Ice Age 2014!
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In This Issue.

* Currencies get sold on Friday .

* But Gold gains!.

* BOE & ECB meet this week .

* What's the Mogambo thinking? .

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

Ice Age 2014!

Good Day! And a Marvelous Monday to you! It's 1983, all over again! The year that Chris Gaffney's favorite song made it all the way to #13. Dexys Midnight Runners one hit wonder song, Come on Eileen! I say all this silly stuff, because it's been that long since we've seen the bitter cold temperatures that we have today and will have tomorrow. We got slammed with a monster snow storm yesterday, I even went outside and tried to help my beautiful bride push some snow before it got too bad, only to wish I had let discretion be the better part of valor, later that night!

So, there will be a smaller crowd here today, much like last week, when there were quite a few people gone. I would assume that the snow storm we got yesterday is on its way east, so be prepared, it packs a punch! And if it heads Northeast, then the anticipated return of the majority of traders to their desks today, will be delayed. In fact, I'm going to say that I think trading today will be subdued, as the country, for the most part, tries to dig their way out, and find a way to remain warm! Trading is not the number one priority of people today.

We have a full week with no mid-week holidays this week, and it should be packed with a plethora of market moving stuff. The U.S. data cupboard gets a real workout, this week, with things like Factory Orders (that need to rebound from the Oct -.9% bad showing), the Fed's FOMC meeting minutes from 12/18 (when they announced tapering), and then ending the week with the Jobs Jamboree, which has started to become about as useless of a tool to me as CPI (consumer inflation), as the books get cooked, and cooked until the data doesn't look anything like it's supposed to. Sort of like how my mom, bless her heart, used to cook vegetables.

On top of all the data this week, we also have Central Bank meetings in the UK and Eurozone. And don't forget that Janet Yellen will probably be confirmed as the next Fed Chairperson today. I got a chance to read my friend, the Mogambo Guru's latest letter this weekend. It was in the Saturday edition of the Daily Reckoning, ( The Mogambo was in a good mood, and decided that he would not place all blame on Big Ben Bernanke, but focus most of it on Big Al Greenspan. The reason I tell you this, is that as I've said before, I don't see Ms. Yellen (I'll have to come up with something other than calling her "BIG", now that wouldn't be nice!), changing her colors from the previous gentlemen, that the Mogambo holds responsible for our monetary mess.

The currencies on Friday, were not in any mood to rally VS the dollar, but we all knew that Friday morning, when I told you. The euro really led the currencies downward, but has appeared to have turned around this morning. Gold held on to its $7 gain on Friday, and is trying to eke out a gain this morning. The last day of 2013, and the first couple of trading days in 2014, have seen Gold trade with a bid in its sails, and that's been exciting to see. But we've seen the wind knocked out of those sails so many times in the past 3 years by the manipulators that if you're like me (and I'm sorry if you are!) you sit there watching Gold inch higher and just keep anticipating the punch to the gut that will knock the wind out the shiny metal. let's hope it never shows its ugly face again, but, that punch hangs over Gold like the Sword of Damocles, folks.

The price of Oil has dropped like a rock from a high place this past week. A week ago, I wrote about how $100 Oil was going to cause problems for the economy, and a week later, it is $6 cheaper! But as I've said all along, the price of Oil is about how expensive it is to get it out of the ground, and that expense just keeps getting added to, due to the more interesting ways we get Oil out of the ground these days. So, I guess what I'm saying here is that I don't see Oil dropping much more from here, due to the cost of getting it out of the ground.

So, later this week, the UK will see a Bank of England (BOE) meeting. And believe it for don't, but there are calls in the UK for the BOE to hike rates! In fact I would say that most of the upside in the pound sterling in recent weeks has all been tied to the push for a rate hike. That's where I think these guys calling for a rate hike might be just a little ahead of their time, and therefore we could see some real non-event risk on Thursday. I just think it's too soon to pull the buns out of the oven for the BOE.

