BOJ To Expand Monetary Stimulus.
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In This Issue.

* German ZEW soars.

* Oil & Gold head higher.

* Global growth gets a boost!

* Yen weakness continues.

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

BOJ To Expand Monetary Stimulus.

Good day. And a Tom Terrific Tuesday to you! Well. It's been a tough weekend emotionally wise for your Pfennig editor. I arrived back in town on Saturday to hear about the passing of my dad's favorite baseball player, Stan the Man Musial. This news shook me as if Stan Musial was a member if my family. I don't know that I can ever put into words that would describe the loss that not only myself but all of Cardinal Nation feels. On the statue of Stan the sits outside Busch Stadium these words are inscribed: Here stands baseball's perfect warrior; here stands baseball's perfect knight. No one that ever met The Man, ever said anything bad about him. I doubt there are many people alive that can lay claim to that. I have a bit of stats on Stan in the Big Finish. But I won't spend all day on this, so . here we go.

Well. my sabbatical in the warm sun of S. Florida was just what the doctored ordered, although it wasn't all rest and relaxation. But I kept track of what was going on in the markets through the Pfennig (Thanks Chris & Mike!) and my trusty iPad. Even still, I was somewhat surprised to see the lofty price of Oil this morning ($95+). And. of Gold ($1,692). Seems the story that I sent Chris last week about Germany's Bundesbank looking to retrieve their Gold held at the Bank of France and at the Bank of NY has really stirred up a hornet's nest in the markets. The fear and suspicion going around right now is really elevated. And for once, all this fear hasn't driven investors to dollars and Treasuries!

The euro is stronger this morning by a tad on the news that German Investor Confidence, as measured by the think tank ZEW, increased to the highest level in 2 ½ - years, this month. In Germany, the Eurozone's largest economy, the markets use this report issued by ZEW, in an effort to predict what the economy might look like in 6 months from now. Get this. the index number soared from 6.9 in December to 31.5 this month! WOW! Does this mean the recovery in the Germany economy is here? Well, no. But it does give the Germans hope that a recovery could be coming! See, what happens when all the negativity is stuffed away in the closet?

This, in no way, is any indication that the euro is out of the woods. Shoot Rudy, Cyprus is a good example. There's going to be an agreement on aid for Cyprus in March, and that alone, although it will be small shakes compared to the other problems in peripheral Eurozone countries, is evidence that a threat to the euro remains in the shadows.

The Aussie dollar (A$) (& Kiwi) are stronger by about 1/2-cent this morning on news that the Bank of Japan (BOJ) is "all in" on the idea to provide an expansion of monetary stimulus for the Japanese economy. Remember what I've told you for years and years now about the A$... It's a proxy for global growth. And if the markets believe that global growth has a better than the average bear chance of gaining traction if the BOJ expands stimulus, then the A$ will be the benefactor. And so it is.

There have been a lot of pundits writing about the impending fall of the A$... They believe that when the Reserve Bank of Australia (RBA) comes back to the rate cut table in the first quarter of this year, that they will cut rates and hang the A$ out on a line. Well. I don't know about that! But I will give them some agreement on the rate cut idea. I personally don't believe the RBA needs to raise rates, given the recovery in China, the rising iron ore prices, and now the stimulus in Japan. These things will all provide good growth opportunities for the Aussie economy. But, the RBA being a Central Bank, they will feel that they "have to add assistance".

So, see, it's not just the Fed that I bang on with this "need to provide assistance". The "Currency Wars" story is really beginning to get some air play around the world. But like I've said all along, since reading the great book, Currency Wars by James Rickards, that it might be all well and good that this is happening, but look to the U.S. dollar to lead the currencies down, which means that other currencies will remain at greater value than the U.S. dollar. of course that's my opinion, and I could be wrong.

I read a story this past weekend, about how Norway's Sovereign Wealth Fund (SWF) ($700+ Billion is size) is beginning to look to other markets for their bond investments. The "other markets" being countries that don't have truck loads of debt. Doesn't that sound like my call for the Emerging Markets because they don't have debt loads to drag them down? So. I have to stop the patting myself on the back before the bursitis pops up! HA! But seriously.If Norway's SWF is looking to invest in these lower debt burdened countries. I think that's a ringing endorsement for the Emerging Markets, eh?

The rising price of Oil has the Petrol Currencies moving higher VS the dollar this morning. Countries that include: Norway, Canada, Brazil, and Russia, are all seeing their currencies bid stronger. I'm sure Brazil's Dilma Rousseff doesn't like seeing the Brazilian real move stronger, but it is what it is right now. And besides. if she isn't ready to see an improving real price, then she shouldn't be targeting higher growth for this year. (her Presidential term is about half over, so if she wants to get reelected Brazil had better turn the economy around!)

