In This Issue.
* Currency rally gets stopped overnight.
* Talking about Trends.
* Renminbi hits 19-year high.
* A$ & kiwi see profit taking.
And, Now, Today's Pfennig For Your Thoughts!
Frank On TV!
Good day. And a Happy Friday to one and all! Those nasty and devastating storms that moved through our area on Wednesday night and left a ton of destruction, continued on to the East last night. Hopefully everyone was safe. Remember, houses can be replaced, lives cannot. Well... Did you get to see my long time friend, and Big Boss, Frank Trotter on Bloomberg TV yesterday talking with Pimm Fox? He was also on the Street.com with Joe Deux, of whom I've held many a conversation with. I have the links to the short videos in the Big Finish, should you want to check out these very well done videos. I've always said that Frank had the face for TV, I had the face for radio!
Well... Yesterday was a non-event, currency and metals prices move wise. I was at home last night, by my lonesome, doing some reading about the day, and some of the "opposing views" from mine regarding the dollar and Gold's future, when I had a V-8 moment, slapped my forehead, and said, "I forgot to mention Jim Rogers last week"! And so, I'll begin today's letter with a reminder to all those falling for Goldman's call to short Gold... And that is... Gold is a Commodity, and while it really hasn't been traded like one recently, it remains a fact that it is a Commodity. And Jim Rogers taught us long ago that during the history of mankind, Commodity Bull Markets take anywhere from 17 to 22 years to play out. At last check the current Commodity Bull Market has only been in place for about 12 to 13 years depending on when you say the Bull Market began.
To further that discussion, I came across a recent report from the IMF, where they highlighted the importance of understanding commodity price fluctuations for commodity producing and consuming countries and the role of commodity prices in growth, inflation, and monetary and fiscal policies. And the explanation of Super Cycles or as Jim Rogers put it, Bull Markets. Gold, being a commodity, therefore is in the middle of a correction and not the beginning of a multi-year decline, or the end of the Bull Market.
Look, folks... I just tell it like I see it, or know it to be. And remember, I've always told you to take what these Big Brokerage houses call with a grain of salt, for, they could have ulterior motives... In other words, they could be uber-short, and need for the price of the asset to go down tremendously, so they can cover their short positions at cheaper prices... So... use your noggin...
And for the legal beagles... that's all my opinion, and I could be wrong... But then so would quite a few people with far more gray matter than me!
I put the finishing touches on my ,monthly contribution to the World Money Analyst yesterday, and talked about how the dollar remains in the underlying weak trend, even though it has seen some strength in recent months. Always remember this also happened in 2005, 2008, 2010, and now. and each time the people that think they know how trends work, but really have no clue, called for a multi-year dollar rally, and were proven wrong, as I do believe they will also be proved wrong now.
However, having said that. The dollar has caught a bid after two days of selling, and is on the rally tracks this morning, even with the IMF lowering their economic growth outlook for the U.S. from 2% growth to 1.7%... The currencies, led by the euro, are weaker this morning, than they were yesterday. The euro is leading the currencies down the path that's headed to the woodshed, as Eurozone Finance Ministers are meeting today to discuss Cyprus. And Gold is down another $13 this morning.
The fave currency of traders and investors to sell, Japanese yen, came within a whisker of hitting the 100 level last night (99.96) before seeing some buying, as Bank of Japan (BOJ) Gov. Kuroda, spoke last night and didn't say anything that hasn't already been said. So, nothing new from Kuroda, and the yen sellers took a pause for the cause.
Also in Asia last night, the Monetary Authority of Singapore (MAS) left their current currency policy unchanged, which is good for the Singapore dollar (S$). For those of you new to class, the MAS is like a Central Bank, but even better! The MAS reviews the Singapore economic landscape and then decides if the current band the S$ is allowed to trade in, is strong enough to fight inflation or if it needs to weaken. The MAS has been on a strong band policy for some time now, so the S$ has that going for it!
While we're in Asia. Let's skip to my Lou over to China to see what's going on there! Well, it looks like the People's Bank of China (PBOC) is doing a great job of continuing to push the renminbi/ yuan higher VS the dollar. The renminbi / yuan hit a 19-year high overnight, when the currency was fixed at 6.2506. This week's gains add to the previous 6 weeks of gains in the currency, thus making the renminbi's its longest winning streak in some time.
I believe that the PBOC is seeing the same thing I see there all the time, and that is Capital inflows coming into China by the boat load. And. the PBOC and the Chinese Gov't has to do something to keep investor's interested here. They need the foreign investment to further fuel their baby steps toward a floating currency that has some percentage of Gold backing, and eventually takes the reins from the dollar.
