More Signs That Strong Dollar Trend Is Ending.

* Wheeler doesn’t diss kiwi!.
* Aussie Consumer Confidence soars! .
* Kuroda needs to keep yen above 100..
* Leeb says Gold to be included in SDR’s.

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

Good Day. And a Tom Terrific Tuesday to you! I’m sick of all the political stuff already! And I still have more than 2 months of this stuff to go! UGH! I try to switch the channels, when the ads come on, but then the ads are on the new channel too! They’re here, they’re there, they’re everywhere! And why do people believe that the best way to get your attention is to tell us fabricated stuff? For crying out loud! Just tell us who you are, what you’re going to do to get us out of this debt driven mess, and be done with it! OK, that’s my public service announcement for the day! Tyrone Davis greets me this morning with his song: Can I Change My Mind. Baby, can I change my mind? I just want to change my mind..

Well, I did my usual check of the currencies, metals and Oil right out of the starter’s blocks this morning, and guess what I found? I found that the dollar, who was the king of the hill yesterday, had to go back and fill in the gaps from the move on Friday and overnight Sunday to Monday morning, which means the currencies have reversed the dollar’s moves. But no such reversal has materialized for Gold and Oil.. Gold is flat on the day so far, and the price of Oil has slipped.. So, let’s take this one at a time, and talk about the good stuff first!

The New Zealand dollar / kiwi is the best performer overnight, moving decisively past the 73-cents figure overnight. I told you yesterday that Reserve Bank of New Zealand Gov. Wheeler, was giving a speech that I pretty much figured would contain at least one shot at kiwi strength, which Wheeler believes is kryptonite for the New Zealand economy. But everyone was surprised to hear Wheeler let kiwi skate through untouched, no mention of kiwi strength, or no mention of a rate cut coming in September, just set the kiwi traders on the rampage, and they bean marking up kiwi moving it past 73-cents, where it trades this morning.

The Aussie dollar (A$) is also trading with a flyer this morning as the ANZ Consumer Sentiment Index report rose from 117.6 to 121.8, the highest level since November 2013, as Aussie consumers have boosted their thoughts / expectations of the Aussie economy. One of the Big moving components of the report was the “Time to buy a major household item”, which jumped 7 points!

The Eurozone flash PMI for this month surprised observers for their resiliency and strength, as many have thought that the fallout from the BREXIT vote would hit the Eurozone manufacturing hard. But it hasn’t so far, and the August flash PMI printed at a 7-month high of 53.2, from 51.5. That’s a HUGE jump in this index, and went a long way toward getting the euro back over 1.13 this morning. I like this result folks, because it indicates to me that the Eurozone economy remains on a steady growth path, and no signs of the economy being diverted off that path by the BREXIT vote.

Maybe, just maybe, because you never know, the European Central Bank (ECB) will not have to announce any new stimulus measures when they meet the first full week of September.

Oh, and look at pound sterling! Trading with a 1.31 handle and close enough to 1.32 that it can taste it! If this isn’t a sign that the dollar is seeing chinks in its armor that surrounds the strong dollar trend, then I don’t know what is! The U.K. is a mess right now, and still the pound pushes higher. But what is really happening here is that the dollar is getting sold. and pound sterling is the beneficiary.

And Japanese yen is getting oh-so-close to falling below 100 again. What gives with this yen strength, when the Japanese economy is a basket case, and their debt picture is awfully ugly? Well, I think there are two things in play here. 1. Signs that the strong dollar trend is over, or about to be over, and 2. The so-called Shanghai Accord, which called for yen, euro, and renminbi strength, VS the dollar. Well, we’ve seen yen strength more than we’ve seen strength in the other two currencies, albeit they have strengthened, but just not like yen.

Well, Bank of Japan (BOJ) Gov. Kuroda is scheduled to give another speech today. And, here are my thoughts on that subject. If Kuroda doesn’t make any mention of additional stimulus measures that will be taken at the next BOJ meeting In September, then I don’t think yen will have any problems moving to a level below 100 again. (remember yen is a European priced currency so the lower the number the more value it returns VS dollars)

I have to go down this rabbit hole folks, so stick with me here, but this is important stuff. You see I have to take issue with the Fed members saying that they see economic growth this year. (they just want to make certain that they can say, “see we told you we saw growth, IF they hike rates) Well, I just want to make certain that everyone understands that the Fed told us they saw growth in 2011, 2012, 2013, 2014, 2015, and now this year. In fact, since the financial crisis of 2007 & 2008, they’ve been telling us about green shoots and their view on the economy, which have all been wrong. Yesterday, I told you about the Stanley Fischer speech (Fed member) the day before, and how he talked about the low productivity, and I said that he must have read the Pfennig on Sunday ( ). Well, he also said that “Looking ahead, I expect GDP growth to pick up in coming quarters”. And he’ll hang his hat on the fact that the 2nd QTR GDP will be better than the first Quarter. 1.2% 1st QTR, 2% 2nd QTR. That’s a pick-up right? I’m laughing inside right now, I hope you are too, because you can’t let this stuff get to you, otherwise things will all go black.

Alrighty then, I just pulled myself out of that rabbit hole, and am ready to talk about the price of Oil.. Yesterday morning, Oil saw its price fall to $47.22, and then in the past 24 hours it has fallen further to $46.84. First we had Iraq saying that they were going to increase production, and then Nigeria said they would increase production too. That news has thrown cold water on the hopes that an OPEC meeting in September would call for a freeze in production. I told you when the news of that meeting first came to light and the price of Oil began to rally, that I didn’t hold any hopes of that meeting producing any such agreement to freeze output production, and that we just might see the price of Oil stumble going forward, well that stumble has happened, and now we have to wait-n-see if the stumble will turn into an all-out fall.

