The CBR Sends The Ruble To The Woodshed.

* Yellen’s Friday words still dominating currencies & metals.
* Yen falls another whole figure.
* Singapore 1st QTR GDP is strong!.
* Doesn’t anyone see what I see?

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

Good day.. And a Wonderful Wednesday to you! Well, those dangerous storms continue in the South. Last night, I sent a text to my younger sister, who lives with my other younger sister, just outside of Houston, to check and make sure they were safe. Not that I know what I would have done if she said they weren’t safe, but, I felt I needed to do that, being their older brother. It’s been quite the storm filled spring here in the U.S., eh? Usually, our area is right smack dab in the middle of that stuff, but not this year, as the jet stream has dropped to the south. But not today, it appears the nasty stuff is headed straight up Highway 44 to St. Louis, the normal route for spring storms. UGH! The official start to Spring doesn’t come until the middle of next month, although the thought that summer began with Memorial Day, usually registers more with people..

June is going to be quite interesting for the Eurozone, the euro, and Greece, as Greece is scheduled to make loan payments to the IMF on June 5th, 12th, 16th and 19th. WOW! I’m not sure what Greece can do about all this, except to accept the austerity measures and secure the loans, or, just walk away, default, and cause chaos. I’ve written about how if I were the Eurozone leaders I would just say, “here it is, take it or leave it”, and if Greece decided to leave it, then so be it. For, to me, they are the slowest Buffalo. And to make the herd faster you must allow the slowest Buffalo to be killed. Hey! In all seriousness, I learned the slowest Buffalo theory from Cliff Clavin! So there!

The dollar rally seems to have been a little overdone, and the green/peachback is generally weaker this morning. The Japanese yen seems to be really slipping and sliding along the slippery slope these past couple of days. Yesterday, I told you how the yen had slipped from 121 to 122, well today it’s 123. It’s not the same old names, but the same of titles of officials that are talking about, “how excessive FX moves are not warranted” and stuff like that. But, they have no one to blame but themselves for these sweeping moves taking place with yen, as it’s these same leaders that have gone about adding stimulus and generally attempting to get yen weaker to promote economic growth. It’s a classic case of being careful of what you wish for, as you may get your wish!

The euro has regained some lost ground, but it has been trading all over the place lately with no general direction carved out. Some might say that the 3-cent drop in the euro from Friday morning to Tuesday morning, as a clear direction downward, but I would stop them and say that the euro has bounced twice now after falling below 1.09, so be careful here. The Eurozone/ Greek talks will begin again today. I don’t hold out a lot of hope here today.

In the U.K. today, the Queen will speak and set out the government’s policy for the parliamentary sessions. The markets will be looking for any sign that the Queen is behind this latest move by parliament to leave the European Union. They call this a Brexit. So, now we’ve made up two words: Grexit, and Brexit. The British pound has enough to worry about, with the lack of economic growth, falling inflation and no rate hikes as promised, but apparently you can now count this little ditty.

The Bank of Canada (BOC) meets today, and will make a rate decision. I don’t believe that the BOC will do anything drastic with rates. The economic performance of Canada has been a mixed bag-o-results, and with that going on, there’s no reason for the BOC to move rates in either direction. Although I would think that BOC Gov. Poloz would love to cut rates so he can join his fellow Central Bankers around the world. Shoot Rudy, if he doesn’t cut rates like the rest of the clan, what on earth would they talk about at the next cocktail party?

I had a dear reader send me a note yesterday, telling me that all these moves by Central Bankers reminded him of the great Albert Einstein quote, which I now believe is my fave quote! Einstein said, “The difference between intelligence and stupidity is that intelligence is limited”. I think that sometimes that quote applies to me. I was such a dolt yesterday about something so mundane, but a dolt nonetheless, so, see, the dear reader believes that quote reminds him of Central Bankers, and I think it reminds me of me! HA!

Well, one of the best performing currencies year to date, the Russian ruble, appears to have met its match with regards to appreciation, as the Central Bank of Russia (CBR) is gaining traction with their desire to weaken the ruble, as they feel that the ruble’s move has been too far, too fast. I think otherwise, but then I’m no Central Banker. The chartists are now piling on the ruble, talking about how the ruble has traded through its 200-day moving avg. (DMA) and it could be the start of a bearish trend in the ruble that could take it from the current level 51.50 to 56. For the record, the CBR has cut rates, as if that wasn’t expected given the CBR boosted rates to 17% to defend the ruble last year, and the CBR has apparently intervened, selling rubles in the market to weaken it.