I saw a story on the Bloomberg this morning, and it made me smile, for just last week, I told the audience at the Global Currency Expo about some currencies they should look to, for their fundamentals placed them at the head of the list of currencies when you value them as the stock of a country. And then the Bloomberg story had a title of: "PIMCO favors Australia, Canada, Scandinavian currencies to dollar". I don't recall seeing him in the crowd, but maybe he had a representative there! HAHAHAHAHAHAHAHA! As if Bill Gross or whomever at PIMCO needs to get their currency research from little old me!
Speaking of Aussie dollars (A$), and its kissin' cousin across the Tasman, the New Zealand dollar / kiwi, were flying high yesterday, but they flew onto too many trader's screens. And those traders took profits, thus leaving the two South Pacific currencies weaker this morning. The two are still set for weekly gains though, so I won't harp too much on today's weakness. The key here is the optimism for China. as long as the optimism remains as it is today, strong, A$'s and kiwi should remain well bid, and supported.
You know. that the markets are still hanging on to hopes of one more rate cut from the Reserve Bank of Australia (RBA), even though the recent economic data, and talk from the Central Bank are not indicating a rate cut is coming. Aussie PM Gillard, is seeing her popularity slip and it looks like she's in trouble for the upcoming election this fall.. I'll betcha a dollar to a Krispy Kreme that we'll start to hear Gillard call for rate cuts, as she thinks rate cuts could save the election for her. I sure hope the RBA holds steady Eddie to the fundamentals.
The U.S. data cupboard has a Biggie report to issue today. March U.S. Retail Sales. I told you yesterday that the BHI was indicating to me that the report would be soft. But truthfully, I wasn't really home much in March, so I don't really know what the BHI is indicating. But I'm going to stick with the soft forecast, especially since oil prices are cheaper.
Then There Was This. OK. the other day, I said I would look into the report that a record amount of Gold had been removed from the COMEX. Some readers thought that meant I would do it right away. Shoot Rudy, there are only so many hours in a day, minus naps that is! But I did get a chance to look into it yesterday, and while the reports are what they are, fact is that a total drainage of nearly 2 million ounces of Gold ($3Billion worth) has occurred in the past 90 days, the most during a single quarter since records began being kept in 2001. The reason this has occurred is a mystery, except to the companies that withdrew the Gold.
But, the conspiracy juices are flowing for me on this story. And I immediately think that these guys, "know something we don't". And that something could be a major market moving event or even a default of some kind jumps to the front of my mind. And then it could be something as minor as these holders wanting to store their gold elsewhere and not at the COMEX. I guess we'll find out as time goes on. But I find this move of the Gold to be curious at least, given all the stories about Gold losing its luster.
To recap. The currencies held their gains throughout Thursday, but have seen some weakness led by the euro, which has a Finance Ministers meeting today on Cyprus. Chuck goes on and on about the Commodity Bull Markets, and Trends to make his points. And the Chinese renminbi / yuan hits a 19-year high VS the dollar overnight.
Currencies today 4/12/13. American Style: A$ 1.0525, kiwi .86, C$ .9880, euro 1.3055, sterling 1.5370, Swiss $1.0730, . European Style: rand 8.9385, krone 5.7280, SEK 6.3865, forint 226, zloty 3.1495, koruna 19.8075, RUB 30.99, yen 99.25, sing 1.2375, HKD 7.7615, INR 54.52, China 6.2506, pesos 12.07, BRL 1.9755, Dollar Index 82.40, Oil $92.53, 10-year 1.76%, Silver $27.35, and Gold. $1,546.07. and it's been awhile, so here's your chance to take a peek at the U.S. debt clock, click here.
Yes, that's right. it doesn't seem that long ago that we hit $16 Trillion, and already we are at $16.795 Trillion.. YIKES!
That's it for today. Another tough night for yours truly. I'm scheduled to see one of my doctors on Monday, but I have a HUGE presentation I have to make on Monday, so, I'm going to see if he'll see me today. The Cardinals are going to honor Stan Musial tonight before their game with the Brewers. They will have special baseballs for the game. It got cold here again, UGH! Spring feels like it will never be Sprung! I spent the work day in my office yesterday, getting a ton of stuff done, and it looks like I'll be there again today. I'm not really an "office person", as I prefer to spend my time on the trading desk, but sometimes you've got to get the work done! OK. here are the links that I promised. enjoy. and I hope you have a Fantastico Friday!
EverBank World Markets