ECB’s Draghi, Shines A Light On Next Summer…

September 17, 2018  

* Currencies trade sideways… 

* Who’s buying all those Treasuries being issued?

 

Good Day… And a Marvelous Monday to you! Well, I had a nasty fall on Saturday night, in a restaurant, I took out a couple’s table, and ended up beaten and battered on the floor! It was not a pretty sight, and certainly not full of grace! It’s no fun being partially handicapped, and there are times I forget that I am, and when I do… Well, I end up on the floor! OUCH! That’s going to leave a mark! What in the world happened to my beloved Cardinals this past weekend? 10 days ago they went to LA and swept the Dodgers, then the Dodgers came to St. Louis, and nearly returned the favor! UGH! But my Missouri Tigers won on the road at Purdue, so that was fun to watch Saturday night, as I tended to my wounds… Steely Dan greets me this morning with their song: Peg…

For those of you who follow me on Twitter (I have to say that I don’t tweet very much) read on Thursday afternoon, well, shoot, why don’t I just copy and paste what I said? Here you go! ECB’s Draghi says that current negative deposit rates will remain until at least next summer… The markets didn’t punish the euro though, as at least there’s something to look forward to now…

And so it was for the currencies on Friday too… The euro traded in the same clothes as Thursday, and nobody seemed to want to deal with the rot on the vine that was exposed when the U.S. Data Cupboard took front and center.

I’ve told you over and over again that this dance is gonna be a drag, no wait! What I’ve told you is that the 3rd QTR data just keeps printing weaker and showing cracks in the economy’s foundation… On Friday, it was Retail Sales, for August, and they were supposed to have gained 0.3% but only mustered a 0.1% gain… So much for that blowout 0.7% gain in July, right? I told you it was goosed up by back to school spending…

We also saw Industrial Production was bang on expectations of 0.4% growth, and Capacity Utilization didn’t meet expectations of 78.2%… But… But… But… Consumer Sentiment increased to 100.2 from 96.8 in July.. WOW! The Sheeple are gathering steam… They’re all following the leader to their demise… I’m just saying…

Gold on the other hand did not have a “do nothing” Friday, as it was sold to the tune of $7.80, to close, once again, back below $1,200, at $1,193. The shiny metal is up $2.50 in the early morning trade today though, as once again the Gold Bugs attempt to pull Gold off the canvas and back into its corner to get revived.  

In reviewing what I was reading this past weekend, I noticed a theme… More and more economists, and observers are getting scared about what’s going on here, and abroad.  The usual suspects that call for this stuff, like Peter Schiff, and James Rickards, were front and center, and then there were the others with their thoughts on how this is going to get really ugly, folks… 2008 on steroids, like scenarios…  That’s scary stuff…  I have a sample of this stuff in the FWIW section today… And in my latest Dow Theory letters piece, I dive into all the derivatives.. Talk about some scary! 

Among the best articles I read this past weekend was something that Ed Steer printed, that was a reprint of the great James Grant article… We’re not privy to a lot of what James Grant says, because, well, his letter is a “paid subscriber letter”… So, when stuff is out there for free, I take advantage of it… And in this quote, James Grant is talking about how the Treasury is going to have to issue tons of Treasuries this year… let’s listen in now on something I pulled from: www.edsteergoldandsilver.com   

“This year… the government will issue… the most government securities as a percentage of GDP since the end of World War II. So the supply of government securities in relation to national production is the highest since the mid 1940s. Although this country is under arms in some degree, but it’s not waging a world war, so this is a very different fiscal picture than what we have been used to.”  

Chuck again… yes, I’ve been talking about this for months now… The debt is exploding above $1 Trillion per year again, which means more and more Treasuries need to be sold to finance the debt, but… the major players, like China, Japan, Russia and others have been backing away from the Treasury auction window… So, that leaves us with the question… All this issuance, but who’s doing the buying of these Treasuries?… 

When a country has a problem with financing its debt, it has a couple of choices… It can allow a general depreciation of its currency to allow the bonds to become cheaper to buy… Or, it can aggressively raise rates, and get the bond boys to go along, to make the bonds more attractive…  Or, heaven forbid, the country implements an austerity plan to reduce debt, and debt issuance…  yeah, pigs will fly before that happens here in this country folks…   I know, I’ve gone through these options several times through the years, but it’s always good, especially right now, with the U.S. debt exploding higher, to remind everyone the problems that go along with attempting to figure out how to repay the debt… 

So… getting back to the ECB and Eurozone, and Mario Draghi for a moment before we head to the Big Finish…  I’m not sure what to make of his speech last week… While he sounded a bit hawkish, his comments were laced with dovish remarks, and traders got what they wanted, in a sense, that is, as Draghi, told them that rates wouldn’t be hiked until next summer… Traders have a definitive time period in their collective minds now, and that’s usually a good thing… 

But the thing that I’ve found through the years, and brother have I been doing this for very long time, is that traders grow tired of waiting for a move, and then all the good that was gathered up is thrown to the curb, and things get messy again… So, it will be up to Draghi, to remind the markets over and over again that there is a rate hike coming… And then do NOT pull a Mark Carney, and disappoint next summer! 

So, we could very well see the euro bump along a bit higher in the near term, and then depending on what’s being said and done at the ECB, the euro will either make a strong move higher, or get sold… 

Of course, I’m just talking about “euro ” moves…   If the dollar bugs decide to look around at what’s going on in this country instead of being myopic with their view of interest rates, and the dollar begins to move downward, the offset currency to the dollar’s downward move would be the euro… And the euro could rise on that merit, and not a “euro” merit… I’m just saying… 

The U.S. Data Cupboard has a week to take a breather, with only some regional manufacturing indexes, like today’s Empire (NY region) print, and some housing data as we go through the week… So, as I look at it, it sure looks like a good week for me to take a mini-vacation… 

To recap… The ECB meeting last Thursday brought about a time-line that traders can put their arms around, and decided not to punish the euro for the ECB’s call that rates won’t be raised until next summer…  Debt is exploding higher here in the U.S. and James Grant chimes in with a comment about Treasury Issuance… And then Chuck goes all in on the euro’s prospects… 

For What It’s Worth…  Well, I pre-billed this is a an article about how the next problem for the U.S. will be worse than 2008… So, if you promise to put the sharp objects away first, you can find it here: https://news.sky.com/story/next-financial-crisis-has-begun-and-will-be-worse-than-2008-crash-economists-warn-11497433 

Or, here’s your snippet: “The beginnings of another financial crisis are already in motion – and it will be worse than the global meltdown of 2008.

That’s the opinion of one of the select band of economists who predicted the 2008 economic collapse, which started with the bankruptcy of Lehman Brothers bank a decade ago and ended up affecting every country in the world.

Ann Pettifor predicted that crisis in 2006, more than two years before it actually struck.

Now she thinks the global economy is in danger once more thanks to huge corporate debt, and the prospect of rising interest rates in the United States.” 

