More Signs The U.S. Economy Is Weakening.

In This Issue.

* Mixed bag-o-currencies today.
* China to cut their RR?
* A$ carves out gain.
* Chuck goes bananas again!

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

Good Day. And a Happy Friday to one and all! Right from the get-go this morning, let’s do everything we can to make this a Fantastico Friday, OK? The week has been long, the morning’s tough, the data weak, and the GT’s starting to wear on us, so let’s put it all behind us and make this a Fantastico Friday, that leads to a Wonderful Weekend! I know, I know, I have to get through today’s letter, which won’t be much of a lead in for a Fantastico Friday, but that’s a given, so let’s enjoy the letter and then get to work on having a great day! Dobie Gray greets me this morning with his song: Drift Away. Give me the beat boys, to free my soul, I want to get lost in your rock-n-roll and drift away.

Well, to start the day, the dollar is slightly stronger this morning. The Dollar Index remains under 100 at 99.76, but it has been inching higher since dropping to 99.56 earlier in the week. No BIG shakes, but stronger overall. Some currencies have maintained their moves earlier in the week VS the dollar, while some, like the Petrol Currencies have really lost some footing and are no longer on terra firma. And then some currencies seem to be stuck in the mud, having neither moved earlier in the week or now! So, another mixed-bag-o-currencies today.

And the precious metals aren’t making headlines either, in fact, if there were to make the headlines, it would be a headline telling of metals weakness since earlier in the week. Last week at this time Gold was sitting bang on the technical level of $1,291, which the technicals told us that should Gold breach that level, it was ready to break out to the upside. Unfortunately, Gold didn’t breach the level, and if it’s done anything since reaching that level, it has broken out to the downside. UGH! But, I remain optimistic here, and therefore believe that the cheaper levels of Gold potentially give us an opportunity to buy at cheaper levels. That’s not a buying recommendation, it’s simply pointing out that if you were looking to buy, you could certainly do so at cheaper levels today and prices could continue to go lower.

And Silver has dropped below $18, which is a real bummer to me. But then if you read yesterday’s Pfennig, and see the number of days of production it would take to fill the short positions that are on the books, then you can probably live with Silver below $18. I’m different, of course you knew that, I believe that with physical demand, we can wipe out the paper trades. And then $18 Silver could be in our rear view mirror!

So, the currencies that have carved out gains VS the dollar overnight include the Aussie dollar (A$), and Palladium. That’s it! The list of weaker currencies VS the dollar is too long but you can certainly see the currencies’ values in the currency roundup below. The euphoria toward the call of a snap election in the U.K. has worn off on the pound traders. The pound had gapped up from 1.2545, to 1.2845 in one session’s trading when the election was announced by UK PM May. But has since looked unable to add to those gains, and instead has faltered a bit, barely holding to the 1.28 handle this morning. So, maybe the pound traders around the world read the Pfennig, and saw that I had said that I thought this calling an election was a risk that didn’t need to be taken. Well, don’t laugh, it could be happening! And don’t give me that “when pigs fly” line either! I’m saying traders around the world are reading the Pfennig. That’s my story and I’m sticking to it! HA!

The GT’s have backed off as the week has come along, and that’s seen in the Japanese yen weakening, Gold weakening, and the 10-year Treasury’s yield ratcheting higher, not much, but still not looking like it was heading to 2.10% like it did earlier in the week. But here we are to the weekend again, and the weekend is when these GT’s seem to flare up. Hopefully, we can get through this weekend without any GT’s. (for those of you new to class today, GT’s is short for Geopolitical Tensions)

I think the euro, holding above 1.07 is looking pretty interesting, given the French election’s first runoff is scheduled for Sunday. It’s still a 4-way, neck to neck battle between candidates. I have to say the French have an interesting vote to make, given that they can choose a candidate that represents: leaving the euro, a deeper dive into socialism, a far right candidate, and a far left candidate. It’s too close to make a call here, and besides who knows what the French voters will do? Whatever outcome, there’s bound to be a section of voters who don’t agree, and things could turn sour here.

The Petrol Currencies led by the Russian ruble are taking one to the mid-section this morning, and it’s not just the ruble hunched over, trying to regain its breath that was knocked out of it. The Norwegian krone has slipped further downward, the Brazilian real has slipped downward too, with the Canadian dollar / loonie the only one bucking the trend, and the loonie wallows around in the mud.

The Indian rupee started its “pause for the cause” earlier this week , and has continued it throughout the week, which as I said earlier in the week that this pause was good, for it will keep the rupee from overheating, is certainly keeping the heat off now!

And the Chinese renminbi continues to trade around 6.88 and change. There was a rumor going around that someone’s underground and.. No wait! That’s not the rumor I’m talking about! This rumor that’s going around is about how the People’s Bank of China (PBOC) is going to reduce the reserve ratio, this would be a good thing, given it goes along with the general loosening of the capital controls, which would tell me that the Capital outflows in China have abated.

No wonder the A$ is the one of the few currencies with gains this morning! Should China make that move, the Global Growth currencies, led by the A$ could get on the rally tracks!

Well. I’m very exhausted by the never ending information that comes my way regarding the stuff that just doesn’t seem right here in the U.S. Yesterday, it was a blurb about the latest report on bankruptcies from the American Bankruptcies Institute, who reported that In March there were 81,590 Commercial and Consumer Bankruptcies files. Compared to last March when the number was 78,372. So, quite a pick up, right? Well, immediately my mind began to go back to the March BLS jobs report, in which they said that the economy created just 98,000 jobs in March. Well, let’s see. 32,000 of the 98,000 were added by the BLS with their birth/ death model. Now, put 1 and 1 together. Bankruptcies were over 81,000 and that included Commercial bankruptcies, so lots of businesses closed in March, but, the BLS said that Openings were greater, and so they added 32,000 jobs after the surveys were completed, to get to 98,000. Not that it would have made that much of a difference in 98,000
or 66,000, the point is that the BLS’s hedonic adjustments aren’t warranted, not when you see data like this!