Longtime readers know how much I dislike Central Banks sticking their hands in the currency cookie jar, so not that long ago I smiled when thinking of the ruble, and now my smile has turned upside down, because of the CBR’s actions. UGH! Can I get a bone thrown to me here?

The Chinese renminbi / yuan was pushed weaker overnight by the Peoples Bank of China (PBOC). I’m somewhat surprised by that move, given the news last night from the SWIFT payments people that the renminbi / yuan has become Asia’s most-active currency for payments in China and Hong Kong. Get this. The renminbi / yuan accounts for 31% of the region’s payments, up from 7% in April of 2012.. Now, most people don’t see this as BIG News. But I do. just like yesterday, when I told you about the SGE Gold Fund, no one else talked about it, because they didn’t see it for what it was, another brick in the wall of removing dollar relevancy.

And this news? Well, here’s how I look at it, folks. China needs a wider distribution of their currency, and to get that, they need dealers to begin to make markets in the currency, and they also need for importers and exporters to begin to make payments using the renminbi / yuan so the distribution begins to spread out. So, for now it’s Asia that China has cornered the payments, and next it will be what region? Oh, there will be another region, and then another region. Because that’s what China wants.

You know, there are tons of articles and reports out there that talk about deflation, and how Central Banks are fighting deflation, and would rather see “controlled inflation” as if that’s really a thing to strive for. But no one ever talks about where the deflation came from? Well, let’s take a quick look at the poster child for deflation. Japan. then switch over the U.S. and then to the Eurozone, and the U.K. what do all of these countries have in common. Large Debts.. That’s what. So guess where deflation comes from in my mind? The deflation comes from the rise in the cost of government in addition to the collapse in leverage. As governments with power turn to extracting more from the people rather than weak government.

Well, there’s no sign of deflation at Disney World. Yesterday’s Five Minute Forecast (The 5) talked about this, and it caught my eye, so I’ll borrow some of their stuff here. No worries, I’ll give it back to them when I’m finished! HA! So, Disney just announced that tickets for Disney World in Florida had increased to “just $100”. That’s a far cry from what tickets cost in 1971, when it opened.. $3.50. So, the increase of ticket prices by decade has gone like this. 1971 $3.50, 1981 $9.50, 1991 $33.00, 2001 $48.00, 2011 $85.00 and 2015 $105. YIKES! Talk about inelastic demand! So, here are my thoughts on this. The fact that still have families heading to Disney World, when everything around them hurts, like Retail Sales, 6,000 Retail Stores to close this year, and gas sales not being the ka-bang to the economy that everyone thought, tells me a lot. It tells me that it’s like a one last time. You know a star shines the brightest right before it burns out, thing.

Well, Gold is down again today, and has now fallen below the $1,190 figure. losing touch with $1,200 as the days go by. I told you yesterday how Fed Chair, Janet Yellen’s speech on Friday afternoon had really deep sixed Gold, by renewing the thought that a rate hike could happen in June into the minds of traders. You know, I told you yesterday, what my thoughts were on what she said. in case you missed it, you should go to the Pfennig’s website, and you can find it in the archives. just click here: www.dailypfennig.com

On a sidebar, I love the Pfennig’s website, because it gives readers the chance to go back in the archives and check out something I said in a previous Pfennig. You know, how I always say, stuff like, “I told you the other day that. “? Well, this way you can makes certain that I did say what I said I said. And on Fridays I always post a picture of me just to remind you that I’m somewhat short, overweight, and balding, you know like the grandfather of 3 grand kids, and someone that you would want to have dinner with! HAHAHAHAHA!

Singapore printed some good economic growth data yesterday. Sing 1st QTR GDP was given a final upward revision to 3.2% VS the advance estimate of 1.1%… Now that’s what I call a good upward revision! So, VS the previous quarter, the Sing economy grew 3.2%, and on an annual basis, the Sing economy grew 2.6%… And the outlook for the rest of 2015, is for an even modestly stronger growth. So, how is Singapore growing so strongly, when the rest of the region, and the world for that matter, isn’t? It’s called having the key ingredients being the right mix. Pharmaceuticals, electronics, and services. Things people all over the world need and want.

Have you ever heard Otis Redding’s version of the song; Try a little tenderness? Shoot 3-Dog Night did the song, the Commitments, and probably countless others, but Otis Redding’s version will get to you.

