* Currencies drift overnight.
* Chuck points finger at ECB not Germany..
* RBA to meet tonight.
* Follow up on Deutsche Bank’s problems..

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

Good Day. And a Marvelous Monday to you! I’ve been up a couple of hours now, so instead of sitting there trying to go back to sleep, I decided to fire up the laptop and get to work! Well, it pains me to say this, but congratulations to the Patriots, they are the Super Bowl Champions this year. I knew in my heart of hearts that no matter how many points the Falcons went ahead, that the Patriots would come back, and they did.. UGH! Oh well. Football is out of the way and we have 8 days until Pitchers and Catchers report to Spring Training.. I went to the box office the other day, and picked up my season tickets for Spring Training Games. Boy, talk about inflation! Too many dollars chasing a set number of seats.. When I first started going to spring training games in 1993, tickets were about $8. Now, depending on who’s in town, they could be $45! I’m going to have to cut back in future years I’m afraid, as the tickets continue to rise, and my income flow takes a hit in retirement.. The Righteous Brothers greet me today with their song Heart and Inspiration..

It’s a quiet overnight trading session, and for the most part, the currencies are trading at the closing levels of Friday. Gold is up a couple of bucks from Friday’s close of $1,219.50, in the early morning trading, and the price of Oil is inching higher again. Friday, we had the Jobs Jamboree, which was a mixed bag-o-nuts, and not a whole lot of anything else that wasn’t political..

Last week I talked a lot about the new U.S. administration, blasting other currencies for their weakness, and highlighted the shot the U.S. chief of the National Trade Council took at Germany for the weakness of the euro. And this is where in my past I would have gone all Rambo on Navarro for blaming Germany for the euro’s weakness. For isn’t it the European Central Bank (ECB) that implemented Quantitative Easing, and negative deposit rates? And I do believe that Germany fought the ECB on every stimulus, potential inflation increasing policy.

Speaking of the euro. German Finance Minister, Schaueble, said this past weekend that he agreed that the euro was too weak, but instead put the blame on the ECB for their QE, which he also said he was not “fan of”.. The euro which broke out of the mud it was stuck in for a couple of weeks for a short period last week, but was put right back in the mud by the 1. Lack of Eurozone data, and 2. Stronger data from the U.S. We did see the Eurozone PMI’s last week, and they looked good, and this morning, in Germany, German Factory Orders for December printed a very nice upside for the month, rising 5.2% VS November, and 4.4% for the Quarter.. Some additional ammo for the Tent revival for Global Growth, eh?

The Aussie dollar (A$) saw a little slippage, not much, just a smidgen on soft Retail Sales data, but it won’t be soft enough for the Reserve Bank of Australia (RBA) to do anything drastic with interest rates when they meet tonight for us, tomorrow for them. I truly believe that the RBA has come to the end of their rate cut cycle, but they don’t want to come out and say that, because that would get traders all lathered up that the next move in rates would be up, and the RBA doesn’t want to see the markets get ahead of the economy. So, any move higher from the 76-cent handle where the A$ trades this morning, will have to come from very strong domestic data, or, stronger Chinese data.

The price of Oil inched higher on Friday and overnight, but the moves were, well, measured in inches, that’s why I said they “inched higher” , see how I tied that all together in neat little bow? Man, I’m getting good at this after 25 years! HA! There have been no reports of any of the OPEC and Non-OPEC members that joined in on the production cuts, cheating. And as long as the line holds, the price of Oil has a chance to move higher.

Another weekend, and another weekend full of reading for yours truly. And I came across a report that Iran had decided to drop the use of the dollar in its financial and foreign exchange transactions, beginning in March when their fiscal year begins. So, let me see if I have this correct.. When Hussein said he was going to begin trading his Oil with euros, he found U.S. jets buzzing his country, and he was soon outed. When Gaddafi said he was going to stop using dollars for his Oil trades, he found Patriot missiles flying through his kingdom, and he was outed. So, the history of these Middle East countries attempting to break the Petrodollar hold on the Oil trade, is not a peaceful one. What does that tell us about this news that Iran is pushing the envelope here? I shudder to think about what could potentially happen here, and think about Julius Caesar’s army crossing the Rubicon. I’m just saying.

