RBNZ Asst. Gov. Deep Sixes kiwi.

* It wasn’t Wheeler this time.
* Weak PMI’s in the Eurozone and China
* U.K. Retail Sales print weaker than expected.
* A note from my new friends at GATA! .

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

Good day.. And a Tub Thumpin’ Thursday to you! I really didn’t think I was going to be able to answer the bell this morning, but here I am. So I’ve got that going for me, eh? Crosby & Nash greet me this morning with their song: Southbound Train, my fave song by them. Well, we’ve had some major moves overnight, so I guess I should get to them before I gloat about the pep talk I gave our Blues last night! HA! I had our IT guru, Jeremy, in my office yesterday working on a problem I’ve been having with my laptop, and I caught him mouthing along with the music from my iPod. So, it’s not just me!

Well, the biggest underperformer overnight is the New Zealand dollar / kiwi, and it wasn’t data that brought kiwi to its knees. Remember the other day, when I said that Reserve Bank of New Zealand (RBNZ) Gov. Wheeler never misses an opportunity to diss kiwi? Well, it wasn’t Wheeler this time, it was his Asst. Gov. McDermott, who deep sixed kiwi. And while he didn’t just come out and say “sell kiwi”, he might as well have, as he said “the bank is not considering any increase in interest rates but a more balanced evidence of weakening demand and domestic inflationary pressures would prompt us to consider lowering interest rates.” Now, I ask you, to re-read that quote by McDermott, and then tell me if you think it was as dovish as the markets seem to thinking it was? Because I certainly don’t think it was!

And you know that run the kiwi had that brought it within 1/3rd cent of the Aussie dollar (A$)? Well, that has now widened back out to 11/4-cents (that’s one and one quarter, sometimes these fractions in type don’t really work out too well!) I really don’t like the timing of this, given I just highlighted kiwi as our currency of the month! UGH! These darn Central Banks.

Speaking of Central Banks. At my recent talk in Irvine CA, I was asked why I didn’t include the Swiss franc in my list of currencies that are currently looking attractive. I told them that the SNB (Swiss National Bank) continues to talk about ways to weaken the franc, and I don’t like central banks that do that. Well, less than 2 weeks after that talk, the SNB made a move to weaken the franc and reduce franc holders. What did they do now? Well, The SNB reduced the group of franc deposit holders that were exempt from negative interest rates. The announcement caused an immediate selloff in the franc, reducing its value by more than 1%… This move hits some big holders of francs too. Like The PUBLICA, which is the pension fund of the Confederation. (The Gov’t) And the SNB Pension Fund. This is going to be a tough row to hoe and overcome for the franc folks. And another case of a Central Bank, doing devastating things to its own currency. The whole thing just makes me ill. Seriously, it’s a good thing that I take an anti-nausea pill each day!

The euro is carving out a small gain this morning, but the gain was larger overnight before the latest Flash PMI’s printed for the Eurozone. OK, remember the PMI is an abbreviation that we use to describe the Manufacturing & Service sector Indexes. So, the Eurozone Composite (both manufacturing & service) PMI slipped by .5 to 53.5 this month (thus the “flash” ) and the markets reacted violently to the slip of the PMI. But come on! It was .5. Certainly that could be considered a “rounding error”. That is unless we continue to see more slippage going forward. And this .5 slippage isn’t even large enough to register on the scale of things that make up GDP. So, why all the commotion? I shake my head in disgust at the goings on these days.

The Eurozone’s largest economy belongs to Germany, and you can usually look to Germany for the direction of the Eurozone. Obviously, not exactly, but a good indication. And to that end, Germany raised their forecast for GDP this year, and next year. They believe their Annual GDP for this year and next year will be 1.8%… I loved this quote from the German Economic Minister, Gabriel, who said, “Economic success doesn’t just happen, and Germany can by no means afford complacency despite solid growth rates.”

So, yes, I can dig it. “Economic success doesn’t just happen”. But to think that 1.8% growth rates are “solid” is stretching it a bit, eh? Yes, I realize that a year ago, Germany was in a recession, and I also realize that they are really doing this by themselves, as the other Eurozone countries are a drag on aggregate economic growth, but still. I’ll have to go back to my economics books and see where 1.8% growth is considered to be “solid growth”.

