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It’s Chuck’s Birthday!

* U.S. stock sell off causes risk off!
* Currencies are a mixed bag today
* Gold has nice performance!
* RBNZ meets tonight!

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

Good Day.And a Wonderful Wednesday to you! If you think I’m over the whining, you have better think again. But, I have reason to celebrate today, for it’s my birthday! I always send out birthday wishes to everyone else, but today, I get to send them out to me! My best friend, that I’ve known since the 2nd grade, already sent me Happy Birthday wishes this morning, and I told him in a reply, “When I was a young man, I never in a million years thought I would live to reach “retirement age”, but here I am. And although my body seems to revolt over and over again, I still soldier on. One of my fave all-time songs is Ferry Cross The Mersey, by Gerry and the Pacemakers. I’m thinking of that group’s name quite a bit today. Can you guess why? Answer in the wrap up!

Well. it’s a real slow day in the markets, there’s no data to speak of, there are no Fed member speakers, and we won’t have a Central Bank decision until very late this afternoon (RBNZ). So, guess what? It shouldn’t take you too long to get through today’s Pfennig.

So, we have a mixed bag of currency performances this morning.. At first glance to the Dollar Index one would think that it’s a “sell the dollar day”, as the index dropped from 99.97 yesterday to 99.86 today. But like I’ve told you many time in the past, the Dollar Index is so heavily weighted with euros, and doesn’t include currencies like the Aussie dollar (A$), kiwi, the Chinese renminbi, and so on. Therefore, the major currencies like the euro, sterling and yen, can be tracked with the Dollar Index, but that’s it!

In the old days of just a couple of years ago, we spend our days speaking the markets terminology for the direction of the currencies and metals.. Remember, risk on, risk off? Well, in the past year or so, we’ve pretty much seen a decoupling of the currencies and metals from the stock market performances. And so when U.S. stocks sunk like the Titanic yesterday, in the old risk off trading, currencies and metals would have followed, but not any longer, well, not any longer as a “whole”.. What I mean by that is simply that if you U.S. stocks are getting sold off, then you could very well see currencies like the A$ and kiwi get sold too, for they are tied to Global Growth, and a U.S. stock market sell off is too! But at the same time the euro, sterling and yen could very well rally, which is what we saw yesterday and overnight.

Clear as mud, right? Sorry, but that’s the way it is, and so it’s better that you understand that when in investing in currencies and metals right now. Of course traders are fickle, and they could move the goal posts today if they wanted to, so we have to stay on top of these things.

The price of Oil got smacked-whacked and taken down again in the past 24 hours, after recovering a buck on Monday to Tuesday. But Gold closed up $10.30 yesterday, putting in a very nice performance that put the close for Gold at $1,244.20. There were 224,000 contracts traded yesterday.. Doesn’t that sound enormous? It sure does to me! But Ed Steer tells me this morning that the 224,000 contracts will “increase substantially in the coming week, as First Day Notice for delivery in the April Gold Contract is only seven business days away.” I tell you that just to warn you that the metals pricing could be volatile during this period. I quoted Ed, from his letter this morning

If you’re looking to buy metals, don’t try to time it. Wild swings in prices can occur when the contracts mature, and you don’t want to be caught up in that! To borrow some lyrics from Cat Stevens, If you want to buy, buy. If you want to be free, be free, ’cause there’s a million things to be, you know that there are.

The Petrol Currencies took a shot to the mid-section yesterday, with the drop in the price of Oil, these currencies that include: rubles, krones, reals, pesos, and loonies, go back and forth with the price of Oil, and to make matters worse here, is the rumor going around that the OPEC countries could very well scrap their production cuts they agreed to earlier this year.

Speaking of rubles. Maybe the currency can overcome the drop in the price of Oil, when the markets get wind of this news. Russia will pay off the former Soviet Union’s debts in full within weeks! Moscow has to settle with Bosnia and Herzegovina but once that’s done, the debts will be paid in full. This is the last of the Soviet debt, and you know me. Paying off debt is a good thing!

Oldest son, Andrew’s wife, Rachel is a real sweetheart, as she just sent me her Bitmoji telling me Happy Birthday! You should see my Bitmoji, it looks just like me! Oh! Sorry for going off on that tangent.. back to work!

Well, I put the finishing touches on the April Review & Focus, which will be posted at : the first week of April. Be sure to check it out, I have gone the extra mile in delivering an excellent letter if I may say so myself! HA! I mention that because in the letter I talk about the Fed’s Rate hike last week, and give you my reasons for thinking the markets took it as a rate cut rather than a rate hike.. I also get into the Fed Credibility, and a ton of other stuff..

The WSJ tells me this morning that the U.S. stocks sold off yesterday on fears that the Trump Administration will have difficulty implementing tax cuts that he promised during his campaign. I have to tell you that this is the kind of stuff that drives me nuts. and borders on Fake News, right? Just because an administration will have difficulty implementing a program, doesn’t mean they won’t be able to! So, why get all lathered up over stuff like that? It just drives me nuts!

