In This Issue   Safe Havens get unwound   R

first_imgIn This Issue. *  Safe Havens get unwound. *  RBA disses the A$ again! *  Spending more than we make, why not? *  China’s Gold shipments up 51% this year so far. Saber Rattling Quiets Down.. Good Day! .  And a Tom Terrific Tuesday to you! Well, Front and Center this morning, I feel like I’m becoming like the main media, and focusing on stupid stuff instead of the things that we should be focusing on, for this morning, I’m going to talk first about a couple of emails I received yesterday from people that were quite upset with me for calling the country of Ukraine, “the Ukraine”. I do understand the difference, but really, a simple explanation would have done the trick!  So, I apologize to all Ukrainians who felt I was putting them back in the Russian stable.. Ok, dear readers, you get what I’m talking about here, right?  I mean you don’t call Japan, “the Japan”, or France, “the France”. But funny thing, you do call our country The U.S.! As if we’re still a group of colonies! HA! Well, do you get the feeling that there’s little to talk about today, and Chuck is doing his best to beat around the bush this morning? If you do, you win a Gold Star!  Speaking of Gold, yesterday, the shiny metal gained over $20 and pushed ahead of the psychological level of $1,350. But that was all “fear trading” as I talked to you yesterday morning about the saber rattling going on in the country of Ukraine. Overnight, all that saber rattling appeared to be exaggerated, and Gold has backed off the $1,350 level, by $12. Have you ever listened to the Moody Blues, Seventh Sojourn Album? For over 40 years it has always been one of my faves. New Horizons from that album is playing right now, and I had to turn it up, as this is a song that gives me peace of mind.  How can I be my usual smart alec self after listening to this song?  I’ll do my best! But you should really, dig that album out of your old albums bin, and put it on the turntable again.. Well, the Reserve Bank of Australia (RBA) kicked off this busy week of Central Bank meetings and Job Jamborees with a meeting of their own last night, and kick things off is what they did! The RBA decided to kick the Aussie dollar (A$) off the path to recovery last night, by emphatically mentioning that the “currency remains high by historical standards”.  Once again, I used to like the RBA and thought of them as prudent, for they always seemed to have price stability as their main goal. By wishing, and hoping, and thinking and praying that the A$ will get weaker the RBA is inviting inflation into their economy, and that’s not providing price stability, folks. Shame on you RBA! Yesterday, it was all about the safe havens, and today it’s back to kicking sand in the face of Japanese yen, Gold, and francs.  The U.S. Sec. of State, Kerry, is visiting Kiev today, so he must have put the fear of God into the Russians and had them back off, and end the saber rattling. Or maybe, as I said above, it was all exaggerated.  Russian President, Putin has decided that there’s no need to send troops into Ukraine, and that has everyone breathing easier this morning. And with that we have the safe havens on the selling blocks today. The euro is attempting to get back on the rally tracks this morning, after getting sold yesterday. I doubt that the euro will get much traction though, as we head into the European Central Bank (ECB) meeting on Thursday. So, any traction it gets will be hard fought for!  I still believe that we’ll see better things from the euro this year as I feel the single unit will be able to add on to last year’s positive gains.  The euro is far from being out of the woods, given the peripheral countries of the Eurozone’s problems, but as long as relative calm can continue to be cast over the Eurozone, the euro will find ways to inch forward in price. The U.S. Data Cupboard was choking on the data it had to spit out yesterday. First and foremost, the U.S. PMI (manufacturing) index didn’t show that it had any problems with the “bad weather” in Feb, and gained.  That’s a good sign for the U.S. economy and the first one we’ve seen in awhile.  But then we had the Personal Income and Spending data. We simply cannot help ourselves when it comes to spending money, and in some cases spending money we don’t have!  January consumer spending was up .4%, while January consumer income was up only .3%.. So once again, we spent more than we made.  When you put the exploding Consumer Credit numbers up with these spending reports then the picture begins to become HD quality.  Oh, and an ugly step-sister to all this is the larger than should be comfortable to Fed Heads, Margin Debt, just keeps growing. I don’t want to spoil the party so I’ll go. I would hate my disappointment to show.  So, just go ahead and spend, and you’ll find out in the end, that it would have been better to save. On a sidebar, (I’ve seemed to go on a lot of these today, eh?) When the stock market last crashed (remember the tech bubble?) I had gone on record, months prior to the mess exploding, saying that IF the Fed, led by Big Al Greenspan, wanted to truly slow the stock market down, all he had to do was raise the initial Fed Call, margin rate, which stands at 50%… When I was a young man learning how a margin dept works at the brokerage firm Stifel Nicolaus, the initial Fed call margin rate was 65%… When it was dropped to 50%, stocks took off and never looked back, well that is, until the tech bubble popped.  Just a bit of history for you. And getting back to spending more than we make. a report that EverBank posted on Google+, says that 1 in 3 Americans don’t save. And that only 68% of Americans spend less than they make and save the difference.  That’s down from 73% at the start of the depression, when everyone was scared straight, and decided to shore up their own personal balance sheet. (remember that series “Scared straight”?)  