In This Issue   Currencies metals receive so

first_imgIn This Issue. *  Currencies & metals receive some healing. *  Bullard says Bernanke’s timing was inappropriate. *  Bernanke told us, we didn’t listen! * Richard Russell & Jim Rogers in the same Pfennig!  . And, Now, Today’s Pfennig For Your Thoughts! Getting Buyer’s Remorse.  Good day. And a Tom Terrific Tuesday to you! Monday was interesting in the markets and it was a day off for baseball here, so, that meant I had lots of time to read about the interesting day last night. Congratulations to the Chicago Blackhawks on winning the Stanley Cup last night. I tried to watch some of the game, but frankly, when it’s 92 degrees outside, it’s baseball season, they run hockey way too long into the year as far as I’m concerned. Yesterday was much like someone getting buyer’s remorse. Here’s the skinny. From the time the announcement by Big Ben Bernanke was made that he “may” begin tapering this year,  and that interest rates “may” go up if unemployment gets to 6.5%, the markets took the statement as “set in stone” that these things would happen. And then, they traded accordingly, with everything, and I mean everything getting sent to the woodshed. Stocks, bonds, currencies and metals. But yesterday, we saw some healing, and we began to hear Fed Heads backpedaling, and the markets began to ask themselves, “what are we doing buying dollars”?  And the buyer’s remorse set in. Let’s see what the Fed Heads are saying. “What we’re talking about here is dialing back. The word “exit” is not appropriate here. – Richard Fisher.  “The Fed must emphasize in its statement that policy will remain accommodative for a considerable time.” – Narayana Kocherlakota.  And then the best one I’ve heard or seen came from St. Louis Fed President, James Bullard who said that the “19 officials who took part in the policy discussion on Wednesday released economic projections in which they marked down forecasts for the U.S. growth and inflation in 2013. And then went on to say “a more prudent approach would be to wait for more tangible signs that the economy was strengthening and that inflation was on a path to return toward target before making such an announcement.”  Yes, he even went so far as to say that the “Bernanke bond announcement was inappropriately timed.”   So. not that I believe I’m on the same thinking level as these Fed Heads, but it was nice to see them say things that agree with what I’ve been saying about the economy. Now whether there needs to be more stimulus or not is not my cup-o-tea. I just think that the buyer’s remorse is written all over these Fed Heads. So, the currencies tried to heal a bit yesterday, and Gold went from down $11 to up $2 as I left for the day.  This morning, there’s more healing going on in most of the currencies, and the price of Gold is up a couple of bucks again today, with the price of Oil rebounding $2 since yesterday morning.  Some currencies have found it difficult to navigate to safe land. One of those finding it difficult, is the Canadian dollar / loonie. OK. I admit it, I probably gave the loonie the old kiss of death last week, when I talked glowingly about it.  In the past week, Canada has printed good economic data, the price of Gold didn’t help, but the price of Oil remains well bid, but the loonie is now touching a 2-year low. I still like the loonie. So the old saying applies to me here. it goes like this. If you liked buying loonies at 98-cents, you’ll love buying them at 95-cents! Getting back to the buyer’s remorse thought. Remember about week or so ago, when Fed Watcher, Jon Hilsenrath, got the markets all lathered up with an article in the NY Times about how the Fed can’t raise interest rates now? Well, Mr. Hilsenrath was back to discuss the what the Fed did last week. Let’s listen in.. “Despite the Fed’s efforts to signal it wouldn’t apply the brakes any time soon, the market reacted sharply. Investors appear to have been caught off guard by the specific timetable Mr. Bernanke laid out and the central bank’s optimism about the 2014 growth outlook.” He then went on to quote Big Ben. (notice that the cable news guys missed this quote completely. ) “”If you draw the conclusion that I’ve said that our policies, that our purchases, will end in the middle of next year, you’ve drawn the wrong conclusion, because our purchases are tied to what happens in the economy . we have no deterministic or fixed plan” – Ben Bernanke So. now you see why the markets are doing a Vinnie Barbarino and are all confused. The markets “thought they heard exit” but the Fed tried to steer them away from that thought, and failed miserably. So, like I said last week when the markets went ballistic on the investment asset classes, “he said he “may begin tapering”, he didn’t say he was going to on “x-date”” I saw a real good quote yesterday that our metals trader, Tim, sent over to me, for he knows how I am about fundamentals. This was from a guy name Bob Widemer, who was the coauthor of the Aftershock Investor and sounds like this guy is a Pfennig reader!   “when markets around the world are driven on faith in central bankers, rather than on true economic or financial fundamentals, those markets run the risk that faith can change very quickly.” So. if we’re looking solely at fundamentals in the U.S. and not getting caught up in market sentiment, things change very quickly away from the current bias to buy dollars. You might want to make this entry into your data journal, for I believe it’s very telling and a true economic fundamental. Jobless Americans totaled 4 million more last month than in December 2007, when the recession began.. ARE YOU KIDDING ME?  No I wouldn’t kid you Chuck. That’s right. We haven’t left square one in the unemployment category.  According to the WSJ, nearly 12 million Americans were unemployed in May, down from a peak of more than 15 million, but still more than 4 million higher than when the recession began in December 2007. A People’s Bank of China (PBOC) deputy director made some comments overnight that have calmed the markets in Asia. the PBOC said that they would keep interest rates at a “reasonable level”  and that “generally speaking, the timing and the seasonal fluctuation are temporary and will fade away gradually.”  