Good Day! And a Happy Friday to one and all! On top of it being a Friday before a 3-day weekend, it’s also Valentine’s Day! You know, no flowers, cards, candy, dinner or romantic dinner is necessary as long as you remember to give your sweetheart a big bear hug, and kiss, tell them you love them, and all will be right on the night. So, with all these things rolled into today, I’ll say right here, right now, that it will be a Fantastico Friday!
Of course, I’m not just saying that stuff about no need to buy stuff for Valentine’s Day, because I didn’t do it! And I’m attempting to grease the tracks for my arrival at home today. My beautiful bride doesn’t read the Pfennig any longer. So, there you go!
Well, yesterday’s Pfennig told you how the day was all about U.S. Retail Sales. I told you that the BHI indicated that the report would be disappointing, and disappointing it was! U.S. Retail Sales for January, fell -.4%, following a downward revised -.1% drop in December. Most people focused on the January report, but my focus went right to the December downward revision to a negative number. Folks, that was in December, you know, Christmas shopping season. And yet I continue to read articles from people that should know better, given the rot on the economy’s vine that has been exposed lately, that this U.S. economy is in recovery, but in reality it’s going nowhere fast.
The Fed Heads must be feeling a tightening in their collective stomachs right about now. This is NOT the kind of report that a strong economy prints. I told you months ago that the Fed Heads were being overly optimistic about the economy, and it now appears that I was right! Of course long time readers will say, “There goes Chuck backslapping himself again, will he ever grow tired of being right all the time?” HA! As If! But this will all go hand in hand in what I’ve also said, and that is the Fed Heads will be stopping their tapering by June, July or maybe even stretching to August.
The currencies kind of got jiggy with the Retail Sales number and rallied a bit VS the dollar, but for the most part, whatever gains they had carved out in the early morning before the Retail Sales print, they held on to and in some cases added a shekel or two. Gold on the other hand, loved the color of the report. And pushed higher further moving closer to $1,300. I was talking to our metals trader, Tim Smith, earlier this week, and I asked him, when he thought we would see Gold hit $1,300, I had my guess, but wanted to hear what he thought. He said next week..
But what’s that I hear? Buzzzzzzzzz, next week is your final answer? Well, sorry, but that’s incorrect, Thank you for playing, Johnny, will you show him his parting gift at the door? HAHAHAHAHA! Bouncing higher yesterday didn’t stop at $1,300 and Gold has added another $8 overnight, brining the shiny metal to a multi-week high of $1,311 this morning. I had a dear reader ask me why I thought the price manipulators were allowing this rise over $100 so far this year? Physical Demand is putting pressure on the paper trades, folks, and if the rumor are correct that the supplies at the COMEX (the clearing house for Gold trades) then the short positions are having a problem finding supply to make deliveries, which causes them to have to go into the market and buy to cover that short. Uh-Oh. is this the scenario that we’ve been waiting for? We’ll have to wait-n-see to be sure, but if it is, these current levels in Gold are going to seem like bargain basement prices. But, to temper this, remember, what the likes of Gold Bullion Banks did to the price of Gold before. They hang over Gold like the Sword of Damocles..
Well, the euro is pushing the envelope to 1.37 this morning. It’s been a good week for the single unit. This morning, 4th QTR GDP for the Eurozone printed and showed that the economy is gaining momentum, as a whole. Greek GDP was negative, but the aggregate increase in the 4th QTR was .3%, VS .1% in the 3rd QTR. I know these figures are nascent at best, but it’s better than a sharp stick, or pencil, in the eye, and better than the negative numbers the Eurozone was printing a year ago! So, the markets liked the direction of the data, and started pushing the euro toward 1.37.
So with the Big Dog off the porch this morning, the little dogs are running wild! For instance, the Aussie dollar (A$), which yesterday was getting sold for their awful jobs data print from the previous night, is cooking with gas again this morning. You know. to me, and I don’t have a large research department like the Big Boys to do all this comparisons and graphing, etc. But to me, it appears that the A$ has found a base around 90-cents. Which might upset the folks at the Reserve Bank of Australia (RBA), for they had mentioned that they wanted to see the A$ fall to 85-cents.. Now, I’m not saying that the A$ won’t fall to 85-cents, I’m just saying that it now appears, to me, that it’s fall to 90-cents is all the markets are going to stand for.
