Still. Waiting On Janet.

* Another “no movement” day.
* Traders await Janet Yellen’s speech .
* Japanese CPI prints negative, what’s new?.
* China takes next step .

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


Good Day. And a Happy Friday to one and all! I have this feeling, that today will end up being a Fantastico Friday, so let’s mark it down now, and play to have some fun! Another night of lost sleep, seems to be better though, so I’ve got that going for me! The Cyrkle greets me this morning with their song: Red Rubber Ball. A piece of cocktail trivia for you. The Cyrkle was the opening band for the Beatles! I’m going to warn you front and center this morning, that today’s letter is going to be short-n-sweet, because, well, there’s just not a lot to talk about until we see the color of Janet Yellen’s speech later this morning.

Another day of waiting, and another day of boredom in the currencies, metals and bonds, as there wasn’t much movement, if any, at all. Those clothes the currencies are wearing are getting a little rank in the smell department, and looking quite wrinkled at this point. It’s a good thing they get to change them later today! I would say that if anything the dollar is a bit softer going into the Yellen speech, but not that much softer.

So, what’s it going to be Janet? Will you. 1. Give us an indication, either way, on rates? -OR- will you. 2. scrap the rate talk, and talk about the need for revamped models used to measure the economy? I really do believe that the markets are all geared up for an indication that rates will rise in September. And if they are correct, it will not be a good day for the currencies and metals, and bonds. But what if they’re wrong? And this is where the rubber meets the road as far as I’m concerned. I really do believe that the risk is all around disappointment.

By, the By, did San Francisco Fed President, Williams give us a blue print for the talk by Yellen today, when he talked yesterday once again about increasing the inflation target? Maybe, and if Yellen even mentions this idea, it will be akin to her sprouting wings, and taking flight as a dove. And that will be very bad for the dollar, as I said, I do believe that the markets are all lathered up for a rate hike next month, and want Yellen to confirm that this morning.

So, there you have it! The gist of today, and going forward, as this speech will remain in traders’ heads for some time. In other news. It’s the same-o, same-o in Japan, as their July CPI (consumer inflation) printed negative at -0.5% year on year. The Japanese just can’t manufacture any inflation, and haven’t been able to, except for spurts here and there, for over two decades.. But yen remains well bid. stranger than fiction my friends, stranger than fiction!

There’s some very interesting news from China overnight. The World Bank will bring its first offering in China of bonds denominated in Special Drawing Rights to the market before month’s end in Shanghai and authorize them to trade on China’s interbank market. In a victory for China’s effort to make the yuan an international currency, the bonds will be payable in yuan, and principal and interest on the debt, worth about $700 million, will be paid in yuan upon redemption.

That’s the first leg of the demise of the dollar folks. right there. I’ve laid this all out for you for years now, with regards to China’s desire to remove the dollar standard, and all the things they’ve done with currency swap agreements, opening clearing banks all over the world, widening the distribution of the renminbi / yuan, and trading Oil with Russia without the use of dollars, and a few other things, were just the set up for this next move, and that is to be a part of the IMF’s SDR’s (special drawing rights). And now the World Bank is issuing bonds that will be paid in renminbi / yuan. Can you see the cracks in the dollar’s foundation now?

OK, I’m going to stop there! I can see myself going into a dissertation on this whole China, the currency regime change, and so on, that could take me into lunch today, and that can’t happen!

Gold lost $2.20 yesterday but is up $4.70 so far this morning. Gold’s performance today is tied to Yellen’s speech, so be prepared for a large move either way, depending on what she has to say.

The U.S. Data Cupboard yesterday, saw things work out just the way I thought they would and said so. Durable Goods Orders for July saw a bounce, after the 2 previous months printed negative, July was up 4.3%, beating the estimates of 3.3%… It’s a good start to the 3rd QTR, but will it have lasting power? I doubt it. Capital Goods Orders, weren’t so strong, but did pick up 1.6% in July, which is probably the best result this sector has received in a while. So, overall a good start to the 3rd QTR.

Today’s Data Cupboard has the final 2nd QTR GDP print. I don’t think anyone really cares now that we are well into the 3rd QTR. But let’s see what tricks the bean counters have done with the GDP report now, eh?

So, I told you it was going to be short-n-sweet, and so it is! Let’s go to the Big Finish!

To Recap.. It’s all about Janet Yellen’s speech today, and Chuck believes the risk is in disappointment by the markets, who have really geared up for rate hike indications by Yellen. SF Fed President, Williams, may have laid out a blueprint for Yellen’s speech today, and if that’s the case, the disappointment will be great, and the damage to the dollar will be great too! It’s the same-o-, same-o for Japan, as they printed a negative -0.5% CPI for July, I think of Humpty Dumpty when I think of Japan’s economy. And that’s it for today!

For What It’s Worth. Dear Reader Bob sent me a link to an article about how ½ of Americans are in dire straits and when I clicked it, it took me to but I wanted to find another source for the info, and found it here on the Daily Coin.

Or here’s your Snippet: “A new poll has revealed that six in ten Americans are teetering on the edge of financial ruin in case of a medical emergency or act of god, and only 23% expect to see any improvement in the near future.

The survey, conducted by the Associated Press-NORC Center for Public Affairs Research found that 57% of those polled describe the economy as “poor,” and only 22% believe that the economy has recovered from the financial crisis of 2008. Additionally, only 28% of Americans have confidence that they would be able to find equal or better employment if they had to leave their current job.

“Even though there are signs that the economy has improved in recent years, a lot of people are not feeling that the recovery has reached them.”

Chuck again. Now that’s sad, and something I shouldn’t have even thought about on a Friday, but, it has ramifications for the economy in the U.S. and ties in with the thought I presented to you yesterday, about how the U.S. Consumer has hit the wall.

Currencies today 8/26/16. American Style: A$ .7633, kiwi .7317, C$ .7750, euro 1.1287, sterling 1.32, Swiss $1.0340, . European Style: rand 14.1238, krone 8.2155, SEK 8.4027, forint 273.96, zloty 3.8330, koruna 23. 9422, RUB 64.83, yen 100.45, sing 1.3525, HKD 7.7557, INR 67.05, China 6.6729, peso 18.39, BRL 3.2345, Dollar Index 94.66, Oil $47.21, 10-year 1.57%, Silver $18.62, Platinum $1.084.48, Palladium $696.07, and Gold. $1,329.10

That’s it for today. win one, lose one, I’m so frustrated with my beloved Cardinals. UGH! Well, in keeping with my renewed attempt to be better at tracking birthdays in the office. A Big Happy Birthday to Debbie Gehringer today.. Debbie is in our compliance dept. so it’s a good thing I remembered her birthday! HA! Can you believe that summer is nearing an end? Did it just start? I’m flabbergasted at how quickly the summer has come and gone. I will say though that for the best weather in St. Louis, the autumn weather beats all the seasons, so we have that to look forward to! The O’Jays take us to the finish line today with their song: Love Train. People all over the world, join in, start a love train, love train.. And with that, it’s time to get off this bus, and get down to Fantastico Friday corner! I hope meet you there! And. Be Good To Yourself!

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