Where Is Carney And His Bag-O-Promises?

* China fixes renminbi basically flat to calm markets.
* U.K. Industrial Output and Manufacturing print weak!
* Everybody is doing it!
* Fed speakers aren’t gung ho on the rate hike!

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

Good day. And a Tom Terrific Tuesday to you! And a Great BIG Happy Birthday to my song Andrew! Andrew was born during a snow storm in St. Louis, but that didn’t deter me from driving around to let everyone know that I had a son! And his sister, Dawn, was so proud of her little brother, that she told everyone she saw about her little brother and that she was now a big sister. (she was 2 and a half at the time!) A little trip through time, to start the day. Van Morrison greets me this morning with his song: And It Stoned Me.

Well, I’m really tired this morning, as I tried to stay awake to watch the College Football National Championship Game, but really only made it to half-time. I’m seeing the highlights on the TV this morning, and the game appears to have turned out to be a good one, not USC-Texas quality, but a good one nonetheless.. And that’s why I can barely keep my eye open this morning. I have kept open enough though to see that the dollar is mixed this morning, with the euro down a small amount, and the euro alternatives of Norwegian krone, Swedish krona and Swiss francs all booking gains VS the dollar.

Whenever I do my “first look” at the currencies each morning, I first look at the euro, because it’s the offset currency to the dollar. I then look at the Norwegian krone, because it’s an indication of what the price of Oil is doing, and finally, my eye searches for the Chinese renminbi. After seeing the performance of those three, I pretty much could tell you how the currencies are performing at that time. So, I checked the euro, and it’s down just a small amount, but the Norwegian krone is rallying, so then I go and check the price of Oil, to find that it’s not doing very well. So, something else has the krone on the rally tracks today.

The only thing I see that could be pushing the krone and krona higher this morning is the fact that China didn’t move the renminbi in either direction by any appreciable amount this morning, so some stabilizing for the markets seems to be the direction, and that’s fine with me! Speaking of China, they weakened the fixing of the renminbi by just 20 ticks overnight, which is nothing. It’s almost like calling it in for the day, without doing any work! HA! But, that is a psychological move by the Peoples Bank of China (PBOC) because it says, “whoa there partner, time to step away from craziness every day and calm down” What? You don’t think the PBOC talks like that? Oh come on!

The British pound sterling, is getting sold again this morning, this time it is because of a very poor print of Industrial Output. I read on the Bloomberg this morning, that the pound has weakened to a level not seen since 2010. YIKES! 1.4440 is where the pound sits this morning, after Industrial Output fell -0.7% in November, and Manufacturing Production fell -1.28% in the same month. Oh, and where’s Bank of England (BOE) Gov. Mark Carney and his bag-o-promises to hike rates now? He’s nowhere to be found, that’s where! You would think that traders would be calling me left and right, and asking me how I knew a year ago, that the pound was going to suffer after rallying for 6 months! But Noooooooo! They’re probably calling someone, but it isn’t me!

Well, I talked about the Aussie dollar (A$) falling to 60-cents yesterday, as forecast by someone, and just typing that made my skin crawl. Well, the A$ did fall below 70-cents yesterday, and is down a small amount this morning. We’ve heard nothing from the Reserve Bank of Australia (RBA), which tells me they’re OK with this weaker A$… In fact, I can’t imagine a Central Bank or Central Banker that isn’t OK with a weaker currency right now. But something has to give here, folks. Maybe not today, tomorrow, next week or month, but at some point this whole shootin’ match is going to come to the cheese that binds. With every country making sure their currency is weak, no one wins. And it all ends up really ugly. So, somebody had better sit and take notice that everyone is “doing it”, and it’s his or her opportunity to be better than everybody else! I used to call the Central Banks from: Australia, New Zealand, Norway, the U.K., and the Eurozone, the “Prudent Central Bank” group, now I would have to rename them the “I’m just like everyone else Central Bank group”.

