Personal Update

Dear Daily Pfennig Readers,

We hope this finds you well.

Many of you have written asking how Chuck is doing… So here’s the latest…

Since writing to you last week, Chuck’s terrible pain and immobility has continued.

Late last week, he went to see the orthopedist who did his surgery 10 years ago. The end result is that Chuck has to have another major hip surgery this Friday.

This means he’ll be out of touch for at least the next couple of weeks.

We will all miss Chuck. But please send him your best wishes and prayers  on Friday for a positive outcome and a speedy recovery… We know he’ll appreciate it.

Thank you and all the best,

Mary Anne & Pamela Aden

Where Has The Pfennig Been?

November 7, 2017      

Good day…  I just wanted to drop you dear Pfennig Readers a line and let you know what’s going on, with the non-delivery of a Pfennig the last two days…  I woke up from my nap after my infusion on Thursday, took a step and nearly fell to the floor…  I didn’t thank goodness!  But the pain coming from my reconstructed hip was excruciating…  And soon I had to have Kathy go into the attic for my walker I used after the reconstructive surgery over 10 years ago.   I had to cancel my trip to S. Floriday and then had to live with excruciating pain all weekend.  Yesterday, I went to the hospital to find out what was wrong, and they put me through the wringer, and hurt me badly, but they had to find out CT’s, X-rays, dopplers, you name it they put me through it, and at the end of the day… The could confirm two things… 1. I had no blood clots, and 2. no sign of cancer, which is the thing I feared, since every time in the pat 10 years that I had tremendous pain like this it turned out to be the same damn cancer… But not this time!  So, what could it be?  I’m sitting here in pain, trying to move a little this way or that way to lesson the pain.   They sent me home with pain medicine that’s stronger than the Tylenol I was taking, but they don’t seem to be doing much for the pain.  I’m heading to the orthopedist that did the surgery 10 years ago on Thursday, maybe he has an answer…   Until I don’t have this pain that brings me to near tears at time, I won’t be writing a Pfennig…   I hope you understand that this is important to me… And in the past I’ve never shied away from bringing you up to date with my health, so here you go… other than the pain in my right leg, I’m fine!    

Thanks for reading the Pfennig, even when I drop the ball and don’t answer the bell…    

Chuck Butler

Fed Leaves Rates Unchanged, But Sounds Hawkish…

November 2, 2017  

* 3rd Consecutive day of little movement in the currencies

* Eurozone PMI prints strong again!

* Palladium knocks on the $1,000 door!  

 

Good Day… And a Tub Thumpin’ Thursday to you! As usual, you’ll have to pick up the slack from me having an infusion today, for Tub Thumpin’! Congratulations to the Houston Astros, who beat the Dodgers in Game 7 of the World Series last night… I tried to stay awake for the end, but just couldn’t, as the game dragged on with all the pitching changes. I was glad to see that nothing happened after I went to bed!  Head East greets me this morning with their song: Never Been Any Reason…  My good friend, Duane and me have breakfast now and then at the Olivette diner, where the picture of Head East members sitting at the counter was taken many years ago…   

Can you say, three days in a row? I knew you could! HA!  But that’s what we had yesterday, a third consecutive day of little or no movement to speak of in the currencies…   the early morning gains in Gold couldn’t be held onto by the shiny metal, and the price of Oil slipped for the first day in a week. The Dollar Index moved 2 ticks in the past 24 hours, and there you have it. I’ll Talk to you Monday…  Just kidding…  I can write for hours about things on my mind, if that were the charge…    

The Fed left rates unchanged as suspected they would, but changed one word in their statement that got the markets all riled up… The Fed decided to change their outlook for growth from “moderate” to “strong”…  Makes sense given the fact that Fed Chair, Janet Yellen has used the phrase “strong and robust” to describe the economy in the past.  The Fed had two other points for us… “Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize”, and :  “Near-term risks to the economic outlook appear roughly balanced”   

The Fed sure sounds like a Central Bank that’s hell bent and whiskey bound to hike rates at their next meeting in December…  But something about that just doesn’t feel right to me, and I’ve said it for several months now that the Fed is finished hiking rates in this cycle…   Two years ago all points were directed at a Fed rate hike in December, and I held my ground on no rate hike, and had to wipe the egg off my face after the Fed hiked rates for the first time in a decade…  I sure don’t want to have to go through that again, and I truly don’t believe I’ll have to!  

It’s a real problem that’s going on with the Petrol Currencies of Norway, Russia, Brazil, Canada, and few others. I told you yesterday, that the Petrol Currencies hadn’t been able to rally with the rise in the price of Oil…  But boy did they sure get sliced when the price of Oil slid lower yesterday… The slicing was done thinly, so the losses to the Petrol Currencies was not much to speak of, but it was a loss nonetheless. 

Have you been tracking the price of Palladium in the past week? Letting Gold get all the headlines, Palladium has moved, stealthlike, up the $900 handle with ease, and is knocking on the door of $1,000 this morning. Remember last month when Palladium passed Platinum in price, and reached levels it hadn’t seen in 16 years, only to have the rug pulled out from under it, by “the boys in the band”?  It takes about 100 days of production of the this metal to meet the short positions that have been taken in the metal…  I’m just saying…   But will they leave Palladium alone to rally this time?  I doubt it…    

Boy, you sure sound negative this morning Chuck! Sorry, I’ll try to do better..  This morning, Eurozone PMI printed for Rocktober. For all of you new to class, the PMI is a Manufacturing Index that has a line of demarcation between expansion and contraction at and index number of 50…  PMI actually stands for Purchasing Manager’s Index…   Well, the Eurozone’s Rocktober PMI remained strong at 58.5, the same figure that printed for September.  But the euro can’t seem to find a bid to move higher this week, even with a strong economic print like this!  

Today is the day the U.S. Tax Reform bill is supposed to be made public, which means the clock is ticking for a passage of the bill before the lawmakers leave for their Thanksgiving break. That’s less than 10 days as I see it, and given the battles that go on in Congress, I just don’t see it happening…  And the longer it goes on without any resolution and vote, the pressure will begin to build against the dollar… 

This is why I believe we’re seeing the no or little movement in the currencies each day… Traders don’t want to make a call on the direction of the dollar, until this Tax Reform thing gets settled…  And we also have the nomination of a new Fed Chairman that’s supposed to be done before the President heads to Asia next week.  Will it be Jerome Powell, or Kevin Warsh?  Either one is a dove, and will keep rates low..    it sounds like it will be Powell, and it will be announced today… 

So, that’s one of the things that was helping the dollar along that will be out of the way…   The saber rattling with N. Korea has been put on the back burner for now, and as I see it, the dollar should be getting back to the underlying weak trend soon..   

The Swiss franc is at parity with the dollar this morning, trading at 1.00…  This move in francs has nothing to do with things in Switzerland…  It’s all about the cross with the euro, and with the euro weaker, the franc gets stronger, and then that carries over to the franc / dollar cross…  The Swiss National Bank (SNB) has stated over and over again that they want a weaker franc… Negative deposit rates, haven’t done the trick for the SNB…  If that’s the case then forget about a weaker franc and embrace a stronger franc with positive deposit rates! 

I’ve not been a fan of the SNB since they put that floor on the euro/ franc cross years ago, and then removed it to everyone’s surprise (except the wife of the SNB president! HA!) a few years later… The SNB has tried everything under the sun, moon and stars to weaken the franc, and that immediately gets you put on Chuck’s list…  Which is someplace you don’t want to be!   

As I said above Gold wasn’t able to hold on to its early morning gains of $9.40 yesterday morning…  the “boys in the band” were working hard and saw to it that 363,000 contracts were traded in Gold yesterday…  That’s right I said 363,000 contracts….  That’s crazy folks!   The price of Gold flip-flopped a couple of times yesterday, as the short sellers would bring it down every time the shiny metal would mount a rally…  Gold did end the day on a positive note, but up only $3.90 to close at $1,274.30 on the day. 

The U.S. Data Cupboard has the stupid Productivity report for Rocktober this morning, along with the Unit Labor Costs…  These are interesting data prints but not market moving, even though the Fed members have been making a BIG Deal about the lack of productivity…  Yesterday’s Data Cupboard has the ADP Employment Report for Rocktober, and it showed that 235,000 jobs were created in Rocktober..  WOW!  The ADP report is more reliable than the BLS report which will print tomorrow…  

I of course will be resting and not looking at the markets at all tomorrow morning…  

To recap… Another day of little or no movements in the currencies… Gold couldn’t hold its early morning gains but ended the day up nearly $4, and the price of Oil slipped.  Eurozone PMI was strong for Rocktober, but wasn’t able to give the euro the traction it needs to move higher. The Swiss franc is at parity to the dollar this morning, and it’s all about the euro/ franc cross, nothing that the SNB has done.   

For What It’s Worth…  You’ve got to love it when a plan comes together right? Well, the plan in Russia was to make doing business easier, and they have done just that!  This is where you can find the article:http://russiafeed.com/russia-soars-global-ease-business-rankings/    

Or, Here’s Your Snippet: ”  Russia has jumped five spots to 35th in the World Bank’s annual Doing Business Report that evaluates the ease of doing business in a country.

The Doing Business survey ranks 190 national economies based on 11 areas of business regulation. Russia’s new ranking places it ahead of many Western countries such as Belgium and Italy, and just behind Japan.