Chuck Again…  And all those derivatives… I know they are an unknown as far as the normal investor is concerned, but they were not the cause of the 2008 meltdown, but they were in the vicinity folks.. just be aware of that… 

Currencies today 9/17/18… American Style: A$ .7177, kiwi .6570, C$.7680, euro 1.1660, sterling 1.3098, Swiss $1.0364, European Style: rand 14.9887, krone 8.2126, SEK 8.9784, forint 278.58, zloty 3.6890, koruna 21.8467, RUB 68.07, yen 111.98, sing 1.3736, HKD 7.8475, INR 72.40, China 6.8675, peso 18.86, BRL 4.1704, Dollar Index 94.77, Oil $69.55, 10-year 3.00%, Silver $14.20, Platinum $789.21, Palladium $981.72, and Gold… $1,197.28

That’s it for today… Yeah, it was a nasty fall… I think I had a bit of a concussion, and a bad cut on my arm… My head and shoulder hit the table next to me and the couple sitting there had their drinks and stuff flying it was a mess! Now, when I go to the doc next week, and they ask me if I’ve fallen, I’ll have to tell them yes… The fall reminded me of when I took out the first row of pews at a church when little Everett was baptized! Good thing I have all this padding on me! HA!  Ok… I’m heading up east for a few days, and then finally back home…  The band Yes, takes us to the finish line today with their classic rock song: Roundabout…   I hope you have a Marvelous Monday and a Wonderful Week… Be Good To Yourself!

Chuck Butler

Going Down The Debt Collapse Rabbit Hole…

September 13, 2018  

* Currencies & metals rally on the day!

* Wholesale Inflation falls in August? 

Good Day… And a Tub Thumpin’ Thursday to you! Another day on the “wonder drug”, and my foot feels soooooo much better this morning. Now it just feels like a small pebble is in my shoe when I walk, and not the sharp object that was there the other day! Well, I guess I should have not said anything but my beloved Cardinals played just like I said they would yesterday…  Maybe I should book a flight to Vegas? HA!  Jackson Browne greets me this morning  with his song: For A Dancer…  A strong lyric in this song goes like this: In the end there is one dance you’ll do alone… 

Yesterday, saw the drifting toward higher levels for the currencies VS the dollar, turn to an all-out rally. This morning the European Central Bank (ECB) is meeting and they hold the key to any further gains of the euro and other currencies. But not all other currencies, for the Emerging Markets currencies are a horse of a different color, and have their own problems with the dollar that we’ve talked about before. No need to air the dirty laundry so to speak again… 

I have to say that, as you longtime dear Pfennig Readers know, I do a lot of reading each day, trying to not only learn more about trends, economics, etc. and one theme of articles that I’ve been seeing appear over and over again lately, is about  the dollar.  But wait! These aren’t your run-of-the-mill articles, these are large financial institutions research groups, Central Bankers, economists, and really a representative from each major group, all singing from the same song sheet, that “the dollar looks tired, and has run its course for strength”… 

Now, all I need is for the “tech guys” to chime in, for me to know I’m on the right path here, and that the dollar is looking shaky…  And if China and Russia have anything to do with it, and they will, trust me on this one folks, the dollar will cease being held in large amounts by Central Banks around the world to settle the terms of trade transactions…  And this will put many dollars up for sale, while the respective domestic currency of the Central Bank selling dollars will be bought. 

Yesterday, I came across this article from the GATA folks, and well, this plays well in the sandbox with the previous paragraph… Check this out…  

Jean-Claude Juncker has vowed to turn the euro into a global reserve currency that could rival the dollar as part of the European Union’s drive to reduce its financial dependence on the United States.

In his last “State of the Union” speech to members of the European Parliament in Strasbourg yesterday, the president of the European Commission said it was an “aberration” that the EU paid for more than 80 percent of its energy imports in U.S. dollars despite only 2 percent of imports coming from the U.S.

Most of the dollar-denominated imports are from Russia and the Gulf states.

“We will have to change that. The euro must become the active instrument of a new sovereign Europe,” said Mr. Juncker, whose five-year tenure as commission president is due to end next year.”  

Now, this statement would have gone a long way, like an Albert Pujols home run off Brad Lidge (is that ball still going?) if ECB President, Mario Draghi had said that this morning after the ECB meeting… It takes currency wonks like myself to find these gems out there, as it is… But if Draghi had said that, the euro would be running higher, most likely… 

Speaking of Draghi… The ECB is meeting while I write this morning and the rate decision will be made probably before this gets to you, but you can be sure it was a no-go on a rate hike, but that’s all a given as far as the markets are concerned, what they really want to see and hear, is the Draghi press conference that will follow, to see if he gives any clues about stimulus policies and their removal…  

Gold found a way to carve out an $8 gain yesterday, to close at $1,206… The shiny metal is down a buck today in the early morning trading, so that’s something that could wiped out in heart beat! Let’s hope so! 

Let’s see now… A quick review of the TOP Stories this morning has JP Morgan saying that the next financial crisis will arrive in 2020… And that we’ve never learned from the Lehman Brothers demise… The Crypto’s 80% plunge is worse than the dot-come crash… And that Jamie Dimon is now backing away from his braggadocio that he could beat Trump in an election…  But the most important headline is this:  Hurricane Florence to park above Carolina coast line and dump rain for days…  That’s horrific news, folks, and while I say weather people don’t know their rear end from a hole in the ground, I’m hoping their wrong again! 

There’s another headline story that says: It’s a Debt, Debt, Debt, Debt filled world after Lehman crash…   And brother, there aren’t truer words that have been spoken! And one of these days, I don’t know when, or where it will begin, but all this debt accumulation will come crashing down on anyone that didn’t believe it ever could come crashing down… There’s no other way for this to all end, folks… 

I don’t care to go down that rabbit hole on a Tub Thumpin’ Thursday, which has become my own version of a Fantastico Friday, but I did, and really feel badly for doing so… But it has to be said, and if I’ve been brave enough to call it out for so long, I may as well, go the distance, eh?

The U.S. Data Cupboard is still searching for “real economic data”, and it won’t find it today with the stupid CPI printing for August, and the Core Inflation data printing…  Yesterday, PPI (wholesale inflation) fell in August by -0.1%…  That’s crazy!  I would have thought that if the Fed was right, and all the other economists that repeated what the Fed said, that by now, Businesses would be forced to raise prices from wage increases, and PPI would be showing us just that!  But NOOOOOOOO! It didn’t do anything close to that! It showed us that wholesale prices are falling!  Crazy… 

On a sidebar… Do you know the #1 song played on juke boxes through the years is?  That’s right… it’s Patsy Cline singing Willie Nelson’s song: Crazy…  (OK, young kids, juke boxes were music machines in bars and restaurants that you put money in and played music that you picked out from the selection they provided… In today’s world, that’s a thing called Touch Tones… Where you can connect to it with your smart phone, and play the songs you have on your phone through the Touch Tones system)

To recap… The daily drifting of the currencies and metals turned to an all out rally for the anti dollar asset classes… The ECB is meeting while I write this morning, but more important than the rate decision is the press conference following their no rate change decision! And Chuck is following a ton of stories about how the dollar is looking tired…  

For What It’s Worth… Well, for years on years I’ve stated that the BLS jobs report is nothing but a bunch of lies… filled with adjustments that alter the surveys that are used to guessimate the number of jobs created… Then they mix in their adjustments, and voila! They have a number to show the markets… I’ve long thought that these folks at the BLS were on the payroll of whatever administration that’s in charge… Well, here’s something that goes along with these calls that the BLS jobs report is B.S. and it can be found here: https://www.zerohedge.com/news/2018-09-09/employment-report-has-become-orwellian-extreme

Or, here’s your snippet: “The employment report is unquestionably the most manipulated economic report issued by the Government. The content of the the headline on which the mainstream media bases its broadcast and analysis of the report is entirely disconnected from the actual data contained in the report. The damning data that no one in the financial media or Wall Street seems to be able to find is at the top of the BLS’ report:

As you can see, the “civilian labor force”declined by 469,000 people in August from July. The number of “employed” dropped 423,000. The “not in labor force” increased by nearly 700,000.