Like I said above, the price of Gold is flat today, after gaining just $3 yesterday. Have you heard what analyst and newsletter writer, Stephen Leeb said about Gold? Ok, you’ve got to hear this. Basically Leeb believes that when the IMF adds the renminbi (he calls it the yuan, and you know what I’ve said about calling it the yuan!) that the IMF will also add an allocation of Gold to the SDR’s. Now talk about the largest call to buy Gold that I’ve ever heard of! For if the IMF is going to add Gold to the SDR’s, then all the SDR’s that are out there, would have to have Gold added to them. But then countries like China, Russia and India won’t have to worry, for they already have more than enough Gold to allocate to SDR’s. The GATA folks sent me that info, and I have to say thanks, because otherwise I wouldn’t have seen it!

You know. This is a letter to inform you of things going on that could help you make investment decisions. It’s not an advertisement for something. But there are times that I need to bring something to your attention, and today is that day. So, if you would be so kind to scroll back to the top and check out the marketing ad for our Metals Automatic Purchase Plan. This is akin to dollar cost averaging, which I’m a HUGE fan of. or is it that I’m just a HUGE Fan? HAHAHAHAHA!

The U.S. Data Cupboard printed the Chicago regional manufacturing data yesterday, and while the recent month beat expectations, the 3 month average is still negative. Not a good thing, eh? But I don’t think the markets cared too much about the data, so we’ll move along too. Today’s Data Cupboard will print the Flash PMI for the U.S. As I’ve explained previously, this PMI is different from the ISM that the markets pay more attention to it, but that doesn’t mean that if today’s Flash PMI printed a huge increase or decrease that the markets would ignore it. So, I guess we need to watch for that..

In addition to the Flash PMI, we’ll also have some data on New Home Sales for July. I have no reason to believe that they would be bad given the low level of mortgage rates that still exist.

To recap.. The dollar’s grip on the currencies loosened overnight and early this morning as the dollar had to go back and fill in the gaps from its huge run up Friday and Sunday night. Kiwi is the best performer overnight, as RBNZ Gov. Wheeler didn’t diss the currency or talk about rate cuts in his speech, last night. Aussie Consumer Confidence hit a near 3-year high, and the A$ rallied on the report. Eurozone Flash PMI’s were stronger than expected, and gives Chuck the feeling that the Eurozone economy is on the right path to recovery. Chuck takes issue with Fischer’s call that the Fed will see economic growth in 2016. And Kuroda has a mission to keep yen above 100, will he succeed?

For What It’s Worth. Well for the last couple of years, I’ve chronicled the stories about the “war on cash”. Well, according to an article on CBS News, the War on Cash by the Gov’t, just picked up a new ally, Big Businesses. You can read the article here:

Or here is your Snippet: “Some merchants such as SweetGreen, a salad chain, refuse to open their registers for cash, telling customers they can pay only with mobile payments or cards. With some newer vending machines, only a card or mobile wallet will get that cold Coca-Cola to roll down the chute.

The stance may appear un-American — after all, currency is considered legal tender for all debts or dues — but the Treasury permits private businesses to set their own policies, which means going cashless is fine with Uncle Sam.

“What we’ve seen is a push toward electric payments because of convenience, especially for Generations X and Y and onward,” said Greg Burch, vice president of strategic initiatives as Ingenico Group, which makes payment systems for merchants. “The phone has become more personal than the wallet has.”

While going cashless is still at what Burch said is an experimental level, he predicted that more stores will be adding mobile payment options or their own mobile wallets, similar to Starbucks’ (SBUX) payment app. The coffee chain’s mobile wallet is gaining in popularity: It now accounts for about one out of every five purchases.”

Chuck again. I get it, the younger generations love using mobile apps to pay for things, but that’s just Starbucks and stuff like that. It’ll get tricky when they try to use a mobile app to buy a House, or a car, etc. I like my cash in my pocket. I’ve told you this before, but as a kid, were lower middle class, and I had 6 siblings, so money was scarce at hour house, so the first job I got, I cashed the check, and put the money in my pocket, and felt rich! And so to me, to have cash in my pocket I still feel rich! So, I hope no one ever takes my “cash” away, and makes me pay with my phone! (I don’t mind paying with a phone app, but come on!)

Currencies today 8/23/16. American Style: A$ .7636, kiwi .7318, C$ .7743, euro 1.1330, sterling 1.3180, Swiss $1.0392, . European Style: rand 13.5450, krone 8.2245, SEK 8.3583, forint 274.14, zloty 3.8055, koruna 23.8530, RUB 64.80, yen 100.20, sing 1.35, HKD 7.7533, INR 67.09, China 6.6438, peso 18.26, BRL 3.20, Dollar Index 94.42, Oil $46.84, 10-year 1.57%, Silver $18.97, Platinum $1,105.68, Palladium $694.26, and Gold.. $1,342.60

That’s it for today. Quite a few of you dear readers asked me about my scans, and since I didn’t talk about them some thought I had bad news. But quite the opposite! My scans showed no new signs of cancer. 2. The tumor in my chest is completely gone now! And 3. The tumor in my mouth has seen some shrinkage (but I could have told them that!) So, it was all good. Of course I would love for the tumor in my mouth to be gone, as it has become a real problem with bleeding and so on, but as long as it continues to shrink, I’ll be patient! And my infusion confusion Friday’s are becoming more bearable, so I’ve got that going for me! I still have chemo brain, so when I forget something, I have an excuse! HA! Crosby, Stills and Nash (CSN) take us to the finish line today with their song: Suite: Judy Blue Eyes. They did a great version of that song live at Woodstock! Alrighty then, let’s go have a Tom Terrific Tuesday! And Be Good To Yourself!

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