So. the U.S. Data Cupboard yesterday, did print, as I said it would, a negative Durable Goods Orders for April, printing -0.5%… so, the first month of the 2nd QTR continues to prints some very weak data. Capital Goods Orders though rose 1%, to offset March’s -0.5% print. The S&P/ CaseShiller Home Price Index rose in March by 1.3%… Again, this housing stuff is getting overdone in my opinion, for this is nothing that looks like a long term move, but more like a blue light special sale that consumers don’t feel will be there much longer, so they have to buy now, kind of thing. And the Consumer Confidence Index rose from 94.3 to 95.4. But it’s important to look that last month’s original print was 95.2 but was revised downward to 94.3. I’ll bet a dollar to a Krispy Kreme that this print of 95.4 will get revised downward next month too. Maybe I’ll remember to talk about that next month! But then next month is not promised to me, only today is.

Today’s Data Cupboard gets a breather before heading into our Tub Thumpin’ Thursday menu. So back to no data equals no bad data for the U.S. (except housing and fabricated jobs) So, get your rest now while you can, because we’ll head into the end of the week, and when we come back next Monday it will be June, and the data will come rolling in day after day!

To recap. The dollar’s mighty rally appears to be somewhat squelched by those traders that think the rally was overdone. The euro has regained some ground this morning, but it has really bounced around a lot lately, so watch for that. Japanese yen has lost 3 full figures since last week, now trading to 123. Japanese leaders were vocal last night about “watching excessive moves in FX” same old rhetoric, different names, same titles. The calls for an exit of the European Union, by the U.K. are becoming quite strong, and the Brexit as it’s called will begin to be headline news soon. Singapore posted a strong 1st QTR GDP, so what gives with Singapore being able to have economic growth when the rest of the region is struggling? And Gold gets another day on the selling blocks, what is going on here, don’t people/ traders see the SGE Gold fund like Chuck does? Apparently not!

For What It’s Worth. Well, I found this on the Telegraph.co.uk website, because I’m always drawn to articles about debt, just like a bug to the neon light! So, it’s not an upbeat article, it’s about debt, but I’ll try to break it to you softly. HA! Here is the link to the whole article: http://www.telegraph.co.uk/finance/economics/11625406/The-world-is-drowning-in-debt-warns-Goldman-Sachs.html And as usual, here are a couple of snippets for those of you, needing to get to the Big Finish quickly today!

“The world is sinking under too much debt and an ageing global population means countries’ debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned.

Andrew Wilson, head of Europe, Middle East and Africa (EMEA), said growing debt piles around the world posed one of the biggest threats to the global economy.

“There is too much debt and this represents a risk to economies. Consequently, there is a clear need to generate growth to work that debt off but, as demographics change, new ways of thinking at a policy level are required to do this,” he said.

The demographics in most major economies – including the US, in Europe and Japan – are a major issue – and present us with the question of how we are going to pay down the huge debt burden. With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we’ve managed to do in the past.”

Chuck again. So.. I’ve beaten this debt thing to a pulp over the years, but there are still economists, observers, traders, etc. that don’t think it’s that Big a thing. Well, remember what I told you above about where I believe deflation comes from. And then tie it back to this article about the debt of the developed nations. of which they all have deflation. Hmmm

As we head to the currency roundup the euro has done like I feared it would this morning, giving back its gains in the two + hours I’ve been here. UGH!

Currencies today 5/27/15. American Style: A$.7710, kiwi .7225, C$ .8025, euro 1.0860, sterling 1.5370, Swiss $1.0515, . European Style: rand 12.1315, krone 7.7535, SEK 8.5290, forint 284.45, zloty 3.8045, koruna 25.2255, RUB 51.81, yen 123.75, sing 1.3525, HKD 7.7530, INR 64.02, China 6.1198, pesos 15.34, BRL 3.1530, Dollar Index 97.41, Oil $58.73, 10-year 2.15%, Silver $16.66, Platinum $1,123.19, Palladium $781.82, and Gold. $1,186.48

That’s it for today. Well, after the storms came through yesterday morning, it turned out to be a very nice day. Sunshine and warmth.. But days of rain off and on are the forecast for this week. Cards bats come alive last night, and they were needed! WHEW! So, have you even heard about our NFL team, the Rams, and the owner that wants to move the franchise to L.A.? I try not to get into this much, because it just makes me very angry. Sure it’s his “company” he bought it, but doesn’t it also belong to the city that supports it? Oh well, Que Sera, sera. Whatever will be will be, the future’s not ours to see, Que, sera, sera. How many of you remember, Doris Day singing that song? I know I do. Marshal Tucker’s song: 24 Hours is playing on the iPod right now. I always found that this song, and the song by Missouri, Movin’ On, were the best driving songs, well especially if you had a care free frame of mind. Well, did you see that the U.S. is going after FIFA for corruption? WOW! I would say something snarky here if I had a care free frame of mind, but I think I’ll just keep that comment to myself! So, let’s go make this a Wonderful Wednesday!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts
1-800-926-4922
https://www.everbank.com