The Reserve Bank of New Zealand (RBNZ)meets tonight (for us, tomorrow morning for them) and like I said on Monday, I don’t expect the RBNZ to move rates.. And now that especially so, given the latest speech by RBNZ Gov. Wheeler. Wheeler, who will step down in September of this year, suggested that the RBNZ has grown circumspect about the Global Growth nascent recovery. And therefore interest rates in New Zealand are going to remain on hold for at least the next 6 months. The next Currency of the Month is going to be the kiwi, and I talk extensively about how Wheeler has to throw cold water on the New Zealand economy and kiwi, for he can’t afford to have the markets get ahead of themselves here. And he’s doing a very good job of it, which makes me sick to my stomach! But, that’s his game, and Wheeler is his name!

Well, I saw my guitar playing buddy, and investment analyst guru, Steve Sjuggerud, writing about the Big Mac Index yesterday. Boy, I hadn’t heard about the Big Mac Index in quite a few years. But basically what it does is compare the price of a Big Mac in each country to the price of a Big Mac here in the U.S. Well, according to Steve, the British pound sterling is 20% undervalued VS the dollar, and the Mexican peso is more than 50% undervalued VS the dollar, based on the Big Mac Index. I’ll have to get that old Big Mac Index out and shake off all the dust, and see what it says about other currencies right now..

This is all based on what’s called Purchasing Power Parity (PPP) which is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. Years ago, we used PPP as one of the fundamentals used to determine currency values. But when fundamentals were taken out of equation, and Trader Sentiment replaced fundamentals, PPP was forgotten about, but the other day I talked about the return of fundamentals maybe taking place, and if that holds water, then PPP will once again be used!

The U.S. Data Cupboard is near empty again today, with only the Existing Home Sales for February on the docket.. Yesterday, the Current Account Deficit printed for the 4th QTR, and it came in just under where I thought it would. Recall, I said it would be 2.50% of GDP, and it came in at 2.40% of GDP.. Thank goodness GDP continues to grow, with the added items to include in GDP that is. Remember, those items that were added a couple of years ago, that would potentially add 3% to GDP totals? Research & Development? Oh and a few others that didn’t make sense to me were added. but I digress..

To recap.. we have a mixed bag of currency performances today, as the U.S. stock market sell off yesterday caused selling in the Commodity Currencies but didn’t hurt the likes of the euro, sterling and yen. the price of Oil dropped again, but the price of Gold rose over $10 on the day! The RBNZ meets tonight, and Chuck doesn’t expect any fireworks here and gives the reasons why. And it’s Chuck’s Birthday! YAHOO!

For What It’s Worth. I found this on MarketWatch and thought it to be worthy! It’s about the sad state of the American consumer, and can be found here:

Or, here’s your snippet: “About a third of consumers say they would have trouble coming up with an emergency $2,000, according to a new study released Monday.

The New York Fed, as part of its survey of consumer expectations, has begun releasing the answers to questions about financial fragility. The study found around 67% said they were likely to come up with $2,000 in a month, meaning nearly 33% said they weren’t likely.

The differences were most pronounced by credit score – only 11% of those with a credit score of 760 and above said they would have difficulty, versus 64% of those with a credit score of 680 and below.”

Chuck again. That’s a sad state of affairs for U.S. citizens, don’t you think?

Currencies today 3/22/17. American Style: A$ .7660, kiwi .7026, C$ .7465, euro 1.0788, sterling 1.2468, Swiss $1.0068, .. European Style: rand 12.6140, krone 8.5130, SEK 8.8260, forint 285.79, zloty 3.9674, koruna 25.0446, RUB 57.32, yen 111.25, sing 1.40, HKD 7.7674, INR 65.39, China 6.8966, peso 19.19, BRL 3.0736, Dollar Index 99.86, Oil $47.46, 10yr 2.40%, Silver $17.51, Platinum $965.59, Palladium $783.43, Gold $1,245.80, and SGE Gold $1,244.14

That’s it for today. Well, I kept you in suspense long enough don’t you think? The reason Gerry and the Pacemakers are on mind today, is that this Friday, I will have a pacemaker put in. It’s not a big thing, and I’ll be fine, no worries! The most important thing today is my birthday! I was never a real “get all giddy about my birthday” until the first birthday I celebrated after my cancer diagnosis 9 months earlier. it was then that I “got it” that birthdays should be celebrated, for life is precious, and we never know when “our time” has come. So, Happy Birthday to me! I just wish I were going to be sitting in my seats at Roger Dean Stadium today, watching my beloved Cardinals play baseball. Oh, well, maybe next year! Congrats to Team USA for reaching the finals of the World Baseball Classic.. they will play Puerto Rico for the Championship.. Go Team USA! Steely Dan takes us to the finish line today with their song: My Old School.. (Love that Steely Dan!) And with that, I’ll get to eating some birthday cake! (not on my diet, but I’m having some anyway!) I hope you have a Wonderful Wednesday, and Be Good To Yourself!

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

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