Well, two Fed members were out on the speaking circuit yesterday and both sounded as though they were having rate hike remorse. you know sort of like “buyer’s remorse”! First up we had voting member Lockhart, who hinted that there was no bias to hike rates in January, and that by the time March gets here, there might not be enough information to hike rates at that time. Hmmm. and then non-voting member, Kaplan, the new President of the Dallas Fed, talked about needing time to look at the impact of the rate hike on financial market volatility. Well, think about that for a minute, he knew all too well that since the rate hike in December the stock market has been very volatile, so why did he mention this? Well, I think he simply was hinting to the audience that rate hikes are on hold.

Where are all the intelligent minds out there? A simple-minded guy like me, that has his focus only a couple of times a day, due to the “chemo-brain” he has, can figure this stuff out pretty easily, why can’t the boys and girls with far more gray matter than me, do that?

I shake my head in disbelief. Speaking of intelligent minds. There were more intelligent minds analyzing the jobs report since it was printed on Friday.. One that I always appreciate is that of Art Cashin. He had some info on the jobs breakdown, and it played well with my breakdown yesterday. Only 3% of the total jobs reported went to folks between the ages of 25-55. you know the “breadwinners?” That’s less than 10,000!!! No wonder there was no pressure on wages, as the majority of the jobs went to youngsters and those over 55, so we’re talking about seasonal employment, eh? No wage pressures. And no what used to be called “seasonal adjustments”. So, with all this detail known to everyone why is the Gov’t and Fed still banging the drum for this report? I’ve got a game we all can play. It involves the State of the Union Address that takes place tonight. Every time the president mentions the strong jobs report everyone takes a drink, or a piece of candy, or whatever you want to input there. Come on this could be fun! Oh, I didn’t that of that. this would mean we would have to actually watch and listen to the SOTUA. Sorry, so much for having fun. HA!

Also speaking of my numbers yesterday with the jobs breakdown. I had a reader point out that I made a mistake with the numbers. Hmmm. Well, I didn’t think I had made a mistake, but it’s not out of the realm of possibilities for me to make a mistake! HA! Sorry, really all I wanted to say was that the jobs mix was awful, I should know better to start to pull out my numbers skills!

The U.S. Data Cupboard remains pretty empty, with only some third tier data to print today. And we might as well get used to this going on with the Data Cupboard this week, for we won’t see any “real data” until Friday, when December Retail Sales will print. I know it’s early in the week, but looking at the December Retail Sales tells me that I need to do a review of the Butler Household Index (BHI). December should be a blow-out month for Retail Sales given the Christmas shopping season. But all the whining and crying from Retailers tells me that the Christmas shopping season was a bust for them, and auto sales are finally backing off, therefore the BHI isn’t going to help us much this month, because the deliveries of items were made daily to the Butler house, during December. So, I’ll go out on a limb here and say that Retail Sales will be disappointing for December, which IF that’s the case, I would have to say that our train that’s leaving the station soon for Recessionville is ahead of schedule.

People tell me all the time, that they think I’m too gloom and doomish.. I tell them that’s not true, I don’t make this stuff up, I just report on it! I’ll give you an example of some outfit that may be considered too gloom and doomish. the Royal Bank of Scotland (RBS) advised clients to brace for a cataclysmic year and a global deflationary crisis,, warning that stock markets could fall by a fifth and Oil may plummet to $16 a barrel.

Am I the gloom and doom guy here, because I told you about RBS? Hmmm. When a weather person tells you to go to your basement because a tornado is about to hit in your area, is he gloom and doom? Sorry, I got carried away this morning with this, I didn’t mean to! But. it just happened!

Oh, and just to add to the argument. I told you a week or so ago, about the Baltic Dry Shipping Index falling to an all-time low, right? Well, now the rail shipping is taking a beating too. Railroad cargo in the U.S. dropped the most in 6 years in 2015. Uh-Oh. Tickets? Tickets? Have you got your Tickets for Recessionville? The train will be leaving the station soon, please take your seats.

Gold is down $2 this morning after having a down day yesterday too. We have some numbers from the U.S. Mint, which pretty much confirms what we already knew given the price movement of Gold to start the year. But the U.S. Mint reported that they sold a record amount of Gold on the first day of trading. But what was even more impressive was the amount of Silver that was sold during the first week. Reuters reported that American Eagle Silver coins saw huge demand, with more than half of the week’s allocation of Silver sold on the first day of 2016.