With these facts in mind (“facts” at least as far as the BLS numbers contain any shards of credibility), how can the Government claim that 201,000 “jobs were created” in August? How can CNBC say the “economy created more jobs than expected?” Based on the numbers in the details of the BLS report, it looks like, between the decline in the number of people employed and the decline in those not counted as part of the labor force, the economy shed over 1 million jobs.

Titus remarked to me that, in terms of manipulating the data to make the headline report look positive, this is the worst report he’s ever scrutinized:
“In terms of people leaving the labor force, it sure looks like earlier data was was manipulated to hell and back and the BLS just couldn’t hide it any longer. The deltas are f***ing crazy.”

By the way, has anyone besides me noticed that the BLS calls this report the, “Employment Situation Report?” What does that even mean?

Chuck Again… Yes, there was a graph of numbers they were referring to, that you can see if you click the link above… It’s nice to know that it’s not just me calling out the BLS each month…

Currencies today 9/13/18… American Style: A$ .7193, kiwi .6555, C$ .7690, euro 1.1630, sterling 1.3065, Swiss $1.0316, European Style: rand 14.7612, krone 8.2388, SEK 8.9835, forint 279.56, zloty 3.7103,  koruna 21.9533, RUB 69.38, yen 111.55, sing 1.3715, HKD 7.8484, INR 71.72, China 6.8640, peso 18.97, BRL 4.1448, Dollar Index 94.89, Oil $69.38, 10-year 2.98%, Silver $14.26, Platinum $802.76, Palladium $979.10, and Gold $1,205.25

That’s it for today… and this week of course… And well, next week, I’m going on a mini-vacation, so I’ll write on Monday, and then I’m off to visit our good friends up east, Gus and Vivi!  Got it?  so a mini-vacation for me… But check your Twitter feeds, because you never know when I’ll tweet out something that’s on my mind! I saw the line of cars on the highways leading away from the N. Carolina coast on TV last night… Good luck to all of you, stay safe, for your life is more important than the possessions… And then finally, next weekend we’ll return home for a few days, to watch my darling granddaughter, Delaney Grace, in a play: The Wizard of Oz, which happens to be my all-time fave movie!  Steely Dan takes us to the finish line today with their song: Rikki Don’t Lose That Number…  And so, I hope you have a Tub Thumpin’ Thursday, a Fantastico Friday tomorrow, and great weekend! And don’t forget to Be Good To Yourself!

Chuck Butler

The Band Is Going On The Road, Man!

September 12, 2018  

* Currencies drift again but this time higher!

* China releases their “official Gold Holdings”… Chuck calls B.S.! 

Good Day…. And a Wonderful Wednesday to you! I guess this is becoming the norm, the later in the morning Pfennig, that is… I’m finding that dealing with chemo, and waking up early just doesn’t mix well… The doctor came through for me yesterday, and my plantar fasciitis has backed off from the acute pain this morning, a couple more days and I think I’ll be ready to run a marathon! HAHAHAHAHAHA! As if! My beloved Cardinals saw their collective bats come alive last night, and won big. Unfortunately, their history shows that a big scoring game is usually followed by a shutout or something like that. UGH! Day game at Busch today, but I’m not there, sorry Duane!  Ambrosia greets me this morning with their song: How Much I Feel… 

Well, another day, another drifting in the currencies, and metals… Yesterday’s drifting though was a bit different than the recent drifts, in that the currencies leaned toward an uptick VS the dollar… The euro is trading in the same clothes as yesterday, and I don’t see much movement from the Big Dog, until we see the color of the ECB’s (European Central Bank) words after they meet tomorrow. 

The markets are holding their breath waiting for any words that would give them a clue as to when rates are going to rise in the Eurozone…  Unfortunately, I just don’t see the ECB and their President, Mario Draghi, saying anything that would help the euro… And basically he’ll have the data on his side this time, as the Trade War has begun to take a pound of flesh from Eurozone economic growth.  

I wrote in yesterday’s Pfennig that I blame the currencies sliding on the ECB’s unwillingness to begin the removal of their stimulus monetary policies, and I stick by that statement… For no little dogs (the other currencies) can run unless the Big Dog runs first… 

The Russian ruble has seen a major slide in recent weeks, as it has to deal with the 1. economic sanctions, 2. a drifting lower of the price of Oil, and 3. a route of the Emerging Markets currencies. But after sliding to a greater than 70 figure on Monday, Tuesday saw the ruble bounce back below 70, when the most recent data for Oil supplies showed a huge drop, and the price of Oil rebounded more than a buck on the day. 

Yesterday, the Russian Economic Development Minister Maksim Oreshkin, said in an interview that “that now is a good time to buy the undervalued ruble, and that, You know the famous quote from Warren Buffett: ‘Be fearful when others are greedy and greedy when others are fearful.’ When everything is good and everyone is bullish about something, it means, on the contrary, that this asset has little prospects.?”

What he’s saying here folks, is that much like my good friend Steve Sjuggerud like to do… buy something when every hates it…  I’m just saying, that it rings a bell…  

On a sidebar, if you’re ever around me again, ask me to tell you the joke about ringing a bell…

Well, it was reported yesterday for the 22nd consecutive month that China didn’t “officially” add any physical Gold to their “official holdings”… What! What? Is that right? Well, in my humble country bumpkin opinion (texters use IMHO, I use IMHCBO) I don’t see any way in hell that their “official” Gold reserves are just 1,842.6 tonnes… And China won’t reveal their true holdings until they think the time is right… When that will be is anybody’s guess, but remember that there is a pattern here…

 In China it is fashionable to hold back and then come out with both guns blazing, when it comes to announcing their Gold holdings… China reported zero increases in its gold reserve from late 2002 to April 2009 and then again from April 2009 until July 2015 and on each occasion then reported massive increases.   (I found that info on Ed Steer’s letter this morning: www.edsteergoldsilver.com) 

So, if the pattern repeats, then we won’t hear about China’s real Gold reserves until 2021 or later… UGH!   But if things go the way I believe them to be going, we won’t have to wait until 2021… wink, wink… 

Back here in the U.S. things are beginning to unravel for the economy… In jus the last week, we’ve seen a drop in household employment, a slide in full-time jobs, and a retreat in factory payrolls. There’s more but I don’t want to scare the bejeebers out of you… But there was one piece of data the other day that caught my eye…

Consumer Credit (read Debt), exploded higher in July to $16.6 Billion from the $9 Billion figure for June… That’s an annual growth rate of 5.1%. Economists had been expecting a $13.9 billion gain, and surprised most economists…   I think this will probably be a case of student loans growing by leaps and bounds, because, well, EVERYBODY has to go to college, right?  

