Monday’s Daily Pfennig

* Gold gets Whacked again on Friday!
* Busy Central Bank meetings week..
* Will the BOJ defy the IMF?
* Iron Ore prices get off the canvas!

Good Day. And a Marvelous Monday to you! Well, here I am back in the saddle at the office today. It seems very strange.. As If I’ve been gone for years! And then my Bloomberg had to be updated and new software added before I could even get going on writing! Sure I could have bagged it, and done it later, and just gone back to the way I did things while I was gone, but that’s not me, you know that! When there’s something to be done, I do it, and then worry about moving on. The Foundations greet me this morning with their song: Baby, Now That I’ve Found You. A great old song from the 60’s. I’m really running late now, because of all the “distractions”. My former desk comrades left a Welcome Back sign for me this morning, and there’s a stack of letters, and cards on my desk to read, so, I’ll be busy on my first day back in the saddle!

So, nothing works for me this morning. Why did I get up at o’dark 30 then? Some days it just doesn’t pay to try and function! Well, I don’t have any contact with the markets at this point, but I do know that this will be a very busy week, with economic data, Central Bank meetings, and Corporate Earnings here in the U.S. The Fed will meet on Tuesday & Wednesday this week, and there’s very little chance that the Fed would opt to hike rates at this meeting, and in fact, I doubt that we hear very little about what their thoughts are at this time, given the fact that there will be no Press Conference following the meeting. Two days are needed to tell us that they are keeping rates unchanged? Oh well. get the board games out, it’s a two-dayer.

Other Big Highlights of the coming week, include Oil Inventory from the American Petroleum Institute tomorrow afternoon, and then a report from the Energy Dept. on Wednesday morning, as there is so much attention paid to the price of Oil these days, as a sign of good or bad..

On Thursday, the Bank of Japan (BOJ) and the Reserve Bank of New Zealand (RBNZ) meet to discuss rates in their respective countries. The Japanese yen has really lost some ground since early last week, and a lot of that lost ground come from the whispers in the wind, that the BOJ will be looking to cut rates even deeper into negative territory. The RBNZ is not expected to cut rates at this meeting, as they attempt to see what last month’s rate cut has brought them.

I find this BOJ meeting to be the most interesting one of the week, in that are they going to defy the IMF and the Shanghai Accord that told them to stop deliberately weakening the yen, and cut rates further which would do exactly that? Weaken the yen.

There was some very good news that came out of Australia overnight. The interest in trading iron ore is taking off, and that’s a good sign that 1. China is doing the ordering, and 2. The Aussie economy will grow. As a percentage of open interest, trading volume in iron ore futures hit a record 621.5% last week! That’s 15 times the long-term average! Iron ore accounts for about 20% of the value of Australia’s exports, so when iron ore rallies it is considered manna from heaven for the Australian economy.

It’s ANZAC Day in Australia and New Zealand today, so they are on holiday.. Happy ANZAC Day to my friends in Australia and New Zealand!

And with the Chinese demand. One has to believe that all the liquidity injections that the China has been making ($945 Billion total) if being directed to construction, and, that has to mean that the domestic demand for space is rising, and that’s a very good sing for the Chinese economy, that has been in slowdown mode for a long time now.. The other thing that’s taken from the 621.5% open interest is that there has to be a lot of speculation in that number. And well, speculators can drive markets when they put their collective minds to it!

The April Business Climate report for Germany as measured by the Think Tank IFO, came in lower than expected 106.6, down by 0.1 points from the previous month.. Last week we saw the Flash PMI’s for the Eurozone and they had ticked upward, so I guess a 0.1 point downward tick isn’t that bad. I would have thought that with the Flash PMI’s gaining ground, that the IFO would be better than this. Maybe in Germany, they are like we are in Missouri, we need to be shown that this is for real.. The euro is stronger this morning, but last week was not kind to the single unit, so it has some work cut out for it to do!

Gold got whacked on Friday, and lost $15.80 on the day, with most of that $15.80 loss coming in 5 minutes of trading. That’s right, that’s what I said. Now, why can’t people see this and do something about it? Because they don’t want to, that’s why. So, Gold is up $4 this morning, but what an awful day on Friday. I’m glad I was flying back home, and then proceeded to go to sleep once I got home, for most of the day, as I was still whacked out from my infusion on Thursday. And Silver lost the $17 handle that it had gained earlier in the week and proudly had it on display until the road wreck that caused Gold to drop $15.

