In This Issue   Tourniquet gets wrapped around

first_imgIn This Issue. *  Tourniquet gets wrapped around Gold & Silver. *  Currencies attempt to gain traction. *  NZ prints Trade Surplus. * American ingenuity on display in backyards! And, Now, Today’s Pfennig For Your Thoughts! U.S. GDP Gets Revised Down To 1.8%!.  Good day. And a Tub Thumpin’ Thursday to you! Well, a tourniquet was wrapped around Gold & Silver yesterday and the drop in each respective metal was halted. That didn’t erase the nastiness of the price action before the tourniquet was applied though. Again, I have to wonder why?  Dusty Springfield is singing to me this morning, and now I just want to sit back and melt in my chair. Pardon me while I close my eyes and let Dusty’s sultry voice take me away. OK. I’m back now. Where was I? Oh. The daily whacking of Gold & Silver. Look, if this is all about tracking the economic data, then let’s play ball on both sides of the court, and not just the side of the court that shows better than the average bear, data.  The Sword cuts on both sides, right? And in that frame of mind, today we’ll see the color of the May Personal Spending and Income, to which we’ll probably see that we as a country spent more than we made once again. But, unfortunately for us, the markets don’t care about that. (which they should, because it leads us right back down the path we took before 2007, but apparently the markets don’t care), and they will look at the Personal Spending data as a key for the economy. (consumption is around 70% of the economy, so that makes sense to a degree, however, if you ever take a walk through an old, country cemetery, you’ll find that a majority of the deceased died of what was then called, “consumption”.) So. Personal Spending in April was actually down -.2%, but May’s figure is expected to rise .3% VS April.  So, let’s think about this for a minute. April was -.2%, and if May comes in as expected at +.3%, that would mean that the 2nd QTR so far, through two months, only has a negligible rise in Personal Spending. That doesn’t bode well for the 2nd QTR GDP, now does it? Speaking of GDP, did you see that I proved once again that even a blind squirrel can find an acorn, when the 1st QTR GDP, was revised downward below 2%, (at 1.8%), just like I said it would end up doing, a couple a months ago?  OK, I was going to go into my Rocky the Flying Squirrel voice and announce Mr. Know it All. But thought I had better not. Oh! Look, I did it any way! UGH! Now make sure you put that in your data journal, although it is water that has passed under the bridge a long time ago. And maybe the Fed heads don’t care about the 1st QTR. Only looking forward. OK. that’s fine with me, but let’s not forget that when 2nd QTR GDP has problems moving upward. And while we’re searching through the U.S. data cupboard for something to sink our teeth into, we will come across the Personal Consumption Expenditures data (PCE) May is expected to increase .1%, and year on year show a 1.1% increase. Now, I’m not a PCE guru, our guys down in Jacksonville are though, and they think that this data gives us strong indicators on the economy. The monthly number has been all over the place this year so far with some months up and some months down, with the total so far in 4 months just a net +.1%…  Like I said I’m not a PCE guru, nor do I play one on TV, and I didn’t stay at a Holiday Inn Express last night, but. I would think that this net number has to get some giddy up in its step, or else the economy will show its true colors (weak) sooner than later. And, it appears that Fed Richmond President, Jeffrey Lacker, agrees with my assessment of the U.S. economy. let’s listen in. We’re not anywhere near decreasing the balance sheet yet, as he forecast a couple more years of sluggish growth. The economy is telling us this is about all we’re capable of right now, we’re going to continue to get growth at a fairly disappointing rate going forward.”    Yes, that’s right Mr. Lacker. sounds like you’ve been reading the Pfennig instead of watching the cable news! OK. So, the metals had a tourniquet wrapped around them yesterday. and the currencies tried all day to gain some traction VS the dollar, but just couldn’t put together any sustained gains VS the dollar.  This morning, some currencies are eking out some gains, but the moves are miniscule at best right now. The dollar is softer overnight, but really there isn’t much to go on right now. That could be good for the currencies. to have a day to breathe, or it could end up in tears, given the sentiment or attitude of the NY traders when they arrive at their desks today. The other day, I quoted a guy with a very important thought that I think I’ve been trying to say for a long time, but he put it together best, let’s go back a couple of days and revisit those words. When markets around the world are driven on faith in Central Bankers rather than on true economic or financial fundamentals, those markets run the ris that faith can change very quickly. I don’t know that truer words have ever been spoken, folks. And right now that’s exactly what we have going on. The markets have put their faith in Central Bankers instead of fundamentals. Well, as they found out in Japan, that can get turned around in a heartbeat. The markets went all-in on Japanese stocks when they put their faith in the Bank of Japan (BOJ) and look what happened. After a huge two-month rally, that faith was shaken, and the faith was changed very quickly. The same will happen here eventually. the markets have put their faith in the Fed. and I have no doubt in my humble little mind that the Fed will disappoint them BIG TIME! And the true economic fundamentals will prevail once again, as they have always done. Yesterday, Brazil continued with their mea culpa to the markets by relaxing Capital Controls even further, and cutting the reserve requirements on short spot USD positions. Again, folks, this is akin to remembering to drain the swamp when you are up to your rear-end with alligators. or closing the barn door after the cows are in the field. Brazil has seen investors leave by the truckload, and Brazil no longer feels that they need to have these controls in