There’s not much in the U.S. Data Cupboard today… PPI (wholesale inflation will print for August and the Fed’s Beige Book will print, and that’s about it… Yesterday, I made a big deal out of the trio of Bernanke, Paulson and Geithner’s oped in the NY Times… Calling it the band getting back together… Well, after their reunion concert, they’re going on the road! Seriously! They’re taking their act on the road!  Can you believe that one? These guys seriously believe that they saved the world…  

When in reality, they helped usher in the mess that they then think they saved us from.. I’m just saying… I wouldn’t pay on iota of attention to what they have to say, other than to point out the problems with what they’re saying! 

There’s a big to-do that’s going to take place in this weekend… It’s called the Shanghai Cooperation Organization (“SCO”) summit that will take place in Qingdao.  Man would like to be a fly on the wall there!  You don’t think these Asian countries are going to get together and agree to something like… eliminating dollars from their reserves, do you?  I’m just thinking that given all the talk about this from Russia and China in recent months, that it makes sense that this is the direction Asia would go… 

To Recap… The currencies and metals found a way to drift higher yesterday, but in real terms there wasn’t much movement at all… Chuck believes traders are waiting to hear the color of the ECB’s talk tomorrow after their meeting… Chuck also believes they won’t hear anything worthwhile from the ECB… The price of Oil rebounded on depleted supplies data, and China once again reported no gains to their Gold holdings…  Chuck wonders when China’s pants will catch fire… 

For What It’s Worth…  I’ve talked about this cashless society for a couple of years now, and in that couple of years we’ve had Sweden go all-in on a cashless society, and more and more reports of cash not being accepted… My good friend and Spring Training buddy, Rick (the 80’s music guy!) sent me this yesterday, and then when I saw that MarketWatch also sent it, I was like, “Well, that’s a surefire sign that it needs to be a FWIW article!” And so, you can find it here: https://www.marketwatch.com/story/america-moves-closer-to-being-a-cashless-society-2018-09-11?mod=MW_section_top_stories

Chuck Again… Remember this… I warned you… many years in advance that your civil liberties were being taken away from you, so when it finally dawns on everyone, they can’t blame me for not telling them! And asking them… Got Gold?

Currencies today 9/12/18… American Style: A$ .7115, kiwi .6515, C$ .7660, euro 1.1581, sterling 1.2984, Swiss $1.0272, European Style: rand 15.1102, krone 8.3145, SEK 9.0414, forint 280.35, zloty 3.7195,  koruna 22.0721, RUB 69.96, yen 111.50, sing 1.3767, HKD 7.8490, INR 72.18, China 6.8663, peso 19.17, BRL 4.1199, Dollar Index 95.16, Oil $69.84, 10-year 2.96%, Silver $14.15, Platinum $788.92, Palladium $975.22, and Gold… $1,196.89

That’s it for today…  thank goodness for the MLB app, that I have on my TV, and can watch my beloved Cardinals games while down here at my home away from home. Or watch the games on my iPhone or iPad if away from my TV… When I was a young man, the only way I could see my team was if I went to Busch Stadium! Kids today, they have it so easy! HA! Well, I need to get this out the door, so… Kansas takes us to the finish line today with their song: Dust In The Wind…  (I have a good story about me singing that song in a town square in Cancun, if you ever want to hear about it!) I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

Getting The Band Back Together!

September 11, 2018  

* Currencies drift again… 

* Gold gets off on a bad foot this morning (like me!) 

Good Day… And a Tom Terrific Tuesday to you! Well, this is our day of observance of our 2nd “day of infamy” in the history of this country. I’ll always remember that day, with just about everyone in our office sitting around my desk, as I had a small TV sitting on my desk.  That was a horrible day, and one that I hope I never have to witness again…  Well, this is late today… My pain from the plantar faciitis has me hobbling around, and well, I made it from the bed to the chair, and then fell back asleep! Then it was so late, that I almost thought about ditching the letter for today… But then I was reading a piece on Zero Hedge.com  and thought I just had to comment about it… So, here we are…  Billy Joel greets me this morning with his song: The Stranger…  

Front and center this morning, this will be short and sweet, as I’m late and don’t want to take up your lunch hour instead of breakfast hour! UGH!  The Currencies have drifted a bit since yesterday, not really moving much at all, but the bias remains to move them downward VS the dollar. Gold didn’t move much either only losing 80-cents on the day.  But today is a different story for the shiny metal, as it is already down $6 on the day… 

I was putting together my latest DTL piece last night, and pretty much laid the blame for the currencies’ weakness on the European Central Bank (ECB)… You see, the ECB has lagged the Fed in removing their stimulus policies, and as long as the ECB drags their feet on this, the euro will not be able to gain significantly VS the dollar, and if the euro isn’t gaining significantly VS the dollar, the other currencies aren’t either!  

So, come on ECB throw me bone here, before I go to meet St. Peter! I’m serious about that folks! At this point, I’m failing to see when the ECB will begin to remove their stimulus policies… Call me crazy, shoot Rudy, I’ve been called nastier things, but at this point I’m thinking that the ECB will never get around to removing their stimulus policies! 

OK, we’re going in a different direction today, because of this article that I read on ZeroHedge.com yesterday, that was the great James Grant’s response to an oped that Bernanke, Paulson and Geithner wrote for the NY Times…  Yes, they “got the band back together” for a concert of sorts… And this is what they were talking about… 

“After sharing their self-exonerating analysis of the events of 2007-2009 and subsequent response (which one of the three did the fact checking?), Bernanke et al. argue for greater regulatory powers, or as they put it, “adequate firefighting tools,” to resolve future financial crises.

Blanket guarantees of bank debt by the Federal Deposit Insurance Corporation, the Fed’s emergency lending capabilities and the Treasury department’s guarantee of money market funds are among the mechanisms cited by the authors as necessary for crisis prevention and mitigation.”

Well, as you can imagine, the great James Grant, pulled no punches in his review of their article, and it can be found here if you care to read the whole thing… https://www.zerohedge.com/news/2018-09-10/james-grant-responds-bernanke-paulson-geithner-op-ed 

I’ll add my two cents to this discussion, by adding that nowhere in the article did it mention that Bernanke had been so wrong on the whole financial meltdown! Recall, when asked what his plans were to deal with a housing sector with falling prices, he responded: “Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.”

Yeah, there was no mention of that or any of the other (there are too many to quote them all) quotes he made that were wrong…   But I’ll stop here because my blood pressure is rising, I can feel it! 

To recap… The currencies and Gold drifted yesterday, but Gold is down $6 this morning, and the bias in the currencies remains a downward direction…  Chuck goes after the ECB for this currency weakness, and points out their dragging their feet toward moving their stimulus policies, and then the “band got back together” with Bernanke, Paulson and Geithner writing an oped in the NY Times… UGH!

No FWIW this morning, like they say when the replay a football game on TV, “due to time constraints, we move along in the game”

Currencies today 9/11/18… American Style: A$ .7095, kiwi .6507, C$ 76, euro 1.1585, sterling 1.2997, Swiss $1.0269, European Style: rand 15.1585, krone 8.3660, SEK 9.0688, forint 280.17, zloty 3.7173, koruna 22.1290, RUB 70.16, yen 111.40, sing 1.3777, HKD 7.8491, INR 72.73, China 6.8566, peso 19.35, BRL 4.0768, Dollar Index 95.31, Oil $67.57, 10-year 2.96%, Silver $14.05, Platinum $784.42, Palladium $970.22, and Gold… $1,189.91

That’s it for today… A nice rally from my beloved Cardinals got them a win last night… Not exactly a “good game” from the starting pitcher, left them in a hole, but they recovered… 19 games left, every game is important at this point… (but if they had only won more in April they wouldn’t have to win every game now!) And the games start so darn late on the East Coast! UGH! Well, things are moving along now upstairs, so at least something is getting done!  I’m going to attempt to see a doctor today, hopefully they have something that will move this pain along!  The late Great George Harrison takes us to the finish line today with his song: What Is Life…  I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!