So, did you get an opportunity to read the Sunday Pfennig yesterday? Come on. It was in your email box early in the morning and didn’t interfere with the Super Bowl pre-game festivities! Well, if you haven’t read it, please do so, because it’s about the Russian ruble, the best performing currency in the last 6 months. Wait! What? That’s right. Who’da thunk that one? Economic sanctions and all! Speaking of the economic sanctions, I saw where the technology companies were given a waiver on the sanctions, and can export to Russia.. Hmmm. Is that a start? Oh, if you mistakenly deleted the Sunday Pfennig email, (I know it can happen, wink, wink) you can still read it here: www.dailypfennig.com

The IMM Futures report for last week, showed once again that the dollar long positions were cut, and now stand at the lowest level in 6 months. And get this one.. Euro short positions have reached their lowest level since June 2016. A lot of times, these moves in the futures contracts doesn’t mean a hill of beans, but then there are times they give a very good indication of what traders are thinking. . And I do believe that this time is the latter of those two thoughts.

Well. At first glance, the emails coming through, from dealers, and research teams on Friday, were all upbeat and goosed to the max that the U.S. created more jobs in January than expected. The total was 227,000 VS 194,000 expected. (some reports had 180,000 expected, but the report I use, said 194,000) But that was it as far as the good news from the report goes. The Unemployment Rate rose from 4.7% to 4.8% (now, how can that be, when you supposedly added 227,000 jobs?) And here’s where the rubber really meets the road. the Underemployment Index rose from 9.2% to 9.4%, The labor Participation Rate rose from 62.7% to 62.9%, and. the Average Hourly Earnings only grew 0.1% and December’s original 0.4% gain that everyone got all lathered up about, was revised downward to 0.2%… not so much on the getting all lathered up over those numbers now are we? And the Employment Cost Index (ECI) only showed growth of 2.2% year on year.

None of this says: “full employment”. and none of this says: “we need to aggressively hike rates”.. and none of this says: “happy days are here again, the skies above are clear again, So let’s sing a song of cheer again, Happy Days are here again”

Oh, come on Chuck, lighten up a bit! It’s just a report that can be “adjusted” to whatever the BLS is feeling that day, there’s no reason to carry on this way! OK, you’re right, but I’m warning you right here, right now, that interest rates are going to go higher, come hell or high water here in the U.S. and when the economy comes crashing down around us, don’t come asking me how that happened. For I told you already, but you said. “it’s just a report”..

Alrighty then.. I’m back now, I had to step away for a few minutes, to clear my head, so I have nothing but happy thoughts for the rest of the letter today!

Gold, as I said above, added $4.10 to its price on Friday to close the week at $1,219.50.. The World Gold Council (WGC) sent me their latest report on Friday, and they reveal that demand for Gold rose 2% in 2016 from 2015 levels. In my time dealing with the reports that the WGC prints, I find that their numbers are usually grossly understated.. So, If they report that demand rose 2% last year, demand probably actually grew 8-10%.. The difference is mainly in the numbers they use for China.. China either doesn’t report or sandbags their reports.

I have something else on Gold in the FWIW section today, so keep reading!

There is no data that will be reported today here in the U.S. The Data Cupboard is amazingly empty today. So, I expect some drifting of the currencies today. But then we never know what might be said in Washington D.C. ! So.. Air Force One was parked at the Palm Beach International airport this weekend. My martini drinking buddy, Gus, took his daughter and grand kids to the airport on Saturday, and said he saw tons of people taking pictures of the airplane, and he wanted to know, why? I laughed out loud!