The European Central Bank (ECB) will also meet on Thursday. And can you believe there have been more calls for another rate cut in the Eurozone? Unbelievable! But I doubt ECB President, Draghi, is going to listen to them. I think he'll opt to talk about all the "tools he still has at his disposal", which the markets have heard before, and will soon grow tired of hearing about them.

Speaking of the Eurozone, did you hear that German Chancellor, Angela Merkel, got hurt skiing this weekend? What in the world is someone like that doing skiing? Oh well, they say she's OK, just an injury to her pelvis, during a cross-country skiing trip. Again, why?

Well, there I was reading the latest Economist yesterday, and right there before my very eye, I read an article about how the Year is starting out the same as it has for the past 5. Hmmm, where had I hear that before? It's coming to me. Ahhh Yes! I WROTE THAT LAST WEEK! The difference between my take on the start of the year and the prognosticators calling for economic strength to return in the U.S, and the Economist's take is that they believe that maybe, just maybe the prognosticators finally have it right! And that The economists calling for accelerated economic growth in the U.S. will finally be able to crow.

I bring this to your attention because, I'm sticking to my guns.. Just like I have for the past 6 years. Yes, the economy is doing better, I'll give you that, but remember, last year, we saw the same stuff and by March, 66% of the data prints were failing to meet their forecasts. I think it all depends on the Fed. Will they cut their bond buying, which right now is set for a $10 Billion cut this month, at every meeting, or is this it for awhile? With the stimulus I think the economy can push to 3% GDP gains. Without the stimulus I think we fall back to sub 2% gains.

Well, none of the NFL Wild-Card Playoff games went the way I wanted them to, except maybe the Saints win. How did the Chiefs blow a 28-point lead? YIKES! How'd your team do?

The Norwegian krone is really getting the sand kicked in its face overnight, as Norway's manufacturing index (PMI) printed lower for December than November at 51.6 VS 54.1 in Nov. This was unlike all the other PMI's that printed last week, that showed December manufacturing being much slower than November, but apparently, the markets think this is a bigger deal for Norway than the dozen or so other countries that printed the same slower data for December!

And the Chinese have really tried to scare away the traders that continue to think that the renminbi is a One-Way Street to appreciation. Basically, it's probably the closest thing there is to such a thing, but in reality there is no such thing! All currencies have risk. The thing with the renminbi though, is that traders know, by now at least, what the Chinese are thinking about their currency, so these 3-day weak trading periods are simply shrugged off, as such. I used to think that I was the only one that saw what the Chinese were doing with their currency, but Shoot Rudy, there's are so many out there now that I can get down from the bit fat limb I was on!

Did you get to hear or read what Fed Head Plosser had to say last Friday regarding inflation? Plosser stirred the inflation fears drink a little by saying that he was "less concerned about disinflation and more concerned about too-high inflation if banks start to quickly release the 2.4 Trillion in excess reserves they now." Remember the banks he's talking about have their excess reserves at the Fed, whom pays these banks interest for these excess reserves. This is what's holding the reins back on the money supply and the velocity of money catching up the Fed's Monetary Balance Sheet of nearly $4 Trillion.

But Plosser is correct here folks. The question that I would have asked him is simply, "what do you believe will be the catalyst to getting banks to put those excess reserves into the economy?" Because THAT will be the turning point on inflation. Of course you, me and the guy down the street knows that there really IS inflation, but it's not the kind of inflation that the Fed can see.

Before I head to the Big Finish. I wanted to ask you if you asked yourself the same question I did when I was outside this morning. That question was, "Where's Al Gore and his global warming?" I don't mean to be smug about all that stuff. It's just when I read that 3 ice breaker ships can't break through ice and that the arctic ice was supposed to be ice-free by 2013, and I'm standing outside scrapping ice off my car's windows, and freezing my, well, let's just say it was cold, I had to wonder.

For What It's Worth. OK. I have to warn you right now, that this is longish.. but, well worth the read. For a lot of you, you'll recall me saying some of these things in the past, like how Goldman showed the Greece how to hide their loans, etc. Well, this was in the website that I'm beginning to find to be quite interesting! This was a talk that Sun Zhaoxue, GM of National Gold Corp in China. Take it away Mr. Zhaoxue.