Last year, Russia ranked 40th based on categories evaluating the ease of starting a business, registering property, getting loans, paying taxes, and enforcing contracts.

Russia has steadily risen in the overall “Doing Business” rankings over the years. After the country had ranked 120th in 2011, President Vladimir Putin signed a “100 steps” decree the following year with the goal to reach 20th place by 2018.”   

Chuck again…. WOW! Now that’s the way to set a goal and then go about achieving or meeting that goal!    

Currencies today 11/2/2017… American Style: A$ .7706, kiwi .6916, C$ .7787, euro 1.1638, sterling 1.3250, Swiss $1.00, … European Style: rand 13.98, krone 8.1437, SEK 8.3915, forint 266.85, zloty 3.6390, koruna 21.96, RUB 58.19, yen 114.05, sing 1.3603, HKD 7.8014, INR 64.66, China 6.6136, peso 19.05, BRL 3.2690, Dollar Index 94.66, Oil $54.24, 10-year 2.37%, Silver $17.10, Platinum $931.15, Palladium $995.75, and Gold…. $1,277.10…

That’s it for today, and this week, as today is an infusion day, and tomorrow is Infusion Confusion…  I had a great lunch yesterday with some friends from high school, and with a 3 month old baby girl, named Poppy..  One of my friends was on grandma duty so she brought the baby to the lunch, and we all loved it! I was happy with the Astros winning the World Series, good thing for Houston. My two sisters live near Houston, so I’m sure they were excited!  Next week I’ll be writing to you from S. Florida…  And I’m sure to be in a better mood each day!  Depeche Mode takes us to the finish line today with their song: Personal Jesus…  And with that, it’s time for me to reach out and touch faith, and send you on your way to a Tub Thumpin’ Thursday! Be Good To Yourself! 

 

It’s A FOMC Day Today!

November 1, 2017    

* Another nothing day in the currencies… UGH

* U.S. Consumer Confidence Soars higher!

* A Like it never happened day for the FOMC…  

 

Good day…  And a Wonderful Wednesday to you! And Welcome to November…  How was your Halloween?  Mine was good, as a few neighbor friends sat around a fire that I built in the driveway, and gave out candy to the Trick-R-Treaters…  It was cold out, but not around that fire pit! Then we folded everything up, and went inside, and I watched the last few innings of the World Series Game 6, thinking that the Astros would build a come back rally like they had in previous games, but that was not to be last night and so we’ll see a Game 7 tonight! Game 7’s are very special… Who will blink?  One of my best memories is Game 7 of the 2011 World Series, when I was at the ballpark with my sons, Andrew, Alex and Jerry to watch our beloved Cardinals win the Series.  Supertramp  greets me this morning with their song: From Now On…    

Oh, and I stayed up way too late watching the baseball game last night, which means this morning I almost didn’t answer the bell! But like I’ve told you before, whenever I’m laying there thinking that discretion would be the better part of valor, and go back to sleep, I think about my dad…  Who had all kinds of ailments through the years, but got up and went to work driving a truck, every day! And so… here I am! Aren’t you glad? HA! All my clothes last night smelled of wood smoke, they went straight to the washing machine room!  

Well, I’ve beaten around the bush enough today…  It was another “nothing day” for the currencies yesterday, and through the overnight sessions. Gold lost $5.60 but is up $9.30 in the early morning trading today… But this non-movement in the currencies is beginning to give me a rash! I mean this is like its the Dog Days of Summer, and we’re way past that!  The Dollar Index moved 1 tick in the past 24 hours, as yesterday morning it was 94.63, and today it is 94.64…

The best performer overnight is the New Zealand dollar/ kiwi, which has really spent an inordinate amount of time in the woodshed, folks… but it escaped last night, and found its way back to the 69-cent figure… That’s about a 1/2-cent move for kiwi, and that’s a good thing.. I think, and I believe I said this last week here, that kiwi has been oversold, and a reversal of that overselling should be on the way…   So, there you go! Now, if kiwi can just keep the pedal to the metal here…   

The U.K. pound sterling is also stronger this morning and is up one full cent to trade in the 1.33 handle. Over and over again, pound traders continue to believe that Bank of England (BOE) Gov. Mark Carney is going to hike rates here… The economic data in the U.K. is a mixed bag-o-nuts and then the U.K. has the BREXIT negotiations hanging over it like the Sword of Damocles…  I would use these “run ups” in sterling as an opportunity… wink, wink…    

The price of Oil moved higher again in the past 24 hours, and now trades with a $55 handle… But the Petrol Currencies are not getting any traction from this move in Black Gold, Texas Tea… 

Here in the U.S. it’s an FOMC Day today…  And this meeting by the Fed will be lile ServPro  “like nothing happened!”  The fed will meet, they’ll leave rates unchanged, and make that announcement, and that’s it. No press conference with Janet Yellen, no statement at this time…  The minutes of the meeting will print in a few weeks, but until then we’ll have to think that Fed is still trying to come to grips with a rate hike in December… 

Of course I’ve said over and over again since April that there will be no rate hike in December… And maybe the FOMC meeting minutes will give us a clue when they print in a few weeks… By then, we’ll be stuffing ourselves with great Thanksgiving fare!  The weeks all begin to meld together from here on out folks… Thanksgiving will be here before we know it, and then it’s into December and Christmas!  

I talk about this  because I’m looking at the Tax Reform Bill which has still not made itself public… and when it does, there will be little time before the Thanksgiving Break to get it done, and then, well, like I said above, it’ll be Christmas!  And this Tax Reform Bill is what has the dollar so perky these days… As the Bill is supposed to remake the American economy…  and no one knows when it will be presented to the American public… Hmmm…    

I hear that part of the TBR (tax reform bill) is a provision to reduce the amount of money investors can deposit to the 401K’s on an annual basis…  I have loved the idea of the 401K through the years, but now that I’m sort-of retired I don’t contribute to my 401K any longer, so I won’t be affected…  But my kids will be! But my two older kids are teachers, so they have their own retirement plans, and Alex still has 2 1/2 years to go through college… 

But I see this as a real dud for other people…  No, not a real dud, a real bummer, as they used to say back in the 70’s…    

Boy the U.S. Data Cupboard yesterday, Consumer Confidence saw a moon shot higher moving to 125 from 119…  Again, they don’t call me for my opinion, so I just move along here for these are not the droids we’re looking for!   And today’s Data Cupboard is all about the FOMC meeting this afternoon…   

As I said above Gold lost $5.60 yesterday to close at $1,270.40, but is up $9.50 this morning, so this morning its trading at $1,279.90…  Yesterday, I told you about the story going around about the Canadian Royal Mint stamped wafer turning out to be fake…  Well, the Canadian Royal Mint issued a statement yesterday that claimed the wafer not to be one of theirs…  So, if that’s the true, then someone out there has a Mint stamp and using it for no good…   I’m thinking of Dudley Do-Right, and Snidely Whiplash, right now…  

To recap…  It has been a nothing day for the currencies in the past 24 hours, kiwi was the best performer and it only gained 1/2-cent! The Dollar Index moved one tick from 94.63 yesterday to 94.64 today…  Gold though sold off by $5 and change, and is up $9 and change this morning… The price of Oil is now trading with a $55 handle… But that hasn’t helped the Petrol Currencies…  And the Fed’s FOMC meets today, to announce that they are keeping rates unchanged…    

For What It’s Worth….  The FWIW article came courtesy of dear reader Bob, who seems to know exactly what i’m looking for in these articles! this is about small community banks getting swallowed up by the Big Banks and it can be found here: https://www.globalresearch.ca/selling-out-to-americas-megabanks-regulation-is-killing-community-banks-public-banks-can-revive-them/5615902    

Or, here’s your snippet: “At his confirmation hearing in January 2017, Treasury Secretary Stephen Mnuchin said, “regulation is killing community banks. If the process is not reversed, he warned, we could “end up in a world where we have four big banks in this country.” That would be bad for both jobs and the economy.” He goes on to say… 

“I think that we all appreciate the engine of growth is with small and medium-sized businesses,” said Mnuchin. “We’re losing the ability for small and medium-sized banks to make good loans to small and medium-sized businesses in the community, where they understand those credit risks better than anybody else.”

The number of US banks with assets under $100 million dropped from 13,000 in 1995 to under 1,900 in 2014. The regulatory burden imposed by the 2010 Dodd-Frank Act exacerbated this trend, with community banks losing market share at double the rate during the four years after 2010 as in the four years before. But the number had already dropped to only 2,625 in 2010.  What happened between 1995 and 2010?”   

Chuck again… Yes, the times they are a changing… eh? This is a good article just to give you a heads up of what to expect coming down the line with banking…    

Currencies today  11/1/2017… American Style: A$ .7682, kiwi .6913, C$ .7767, euro 1.1638, sterling 1.3303, Swiss $1.003, …  European Style:    rand 14.1235, krone 8/1326, SEK 8.3806, forint 267.55, zloty 3.6388,  koruna 21.9620, RUB 58.18, yen 114, sing 1.3602, HKD 7.8019, INR 64.62, China 6.6327, peso 19.14, BRL 3.2799, Dollar Index 94.64, Oil $55.04, 10yr 2.39%, Silver $16.98, Platinum $928.41, Palladium $994.10, and Gold… $1,279.90  

That’s it for today… I heard some good jokes last night… And was amazed at a kids magic tricks with cards… So… why don’t you grab a ghost from behind…   Give up?  Because you get a handful of sheet!  Again, I had you going there didn’t I?  So it’s November, my most hated month, and to attempt to make it go fast, I’m heading to S. Florida for 12 days this Friday after my infusion on Thursday.  No Worries, I’ll be writing from there… But no Pfennig on Friday, right? Correctomundo! I’ve got a real oldie spooling up for the last song this morning… Barbara Lewis takes us to the finish line today with her song: Hello Stranger…  Don’t know Barbara Lewis? She was huge in the 60’s… You should check her out on YouTube…  And with that… I had better send you on your way to having a Wonderful Wednesday…  Be Good To Yourself! 

