Aussie 2nd QTR GDP Beats Estimates
September 4, 2013 · by Chuck Butler
Good day… And a Wonderful Wednesday to you! What day is it? I just love that commercial! Well, the Washington Post is reporting that members of the Senate Foreign Relations Committee have reached an agreement on the wording of a new resolution authorizing U.S. military force against the Syrian Gov’t. Of course the Senate is not what the President is worried about… It’s the House, where Boehner can’t even get his ducks to line up in a row… But here’s the thing that gets me about this whole process… Didn’t Congress already authorize the President to do what he wants to do when they adjusted the War Powers Act a few years ago?
The only reason I talk about this stuff is that it carries over to the currencies and metals, especially the so-called safe haven currencies and Gold. The U.S. ISM Manufacturing Index that printed yesterday for August printed stronger than expected… So, that’s another feather in the book cookers hats, and they’ll get a gold star from the Fed Heads for doing what they were told to do… (see yesterday’s rant about the Fed getting what they want from the data) … Today, the Fed’s Beige Book will print, which is a region by region capsule of what the Fed Heads see in their district. There’s no way, the Beige Book is going to reveal anything but seashells and balloons from the Fed Heads…
The best performer on Monday night was the Aussie dollar (A$), which saw the Reserve Bank of Australia (RBA) remove their easing bias… Well, the best performer for two consecutive nights was the A$, with last night’s move being the result of a stronger than expected 2nd QTR GDP report. Aussie 2nd QTR GDP grew .6% from the 1st QTR, putting the annual rate of growth at 2.6%, both the quarter and annual levels are better than expected, and with the RBA removing the easing bias, for now, this report was looked at as very A$ positive. Of course, a Negative Nellie could look at it and say that the RBA has more work to do, to get the growth rate higher… And those Negative Nellies will continue to call out to the RBA to cut rates one more time before the year comes to an end.
You can look at this 2-day rally in the A$ two ways… One way would be to be very happy that the A$ has recovered, and to remain steady Eddie… The other way would be to look at this 2-day rise as an opportunity to get out while the getting’s good… Of course I could go into my dissertation on whether you bought A$’s to diversify your investment portfolio or not… But I did that last week when talking about owning Norwegian krone, so, I won’t go there again… For those of you who missed class that day, check out last week’s archives on the Pfennig blog site at: www.dailypfennig.com
Well, the markets are reporting that the Reserve Bank of India (RBI) intervened overnight, and sold dollars, buying rupees, thus supporting the currency. The rupee is positive this morning, which is a change in scenery for the rupee… The new RBI Gov. Rajan, of whom I’ve talked about before as having some lofty ideas as to how to bring about a reversal in the rupee and the Indian economy, is beginning to implement some of his ideas. Let’s just see how far he gets before he’s asked to fall on a sword…
As I told you yesterday, the Bank of Canada (BOC) would meet today… Expect the BOC to announce a 1% benchmark interest rate for the 24th consecutive time today… (That’s 4 years of meetings for those of your keeping score at home!) It will be interesting to see if new BOC Gov. Poloz continues to lead the markets along on a snipe hunt for higher interest rates. Remember former BOC Gov. Carney rinsing and repeating over and over again his famous line about how accommodation would have to be removed soon? The Canadian dollar / loonie is stronger this morning, but only because the A$ and kiwi are also up…
In other good news for the global growth countries / currencies, China’s official PMI Manufacturing Index rose for a second consecutive month in August to 51 from July’s 50.3, thus indicating growth momentum. There are reports from China that market volatility has eased significantly, and that has helped to stabilize the economy. I also read that China is ready to spend the rest of their 2013 fiscal year budget (58% of the budget) on all sorts of things like infrastructure and railways, but also on shantytown renovations… China has weathered the storm / slowdown without going hog wild with stimulus (even though they have the treasure chest of funds to do so), and so, the Chinese Gov’t and Central Bank grew up a little bit..
You have to like that China was willing to take slower growth than just inject funds to keep the economy status quo… They saw some fundamental problems, and allowed the economy to slow down to adjust the problems… And once again, all those analysts and pundits that called for a collapse of the Chinese economy, have egg on their faces… I sat on a panel with a guy last year in Weston Florida, who was Chinese and was a well known analyst on China… He told the crowd that the Chinese economy would collapse soon… It’s been 16 months since I heard that…Proving once again, that I don’t think anyone knows for sure what’s going on there, unless you’re part of the “in crowd”…
This weekend the G-20 will meet in St. Petersburg, Russia… From what I understand, G-20 has no intentions of putting a discussion of Syria on the agenda… But… Russian President, Putin, has stated that he wants to talk about it at G-20, and what Putin wants, he usually gets… Just ask Robert Kraft about his Super Bowl ring… But then G-20 rarely does anything constructive in my opinion anyway… So, Shoot Rudy, they might as well talk about something other tan economies!
Yesterday, Gold added to its early morning gains (recall I said it was up $4), and traded past $1,400 once again. The shiny metal is down -$9 this morning though, as the high yielders, (A$, kiwi, S. Africa, Mexico and others) are outshining Gold… It’s been a strange connection between the euro / dollar, and Gold / dollar… In days past, Gold and euro were both considered to be anti-dollar assets, thus you would see when one rallied the other one did too… But recently (last few months) these two don’t always trade in the same direction… It’s like the currency traders see the a reason for the dollar to go down, but not the metals traders… I don’t mind this going on, because currencies and metals have different pricing mechanism and independent inputs which is why they make excellent choices as diversification tools for your investment portfolio!
