Nowhere To Run, Nowhere To Hide.
Daily Pfennig

Blog Subscription Form

  • Email Notifications


.........But First, A Word From Our Sponsor..........


The rarity of precious metals helps drive their value and potential significance to your portfolio. But for those not interested in making a mad rush to metals, EverBank has unearthed an exciting and equally rare investment alternative.

With our automatic purchase plan, you can start mining metals at your pace.

?Fund for as little as $100 a month

?Choose from gold, silver and platinum

?Pay no ongoing fees

Available only with the NON-FDIC INSURED Metals Select Unallocated Account1, this is a rare opportunity to strategically utilize dollar cost averaging to grow your metals ownership from one month to the next.

Start mining at your pace today. Learn more and view IMPORTANT DISCLOSURES at Or call 800.926.4922.

EverBank is an Equal Housing Lender

© 2013 EverBank. All rights reserved. 13AGM0003.


In This Issue.

* Gold loses $50 and Dow Plunges.

* Could loonies be a shining light?.

* U.S. Corporate Capital expenditures slump.

* Big Ben a disgruntled employee? HA! .

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

Nowhere To Run, Nowhere To Hide.

Good day. And a Happy Friday to one and all! I have the feeling that this is going to turn out to be a Fantastico Friday, so let's go ahead and claim it be so, and get moving in that direction! Congrats to the Miami Heat, who, amazing to me, won the NBA Championship last night. I say "amazing to me" as sarcasm, folks. Who didn't see this happening once the series went back to Miami? I don't have an axe to grind here, other than to say, I preferred to watch my beloved Cardinals play baseball than to watch that "other game".

Yesterday, we tried to clean up the mess that Big Ben and the Fed Heads brought on to the markets Wednesday afternoon. The cleanup got pretty ugly though. Gold lost $50 at one point, and Silver an even larger loss percentage wise. Some very astute investors, in my opinion that is, looked at the carnage in metals and decided that it was a good time to buy more. Of course we'll have to wait-n-see if my opinion here proves to be correct.

It was difficult to navigate around all the blood in the streets yesterday left over from Big Ben's announcement that he sees the "beginning of the end" of stimulus. There was nowhere to run to baby, nowhere to hide, It's not love I'm running from, it's the heartaches that I know will come. vintage Martha & the Vandellas. funny, spell-check doesn't like: Vandellas. How can you not like the Vandellas? HA!

But seriously, there had to be somewhere for us to go with our cash right? OK, let's just deposit it in the bank and wait for the dust to settle, we can earn some real interest there, right? OH. I said "real interest". Even if we use the stupid CPI of 1.7% inflation number, you can't earn any "real interest" in a bank account. So, what to do? What to do? Might I suggest a currency that seems to be holding up? Yes, it dropped like everything else, but. I think it will recover, because right now, things look better all the time. I'm talking about Canada and the Canadian dollar / loonie.

My friend, and guitar playing buddy, Steve Sjuggerud, wrote the other day about Canada. He said, "Everyone is betting against the Canadian dollar. And historically, when you reach points like this - when there's nobody left to be against a currency like this - then it goes up in value.

In my True Wealth newsletter, we're taking this bet."

Then yesterday, I saw this come across my computer from the researchers at RBC. The market value of Canadian household net worth rose by 1.9% ($134 billion) to $7.2 trillion in the first quarter of 2013. The gain builds off the 1.4% ($107 billion) increase seen in the previous quarter and pushes the aggregate wealth of Canadian households to its highest level on record.

So. maybe, just maybe, because we never know for sure, but maybe the loonie can be a shining light. maybe.

Well. our first entry into the Data Journal I talked about yesterday, was on the "bad side" of the ledger, as the Weekly Initial Jobless Claims rose last week by 18,000 to 354,000. The second entry though was on the "good side" of the ledger and quickly erased the bad feelings that the Jobless Claims brought to the markets. The Philly Fed Index (regional manufacturing) reversed last month's negative -5.2 reading, and printed at +12.5. the best showing in this index since February 2011! Now that surely is going to get the markets all lathered up and fearing tapering again, I thought when I saw the number, and sure enough it did. I loved how they phrased it over a calling it "another Taper Tantrum" by the markets.