Royal Canadian Mint-stamped Gold Wafer Appears To Be Fake…

Rocktober 31, 2017  

* Eurozone data is mixed…

U.S Consumer Spending soars!

 * But is it a one and done event? 

 

Good day… And a Tom Terrific Tuesday to you! It’s Halloween! And it’s cold outside! And that means most little kids, the ones I really want to see, will have their costumes covered up with coats. UGH! Tradition has me sitting on the front porch to give out candy the Trick-or-Treaters, but the last couple of years have seen the number of Trick-or-Treaters dwindle, and so I doubt I’ll sit outside tonight…  Our kids used to bring the grandkids here to Trick-or Treat, but they have their own neighborhoods now, and so life goes on…  Am I a bit melancholy today? You bet I am!   Jack Johnson greets me this morning with his song: Posters…   

There wasn’t much movement in the currencies and metals yesterday. the U.S. Data was interesting (more on that later) but failed to give the dollar any fuel to strengthen, and so we sit here this morning trading in about the same clothes as we traded in yesterday.  Stocks even failed to make a 1% intraday move, for the first time in a month of Sundays! Gold added a couple of bucks, and that left the price Oil to carry the flag for rallying assets…   

The price of Oil traded through the $53 handle in the past 24 hours to trade this morning with a $54 handle! That’s a $2 move in the past couple of trading sessions! I told you yesterday that it appeared to be a case of traders taking the Saudi’s seriously, regarding their announcement late last week to cut Oil production even further, and that thought is still prevalent in the markets this morning.

Earlier this morning we saw some data print in the Eurozone…  Eurozone 3rd QTR GDP was 2.5%..  And CPI for September was 1.1%…  So the Eurozone is seeing economic growth across the board, but inflation is lagging still…  And so this data wasn’t able to light a fire under the euro this morning. 

Last week, somehow this slipped past me, so better to report it later than never, right?  Russia’s 3rd QTR GDP was 2.4% beating the expectations for 1.9% and bettered the previous quarter’s 2.3% print…  The Central Bank of Russia (CBR) met on Friday, and kept rates unchanged, and so, if you take these two things and add in the jump in the Oil price, then you have a Russian ruble that’s on the rally tracks!  OK, settle down Chuck, the positive move in rubles is very small, so put down the vuvuzela horn and cowbell, Chuck…  Awe, Shoot Rudy, I wanted to party!     

Speaking of cowbells, there used to be a group of parents at the water polo games for the team my son, Andrew, coaches, that would ring their cowbells whenever the my son’s team scored a goal… I found the noise they created to be obnoxious, and couldn’t wait for their kids to graduate! I hear that the state of Missouri has banned any kind of noise maker other than people’s voices and hand clapping at high school games.  Too late to have saved my ears from all that cowbell ringing!  

OK, getting back to work here  I see that the 10-year Treasury’s yield, which last week hit 2.45%, has been slipping lower again and this morning is trading at 2.37%.. Remember when I told you that the 2.45% had moved higher too fast, and I expected to see this come back down? Of course with all the supply that’s going to be hitting the bond market, from the Fed no longer buying Treasuries, and the Treasury Dept. having to issue more debt, one would think that the yield on the 10-year will be heading higher again… 

But that’s only if you don’t believe my scenario that by yearend and into next year, the Fed will be announcing another round of QE/ bond buying…  That’s my story and I’m sticking to it!  You might be wanting to ask me how I can be saying something like that, when the U.S. economy, is strong, as witnessed by the 3rd QTR GDP of 3%?  Because it’s all done with smoke and mirrors folks.. If GDP doesn’t add up to what you want to see, you just add a few items to the calculation and see what that does to the final number, and so on…   I’m not buying the strong and robust economy, and neither should you! But like the horse that you lead to water, I can’t make it drink, and I can’t make you think like me, I can only present you with the facts…  

Have you ever noticed how when Fed Chair, Janet Yellen, talks about how the economy is strong and robust, that she never gives us any details as to how she came to that decision?  I’m sure there are details that prove that to the Fed, right? Details? Come on they’re here somewhere! I saw them yesterday by the copy machine.. No, I saw them over by the candy bar dispenser… Oh, they’ve got to be here somewhere!  We’ve got to produce them, because there’s this country bumpkin in St. Louis, that wants to see them.    

Oh, stop it, Chuck! Move onto something else quick, before you lose your dear reader!   The price of Gold saw some choppy trading yesterday, but by the end of the day, the shiny metal has gained $2.80, to close at $1,276.00…  The early morning trading is pretty flat this morning, so we’ll have to wait-n-see how “the boys in the band” feel about the level for Gold & Silver this morning.   So, did you read about the apparent fake Gold 1 oz. bar that was discovered in Canada?  This whole story seems fishy to me, but here’s the link to the story should you want to read it, and decide for yourself…  http://www.zerohedge.com/news/2017-10-30/could-be-huge-gold-bar-certified-royal-canadian-mint-exposed-fake     

My friend, and former colleague, the metals guru, Tim Smith , sent me that link yesterday, and I responded to him that I hope that the two guys that supposedly discovered the fake Gold bar, are given the Gestapo interrogation because they seem to be prime suspects to me…  Hey! I’m that kind of person, always looking around the corner, or under the hood for the real story!   

The U.S. Data Cupboard saw a strong Personal Spending print for September yesterday… But I’m sure hoping the markets and the Fed realize that this was a one and done deal for spending in that it contained all the hurricane relief spending… Personal Income was up 0.4%, which was fine… And Personal Spending was up 1.0%, which if it were for “real” (and I know it’s for real, I mean spending that will continue) then you would see the Personal Consumption Expenditures rising at a fast pace… But that didn’t happen! The PCE was up just 0.1% and remains well below the Fed’s 2% target at 1.6%… And the Core PCE (minus food and gas) is only 1.3%… Retailers couldn’t raise prices during the Hurricane relief, because that just wouldn’t have the right thing to do… So, all this spending and no inflation increase? Crazy, eh? 

I read this morning that the U.S. economy hasn’t seen a month of consumer spending like this since the “Cash for Clunkers” deal… Remember that boondoggle to get consumers spending? it lasted a month… that’s it! And so too, I expect this September Spending print to last just one month…  

I was also reading this morning on the Bloomberg website an article about how local governments are stepping in to help save retail malls in order to preserve tax revenue they received from the mall. I find this to be a really dumb idea… But then I thought Cash for Clunkers was dumb too…  The government, whether it be the national or local or state, just doesn’t see the forest for the trees…  I’m just saying…   

To recap…  It was a day of plugging holes and repairing cracks in the foundations yesterday, as the dollar backed off after putting in its best week of 2017 last week. The currencies and metals hardly moved, Gold added $2.80, but that’s it… The price of Oil continued to climb higher after the Saudi’s announced they would cut Oil production further, and Russian interest rates remained unchanged on Friday, giving the ruble something to gain on.  

For What It’s Worth… I had quite a few FWIW articles to choose from this past weekend, as dear reader Bob, sent me quite a few (Thanks!)  And I found this one to be the best, given that it talks about Germany and Russia getting together, thus turning another ally of the U.S. into a Russian friend..  And you can find the article here: http://www.informationclearinghouse.info/48100.htm  

Or, here’s your snippet: “The visit to Moscow this week by German President Frank-Walter Steinmeier heralds a growing rapprochement between the two countries. That’s not just good news for bilateral business ties. It is key to unlocking the dangerous East-West crisis.

“I‘m convinced we need to resist the alienation that has grown up between our countries in recent years,” said Steinmeier at the talks with Russian President Vladimir Putin. The two leaders held wide-ranging discussions beyond narrow bilateral interests. Both reportedly exchanged views on “pressing global issues” including Syria, Ukraine, North Korea and Iran.

Putin said of his meeting with Steinmeier: “I want to voice hope that your visit will help us to make a contribution to developing our bilateral relations and strengthening our interstate ties.” The German president’s role as head of state is largely ceremonial. Formally, he doesn’t have political power, which rests with the country’s chancellor, Angela Merkel. Nevertheless, the symbolism of Steinmeier’s visit to Moscow carries enormous significance.

This week was the first visit to Russia by a German president since 2010. Steinmeier’s predecessor, Joachim Gauck who was in office from 2012 until this year, was renowned for having a “frosty” view of Russia. Under Steinmeier the relationship is not just thawing, it is warming rapidly.” 

Chuck again…  I can hear Putin saying under his breath, “can you do something about the Eurozone’s economic sanctions on us?”  With Germany being the largest economy in the Eurozone, one would think that their opinion weighs heavily on the decisions of the Eurozone, eh? but one never knows…   only the Shadow knows!  

