Retail Sales Up, But Disappointing.

* Dollar gets sold on disappointing Retail Sales.
* But rallies back in overnight and morning sessions.
* China 1st QTR GDP at 7%.
* 2 positive days is not a trend .

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

Good day.. And a Wonderful Wednesday to you! It’s also Tax Day, April 15th. So, with that, we have a Pfennig Tradition for Tax Day. “Let me tell you how it will be, There’s one for you, nineteen for me, Cause I’m the Taxman, yeah, I’m the Taxman.” – The Beatles. And I can tell you when I signed the paperwork to file my taxes on Monday, that’s how I felt. one for me nineteen for the taxman. So, now the government has taken their pound of flesh from me in taxes, I can begin to work for this year. The tax Freedom Day varies by state, but as a nation, the day is 5 days later this year than last year and arrives April 18th.

Taxes. I saw a cartoon this past weekend in the paper, that a kid asks his day why he has to pay taxes, for he thought it was a “free country”. the dad says, we have to pay taxes so we can have schools, police, fire, and good roads. But then says under his breath, it would be fine if it stopped there!… I agree.

Well, yesterday saw a wild swing in the currencies, and for once it was a positive swing, as the dollar got sold after the Retail Sales report printed. U.S. March Retail Sales grew at .9%, which missed the expectation of 1.1%, but that wasn’t the only thing that cast a shadow on the .9% increase over last month. The thing that cast the longest shadow on the data, was the fact that it was pumped up with Auto sales. Gasoline sales were down -.6%, and when you just look at the “control Sales” which removes auto and gas sales, Retail Sales were only up .3%… That’s a far cry from 1.1% expected, eh?

So, the dollar bugs crawled back into the floorboards, as the lights were turned out for the dollar on Tuesday. The markets seem to be getter smarter and doing what I’ve always done, look under the hood at data. The looked under the hood yesterday, saw that Retail Sales were not what they were made up to be, and then went about selling dollars, because it was another nail. Recall, that we talked about the need to begin gathering nails for the Fed’s rate hike coffin.

And like I always tell you, watch the dollar for direction in the euro. So, the dollar got sold, and the euro rallied to 1.0650, almost a full cent on the day. But then a reminder of the fact that Greece is still hanging around the euro like a cheap suit, got to the euro overnight and it has given back ½-cent.

Well, Chinese 1st QTR GDP printed last night. I might remind everyone that the Chinese Gov’t said a few months ago that they believed GDP might fall to 7% (from 7.5%) and guess where 1st QTR GDP printed? Ahhh grasshoppers you are so smart! Yes, of course 1st QTR GDP in China was 7%! While 7% is not 10% like China used to print every quarter, it’s also not 1%, which is where I believe after all the revisions are made, the U.S. 1st QTR GDP will print. So, think about that for a minute.

OK. Now that I’ve given you a minute to think about that, let’s talk about this from my point of view, which is you can grow your economy so strong that it reduces the debt. So, the U.S. needs to grow its economy to reduce debt, but it’s not. the average annual GDP 2.15% In the last 4 years. it just cracks me up when I hear people say stuff like GDP is growing. Well, technically it is, that is if you really want to count 2.15% a year as “real growth”, then go ahead. But it won’t make any dents in the national debt. Oh, and the Fed is still talking about hike rates. let’s see, we achieved an average growth the last 4 years of 2.15% with zero interest rates, I wonder how that will turn out when rates are raised?

Of course, I’ve gone on record saying there will be no rate hike in June, and I know you’re getting tired of hearing that from me, but there are new readers every day folks, and this might be the first letter they read. Then in June when I’m doing the boogaloo down the streets of Broadway because I was right, they might think, “I don’t recall him saying that”. The Fantastic Johnny C did that song, Boogaloo down Broadway, and the great Wilson Pickett sang “Funky Broadway”.

Two days do not make a trend. But the Norwegian krone has been in the black for two consecutive days. As I told you yesterday, the major trading in krone has been VS the euro, and thus the gains the krone is making VS the euro. But in the crosses that are traded, they eventually come back to dollar / krone, and the krone has a two consecutive day rally Vs the dollar going on. But I want to make sure that everyone understands that the krone is really trading VS the euro right now. it’s not a dollar / krone trade, but ends up being one on the crosses. But we’ll take any rally we can get from the krone, eh?

The best performing currency overnight is once again the Russian ruble, which is now trading with a 50 handle. And Russia is getting ready to deal a bond offering that’s the largest they’ve done in 15 months, if that bond offering goes off without a hitch, we could very well see the ruble below 50 by the end of the day. I’ll remind everyone that the ruble is an emerging market, and therefore only Speculative money by Speculators should be allocated to the ruble. And I also want to point out that before the conflict in Ukraine became headline news, and the sanctions were placed on Russia, the ruble traded around 35.

The Chinese renminbi / yuan was allowed to appreciate by a wider margin than what we’ve seen lately. Apparently the Chinese Gov’t was pleased with their 7% GDP print! I think it’s important to look at things relatively, and compare them to what’s around. That’s when China’s 7% GDP outshines just about everyone else, and given that they are tied with the U.S. as the world’s largest economies, it makes sense to compare their GDP number to that of the U.S. When you do that, you get a different sense of what’s to come for the two countries. Well, at least I do. I know, I’m different when it comes to this stuff, but. it serves me well, I think!

