Gold Soars On The Uncertainty Card!

In This Issue.

* Dollar holds the conn VS most currencies.
* Gold & Oil carve out their own gains
* BOC meets today.
* Are rupees ready for a pause?

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

Good Day. And a Wonderful Wednesday to you! Well, I came back! I didn’t want to come back, but I did, and brother was I thrown a curveball upon my arrival in St. Louis, which friends had told me it was warm here, but I stepped out to the curb for my ride home (Thanks again Duane!), and was immediately hit by the “chilly air”! There I was in shorts and a “summer shirt” that Omar the tentmaker made for me, and the chills went up my spine. And then all night at home I couldn’t get the chills out of me. I thought that maybe I was coming down with something, but then that wasn’t the case, which is a good thing! I had a very restful vacation, which is what I needed, after the previous 3 weeks goings on. The Gin Blossoms greet me this morning with their song: I Found Out About You.

Well, the old saying that “when Chuck’s away, the currencies rally” didn’t hold true this time, but then they never got the chance to rally, given the cruise-missile attack on Syria that took place last week. Chris, and a great BIG THANK YOU goes out to him for taking the conn on the Pfennig while I was gone, did a great job explaining to you how the action the U.S. took in Syria, left the markets with no other choice but to head to safe havens, for this is a time of uncertainty. Remember that word, for I’ll come back to it in a bit. But for now, this uncertainty of whether this action by the U.S. is going to lead to a number of things, has the dollar on top of the currency hill.

The euro, the offset currency to the dollar, has seen better days for sure! But, the single unit continues to defy those naysayers that believe that the euro is going to drop below party, and is trading right smack dab on the 1.06 handle this morning. The currency that has really underperformed in the past week, while I was gone, is the Aussie dollar (A$). The Reserve Bank of Australia (RBA) left rates unchanged at the last meeting, and sounded upbeat about the outlook. So there was nothing there to cause the weakness in the A$. There have been questions coming in from left field, about the, what I call, Tent Revival for Global Growth. That and the idea that the positive interest rate differential that the A$ enjoys VS the dollar will be narrowing, has also weighed on the A$. The A$’s kissin’ cousin across the Tasman, kiwi, is trading exactly where it was trading when I left!

Speaking of kiwi, did you all get the opportunity to open up and read the Currency of the Month two Sundays ago? It was highlighting the New Zealand dollar/ kiwi. If you “missed it” you can simply go to: www.dailypfennig.com and scroll down the archives until you see it. It’s easy peasy to do, so go on, click on the link above, then you can always come back to today’s letter!

The April Review & Focus is online and can be found here: www.everbank.com/reviewfocus , I dive into the rate hike last month by the Fed, give some opinions on things, and talk about India. You should check it out!

Speaking of India. the Indian rupee is still inching out small gains nearly on a daily basis, and the Chicken Littles are all screaming about the rupee being overvalued and overheated, and while they scream their heads off, the rupee quietly goes about moving stronger.. I talk about in the April Review & Focus of how PM Modi has won back the hearts of the fans in India, and how that could underpin the rupee, but I have to say that the rupee’s move to its current level looks to me to be ready for a pause.

Another currency that has had stealth-like moves recently is the Canadian dollar/ loonie. And looky here! The Bank of Canada (BOC ) is due to meet today! Recent economic data here would lead someone not aware of the BOC Gov.’s preferences, to think that the surge that was seen in January GDP (up .06%) and the recent labor reports printing stronger than expected, would be enough for the BOC to hike rates. And don’t forget they have housing bubbles in Toronto and Vancouver that are in dire need of a rate hike! But. This is the BOC led by BOC Gov. Poloz, who shrugs off any mention of better economic data, as not sustainable, and turns his back on the housing bubbles, so with that in mind, I don’t expect the BOC to move rates today. And the loonie will probably inch downward on that news, but traders know that Poloz can’t ignore the data that much longer, and so I think they will keep the loonie underpinned..

The best performer yesterday was Gold. I know, I know, I’ve waited this long to talk about the shiny metal that gained $19.60 yesterday! Yes, almost an Andrew! (a $20 bill for those of you not wearing your thinking caps yet! HA!) Gold has been on traders’ minds since the actions in Syria last week, and for what reason? Geopolitical tensions, uncertainty, and well, in my humble opinion, which could be wrong, just catching up with where it should have been trading long ago. Take any three of these and you could write an article about why Gold is rallying. I bet you know which one I’ll choose, right? I gave you the hint earlier in the letter today. Uncertainty. I’ve long told you that uncertainty is not something that traders like one iota! And that’s what’s going on here. The dollar, while having the conn against most of the currencies, isn’t faring so well against Gold and Oil this past week.

Treasuries, Gold, dollars, and yen, seem to be the biggest beneficiaries of this “uncertainty” in the markets right now. The 10-year Treasury fell to 2.22% last week, but has since come back to 2.30%, but still quite low and will continue to remain there, as long as the uncertainty remains in the markets. With the 10-year Treasury’s yield at 2.30%, it means mortgage rates are still relatively low. And the current bubbles being blown will continue on, and on.