Currencies today 10/31/17… American Style: A$ .7670, kiwi .6845, C$ .7787, euro 1.1632, sterling 1.3207, Swiss $ .9984, … European Style:   rand 14.1040, krone 8.1741, SEK 8.3717, forint 267.62, zloty 3.6518, koruna 22.0495, RUB 57.90, yen 113.25, sing 1.3615, HKD 7.80, INR 64.80, China 6.6488, peso 19.24, BRL 3.2530, Dollar Index 94.63, Oil $54.12, 10-year 2.37%, Silver $16.88, Platinum $919.32, Palladium $974.08, and Gold… $1,276.50   

That’s it for today… Boo! Did I scare you? HA!  OK, so tomorrow I’ll have some Halloween jokes for you… I still remember the one my oldest son, Andrew told when he was a kid… What do you do with  the Elephant with three balls? You walk him and pitch to the giraffe!   Had you going there, for a second didn’t I?  How about our Blues? They beat the LA Kings last night, in a battle of the two of the three best teams so far this year! I watched the whole game, and came away with new respect for Jake Allen the goalie..  We no longer have a little one to dress up for Halloween, so the day is just like any other day it seems…  Hopefully the little kids can cheer me up tonight!  And with that, Eddie Floyd takes us to the finish line today with his song: Knock On Wood..  I recall playing that song in the “Soul Wonders Revue” band I played in, with our shiny gold pants and gold shirts doing the dance steps while we played..  May, that was a long time ago!  And with that, I hope you have a Tom Terrific Tuesday, and great all Hallow’s eve..   Be Good To Yourself! (but don’t eat too much of the Halloween candy!)  

Using Smoke And Mirrors..

Rocktober 30, 2017  

 * 3rd QTR U.S. GDP hits 3%? 

* Huge data week with FOMC on Wednesday!

* Short positions in metals continue to be HUGE! 

 

Good day…  And a Marvelous Monday to you! I’m not “feeling it” right now, but who knows how that will go by the end of the letter! The “Big Chill” came over the St. Louis area this past weekend, and when we came home last night after eating out, you could smell the fires that had been built in fireplaces in the neighborhood…  Our Blues are on a winning streak, and my beloved Missouri Tigers have won two in a row! WOW! (of course they weren’t playing SEC teams)…  Rod Stewart greets me this morning with his song: Every Picture Tells A Story…  And Ain’t that the truth! 

The dollar had a fair day on Friday, after the first print of 3rd QTR GDP showed that the economy grew at a 3% clip…  I’m telling you right here, right now, that 3%  was only achieved using smoke and mirrors! But that’s what the Gov’t tells us, and the markets used that print as an excuse to buy dollars. 

But along the way on Friday, the dollar buying stopped, and as the news wires described it…  The dollar pared its gains for the week Friday afternoon.   However, the dollar still posted its 2nd best week of the year, last week…   It sure seems as though just when the dollar was ready to drop through psychological figures against a handful of currencies and metals that “all this stuff” came along to save it…   Let’s count the “stuff” that’s happened to reverse the dollar’s direction of a few weeks ago…    

First, we had all the saber rattling between the U.S. and N. Korea, which has quietly moved to the back burner, but to pick up where the saber rattling left off, we had Political uncertainty from both Germany and New Zealand on the same weekend, where new coalition governments had to be formed.  Then the vote in Catalonia started the state down the road of independence from Spain, and Spain doesn’t want that to happen. Everyday there’s something going on here that cuts off a slice of the euro’s value..  

And I’m not finished! Then we had the U.S. President announce his tax reform plan, that now has a chance to live given the fact that Congress finally passed a budget bill. And then on top of all those things was the announcement that the President was close to naming a new Fed Chairman to replace Janet Yellen, when her tem expires in February 2018. And the person rumored to be named Fed Chairman was John Taylor, a hawk. That got the markets thinking of additional rate hikes and bought more dollars!    

So, let’s see…  As I said above the saber rattling is sitting on a back burner right now, New Zealand has dealt with their political uncertainty, and has formed a coalition government. Catalonia is Catalonia, in the end there will be a diplomatic conclusion here…  The Tax reform is still up in the air, and now the new rumor has shifted and the new Fed Chairman could be former Fed member, Jerome Powell…  And don’t forget the dark horse here, is Kevin Warsh…  Both Powell and Warsh would be better fits for President Trump, as the President is all about cheap money..  

So, what I’m saying here is that this run for the dollar might be getting near an end…  And soon we’ll be returning to the underlying weak dollar trend, which even writing that right now, seems a little strange, given the strength of the dollar right now.  

And the U.S. Data could very well play the part of deciding which way the dollar goes this week…   The Fed meets this week on Wednesday, and will keep things unchanged, but I expect Janet Yellen to give it the old “strong and robust” description to the U.S. economy once again..  And while the House may be ready to announce the tax reform that is supposed to remake the U.S. economy, the Treasury will be issuing more debt to make up for the lack of participation from the Fed (recall the Fed us unloading Treasuries not buying new ones!)  

Of course the markets will focus on the Tax reform, and not the fact that more debt is being issued… Don’t get me wrong here, I love a tax break when I can get one, but this tax reform is not about me, you and the guy down the street that hold a garage sale every Saturday…  It’s about Corporate tax reform…  

As long as we’re on the subject of economic data, we might as well take a peek at the U.S. Data Cupboard this week, which is going to be hot and heavy all week long, starting with two of my fave data prints today, Personal Income and Spending…  And ending Friday with the Rocktober Jobs Jamboree… And with the Fed meeting in the middle of the week, we have other reports sprinkled in and that makes for a hot and heavy week of data this week!   

One of my fave economists/ analysts; Danielle DiMartino Booth, tweeted a note the other day that “Some Americans are already showing signs of maxing out on debt…Household debt — in aggregate — is above levels last seen just before the economic calamity”    I’ll have more on this in the FWIW section today…  So, be sure to stick around for that!   

The price of Oil has pushed through to the $53 handle since Friday, as Oil traders take Saudi Arabia at its word that they cut production of Oil even further… However, the Petrol Currencies haven’t been able to rally alongside the price of Oil, as the dollar surge has been too much to overcome… 

Gold finally found a bid on Friday, and gained $7 on the day to close the week at $1,273.20, which was down on the week. UGH!  The weekly chart that Ed Steer posts in his Saturday letter (www.edsteergoldandsilver.com) didn’t show any changes in the short positions that are greater in total than the amount of metals that are above ground…  For those of you keeping score at home today, for Silver, the number of days of production it would take just to match the short positions in the metal remains at 210… For Gold it’s 95… 

I continue to find this to be allowed to go on is preposterous.. And one day, something will break, and when it does…. wink, wink…  I’m hoping that the recent ruling against a HSBC FX trader for rigging the price of a currency, would give whatever number of investigative journalists out there a thought to look into metals…   But it is what it is, for now that is…

Before I head to the Big Finish today, I wanted to talk about something that I’m highlighting in my next Dow Theory Letters article… and that is this changing of the horses in the middle of the stream that the U.S. is apparently doing, regarding pointing the blame finger at Iran for 9/11, and taking it away from Saudi Arabia…  If you’re interested in my take on this and how it plays into the dollar’s value, you should go to www.dowtheoryletters.com and sign up (it costs, but just read my thoughts on something every week is worth the price of admission! HA!)

To recap… The U.S. 3rd QTR GDP printed Friday at 3% and that pushed the dollar further until Friday afternoon came along and then the dollar pared its gains, and has lost a little ground since.. Chuck goes through the list of things that suddenly appeared to help the dollar from going on a long ride on the slippery slope, and how they could all be coming to and end soon, which would put the dollar back on the underlying weak trend…  Gold gained $7 on Friday..  

For What it’s Worth… Ok, the Danielle DiMartino Book tweet on Friday got me following a link to an article on Household debt, and that article can be found here:http://www.businessinsider.com/us-consumer-debt-is-a-problem-for-the-poor-2017-10     

Or, here’s your snippet: “Rising US household net worth and lower debt levels relative to income mask sharp underlying inequalities.

“Balance sheets have become more fragile for the lower part of the income distribution,” Deutsche Bank says.

All parts of the income distribution have seen their net-worth-to-income ratio decrease — except for the wealthiest 10%.

How can the following two things be true at the same time?

Household debt — in aggregate — is above levels last seen just before the economic calamity that hit America a decade ago.

Everything is fine.

That’s a line you’ll hear from Wall Street economists, who are noticing the high debt but also telling their clients it won’t hurt.”  

Chuck again…  Some measures of income growth have slowed; the saving rate has fallen to near record-low-levels; and consumer debt continues to rise… I don’t see how this all works out favorably, do you?   

Currencies today 10/30/ 17… American Style: A$ .7677, kiwi .6855, C$ .7793, euro 1.1632, sterling 1.3157, Swiss $.9980, … European Style:   rand 14.1117, krone 8.1508, SEK 8.3457, forint 266.83, zloty 3.6450, koruna 22.0471, RUB 58.02, yen 113.60, sing 1.3633, HKD 7.7997, INR 64.88,  China 6.6503, peso 19.12, BRL 3.2444, Dollar Index 94.67, Oil $53.84, 10yr 2.40%, Silver $16.76, Platinum $920.04, Palladium $968.88, and Gold… $1,272.30    

That’s it for today…  WOW! How about that World Series Game last night? 13-12 in 10 innings!  The Astros won and lead the series 3-2, as they head back to L.A. I watched my beloved Mizzou Tigers win at U-Conn Saturday evening… All by myself!  The Tigers come home to play Florida this coming Saturday. And how about those Blues?  they really played a good game Saturday night, and are off to one of their best starts of all time!  Danielle, Dane, and Chris all stopped by my local watering hole on Friday to say hi! it was good to see them all…  I sat in the cold on Saturday and Sunday at the grandkids’ soccer games… And it was cold Saturday!  I leave for a mini-visit to S. Florida this Friday, to get away from the cold and November…  And with that it’s time to go…  The Beatles take us to the finish line today with their song: Let It Be…   I hope you have a Marvelous Monday, and Be Good To Yourself!