I was at the airport yesterday, picking up Kathy, who decided to come back, and I didn’t see Air Force One, but then I wasn’t looking for it! And the U.S. Data Cupboard doesn’t really have any major “real economic” prints this week. We will see Consumer Credit (read debt) for December tomorrow.. This should be a blowout number.

To recap. Not a lot going on in the currencies and metals overnight. The Jobs Jamboree was a mixed bag-o-nuts, and so the dollar didn’t get a lift at all from the large number of jobs, so-called created. The U.S. Data Cupboard is empty today and doesn’t have much for us the rest of the week, so Chuck thinks that a lot of drifting of the currencies and metals will be the call to order this week. But then we never know what might be said from Washington D.C. The RBA meets tonight, and Chuck thinks the RBA’s rate cut cycle is over, but they can’t say that.. yet.. ,

For What It’s Worth.. I first saw this on a note from the GATA folks, and then I saw it on Bloomberg, and said,, “that’s a sign”! So, this is about Deutsche Bank apologizing to the public for their “serious errors” And here’s the link to the full story: https://www.bloomberg.com/news/articles/2017-02-05/deutsche-bank-purchases-ads-to-apologize-for-serious-errors

Or, here’s your snippet: “Deutsche Bank AG bought full-page ads in all major German newspapers over the weekend to apologize for “serious errors” after misconduct costs helped tip the company into two years of losses.

Legal cases that date back many years cost the Frankfurt-based company “reputation and trust” in addition to about 5 billion euros ($5.4 billion) since John Cryan took over as chief executive officer in July 2015, the CEO said in the ad, blaming the “misconduct of a few” employees.

Cryan, who signed on behalf of the executive board, expressed “deep regret” that “the conduct of the bank didn’t follow our standards” in relation to the U.S. mortgage business in 2005 to 2007 and was “unacceptable.” That was also the case in other matters, he wrote.

Last month, Deutsche Bank finalized a settlement with the U.S. Justice Department over its handling of mortgage-backed securities before 2008. The bank agreed to pay a $3.1 billion civil penalty and provide $4.1 billion in relief to homeowners. Last week, it was fined $629 million by U.K. and U.S. authorities for compliance failures that resulted in the bank helping wealthy Russians move about $10 billion out of the country.”

Chuck again.. Remember when it was thought that Deustche Bank was on the edge of default a couple of months ago? Getting their fine with the U.S. reduced helped them immensely.. They aren’t out of the woods just yet, but better than they were.

Currencies today 2/6/17. American Style: A$ .7666, kiwi .7310, C$ .7682, euro 1.0742, sterling 1.2480, Swiss $1.0050,. European Style: rand 13.2820, krone 8.2448, SEK 8.80, forint 287.62, zloty 3.9875, koruna 25.1424, RUB 58.97, yen 112.95, sing 1.4095, HKD 7.7572, INR 67.08, China 6.8722, peso 20.55, BRL 3.1143, Dollar Index 99.94, Oil $53.89, 10-yr 2.45%, Silver $17.60, Platinum $1,008.60, Palladium $754.25, Gold $1,222.05, and SGE Gold $1,219.76 (they have to play catch up after being gone all last week)

That’s it’s for today… The Chamber of Commerce days continued throughout the weekend here, and Saturday night I went to a steakhouse with my friend Gus, and boy did we run up a tab! But the meal was great, and the company was superb! Not much else went on this past weekend for me. My beloved Missouri Tigers stopped their 13-game winless streak on Saturday VS Arkansas.. And the St. Louis U Billikens won their basketball game too! And our Blues got beat badly again.. UGH! My iPhone bit the dust last week, and I had insurance on it, so they sent me a new one and now I have to go through setting it all up. UGH! I see the doctor tomorrow regarding my scan result. Should be good, and then they can do something about the excruciating pain I’m getting in my lower back.. Alrighty then. Weezer takes us to the finish line today with their song: Island In the Sun.. So, now, go out and make this a Marvelous Monday! 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