I mentioned the price of Oil above, and while it touched $54 yesterday, it dropped back to $53.70 this morning, but still much better than when I left, when I mentioned that the price of Oil was gaining on the news that Saudi Arabia was recruiting more Oil producers to cut production. I had a dear reader send me a note, telling me that he wondered if the “recruits” were the U.S. shale producers. That got my spider sense tingling, and so I went to work researching this thought, but couldn’t find anything, other than the usual run of the mill story that Saudi Arabia is keeping to their production cuts. But. Oil supplies continue to dwindle downward, and that makes me think, doesn’t it make you think too?

OK. enough spider sensing.. HA! I did a lot of reading while on vacation. I finished the book, Fed Up, by Danielle Di Martino Booth, and had lots of thoughts in there to talk about, but. I didn’t write them down, and now I’m sitting here wanting to highlight something she said in the book, and I can’t! UGH! Well, I did mark the pages so, I’ll have to go back and review the pages, and you’ll get a treat hearing what this former Fed Reserve insider had to say about things before, during, after the financial crisis, and her thoughts on what the Fed should be. So, stay tuned.. same bat time, same bat channel..

The U.S. Data Cupboard is basically empty today, with only the Federal Budget for March, and the Import Price Index to print. Yesterday, it was about the same in the U.S. Data Cupboard, but we did see the color of the NFIB Small Business Index for March, and it dropped from a 105.3 reading in February to a 104.7 in March.. And I’ve decided to put this report as the FWIW article today. So keep reading to hear more about this Index.

To recap. It’s more of the same today, as the markets continue to deal with the Uncertainty that the cruise-missile attacks on Syria will bring. Uncertainty is a good thing for Gold, but not so much most of the “risk assets”. The price of Oil dropped back to $53.70 overnight, but still much better than before I left to go on vacation. The Bank of Canada meets today, and Chuck thinks the BOC should hike rates, but won’t. OH MY! We can’t have the loonie getting stronger! And Chuck does a lot of promoting of the articles he’s written recently that are online at the everbank.com website..

For What It’s Worth. Well the NFIB Small Business Index is the topic for today, and this quick and dirty article that can be found here: http://www.marketwatch.com/story/small-business-sentiment-declines-as-post-election-euphoria-runs-out-of-steam-2017-04-11 gives us some food for thought today. At least I hope that’s how you see it!

Or, here’s your snippet: “Small-business owner optimism declined in March as sales expectations and earnings came back to earth after a post-election surge.

The National Federation of Independent Business said its monthly sentiment gauge fell 0.6 point to 104.7, a slightly larger decline than the 0.5-point dip forecast by economists surveyed by Econoday.

The post-election surge was the biggest in the four decades NFIB has been conducting its survey. The gauge rose again in January but then receded in February.

In March, some warning signs appeared. The uncertainty index rose to 93, its second-highest reading on record. “More small business owners are having a difficult time anticipating the factors that affect their businesses, especially government policy,” noted Bill Dunkelberg, the groups’ chief economist.”

Chuck again. I want to point out that this survey was taken before Congress failed to repeal the ACA / Obamacare, otherwise had the responders known that they would be saddled further with the costs of ACA, I think this index would have dropped even more! Or, if you prefer to look at the glass as half-filled, if Congress had repealed it, this index could have been much higher! How’s that for being fair and balanced?

Currencies today 4/12/17. American Style: .7490, kiwi .6923, C$. 7510, euro 1.06, sterling 1.2495, Swiss $ .9925, . European Style: rand 13.7085, krone 8.5890, SEK 9.03, forint 294.01, zloty 4.0047, koruna 25.1180, RUB 57.02, yen 109.60, sing 1.4017, HKD 7.7714, INR 64.69, China 6.8994, peso 18.76, BRL 3.1341, Dollar Index 100.70, Oil $53.70, 10-year 2.30%, Silver $18.34, Platinum $965.88, Palladium $795.54, Gold $1,276.40, and SGE Gold. $1,267.78

That’s it for today. I had grand designs of getting up extra early this morning, going into the office, write the Pfennig, print off some documents I need to get taken care of, and get out of there before the crowd arrived, and when the alarm went off “extra early” this morning, I turned it off and went back to sleep! So, I’ll try again tomorrow! My beloved Cardinals sure are starting the season off ugly. Errors, bad pitching, and no timely hitting. They didn’t exhibit any of that in the spring training games I saw. The markets will start to thin out tomorrow, as Friday is Good Friday, and the stock market is closed. Sunday will bring us Easter, and I can’t wait to see my darling Delaney Grace and her Easter outfit! The low sodium program I’m on is really getting old. But, I continue to lose the steroid induced weight, which is a good thing, and Robin Trower takes us to the finish line today with his song: Bridge of Sighs.. Thanks again to Chris, Mike, Dane and Frank for wo
rking together to bring you the Pfennig while I was gone. And with that, it’s time to say good bye. I hope you have a Wonderful Wednesday.. Be Good To Yourself!

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