Chuck Butler

Going All In!

September 9, 2018  

* currencies and metals get sold on jobs data

* RBI stays out of the intervention game… 

Good Day… And a Marvelous Monday to you! As I was heading to bed last night, I had a thought cross my mind, it was a fleeting thought, and one that was very wrong! I thought for a moment that today was a holiday… Why on earth did that thought cross my mind? I guess I was still reliving the previous Labor Day Weekend festivities… I guess… My beloved Cardinals are sliding backwards again… UGH! And Little Feat greets me this morning  with their great song: Dixie Chicken. The live version, from the iconic rock album. Waiting For Columbus… 

Well, Friday was another day of dollar buying after the Jobs Jamboree showed that 201,000 jobs were created in August… A geeks like me that look under the hood found that 104,000 jobs were added by the BLS to the surveys, because, well… they can…  thus putting the actual “hard number of jobs created” at less than 100,000… thus the second QTR is off to a rip-roaring start (NOT!) when if comes to actual jobs created!   But don’t let all the euphoria of the BLS doctored jobs numbers blur your vision… The actual jobs created in the 2nd QTR is just 86,000… That’s it folks… 

But the markets are so conditioned to taking whatever garbage the BLS prints and running with it, and so, that’s what happened Friday, and carried over to the overnight markets last night. The dollar bugs are back out from the wall board and running all over the place, and Gold & Silver are being treated as persona non gratis…  There’s been little to no news in the overseas markets, so it’s all been about the dollar… And here’s where I’m going down the confused road, because besides the shenanigans the BLS plays with jobs numbers, I’m wondering why the dollar is being bought with President Trump calling for more tariffs… 

Yes, Trump is doing something that is akin to the poker game move of “going all in”…  The President is calling for an additional $247 Billion of tariffs on Chinese goods… Wait! What?  That’s it… He’s going “all-in” folks… which will not be good for China, but won’t be as equally good for the U.S. So, why do it? That’s the question I keep asking…  I’ve been surveyed dozens of times about “how the President is doing” and each time I ask the question… “Why the tariffs/ Trade War?”   

Ok… enough of that this morning! One could develop an ugly rash if they kept talking about tariffs and Trade Wars! And I certainly don’t want to do that!  Going back a few years, I was asked by a trader I did business with, what I thought would be the key to the next financial crisis here in the U.S. and I immediately answered, ” A Liquidity crunch”…  Well, despite all the warnings of such a thing, there’s been no liquidity crunch… yet!  But that doesn’t change my answer, in fact it’s write-ups by JPMorgan that have me thinking the Liquidity crunch” is still coming, it’s just taken longer than I first believed…  Here’s a quote from JPMorgan on all this… 

“Many people theorise what will cause the next financial crisis and what will it look like? JPMorgan’s global head of quantitative and derivatives strategy, Marko Kolanovic says the dominance of passive, quant, and ETF funds on shares at the moment will lead to what he calls the Great Liquidity Crisis. Here’s what he said just last week:
“What will the next crisis look like?
This year marks the 10th anniversary of the 2008 Global Financial Crisis (GFC) and also the 50th anniversary of the 1968 global protests. Currently, there are financial and social parallels to both of these events. Leading into the 2008 GFC, some financial institutions underwrote products with excessive leverage in real estate investments. The collapse of liquidity in these products impaired balance sheets, and governments backstopped the crisis. Soon enough governments themselves were propped by extraordinary monetary stimulus from central banks. Central banks purchased ~US$10 trillion of financial assets, mostly government obligations. This accommodation is now expected to reverse, starting meaningfully in 2019. Such outflows (or lack of new inflows) could lead to asset declines and liquidity disruptions, and potentially cause a financial crisis.

Pretty interesting don’t you think? Something else that I’ve been following lately is the rot on the vine of the Indian rupee… The rupee is falling like a rock, kicked off a cliff, and the Reserve Bank of India (RBI) hasn’t stepped in to defend the currency. The RBI has a history of attempting to defend the currency with no real results, so maybe, just maybe the RBI has learned their lesson?  Central Bankers have thick skulls…  I’m just saying… 

Asia as a whole, has seen better times with their currencies and economies for sure, as the Trump tariffs begin to dig their spurs into these economies. I know that most people don’t think of India as part of Asia, but it is… The Chinese renminbi, which had been on a winning streak of nightly fixings, has seen that winning streak fade away, as the Chinese appear to be back on the “mark the renminbi down to offset the tariffs” kick, which they reported said, “We’re not doing to the renminbi what we’re said to be doing”…  I called B.S. on that back when it was said, and still do!

The data overseas is sporadic at best, but we did see the final revision to 2nd QTR GDP in Russia this morning, which came in at 1.3% growth, which was down from the 1st QTR print of 1.8%… When you factor in all the economic sanctions on the Russian economy, one has to think that this economy would be growing gang busters without the sanctions, right? But the sanctions are there, and that’s what’s holding this economy back…

Here in the U.S. the Data Cupboard will be sporadic at best this week too, with the stupid CPI the main attraction on Wednesday… Today, though we will see the Consumer Credit (read debt) for July, which I’m thinking will be alarming… But the markets don’t really pay attention to these data prints until its too late to do so…

To recap…  The currencies and metals have been getting sold since the Jobs Jamboree on Friday morning, which saw 201,000 so-called jobs created in August… Don’t worry, Chuck has the “real numbers”, and they aren’t as pretty as a peach…  The RBI has declined to intervene with the rupee falling without a net, which is not like what they normally do, so Chuck thinks that maybe they learned their lesson? And Chuck’s liquidity crunch scenario, is it coming to fruition?

For What It’s Worth…  I’ve talked about the short falls in Pensions since 2003, and it just continues to go deeper in the red with every passing year! And this article is all about the pension funding problems, and can be found here:  https://www.lewrockwell.com/2018/09/simon-black/the-pension-crisis-is-bigger-than-the-worlds-20-largest-economies/

Or, here’s your snippet: “As you probably know, pensions are giant pools of capital responsible for paying out retirement benefits to workers.
And right now many pension funds around the world simply don’t have enough assets to cover the retirement obligations they owe to millions of workers.

In the US alone, federal, state, and local governments, pensions are about $7 TRILLION short of the funding they need to pay out all the benefits they’ve promised.

(** And that doesn’t include another $49 trillion in unfunded Social Security obligations…)

America’s private pensions are in bad shape too — a total of around 1400 corporate pensions are a combined $553 billion in the hole. Plus, 25% of those funds are expected to go broke in the next decade. But the pension problem is much bigger than just what’s happening (though the US problems are SEVERE).

In 2015, the total worldwide gap in pension funding was $70 TRILLION according to the World Economic Forum. That is larger than the twenty largest economies in the world combined.”