In addition, I also saw an article on MarketWatch about how 65% of Americans are losing sleep over money issues, which is worse than before the Great Recession. If that’s so, then how on God’s green earth has the Consumer Confidence continued to go higher and higher each month? Don’t you just love it when we have data conflicts? It just makes everything so clear as mud!

Oh and one more thing. (I told you I see a lot!) A U.S. Census Bureau report shows that 1 in 3 young adults live with their parents. and that 2.2 Million also don’t go to school and are not employed. I’ll get on my soapbox here and tick a few people off, but I’ve got my hands in the air like I just don’t care! See what all your coddling, and giving trophies for participating have gotten you? But then you’re probably in heaven because little Tommy, that’s not so little any longer, is back home, where you can feed him, wait on him, and make sure he’s comfortable while he sits there and plays HALO on his Xbox.. UGH!

Yesterday’s U.S. Data Cupboard was basically dry, but did have a couple of 3rd tier data prints, and one of them was the Philly Fed Index, which is an index of manufacturing in the region. The only reason I’m talking about it is because it dropped from 32 in February to 22 in March. Which is a big drop, right? The thing about 22 is that it is still a very strong number, and in fact only one number in the data’s history is higher, and that is February’s 32! So, a HUGE drop, but still a strong number. clear as mud.

Today’s Data Cupboard has the Existing Home Sales from March. And some Markit prints on manufacturing and services. I’ve explained these before, and that is that Markit is an independent data collector, and not the official Gov’t reports..

Gold closed yesterday at $1,281.70 up $1.40 from Wednesday’s close. In the early morning trading today, Gold is up a buck or two. Yesterday’s trading in Gold saw 230,000 contracts traded.. That’s just crazy folks. 230,000 contracts! I read in Ed Steer’s letter this morning that The Central Bank of Russia (CBR) has added 2.1 Million Troy ounces of Gold to their reserves in 2017, which that 2.1 Million total is equal to the amount that has been mined so far in 2017. So, they’re keeping all that they mine, good for them!

To recap. it’s another mixed-bag-o-currencies today, and the metals have backed off too, except Palladium. The A$ is the about the only currency with a gain carved out VS the dollar this morning, but then there are a lot of currencies that haven’t moved much at all. The French first runoff of their election is on Sunday. It’s a 4-way neck and neck battle right now. Data lately has been conflicting, making everything clear as mud. GT’s have backed off and yen, Gold and Treasury yields have backed off their gains from earlier in the week. And Chuck goes all bananas on a report about 1 in 3 young adults living with their parents..

For What It’s Worth. Well the extravagances of the world continue to amaze me. From people taking vacations to destinations you never heard of with Butler service, to suburbanites driving the new Bentley SUV that costs $250,000, and now the housing bubble in Toronto joins in. I’ve been telling you about the housing bubbles in Toronto and Vancouver for a couple of years now, and this article tells of the craziness that’s going on with home prices in Toronto. it can be found here:

Or, here’s your snippet: “It’s no secret that the real estate market in Toronto is out of control, but this latest ‘sold over asking’ case is shocking nonetheless.

A three bedroom, three-and-a-half bathroom townhouse on Davenport Rd. in Toronto recently sold for $1 million over its asking price.

Originally listed at a very respectable $1,995,000, the home sat on the market for one week before selling for $3 million.”

Chuck again. Can you believe that? The home sold for more than $1 Million over the asking price! That’s right I said 1 Million! And. here’s the real bugger for me. it’s a Townhouse, that’s right it’s an attached home with limited outdoor space, and it sold for $1 Million over the asking price! Can you say Bubble? I knew you could!

Currencies today 4/21/17. American Style: A$ .7537, kiwi .7015, C$ .7430, euro 1.0720, sterling 1.28, Swiss $.9981, . European Style: rand 13.1465, krone 8.6180, SEK 8.9830, forint 292.54, zloty 3.9848, koruna 25.1275, RUB 56.33, yen 109.11, sing 1.3974, HKD 7.7765, INR 64.63, China 6.8838, peso 18.82, BRL 3.1488, Dollar Index 99.76, Oil $50.66, 10-year 2.24%, Silver $17.97, Platinum $976.71, Palladium $801.76, Gold $1,283.00, and SGE Gold. $1,287.37

That’s it for today. I met Frank Trotter for lunch yesterday at his favorite place, and bought him lunch for his birthday. We had lots to talk about, and the conversation went well past our the finishing of our food. I see my St. Louis oncologist today for the first time since December. I have a bone to pick with him, so he had better be ready! My beloved Cardinals couldn’t keep their win streak going last night, and our Blues resume their playoff series with the Wild tonight in Minnesnowta.. (that’s what Frank calls the state, and he should know, he played his college hockey there!) Let’s Go Blues! Oh when the Blues come marching in. Blues fans get a chill when they hear that song! Well, it’s supposed to be a yucky weather-wise weekend here. UGH! Tomorrow is Earth Day. And Sammy Hagar takes us to the finish line today with his very appropriately titled song: Rock-n-Roll Weekend! Time to get off this bus this week, and head toward the weekend, but first let’s have a Fantastico Friday. Be Good To Yourself!

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