 

ECB Disappoints Markets With Dovish Tapering Details…

Rocktober 27, 2017   

ECB sounds dovish, and euro gets whacked!

* Strange bedfellow gain on dollar.. francs & renminbi!

* John Mauldin sounding like Chuck?

 

Good day… And a Happy Friday to one and all!  this darn cough is driving me batty! It even wakes me up! UGH!  It’s just a cough, nothing else. I don’t feel bad, etc.  Oh well.. So be it!   No baseball last night, no Blues hockey, so I sat down and started reading, James Rickards new book: The Big Drop..  If you buy it, you’ll want to secure all the sharp objects around you before you begin reading…  Steely Dan greets me this morning with their song off the Aja album: Black Cow…   

Well, I told you yesterday that if the European Central Bank (ECB) satisfied the markets desire to see monetary stimulus end in the Eurozone, the euro would rally, and if the ECB disappointed the markets, the euro would suffer…   So, it was the latter of the two that took place yesterday with the European Central Bank announcing that they have halved its asset purchase stimulus program, to €30bn per month, for another nine months. But the ECB also left little doubt that it intends to keep buying bonds for even longer than announced today, in an attempt to get inflation…. 

I’m questioning whether the ECB wants to see the euro stronger at this point.. I’m guessing they don’t, otherwise they wouldn’t be throwing it under the bus every time the bus makes stops at the Frankfurt stop. I’m not a fan of this Central Bank stimulus stuff, never have been, and never will be, and now the ECB is holding back rate hikes in Norway and Sweden…  Whatever happened to Draghi’s “I’ll do whatever it takes to defend the euro” status?    Central Bankers… I shake my head in disgust at them, I truly do!    In fact, they tick me off so much, that I go yell at the walls whenever I read something they’ve done that equates to utter madness!   

Well, there was no need for the Bank of England (BOE) to throw pound sterling under the bus yesterday…  A very weak Retail Sales print did that for them!  Yesterday, I told you about how the 3rd QTR GDP beat the estimates, and sterling traders were dancing in the streets, but then along came reality… And this time reality bites!  This is just another nail in Mark Carney’s (BOE Gov.) rate hike coffin..   Rate hike in the U.K… My, ask me no more questions, I’ll tell you no more lies…  

So, with the euro getting sold like funnel cakes at a state fair yesterday, the rest of the currencies were being sprinkled with powdered sugar too, and Gold got whacked again. All-in-all it was an ugly day for the non-dollar assets.  And the overnight markets haven’t been any different with regards to the selling of the currencies and metals. 

There were two currencies that booked gains in the last 24 hours, and the two are strange bedfellows… Swiss francs and Chinese renminbi…  I’ve explained this franc / euro cross thing before so I won’t get into it again, but that’s what is pushing francs this morning, and I have no idea what’s on the Peoples Bank of China (PBOC) with this appreciation of the fixing overnight, after weeks of marking the renminbi down every night, they pick the night where every other currency is getting sold, and decide to reverse their course… 

I was beginning to think that the Chinese wouldn’t have to go through with a huge devaluation if they kept up the mark downs every night! 

The poor euro, every time it appears that the currency is getting ready for prime time again, it gets pulled back into the green room.  Now it has to contend with traders who aren’t so happy with the ECB’s tapering, and let’s not forget that the Catalonia things is hanging over the euro like the Sword of Damocles. I sure hope that the Catalonia and Spain diplomats can salvage a working relationship, and this doesn’t turn into a civil war… 

Considering the fact that it wasn’t that long ago that sentiment toward the dollar was sinking faster than the NFL’s TV ratings, and all things looked like the dollar was heading for a permanent stay in the woodshed…  One would have to think that this dollar buying is a temporary thing, and soon we’ll return to the underlying trend that was established earlier this year.  And if that’s so… then these are some real bargain basement prices to enter or add to currency positions… 

I was going through my emails yesterday (boy, do they sure mount up when I step away from them for a few hours!) and I came across the Outside The Box email from longtime friend, John Mauldin.. I’ve always laughed out loud when readers send me a link to a Mauldin article.. He’s a friend, I read his stuff! But they tend to forget and send me them any way…

But I read something in the intro that John wrote that caught m eye… You see, John is an optimist, and you have to get up pretty early to sneak the sun past the rooster, and you don’t always see John writing like Chuck! So, I’ll share this little piece with you from his letter yesterday, and then tell me if he’s not turning Chuck, yes, I really think so! Here’s John! (I bet he doesn’t like Johnny!)

“I know that Trump is going to be appointing a new Fed chair and Fed governors, but I have to tell you, there is simply not enough money to make me want to sit around that table and be responsible for cleaning up the mess that the present denizens have created. I think the FOMC is going to find itself in a situation where they have no good choices, and probably not even merely difficult ones. But they will be forced, or at least feel like they are forced, to “do something”; and that something is going to once again take the form of lower rates and more quantitative easing –and maybe even a few little innovations like negative rates and asking Trump and Congress for permission to shift out of their normal “We can only buy government-backed assets” mode. Much as the Bank of Japan, the ECB, and the Swiss National Bank have done.” –John Mauldin

See? I told you! That sounds like what I’ve been saying for months now, and I would bet a Krispy Kreme to a dollar that he’s been thinking it too for months now, but he just didn’t want to say it.. Well, he did! And Oh! I can’t let you go here without giving you his website link in case you want to sign up for one of his letters… you can find John, here: www.mauldineconomics.com   

On a side bar…  I found my thrill… On Blueberry Hill.. Ain’t that a shame… and more great songs from long ago are left behind with the passing of the great Fats Domino on Wednesday… All of our early rock-n-rollers are getting up there in age, and while some seem to be quite fit and still performing, the age and health factors have seem to crept on to the others…   

I think about this quite a bit… What if I had been successful in my efforts to be a rock star in the early 70’s?  Would I still be performing today? I would have to think I would be, given my drive to do something each day.  My pal, Preston, who was the drummer with the traveling band I played in, just recently retired, after a stellar career with various local bands, and tour with Uriah Heep!    OK, sorry for that detour off the road of investments, economies, and dolts..  back to our regularly scheduled programming now.   

Gold got whacked and knocked down by $11 yesterday, as 362,000 contracts were traded..  In those 362,000 contracts traded yesterday do you think there were a few short Gold paper trades? Just a few, right? I shake my head in disgust over this shorting that continues to be a thorn in my side.  

Ed Steer had an article in his letter this morning (www.edsteergoldandsilver.com) that highlighted an article in the Wall Street Journal (WSJ) on August 10, where 4 GATA members were interviewed about the Gold price suppression…  And in the article the writer wants to know why the WSJ didn’t follow up with any investigation into the claims by the GATA members…  Well, I know, but, oh well, I’ll say it… There are no such things as investigative journalists any longer. They take the short cut and get their story out there..   Oh well, the story is out there on his website if you don’t get his letter…   

The U.S. Trade Balance (Deficit) printed for September yesterday. I told you yesterday morning that I expected the deficit to be around $64 Billion, which was greater than the expectations ($63.5 Billion) because the dollar had gotten stronger in the month of September. Well, that’s exactly what happened with the data printing at a deficit of $64.1 Billion…  

Traders and such just don’t seem to care about the Trade Deficit any longer, and that’s a shame. It really is, folks..   

Today’s Data Cupboard has a reading on 3rd QTR GDP here in the U.S. and it’s expected to have fallen from the 2nd QTR’s print of 3.1%, to 2.7% in the 3rd QTR..  I don’t see how the accountants shimmied the numbers to get 2.7%, but they’ll print it and the markets will swallow it, hook, line and sinker.. We’ll also see a report on Consumer Sentiment, which should be stronger than steel given the stock market’s Energizer Bunny act.  

For What It’s Worth…  I had a lot of candidates for the FWIW story of the day today, but chose this one, because it reminds me of my call many years ago, regarding the popping of the Bond Bubble…  I found this on zerohedge.com and can be found here:http://www.zerohedge.com/news/2017-10-26/ray-dalio-warns-significant-bond-market-risk   

Or, here’s your snippet: “Casting his vote in the ongoing debate of which is a bigger bubble, bonds or stocks, Bridgewater’s billionaire founder Ray Dalio, who has continued his whirlwind of media appearances in recent years, said that he sees a “significant amount of risk in the bond market” envisioning a growing risk to stability as the U.S. moves toward a bigger deficit and the Federal Reserve unwinds its balance sheet. He is, of course, referring to this projection by the CBO of the U.S. debt over the next 30 years which, sadly, remains quite unsustainable especially in a rising rate environment and in which central banks no longer monetize deficits (which is precisely why the Fed will promptly resume QE after a brief cool off period).