With the euro rising, the Swiss franc follows suit, and this morning, the franc has a $1.12 handle on it. Another rebounding currency is the Canadian dollar / loonie, which has pushed past 91-cents this morning. And the British pound sterling has a 1.67 handle this morning. Norway and Sweden are also rallying with an edge to them.So, all the little dogs are happy this morning chasing the dollar down the street.
The Chinese allowed the renminbi to appreciate overnight, on news that consumer inflation (CPI) printed at a very reasonable figure of 2.5%… The markets seemed uninterested in the data print, but I think that the Chinese had to like it, for it was just a year ago, that inflation was running over 5% !
I was doing some reading last night, as once again, the Olympics couldn’t hold my attention, as I couldn’t stomach watching my beloved Missouri Tigers turn the ball over again and again and again! They eked out a win, but it wasn’t pretty! And I came across some research on India that caught my eye. The researchers said that “increased power generation, the ongoing removal of hurdles in the mining sector, changes in energy pricing policies and stronger external demand could lift growth.” Chuck again. India has been a real disappointment these past couple of years, but ever since last summer when it appeared the light was about to be turned out on India, things have turned around, and instead of the light being turned out, it’s burning brighter.
I told you yesterday that I was doing research for the currency insights on the website the other day, and I had to do some research on the “Euro-Wannabes”. Long time customers and readers will recall that in 2002, I coined that phrase to describe the countries that were deemed to be on the fast track to Euro acceptance. Hungary, Poland and the Czech Republic. It’s been a long road for these 3 Amigos, and while Poland and Czech Republic ducks continue to be put in a row, for euro-acceptance, Hungary seems to be sliding further away. I be these three are smiling like Cheshire Cats that they weren’t already euro-members when the fit hit the shand in the Eurozone in 2010.
I continue to like what’s going on in Poland, and think they will be the first to gain euro-acceptance. Continue to consider these three as Emerging Markets, even though their currencies are somewhat liquid and deliverable.
Speaking of the Emerging Markets. I saw a quote from the firm Brown Brothers and Harriman in London, that they believe the “worst is over for Emerging Markets Currencies”. They said a couple of other things so let’s listen in. “Gov’ts and central banks from “weaker countries” are starting to fight back, and some currencies will continue to trade weaker, but the speed of the selloff is definitely going to diminish. The Poland zloty, which hardly moved compared to other currencies, when the EM currencies got routed, will be better bet for stability rather than outperformance, while the risks in Poland are relatively balanced, and the zloty is supported by very decent fundamentals.”
Chuck again. I love it when the Big Research firms agree with little old me!
OK. the U.S. Data Cupboard has two of my fave prints today, Industrial Production and Capacity Utilization. Just because these prints are two of my faves, doesn’t mean they’ll be market moving today. Yesterday, the Weekly Initial Jobless Claims added 8,000, from the previous week bringing this week to 339,000. Just another data print on the roster of disappointing, and showing signs of economic weakness, folks. The hit parade of these disappointing reports just keeps passing us by. When will the Fed Heads wake up and smell the coffee?
Well, the East got slammed with another winter storm yesterday. We’re supposed to get about an inch of snow today, no biggie, and then the temperatures are supposed to begin to heat up! My beautiful bride and me went out to dinner last night (you know me, bat the crowd for tonight!) and we both commented that while cold outside, it wasn’t brutally cold for once! So, bring on the warmer temperatures mother nature!
For What It’s Worth. Well, I’m happy that I have another Richard Russell comment this morning, that I found on Kingworld.com. He’s not in a very good mood while writing this one, folks, and if you thought last week’s Richard Russell note was a wakeup call, better buckle yourself in, and keep your arms and legs inside the vehicle while moving. Here’s Richard Russell!
First though, Richard Russell is commenting on a statement that appeared on John Williams’ Shadow Stats website, and plays along with what I’ve said previously regarding the Gov’t moving the goal posts on data, because they didn’t like what the data was telling them.