Chuck Again…  Yes, that was in 2015, just imagine if you will, just how deep in the red these pensions are 3 years later?  I’m just saying… 

Currencies today 9/10/18… American Style: A$ .7122, kiwi .6540, C$ .7590, euro 1.1580, sterling 1.2945, Swiss $1.0245, European Style: rand 14.1355, krone 8.3815, SEK 9.0410, forint 280.17,  zloty 3.7215,  koruna 22.1448, RUB 69.73, yen 111.15, sing 1.2795, HKD 7.8495, INR 72.30, China 6.8428, peso 19.28, BRL 4.0616, Dollar Index 95.29, Oil $68.24, 10-year 2.94%, Silver $14.20, Platinum $784.10, Palladium $981.69, and Gold… $1,194.02

That’s it for today… I’ve had plantar fasciitis through the years flare up and then go away after a few days, and this past weekend it flared up again… UGH! Very painful to walk… Hopefully, this won’t last too much longer! I noticed this past weekend that the Kentucky football team beat Florida for the first time in 31 previous tries… Reminded me of the hex that Nebraska held on my beloved Missouri Tigers for about 25 years, but when it ended it ended badly for Nebraska… And too it will for Florida…  OK… the long awaited of Adam Wainwright pitching for the Cardinals ends tonight, I’ll be watching for sure!  And Montrose takes us to the finish line today with their song: Rock Candy…   I hope you have a Marvelous Monday, and be sure to Be Good To Yourself!

Chuck Butler

Everywhere You Look, There’s Debt… UGH!

September 6, 2018  

* Currencies rally on Wednesday

* Gold has a two day rally going! 

Good Day… And a Tub Thumpin’ Thursday to you! While I’m tired, I’m still feeling pretty good, given that it’s been over a week since I last took Chemo… That all ends today, as a new dosage / shipment is being delivered to me today… But that’s not going to stop me from doing some Tub Thumpin’! My day of travel went as planned no hiccups, so that’s always a good thing. I’m back down South, where it’s still summer, for sure! I was sad to remind oldest son Andrew last Saturday, that I would be gone this coming weekend, when he asked me to attend the Missouri / Wyoming game … UGH! Missouri and Illinois used to play their first games of the year in St. Louis, which was a must see game for me and by boys each year, and even Kathy went with us sometimes! But that contract ran out, which was a good thing for Illinois, because my Missouri Tigers beat them every year! I know, because I was there! The Gin blossoms greet me this morning with their song: Until I Fall Away…

The old saying on the trading desk was “when Chuck’s away, the currencies rally”… Well, that held trud yesterday, as the currencies fought back and won back most of the ground they had lost the previous day… No real direction here folks… I would suggest that we stay on the sidelines and wait for a sign that there is real direction…

In the overnight markets there wasn’t much movement… I was looking at the currency screen this morning and when I came across the Japanese yen, I thought… “It’s been 111 something, for what seems like a long time… The euro gets whacked by the dollar bugs, but yen remains 111 something… 

The other currency that caught my eye this morning is the Swiss franc… The franc has very quietly, and stealthlike, moved higher inch by inch for the last month, and this morning it has gained to the $1.03+ level. So, when you put the franc alongside the yen, you sort of get the picture that currency traders are fearful of what’s going on in the world, and are clinging to so-called safe havens… 

 To that end… Yesterday, both Citibank, and Goldman were sending out warnings about lower earnings that in their opinion were on their way… But to add to that, Well, it’s not just me that sees dark clouds ahead for the U.S. economy… Apple and Samsung are experiencing inventory stockpiles not seen since before the 2008 Financial meltdown… That was a Bloomberg story on Tuesday, that caught my eye, and made me think back ten years… Did you know we’re coming up on the 10 year anniversary of the shut down of Lehman Brothers? That shut down is pointed to as the snowflake that started the avalanche… Albeit being a rather large snowflake, don’t you think? But then again IT WAS a rather large avalanche, wasn’t it?

As Paul sang to Paulette…. Are you ready? And she replied: yes, I’m ready… Which would mean that she’s placed current stop loss orders on stocks, bought Gold & or Silver, and are ready for the coming tide…

Every day, a longtime reader of mine, Bob, sends me lots of stories to read, and I eventually get to all of them and some of them end up being FWIW section articles. But yesterday, Bob sent me (Thanks by the way!) a very good article that will be featured in the FWIW section today, but as just a teaser I thought I would give you a line from the article: “Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.—“

People around the world are beginning to realize that there just too much debt in the world, and at this point most believe the majority of this debt will never be repaid… Defaults will be the new trending word going viral, folks… And then you’ll thank me that you bought some Gold or Silver… I’m just saying…

One of my fave economists, Danielle Di Martino Booth, has been pointing out that inflation is getting ready to go on a moon shot ( my words), And the Fed Chairman Jerome Powell is doing the right thing by hiking rates now… I don’t know if I agree with that thought 100%, but… she used to be an insider at the Fed, and knows more about this stuff than I can claim to know! What I do know is that if she’s correct, then buying Gold at these current levels seems like an obvious thing to do, no? 

Speaking of the shiny metal… Gold gained $5 yesterday, and it up $8 in the early morning trading today.  There comes a time in a person’s life when they feel like the whole world is crashing down on top of them… They soon realize that it’s not going to happen and they work out whatever was the problem that caused them to feel that way.  But with our problem, which is too much debt in the world, the problem is never going to get “worked out”! 

Well, I’m full of you know what and vinegar this morning, now, aren’t I?  REO Speedwagon sang a song years ago, with words that went like this… I can’t stop this feeling any longer…  Well, that’s me in a nutshell… I’ve been talking about debt problems for so long now that I’m sure you dear longtime readers have become comfortably numb when I go on a debt rant…  But…

With every day that passes, the Debt loads get larger and larger… Debt with the government, States, and consumers… And where does the foundation of this debt pyramid begin to crack? When consumers begin to default on their loans…   Uh-Oh…  net bank chargeoffs for bad credit card debts have soared 16% year-on-year!   

So, get your journals out, and record this day as the first day that I said that the cracks in the debt foundation, are beginning to form… 

Yes, most of the world has debt up to their collective eyeballs, and I worry about that, but I’m more worried about my homeland debt…  It’s growing like an unattended weed, and it’s only going to get worse…  Please hear my warnings on this folks…  

The U.S. Data Cupboard begins to get everyone ready for the Jobs Jamboree tomorrow, with the ADP Jobs report for August on the docket to print today.  You know, something slipped my mind last week when Durable Goods printed…  Durable Goods Orders have printed negative 3 of the last 4 months!  Doesn’t anyone at the Fed or the White House look at this and say, “something is wrong here?” 

Before I head to the Big Finish today, I have this little ditty for us to share today… I found this on Reuters… “Pricing practices within American Express Co’s foreign-exchange unit is being probed by the Federal Bureau of Investigation (FBI), the Wall Street Journal reported, citing people familiar with the matter.

The investigation is in its early stages and is focused on whether the foreign-exchange international payments department misrepresented pricing to clients in order to win their business.” 

To recap… The currencies fought back to win back most of the ground they lost earlier this week. I just don’t see any conviction by traders to take currencies in one direction for longer than it takes to drink a cup of hot coffee! Chuck is having an adverse reaction to all the debt in the world, especially here at home…  You’ve just got to wonder when it all comes crashing down on us…. 

For What It’s Worth…  Well, I advertised this article up top to be a good one, so hopefully it doesn’t disappoint…  The article is about global debt and can be found here: http://www.savannahnow.com/news/20180903/global-debt-soars-along-with-fears-of-crisis-ahead

Or, here’s your snippet: “Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.