Addressing this, Dalio said that “tightenings become progressively more concerning because as you move along they’re more and more difficult to get perfect.” Speaking to Bloomberg radio, Dalio also warned that “as we’re progressing, we’re entering a period of greater risk in the nature of the market.”

Meanwhile, confirming what anyone who has seen the fund’s 13F knows, Dalio said that Bridgewater has been long equities, but didn’t provide more details on how the world’s biggest hedge fund is trading the market. He also said he doesn’t think the Fed can continue the pace at which it has begun to unwind its $4.5 trillion balance sheet. Dalio also said he expects the U.S. budget deficit to increase to 1.5% of GDP, growing the supply of debt at the same time the central bank is offloading bonds.”   

Chuck again… Oh, the calls we make… I still have this image in my head of a slide I used to use in my presentations to show that I too can be a dolt, and featured a guy sitting at his desk banging his head on the desktop… I would say, this is me, as I ask myself why did I make that call on bonds?  

Currencies today: 10/27/17… American Style: A$ .7640, kiwi .6642, C$ .7770, euro 1.1625, sterling 1.3087, Swiss $1.00, …   European Style:    rand 14.1961, krone 8.1729, SEK 8.3684, forint 267.58, zloty 3.6638, koruna 22.0562, RUB 57.71, yen 114, sing 1.3686, HKD 7.8035, INR 65.10, China 6.6365, peso 19.17, BRL 3.2507, Dollar Index 94.86, Oil $52.63, 10-year 2.45%, Silver $16.74, Platinum $919.06, Palladium $968.28, and Gold… $1,268.60    

That’s it for today…  What  long week! UGH! And I’m semi-retired! This should be a good sports weekend, with the World Series, and college football. I have to say that I’ve circled the Penn St / Ohio St game as a must watch game of the weekend. My beloved Mizzou Tigers will be in Connecticut on Saturday. And next week is Halloween!  And then my most hated month, November… UGH!  I hope to see some former work friends this afternoon, and I’m sure there are soccer games the grandkids will be playing in. So a busy weekend, which is a good thing for me.. And I hear we might get a dusting of snow! Crazy, eh?  OK.. Charlie Daniels Band takes us to the finish line today, with a song that’s always a big sing-along with at parties… Long Haired Country Boy…  Well, let’s try to make this a Fantastico Friday, and Be Good To Yourself.. And one more thing… it looks like a Great Day, to have a Great Day!   Bye~

 

It’s All About the ECB Today!

Rocktober 26, 2017     

* Norges & Riksbank keep rates unchanged

* India gets caught red handed, intervening!

* Gold gains a whopping 90-cents on the day!

 

Good day… And a Tub Thumpin’ Thursday to you! Whew! what a World Series Game 2 last night! I tried to stay awake for the whole game, but folded like a lawn chair after the 10th inning, only to see that it was won by the Astros in the 11th, when I checked the score this morning. Home Runs were flying out of the park last night! Man, I’ve developed a real irritating cough, that is driving me crazy! Oh well, Chicago greets me this morning with their song: Old Days…   

Well today is the day the European Central Bank (ECB) meets and gives us the details of their plans to taper their bond purchasing program. The meeting is going on as I write.. When I first woke up this morning, I thought, that I should just go back to sleep and then get up to write the Pfennig after the ECB’s meeting. so I could talk about what they said..  And then I thought, nah… better to have the day to go through the ECB’s plans with a fine tooth comb, than to give a knee jerk reaction to it… So, here I am.. Aren’t you glad?  HA!  

Euro traders aren’t waiting for the ECB, as they are anticipating a good discussion after the ECB meeting, and have pushed the euro back above 1.18 this morning…  The euro and sterling are about the only currencies showing some life this morning though.  Sterling is getting some love after a better than expected 3rd QTR Preliminary GDP report showed a 0.4% gain for the quarter.  I know, I know, that’s not a figure that should excite Pee Wee Herman, but.. when you are comparting it to negative numbers that printed previously, then you see the reason for the giddiness of traders this morning.     

In my weekly letter this week for the Dow Theory Letters (www.dowtheoryletters.com)  I talk about something that hasn’t happened since 1991… And in researching things that happened in in 1991, I came across the news article that highlighted Pee Wee Herman’s downfall… that was a real shame, because my son Andrew and I loved Pee Wee Herman’s show. Andrew was just 9 at the time, and I wasn’t much older, HA!  That was 26 years ago folks! Crazy how time flies, eh?   And you don’t even have to be having fun for it to fly by!   

OK…  How about that BIG upward move by Gold yesterday? What? You didn’t see that? It was a whopping 90-cents! HA!  Gold has really been caught in all the rate hike rhetoric lately, and yesterday was no different, as the price gyrated up and down all day. There were 360,000 contracts traded yesterday!  That’s crazy folks!   But, it is what it is, and we are left to deal with the end result…  What on earth are the paper short Gold trades attempting to do?  Well, that’s a good question, as it just seems that they could be spending their time doing more productive things than keeping a lid on the price of Gold, right?  

In my humble opinion it’s Government directive  that has these paper trades keeping the pedal to the metal! And that’s all I’m going to say about that today…   There’s no Government directive to keep a lid on the price of Gold in Russia or China, as they keep backing up the truck to buy more physical Gold.. 

Speaking of China… Premier XI was confirmed as the leader for another 5 years, and the thing I think needs to be pointed out is that he did NOT name a successor to follow him… It’s traditional when a leader sees his next 5 years to be the end, for him to name a successor, but Xi didn’t do that, which is a signal to me that he plans on remaining in power for many years to come… 

That could be a good thing or bad thing… Right now I think it’s a good thing because he has tons of reforms he wants to implement, and having stable leadership is important.   

I haven’t talked about India or the rupee for some time, and thought that today would be as good a day as any…  I don’t know if you’ve been watching the rupee’s performances lately, but they’ve been in a very tight range, and watching this, I had a feeling that some intervention was going on.. And sure enough it was revealed last week by the U.S. Fed that they were watching the Reserve Bank of India’s (RBI) currency moves..  In other words, they are putting the RBI and India on notice that they could be named a currency manipulator should they keep up the blatant intervention..   So, the RBI is going to have to become a little more discreet about their intervention…  

The RBI and the Indian Gov’t is concerned that the rupee could get overvalued very quickly with their intervention, which involves selling rupee and buying dollars. I would have to call this blatant currency manipulation! So, go ahead Fed, put them down on the list, and maybe the RBI will stop this insanity…   

Elsewhere,  Norway’s Norges Bank left rates unchanged this morning, saying that, “New information does not provide a basis for changing the Bank’s assessment of growth in the Norwegian economy. The improvement in the labor market appears to be continuing. Inflation has been slightly lower than projected, while the … exchange rate is somewhat weaker than projected.”   I would have liked for the Norges Bank to sound a little more upbeat, but I guess until the price of Oil goes higher, if it does, they have to remain cautious..    

And Sweden’s Riksbank also left rates unchanged this morning, and told reporters that they did not plan on hiking rates until mid-2018…   So, I guess we should just ignore all Riksbank meetings until then, eh?  Oh, by the way, I don’t think the world’s financial system is going to allow them to hike rates in mid-2018, because in my opinion, it will be a real mess by then! 

The U.S. Data Cupboard had some very strong economic data reports yesterday, with Durable and Capital Good Orders both beating expectations, and New Home Sales soaring much higher then the expectations.. I tweeted a note yesterday evening the same thing I said yesterday in the Pfennig and that is that like I always say, one swallow doesn’t make a summer and one strong econ. print doesn’t make a trend.. 

Today, we’ll see the color of the Sept. Trade Deficit, which should have widened during the month, as the dollar rebounded in September..  Look for the deficit to be around $64 Billion up from August’s $62.9 Billion. 

To recap…  It’s all about the ECB today, and what they tell us about their plans to taper their bond buying program.. If the markets like it, the euro will rally… If the ECB disappoint them the euro will get sold..  I’ll have all the details tomorrow.. Both the Norges Bank and Riksbank left rates unchanged this morning, as expected, but Chuck would have liked to have seen more optimism from the Norges Bank, and for the Riksbank to clam up!  Gold gained a whopping 90-cents yesterday… How about that? 

For What It’s Worth…  I came across an article by Caroline Baum last night, and stopped me in my tracks! Longtime reads might recall me quoting Caroline Baum over and over again back in the day, as she made so much sense, but then she disappeared..  But there she was last night, and so I picked her article as the FWIW story today. It’s about how the Fed needs to stop using their antiquated models and listen more to what the markets are telling them… And it can be found here: http://www.marketwatch.com/story/the-fed-ignores-the-most-relevant-evidence-2017-10-26    

Or, here’s your snippet: “Perhaps you have heard that the Phillips Curve, a model that purports to describe the inverse relationship between unemployment and inflation, is — take your pick — dead, dying or dormant. In other words, it isn’t working.

The 1970s witnessed a period of “stagflation:” high unemployment and high inflation. The 1990s featured a peaceful coexistence of low unemployment and low inflation, a condition that persists to this day, much to the consternation of the Federal Reserve.

Maybe it’s time to look elsewhere for “forward guidance”: not the verbal kind, by which the Fed aims to align expectations with its prescribed path for the federal funds rate; but the kind that provides useful, real-time information on the stance of monetary policy and its implications for the business cycle.

Travel with me back to the period between 1986 and 1990, when Manuel Johnson was Federal Reserve vice chairman. He and his chief economist, Robert Keleher, introduced the board to the idea that auction-market indicators could be useful guides in the conduct of monetary policy.” 