If the economy will not grow, just redefine it. The US economy continues to stagnate and turn down anew, as part of the deepest and longest economic downturn seen since the Great Depression. With actual business activity moribund, the US government once again has turned to redefining a major economic series, so as to boost a reported activity. – John Williams
Now R. Russell. “This agrees with my previous observation that the US economy is sinking, regardless of stock market-top fluctuations. How long, I wonder, before the real truth decorates newspaper headlines? Frankly, I’ve never seen a stock market so obsessed with current news. I grew up thinking that the stock market discounts conditions as they will materialize months in the future. Americans must be confused as they note the harsh conditions of their current life when compared to what the Federal Reserve and the government tell us. Ultimately the truth will come out. And I believe that John Williams is telling us the truth. This is indeed the longest economic downturn seen since the Great Depression.
I note that Wal-Mart, with its slipping sales, is now being called “too expensive for the middle class.” This tells us something about the struggles of the middle class, which are now exiting Wal-Mart, in favor of … well, staying home. For the middle class, these appear to be hard times. Interestingly, the last two generations are the first two generations in America history that have never seen hard times — that is, unless they’ve heard descriptions of hard times from their parents, who braved the Great Depression. Now we hear more and more of children moving back in with their parents, or parents moving in with their older children. I’m thinking that we will see a good deal of novel living situations as the months go by.
I hesitate to say this because it’s so extreme, but I believe the world is in a depression. We’re being lied to by a frightened and desperate government and Federal Reserve. Sooner or later the US public is going to realize that we’re in a depression. The government and the Fed will fight the gathering depression with lies and propaganda. To fight the depression, the Fed will open the money spigots wide, creating new trillions of “dollars.” Some wise investors are aware of all this, which is why gold continues to push higher (over $1300 an ounce today).
IF we had the actual gold, I feel that the US would unilaterally raise the price of gold to $5,000 or $10,000 an ounce. The government is not doing this because we don’t have the gold. Once the news of the US gold reserves being depleted is out, this will result in an unbelievable scandal. Once the dollar index closes below 80, the fireworks should start. How many items can the Fed manipulate? Sooner or later the Fed will lose its grip on bonds, the dollar, stocks or gold. I think gold over 1300 suggests that the Fed is losing its grip.”
Chuck again. Thanks to Richard and John for their input today. Oh, I just saw something flash across the screen that makes me want to go yell at the walls. it’s just a little ditty, so read it and see what you think. 30% of people that have signed up for the Affordable health care haven’t paid.
To recap. Retail Sales were very disappointing falling -.4%, with December’s outcome revised downward to -.1%, you know during Christmas Shopping season! Overnight the Eurozone 4th QTR GDP printed and showed increased momentum for the aggregate economy, with the news pushing the euro to 1.37. Gold has pushed past $1,300, and the paper trades might be in trouble. The A$ rebounded along with most of the little dogs this morning.
Currencies today 2/14/14. American Style: A$ .9030, kiwi .8380, C$ .9135, euro 1.3715, sterling 1.6715, Swiss $1.1215, . European Style: rand 10.9095, krone 6.0935, SEK 6.4420, forint 225.20, zloty 3.0275, koruna 19.9860, RUB 34.98, yen 101.80, sing 1.2610, HKD 7.7555, INR 61.92, China 6.1070, pesos 13.24, BRL 2.3905, Dollar Index 80.09, Oil $99.90, 10-year 2.72%, Silver $21.07, Platinum $1,428.13, Palladium $735.75, and Gold. $1,316.73
That’s it for today. Well. as I said above, we’re heading to a 3-day weekend, so that should be cool. Our St. Louis U. Billikens play VCU tomorrow, VCU is a big time program compared to SLU, so our Billikens will have their hands full dealing with VCU. Los Bravos are playing their hit song: Black is Black right now, that song always gets me bopping in my chair. The USA hockey team got off to a good start with a 7-1 victory over Slovakia yesterday. Tomorrow they play Russia in Russia, that should be quite the game! Well, we’re inside of a month now, until I head to spring training and the warm sun. The reports from Jupiter, Fl. Where the Cardinals train, are beginning to be filed, and it warms my heart to read them! When I retire, I’ll be there for all of spring training, but that’s a few years away, I think! I see people on TV all wearing red for VD. I wore blue today. (I wear blue just about every day, as that’s the predominate color that Omar the tent maker has to offer) So, I guess I’m not in a romantic mood today. Oh well. I thank you for reading the Pfennig, and I hope you have a Fantastico Friday, as well as a wonderful 3-day weekend.
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