"The hottest topic at the moment is oil and gold. The ground war we are seeing around the world is I think war for oil whereas gold is the currency war. Why? We observe that the integrity was the driver for US Dollar to become world reserve currency. The US Dollar and gold decoupling from 1971 caused the US Dollar to depreciate massively. From 1990 onwards, the Eurozone was in consultation to form a strong Euro to counter the US Dollar, in order to prevent the latter from stripping Europe of its wealth. The Euro was born in 1999, supported by its strong economy and 11,000 tons of gold.

With the birth of the Euro a competitor to the US Dollar was created, and so the US decided to lay a trap for the Eurozone as part of the currency war. Some countries in the Eurozone violated the Eurozone's norms by issuing bonds. Which entities participated in the issuance? US investment banks. After the debt was issued, it was US ratings agencies that struck a blow to the Eurozone by saying that its economies had problems.

Only gold remains on par with the US Dollar to benefit from the Eurozone and Euros collapse. This is why the US began to suppress gold by issuing a statement two months ago that the Eurozone will sell its gold when it is unable to service its debt, then stating three days later that the news was false. Furthermore Goldman Sachs made a forecast for the gold price at the beginning of the year but suddenly changed its course saying the gold price will fall to $1300. Buffet said that he would not buy gold even if its price fell to 800USD. Our research indicates that Buffet made a lot of money from four gold companies. So his statement is inconsistent with his personal action.

Bernanke's speech followed, saying that monetary easing will end, that the US economy is improving. This series of examples shows that the fall of the gold price is premeditated. So I say that this process is a genuine currency war.

Many people say that gold is just a beautiful thing. Then we have to ask the US why they store so much gold but instead of selling gold, they issue debt to other countries to rescue the financial market. The US owes Germany so much gold but instead of repaying immediately, sets a 2020 deadline to return the gold. From this example and process as well as some typical factors, this is a downright currency war to maintain US Dollar hegemony by defeating all other currencies. I shall stop here."

Chuck again. WOW! Talk about putting the major events of the past 8 years in a nutshell, tying it up in a bow, and delivering it to the markets. And what did the markets do with this info? The markets ignored it. But you and I don't have to ignore it.

To recap. The dollar had its way with the currencies but not Gold on Friday. The articles on how strong the U.S. economy will be this year are showing up everywhere, and that scares Chuck, for we've been here before, right? The Central Banks of the UK and Eurozone meet this week, Yellen gets confirmed as Fed Chairperson, and the U.S. Jobs Jamboree all get jammed into this week. Be careful out there!

Currencies today 1/6/14. American Style: A$ .8950, kiwi .8280, C$ .9395, euro 1.3605, sterling 1.6385, Swiss $1.1050, . European Style: rand 10.7105, krone 6.1830, SEK 6.5240, forint 220.05, zloty 3.0675, koruna 20.2180, RUB 33.23, yen 104.65, sing 1.2685, HKD 7.7550, INR 62.31, China 6.1059, pesos 13.13, BRL 2.3835, Dollar Index 80.81, Oil $94.62, 10-year 2.98%, Silver $20.00, Platinum $1,404.25, Palladium $731.10, and Gold. $1,236.12

That's it for today. Well, that was quite the exciting game Friday Night in the Cotton Bowl for my beloved Missouri Tigers! WOW! We had a blast with a large group of fiends all rooting for the Tigers. My good friend Rick also saw his Tigers from Clemson win, so a good night for Tigers all around! I have a friend that just recently signed up to read the Pfennig, and he told me Friday night that "he loves it"! I could have said, of course you do! (HA!) . But I simply thanked him. Chris is back today, I'm sure he wishes he had stayed in Florida! Our Blues are on a roll. Down a couple of key players, they just keep winning. But as we've learned so many times over the years, winning now doesn't mean a hill of beans if you can't take that winning through the playoffs! I wonder how many people will actually be here in the office today? Chris & Mike and Chuck are here! And with that, I hope you have a Marvelous Monday!

Chuck Butler
EverBank World Markets

Posted 01-06-2014 11:54 AM by Chuck Butler
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