Chuck again…  This article plays well with my call many years ago that the economy would be better if the Fed didn’t set rates, but instead the markets set the interest rates..  All the bond folks at a former place of employment didn’t agree with me, but I didn’t care I said it any way! 

Currencies today 10/26/17… American Style: A$ .7715, kiwi .6880, C$ .7815, euro 1.1815, sterling 1.3225, Swiss $.99, … European Style: Rand 14.19, krone 8.04, SEK 8.2330, forint 263.05, koruna 21.6667, RUB 57.62, yen 113.61, sing 1.36, HKD 7.8011, INR 65.83, China 6.6503, peso 19.02, BRL 3.2403, Dollar Index 93.69, Oil $52.26, 10-year 2.42%, Silver $17.01, Platinum $924.06, Palladium $970.89, and Gold… $1,279.70   

That’s it for today..  Another day in the books, as it didn’t seem like I would be able to answer the bell today, but did, and here we are at the finish line! Our Blues held on for a win last night. I was flipping the channels back and forth between the hockey game and baseball game… I know hockey just started and it’s a Loooooonnnnggggg season, and baseball is in the Championship round, but I love the Blues, and can’t just turn my back on them!   I had a great lunch with my good friend, Ellie Williams yesterday. She too is a cancer survivor, so we understand each other very well!  Kansas takes us to the finish line this morning with their song: Song For America.. And with that it’s time to go and send you on your way with hopes that you have a Tub Thumpin’ Thursday!  Be Good To Yourself!

Currency Traders Can’t Escape All The Rate Hike Rhetoric!

Rocktober 25, 2017    

* Talk, talk, talk, about rate hikes… 

* BOC meets today… 

* A$ & kiwi’s rate advantage to narrow?

 

Good Day… And a Wonderful Wednesday to you! Game 1 of the World Series is in the books, and it was a pitcher’s duel, with the Dodgers coming out on top. That’s they way baseball should be played, as the game lasted 2 hours and 28 minutes..  Back in the day, the Great Bob Gibson pitched effectively, as throughout his career, the average length of time of games he started was only 2 hours 1 minute! The Turtles greet me this morning with their song: It Ain’t Me Babe..  

I don’t know if I can stand much more of all this rhetoric going around about how the Fed is ready to hike rates again in December, due to the strong and robust economy… The newswires are full of them, and the cable news, not that I watch much of that, have one analyst after another talking about rate hikes…  

And… Well, currency traders can’t escape all that rhetoric, and begin to believe it themselves, and soon they find themselves buying dollars And that’s what’s happened in the past 24 hours.. Yesterday, there was a calm before the storm, and now the storm is over the currencies and metals. Time to hunker down, or look to buy bargains… 

The euro is not part of the currency selling, right now, as traders are still intrigued with what the European Central Bank (ECB) will talk about tomorrow, with regards to their promise to discuss the tapering of their bond buying program. However, should the ECB break their promise, the euro will be taken to the woodshed immediately, not passing Go, and certainly not collecting $200!   

The Bank of Canada (BOC) meets today, and while I don’t expect the BOC to hike rates at this meeting, I do expect them to talk about the prospects of another rate hike by year-end.  If they do that, then the Canadian dollar/ loonie could get back on the rally tracks and win back some of the ground it has recently given back. I read this morning that the Big Banks of: Royal Bank of Canada (RBC), Scotia Bank, TD, and Bank of Montreal (BMO), are all calling for a loonie rally into year-end.  So, I’ve got some weight behind my thoughts this morning, eh?  

Aussie dollars (A$) and their kissin’ cousin across the Tasman, kiwi, have really been sold in recent days, as the rhetoric about a U.S. rate hike heats up… These two currencies have enjoyed a nice rate differential to the U.S. dollar for some time now, and IF the Fed does hike rates in December it would narrow that positive rate differential for the A$ and kiwi…  So, one would think that IF Chuck’s scenario for interest rates in the U.S. come to pass, then the selling in these two currencies would be reversed very quickly…  So, there’s your challenge for the time being…  I’m just saying…  

What IF I’m right? And I have no other thought than to think I am right, but what IF I am right, and the Fed doesn’t hike rates in December, and begins to discuss a reversal of their previous rate hikes?  Then all this negativity towards the currencies and metals would also be reversed, thus making the prices today and in coming days, bargain basement prices… And if I’m wrong…  Well, I guess we do have to talk about that, because, I’ve been wrong before, or ended up being right, but much later down the road, which is the same as being wrong. 

And I do see a scenario where Fed Chair, Janet Yellen, sees this meeting as her last opportunity to… wait, a minute Chuck, you don’t want to go down that road this morning, do you?  I guess not… Thanks for saving me, because I almost said things like, no wait! You almost slipped up again, you dolt!  Come on now, move along…   

And China is preparing to sell $2 Billion of dollar denominated bonds, in an effort to gain more status in the credit markets.. I’m not sure I know why they decided to denominate the bonds in dollars, instead of renminbi, except to make them more acceptable by institutions that have bylaws that forbid them from buying foreign denominated bonds. 

Gold got sold again yesterday, this time to the tune of $5.70 and closed yesterday at $1,275.30…  And the shiny metal is down another $3 in the early morning trading today…   And the other precious metals of Silver, Platinum and Palladium, are also getting sold, along with Gold.  Yesterday’s trading in Gold saw 255,000 contracts traded… So the activity in the shiny metal remains strong…  The most recent COT (commitment of Traders) report shows that speculators in Gold are long, and that commercial players are remaining short…  Hmmm…   The way I see it, is that we need for the two players here (speculators and commercial players) to switch positions…    Oh well, it’s a thought any way… 

The U.S. Data Cupboard finally gets to show off some real economic data today when it will print September readings of Durable and Capital Goods Orders… These two pieces of economic data have not been really strong in some time, but if the forecasters are correct, that will change with this month’s print.  Of course, as I always say, one swallow doesn’t make a summer, and one good data print doesn’t make a trend, but that won’t stop the markets from pointing to the data as their proof that they are right about the economy.. UGH!   

The Data Cupboard will also have the New Home Sales data for September today.. I’m not a “housing expert” , but would have to think that with what’s going on right now, that home sales should begin to slide…  

To recap…  All the rate hike rhetoric is driving Chuck crazy, and has the dollar swinging its mighty hammer again this morning. A$ and kiwi are getting sold more than the other currencies because the markets think the positive rate differential that these two have held VS the dollar for so long will narrow. Gold got sold again, and is getting sold this morning too. UGH!  And Chuck talk about what will happen if he’s right about rate hikes…   

For What It’s Worth… Well, longtime readers, Bob, was at it again yesterday, and sent me a link to this article that was very enlightening… It’s about Citi and Merrill’s derivative businesses in 2008 and now.. And it can be found here: http://wallstreetonparade.com/2017/10/two-of-the-biggest-bailed-out-derivative-banks-citi-and-merrill-get-fined-for-breaking-derivatives-rules/

Or, here’s your snippet: “Over the past month, with little media attention, both Citigroup and Merrill Lynch have received fines from regulatory bodies for failure to properly report their trading in derivatives – an opaque trading arena that played a significant role in bringing down both firms during the financial crisis. As reported by the Government Accountability Office (GAO) in 2011, Citigroup received $2.5 trillion in cumulative, secret low cost loans from the Federal Reserve during the 2007-2010 financial crisis while Merrill received $1.9 trillion. These loans, many at almost zero interest rates, were made without the authorization or awareness of Congress. (See GAO chart below.) The loans to the two firms were on top of the publicly disclosed and Congress-approved TARP bailout funds.


Significant portions of the money loaned to Citigroup and Merrill Lynch were authorized by the Federal Reserve to be funneled to the broker-dealer subsidiaries of the firms in London – where it found its way into pursuits that remain undisclosed to this day.”  

Chuck again…  the snippet doesn’t really tell the story in this article, so make sure you 1. sit down, 2. put away the sharp objects, and 3. click on the link above for “the rest of the story”…  

Currencies today 10/25/17… American Style: A$ .7703, kiwi .6885, C$ .7880, euro 1.1770, sterling 1.3220, Swiss $.9920, … European Style:   rand 13.7376, krone 8.0115, SEK 8.2218, forint 263.60, zloty 3.5923, koruna 21.7261, RUB 57.52, yen 114.16, sing 1.3627, HKD 7.8045, INR 66.07, China 6.6631, peso 19.21, BRL 3.2412, Dollar Index 93.87, Oil $52.32, 10-year 2.45%, Silver $16.86, Platinum $915.49, Palladium $960.73, and Gold… $1,273.43   

That’s it for today…  the warm weather has gone! It’s downright chill-city out there this morning! I made our airline reservations for my January trek to S. Florida yesterday. I have to wait until January 9th this year to head south.. UGH!  Our Blues get back on the ice tonight, with a home game (they’ve been on the road so much to start the year!). Let’s Go Blues!  Little Braden stayed with us last Friday night, and I kidded him when he got here, saying, “you’re here again? You might as well move in with us”, and he said… “OK!”  I laughed out loud!  I’m meeting one of my dear friends at lunch today, I can’t wait to see her!  The late, great George Harrison takes us to the finish line today with his song: What Is Life..  And with that I’ll send you on your way to having a Wonderful Wednesday, and remember to Be Good To Yourself! 

