Yellen To Do Leslie Gore or Aaron Neville?
Chuck Butler

Good Day!  And a Tom Terrific Tuesday to you! I just saw on the TV that Shirley Temple (Black) died overnight. I heard that, and I immediately heard her singing on the good ship lollipop in my head. Strange how the human mind works, eh? Or, maybe I should just say strange how Chuck's mind works! Today, we get Janet Yellen's take on the economy, as if, no wait, I can't go there! The kinder, gentler Chuck will just let that slide, and allow you dear reader to make your own finish to that line.

So, we have Yellen speaking to lawmakers on one side of the hill today, and then the other side on Thursday. In other news, the currencies and metals seem to be kicking sand in the dollar's face today, which is interesting in that, we have Yellen speaking today. Who knows? She could come channel her inner Leslie Gore and start singing: Sunshine, Lollipops and rainbows, Everything that's wonderful is sure to come your way!  I know one thing, she won't do, and that's channel her inner Aaron Neville and Tell It Like It Is.

I would have thought the currencies and metals would at least wait to hear what Yellen had to say before they began kicking sand in the dollar's face.  But they are, so let's check the tape for what's behind the moves.

Front and Center, the Big Dog euro is off the porch and chasing the dollar down the street this morning, so that allows all the little dogs the opportunity to stretch their legs and do some chasing on their own. The Aussie dollar (A$) had the best overnight performer written on it this morning. The A$ has climbed back to 90-cents, and has recovered some lost ground on the cross to the New Zealand dollar / kiwi. Aussie home prices rose at the fastest pace since 2010 last month, and Business Confidence strengthened, giving all those that were negative about Australia's ability to see its economy grow, a headache this morning.

Let's not get too carried away here, just yet. We haven't heard from the Reserve Bank of Australia (RBA) yet, and I'm sure they'll have something negative to say about the A$'s rise above 90-cents.  Which could very well mean that this move above 90-cents give those on the fence questioning whether they should sell and cross to kiwi, the opportunity to do so. But in the end, this move in the A$ is intriguing in itself, I would say.

Speaking of kiwi, the kissin' cousin of the A$ across the Tasman, it has moved above 83-cents overnight, and I was doing some reading last night, (the Olympics just weren't grabbing my attention) and saw where an economist thought that any time kiwi moved above 83-cents that investors should use the move as their opportunity to take profits, for he felt that the Reserve Bank of New Zealand (RBNZ) was not about to allow kiwi to book HUGE gains ahead of their rate hikes that will be coming in 2014.

I have to say that I think this guy is onto something, but. The one thing he's forgetting about is momentum. Once momentum kicks in, you had either grab on to a rail and go for a ride, or get out of the way before you get run over. I'm not saying that momentum has kicked in on kiwi yet, but I feel we're. that close!

Meanwhile back at the ranch, the euro is pushing the envelope on technical advances.. Overnight the euro took out a line of resistance at 1.3655 and now appears to be ready to move to the next line which stands around 1.3735.  I doubt that it will be a linear move to 1.3735, so there will be a lot of movement back and forth, just like there was to 1.3655. Remember what I told you back in December? Ahhh, I know that was a long time ago. But, I told you that I thought the euro had the chance to revisit 1.50 in 2014. I also told you that the boys and girls over at Barclays didn't agree with me, saying that 2014 was going to be the year of the dollar. Hmmm, Oh, did you hear that Barclays is going to cut 12,000 jobs this year?  Not that the two have anything to do with anything, but. Maybe you could connect the dots.  Which makes me do my best Pee Wee Herman voice and say, la, la, la, connect the dots.

Another strong mover overnight VS the dollar is Gold. Physical demand continues to be the driving force behind the move higher in Gold's price this year. The weak dollar, so far this year, is really helping the beaten down and beleaguered shiny metal recover lost ground. You know, 2013 was the worst performing year for Gold since 1981. So, it's time to turn that around, don't you think? Especially if you have taken stock in the research and reports that physical Gold at the clearinghouses is becoming a problem for those needing to make deliveries. And as Paul Craig Roberts said last week in the article that I gave you the link for, "you don't want to fail on a delivery of Gold to China"..

Well, that was interesting, everything on my computer just froze, as if it was subjected to the near zero temperature outside! I had to shut it all down and start over. At least, I saved what I had already written this morning as a draft, so I didn't have to recreate that again! I've had to do that before, and trust me, I was not a happy camper! But not today, save the draft, and turn it off and turn it back on. Our old IT guru, Taru, always told us that. So, one time when I was in the hospital, and I had all these machines hooked up to me, I thought, I wonder if they turn them off and turn them back on, that I'll be OK again! HA!

I've told you all before that I truly enjoy reading Grant Williams' stuff. And I received his latest article last night. So before I could go to bed, I had to open it up and see what Grant had to say. As usual he had lots to say, but I thought I would cut a snippet for you all here, as the title of his article was: The End of The Innocence.   Let's listen in.  "the mantra being changed by FOMC officials around The Taper has been this: "Tapering isn't tightening"  Well, maybe it hasn't been - yet - in the USA, but thanks to the unintended consequences of Fed actions, it sure as hell has been elsewhere. Across the world, emerging markets are suffering from the Fed's unilateral declaration that it's every man (and woman!  - sorry, Janet, ) for him - or herself."

