In This Issue   On off and on again currency ra

first_imgIn This Issue.*  On, off and on again currency rally. *  FOMC minutes spur talk of QE ending. *  Budget gets 6% more spending. *  Kiwi is best performer overnight.And, Now, Today’s Pfennig For Your Thoughts!Same-o, Same-o.Good day.  And a Tub Thumpin’ Thursday to you! I’ve got to get to Tub Thumpin’ today, because I’m so late! The alarm clock just didn’t do the trick this morning for me. but then, I finally got to sleep so late last night, that I don’t recall checking it! Oh well, think of this as your chance to get some things done this morning, before reading! HA! Our little Christine brought in breakfast sandwiches, and even went back to turn a light off in my car that I had left on!  We were hit very hard by storms last night, and there’s damage and destruction all around, but for once my little river town wasn’t smack dab in the line of the storms.The currency rally that I said had finally found legs yesterday morning, kept those legs moving yesterday, and as I turn the currency screens on this morning, the euro has moved past 1.31. the single unit is up 2.5% since April 1, and that’s no joke!  I have to say that I’ve been impressed with this move by the euro which seems to have really benefitted from the poor showing of the U.S. Jobs data last week. Another thing that is fueling this move higher by the euro is the narrowing of the bond yields in the peripheral markets of the Eurozone. In other words, for instance Italy’s bond yields have fallen and are moving in the right direction.But. is it the euro moving the rest of the currencies or the other way around? I read an article last night by an analyst that believed he was seeing the currencies pick the euro up and move it higher. Hmmm. While I don’t see it that way, I won’t argue with him. I prefer to think that the offset currency to the dollar, the euro, is the Big Dog, and all the little dogs (other currencies) only get to run off the porch to chase the dollar down the street, if the Big Dog, leads them.The Best performing currency overnight was the New Zealand dollar / kiwi. I said yesterday that I thought kiwi was pushing the currency gains envelope a little too far. Well, that didn’t stop kiwi, as it pushed through the 85-cents handle all the way to .8660! Last night, the New Zealand Finance Minister (Fin Min) confirmed to the markets that New Zealand is still on track to return to a Budget Surplus in 2015, and then he also backed up what the Deputy Gov. (Spencer) of the Reserve Bank of New Zealand (RBNZ) had to say earlier this week about interest rates going higher should the housing problem continue.That’s all good and fun for now, but, I always get a bit tight in the collar when these guys say stuff like this, that gets the markets all lathered up, and then fail to actually act on what they said previously.  Take the Bank of Canada, and their former Gov. Mark Carney. Carney for over two years told the markets that it was time to remove stimulus from the economy and look to raise interest rates. And nothing was ever done. So, for the longest time, the markets bought up Canadian dollars / loonies thinking that Carney was going to hike rates, and when they finally realized that he wasn’t going to hike rates, they sold their loonies. And THAT is the reason the loonie fell from a level over parity to below parity.But for now. kiwi seems to be the belle of the ball for traders and investors. In addition, New Zealand also printed a stronger than expected manufacturing index in March, and house prices continue to advance, now to a record level. So, the reasons to hike rates are there. now let’s see the RBNZ deal with rate hikes.In Australia. the Aussie dollar (A$) saw some initial selling after their latest jobs report showed that the unemployment rate had risen to a 3-year high. But soon that selling was reversed and the A$ has moved higher by about 1/4-of a cent. It’s all about yield, folks. or better said. it’s all about relative yield. Because the yields in Australia and New Zealand aren’t like the yields we’ve seen in the past, but they do give you a pick up over U.S., Japanese, and Eurozone rates. And these days, that’s all that seems to matter to investors.Money is always going to go where it’s treated the best. It’s that simple. Well, that is as long as the country sporting the yield differential isn’t a banana republic or taking a ride on the inflation fueled slippery slope.  The fundamentals of Australia and to a lesser extent New Zealand are not of that ilk, and so the smart money goes where it’s treated best..The U.S. dollar received a bit of fanfare yesterday morning, when the Fed’s FOMC meeting minutes from March were released. Funny thing, that is if you don’t care about this stuff it’s funny. But the Fed actually released the report to Congress and some trade groups the day before. Hmmm. My conspiracy blood is boiling, but I won’t go there. I think it’s more important to talk about what the minutes revealed. And that is that only a handful of Fed Heads still believe that Quantitative Easing is needed past June. The markets took that news hook, line and sinker and said, “the Fed Heads are ending QE”. And Gold got sent to the woodshed.Well. talking about putting the cart before  the horse!  Did the minutes say, that Big Ben Bernanke believed that QE should end in June? No they didn’t! And until Big Ben Bernanke says those words, it matters not if all the Fed Heads believe QE should end. Sure, you may think that the FOMC is a Democracy, but it’s not! It’s a benevolent dictatorship. And like I’ve always told the people here. “This is a benevolent dictatorship and I can take the benevolence out at any time!”So, the dollar was seeing some fanfare, and then as if to say.  