The U.S. Data Cupboard will leave us wanting today, but tomorrow it kicks into gear with March Durable Goods Orders, which will most likely print another negative result . This is one of those “real economic data prints” that I talk about, and it sure doesn’t paint a pretty picture of the U.S. economy.. And I think the Fed members are beginning to see that, as there hasn’t been much talk about a rate hike in April lately has there? And there won’t be. It will be interesting to see what becomes of the talk after this week’s Fed meeting. Will the rate hike campers come out of the wall boards and start talking about a rate hike in June again? Or will it all be quiet on the Western Front?

I see that the IMM Positions reports shows that the Commitment of Traders (COT) has turned bearish on the dollar. This is a very good indicator of what I’ve been saying and that is that the dollar’s strong trend is coming to an end.

I apologize for the shortness of the letter today. with a travel day on Friday, and then not having my usual screens to deal with this morning, has left me void of a lot of info and data. But we’ll get it all fixed today, and see how things turn out tomorrow morning! I don’t have all the currencies as usual, and the Currency Roundup will be lacking a lot today, but it’s just one day.

To recap. Chuck’s Back in the saddle, and nothing works! It’s a difficult day for him as he tried to patch together some info for the letter.. But the dollar is mixed today, and Gold lost $15.80 on Friday, but is up $4 this morning. It’s a busy week for Central Bank meetings and economic data and Corporate Earnings. The Fed has a two-dayer all lined up for this week on Tuesday and Wednesday, and the BOJ will be watched closely for any signs that they are defying the Shanghai Accord and weakening yen anyway..

Before I head to the Big Finish. I wanted this to be a Public Service Announcement, and then I see that my guitar playing, investment guru, friend, Steve Sjuggerud decided to do this too.. So, I’ll let him tell you about it, for he is a wordsmith, and I’m just a country boy in the big city. “In short, if you get a phone call out of the blue, supposedly from the IRS, hang up. It’s most likely a scam.

IRS commissioner John Koskinen says:
Taxpayers across the nation face a deluge of these aggressive phone scams. Don’t be fooled by callers pretending to be from the IRS in an attempt to steal your money. We continue to say if you are surprised to be hearing from us, then you’re not hearing from us.

The IRS says it will never “call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.”

So.. there you go! I hope this helps someone!

For What It’s Worth.. This is on the public side of the Bloomberg so you can see this entire article here:

Or here’s your snippet.” Schlumberger Ltd. cut more jobs in the first quarter as the world’s largest provider of oilfield services sees the industry in an unprecedented downturn.

The global headcount dropped to 93,000 at the end of the first quarter with the reduction, Joao Felix, a spokesman for the company, said by e-mail. The company let go about 8,000 people in the quarter, and reclassified about 5,500 contractors as permanent workers, Chairman and Chief Executive Officer Paal Kibsgaard said Friday in a conference call with analysts and investors. One-third of Schlumberger’s workforce, or roughly 42,000, has now been cleaved off since the worst crude-market crash in a generation began in mid-2014.

“The decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis,” Kibsgaard said in a statement announcing first-quarter earnings Thursday. “This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.”

Chuck again. I’ve warned people for over a year now that the financialization of the Oil business was going to come up Front and Center soon enough, and be a BIG problem for the economy. Well, here we go..

Currencies today 4/26/16. American Style: A$ .7720, kiwi . .6867, C$ .7887, euro 1.1255, sterling 1.4505, Swiss $1.0260, . European Style: rand 14.4930, krone 8.2225, SEK 8.1332, Forint 276.55, zloty 3.9025, koruna 24.0305, RUB 66.24, yen 111.05, sing 1.3520, HKD 7.7575, INR 66.63, no price on China today, pesos 17.56, BRL 3.5633, Dollar Index 94.79, Oil $43.30, 10-year 1.77%, Silver $16.94, Platinum $1,025.50, Palladium $608.65, and Gold. $1,233.50

That’s it for today. Late of course, sorry. Late and not up to usual. UGH! Double sorry! But I’ve been scrambling all morning trying to find prices and news, etc. I had a great weekend, especially yesterday, it was a Chamber of Commerce Day here, and all the kids and grandkids were over.. Even Alex was there! My beloved Cardinals took 2 of 3 from the Padres in San Diego over the weekend, strange start times for the games, and now onto Arizona, for some more late start times! UGH! And our Blues. Oh no, here we go again! Jump out to a 3-1 lead in Game 6, only to lose 6-3! Game 7 is tonight in St. Louis. Let’s not allow the visitors to score on our home ice! The Blues need to shake this albatross (the Blackhawks) from around their necks and go on with the playoffs! Brian Setzer Orchestra takes us to the finish line today with their remake of the great Santo and Johnny song: Sleepwalk. And with that I need to get this out the door.. I hope you have a Marvelous Monday
and Be Good To Yourself!

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