Well, as I’ve gone along here this morning writing the letter, the dollar has gotten a little stronger than when I first began to put things together for the letter. I also saw a snippet of an interview with Doug Casey in the Daily Reckoning yesterday, and in it, Doug attributes a lot of this temporary dollar strength to the fact that there’s so much dollar denominated debt in the World, and so much to have to take on, and that is supporting the dollar right now.

The U.S. Data Cupboard is chock-full-o-data this morning. and it includes two of my fave prints: Industrial production (IP) and Capacity Utilization (CAPU) for March today. I would say that keeping with the weak data prints, that I would look for a very weak IP print today, and for CAPU to weaken too. We’ll also see the Net Long term TIC Flows, which I always remind everyone that this used to be a Big Deal, but no longer is. And the Fed’s Beige Book prints this afternoon. And as usual the markets will scour through the Beige Book for signs of direction.

Gold is flat to down a buck or two this morning, it just keeps flipping back and forth. I haven’t seen anything else from the story I told you about yesterday that was in Ed Steer’s letter, talking about a secret meeting of Central Bankers in Washington this Friday to discuss Gold. This morning Ed has another intriguing headline it goes like this: Hedge Funds/ Managed Money Double Bullish Gold Price Bets. Well, that’s fine, but they could really make a difference by stepping up the plate and knocking it out of the park by taking those futures trades and trading them in for physical Gold trades!

For What It’s Worth. Several years ago, I sat in the audience at the Hotel Vancouver, during the premier showing of I.O.U.S.A. the award winning documentary that my friend Addison Wiggin and company put together to bring the problem of the U.S. Debt to the everyday man’s attention. My oldest son Andrew, who teaches High School students, used to show I.O.U.S.A to his students, and quiz them on it, to make sure they understood what it was about, but it has become a little dated now. So, I lit up like a Christmas tree when I saw that Addison had an update in the Daily Reckoning yesterday. So, here is Addison Wiggin.

“The U.S. budget deficit widened slightly during the first half of the 2015 fiscal year,” reports The Wall Street Journal, “ending a streak of sustained declines.”

The government spent $439 billion more than it took in revenue. That’s up 6% from the same period last year. Meanwhile, Obama, Boehner and McConnell are still patting themselves on the back — pointing out that deficits are still at the lowest levels in six years. Instead of spending trillions — with an s — they don’t have, they spend a singular trillion that they’re light.

What they fail to mention is that the federal government took in $98 billion more in tax revenues than they did last year. In other words, the spending problem’s gotten worse.”

Chuck again. When does all this crazy deficit spending end? Well, when daddy takes the T-Bird away, no wait! When daddy takes the credit card away. And who’s your daddy, is he rich like me? No wait! Man will I ever get through this part? But is our daddy is China?

To recap. The dollar got sold yesterday after the markets looked under the hood of the March Retail Sales and found problems. But the dollar has come back overnight and in the morning session in Europe. The Russian ruble is the best performing currency overnight, and Chuck warns about the ruble being speculative money only. Chinese 1st QTR GDP rose 7% which is down from the previous quarter’s 7.5%, but still 7% is better than the 1% that Chuck believes the U.S. 1st QTR GDP will print when all the revisions have printed. And Gold is flat to down a buck or two this morning.

Currencies today 4/15/15. American Style: A$ .7590, kiwi .7505, C$ .7975, euro 1.0590, sterling 1.4750, Swiss $ 1.0250, . European Style: rand 12.1350, krone 7.9575, SEK 8.7955, forint 281.10, zloty 3.7890, koruna 25.8635, RUB 50.63, yen 119.55, sing 1.3610, HKD 7.7515, INR 62.37, China 6.1340, pesos 15.32, BRL 3.0620, Dollar Index 99.17, Oil $53.90, 10-year 1.90%, Silver $16.15, Platinum $1,152.14, Palladium $ 765.60, and Gold. $1,191.39

That’s it for today. Well, thanks to all that sent along get well wishes to me yesterday. I think my proactive response to this coming on, saved me a trip to the hospital, at least for now it has! I want to go back to S. Florida. I had not problems like this when I was there! The vitamin D was great every day! And besides it’s the middle of April and here in St. Louis, it’s damp, chilly, and gray. UGH! No double UGH, UGH! The Great Dusty Springfield is singing her song: song of a preacher man in the iPod right now. I’m really surprised I got through the letter today without nodding off, I just kept thinking, I’ll close my eyes for just a few minutes. and then I would say, “no you can’t do that” and I didn’t, and now it’s finished! See what you can do when you put your mind to it! Now if the currencies and metals would do the same! HA! Hopefully the rain will stay away so the Cardinals can get back on the field tonight.. A day game tomorrow, and I won’t be able to go! UGH! I love day games, as I truly believe that’s when games should be played! And with that. I hope you have a Wonderful Wednesday!

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