The loss of investor confidence in the Turkish lira, which has surrendered more than 40 percent of its value this year, is only a preview of debt problems that could engulf countries such as Brazil, South Africa, Russia and Indonesia, some economists say.

“Turkey is not the last one,” said Sebnem Kalemli-Ozcan, an economics professor at the University of Maryland. “Turkey is the beginning.”
For now, few experts think that a broader crisis is imminent, though Argentina this week asked the International Monetary Fund to accelerate a planned $50 billion rescue as the peso crashed to a historic low. But the danger of a financial contagion that could hit Americans by crushing U.S. exports and sending the stock market plunging should be taken more seriously in light of a massive increase in global debt since the 2008 downturn, the economists said.

Total debt is a whopping $169 trillion, up from $97 trillion on the eve of the Great Recession, according to the McKinsey Global Institute.

While previous debt crises involved U.S. households and, later, profligate European governments such as Greece, this time the concern centers on companies in emerging markets that borrowed heavily in dollars and euros.”

Chuck Again… Well, if you read it, you’ll know why I was so hyped up about debt this morning…  It only takes one default to beget another, and then another… I’m just saying… 

Currencies today 9/6/18… American Style: A$ .7188, kiwi .6590, C$ .7588, euro 1.1625, sterling 1.2933, Swiss $ 1.0316, European Style: rand 15.3515, krone 8.4023, SEK 9.0990, forint 281.00, zloty 3.7183, koruna 22.1268, RUB 68.22, yen 111.28, sing 1.3753, HKD 7.8494, INR 71.90, China 6.8303, peso 19.29, BRL 4.1521, Dollar Index 95.13, Oil $68.77, 10-year 2.90%, Silver $14.30, Platinum $789.62, Palladium $986.23, and Gold… $1,205.25

That’s it for today…  I think I’ve finally recovered from the Holiday Weekend! I’ve been dragging the line every day this week, but today seems better…  Man, those pesky Nationals… They just wouldn’t give up, and kept coming back each game my beloved Cardinals played them. The Cardinals took 2 of 3 from the Nats, but it was like pulling teeth!  Lots of home runs by the Cardinals in this series… Hmmm…  The wishful love of my life, Stevie Nicks takes us to the finish line today with Fleetwood Mac’s iconic rock song: Landslide…  I hope you can get out and make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler

India’s RBI… Going For Gold!….

September 4, 2018 

* Dollar rallies in the overnight trading!

* Trade Talks heat up… 

Good Day… And a Tom Terrific Tuesday to you! WOW! What a great Holiday Weekend for yours truly! Not so much for my beloved Cardinals, but for me personally… WOW! It all began last Thursday when I had lunch with former colleagues, Jennifer and Christine. Then Friday was consumed with cooking all day, but a trip to my fave watering hole for HAPPY Hour yielded visits from more former colleagues, Aaron, Danielle, and Peter! And then Saturday was just fantabulous! At one point I think there were about 70 people in my backyard! And the food was great, the company was great, and we did see our Missouri Tigers win their first game easily, as they should have! I absolutely love that weekend, because of our Annual Butler Labor Day BBQ & Pool Party… I love when people say, “That pulled pork, or Turkey breast was great!”

As I left you on Thursday morning, the euro was bumping up against the 1.17 figure, and Gold was $1,204… But on Friday, they both led their respective asset classes downward, as the Trade War talks kind of went in the background, and traders knew of no other thing to do but to go long dollars ahead of the 3-day weekend.

Yesterday, while the U.S. was on their last summer holiday, the currencies and metals kind of drifted, with no conviction by traders to go long or short, without their comrades in arms in the U.S. But in the overnight markets, the dollar was bought like it was the only currency on earth, and this morning we are seeing the currencies down by a large margin, and Gold following suit. 

The only anti-dollar asset that’s rallying is Oil. The price of Oil this morning is basically $71 because of a tropical storm that’s heading toward the Gulf that will disrupt Oil production. These types of rallies aren’t normally the kind that have lasting strength, but Oil has strength in price right now, and that’s all that matters to most traders. 

I have to say that the long weekend lent itself to lots of reading by me about what’s going on in the world… And most of what I read confirmed what I’ve been talking about on several fronts… Like how the U.S. is nearing a recession… and how the world is turning on the U.S…. And how none of this is good for the dollar!

So, first let’s talk about how not only guys like me, and the great economist, David Rosenberg, have been pointing out the cracks in the economies foundation and warning of a recession, but now the Fed itself is doing that too! Wait, What? Yessirree Bob! I read this past weekend that the Fed San Francisco had two economists put together a report, and well, the report pointed to a recession in the near future… Seriously, you don’t think I make this stuff up do you? Well if you do, then you need to check out this article that can be found here: https://www.reuters.com/article/us-usa-fed-recession/markets-may-be-signaling-rising-recession-risk-fed-study-idUSKCN1LC1VO

And then there was this… How the world is turning on the U.S. and the dollar… I’ll borrow this paragraph from the article I read so you get the whole gist of what I’m talking about. This was from Zerohedge.com: “Trump’s America waging economic warfare against most of the world and 2 billion people with a combined GDP of more than $15 trillion
– Targeted nations include China, Russia, Iran, Venezuela, Pakistan, Turkey, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others…“

So, basically, what they are talking about is that we as a country have targeted these countries with some kind of embargoes, economic sanctions, and anything else that can make their livelihood difficult, and their response is going to be to shun the dollar… Now, I’ve been writing about the different payments systems outside of the dollar, and when they’re all up and running, guess who’s going to first in line to use them? Any of the countries above, that’s who… And more will then follow, and the dollar will no longer be used by countries in the terms of trade, that is unless they are trading with the U.S. And since the Trade Deficit here in the U.S. is astronomical in size each month, you would have to think that the “net” trade balances won’t be to settle in dollars!

I’ve said this before, but longtime readers know that when I say something once, I’m going to probably repeat it like a broken record, over and over again until it reaches everyone! So, here goes… We did this to ourselves folks… decades of easy credit, led to an every growing National Debt, which is now 105% of GDP, and growing leaps and bounds each year going forward. We as a country didn’t have the intestinal fortitude to buckle down, and take some small hits… You don’t get reelected if you allow small hits during your watch! So, this is all our leaders fault… But, we as consumers with votes, allowed them to act so irresponsibly… And that’s all I’m saying about that!

So… What’s on your mind? I wish I could know, or hear about it, but the Pfennig Replies site is still not working, and I just don’t know what to do about it!

I’ve told you what’s on my mind, as usual that is…

Friday and yesterday, Gold was able to hold the line… love isn’t isn’t always on time… No wait! Gold held the line at $1,200 through Monday, but in the early trading this morning the shiny metal has dropped nearly $6, to bring Gold’s spot price to $1,195.56 as I write… UGH!  

Well, it’s September, a month that will bring us another Fed rate hike, according to just about everyone that follows these things. I do believe this to be true also, but… that leaves major risk for the Fed meeting. What if they don’t hike rates at this meeting, and further discuss their dovish stance at the Jackson Hole boondoggle? Now that would throw the markets for a loop!  So, that’s the risk of the meeting… But the smart money is on a rate hike, so we’ll have to go with that scenario, until we know for sure in a couple of weeks.  Yes, the Fed’s FOMC Meeting won’t take place until September 25 & 26… 

Which means we’re going to see nearly a month of hems and haws about rate hikes. The Trade talks with Canada are still going on, along with trade talks with China, so those hold some risk to the dollar’s rally… In fact, Trump’s additional Tariff to be placed on $200 Billion of Chinese exports to the U.S. could be announced this week! UGH! 

