Where's The Deleveraging?
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In This Issue.

* Currencies add to Friday's gains.

* Krona is best performer overnight.

* Euro pushes past 1.3850.

* The Big Boss treats us with some thoughts.

And Now. Today's A Pfennig For Your Thoughts.

Where's The Deleveraging?

Good Day! . And a Marvelous Monday to you! It's rain storm central here in St. Louis this morning. The rain began yesterday, right after the Cardinals finished their game, and hasn't really stopped since. Good thing the Cardinals played their usual 1 o'clock Sunday starting time. Sometimes the schedule maker and ESPN have them playing on Sunday night. I totally dislike Sunday night games! Sunday is to be spend outside, charcoal burning, baseball on the radio.

OK. time to get down from my soapbox.. As I turn on the screens this morning, I see that most of the currencies are looking at gains VS the dollar today, with two exceptions, and their losses are so small, you might be inclined to say that they are flat today. The Japanese yen, and New Zealand dollar are finding that joining the rallying crowd, a bit difficult this morning..

The euro is climbing higher once again, passing 1.3850 overnight. 1.3850 has been kind of an unofficial line in the sand for the single unit, but not any longer, that is, unless the NY markets come in and decide that's enough! But at this point, I would have to think that we're pretty entrenched in this bias to sell dollars today. U.S. stocks took one to the chin on Friday, thus ending their string of positive gain days. However, the foreign stock exchanges are all up this morning, so that bodes well for the U.S. market. Personally, I don't really get excited or bummed out by the stock market, I really just look at it to see if the smartless Risk On, Risk Off trading is going away. So, if the U.S. stocks do gain today, the pundits will be out saying it's a Risk On Day. UGH!

In two days, the Fed is going to meet. It's been 6 weeks since their last meeting in which there was all the confusion over what Janet Yellen said or didn't say. I would hope that lessons were learned and we'll have none of that at this meeting! The Fed will however, drop another $10 Billion from their Bond Buying Program also known as Quantitative Easing, but also known as, debt monetization, money printing, and crack cocaine for the markets. So, that happens in two days, are you excited? HAHAHAHAHA! As if!

The mounting tensions in Ukraine, are boosting the feeling towards Gold. I've said this over and over again in recent days, that I didn't understand why the geopolitical tensions weren't giving Gold a strong bid. But it appears that now, that strong bid is beginning to take shape. Of course the price manipulators can see to that in a NY Minute. But, let's not even think about those rotten scoundrels today! One of our longtime friends, Adrian Day, who runs Adrian Day Asset Management, said, "The Gold situation has been compounded by Ukraine. I'm very bullish on Gold, but it's going to be a trade for the patient." Well, said Adrian!

With Gold being looked at more favorably, the other metals of Platinum and Palladium get to stretch their legs a bit. I like the other metals, as alternatives to Gold. And Palladium, as I believe I've told you previously, was the only precious metal to book a gain last year. So, watch these two, folks. I think they have some play in them.

One of the best performing currencies this morning is the Swedish krona. This morning Sweden announced that March Retail Sales beat the estimates, rising 1.1% VS .2% est. and Feb's revised number of .6%... You know, I've often written in the Pfennig that "The best performing currency overnight has been the Swedish krona". But yet, when you look at the currency it remains in the middle of the pack as far as overall return. I think that when you boil it down, there's a lot of pent of frustration with the krona, traders and investors believe it should be a stronger currency, and when Sweden prints good data, the krona goes wild. But when they don't get good news, the krona drifts. Just not enough volume in the currency to sustain rallies when there isn't good news. But. I don't believe this will continue forever. And just like Sweden's Kissin' Cousin, next door, Norway, One day, traders and investors will realize that the fundamentals here are superior to most countries, and will trade it like the strong fundamental currency it is!

In our recent Review & Focus, look for one soon at a newsstand near you! HA! Actually it will be in the mail this week, I talk about the best performing currency this year. The Brazilian real, and explain how the recent rise is a byproduct of recent rate hikes by Brazil that gives the real the best interest rate differential around the world, and the fact that the Brazilian Central Bank (BCB) has stated that they will be more tolerant of currency appreciation as a inflation fighting tool. But I just can't get my arms around the real , for a great big bear hug. The BCB and Brazilian Gov't has burned so many bridges these past couple of years that it makes navigating back to reals, difficult at best! But you can't argue with the HUGE rate differential real holds in its favor.

