Serenity Now!

* Yen is star performer overnight! .
* Dollar gains back early week losses.
* Gold has another nice day. Shhhhhh!
* Bilderberg begins. Do you care?

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

Good Day. And a Happy Friday to one and all! Whew! What a week! I’ve been down and out, and up and going all in one week! Redbone greets me this morning with their 70’s song: Come and Get Your Love.. It’s your business, if you want some, take some, Get it together baby! Have you ever seen the movie: Guardians of the Galaxy? The music in that movie is all on my iPod, I can tell you, because it’s from the 70’s (before disco)! It’s going to be a hot one this weekend, like 7 inches from the midday sun. The Bilderberg meeting started yesterday. I’ve talked about this many times in the past, and I really thought that my friend, Dave Gonigam who writes the 5 Minute Forecast said it best yesterday, when talking about the Bilderberg meeting.. “We think it’s a fine day to invoke the serenity prayer:

God, grant me the serenity to accept the things I cannot change,
Courage to change the things I can
And wisdom to know the difference..

Thanks Dave. I needed that, remember me going bananas yesterday morning about the crazy low yields in bonds? I should have said those words out loud, and maybe it would have not caused my blood pressure to rise to the moon! Well, guess what? I have more on low bond yields today, from none other than the bond king himself, Bill Gross, so that ought to get me going again today. Oooooh, I can’t wait! Can you? HA!

Well, that darn cat! (remember that movie?) Who’s the cat? I’m talking about European Central Bank President, Mario Draghi, that’s who! That darn cat! He sure knows how to throw the euro under a bus, doesn’t he? He’s done it in the past, with words, and when the words began to become hollow, he started actually implementing monetary policy that just kicked the stuffing out of the euro. And just when you think he’s finished, that darn cat, jumps out of the bag and implements more monetary policy and once again the euro gets thrown under the bus.

I told you yesterday that the euro was getting sold on the news that the ECB was now buying Corporate Bonds from around the world, and running their balance sheet up to 3 Trillion euros. Well, as that news sunk in around the world, the euro began to be shoved toward the street corner, and then eventually get thrown under the bus.. The euro has fallen below the 1.13 figure, and who knows where this will end, for we don’t know just how deep the darn cat’s pockets are regarding his bond buying.

In an effort to be “fair and balanced” There’s a fund manager in Sydney, Australia, who says that “there’s a risk that the Aussie dollar (A$) could almost halve to an unprecedented 40-cents. OUCH! That hurts! Did your mother ever teach you that if you didn’t have anything nice to say about someone/something that you should keep your mouth shut? For those of you keeping a journal, the A$ fell to a post-float low of 47-cents in 2001. So, saying that the A$ could fall below that level is really going out on a limb. But here’s the thing I always remind you about these traders and fund managers. They could be talking their book.. So in this case, maybe the fund manager is short A$’s, and needs people to sell their positions so he can cover his short at a profit.

Japanese yen is the star performer overnight, but then with most of the currencies following the euro down the rabbit hole this morning, that’s not saying much for yen. But yen is trading below 107 this morning, and that’s just got to be driving Bank of Japan Gov. Kuroda, and PM Abe, just bonkers! Maybe they need to invoke the serenity prayer too! Why on earth would anyone want to buy yen in this environment? Sure the so-called Shanghai Accord implicates that yen be stronger, but that was supposed to be trued about the euro too! So, you have forces pulling yen stronger, and opposite forces pulling yen weaker. That’s a recipe for disaster if you ask me.

The price of Oil has really slipped in the last 24 hours, down to a $49 handle. Just a few days ago, Oil was trading with a $51 handle. The EIA Petroleum Status Report that printed on Wednesday, showed that Crude inventories fell last week, but the products like gas, rose. Huh? What the heck does that tell us about this sector? It tells me that gas consumption is slowing. Could that be because of the rise in the price of gas? You bet your sweet bippie it could! The EIA (Energy Information Administration) says that crude inventories are up 5.6% VS last year at this time. And the graph of the inventories (in millions of barrels) shows that increase over last year, but the graph also shows a drop in the inventories that began In April, and is tailing off. Hmmm.