Scotia Bank To Sell Metals Business…

Rocktober 24, 2017

 * The dollar stops swinging its hammer…

*  4 Central Bank meetings this week!

 * Russia says, “What sanctions?”         

 

Good day… And a Tom Terrific Tuesday to you! Another strange night for sleep for me, but that’s the norm these days, so I won’t bore you with the details every time it happens! Sometimes I turn on my laptop and look at what’s gone on overnight, and I sit here and wonder, why did I even wake up for this?  And today is one of those days, although there’s still a lot to talk about, we won’t be spending a ton of time on the currencies performance, because, well… it’s a non-event…  ELO greets me this morning with their song: Can’t Get It Out Of My Head…   

Hmmm that was me yesterday… I just couldn’t get the news that Janet Yellen had talked about how the Fed could be revisiting the moves it made during the Great Recession again, and how the markets just seemed to be not listening..  

I was so focused on the thought that Janet Yellen was greasing the tracks for rate cuts yesterday, that I completely forgot to talk about the Central Banks of Europe meeting this week… We’ll have Central Bank meetings with the ECB, Riksbank, and Norges Bank this week, and don’t forget that ECB President, Draghi, promised us that he would give the details of the ECB’s balance sheet unwind after this meeting… I don’t expect Sweden’s Riksbank, or Norway’s Norges Bank to do anything rash, but I do expect them to begin talks about when they see rate hikes happening.. In addition to the European Central Banks meeting this week, we’ll also see a Bank of Canada (BOC) meeting this week. Recall, that at their last meeting, the BOC hiked rates. I don’t expect them to go back to back, belly to belly, with another rate hike this month, but the BOC does need to keep the heat on the housing market of Toronto and Vancouver, so they don’t see their housing bubbles expand any larger!  

Yesterday I told you that the dollar was being bought because of two thoughts in the markets: Tax reform, and a new Fed Chairman being announced. Well, as the day went along, the dollar buying stopped, but there was little conviction to move currencies against the dollar. The reason for that was that the markets decided that tax reform could go on for some time before actually being implemented, and who knows when the President will name his new Fed Chairman. 

So, the markets are focused on the European Central Bank (ECB) meeting that will take place on Thursday. As I said above, this is the meeting that Draghi and company will give us some details of the ECB’s “tapering” of their bond purchase program. So, this is a Big Deal this week in the Eurozone… The euro has remained steady Eddie in the past 24 hours, and didn’t see any slippage when the Eurozone composite PMI as measured by the folks at Markit, slipped this month… The manufacturing side of the composite report saw a nice increase, while the services side saw the slippage. 

The one thing that I saw in the report was that job creation in manufacturing saw the biggest monthly increase in some time, and because of that data point, the euro was able to maintain its level VS the dollar this morning. 

The  economic data isn’t confined to the Eurozone this morning, as Russia saw their YOY GDP for Sept. beat the forecast and the previous month’s print. If you’re keeping score at home, there are the details…  Russian Sept GDP YOY grew at a 2.4% clip, beating the estimate which was 1.9% (I guess the so-called experts were still under the impression that the economic sanctions were slowing the Russian economy!)  And the previous month’s print was 2.3%, so the data is trending in the right direction!  Russia also announced this past weekend their latest Gold holdings, which we talked about yesterday…  I just can’t imagine how the price of Gold isn’t soaring right now, given the Russian physical Gold news… But, like I said yesterday… Beep, Beep, Beep…    

OK, Chuck, move along here…  There has to be more to talk about… Oh, yes there is! The GATA folks sent me this note that highlighted an article on Reuters… Check this out!  A U.S. jury on Monday found a former HSBC Holdings Plc(HSBA.L) , Mark Johnson, executive guilty of defrauding Cairn Energy Plc (CNE.L) in a $3.5 billion currency trade in 2011.   This is the first conviction in the global currency-rigging scandal that has seen banks pay more than $10 billion in penalties. Johnson’s London counterpart at HSBC, Stuart Scott, is still fighting extradition to the U.S.

The reason I highlight this is the thought that people, in the know, thought this to be impossible given the size of the currency market, but it did, and if it could happen here, who or what says it can’t be done in the metals too?  LIBOR was rigged, and finally exposed… Now this… I’m just saying…   

Longtime reader, and a great source of a lot of information that he sends my way, Bob, sent me a note about an article talking about what the writer feels is going to be a financial tsunami to hit the financial system, soon.  And I thought… Shoot Rudy, I’ve said that for a couple of years now, but put some big words in the article and you get more traction out of it! HA!  

The problem with saying things like that is you have to have some real conviction that what you’re saying has an excellent chance of happening, or else you’ll have egg on your face..  7 years ago, I stood on a stage in Orlando Fla, and told the audience that there was going to be a currency regime change and the dollar would lose its reserve currency status by the end of the decade…  I still believe this to be the case, and I know I stand alone on this thought, but I do believe the Chinese renminbi will be the new reserve currency. 

Having said that, I realize that a lot of changes still need to be made in China for this to happen.  But we still have 3 years, and… Chinese leader, Xi, was just approved to lead China going forward. This will give Xi, more power to implement the changes he has proposed. So, watch for China to open up more real soon.   And getting there, isn’t going to see a big devaluation of the renminbi get in the way…  

OK… Gold reversed the early morning losses yesterday and ended up $2 to $1,282 on the day yesterday. 265,000 contracts traded yesterday, not 300,000 but still a good number of contracts that I’m sure contained more than its fair share of short Gold paper trades..  Gold is down $2 in the early morning trading today, so maybe, just maybe it can reverse that and turn positive again today.   

Did you hear the news that Scotia Bank, which owns the ScotiaMocatta, the precious metals trading business, is putting that metals dealer up for sale? It’s rumored that Chinese interests are looking to buy the business…  So, why is this important?  Well, I look at it like this folks… Scotia Bank is one of the major bullion dealers with short positions in all the precious metals, and if they are getting out of the business, could this mean that “the boys in the band” will be losing a member? I think so..  I guess we’ll have to wait-n-see, but to me, this is HUGE news that should be positive for the metals!  

The U.S. Data Cupboard is still lacking any real economic data today, but tomorrow we get Durable and Capital Goods Orders so stay tuned for that… Same bat time, same bat channel!    I had to laugh there because that’s the ending I put on my weekly DTL letters… This week is a surprising fact about Australia…  and will only be found on the Dow Theory Letters website: www.dowtheoryletters.com   I have a lot of fun with those letters, I hope you find your way to subscribing to the DTL and joining me each week, as I talk about whatever fancies me that week! 

To recap… The dollar stopped swinging its mighty hammer yesterday morning, and the currencies have remained, for the most part, steady Eddie in the past 24 hours. Gold was able to carve out a $2 gain yesterday…  And there’s news that Scotia Bank is putting up for sale their metals dealing unit, called ScotiaMocatta…  There are 4 Central Bank meetings this week, with the  ECB the biggest on of all, followed by the Riksbank, Norges Bank and the Bank of Canada…  

For What It’s Worth….  Today’s FWIW is a section of the 5 Minute Forecast, and it’s about Social Security, and can be found here: www.agorafinancial.com   

Or, here’s your snippet: “As long as we have retirement on the brain, we see a headline this morning that affirms our long-standing outlook about “the awful way Social Security might be saved.”

That was the title of an article your editor posted at The Daily Reckoning 2½ years ago. Already we were noticing a twin phenomenon: Educated higher-earning Americans were working well past retirement age and continuing to contribute to the Social Security system… while poorer Americans who hadn’t graduated from high school were dying in growing numbers before they could ever collect a dime in benefits.

Along comes Bloomberg with a story with the headline “Americans Are Retiring Later, Dying Sooner and Sicker In-Between.”

“The U.S. age-adjusted mortality rate — a measure of the number of deaths per year — rose 1.2% from 2014 to 2015, according to the Society of Actuaries. That’s the first year-over-year increase since 2005, and only the second rise greater than 1% since 1980.””  

Chuck again, I had read that Bloomberg article yesterday and then when I saw it highlighted in the “5” I knew that it was FWIW worthy!   Great stuff Dave!   

Currencies today 10/24/17… American Style: A$ .7780, kiwi .6930, C$ .7898, euro 1.1755, sterling 1.3175, Swiss $ .9865, … European Style:  rand 13. 7217, krone 7.9907, SEK 8..2026, forint 262.35, zloty 3.6072, koruna 21.8046, RUB 57.47, yen 113.70, sing 1.3620, HKD 7.8046, INR 65.09, China 6.6358, peso 19.12, BRL 3.2054, Dollar Index 93.85, Oil $52.20, 10-year 2.39%, Silver $17.08, Platinum $925.50, Palladium $966.32, and Gold… $1,280.00   

That’s it for today…  Well, I got through this today… three times I took my hat off and threw it at my laptop… and two times I had to restart it… UGH! Yesterday brought news that my beloved Cardinals had hired our longtime coach that had been on leave to return. Jose Oquendo. In addition the always popular Willie McGee will also be  coach this next year. I sent an email to my baseball buddies and said, “watch how the infield defense gets better now that Oquendo is back”  I saw Willie McGee hit an inside the park home run at the old Busch Stadium years ago. I still believe he was parallel with the ground when he rounded second!  Ok, time to get going…  The Moody Blues take us to the finish line again today with their song: Ride My Seesaw…   I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!