Ok. back to little old me. I was sitting here yesterday, watching the news stories flash by, and I noticed one that talked about the Russian ruble. And it occurred to me that the Olympics are going on in Russia right now, everybody knows that, well, did you know that Old MacDonald was a bad speller? HA! The point I'm getting to here is that in the past, we could bet a dollar to a Krispy Kreme that a host country for the Olympics was going to see their currency rally.  Shoot Rudy, it even happened when the Games were held in Greece! So, why is it not happening now? Sure the ruble is a little better than it was a couple of weeks ago, but I think that has more to do with the fact that the price of Oil is back to $100. So, what gives in Russia?  I think the pressure that grant Williams was talking about above, that's being built up in the Emerging Markets is holding the ruble back.

The Chinese renminbi is going to be the outlier of the Emerging Markets currencies feeling the pinch in 2014, as the Fed Tapers. I truly believe that the renminbi will continue to appreciate, albeit in small moves, even with the Fed Tapering.  Tomorrow, (tonight for us) the Chinese will report their latest Trade Data. The experts believe that China's Trade Surplus will narrow from the previous month, and that will be an indication that China's trade partners are slowing or that the domestic demand in China is strengthening. I think it's probably a little of both. But the key here is that even with the number narrowing, their Trade Balance is still a sizeable Surplus!

You know, over the years, a lot of people call me gloom and doom. They just don't know me! I'm really not that way! I love to have fun! But I'm also a realist. And see things the way they really are, not the fluffed up versions that others see. yesterday, I received a message from a dear reader that really hit me, that if people read this, they would no longer think I'm gloom and doom instead, opting to give that title to this dear reader.  Let's listen in to some of his forecasts.

On February 13, oil price drops hard, maybe 3%...

On February 26th , yields on 20year Treasuries fall hard.

On March 10th there is a banking crisis, or at least a "situation" that makes banking stocks fall On March 11th or 12th, Wall Street "melts down".

See what I mean? But that's what his research tells him. Let's hope he's wrong on all this. But if he's not, I'll be trying to get him to tell us what he sees coming next!

Before I head to the Big Finish today, I just want to say that while I hope this fellow is wrong, I also think that more bad stuff is on the way for the U.S. economy.. And if not, at least the feeling that this is as good as it gets, right? I mean after 5 years of this slogging along with the economy, despite the record amounts of stimulus and accommodation, we're not really recovering.

For What It's Worth. You know that this winter's cold weather has really put a lot of people in trouble regarding how much they owe to heat their homes. I know this personally, as my beautiful bride's mother, has a propane furnace, and the price of heating propane has gone through the roof. Well, there was a story on YAHOO Finance that highlighted these problems, which is bad enough in their own right, but the problems that the economy will experience as disposable income is eaten away heating homes is an unintended consequence.

"The polar vortex caused nationwide shivers when it swept across the United States in early January. Now it's causing convulsions and hyperventilating as millions of American open their latest heating bill.

Emma Turpin of Richmond, Kentucky, got a $140 electric bill in December, which is typical. But the bill for January spiked to $429, which is almost equal to the $450 in monthly rent she and her husband pay for a one-level, two-bedroom house. "We're still trying to figure out how we're going to pay it," she says. With a two-month-old baby at home, she's reluctant to turn the heat down by much, as a lot of people do to cut heating bills. To shave costs, the family is eating in more and curtailing trips to Wal-Mart, which saves on gas and provisions both. Turpin also hopes to sell a few of her fancier handbags and other items on eBay, but interest is tepid.

Weather often wreaks havoc with household budgets, especially in the winter. Economists estimate the unusually cold weather that has frozen much of America during the past two months could cut $5 billion off economic activity, mainly because increased demand for energy has pushed prices higher, which means people are spending more for the same amount of fuel."

Chuck again. But the media chooses to tell us about Justin Bieber, and Miley Cyrus. 

To recap. Today, Janet Yellen will make the trek to the Hill to speak about the state of the economy in the old Humphrey Hawkins testimony. She'll repeat it on Thursday to the other side on the Hill!  The dollar is getting sand kicked in its face this morning, as the Big Dog euro traded through a line of resistance overnight, thus allowing the little dogs the chance to chase the dollar down the street. The A$ is the best overnight performer, as housing and Business Confidence data pushed the A$ past 90-cents once again.

Currencies today 2/11/14. American Style: A$ .9030, kiwi .8330, C$ .9060, euro 1.3675, sterling 1.6465, Swiss $1.1175, . European Style: rand 10.9830, krone 6.1170, SEK 6.4470, forint 226.70, zloty 3.0590, koruna 20.1190, RUB 34.73, yen 102.40, sing 1.2670, HKD 7.7565, INR 62.21, China 6.1069, pesos 13.28, BRL 2.4045, Dollar Index 80.48, Oil $100.34, 10-year 2.69%, Silver $20.23, Platinum $1,392.88, Palladium $723.30, and Gold. $1,286.93

That's it for today. A little shorter than usual today. There was nothing in the data cupboard, and the currencies are kicking sand in the dollar's face, that's all we need to know today! I've been doing some research into the BLS data last week, I just shake my head at why the markets and investors put so much stock into a report that's a survey with "filler" and hedonic adjustments?  You know, I have my three grandkids pictures on my mouse pad, and I always get a smile on my face when I look down to see them.. So darn cute! The sun is moving north again, but it sure isn't giving us any increased heat! I watch the sunrise most days (when there aren't clouds) from my desk here, and I watch it move back and forth across the windows each season. I love it when it begins to move North again, which it's doing now.. If we could just get some increased heat from the sun for it's too darn cold! And with that. I hope you have a Tom Terrific Tuesday!

Chuck Butler
President
EverBank World Markets
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