In China overnight, we saw the HSBC version of the manufacturing PMI, and HSBC wasn’t so kind to the thought that the Chinese Gov’t’s plans to ease the slowdown, as their PMI printed at a 12 month low of 49.2 for April. YIKES! But remember, the Chinese Gov’t just lowered the reserve ratio requirement Sunday night, so that has yet to be factored into the economy, but facts are facts and the slowdown in China is continue to be tough row to hoe. But. the renminbi / yuan was allowed to appreciate overnight. I always feel that the People’s Bank of China (PBOC) is always a day behind in their fixing of the renminbi/ yuan.

The Indian rupee continues to be caught up in the currency wars going on all around them. And they’ve recently seen an outflow of investments. Recall, a couple of months ago, I talked glowingly about the HUGE inflows into India? Well, they’ve begun to move back out, which is what happens when the “BIG BOYS” see an opportunity, but if they have to wait too long for that opportunity to materialize, they grow impatient, and then sell and move on to their next opportunity. I know that India is working to unlock their economy, but it will take more than a couple of months to accomplish! You have to play good doctor here, and have patience! HA!

In the U.K. this morning, the pound is weaker on the news that U.K. March Retail Sales unexpectedly fell by .5% from February. That data outweighed the good data that printed and revealed that the U.K. Gov’t’s Budget Deficit had narrowed. I guess the fact that it was still a deficit pushed this news to the back of the class and allowed the drop in Retail Sales to be the data print the markets traded off of this morning.

Well, when you see a tumble in kiwi like we saw last night and this morning, there have to be winners from all the kiwi selling. And one of the obvious winners should be Japanese yen. Remember the Japanese housewives swapping their no yield yen for higher yielding A$’s and kiwi? But, yen is back to 120 this morning, and the A$ is down ¼-cent this morning. So, it’s difficult to figure out where the swap money is going. But, you know me, I’ll keep looking under the hood until I find the answer!

We finally saw a little movement in the U.S. Treasury 10-year yield yesterday, with the yield rising from 1.89% to 1.95%… Not a huge move, but the 10-year had been stuck at 1.88/ 1.89% for over a week! I’ve given up looking for this Treasury Bubble to burst. I really have folks. You know, when I first talked about a Treasury Bubble, I had no idea that the Fed was going to become such a HUGE buyer, to suppress yields. Without their buying, who knows where the yields would be right now, but I can make an educated guess that they wouldn’t be 1.95%, they would be higher! Think about what I told you a week or so ago, about how for 5 consecutive months, China has lowered their Treasury holdings. This kind of news should drive the yields higher, but, as long as there is a buyer with deep pockets out there that can take up the slack left by China, nobody notices, and yields certainly don’t move.

Neil Young from his great Harvest album is playing his song: Out on the weekend. See the lonely boy out on the weekend, Trying to make it pay. Can’t relate to joy he tries to speak and can’t begin to say. This song goes well with the C&N song I mentioned above.

The U.S. Data Cupboard yesterday, saw Existing Home Sales jump 6.1% in March VS March of 2014. Now, let me take you back to a couple of days ago when I said this: “there could be a huge run to get a mortgage and buy a house before June, for IF the Fed does decide to hike rates in June, these uber-low mortgage rates, which the guy on St. Louis TV that claims he’s the “mortgage expert” says if you don’t have a mortgage loan rate in the 3’s, you’re paying too much, could be going away, or at least higher. So, a mad rush ahead of June could turn these falling numbers around. But what happens when the Fed doesn’t hike rates in June? Ruh-Roh George!” Chuck Butler’s A Pfennig For Your Thoughts 4/21/15.

So, I guess I had it all pegged, eh?

Today’s U.S. Data Cupboard , and the usual fare of Weekly Initial Jobless Claims are on the menu. In addition, we’ll also see New Home Sales for March, which should have the same push we saw yesterday from Existing Home sales.

Well. Gold got whacked again yesterday, and took Silver, Platinum and Palladium along for a ride on the slippery slope. There was no data to trade off of, nor were there any Fed members out talking, so what led to the whacking that Gold took yesterday? Well, other than price manipulation, I would have to think that what I talked about the other day, with no real economic data in the U.S. that no news was good news for the economy and dollar.

Speaking of manipulation. First I have to give credit where credit is due and that is a huge thank you to Ed Steer, who cleared it for me to use GATA (Gold Antitrust Action) releases from now on. And because of that, I got this note from GATA yesterday that really was interesting to me. So, let’s not beat around the bush, and get right to it.

