A Retail Sales Surprise!
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In This Issue.

* Contrasting data in the U.S.

* Gold gets taken down again.

* RBA intervenes.

* Eurozone PMI is good .

And, Now, Today's Pfennig For Your Thoughts!

A Retail Sales Surprise!

Good Day! And a Tub Thumpin' Thursday to you! Well, Wednesday sure was a difficult day for me, I felt like a death warmed over, (& probably looked like it too!) and the currencies & Gold were looking much the same! I've started off this morning singing from the same song sheet as yesterday, so the only Tub Thumpin' I've done so far today is to turn on the currency screens! UGH! Oh well, we carry on, right?

Well, we had two contrasting data prints in the U.S. yesterday. First was the surprise strong print in Retail Sales for October. Very rarely, over the years, has the BHI given me a wrong signal, but did so for October. One has to wonder what the heck is going on, given the Gov't shutdown, 800,000 Gov't workers furloughed, and the kicking of the can further down the road, but consumers felt good enough about stuff that they drove Retail Sales up .4% for the month! The markets reacted appropriately, and kicked more sand in the faces of the currencies and metals.

Chris made a comment, yesterday that was along the lines of: "The U.S. Consumer basically didn't care that the U.S. Gov't shutdown, it was a non-event to them". That got me thinking, about it. and came back to wondering what the heck was going on. and then it hit me like a ton of bricks. Who compiled the data and printed the report? The U.S. Gov't. need I say more?

The contrasting data print was the rot that was exposed on the Existing Home Sales vine. Existing Home Sales for October fell 3.2% VS September, to reach a 6-month low. This marked the second consecutive month of decline in sales, and could be an indication that after reaching a 6 year high at the end of the 3rd QTR, that the peak sales in Existing Homes has come and gone. Of course, once the markets give up the ghost on their brazen attitude that the Fed is going to taper soon, the yield on the 10-year treasury will begin to slide again. Thus mortgage rates will drop again, and we'll start the housing recovery engine up again. Or, maybe not. I think that ZIRP Forever, as we discussed yesterday will eventually wear off, just like it did in Japan.

OK, I can hear you muttering, "Geez Louise, now he's going to go back to that same well, about how the U.S. is becoming Japanese, when will he ever get it that the U.S. is NOT Japan?" Ahhh grasshopper, I really wasn't going to go there, but as long as it antagonizes you, I will ! HA! Nah. just kidding! But, Shoot Rudy, the reason I beat on things over and over again, is that there are new readers added to the "club" every day, and they need to get their dose of whatever it is I'm beating on too!

Well, the currencies and Gold, as I said above, went through the gauntlet yesterday. And this morning it's a mixed bag, with the euro recovering from an overnight low of 1.3399, but the Aussie dollar (A$) and kiwi, getting sold like funnel cakes at a state fair. So, let's see what's up with these currencies today.

The euro, which as I just said appeared to be on the slippery slope falling below 1.34 overnight, saw a nice rebound when the Manufacturing Index for the Eurozone printed, and although it slipped just a tiny bit, remained well above the 50 level that is the demarcation between contraction and expansion. Germany's manufacturing drove the bus for the Eurozone overall, with Germany's manufacturing rising to an index number of 52.5 (a 29-month high!), from 51.7. The problem for the Eurozone is that members like France printing an index number of 47.8!

The markets apparently like the fact that Germany is cooking with gas or as my fave personality on TV, Phil Robertson, says. "now we're cooking with peanut oil".

The Aussie dollar (A$) on the other hand is getting taken to the woodshed for the second consecutive day. On Tuesday overnight, it was the Asst Gov. at the Reserve Bank of Australia (RBA) making comments about preferring a lower A$... And last overnight, it was RBA Gov. Stevens talking about the RBA being "open-minded" regarding intervention. But soon after his talk, it was revealed that the RBA had intervened last month.

You see, the RBA buys and sells A$'s all the time, to balance out trade. No biggie. But when they buy or sell more than is needed to balance out trade, that signals intervention to move the currency in a direction. And in October, the RBA sold A$ 330 million more than was needed to balance trade. I guess that's what Stevens would consider to be "open-minded" about intervention!