Take this and deal with it. The President’s 2013 Budget was presented. Never mind that our fiscal year began last October. The President’s 2013 Budget was much like his previous Budgets. A 6% increase in current spending levels (hey, I thought we were going to cut spending? Yeah, right, and I’ve got a bridge.)  In fact, this budget cancels the across-the board spending cuts and pumps more money into those areas that were to see cuts. I’m not going to get into all this folks other than to say that it’s the same-o, same-o deficit spending. And when the markets saw this, they immediately began to sell those dollars they had just bought.Oh, and the U.S. Postal Service announced that they were going to cancel their plans to end Saturday mail.  Hmmm, I wonder what changed their mind? Did some HUGE benefactor come along and fund the whole process?I could write a book just on all the “stuff” that went on yesterday!  But don’t let all this get in the way of a stock market rally. The S&P 500 set another record level yesterday. Hmmm. seems to be quite overbought to me, but then I’m not even your last choice as a stock jockey.OK. a long time friend and two-time colleague of mine, Ed, sent me a link to a story in the NY Times about Gold losing its luster as an investment.  And then another reader sent me a story of how John Embry of Sprott Asset Management told the Investors Digest of Canada,  that “The powerful fundamentals which are driving actual gold demand will eventually defeat artificial price suppression.”So. there’s obviously a two-way thought process going on in Gold right now.  I do have to say that I really truly believe that the demand for physical Gold will win this battle in the long run. or maybe that’s just wishful thinking on my part. I doubt it, I’m a realist, a logical thinker, and don’t get caught up in that kind of emotion. I’d rather have fundamentals drive my thought process on assets.Speaking of fundamentals. I’ve been looking into platinum for some time now. I was looking for the fundamentals, etc. of the metal. And like Silver, platinum has industrial uses. so, I think that expanding the holdings of metals is a wise thing.Not much in the form of data in the U.S. data cupboard today, so we’ll go to the Big Finish, and put a bow on this today. we will get Retail Sales for March tomorrow, so strap yourself in for that one. The Butler Household Index (BHI) indicates that Retail Sales will be soft. Then There Was This. Bitcoins. Oh brother has been a rage. For those of you that don’t know what this is, simply put, it’s a form of digital cash.  And has it ever had a crazy beginning! There have been many forms of digital cash that have attempted to come to the markets over the years, starting with a firm called digi-cash in the mid 90’s. All of them folded for one reason or the other, but the prevailing thing that caused problems were the systems used. The developer of Bitcoins believes he has solved all of the previous problems, and Bitcoins have had a meteoric rise in use, and popularity. It’s simply a different way to get your money out of dollars, or whatever your base currency is. There’s even a bar in NYC that accepts Bitcoins as payment now, as long as you have the Bitcoin app on your phone!  I saw a quote in the “5” yesterday that was interesting regarding Bitcoins. “All well and good in a print-mad world,” says another reader, of Bitcoins. “But AU/AG double as an all-weather insurance hedge.”  (AU / AG are the symbols for Gold and Silver)Another “5” reader said, “What good would Bitcoins do in a world where an EMP attack/CME has occurred (however unlikely that may be… That’s what insurance is, after all! And yes, I know the first concern in that type of meltdown is beans and bullets)? Your reader may or may not want to buy tulips with his Bitcoins, but might I suggest some good, bubbly British South Sea breadfruit, circa 1711 or so? For me, I think I’ll cling to my gold, guns and God, thanks.”To recap. The currency rally yesterday got lets, then had them cut out from them, only to regain them again. Tons of things to talk about from yesterday, Chuck even thinks he could write a book about them all! The Aussie and kiwi dollars are pushing the currency gains envelope even further this morning, and the euro has gained 2.5% since April 1.Currencies today 4/11/13. American Style: A$ $1.0560, kiwi .8650, C$ .9895, euro 1.3105, sterling 1.5375, Swiss $1.0745, . European Style: rand 8.9150, krone 5.7180, SEK 6.3525, forint 227.35, zloty 3.1470, koruna 19.7940, RUB 30.86, yen 99.25, sing 1.2370, HKD 7.7620, INR 54.52, China 6.2578, pesos 12.08, BRL 1.9735, Dollar Index 82.22, Oil $94.43, 10-year 1.79%, Silver $ 27.69, and Gold. $1,561.28That’s it for today. This took me eons of time to put together today, so I’ll cut short the “nice section”. Cardinals take the series from the Reds, which is a good start, especially since they’ll play each other 16 more times this year!  Tough Water Polo game last night for my boys. Son Andrew’s team got smoked, which he was not prepared for, as his team was undefeated in conference going into the game, and son Alex got ejected when he got punched in the head and complained to the ref. I guess it was OK that the other kid mugged Alex, but not OK that he complained about it. Oh well, lesson learned for him. Little Delaney Grace went to the game with us, and had tons of questions.  OK. I’m late, and I have a ton of stuff to do today. 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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