Singapore Moves to #3 Financial Center

And now… today’s Pfennig for your thoughts…

Good day, and a marvelous Monday to you! This will be a busy week around the world with Central Bank meetings, and data prints, so let’s get buckled in baby you can drive my car!

Well, the dollar starts the week mixed, losing ground to some currencies and gaining ground against the rest. As I just said, it will be a busy week around the world, and I don’t think currency traders are all that hip to make a break one way or the other right now. Especially, since today is like the calm before the storm, and even here in the U.S. there isn’t any data, nada, nil, zero, zilch data in the Data Cupboard today. And tomorrow, we’ll begin to start slowly, and then hit full-stride on Wednesday, so go ahead do your gardening today and tomorrow, and then be ready!

I can’t believe that I keep talking about Japanese yen like I have, but it is what it is, right? Yen rallied again overnight, and traded to a 107 handle, before a Japanese official reminded the traders that intervention is possible, and that caused some traders to panic at the disco, and lighten up on their position, causing yen to back up to 108. 

I read a piece on the Bloomberg this morning, that the guy known as “Mr. Yen”, Sakakibara, believes that yen will trade down to 100 by year-end.  What, What?  Back in the 90’s Mr. Yen  was a big market mover with his comments, but that was then ,and this is now. Puff that mighty Magic Dragon, he ceased his fearless roar.

Shhh, don’t make a big fuss over this, but gold is within spittin’ distance of $1,250 again this morning. I figure if we attempt to cross the figure quietly, we won’t wake up the price manipulators. What’s the saying, don’t wake a sleeping bear? Or is it baby? HA! Well, anyway, right now we’re only 44-cents from reaching $1,250, so be quiet, and celebrate.

I read a piece that was sent to me from the folks over at Stansberry Research, and they are on gold’s bandwagon.  And this is far different than when a financial institution issues a buy or sell on something like gold, for they have ulterior motives for doing so. This is a financial analyst and his publication that gets to tell his readers that they need to go long gold or add to positions at this time. I don’t have that luxury, but I sure can hint, wink, and beat around the bush, eh?

The Bank of Canada (BOC) meets on Wednesday, The European Central Bank (ECB) meets on Thursday, as does the Bank of England (BOE), and not one of these meetings are expected to shoot off fireworks. As far as the ECB is concerned, they’ve done enough damage don’t you think? I do. ECB President, Mario Draghi, seems to be on a mission to destroy the Eurozone, when just a couple of years ago, he stood on a podium and pronounced to the world that he would do anything to protect the euro. I tell you this, so please hear me now and listen to me later…

These Central Bankers all change, when they are given the title of leader of their respective Central Bank. Look at Big Al Greenspan. He was a gold-bug trained economist under the tutelage of Ayn Rand, but he dissed all that when he became Fed Chairman, and opted to be Keynesian. But now that he’s retired from the Fed Chair, guess who’s talking about gold again?

On Friday, when I got back from the MRI’s I had done (which wasn’t pleasant I might add!), I was doing some reading and came across two things that I highlighted as things I would talk about today. Then later in the day, Chris Gaffney sent me an email and said that he hoped the two links included in his email would help me get started on Monday with the Pfennig. the links were to the same two things I had highlighted previously! I responded to him and told that great minds must think alike! HA! But thanks Chris, for thinking of me, sitting here, with that proverbial blank piece of paper and a thousand thoughts running through my head without any organization!

So, here’s the first item that I thought would be interesting to you. China saw their Foreign Exchange (FX) Reserves increase in March, their first increase since November last year! You probably recall me telling repeatedly, about how the Chinese were spending their reserves in attempts to stimulate their economy, and defend the renminbi against speculators.  Their March reserves stood at $3.21 trillion, which is down from the greater than $4 trillion figure they held just last fall. 

But the thing to think about here is that it’s not all about China slowing their injections into the economy. But a lot of the rise in reserves comes from the weaker dollar, thus the value of the currencies they hold went higher. But either way you cut the bread on this folks, it’s good news for China, and the renminbi was allowed to appreciate overnight in the fixing, as it should have been!

And here’s the second item that really caught my attention, as the hazy fog was lifting from my brain on Friday afternoon. “Singapore Edges Ahead of Hong Kong as No. 3 Financial Center” was the title of the article, and since I had just written glowing words about Singapore in the Currency of the Month article that I gave you the link for last week, in case you missed it the first time, I just had to check this out. And it put a smile on my face given what I said about Singapore a month ago.