In 1981, the Bank for International Settlements (BIS) President Zijlstra, wrote in his memoirs that printed in 1992 that “the price of Gold long had been held down by Central Banks at the behest of the United States, which sought to minimize competition for dollar’s role as the international reserve currency.”

In his speech at the IMF in 1981, Zijlstra said: “I feel that it is necessary for us, within the Group of Ten and Switzerland, to consider ways to regulate the price of gold, admittedly within fairly broad limits, so as to create conditions permitting gold sales and purchases between central banks as an instrument for a more rational management and deployment of their reserves.”

Chuck again. I’ll just let that hang there for a minute, and let you read it again if you wish to do so.

To recap. The Asst Gov. for the RBNZ, McDermott, deep sixed kiwi last night, and Chuck doesn’t see why the markets got so riled up over his comments that were dovish, but not THAT dovish! But kiwi is no longer a threat to reach parity to the A$ this morning. The Eurozone Flash PMI’s saw some slippage in April. Germany raised their forecasts for economic growth this year and next year to 1.8%. HSBC printed a weaker Chinese PMI that had manufacturing at a 12 month low, and the U.K. printed a weaker than expected Retail Sales in March. And Gold got whacked again yesterday. what for now?

Currencies today 4/23/15.American Style: A$ .7735, kiwi .7565, C$ .8180, euro 1.0765, sterling 1.5030, Swiss $1.0365, . European Style: rand 12.2410, krone 7.9090, SEK 8.7145, forint 280.05, zloty 3.7280, koruna 25.4470, RUB 51.55, yen 120.00, sing 1.3470, HKD 7.7500, INR 63.32, China 6.1281, pesos 15.42, BRL 3.0095, Dollar Index 97.90, Oil $56.05, 10-year 1.95%, Silver $15.95, Platinum $1,136.50, Palladium $761.75, and Gold. $1,190.98

Before I head to the Big Finish today I wanted to take a minute and bring something to your attention. EverBank is on Facebook, Twitter and Google+. What I’m focusing on right now is Google+. I would like to get a large following for EverBank on Google+, for as of right now, we have just 261. We post some very interesting articles about life, investments, and what we’re doing on Google+. So go to: www.google.com/+everbank, and see what we’re up to!

For What It’s Worth. Well, I received quite a few compliments about the FWIW section article yesterday regarding the words we used to use. Today’s FWIS section is a “you won’t believe what you just read” article. So, I got this from the guardian.com and here goes.

For the first time in US history, a judge has granted two chimpanzees a petition – through human attorneys – to defend their rights against unlawful imprisonment, arguably bestowing the status of “legal persons” on the primates.

On Monday, Manhattan supreme court justice Barbara Jaffe granted a writ of habeas corpus on behalf of two non-human plaintiffs, Hercules and Leo – chimpanzees used for medical experiments at Stony Brook University on Long Island.

In her order, Jaffe ordered Samuel Stanley Jr, the president of Stony Brook, to argue before the court why the chimpanzees were being “unlawfully detained” at his university and should not be transferred to a primate sanctuary in Florida.

The attorneys who brought the petition forward, part of the Nonhuman Rights Project (NhRP), argue that under New York law, “only a ‘legal person’ may have an order to show cause and writ of habeas corpus issued in his or her behalf. The court has therefore implicitly determined that Hercules and Leo are ‘persons’.”

Chuck again. Hmmm. Is this a trick promo for a new version of Planet of the Apes? HA! I just find this to be ridiculous waste of taxpayers’ money. And no emails about animal rights to me please. I spent a lot of summers on a farm.

That’s it for today. Well, how about that pep talk I gave the Blues yesterday, telling them I was really disappointed in their play? The came out like Grant too Richmond, as my dad used to say, (sorry if that’s painful to southerners, it’s just a saying) and blew out the Wild 6-1!!!! Now the series becomes a best of 3, and 2 of the games are in St. Louis. This is much better than where we were two days ago! My beloved Cardinals blew a 5-run lead last night, but then came back to win. I was not a happy camper watching that 5-run lead disappear. Well, I still feel like I need to go to sleep, and I have an important meeting this morning, hopefully no one asks me any questions, for I’ll already be in la-la land! No one normally asks me questions, because just like at home, they don’t want to hear what I have to say, because it’s usually not your run of the mill, business response. When I officially retire, I’m going to change the name of the Pfennig to: Thoughts From The Butler Patio. Now that’s going to be fun! OK. let’s get you on your way to having a Tub Thumpin’ Thursday! Bye~

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