Same Mixed Bag-O-Currencies Today.

In This Issue.

* Euro and “euro-lites” rally.
* Rubles and real rally!.
* Oil drops below $50.
* US to put 20% Tariff on Canadian lumber.

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

Good Day. And a Tom Terrific Tuesday to you! I’ve got to get this out the door to Mike Meyer this morning for the finishing touches, because the hospital scheduled a CT scan for me at 6:30am this morning. So, this will be short-n-sweet, but jam-packed full-o-news that will help you think today.. Chicago greets me this morning with their song: Dialogue, which is a conversation in a song, that could very well be sung about what’s going on today too. But it was recorded in 1972.

Today’s trading looks to be a carbon copy of yesterday’s price actions. The euro held its gains overnight, and is adding to them this morning, with the single unit knocking on the door to 1.09. But most of the other currencies are either treading water, or losing ground to the dollar this morning. Pretty much what we saw yesterday, but Dollar Index was able to recover a tiny, tiny, tiny bit and sits at 98.98 this morning. The commodity currencies aren’t faring so well this morning, which leads me to the next paragraph.

Well, I won’t say that this compares to the tariff that President Bush put on Japanese Steel back in 2001, which helped to sink the dollar, and send it to the weak dollar trend that began 2002 and ended in 2011, but it could, you never know. What am I talking about? Well, it seems that President Trump has ordered a 20% tariff on Canadian soft wood products coming into the U.S. The U.S. Commerce Secretary, Ross, is calling this an anti-subsidy duty, and will affect about $5 Billion in trade with Canada. Canada could appeal the tariff in the WTO, but by the time that gets heard it would be too late. I read where lumber prices have gained 20% since the U.S. election.

With all the things that have gone on in the past 10 years, and all the unintended consequences that have risen, it makes me stop to think about what the unintended consequences could be to this tariff on lumber imports. Hmmm, think Chuck, think! Oh! I have one, and of course usually the unintended consequences arise later in the process, but I do have one. Could this tariff have any say in construction workers in the Northern states? I guess we’ll have to wait-n-see, eh?

OK. So, like I said, not in the same league as the tariff on Japanese Steel back in 2001, but still a sign that the President is willing to carry out his “buy American, hire American” program.

Like I said above the commodity currencies are not faring well this morning, as they are being dragged down by the Canadian dollar / loonie, which has lost about ¾’s of a cent on the tariff news, and kiwi showing the most sympathy for the loonie has lost about the same as the loonie.

The price of Oil slipped below $50 in the past 24 hours, and is trading with a $49 handle this morning. Yesterday, I told you that the Norwegian krone was getting pulled higher by the euro, and shrugging of the lower Oil price. Well, that’s not happening today, as the krone slips along with the price of Oil. I told you yesterday that the Swedish krona was rallying on the French election news, and told you why. Well, that rally has continued and the krona is pushing the currency appreciation envelope with some pent up frustration this morning.

I’ve told you before that I usually check the Russian ruble first before looking at the price of Oil. And the ruble normally gives me all the information on the Oil price that I need to know, given the rubles close ties with the price of Oil. Well, that didn’t play out this morning. the ruble has moved below the 56 handle (which is good because it’s a European priced currency) while the price of Oil slides below $50, which isn’t good for Oil investors! Oh! And the Brazilian real also gained overnight. So, yesterday morning we had a mixed bag of Petrol Currencies, and we have the same thing today, but the currencies have switched places. Yesterday, the ruble and real were getting sold, and krone & Loonie were rallying. Today we have the ruble and real rallying, and the krone and loonie getting sold. Strange days indeed!

Well, I’m not even your last choice as a stock jockey, and I’ve never claimed to be one either! (I take that back, I was one when we first opened EverTrade Direct Brokerage, but that was only for 6 months!) But I had to sit up and notice yesterday when I received an email from MarketWatch, that said that it took 17 years, but the S&P500 Tech sector finally recovered all their losses from the tech bubble popping in 2000. WOW, 17 years? I had no idea this sector was still in the red until just a few days ago! No wonder my stock account hasn’t looked good! (I kid.) But 17 years. That’s a long time especially for someone like me! But there you have it.

And as long as we’re talking about “other things” this morning. The Wall Street Journal (WSJ) sent me a note yesterday telling me about Saudi Arabia’s plan to take the national Oil company public. It seems that the crowned prince of Arabia told the people putting together the offering that the deal was worth $2 Trillion, but when all the beans were counted. Officials working on the deal have struggled to come up with a scenario under which Saudi Aramco is worth more than $1.5 trillion, according to people familiar with the matter, even after factoring in a recent tax cut and other tools the government has to make it more attractive to investors. Uh Oh. someone has a lot of explainin’ to do, eh Lucy?