But Gold had another good day yesterday closing up $7 and is up a couple of bucks in the early morning trading today. I was going back through some Pfennigs and noticed that on 6/5, just a week ago, the title of the day was “Gold Leaves the $1,250 Level In The Rear View Mirror”. That was the kiss of death, for it was that day that the price manipulators decided that Gold had gone high enough in price, and began their whacking away at the shiny metal. So, I can’t sit here and think about how Gold has left the $1,250 level again, for if I say it out loud, I might wake up the price manipulators! HA!

There’s a dear Pfennig Reader that I’ve talked about before. Bernard Dozier, who wrote the book: Walking In The Light, which is a book about daily thoughts for a lifetime of thinking. And I have used some of those passages in the past. Well, his latest piece is about money, and the role that Gold plays in it.. Here’s a snippet.

“First of all, let’s understand money…what a good money is, and Aristotle defined that 2300 years ago. A good money must be durable, portable, divisible, and have intrinsic value, he said, and that points out the weaknesses of our paper currency, which is not money, but an imitation money that government fiat (order) compels us to use.

Here is an illustration that contrasts dollars and gold as stores of value. Suppose that in 1913, the year that the Federal Reserve was born (and began inflating our money supply) your great-grandfather put $2,000,000.00 in a vault for his descendants to claim 103 years later. The $2M was split between $1M in paper dollars, and $1M in gold. When you went to the vault yesterday to claim your inheritance, you discovered that the $1M dollars had shrunk (through 103 years of inflation) to a mere $25,000.00, while the $1M in gold had increased in value to $60,000,000.00 in spite of several devastating market crashes over the last century.”- Bernard Dozier

Ok.. Well, I told you yesterday that the U.S. Data Cupboard was basically empty yesterday and today, and that remains to be true (that’s a good thing Chuck, otherwise you would have been wrong!) But we will see the U. of Michigan sentiment index for the first ten days of June today.. No biggie, just wanted to make certain that you were aware of this.

The Chinese renminbi was allowed to appreciate overnight in the fixing, a rare sight these days I have to say, unfortunately! I’m reading rumors that the Chinese might have to reduce their reserve ratio again. That’s not a good sign that the economy has bottomed out yet. But they keep working at correcting it.. They haven’t resorted to the monetary magic that Japan, the U.S. and U.K. and now the Eurozone have implemented, but if their economy doesn’t turn around in the next 6 months, I can see them resorting to such monetary magic. I call it monetary magic, because it doesn’t work! It’s all an illusion..

Dear reader Bob, read the Pfennig yesterday, and thought that maybe I needed some more ammo on the bond fiasco going on around the world. HA! Seriously, thanks Bob, here’s what he sent me. This is from the FT, you know the peach colored financial newspaper? “The $10tn pile of negative-yielding government bonds is a “supernova that will explode one day”, according to Janus Capital’s Bill Gross, underscoring the rising nervousness over the previously unthinkable financial phenomenon…

The average yield of the global government bond market has slipped to a new record low of 0.67 per cent, according to Bank of America Merrill Lynch indices, and the overall value of sovereign debt with negative yields rose 5 per cent in May to $10.4tn, according to Fitch.

Even a relatively modest rise in yields could cost investors dearly. Goldman Sachs recently estimated that an unexpected 1 percentage point rise in US Treasury yields would trigger $1tn of losses, exceeding the financial crisis losses from mortgage-backed bonds.”

I just shake my head and wonder when the bust will come. I thought it would come 7 years ago, and then the Fed started buying bonds, and years later when the Fed stopped buying bonds, then the ECB began to buy bonds, and all the while the BOJ was buying bonds. What happens when the merry-go-round stops? The babies start crying, and the toddlers throw tantrums, and the young adults steal one last kiss, and then everyone disembarks and the ride is empty. The same will happen with bonds. Whenever that does happen.