So, Singapore stands behind the New York and London on the Global Financial Centers Index. I had been telling you for the past few years how China was making Singapore the first distribution and warehousing facility for the renminbi, apparently that has gone a long way toward pushing tiny little island nation Singapore to #3 in the world. Pretty amazing, eh? Oh, and the Singapore dollar has really been stealth-like in its recent move higher, but so far this year the S$ is up 5.43%.

In Australia this week, their latest labor report will print. In the fourth QTR Aussie employment was better than expected, and so it only makes sense that we could see some cooling off here, but that’s not to say that employment growth will go negative, but more that employment growth will slow. The Aussie dollar (A$) starts the week on a down note, but the downward move is tiny at this point, so no great shakes.

Across the Tasman, the New Zealand dollar/kiwi, is stronger this morning, and is the best performer overnight vs. the U.S. dollar. This seems a little backward, as kiwi saw the last rate cut in the land down under, while the A$ saw its rate remain unchanged earlier this month. But, as always, the currencies have little surprises for us. Sometimes they’re good, and sometimes they’re bad.

The price of oil jumped higher again, this time to the $39 handle. Could we actually see $40 oil by week’s end? $40 would be outside of the range that oil has traded in for months now. The last time it got up around $40 oil got whacked. I’m afraid of that happening again, as the feeling in the market is that there’s just too much supply glut to warrant a higher price. But hey! The Mexican peso and Russian ruble liked the move as those two petrol currencies have bolted higher this morning. The Norwegian krone is not participating, and the gain in the Canadian dollar/loonie is so small this morning, it’s as if the loonie isn’t participating either!

The euro is down just a tiny bit this morning, and has held to just under 1.14 for over a week now. The euro made a brief run above 1.14 last week, but couldn’t hold it very long, and has ever since range traded just below 1.14. The dollar has seemed to back off its recent pace of decent, and so that doesn’t allow the euro to move higher until the dollar resumes its previous pace of decent.

A nice gain is in the books for the S. African rand this morning. I don’t get to say that very often, and especially in this past couple of years, as the rand has been hammered repeatedly. But in recent times, the strikes that cripple the economy have dissipated, and some semblance of sanity has returned to S. Africa. And with the U.S. Fed apparently on hold for further rate hikes, the rand gets highlighted again as a currency with a positive rate advantage to the dollar.  This currency has always been one that gives me the willies.

I used to say that “I wouldn’t touch rand with your ten foot pole”. And there were times where that would have been very wrong, but there were also times when it would be very right! And so it is with this volatile currency.

So, I told you above that gold was stronger this morning and knocking at the door to $1,250. I just have to continue to think that all this talk that I’ve been telling you about that  wages a war on physical cash, and the negative rates around the world would be pushing people to buy physical gold (and silver of course!). And what is it I’ve always told you would put an end to the paper short trades? If everyone bought physical gold, and I mean everyone!

Well, the U.S. Data Cupboard is empty today. And as useless as the G in lasagna!  It’s not often that the Data Cupboard doesn’t have anything, not even a worthless data print, so I guess we’ll just move along because there’s nothing here to look at!

For What It’s Worth.  This article comes courtesy of MarketWatch, and talks about the Student Loan defaults, and how the loans aren’t being paid down. Here’s the link for the article, and here is the snippet:

“More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay.

The new figures represent the fallout of a decade long borrowing boom as record numbers of students enrolled in trade schools, universities and graduate schools.

While most have since left school and entered the labor force, 43% of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1, according to a quarterly snapshot of the Education Department’s $1.2 trillion student-loan portfolio.

About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had gone at least a year without making a payment. Three million more owing roughly $66 billion were at least a month behind.

Chuck again. Makes sense doesn’t it?

OK, I’m going to cross the line here and say something that will probably set off a firestorm of comments with some not being so nice, but that’s OK. I’m a big boy. So, here goes. These people with these Student Loans that aren’t getting paid down are the generation that started receiving this whole, “get trophies for participating” group. So, they’re used to getting something for nothing, and so they want to carry it over to their education and not pay their loans. 

Now that’s a generalization and obviously doesn’t apply to everyone! I know of a few youngsters paying their student loans diligently! But… Oh, I’ve got a whole list of things that have been the unintended consequences of the “get trophies for participating” phenomenon. But that’s for the Butler patio. See you there!

That’s it for today. I hope you have a marvelous Monday, and be good to yourself!


Chuck Butler
for The Daily Pfennig

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