place to keep investors from running the value of the real up.. No, I don’t think they have anything to fear here, for it’s a case of once bitten, twice shy babe. Brazil ran everyone out by throwing everything at the investors including the kitchen sink, and unless Brazil runs interest rates back up to 10% and more, which would provide a “risk premium”, they aren’t going to see those investors return for some time. Aussie, kiwi, and loonies are all stronger this morning. In New Zealand, the NZ Trade Balance posted a surplus for May printed at +NZ$71 Million. Which sounds good, but was far less than what was forecast (NZ$427M). But the key here is that exports outpaced imports, and all the while that Reserve Bank of New Zealand (RBNZ) Gov. Wheeler complains about a strong kiwi. Hey, Graeme. If kiwi is so strong, then how did exports outpace imports? I think that both Aussie and kiwi are due for a rebound, given how quickly they’ve fallen in value the past few weeks, the question will be can the rebound be sustained? It all depends on how China reacts to its slowdown. Of course, that’s just my opinion, and I could be wrong. I just saw a story flash across the Bloomberg regarding Weber grills. I love my Weber that I outfitted it as a Smokenater last summer. I now have a Big Green Egg smoker, but still use my Weber. I don’t know how many backyard cookouts, grilling dinners, or just some hot dogs to eat while we listened to baseball games that my Weber has done the job for. But he number his more than you can shake a stick at. Sorry for the sidebar, but the story was about Weber grills, and I just got carried away! But think about this Weber Grill story. An American made grill (originally only in America) that was created by a guy that wanted a better outdoor cooking utility. That guy’s company now controls 35% of the $2.5 Billion U.S. market, with the company that’s in 2nd place, far, far behind. That’s American ingenuity, folks. and I could go into what was said last summer about American ingenuity, but I think I’ll leave it right there! That’s what we need here in the U.S. again. A Hoola-Hoop. But then there would probably be all kinds of rules and regulations that would keep the entrepreneur from making it as popular as the Hoola-Hoop was decades ago. For What It’s Worth. I found this on Ed Steer’s letter, it’s a story that appeared on the U.K. Telegraph and written by Ambrose Evans-Pritchard. Mr. Evans-Pritchard has been a frequent visitor to the Pfennig over the years, and while I don’t always agree with what he writes about, he often hits the nail on the head for me, as he did with this little ditty.  Here you go! “The US Federal Reserve has jumped the gun. It has mishandled its exit strategy from quantitative easing, triggering a global bond rout that it did not anticipate, and is struggling to control. It has set off an emerging market shock and risks “blowback” from a fresh spasm of the Eurozone debt crisis, and it is letting all this happen at the same time, before the US economy is safely out of the woods. It has violated its own counter-deflation strategy, tightening monetary policy even though core PCE inflation has fallen to the lowest levels in living memory and below levels deemed dangerous enough in the past to warrant a blast of emergency stimulus. It is doing so even though the revival of bank lending has faded. The entire pivot by the Federal Open Market Committee is mystifying, almost amateurish, and risks repeating the errors made by the Bank of Japan a decade ago, and perhaps repeating a mini-1937 when the Fed lost its nerve and tipped the US economy into a second leg of the Great Depression. “It’s all about tighter policy,” was the lonely lament by St Louis Fed chief James Bullard.” Chuck again. Well. I told you all the other day that buyer’s remorse was beginning to set in for the markets, regarding their reaction to the FOMC announcement last week. And the more writers and analysts jump on my bandwagon, the more buyer’s remorse we’re going to see. This dumping of the deflation thing is HUGE folks. Remember, Big Ben, before he was Fed Chairman, said that he would never allow Japanese style deflation to enter the U.S. This is when he made his now famous speech that reminded everyone that the Fed owned a printing press, and he would dump dollars from a helicopter before he would allow deflation to enter the U.S. economy. Really. So. where’s his Super Hero uniform with DF on his chest (deflation fighter)?   To recap. A tourniquet was wrapped around Gold & Silver yesterday, and the bleeding stopped. But that didn’t erase the drop in prices we had already seen, and Chuck just doesn’t get it, because if it’s tied to the economic performance, then let’s make certain that we play on both sides of the court!  New Zealand prints a trade surplus despite what Graeme Wheeler believes to be a strong kiwi, and Chuck carries on and on about Weber Grills. Hey! It is outdoor cooking season and the 4th of July is next week! Currencies today 6/27/13. American Style: A$ .9305, kiwi .7830, C$ .9570, euro 1.3040, sterling 1.5295, Swiss $1.0590, . European Style: rand 9.9675, krone 6.0655, SEK 6.7290, forint 226.65, zloty 3.3250, koruna 19.8590, RUB 32.80, yen 98.10, sing 1.2635, HKD 7.7565, INR 60.19, China 6.20, pesos 13.06, BRL 2.1865, Dollar Index 82.92, Oil $95.76, 10-year 2.51%, Silver $18.73, Gold $1,233.25, Platinum 1,322.82, and Palladium 641.80 That’s it for today. More rain yesterday and yesterday evening. I’m beginning to think the rain clouds are stuck overhead! The grandkids are all sick.. one gets sick and they all get sick.When they are small like that, they are so pitiful when their sick. Makes you feel bad for them.  But they’ll soon be running around again, viruses don’t stay long with them like they do an old guy like me! Hey! Thanks to an idea by the Big Boss, Frank Trotter, I found one of my band mates from 1973. One down, three more to go! The Strawbs are playing their classic song: Autumn right now, so a perfect song to lead us out the door! I hope you have a Tub Thumpin’ Thursday! Chuck Butler President EverBank World Markets 1-800-926-4922 1-314-647-3837last_img

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