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Testing Optimism In The U.S.

* Dollar continues to drift lower.
* Sterling and rand outperform overnight.
* Gold continues to inch higher.
* RBNZ leaves rates unchanged

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

Good Day. And a Tub Thumpin’ Thursday to you! Well, I didn’t get to sit in Roger Dean stadium and watch my Cardinals win 6-1 yesterday for my birthday as I had wished, but. I did listen to the game on the radio, and celebrated with sons Alex and Andrew, daughter Rachel, and grandson Braden with a very nice dinner made by my wife, with dessert and they all sang Happy Birthday to me! It was nice. I’m usually in Florida this time of year for Spring Training, and don’t get to celebrate with Andrew, Rachel and Braden, instead celebrating with Dawn, Jerry, Delaney Grace, and Everett, who come to Florida each year on their spring break.

Thank you so much to all who sent along birthday wishes to me yesterday! Sometimes you dear readers make me feel like repeating Sally Field’s Oscar Winning speech when she said, “You like me, you really like me” ! I came across this list yesterday. Reese Witherspoon, William Shatner, Bob Costas, James Patterson, George Benson, Chuck Jackson, Andrew Lloyd Webber, and Chuck Butler, all share March 22nd as our birthday.

Alrighty then, enough on that! It’s over now, Chuck, leave it be. OK, well, I wish I could bring to you BIG NEWS of something, other than human devastation, this morning, but like yesterday, it’s pretty boring out there, with no Central Bank meetings and no real economic data to give the markets any direction, we just drift along, waiting..

There are two items today that could move markets. the vote on the Health Care proposal. And a speech by Janet Yellen. First, we have the Health Care Vote, which could prove to be disastrous for the GOP if they don’t garner enough dissenters at this point. Not that the markets really give a hoot about the Health Care Vote, to them it’s more a vote on confidence and optimism in the U.S. And with stocks teetering this would not be a good time for a loss of optimism in the U.S.

Second, we have Fed Chair, Janet Yellen, speaking today. The question surrounding her speech is whether or not she will attempt to set the markets straight about her statement following the rate hike last week, and convince them that she wasn’t “dovish”. I don’t think it will come to that, as like I said above the stock market is not on terra firma right now, and this would not be the time to “set the markets straight”..

So, the dollar is all over the place on these things this morning, but for the most part it’s down slightly against most of the currencies, and down more than slightly against the rand, and pound sterling. the euro appears to be trading in the same clothes as yesterday at 1.0780-ish, and the Aussie dollar (A$) recovered some of its losses from the previous night’s debacle. And the shining star among all the currencies is Gold, which gained $4 yesterday, and is up over $3 in the early morning trading to climb above $1,250 this morning.. Gold closed yesterday at $1,248.20, and is $1,251.30 early this morning.

Yesterday, we had a few Fed member speakers out on the road. Well, what have we here? Fed members that are not singing from the same song sheet, once again! Let’s take a roll call. Fed Member Kaplan, sees no rush to shrink the balance sheet. while Fed Member, Mester, wants to commence the balance sheet shrinkage process this year. Uh-oh! It appears as though we have a problem Houston! Oh well, that’s why you have so many Fed Governors in place so that you get different opinions, right? A wise man once told me that if all I do is agree with him, there’s no need for me to be around!

Of course that doesn’t apply to you, dear reader, and me! HA! OK. Well, did you see where Union Bank of Switzerland (UBS) will begin to charge customers for depositing a million euros? Not that everyone has a million euros laying around that need to be deposited in a bank, but if you do, and I’m sure there are more than a handful of customers that this applies to, you’re going to be charged 0.6% on an annual basis. UBS already charges for large deposits of Swiss francs. So, what’s the big deal, with this Chuck? Well, it all starts with large deposits, then in the dark of night, the goal posts get moved, and it covers medium sized deposits, and so on down to the regular sized deposits. That’s my view on it.

Well, the Reserve Bank of New Zealand (RBNZ) left rates unchanged as universally expected last night. The Official Cash Rate (OCR) in New Zealand (their internal rate) is 1.75%, and looks to be stuck there for some time to come, especially if you listen to RBNZ Gov. Wheeler, who really isn’t a true believer in the Tent Revival of Global Growth. That doesn’t throw cold water on my thinking that the next move for interest rates in New Zealand is up. All it does is push the timing forward. So, is Wheeler really thinking that this nascent recovery of Global Growth is just a false dawn? Or is he doing the old “rope-a-dope” to keep the markets from getting ahead of the economy? I guess it doesn’t really matter, as he’s selling his opinion and the markets are buying it.. We’ll have to leave here for now, and come back in a few months to see where things are at that time.

But don’t forget. the next Currency of the Month is going to be a detail dive of kiwi. so, look for that in your email box in two weeks!

Back here in the U.S. I was reading an article on MarketWatch that gave the 4 most depressing reasons why U.S. citizens don’t save money. this was a survey that Personal Finance did, and the number 1 reason was that 38% said they had too many expenses.. The number 2 reason was that “they can’t be bothered” and the 3 & 4 reasons were that they don’t have a good enough job, and that they were struggling under debt.