Well, that’s what happened, but now it’s back to spending, and not just one’s own money, but spending other people’s money!  One day a huge appreciation and the next day a huge depreciation. That’s what’s gone on with the Chinese renminbi / yuan these last two days. It’s as if the People Bank of China (PBOC) is testing the waters of volatility. Just to see how it works, plays out, affects markets, etc.  For there is no reason that they would allow a huge appreciation one day, and reverse it the next day, unless they were testing the waters of volatility.  Well, today is Shrove Tuesday, or Fat Tuesday. I was in error last week when I talked about it being National Pancake day. National Pancake Day is today. So, drop by an IHOP and get your free stack of pancakes!  I could use some pancakes, I think, today, as my stomach is rolling around and not behaving.  Saturday was Mardi Gras. Here in St. Louis, I think we have the 2nd largest Mardi Gras celebration, so it’s a big deal here. For What It’s Worth. I’ve told you all about this fellow named Koos Jansen, who does tons of work researching Gold shipments, etc. in China.. He normally posts his thoughts on a website called and the GATA people post it too.  Koos then goes to Google+ and makes a post.  This morning, Ed Steer posted it too, so it’s all over the place, but not in places that you dear Pfennig reader would normally see, so I have if for you here!   Here’s Koos Jansen.. “The Shanghai Gold Exchange (SGE) is back on schedule publishing their trade reports on Friday that cover the previous trading week. Last Friday’s report covered the trading week February 17 – 21. For me the most important numbers is always the amount of physical gold withdrawn from the vaults as this equals Chinese wholesale demand. Withdrawals in week 8 (February 17 – 21) accounted for 49 tonnes, year to date there have been 369 tonnes withdrawn from the vaults. If we divide the later by the number of days of the corresponding period (52) we come up with an average demand of 7.09 tonnes per day – this includes weekends and the one week holiday at Lunar year when the SGE was closed. I got a few request regarding demand compared to last year and daily moving averages. Great ideas which I have carried out (request are always welcome, we’re doing this together). Compared to last year demand is up 51 % over the same period. Of course we had the shocker in April 2013 when withdrawals exploded to 117 tonnes in week 17. I don’t expect any spikes that big this year so probably this year’s growth compared to 2013 in percentages will be decreasing when we’ll pass April. Nevertheless, the daily average of 2013 was (2197/365) 6.02 tonnes, while this year we’re up to 7.09 tonnes. China is on schedule to establish a new record, if the world can supply any more gold. The longer this insatiable demand continues, the more I start to ask myself where this gold is coming from. We know form Swiss refineries they’re having a very hard time to source this much gold for China.”  – Koos Jansen Chuck again. Great stuff! The Chinese like to be secretive about their shipments, production and overall usage of Gold, but more and more these numbers are coming to the front page, and none of them indicate to me that China has given up their goal of having more Gold than any other county on earth, to: 1. Make the rules when the countries sit down and show their Gold, and 2. To back the renminbi with Gold to make it the most attractive currency on the block! To recap. It’s Shrove Tuesday, or Fat Tuesday for everyone else that isn’t Irish!  The saber rattling in Ukraine has quieted down, and Putin said there’s no reason to send troops into Ukraine. So, with the quieting down, the safe havens which were what it was all about yesterday, are getting sold this morning.  The euro is back on the rally tracks, and the RBA dissed the A$ last night, saying that it was “still high”.  And Chuck learns a lesson on talking about countries.. Currencies today 3/4/14. American Style: A$ .8960, kiwi .8405, C$ .9040, euro 1.3765, sterling 1.6695, Swiss $1.1305, . European Style: rand 10.8075, krone 6.0015, SEK 6.4370, forint 225.60, zloty 3.0410, koruna 19.8690, RUB 36.10, yen 101.90, sing 1.2690, HKD 7.7610, INR 61.85, China 6.1236, pesos 13.27, BRL 2.3435, Dollar Index 79.99, Oil $103.82, 10-year 2.64%, Silver $21.19, Platinum $1,445.00, Palladium $747.00, and Gold. $1,333.08 That’s it for today. I believe that we will have some cooks (people in the office) making their best Fat Tuesday creations for today. I sure hope my stomach settles down so I can partake! Well, after today, you’ll only have me 5 more days before I head to Spring Training! After walking across the wind tunnel bridge this morning, I have to say that I can’t wait! I have to go where it’s warm, and that’s not here! The Sun continues to move north. Mike and Chuck keep track of it as it rises in the East. We had a fund raiser at a pizza joint last night for the Lindbergh High School Water Polo Team. All the kids, and grandkids were there, so dad got to buy dinner for everyone! My two grandsons, Everett and Braden were entertaining, and at one point they both decided they needed to go to the bathroom. I thought, that’s not going to turn out good. HA! Funny kids! I hope they generated enough money for the program. Oldest son, Andrew is the head coach of the water polo team, so even after Alex graduates this spring, we’ll still be going to games. And with that, Mike is here, that means this is late!  Not as late as yesterday, as I had to retype the whole letter, long story. So, I hope you can make this a Tom Terrific, Shrove and Fat Tuesday! Chuck Butler President EverBank World Marketslast_img

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