Good Day. And a Wonderful Wednesday to you! One of these days Alice! That's what I feel like this morning.. I feel like yelling at everything, and everybody! Maybe it's the steroids, maybe it's the fact that I can't get a decent night's sleep, and maybe I've just come to the end my wits, dealing with all the stuff I have to deal with on a daily basis, and maybe it's just a combination of everything! But, I warn you now, don't cross me this morning.. When I was a teenager, I had a very mean temper. But through the years, marriage, kids, grandkids, cancer, have all mellowed me quite a bit, but there are times I revert, and today is one of those days.
Well, there's no data here in the U.S. today, but the markets are all lathered up for the first press conference by President-Elect Trump. And the dollar, while not surging or being bully again, has the conn this morning, as traders think that this press conference is going to be the confirmation they need for all their optimism.. They're probably right, in a way. I do believe that Trump will lay out his plans but will he talk about how they will be paid for? Will he talk about our nearly $20 Trillion in current debt? Probably not. So to me, nothing's changed. it's still just words, and words are easy to come by.. This is not politics, I'm talking about the market's reaction to what's being said, and I think they are heading down the wrong road, but that's just me, being me.
With no data today, and basically not much on docket for tomorrow, the markets will be searching for something to trade on, and the Trump press conference is the Big Kahuna today and will carry over to tomorrow. Then on Friday, we'll finally see some data worth talking about, when December Retail Sales will print. The Butler Household Index (BHI) indicates that this will be a rip-roaring print, and when you also take in the Consumer Credit total for November of $25 Billion, you get the feeling that there will be carry over to December, and that also indicates a rip-roaring Retail Sales print on Friday. But it's only Wednesday. UGH!
Did you know that the House will vote today on a bill that would cap the size of trading positions firms could take in more than two dozen core commodity contracts? Doesn't that sound interesting? I bet the boys and girls at the Bullion Banks have been fighting and lobbying for the defeat of this bill, don't you agree?
Well, Gold had another good day yesterday, closing up $6.50 and is up a buck or two in the early morning trading today. Yesterday, Gold was trading strongly, and just about to trade through its 50-day moving avg. when a ton of sells hit. Paper sells I might add.. But that's OK. it is what it is, and I'm not going to go all "Rambo" on these paper sells, for I'm sure they had good reason to hit the market at that precise time. (I'm being facetious here, for those of you who think I've fallen off my rocker!)
The price of Oil has plunged this week, and is trading all the way down to a $51 handle.. A couple of weeks ago I mentioned something that is in play here. I told you that the rise in the price of Oil (it was at $55 at the time) was going to bring the shale producers back and soon a glut of Oil will hit the market, and that won't be good for the price of Oil. Well, I read a report this morning that talked about how the Oil business is picking up again with rig counts rising, and so on. You would think that these Oil companies would figure out a sweet spot for production that keeps the price steady so they can keep producing and making money to pay for all that expensive equipment they own. But Noooooooo! They ratchet up the production, the price of Oil falls, and then they have to stop production because the price has fallen so much that they can't make money. And the circle goes on, by and by, the circle goes on, by and by..
So, the Petrol Currencies, led by the Russian ruble, are taking on water this morning with the price of Oil plunging. The Canadian dollar/loonie remains resilient though, lagging the activity in the price of Oil. the Brazilian real just goes with the other Petrol Currencies, as there hasn't been any activity here since the last Selic Rate cut last month. And the Norwegian krone saw its CPI for December rise 3.5%.. Recall I told you yesterday that I was expecting 2.8%, but that was a fat finger mistake. the expected rate was supposed to be 3.8%, so inflation was lower than expected. But the song remains the same (Led Zeppelin) here, as Norway has the inflation that most countries THINK they need, but no rate hike is coming.. And therefore the krone doesn't get any credit because there are no rate hikes coming..
And the Mexican peso is getting whacked again ahead of the Trump press conference today.. I guess traders think that the President-Elect is going to throw Mexico under a bus today.
In a sign that Global Growth just might be on the road to recovery, Japan's Current Account, which had gone downward last year, has seen it return to a Surplus in the recent months. And tonight we will see the latest print of Japanese Current Account, which is expected to remain a Surplus. And that forecast is keeping the Japanese yen well bid at 116 overnight, not being influenced by the dollar any.
Another windy day down here in S. Florida, but it's warm and that's all that matters to me, not that I'm attempting to gloat. I was just leading to the fact that I spent a lot of time indoors again yesterday, reading once again! And this time, I was happy to see my Things That Make You Hmmmm newsletter from Grant Williams in my email box! Grant talks about so much in his letters, and sometimes I have to reread them a couple of times to soak in everything he's talking about.. I was struck by something that he quoted The Credit Strategist as pointing out. "There were four cases where a Republican succeeded a Democratic president. In each of these cases - Eisenhower, Nixon, Reagan, and Bush II, the market fell during the Republican's first year in office by an average of 10%. Further, recent presidents that succeeded two-termers faced daunting economies during their first terms."