Gold’s downward movement this morning is more about the tapering talk having a louder voice than the Syria strike voices have… I think the markets see the same thing I see coming from the House of Representatives, which puts the Syria strike in question. Remember what I said yesterday though… Uncertainty is huge right now, and Gold will do well with uncertainty, so maybe today’s weakness in the shiny metal is a sign to buy at a cheaper price than yesterday! Signs, signs, everywhere signs…
I know this belongs in the For What It’s Worth section but I just can’t stop yelling at the walls and then laughing out loud at this story… So… we all know that the NSA was admitted that they have been listening to our private phone conversations and reading our stuff… Well, you knew it would come front and center soon enough, and here it is… The NSA has now admitted that their analysts spied on their lovers! The NSA said that “a number of its analysts knowingly and deliberately exceeded its surveillance authority on occasion over the past ten years.” The NSA employees had a code name for the practice of gathering intelligence on their partners… “Love-int”… OK… see what I mean.. you want to yell at the walls, but laugh out loud at the same time!
And then before I head to the Big Finish, my friends over at Casey Research have put together a free webinar that features, John Stossel, David Walker, Jeff White, David Galland, and Dennis Miller… They will be talking about the broken promises of retirement… Things like 57% of Americans have less than $25,000 in total household savings and investments. And nearly half of Americans would have trouble coming up with $2,000 within 30 days if they had to. And that 61% of Americans fear outliving their money, more fear than death itself… But there are safe solutions to all this… This ought to be really good folks… I strongly suggest you take a listen tomorrow at 2 pm Eastern Time by clicking this link:
For What It’s Worth… Ever wonder why South Florida’s Atlantic Coast is called the Treasure Coast? Well… A 65-year-old Florida man has spent his life searching for treasure off the coast—and Rick Schmitt and his family have just made their biggest-ever discovery.
Some 150 yards off the coast of Fort Pierce, and about 15 feet underwater, the Schmitt family found 64 feet of gold chain, five gold coins, and a gold ring; the haul has been valued at an estimated $300,000, the Orlando Sentinel reports.
The gold is about 300 years old, leftover from 11 Spanish ships that went down in a hurricane in 1715, earning the area the nickname “Treasure Coast.”
It’s a huge find for Schmitt, whose 20-year-old daughter recounts summers aboard the family’s boats (first the Booty Quest, now the AARRR Booty) spent recovering undersea treasure like … beer cans. Last Labor Day, the family dredged up just one gold coin. But there have been some big finds in the past. In 2002, Schmitt’s son found a three-centuries-old silver platter worth $25,000.
As for the newest haul, the state of Florida gets to keep up to 20% of the treasure for museum display; the Schmitt family and the company that holds local diving rights will share the rest.
Chuck again… I first saw this on the TV, then in USA Today, and then finally in Ed Steer’s letter, so It’s getting around… And reminded me of my neighbor, Paul, who used to tell me about the “ship of Gold” that he invested in, which was a Spanish Treasure ship that supposedly sunk and was then found… Oh well, congrats to the Schmitt family…
To recap… The calls for U.S. to strike in Syria grew louder yesterday, with some congressional leaders siding with the President, and the Senate joining the war campers. Convincing the House to go along is another story… And because of that, the tapering talk was louder than the Syria talk… That meant that the dollar was stronger, and Gold was weaker… But the A$ was the best performer for the 2nd Consecutive night, following up the RBA’s announcement to remove their easing bias, with a stronger than expected 2nd QTR GDP report. The A$ has taken the C$, kiwi and S. African rand along for the ride today…
Currencies today 9/4/13… American style: A$ .9165, kiwi .7895, C$ .9525, euro 1.3180, sterling 1.5610, Swiss $1.0680, … European Style: rand 10.2230, krone 6.0725, SEK 6.6115, forint 228.40, zloty 3.2260, koruna 19.54, RUB 33.40, yen 99.40, sing 1.2740, HKD 7.7555, INR 67.08, China 6.1729, pesos 13.30, BRL 2.3585, Dollar Index 82.25, Oil $107.84, 10-year 2.87%, Silver $23.81, Platinum $1,524.70, Palladium $708.20, and Gold… $1,404.36
That’s it for today… The first of many swim meets last night for Alex, as he enters his last year of swimming competitively… His team won the meet, but he struggled most of the night. I think he spreads himself too thin with everything he does… But he’s 18, I’m not going to tell him anything he doesn’t already know better than me! HA! Cardinals lose again, even after their rookie phenom gave them 7 innings of 3-hit shutout pitching… This funk, reminds me of 2006, when they almost blew their huge lead… No huge lead this year, but for most of the year, they did what they needed to do, until now, with less than one month left in the season. UGH! We may or may not issue a second round of our new MarketSafe CD, folks, so don’t take the chance and miss this opportunity to have 100% principal protection and a chance at upside earnings… And with that… It’s time to say goodbye… I hope you have a Wonderful Wednesday!
EverBank World Markets
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