So, with the markets finding this info out, they immediately reacted negatively toward the A$... And then kiwi got caught up in the trade, and began to slide too. Overall, it was not a good night for these two gems of the South Pacific.

Then add in the HSBC reading of manufacturing for China, which saw a decline for the first time in 4 months from 50.9 to 50.4. Remember, that China is "special" in that it gets two manufacturing index reports. One from HSBC, and one from the Gov't, and never do the two match. So, when the Gov't report prints, and I expect to see it flat or have a small gain, the markets will then avg out the two and decide if the Chinese manufacturing is expanding or contrasting. But the bad news for the A$ is that with this report, it shows a slowing of the Chinese economic recovery.

Speaking of China. Most observers were shocked to see the list of reforms that the Chinese leaders have pledged to implement that printed last week. And then we saw comments by the Peoples Bank of China (PBOC) Gov. Zhou about China going to a floating currency , but not mentioning "when". So, with all this euphoria about China's future, the PBOC decided to weaken the renminbi / yuan in order to not allow the markets to get ahead of themselves with thinking that this is a one-way street on currency appreciation. I get the feeling that the PBOC is flexing its muscles while it can. For, when the PBOC and the Chinese Gov't allow the renminbi / yuan to float, the PBOC won't be "setting the fixing rate" every day. Of course they could always join the rest of the world and have a "dirty float" by intervening daily. but that would get really old. fast!

Well. I received quite a few emails the last couple of days from readers that wanted to know why I had failed to talk about the story that hit the markets earlier this week, regarding the fraud at the census, which spilled over to the BLS and the employment reports. Everyone thought I would be jumping with joy, for this is what I've said all along, that the Gov't employment books and records are cooked. made up. etc. But that would do no good. We all knew this would eventually be exposed. The problem resides in the markets perception of the BLS reports. The markets believe them to be the holy grail of reports, and therefore they allowed the exposing of the fraud to slide right off their back. They shrugged it off. So, what good did it do to expose the fraud?

But for those of you keeping score at home, that didn't see this report, here's a link to the complete story on the census fraud that spilled over to the BLS employment report. Good luck keeping your blood pressure down while you read it!


OK. The U.S. Retail Sales report for October sure was a surprise, and the U.S. Retailers have to be licking their chops anticipating a strong Christmas shopping season. But, what if. with everyone pushing Christmas ahead in the Calendar more and more each year (remember a few weeks ago, I told you about a Christmas TV commercial that aired already), maybe, consumers are going out early to make their purchases, to avoid that craziness of Thanksgiving night and next day! Or. maybe, I should just stick with my initial thought that the books were cooked!

Gold really got whacked again yesterday. The downward move was swift, and full of pain. 6 years ago, I met Ed Steer at a get together at the New Orleans Investment Conference, at that time he was just starting his daily letter and we had a lively discussion to say the least! Over the years, I follow Ed in his letter and find a ton of stuff that he has links to, for the FWIW section of my letter. This morning's letter has Ed explaining the takedown of all four precious metals, led by Gold, and followed by Silver, Platinum and Palladium. It was a $10-buck shaving of Gold's price in a matter of seconds. And then per Ed Steer, "Once the "new and improved" lower price was set, it triggered more sell stops and the brain dead technical funds and small traders followed the script to a "T"; selling long positions and going short even more than they already were."

He then shows a picture of a T-Shirt with these words on it. "I can explain it to you, but I can't understand it for you.

The U.S. data cupboard has the usual Tub Thumpin' Thursday fare today, with Weekly Initial Jobless Claims, but then sprinkles in PPI (wholesale inflation) and the Markit PMI Preliminary report, which is not followed much. Yesterday, besides the two reports I talked about at the top, we also saw the stupid CPI report. And yes, CPI showed that Consumer Inflation fell in October! Yes, with all that buying going on (Retail Sales) inflation was negative. We actually were in a deflationary state according to the Gov't in October. I would have to say that the stupid CPI report was "overcooked"!