This was a follow up to yesterday’s FWIW regarding how the lack of ability by so many Americans to have $2,000 cash for an emergency.

The next downturn, when it comes, and it will come if it already hasn’t begun, will be quite difficult for these people with no savings, and that will make the downturn in the U.S. even deeper and longer..

I was awakened this morning, not by an alarm, but by very loud thunder… the loud thunder was accompanied by very bright lightening, and a very torrential downpour of rain. And it’s still going on a couple of hours later! I used to love to watch it rain, but I don’t know the last time I stopped to stare out a window when it was raining.

The price of Oil rebounded a buck yesterday back above $48, as the U.S. Shale producers were choking on the $47 price, and are still squirming with the price of Oil below $50.. I really don’t know what to say here that hasn’t already been said. the price of Oil rises, the more U.S. production come on line, which lowers the price from too much supply, and then the U.S. production slows again.. it’s a vicious cycle, in need of something to help break it out of this pattern.

Yesterday I told you about Russia was going to be paying off the last of the Soviet Union’s debt in the next 45 days. And as the day went on, I got to think a little more about this, and how great it was for Russia to put this behind them. If they gave an award away for being the best Central Banker in the world, Russia’s Central Bank Gov. Elvira Nabiullina would be the winner by a landslide. And Putin is no dummy, he knows a good thing when he sees it, and yesterday, he extended the term of the Central Bank of Russia (CBR) Gov.

Well, she’s going to have to come up with some additional magic for the Russian economy if the price of Oil continues to slide. But I wouldn’t doubt her ability to do so at this point, given the rabbits she’s pulled out of the hat up to now.

The U.S. Data Cupboard is basically empty again today, with only New Home Sales for February on the docket. We’ve basically not seen any real economic data since last week, when Industrial Production for February was flat, with 0% growth. Add that to the disappointing Durable & Capital Goods Orders from the week before, and you don’t have a pretty picture of the economy do you?

To recap.. I know, I know, this was very short today.. But there’s just not a lot out there to talk about folks. longtime readers know that when there is a lot to talk about, I don’t let you down! So, today’s letter is short-n-sweet, but it pointed out that the dollar is still drifting lower, the RBNZ left rates unchanged, there are two items today that could shake optimism here in the U.S. the Health Care Vote, and Janet Yellen’s speech..

For What It’s Worth. MarketWatch has been my go-to for the FWIW this week, and today’s piece is no different.. this is about how China not only took away our manufacturing but maybe also American Ingenuity.. It can be found here:

Or, here’s your snippet: “Soaring imports from China are blamed for having taken U.S. manufacturing jobs, but what’s less well known is how they also undercut American ingenuity, according to a prominent labor economist.

Massachusetts Institute of Technology professor David Autor and several of his colleagues found that manufacturers most exposed to Chinese competition were forced to skimp on research and production, leading to a “significant decline” in new patents.

Autor examined all corporate patents filed by U.S.-based firms between 1975 and 2007 and granted as of March 2013.

Manufacturing is the locus of U.S. innovation and accounts for more than two thirds of U.S. R&D spending and for a similarly large share of U.S. patents,” Autor writes in a new article.

The U.S. has been running large trade deficits with China for more than two decades. In 2016, the deficit with China totaled $310 billion and accounted for about 62% of the overall U.S. trade gap.”

Chuck again. makes sense to me that this happened..

Currencies today 3/23/17. American Style: A$ .7640, kiwi .7040, C$ .7505, euro 1.0785, sterling 1.2510, Swiss $1.0075, . European Style: rand 12.5515, krone 8.4810, SEK 8.8120, forint 286.46, zloty 3.9611, koruna 25.1407, RUB 57.76, yen 111.00, sing 1.3996, HKD 7.7675, INR 65.46, China 6.8851, peso 19, BRL 3.0885, Dollar Index 99.80, Oil $48.42, 10-year 2.41%, Silver $17.60, Platinum $964.56, Palladium $797.70, Gold $1,251.30 and SGE Gold.. $1,259.07

That’s it for today.. It took me longer to write this short-n-sweet Pfennig today than normal because I was searching and searching for things to write about! Braden was so cute yesterday, as he proudly presented his hand made birthday card to me. And he must have sung happy birthday to me 10 times! Delaney Grace and Everett sent me a picture of a sand birthday cake and card in the sand from Florida! So, all in all, it was a good birthday! My sister, Joanie, sent me a text with a picture of me and her on the front porch steps of the house we grew up in, from when I was probably 10 and she was 4 or so.. Now, that made me feel old! Well, I’m ready for tomorrow morning, when I’ll get a pacemaker put in, and hopefully be home by the end of the day.. So, Mike will have the conn on the Pfennig tomorrow.. The O’Jays take us to the finish line today with their song: Love Train.. and with that, here we go! I hope you have a Tub Thumpin’ Thursday, and Be Good To Yourself!

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

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