Last week I told you about the jump in Singapore's inflation rate. Well, Friday morning I saw that Singapore reported their March Industrial Production data, which showed production growing at 12.1%! That follows a 13.1% pace of February! The research I read said the strength was led by marine engineering and pharmaceuticals, but was also supported by the ongoing ramp-up of petrochemicals production, which is good since this comes in line with the opening of a new plant capacity at the start of the year.

So, it sounds to me like Singapore is hitting on all 8 these days. I would have to think that there would finally be some movement in the Sing $ soon, but remember. What I always tell you, "be yourself".. No wait! Mr. Wizard, this isn't Tudor Turtle you're talking to! But I always tell you that the Sing $ and the Chinese renminbi / yuan can't get too far out of whack with each other, for they are in competition with each other for exports. And with the renminbi/ yuan being held hostage right now, by the Chinese to teach the markets a lesson, the Sing $ might have to bide its time a bit, and chomp on the bit a little harder, before taking off.

Speaking of China. China's employed population in urban areas increased by 3.44 million in the first quarter of this year, with the unemployment rate remaining low, the Ministry of Human Resources and Social Security said on Friday.

The figure was slightly higher than the same period last year, although in the Jan-March period the country's economic growth dipped to its lowest level since the third quarter of 2012.

By the end of March, the country's registered urban unemployment rate stood at 4.08 percent, almost flat compared with that of last year, said ministry spokesman Li Zhong at a press conference.

China also worked to improve rural employment, as 7.27 million workers in rural areas were employed in local enterprises and arrangements were made for 6.49 million workers to work in other regions in the first quarter.

So, see, it's not just all about GDP in China! And the Chinese authorities liked this data so much that they allowed another appreciation last night in the renminbi / yuan. That marks three consecutive trading days of appreciation in the renminbi. Maybe now the Chinese believe that the lesson they were teaching to the markets about thinking that the renminbi / yuan was a One-Way Street, is over. One can only hope, for this run of marking the renminbi / yuan down each night was really getting old!

So, did you see the Big Boss, Frank Trotter's, contribution to the Sunday Pfennig on what's happening in the American Household? I mention this, because this morning, there's a story on Bloomberg, that's talking about how PIMCO's Bill Gross , thinks that the U.S. is returning to an old normal, with Consumers spending more freely after working down their debts. Ahem. Mr. Gross, you might want to check the facts on that last statement, as Frank illustrated in his Sunday Pfennig. "Looking at liabilities, including mortgage, credit card and other borrowing by individuals, the total outstanding in 2008 stood around $14.2 Trillion and would up near $13.8 Trillion in 2013. I would not bet the first decimal place is the correct precision of these figures, but without it there would be no change seen at all - or maybe that's my point."

Yes, there's been all this talk of the "great deleveraging of American Consumers" , but when you get down to the cheese that binds, there has been no "great deleveraging of American Consumers", and now that you add in that in brokerage houses, margin debt is at an all-time high. This is scary stuff to me folks.

Another thing that's scary to me, is all the Gold hoarding by China and Russia. I talked at length about this last week, so I won't go back over the motives, etc. But I did want to mention that according to data released by the USGS, the U.S. exported 57 metric tons of Gold to Hong Kong in January,,, And in 2013, the U.S. exported a total of 215 metric tons of Gold to Hong Kong. What are we doing sending Gold to China? Shouldn't we be holding on to Gold that we produce? Or. if we look under the hood here, what if these were deliveries that HAD to be made on short contracts? Like I said a couple of months ago, you don't go short and not make deliveries to China.

The U.S. Data Cupboard gets a bit of a breather today, with only the March Pending Home Sales data, and a regional manufacturing index from Dallas, to print today. This week will end with a Jobs Jamboree, as we turn the calendar to May. So, as we get to Wednesday this week, and the Fed's FOMC meeting, we'll be getting more data prints than we know what to do with. So, take today's bit of a breather and smile, for the rest of the week, we'll probably have a lot of mixed emotions. I've got those mixed emotions about you!