OK, let’s get back on track now.. Gold was down nearly $17 yesterday morning on the removal of the risks associated with the French election. But Gold fought back all day, but eventually succumbed to the selling to end the day down $7.90 and close at $1,276.00. Not a good day for the shiny metal, but then not as bad as it was at one point in the day, either! Ed Steer tells me that there were 272,000 contracts traded in Gold yesterday. That’s just crazy folks, crazy! Silver remains under $18 at $17.88 this morning, and not looking like it will challenge $18 any time soon. UGH! But with N. Korea out there doing whatever it is they’re doing, the chances of risk coming back are high, and that would be what Gold and Silver are looking for!

In another sign that the economy is weakening while the Fed hikes rates. I found this in the 5 Minute Forecast yesterday, and I thank Dave Gonigam for all his help through the years. Let’s listen in to the 5!… “Every month, Creighton University economist Ernie Goss surveys bank CEOs in rural areas of 10 states stretching from Illinois to Wyoming, and the Dakotas to Kansas. From that survey he compiles his Rural Main street Index. Numbers above 50 indicate a growing rural economy; below 50 a shrinking one.

The number’s been mired below 50 for 20 straight months. In February it notched its highest reading since September 2015 at 45.8. But it’s been sliding backward ever since, and the April number is 44.6.

“Weak farm commodity prices continue to squeeze Rural Main street economies,” says Goss. “Over the last 12 months, livestock commodity prices have tumbled by 5.8% and grain commodity prices have slumped by 4.5.”

And that leads into the U.S. Data Cupboard. which has the S&P/ CaseShiller Home Price Index for February that we can see today, as if the data isn’t stale enough, but it is what it is. In addition, the New Home Sales for March will print, and the Consumer Confidence report, which I talked about the other day. So many Americans are losing sleep to money worries, but yet the Consumer Confidence index continues to rise. Well, maybe the April survey will show that confidence slipped in the month.. I would think so, but then, that’s just me!

To recap. It’s a lot of the same today, only with some currencies switching places today. The U.S. announced a tariff on Canadian soft lumber imports into the U.S. of 20%… Chuck doesn’t believe that it’s on the same par as the Bush tariffs on Japanese Steel from 2001, but, it could lead to more, which we have to watch out for! The loonie got hammered, and is dragging the Commodity Currencies down with it this morning. The price of Oil slipped below $50, but the Russian ruble rallied. go figure, right? Gold fought back yesterday to close down just $7.90, after it was down nearly $17 in the early morning trading.

For What it’s Worth. today’s FWIW comes to us from an unlikely source, the NY Times, of which I don’t read for a number of reasons, but every now and then has a good article for us, and today is one of those days as this is about the shrinking middle class in the U.S. and can be found here:

Or, here’s your snippet:

Middle-class Americans have fared worse in many ways than their counterparts in economically advanced countries in Western Europe in recent decades, according to a study released Monday by the Pew Research Center.

What is more, as Mr. McCabe’s experience suggests, the authors of the Pew study found a broader contraction of the American middle class, even as the ranks of the poor and the rich have grown “Compared with the Western European experience, the adult population in the U.S. is more economically divided,” said Rakesh Kochhar, associate director for research at Pew. “It is more hollowed out in the middle. This speaks to the higher level of income inequality in the United States.”

For example, between 1991 and 2010, the proportion of adults in middle-income households fell to 59 percent from 62 percent, while it rose to 67 percent from 61 percent over the same period in Britain and to 74 percent from 72 percent in France.

Households that earned from two-thirds to double the national median income were defined as middle income in the Pew study; in the United States that translated into annual income of $35,294 to $105,881, after taxes, in 2010.”

Chuck again. Yes, just another sign that “things just aren’t like they used to be”.

Currencies today 4/25/17. American Style: A$ .7534, kiwi .6963, C$ .7367, euro 1.0888, sterling 1.2822, Swiss $1.0058 . European Style: rand 13.0492, krone 8.5505, SEK 8.8119, forint 286.21, zloty 3.8810, koruna 24.571, RUB 56.0086, yen 110.51, sing 1.3931, HKD 7.7820, INR 64.28, China 6.8833, peso 18.82, BRL 3.1476, Dollar Index 99.004, Oil $49.21, 10yr 2.30%, Silver $17.76, Platinum $951.05, Palladium $790.22, Gold $1,268.30

That’s it for today. Well, I did what I could for the economy yesterday, I went out and bought a new laptop, and then sat here messing with it until about 8 o’clock last night. UGH! It’s pretty spiffy though, and I love the face recognition log in. Well, I got the news yesterday about the CT Scan this morning that’s needed because I’ll begin my chemo treatments again this Thursday, and then every two weeks afterward. Lucky me, eh? They (the doctors) tell me that this time I won’t develop colitis again. I sure hope they’re right, I don’t want to have to through that again! UGH! Cardinals get back in action tonight against the Blue Jays. I have a good friend in Canada that is a Blue Jays fan, and I’m sure I’ll hear from him during this series. And our Blues begin their 2nd round playoff series with Nashville tomorrow night. (I’m sure of that one this time! HA!) The Beach Boys take us to the finish line today with their song: I Get Around. A cool summertime song, eh? And with that, it’s time to get this to Mike. I hope you have a Tom Terrific Tuesday, and Be Good To Yourself!

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