To recap. The dollar has taken back some ground lost this week in the past 24 hours, but not against the Yen, which is the star performer overnight. Wait, What? Did you just say that Japanese yen is the star performer overnight? Why, yes I did! Hey! Stranger things have happened! Gold had a good day yesterday and is up a couple of bucks this morning, while the price of Oil slid back to a $49 handle. A fund manager in Australia says that he sees risks that would bring the A$ to an all-time low. YIKES, Chuck hopes he’s just trading his book.

For What It’s Worth. This article comes from Reuters (I can’t get in trouble using a site like Reuters!, so it’s a safe one for me today!) And talks about how investors in the U.K. are lining up to buy physical Gold, as the “leave vote” for BREXIT edges closer to overtaking the “don’t leave vote”, and can be found here:

Or here’s your Snippet: ”
At Sharps Pixley, a gold showroom in London’s smart Mayfair district, demand for bullion bars and coins is rising, with men and women of all ages buying up the safe-haven metal in case of a British exit from the European Union.

Shoppers can walk out of the sleek St James’s Street showroom carrying their gold investments, or leave them in the rows of safety deposit boxes that line the walls.

Sales have picked up since the latest polls suggested that the ‘leave’ campaign is gaining support, with online polls by ICM and YouGov showing at the weekend it had taken a 4-5 percentage point lead ahead of the June 23 referendum.

“It seems to have sunk into people’s consciousness that Brexit is a real possibility now. All stocks are being bought out in advance of even being shipped,” Ross Norman, chief executive of Sharps Pixley said, noting that demand for Britannia coins, which as legal currency are exempt from capital gains tax, had been particularly strong.

“We had a preconception of who the typical gold buyer was, which is male, mature and over 45. The mix of people coming through has completely rebuffed that idea — they’re often much younger, often female.”

Chuck again. That’s right, male, female, young, old it’s never too late or too early to start putting Gold in your portfolio! And like I said yesterday, physical Gold beats all!

Currencies today 6/10/16. American Style: A$ .7410, kiwi .7105, C$ .7852, euro 1.1295, sterling 1.4432, Swiss $1.0380, . European Style: rand 15.00, krone 8.2095, SEK 8.2430, forint 276.74, zloty 3.8560, koruna 23.9240, RUB 64.34, yen 106.25, sing 1.3550, HKD 7.7620, INR 66.76, China 6.5625, peso 18.36, BRL 3.40, Dollar Index 94.26, Oil $49.90, 10-year 1.65%, Silver $17.26, Platinum $998.20, Palladium $553.13, and Gold… $1,271.20

That’s it for today! Another beautiful day yesterday, but as the day went along, it began to heat up, and that’s what we’ll have for the weekend. Sunny, and hot, and I’ll love every minute of it! Cardinals take 2 of 3 from the Reds, and now head to Pittsburgh, where they need to win some more! I wanted to thank a dear reader, Richard R. for sending me an article on Ty Cobb, where the writer disputes the general opinion of Cobb, and gives proof that he was a good man. It was a very interesting read for sure! OK.. thanks to those of you who sent along well wishes to me, regarding the upcoming 40th wedding anniversary of Chuck and Kathy.. The “ruby anniversary” which I found out can be expensive! HA! I told you yesterday that I would talk about Kathy today, even though I promised I wouldn’t, and in the past 24 hours I’ve decided to honor that promise I made about not talking about her. She began to get edgy about me talking about her, after something that happened a few years ago. She went along with me to a conference, and before the conference started, we walked into the bar, and there was a man sitting there, and he recognized me, and said, “You were right, Chuck, she is beautiful” That kind of freaked her out, and from then on I could no longer call her my beautiful bride, or talk about her. which I’m doing, but not like I used to. She no longer reads the Pfennig, and her friends tell her what I’ve said in it, for they read it.. So, I hope they relay this. All the credit of remaining together for 40 years goes to her, for having to put up with me all these years. But the main ingredient of the credit goes to the fact that we love each other, even after 40 years of living together! Now that I’ve used up all my sappiness for today, I’ll leave that there, get off this bus, and head to a Fantastico Friday! I hope you join me! But if you can’t, make sure you at least Be Good To Yourself!

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