These comments have calmed the markets in Asia, and led to the return of the renminbi / yuan to the appreciation table, marking the first time in about a week that the renminbi has appreciated. You may recall me telling the Chinese in the Pfennig last Friday, that they had made their point about the renminbi not being a One-Way Street to appreciation. Do you think they listened to me? HAHAHAHAHAHAHAHAHAHA! As if! I saw a blurb last night that Jim Rogers was quoted as saying that “I bought more Gold today”. He said that he thought Gold might go lower at which time he would load up on more.  Let’s listen in on the guy that people stop and listen to (like the old E.F. Hutton commercials) when to talks, Jim Rogers. As he talks about how the Bull markets in Commodities is far from being over. “Bull markets climb a wall of worry. I’m not quite sure where the supply is coming from that would cause the bull market to end. Maybe they know something I don’t. But when you look back at the stock bull market from 1982 to 2000, stocks collapsed in 1987, ’89, ’90, ’94, ’97, ’98. And every time, people said the bull market is over. But it wasn’t. This bull market in commodities will definitely come to an end someday. But someday is not here yet.” Further on Gold. Yesterday, I told you about how I saw this drop in the price of Gold as something that could trigger a bounce higher, given that the price of Gold has fallen below the price to produce Gold, which could shut down some mines, and then supply gets whacked. Well, playing well with that thought, I saw a story on Barrick Gold Corp, which is the world’s largest Gold mining company announcing plans to reduce its workforce by 55.  Sure, that’s not a shutting down of the mine, but, it’s a start. The Emerging Markets have certainly seen better days, having been sold like funnel cakes at a State Fair since the FOMC last Wednesday. I would have to think that this selling has been overdone. I continue to like the fundamentals of the Emerging Markets, as I’ve said all along, the Emerging Markets aren’t saddled with mountains of debt.  That still holds true, folks. And so while they may be getting taken to the woodshed now, they certainly are positioned to be in seen in a more favorable light in the coming years. And then finally before I go to the Big Finish, which has a thought from the great Richard Russell in the FWIW section, I just wanted to touch on the euro. The once darling of everyone. the euro continues to eke out gains when it can. Just last week, the euro had climbed to 1.34, before having the rug pulled out from under it after the FOMC announcement, the euro is attempting to hold on to 1.31. Even after falling from 1.34, the euro remains 1/3-rd cent stronger than the dollar. Pretty impressive if you ask me. For What It’s Worth. I’m always giddy when it comes to including a quote from Richard Russell in my little old Pfennig. So, with no further beating around the bush, here he is. ”Bernanke has finally realized that the Fed has lost its battle with the primary trend.  The Fed and the economy are now at the mercy of the strengthening primary bear trend.  Deflation, which the Fed has tried frantically to hold back, is now taking over.  The Fed would like to exit the battle field but it can’t.  The mere thought of the Fed giving up the battle to hold back deflation terrifies the stock and bond markets.  Years ago Ben Bernanke stated emphatically that he would never, ever allow the nation to deflate — even if he had to drop cash from helicopters to prevent it.  But now deflation is happening.  And Bernanke, the academician who has never understood markets, is frozen with confusion, consternation, and fear. Everybody’s escape, so far, has been to rush headlong into Treasury bonds.  But that avenue is no longer working (the bonds are sinking).  The next avenue of escape is the dash for cash.  Cash today amounts to intangible Federal Reserve notes, which are fiat paper and actually intangible financial garbage.  The last and final avenue of escape will be to gold.  But that won’t occur until the dollar falls into international disrepute (which could be one to five years from now). Coming — a new reserve currency, and the fall of the dollar. But nobody knows when.” – Richard Russell Chuck again… not much I can add to that. Except that it goes back to what I’ve been saying for over a year now. This may be all Evident, but it’s just not imminent. To recap. The currencies & metals saw some healing yesterday, and most currencies are still healing this morning. The Canadian dollar / loonie is one that is not healing, after I gave it the Chuck’s kiss of death last week. The Fed Heads and the markets are beginning to sound as if they have buyer’s remorse, after the moves from last week. The PBOC is attempting to calm the markets in Asia this morning. And Richard Russell, & Jim Rogers both add to today’s Pfennig! Currencies today 6/25/13. American Style: A$ .9270, kiwi .7740, C$ .9550, euro 1.3135, sterling 1.5460, Swiss $1.0705, . European Style: rand 9.9875, krone 6.0805, SEK 6.6660, forint 226.25, zloty 3.2870, koruna 19.6340, RUB 32.75, yen 97.40, sing 1.27, HKD 7.7565, INR 59.70, China 6.1767, pesos 13.18, BRL 2.2260, Dollar Index 82.30, Oil $95.80, 10-year 2.50%, Silver $19.78, and Gold.. $1,285.50 That’s it for today. Bob Seeger is singing Turn the Page this morning, in which he sings about being on the road back in 1972. That got me thinking that this summer marks 40 years ago, that I left home to travel across the country in a VW microbus with the band. 40 years. Geez Louise, I’m getting old.  Steve Bushey, Donnie Phillips, Jack Perkins, Preston Vaden, and me. I’ve seen Preston in the last 5 years, but the other guys not in over 30 years. I should try to find them and get us together for a 40 year reunion! They ought to hear my son, Alex play the guitar, they would be blown away! So, with my reach in the Pfennig. maybe a reader out there knows one of these guys. Last I heard, Donnie and Jack lived in the Oklahoma City area. Boy look at the time, I’ve carried on too long today! I hope you have a Tom Terrific Tuesday! Chuck Butler President EverBank World Markets 1-800-926-4922 1-314-647-3837last_img