Our third entry into the Data Journal, I think is probably the most telling piece of data, as the Weekly Jobless Claims flip flop week to week, and the regional manufacturing prints are pretty volatile. The third entry is a notation that we'll make pointing out that Caterpillar released their May machine retail sales report, and while you won't find this data on the TV or even in most places that report economic data you can find it here!. Caterpillar said that May machine retail sales in the U.S. were down -16%! For those of you who were already keeping score at home, you'll note that April's number was even worse at -18%... For years, upon years, Caterpillar's results have been used as the best proxy for Corporate Capital expenditures. And going back to the very important one-on-one conversations I had many years ago on economics with the great Hy Minsky, I can tell you that a very good indicator of an economy's health is Corporate Capital expenditures.

So. where's the enthusiasm for the economy in this report?

I can tell you where it is. It the markets participants, unless they read the Pfennig, have no idea this printed. So, in my best Gomer Pyle voice. Shame, Shame, Shame.

The U.S. data cupboard is empty today, so we can put our journals away for the weekend. And no fear of another "taper tantrum" from data, the currencies and metals are attempting to rebound this morning, with most currencies up on the day so far, and Gold adding $6. not that $6 makes up for a $50 loss, but at least a tourniquet seems to have been wrapped around the shiny metal.

I say "most currencies" are up on the day because not all are. Take the Brazilian real, which continues to see its value plunge. The real is even weaker this morning than the Brazilian Gov't's range they proposed for the real last week of 2.15 to 2.25. Real has become a real problem child and a currency I'd just as soon avoid contact with at this point. At one time the real had it all going for it, but then along came the new President of Brazil, and she had a different agenda for the one-time best performing currency of the year. At first the markets fought the Gov't's plans to weaken the currency, but then, they just took their ball and went home.

The Chinese renminbi / yuan was fixed at a weaker level again last night, which marks 4 consecutive days now. OK.. not to Chinese Gov't. I think you made your point about this not being a One-Way Street for appreciation. There are tons of analysts and writers out there banging nails in China's coffin once again. As I read these that come over my desk by the boat load, I think back to just a couple of years ago, when the same black future was cast over China by the same people. I didn't agree with them then, and I'm not going to agree with them now either. Sure China is slowing down, and their switch from a totally 100% export driven economy to one that is better diversified with Domestic Demand is taking longer than the Chinese want, but given the shape of the economies of the world, one would have to understand that this is going to be a slow process. But the key here, is the treasure chest of reserves that the Chinese possess. Don't forget about that. For this is what has been tapped in the past to shore up sectors of the economy that needed a boost.

So, someone outside of the office asked me yesterday what happened to the DOW.. They asked this because of the news reports that the Dow Jones Industrial Avg (DJIA or DOW) saw their biggest one-day point decline since November 9, 2011. Well, when you threaten to remove the punch bowl away from the party, the party begins to unravel, right? You begin to see the first couple make an announcement that it's "time to go", and once one couple says that, everyone else decides that it is a good time to go for them too. Well, that's what Big Ben Bernanke did the other day, he threatened to remove the punch bowl (QE and ZIRP) that has fueled the stock market gains since the first implementation of QE in March 2009.

Notice I said "threatened to remove the punch bowl". yes, he said that "he may begin to remove stimulus". but then maybe he won't! But in fairness to the Fed Heads, they are trying desperately to be transparent.. So, I think this is for real and will probably begin in September and end next June. But, don't be so sure of the end. As this all begins to unwind, the economy will stumble once again. at least that's how I see it, and I could be wrong, of course!

The Emerging Markets have really taken the threat of the punch bowl being removed with much pain. Turkey saw their currency reach an all time low yesterday, I already talked about Brazil's real, and the Russian ruble's only savior has been the price of Oil. The Mexican peso has really dropped, along with the S. African rand. So, across the board, the Emerging Markets have seen their values plunge. And this brings me to something that I've been working on. investments in Emerging Markets. actually , maybe the timing will work out to be the good thing, in that the initial pricing will have these much lower values to start with. I like that! I'll have more info on this in the coming weeks. The marketing gurus have to put their finishing touches on what I've given them so far, but this will be interesting.

The Norwegian krone touched the 6 handle yesterday. It was a double whammy day for the krone in that it saw the Norges Bank's outlook for rate guidance revised downward significantly on the same day that the dollar was being bought up like Pet Rocks in the 70's. But the krone is attempting to recover some today, and is back to a 5 handle. I just don't get it folks. assets that have strong fundamentals like krone, and Gold, get whacked when they should be the shining lights. Maybe this will change one day. maybe.