I tell you this because it plays nicely in the sandbox with what I've been saying and that is that we're either in a recession now, or the train has left the station headed for Recessionville.. Yes, I'm quite aware of all the optimism about the economy that's going on right now and fueling the stock market buying and bond market selling.. But as I've also been saying, it's all based on promises.. So, money talks and B.S. walks, that's what my dad always taught me, and the B.S. here are the promises. That is until they are met, and then we can have an educated discussion about them!
Back to other things. Have you notice the strong rallies in both Platinum and Palladium? They've been stealth-like, and flying under the radar, which is a good thing. But these two industrial / precious metals remain well below their lofty levels of a few years ago, but I do believe they could return to those levels, potentially this year. That's my opinion and I could be wrong, but think about it.. record number of new cars being sold each month, and what metals are used in catalytic converters? And when Gold rallies, these two typically go along for the ride.
To recap.. It's all about the President-Elect's press conference today, what will he tell us and will he include details? The markets are looking for confirmation of their optimism, and I think they will get it, but only in words, not actions, but that will be good enough for them, and the dollar should have a good day, especially since there's no data today or tomorrow to speak of. Gold had a good day again yesterday, but the price of Oil has plunged this week to a $51 handle, and the petrol currencies suffer.. Chuck talks about the Shale Producers and how they need to find a sweet spot for production that keeps the price of Oil steady. And Chuck highlights a talk about recessions in new administrations.
For What It's Worth. There's something happening here, what it is ain't exactly clear. In another sign of the times, this is a report I found on Bloomberg this morning, and it screams that there's something happening here, and what it is ain't exactly clear, but I'll let you decide for yourself.
Or, here's your snippet: "Spending months to find the perfect home in your price range, only to have your mortgage application rejected, or a home inspection turn up expensive repairs, is a nightmare-one that is coming true with increasing frequency, according to a new report from real estate listings website Trulia.
A Trulia analysis of U.S. listings shows that 3.9 percent of homes that moved from for-sale to pending moved back to for-sale again, nearly double the rate in 2015. Such "failed sales" increased in 96 of the 100 biggest U.S. metros, with big swings in areas large and small, rich and poor. That includes Los Angeles and Charleston, S.C., as well as San Jose and Akron, Ohio.
In Ventura County, Calif., where the median home value is $548,000, 11.6 percent of prospective sales failed to close in 2016. That's the highest in the U.S., up from 3.1 percent in 2015. Tucson, where the median home price is $176,000, had the second-highest rate of failed sales, at 10.8 percent, up from 3.5 percent the year before."
Chuck again. I see this as a problem that will continue to grow, and thus hurting the housing sector, along with the hyped interest rate hikes..
Currencies today 1/11/17. American Style: A$ .7385, kiwi .7011, C$ .7560, euro 1.0555, sterling 1.2148, Swiss $ .9833, . European Style: rand 13.7058, krone 8.6048, SEK 9.0565, forint 292.72, zloty 4.1378, koruna 25.6052, RUB 60.01, yen 116, sing 1.4367, HKD 7.7546, INR 68.34, China 6.9251, peso 21.75, BRL 3.1938, Dollar Index 102.05, Oil $51.07, 10-year 2.38%, Silver $16.69, Platinum $980, Palladium $765.65, Gold $1,188, and SGE Gold $1,204.64.
That's it for today. Well, I got through that without using all caps! HA! Actually writing has calmed me down a bit, but I'm still full of you know what and vinegar this morning! I got to watch our Blues last night because they were on the NBC sports channel. Unfortunately, they played like a pickup team. UGH! This team is so confusing. But one thing I do know from all my years of watching and following hockey, our goalies are not "shut-down" goalies. I did get outside a bit yesterday to soak in some vitamin D from the sun. I don't hear the wind roaring this morning, so maybe it's stopped! I sure hope so! No wait, I have my Bose noise cancelling headphones on today, so that's why I don't hear the wind, you dolt, Chuck! I was trying to be as quiet as a church mouse this morning, so I used my headphones. As wound up as I was when I sat down, I was afraid of making noise and waking up Kathy, and since I've been waking up at zero/dark 30 that would not be a good thing! The Counting Crows take us to the finish line today with their song: Mr. Jones.. And with that I'm going to get this out the door before I say something about something that somebody gets mad at me about! So, now, go out and make this a Wonderful Wednesday! Be Good To Yourself!
The Daily Pfennig is written each business day by Chuck Butler and distributed by EverBank World Markets.
The purpose of the Daily Pfennig is not to provide investment advice or to manage your money – THOSE ARE DECISIONS THAT YOU HAVE TO MAKE. If you do hold investments you should conduct your own research and evaluations taking into account other independent sources of information and commentary.
The Daily Pfennig is a general update on the global marketplace, is a commentary on the conduct of fiscal, monetary, and political policy and their collective impact on the currency markets, is the analysis of an individual who has nearly 35 years in the investment business and over 15 years experience in the currency market, is the thoughts of a dyed in the wool Saint Louis Cardinal and Missouri Tiger fan (and sometime Saint Louis Ram’s and Blue’s fan), and is a publication that is designed to provide you with some information, some levity, and some analysis to assist your thinking about currencies and their place in an investment portfolio.
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