I mentioned the Chinese recovery above. and it's always good to go back and revisit something, so here we go! The Chinese recovery got a boost this past weekend when Baosteel, China's largest iron and steel conglomerate raised their March booking prices on steel. This is the 3rd consecutive monthly increase, folks. and that tells me that there's a firmer outlook for steel demand. you don't have a firmer outlook for demand without a recovery going on. So, this is just another notch in our belt, that we use to measure the Chinese recovery.

The poor Canadian dollar / loonie. it tries to play catch up with the other Commodity Currencies, but then there's always the U.S. dollar dragging it down. I like Canada and the loonie. but until it can find a way to leave the U.S. dollar at the door when it heads to the dance, it will have this albatross around its neck. That doesn't mean we all bail on loonies. That just means we have to be patient, and understanding. sounds like a troubled kid, eh? Canada will print their November Retail Sales report today, which doesn't look like it will be good, but I doubt that much will be taken into the report, given the Bank of Canada (BOC) is scheduled to meet tomorrow. All eyes will be focused on that meeting.

This thing with the Bundesbank and Germany's Gold is the kind of stuff I love. The intrigue, the conspiracy theories. Remember the TV show 24? Now that was great TV! OK, so you get where I'm coming from on this whole thing, right? I mean, what happens if Germany isn't the only country to get the willies and request a repatriation of the Gold they hold in other countries? Who's next? It's almost like a game of musical chairs. and the last country to ask for their Gold will be left without a chair. I bet the boys and girls in China and Russia are watching this all unfold and smiling like Cheshire Cats, for they hold their own Gold. What do you think about all this?

Not much in the form of market moving data from the U.S. data cupboard this morning. Some Existing Home Sales data, and regional manufacturing indexes from Chicago and Richmond. So, the Gold story is going to get even more air play today, because this data on the docket isn't going to hold the markets' attention for too long!

Then There Was This. I saw this last week in the U.K. Telegraph by one of my fave writers, Ambrose Evans-Pritchard and thought it played well with what I've been trying to tell you about Central Banks buying Gold this past year. (remember the line? If Central Banks are buying Gold, then why shouldn't you be buying it?). So. here we go.

"The world is moving step by step towards a de facto Gold Standard, without any meetings of G20 leaders to announce the idea or bless the project. Some readers will already have seen the GFMS Gold Survey for 2012 which reported that central banks around the world bought more bullion last year in terms of tonnage than at any time in almost half a century.

They added a net 536 tonnes in 2012 as they diversified fresh reserves away from the four fiat suspects: dollar, euro, sterling, and yen. The central bank buyers are of course the rising powers of Asia and the commodity bloc, now holders of two thirds of the world's $11 trillion foreign reserves, and all its incremental reserves.

It is no secret that China is buying the dips, seeking to raise the gold share of its reserves well above 2pc. Russia has openly targeted a 10pc share. Variants of this are occurring from the Pacific region to the Gulf and Latin America. And now the Bundesbank has chosen to pull part of its gold from New York and Paris."

Chuck again. follow the money, folks. follow the money.

To recap. The currencies are a bit stronger this morning as German Business Confidence hit a 2 ½-year high this month, and the BOJ announced that they were all in on expanding monetary stimulus. The price of Oil and Gold is higher this morning. And the recovery in China got a boost from an increase in the outlook for steel demand. Norway's SWF is looking to push investment in Gov't Bonds to the countries that aren't burdened by huge debt loads. read Emerging markets!

Currencies today 1/22/13. American Style: A$ $1.0570, kiwi .8415, C$ $1.0070, euro 1.3345, sterling 1.5875, Swiss $1.0765, . European Style: rand 8.8490, krone 5.5825, SEK 6.5150, forint 220.25, zloty 3.1225, koruna 19.1950, RUB 30.20, yen 88.65, sing 1.2265, HKD 7.7530, INR 53.80, China 6.2199, pesos 12.68, BRL 2.0445, Dollar Index 79.75, Oil $95.55, 10-year 1.87%, Silver $31.96, and Gold $1,692.00

That's it for today. you know. 20,000 men have played in the major leagues and only four players have finished among the top 20 for home runs, RBI's, and batting average - Babe Ruth, Lou Gehrig, Ted Williams and Stan Musial. Only three men have accumulated more than 6,000 total bases - Willie Mays, Henry Aaron, and Stan Musial. Only one man had both lists - Stan Musial. And a real statement on what kind of man he was, he was never thrown out of a game for arguing. There's a great story that illustrates this, but I've run out of space and time for that today. I got back in town about the same time as the deep cold front. lucky me! NOT! I kept asking myself when I got off the plane here in St. Louis, why I was coming back? Oh well. Mike's here, so it must be time to get this out the door! I hope you have a Tom Terrific Tuesday

Chuck Butler
EverBank World Markets

Posted 01-22-2013 3:30 PM by Chuck Butler
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