For What It's Worth. I was perusing websites and reading research this weekend, and came across this stuff from David Stockman on zerohedge.com. The title just about tells it all: America's Consumers Are Dropping, Not Shopping.

"McDonald's latest results confirm that something is very much amiss on the consumer side. Total global revenue grew only 1% Y/Y, including new store launches and acquisitions.

However, as has been the pattern since 2012, US comparable store sales lagged markedly. The rate of contraction in Q1 was actually the worst in more than a decade.

Even if you believe that the cold and snow of January and February played a role, it could not have explained that comparison. There is simply no way that anything other than consumer exhaustion can create the chart above.

One need only glance at the revenue history of companies in the S&P 500 to see that in full effect. If McDonald's persistent travails are limited to the company, or even the fast food industry, there is no way that the revenue pattern for MCD would so match closely that of the entire S&P 500. The commonality screams macro.

Current projections for the first quarter add up to about 2.5% revenue expansion across S&P 500 companies, but, as last quarter showed, that is likely overly optimistic (fourth quarter revenue was believed to be expanding at near 3% at the outset of earnings season in January 2014, only to be revised lower to almost 0%).

In comparison to the pre-collapse portion of the Great Recession, current results are much worse."

Chuck again. Yes, recall the list of retail closings I showed you a few weeks ago. This all plays well together in the sandbox. Sure there are sales being made, but the sales are at such deep discounts that the companies can't make the spread they used to. But they still have to turn the lights on, pay the water and sewer bills, the heating and cooling, and payrolls with benefits. Do I like reporting this stuff? NO! But, someone has to! Otherwise you would never see any of this on TV. I just read that 73% of Americans get their news on their personal device. Interesting, very interesting. Hello? Marketing, are you taking notes?

To recap. The currencies are for the most part booking gains VS the dollar this morning, with only the yen and kiwi showing up to the party flat to down a bit. Gold continues to look for a bid, but is getting more attention with the geopolitical tensions of Ukraine growing more and more. The euro pushes past the psychological figure of 1.3850 this morning. The Fed's FOMC Meeting will be on Wednesday, and Chuck expects that another $10 Billion will be sliced from the debt monetization tree, also known as Quantitative Easing, or Bond Buying.. The Swedish krona is the best performing currency overnight, as Swedish Retail Sales kicked sand in the face of the expectations!

Currencies today 4/28/14. American Style: A$ .9280, kiwi .8545, C$ .9070, euro 1.3870, sterling 1.6840, Swiss $1.1390, . European Style: rand 10.6380, krone 6.0010, SEK 6.5245, forint 223.25, zloty 3.0350, koruna 19.7960, RUB 36.02, yen 102.30, sing 1.2555, HKD 7.7525, INR 60.63, China 6.15650, pesos 13.10, BRL 2.2430, Dollar Index 79.59, Oil $101.33, 10-year 2.68%, Silver $19.60, Platinum $1,426.69, Palladium $810.30, and Gold. $1,300.00

That's it for today. Well, it was a one and done for our Blues, which is a real shame given how strongly they played this year, but the playoffs always prove to be kryptonite for the Blues. UGH! Cardinals take two of three from the Pirates, and now will attempt to play between the rain drops this week. Alex had a good game on Friday, as the LHS Water Polo team beat a Big Time private school program. He looked pretty sharp in his tux Saturday night for the prom. Poor little Delaney Grace got her finger slammed in a door and fractured her finger on Friday, but by Saturday night she was back to normal. So cute! I taught Everett how to dunk his cookie in milk, and we became good friends, for that time, that is! Today, LinkedIn tells me today is our colleague, Lara Mayhew's birthday, So Happy Birthday! Missouri is playing their hit song, Movin' On, on the IPod right now, and that's what I need to do with the Pfennig. get it Movin' On! Earlier this morning I heard, The Searchers singing Love Potion #9, and had to stop to sing along. I bet you're humming that song now, which plays well in the sandbox with making this a Marvelous Monday!

Chuck Butler
EverBank World Markets

Posted 04-28-2014 11:25 AM by Chuck Butler
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