Yes, things have begun to look a bit brighter for Gold & Silver, but the brighter days ahead are not shining any light on Platinum and Palladium. Especially Palladium. which has fallen to a price of $470. YIKES! What has happened to this metal in the past 3 years?

To recap. The dollar is mixed today, and the currencies that are stronger are stronger because the Chinese attempted to calm the markets by only weakening the renminbi’s fixing by 20 ticks overnight. The U.K. printed awful Industrial Output and Manufacturing reports, and the pound has fallen to a 2010 level, and there’s no sign of Mark Carney and his bag-o-promises to hike rates! Two Fed members spoke yesterday and both sounded as if they had rate hike remorse. And the U.S. Mint reports record amounts of Gold & Silver were sold to start the year.

For What It’s Worth. I first saw this on the GATA release yesterday, and then followed it to the actual story on the Telegraph’s web site, and it can be seen here: http://www.telegraph.co.uk/finance/bank-of-england/12092171/Scrap-Bank-of-Englands-powers-after-century-of-boom-and-bust-says-think-tank.html

Here are the all-important snippets. The Telegraph printed an article on Monday, from the Adam Smith Institute, in which they didn’t have nice things to say about the Bank of England’s Monetary Policy Committee (MPC). Check this out.

“The Bank of England should abolish the Monetary Policy Committee and dump its inflation target because the regime has been responsible for creating a century of boom and bust, a think-tank has claimed.

The Adam Smith Institute (ASI), a free market think-tank, has said in a report that the central bank’s monetary interventions have made the UK more prone to banking crises, and have caused the wider economy to become less stable.

At present, the nine-strong Monetary Policy Committee (MPC) decides on UK monetary policy. Eamonn Butler, the ASI’s director, said this group of experts had “done a very poor job of managing our money”.

He added: “They have created artificial booms, followed by genuinely painful busts, through decades of following their unreliable discretion.”

Chuck again. That was doing a great Aaron Neville, and telling it like it is! I would have to think that the CATO Institute here in the U.S. is the closest thing we have to the Adam Smith Institute, and that’s all I’ll say about that! And for all you astute and paying attention readers, that has to be a cousin of mine at the Adam Smith Institute, calling out the BOE’s MPC! We “Butlers” seem to like to call out our respective Central Banks, eh?

Currencies today 1/12/16. American Style: A$ .6995, kiwi .6540, C$ .7035, euro 1.0850, sterling 1.4420, Swiss $ .9990, . European Style: rand 16.6300, krone 8.9140, SEK 8.5315, forint 292.90, zloty 4.0177, koruna 24.9060, RUB 76.53, yen 117.80, sing 1.4365, HKD 7.7590, INR 66.86, China 6.5628, pesos 17.82, BRL 4.0450, Dollar Index 98.99, Oil $31.37, Silver $13.79, Platinum $838.08, Palladium $ 470.75, and Gold. $1,087.98

That’s it for today. Congratulations to the University of Alabama on their college football National Championship Game win last night. My good friend Rick, that attended Clemson, was probably not in a good mood for most of the 4th QTR, when 40 points were scored! But it was a great season for the Clemson Tigers! So. 34 years ago, St. Louis received 9 inches of snow, it was colder than, well it was cold, and I was still making the rounds to let people know I had a son, to go with my darling daughter. Andrew is now grown, married, and a dad himself. The apple doesn’t fall far from the tree, years ago, when the documentary I.O.U.S.A. came out, Andrew would show it to his class and make them aware of the debt situation in the U.S. Andrew was smart as a young boy, he decided to play sports that his dad didn’t play so I wouldn’t coach him! HA! Swimming and Water Polo were his sports, and now he coaches those two sports! Parents of his swimmers and polo players have always had nothing but nice things to say about Andrew to me, and you know as a parent, that’s pretty cool when other people say nice things about your children! Alrighty then. The Moody Blues take us to the finish line today with their song: I’m Just a Singer (in a rock and roll band). I Love the Moody Blues, folks, enough said there! Now, let’s go out and make this a Tom Terrific Tuesday!

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