OK, before we head to the Big Finish, I wanted to share something with you on the lighter side. Yesterday, we were talking on the desk about how the President had basically fired Big Ben Bernanke the other day, and I said. "what IF Big Ben turns into a disgruntled employee, and at his last meeting he hikes rate 5%, and say, "there deal with that!" Ty Keough said, "he could pull a Volcker" which is referencing the Saturday Night Special that former Fed Chairman Paul Volcker sprung on the markets by hiking rates out of meeting on a Saturday Night. Now, don't go writing me about how this can't happen. It's all in fun!

For What It's Worth. We're going to end the week with some funnies. I'm not going to end the week with a rant or soapbox talk about debts, deficits and dolts. Instead I'm going to reprint something that my good friend (Thanks Rick!) sent me yesterday. Ever hear of the Stella Awards? For those unfamiliar with these awards. they are named after 81-year-old Stella Liebeck who spilled hot coffee on herself and successfully sued the McDonald's in New Mexico , where she purchased coffee. You remember, she took the lid off the coffee and put it between her knees while she was driving. Who would ever think one could get burned doing that, right? That's right; these are awards for the most outlandish lawsuits and verdicts in the U.S. You know, the kinds of cases that make you scratch your head. So keep your head scratcher handy.

There are a list of these that are so funny that you think, there's no way a jury is that dumb to award these people money. Like one was a guy who got money because his neighbor ran over his hand with his Accord, but if the guy wasn't attempting to steal his neighbor's hubcaps his hands wouldn't have been there to run over! Stuff like that. So, here's the winner. get ready this one will blow you away.

This year's runaway First Place Stella Award winner was: a woman from Oklahoma City , Oklahoma , who purchased new 32-foot Winnebago motor home. On her first trip home, from an OU football game, having driven on to the freeway, she set the cruise control at 70 mph and calmly left the driver's seat to go to the back of the Winnebago to make herself a sandwich.

Not surprisingly, the motor home left the freeway, crashed and overturned. Also not surprisingly, the woman sued Winnebago for not putting in the owner's manual that she couldn't actually leave the driver's seat while the cruise control was set. The Oklahoma jury awarded her, are you sitting down?

$1,750,000 PLUS a new motor home. Winnebago actually changed their manuals as a result of this suit, just in case this woman has any relatives who might also buy a motor home.

Chuck again. So, is our court system out of control or what? I hope you enjoyed our trip to the lighter side this morning. This week has been such a drag on me.

To recap. The markets were still reeling from the FOMC yesterday, with Gold losing $50, and the DOW experiencing its worse one-day price drop since 11/9/11. Chuck points to the loonie as a currency that could very well be a shining light. Norway's krone attempts to recover from its double whammy yesterday, and our data journal gets a workout.

Currencies today 6/21/13. American Style: A$ .9225, kiwi .7760, C$ .9635, euro 1.3215, sterling 1.5460, Swiss $1.0770, . European Style: rand 10.1825, krone 5.9795, SEK 6.5740, forint 226.15, zloty 3.2715, koruna 19.5540, RUB 32.80, yen 97.70, sing 1.2725, HKD 7.7465, INR 59.21, China 6.1766, pesos 13.26, BRL 2.2575, Dollar Index 81.87, Oil $95.56, 10-year 2.38%, Silver $19.86, and Gold. $1,293.65 and as usual, it's Friday, so let's take a quick peek at the U.S. Debt Clock by clicking here:

That's it for today. Today is the Summer Solstice. Summer officially begins. Cardinals take 3 of 4 from the Cubs, so the stars are back in alignment, and the karma is flowing again. Dionne Warwick is singing to me right now, Walk on by. talk about putting you in a mellow mood.. This week has been difficult for me, given the way the markets have reacted to the threat of removing the punch bowl. I feel much like the lyrics to this great Simon & Garfunkel song. In the clearing stands a boxer And a fighter by his trade And he carries the reminders Of every glove that layed him down Or cut him till he cried out In his anger and his shame "I am leaving, I am leaving" But the fighter still remains. Yes, the fighter in me will remain to fight the battle against debts, deficits and dolts. And with that. I thank you for reading the Pfennig and hope you have a Fantastico Friday!

Chuck Butler
EverBank World Markets

Posted 06-21-2013 11:49 AM by Chuck Butler