And then before I head to the Big Finish. The Fed's FOMC Meeting Minutes printed yesterday afternoon, and they provided the markets with some fresh thoughts about Tapering coming "in months". U.S. Treasuries took a hit, with the 10-year yield rising from 2.71% to 2.79% (remember in bonds, price and yield have an inverse relationship, so when the yield goes up, the price goes down, and vice versa) But isn't this just like the markets to go off on something like this old news? Because, since the FOMC meeting, we've had up-to-date stuff from Fed Heads, Dudley, Evans and Yellen all watering down those meeting minutes! Typical markets. a bunch of dolts!

For What It's Worth. I have a follow-up to the thought above regarding the take-down yesterday in Gold from zerohedge.com, so let's get right into it!

"What do the following dates have in common: September 12, October 11 and now, November 20? These are all days in which there was a forced gold slamdown so furious, it triggered a "stop logic" event on the CME resulting in a trading halt of the precious commodity. In today's case gold trading was halted for a whopping 20 seconds as the market tried to "reliquify" itself following what was a clear attempt to reprice the gold (and silver) complex lower. Needless to say, there was absolutely no news once again to drive the move. Ironically, this comes just as the London regulator is launching an investigation into London gold benchmark manipulation - we are, however, confident that all these glaringly obvious manipulative events that take places just around the London AM fix will be routinely ignored. After all it is perfectly normal for someone to dump 1500 GC contracts in one trade and suck up all the liquidity from the market with zero regard slippage costs, or getting the best execution price possible. Well, it's normal if that someone is the Bank of International Settlements.

Of course, the liquidity we re-enter at a time when the prevailing price has been reset substantially lower on what is basically a "banging the open" type of event, or in this case market open, when one or more traders attempt to generate the well-known "momentum ignition" event so known to HFT algorithm manipulators everywhere.

Most indicative is that this is taking place less than 24 hours after the FSA announced it was investigating precisely this kind of gold manipulation. What's the saying... "in your face"?"

Chuck again. There's more to this story than I have space for, so if you want to read the whole story and see the graphs, etc. click here: http://www.zerohedge.com/news/2013-11-20/furious-gold-slamdown-leads-third-consecutive-20-second-gold-market-halt

To recap. The Currencies lost a lot of ground yesterday to the dollar, and this morning, they are a mixed bag of results so far. The euro, which saw weakness overnight, has rallied this morning on a good manufacturing report, especially from Germany! The A$ got dissed more by the RBA, and then it was revealed that the RBA sold A$'s last month. U.S. Retail Sales were strong in October? And Gold got taken down once again, swiftly and with pain.

Currencies today 11/21/13. American Style: A$ .9265, kiwi .8220, C$ .9550, euro 1.3465, sterling 1.6140, Swiss $1.0935, . European Style: rand 10.1410, krone 6.0965, SEK 6.6315, forint 220.85, zloty 3.1135, koruna 20.1950, RUB 32.96, Oil $93.79, 10-year 2.79%, Silver $19.96, Platinum $1,398.10, Palladium $717.20, and Gold. $1,248.84

That's it for today. Crazy day yesterday. Always the first day back after being gone is interesting. And even though I had my laptop with me (to write the Pfennig) my email box had over 1,000 emails in it, that while most I'll never even open, and just delete, I still have to sift through them and find ones I do need to respond to. UGH! I'm about ½-of my way though them. And then I had to get caught up on my TV shows I had recorded. Did you see that David Blaine special that was on TV? WOW! He's an amazing magician! I'm still feeling pretty shaky this morning, so It'll be touch and go if I stay or go home. But I made it through the Pfennig! See what you can do when you put your mind to it! HA! Tom Petty is singing Runnin' Down A Dream, which is what I always seem to be doing! OK. Mike's here, time to get this out the door. I hope you have a Tub Thumpin' Thursday!

Chuck Butler
EverBank World Markets

Posted 11-21-2013 12:40 PM by Chuck Butler
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