Kiwi Spends The Night In The Woodshed…

Rocktober 19, 2017

* New Zealand gets new coalition gov’t!
* Dollar buying ends overnight
* Is Gold ready for a turnaround?

Good day… And a Tub Thumpin’ Thursday to you! Not for me, but for you! What a night for our Blues! The thumped the rival Blackhawks 5-2 last night, and I watched the whole game! I feel like someone took a bat and tenderized my body while I slept last night! UGH! I prefer to feel at the top of the game when I go in for an infusion, which isn’t going to happen today! Don Henley greets me this morning with his song: The Last Worthless Evening…

The dollar strength of the last two days has faded and the currencies are making a comeback as I write this morning. the outlier is kiwi… From the title today, you know that kiwi got taken to the woodshed last night, but that doesn’t tell you why, and, well.. that’s what I’m going to do right here, right now!

OK.. Recall a couple of weeks ago, when kiwi got whacked because the election there left uncertainty about what Party would be able to form a coalition government… That uncertainty has been taken care of, as it was announced last night that the Labor Party had formed a coalition government, and now we have a different uncertainty hanging over kiwi like the Sword of Damocles… And so kiwi lost 1 whole cent overnight or 1.6%, for those of you keeping score at home!

You see, the Labor Party is all about spending, and more spending, and they want to dictate to the Reserve Bank of New Zealand (RBNZ) how to calculate things… this is not a good development for New Zealand folks, and threatens the path that New Zealand was on with regard to economic growth. But did the markets overact with selling kiwi? Yes… But as I was explaining to someone last night, the markets always either over buy or over sell… It’s what they do! In the end, I would look for kiwi to recover some lost ground, starting today…

The euro found some terra firma and has rallied back above the 1.18 figure… I understand that this rally has been fueled by hedging trades ahead of next week’s European Central Bank (ECB) meeting… Recall, that ECB President, Draghi, told us that he was prepared to give the details of the ECB’s unwinding of their balance sheet on the 10/24? Well, that’s the day, and I’m sure the markets will hold Draghi’s feet to the fire on this one…

Pound sterling has been on a roller coaster ride recently… Rallying on the Bank of England (BOE) news that a rate hike was in the future, and then selling off when the data doesn’t support that thought. We had more of that this morning when Sept. Retail Sales in the U.K.. only gained 1.2% when 2.1% growth was expected, and was the result of August’s print.

Gold got sold some more yesterday to the tune of $4.30… But… we may have a turnaround today, with Gold up $4.50 in the early morning trading! In the 5 Minute Forecast (www.agorafinancial) , James Rickards was giving his thoughts on why Gold was ready to go on a long strong bull run, and he quoted Commodities expert, Jim Rogers… Let’s listen in… “Rogers makes the point that no commodity ever goes from a secular bottom to top without a 50% retracement along the way.
Gold bottomed at $255 per ounce in August 1999. From there, it turned decisively higher and rose 650% until it peaked near $1,900 in September 2011.
So gold rose $1,643 per ounce from August 1999 to September 2011.

A 50% retracement of that rally would take $821 per ounce off the price, putting gold at $1,077 when the retracement finished. That’s almost exactly where gold ended up on Nov. 27, 2015 ($1,058 per ounce).

This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead.” – James Rickards

I agree with him, and have said that Gold was ready for a long bull run for sometime now… And this period of Gold selling is only making it better for all the Gold buyers that want to buy at cheaper prices, but I wouldn’t procrastinate here… these cheaper levels might not be around too much longer! Of course that’s my opinion, and I could be wrong…

With this being a “Pfennig-lite” today, it’s time to move on and finish this! So…

To recap… New Zealand may have a new coalition gov’t. and that has sent kiwi to the woodshed overnight. Chuck believes it has been oversold, but we’ll have to wait-n-see. The euro is on terra firma this morning as hedging ahead of the ECB’s meeting next week, has the single unit trading over the 1.18 figure again this morning.

Before I head to the Big Finish today…I was doing some reading yesterday, and I had my radio playing 60’s on 6 on Sirius XM, and the old song by Glen Campbell came on. The Wichita Lineman… And in that song is a phrase that could possibly be the most romantic phrase ever used in a song. I’ll let you be the judge… He says, “ And I need you more than want you… And I want you for all time”… That line always gets to me right in the heart… And there you go, I’m be teddy bear at heart…

For What It’s Worth…. Last night I saw an article about Blue Apron cutting 6% of their work force, and then this morning I see where General Electric is cutting their workforce too… It’s starting to happen folks, the tell-tale signs of an economy about to come to a halt… Well, the GE article is here should you want to read about it: http://www.foxbusiness.com/features/2017/10/18/ges-new-chief-starts-making-cuts-starting-with-old-favorites.html

Or, here’s your snippet: “Next month, Mr. Flannery is expected to unveil the results of a strategic review that includes thousands of corporate-level job cuts and scaling back of GE’s global structure, people familiar with the matter said.

The new CEO is shutting down research centers in Shanghai, Munich and Rio de Janeiro, shifting some of their engineering work into individual business units, the people said. The retrenchment will leave GE, which spent more than $5 billion on research and development last year, with just two global research sites, located in Niskayuna, N.Y., and Bangalore, India.

Asked about the looming changes, the GE spokeswoman said: “The company will continue to have an intense focus on our global operations and customer base,” noting that the company gets 70% of its revenue from outside the U.S.

The company is expected to report quarterly results on Friday that include hefty restructuring charges related to the changes, according to analysts.”

Chuck again… I read yesterday that former CEO of GE Immelt, used to have a spare (empty except for pilot of course) jet follow him when he would jet to a destination… Now, that’s overkill, eh?

Currencies today 10/19/17… American Style: A$ .7866, kiwi .7033, C$ .8025, euro 1.1825, sterling 1.3158, Swiss $ .9763, … European Style: rand 13.5110, krone 7.9471, SEK 8.1394, forint 260.84, zloty 3.58, koruna 21.7286, RUB 57.32, yen 112.56, sing 1.3568, HKD 7.8015, INR 65.02, China 6.6220, peso 18.79, BRL 3.1625, Dollar Index 93.19, Oil $51.29, 10yr 2.32%, Silver $17.08, Platinum $928.38, Palladium $962.25, and Gold… $1,287.25

That’s it for today… I’m getting psyched up for my visit to the oncologist today… She’s a great doctor, and always tries to remind me of how strong I am as a person, which is right before I head to the infusion center and reality comes back to me.. 5 solo home runs, and the score was 3-2 in favor of the Cubs last night… I don’t know that I’ve ever seen a game with 5 solo home runs accounting for all the runs in the game! But I have now! I was really impressed with how our Blues played last night, and thought, man would it be great if they could bottle this and let it out for every game? Yeah, and winter doesn’t follow fall! HA! Oh well, The Blues have played 6 games so far, 74 more to go before the playoffs next spring! The Alan Parsons Project takes us to the finish line today with their song: I Wouldn’t Want To Be Like You… And with that, it’s time to get out of your hair today, and send you out to makes this a Tub Thumpin’ Thursday! And remember to Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

 

a) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.

Chuck Butler recently joined the Aden Research Group, a research center led by writers and market analysts Pamela and Mary Anne Aden. The Aden Research Group publishes three newsletters:
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