promises at the Bank of Canada, then at the BOE, and both previous times, the respective currency rallied only then to find that his promises were empty, and the gains were wiped out. So, I guess these guys are ready to swallow that promise, hook, line and sinker once again. You would think that they would learn from previous mistakes. But Noooooooo!

A couple of weeks ago, I told you about how the Swiss National Bank (SNB) was attempting to get the franc weaker with verbal intervention. For now, it seems that the SNB Gov. Jordan, has stopped the franc from getting extremely out of hand VS the euro for now. But that’s the key here, “for now”, because usually the markets get tired of this kind of situation, and usually begin to take on a Central Bank that has been so vociferous about what they plan to do to keep their currency in line.

I talked about the drop in the price of Oil above, and forgot to go into how it effects the Petrol Currencies. Yes, I know I’ve done that at least 100 times before, but it has to be repeated because investors want to know why their currencies are weaker. The countries with those Petrol Currencies include: Norway, Canada, Russia, Brazil, U.K., Mexico and so on. You can look at the currency performances of each of these and they tell you the story.

I had a very nice letter from a reader on my desk when I returned this morning. He suggested that I should be considered as “Fed Chair”. Saying that at least, “logic, reason and honesty would be returned to that position.” I wanted to reach out and shake this man’s hand and tell him thank you. But that will be in the form of a return letter. You know, when I was camping this past weekend, I had some time to myself, as the kids all played in the lake. I sat there with my iPod playing, reading a book and relaxing, and stopped reading for a few minutes and began thinking about what I’ve done in my career. Then later, Chris sent me a text and asked me when I began in the business, as he was putting together a spreadsheet. I told him 1973, which makes 42 years in the investments business. 42 years! I’ve done just about every job there is in a brokerage house and bank, except be a teller, loan officer, and hedge fund manager! So, that would be where all this stuff comes from folk
s. 42 years of seeing, hearing, and physically being in the right place of what was going on in this business.

And now after all this time, it seems to be winding down. No worries, I’m not going anywhere, but the wind down has begun, I can feel it.

OK. Sorry about that, I really have no idea why I went there, except that the letter made me think about what I’m going to do going forward. And it certainly isn’t as the “Fed Chair” HA!

Well, the U.S. Data Cupboard has a Big piece of data for us today. June Retail Sales. The BHI indicates to me that this data will return to disappointing, after a surprise, rogue, I might add, strong May Retail Sales. The other thing going on this week that companies that do business overseas will begin to report on their 2nd QTR Earnings, and it will be interesting to see just how many show that the strength in the dollar is hurting their earnings.

To recap. The Greek Drama is all over for now, with only the encore left to work out, and the focus will shift to China and the falling price of Oil. The falling price of Oil has led to weakness in the petrol currencies, as usual. The A$ is rallying this morning, on a stronger Business Confidence report. The German ZEW fell from June, but, not as far as the experts believe it would, but that hasn’t helped the euro this morning. And Gold is off by another $4 this morning, as another crack in the geopolitical problems foundation was filled in, when a new Nuclear deal with Iran has been ironed out, for now that is.

For What It’s Worth. The BRICS countries met this past weekend at the BRICS Summit in Russia. There’s not been a ton of news coming from the meeting. But I did see this in Google+, and article in the Asia Times.

“Leaders of the BRICS … launched the New Development Bank, which has taken three years of negotiations to bring to fruition. With about $50 billion in starting capital, the bank is expected to start issuing debt to fund infrastructure projects next year. They also launched a foreign-exchange currency fund of $100 billion.

The two new endeavors are statements that the five largest emerging markets are both looking out for each other and, simultaneously, moving away from the western financing institutions of the World Bank and International Monetary Fund.

“The BRICS states intend to actively use their own resources and internal resources for development”, Putin said, according to Reuters. “The New (Development) Bank will help finance joint, large-scale projects in transport and energy infrastructure, industrial development”. Birthing the two initiatives in Russia had been Putin’s top priorities. {1}

Chuck again. This is getting pretty BIG on the Big Things meter folks. I think that the rest of the world is going to be surprised at the development of these countries and what they bring to the stability of the Globe. The BRICS (Brazil, Russia, India, China, S. Africa) are ready to begin their wrestling match with the U.S. to wrestle away the global financial security, which won’t be won by starting wars. The dollar, the Treasury market, and IMF, are all the ways that the U.S. holds its power. The BRICS have gone after the IMF with the start of their AIIB , and you have to wonder what’s next?

Currencies today 7/14/15. American Style: A$ .7435, kiwi .6695, C$ .7830, euro 1.1030, sterling 1.5570, Swiss $1.0580, . European Style: rand 12.3905, krone 8.1705, SEK 8.5310, forint 281.55, zloty 3.7620, koruna 24.5460, RUB 56.84, yen 123.30, sing 1.3600, HKD 7.7510, INR 63.39, China 6.1165, pesos 15.70, BRL 3.1285, Dollar Index 96.63, Oil $51.19, 10-year 2.44%, Silver $15.33, Platinum $1,027.40, Palladium $660.60, and Gold. $1,154.08

That’s it for today. Well, that was a much better Home Run Derby last night, eh? Moved along much better, and who would bet against the home town slugger in the Derby? Not me! The All-Star Game is tonight, There will be 6 Cardinals players & pitchers there! WOW! I know that he was the last player added to the team, but Carlos Martinez of the Cardinals is the hottest pitcher and should be the starter tonight! Thanks to Chris and the Big Boss Frank Trotter, for taking the conn on the Pfennig the last two days. Chris told you that the chilly, rainy days here had finally turned to summer with hot, humid days. But after spending the months of May and June under an umbrella and with jackets on at times, I’ll take the hot and humid. It is summer in Missouri! My beloved Cardinals ran into some really bad luck in Pittsburgh going into the All-Star Game break, hopefully they can put that behind them and come back strong for the rest of the season. Bob Marley is playing his song: Jamm
in’ on the iPod right now. And I hope this jam is going to last! And with that. I bid you good day, and hope you have a Tom Terrific Tuesday!

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