I don’t know if the Chinese know this or not, I’m assuming they do, because they make sure they know everything that’s going on in the world, but in case they don’t, they need to understand that Trump is using this $200 Billion in tariffs threat as his bargaining tool… He’s using it to put pressure on the Chinese Trade Talks… “if you don’t agree to these changes, I’ll smack you with $200 Billion in additional tariffs”… 

The U.S. Data Cupboard will be busy this week, starting today with the ISM for August. This is the manufacturing index, that all other countries call the PMI… Tomorrow we’ll see the Trade Deficit, for August. We’ll get to see if any of the first tariffs have reduced the Trade Deficit…  And then as the week goes along more data will print, leading to the Jobs Jamboree for August…  

To recap… The currencies and metals held the line on Friday of last week and through Monday’s holiday, but in the overnight markets last night, the currencies and metals got whacked! The only anti-dollar asset to rally was Oil, and Chuck’s not to hip on Oil’s ability to retain those gains after the Tropical Storm heading to the Gulf area ends.  There’s plenty of data in the U.S. Data Cupboard this week, and we have the Fed’s FOMC Meeting hanging over us like the Sword of Damocles! 

For What It’s Worth…  Well, I saw this article this weekend, and couldn’t believe what I was reading, well then, I take that back, I could believe it, but it was still shocking…  India is selling their Treasuries and buying Gold..  it’s all right here: https://economictimes.indiatimes.com/markets/commodities/news/rbi-buys-gold-for-first-time-in-nearly-a-decade/articleshow/65651133.cms

Or, here’s your snippet: “The Reserve Bank of India (RBI) has bought gold for the first time in nearly a decade, signalling that the metal could be in demand as a store of value when returns and capital values of fixed-income bonds are declining in a rising rate environment.

The RBI added 8.46 metric tonnes of gold to its stock of holdings during the financial year 2017-18 that ended June 30, taking the level of gold reserves to 566.23 metric tonnes, according to its latest annual report.

It last bought Gold in 2009… “

Chuck Again…  Yes, when the blue light special is flashing it’s supposed to be attracting buyers, and that’s exactly what happened here, with India stepping to the plate to buy Gold…  

Currencies today 9/4/18… American Style: A$ .7180, kiwi .6550, C$ .7606, euro 1.1560, sterling 1.2826, Swiss $1.0269, European Style: rand 15.2357, krone 8.4044, SEK 9.1378, forint 283.36, zloty 3.7265, koruna 22.2690, RUB 67.90, yen 111.35, sing 1.3760, HKD 7.8491, INR 71.51, China 6.8240, peso 19.42, BRL 4.0960, Dollar Index 95.57, Oil $70.99, 10-year 2.87%, Silver $14.27, Platinum $775.10, Palladium $963.66, and Gold… $1,195.56

That’s it for today… And well, tomorrow too… Tomorrow is a travel day with a very early flight for yours truly. So, I’ll pick this back up on Thursday… Well, my beloved Cardinals had a fabulous month of August, and since then it has seen the wheels fall off the bandwagon everyone was jumping on. I sure liked the way my Missouri Tigers looked on Saturday, things will get more difficult each week for them. Keep it Going Tigers!  Boy the heat sure ratcheted up this weekend, but that was better than a rainout! I’m heading south again tomorrow, and hope that the bad weather stays away while I’m there!  Supertramp takes us to the finish line this morning with their song: Even In The Quietest Moments… Which is kind of like the house when I begin to write each day!   I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself! 

Chuck Butler

 

Canada Comes To The Trade Talks Table…

August 30, 2018

* Currencies are in a tight trading range

* A Day for Data here in the U.S… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m still dragging the line a bit, but… I already feel a bit more human being off my chemo medicine for two days now. I was doing some writing yesterday, and went to send it out, and it was lost… Nowhere to be found, and believe me I searched every nook and cranny in my laptop, but it was as if I never wrote the piece! UGH! So, I took a nap, woke up and rewrote it, this time I saved it throughout the piece, and the second time was a charm… I’ve been treated to two songs from Neil Young’s Harvest album… Out on a Weekend, and Words… And that’s how I was greeted today! My beloved Cardinals couldn’t find their bats last night, and lost 2-0… UGH!

Another day, another day of rhetoric regarding trade tariffs. I’m really growing very tired of all this talk… But yesterday, the talk was about how with a “tentative deal with Mexico” now, the hopes for successful talks between the U.S. and China have faded… I don’t like the sound of that, as I had held out hope that a trade deal could be worked out before too much damage was done to both the U.S. and China’s respective economies…

I told you yesterday, that the hoopla over the “tentative deal with Mexico” was beginning to wane, and so it did further throughout yesterday, thus returning the dollar to a defensive position on the ropes, doing the rope-a-dope… And that meant the euro climbed back above 1.17, and Gold added back $6 of the $10 it lost on Tuesday… One step forward, two backward, it seems for Gold these days…

In the overnight markets, the euro slipped back below 1.17, and Gold is down $2…  All-in-all, a very tight trading range for the currencies the last couple of days. As if the currency traders are waiting for something BIG.. 

The early morning news is that a deal with Canada might still be had before the deadline, and that’s good news…  I’ll cross my fingers that this gets done, for the U.S. economy can’t handle more hits to it from trade problems. 

Speaking of Canada, they will print their 2nd QTR  GDP this morning… I expect it to be around 3%, probably better than that figure when all is said and done. I’m thinking that Canada’s 2nd QTR GDP is going to be a lot like the U.S.’s 2nd QTR GDP… A bright light that is about to get dim… 

I was reading James Rickard’s latest letter, and he describes something he’s seeing , and that is Gold is being tied to SDR’s… And of course the Chinese and the IMF are involved… It’s all pretty convoluted but makes sense to me… So Gold has that either going for it or not going for it, considering what direction SDR’s are moving… For those of you that are either new to class, or have forgotten the whole explanation of SDR’s, here you go… SDR’s are short for Special Drawing Rights, and they are like a basket of reserve currencies, that includes the Chinese renminbi. These SDR’s are used by the IMF to provide liquidity for member countries. There’s nothing to stop the IMF from turning the printing presses on and printing as many SDR’s as they feel like printing. But again, if you’re not a Central Bank, you can’t buy or own SDR’s…

There’s an actual breakdown within SDR’s that goes like this: A SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound. With the U.S. dollar having the largest weighting.

Might I suggest something for those of you who are interested in the diversification in currencies… Why not buy each of the SDR components? You can’t buy an actual SDR, but you can buy the components, right? Seems to me like plan… And I love a plan! 

OK, enough of that! Gold has so many hands in its cookie jar that it’s a wonder to me how it ever rallies. But one day, a major reset of the currency system that we now know will change, and when it does I truly believe that Gold will hold a very important place in the new system whatever it is, and so that leads me to ask this QUESTION…. Got Gold?

The piece I was writing yesterday is for an interview with good friend Dennis Miller, the Retirementor, who writes an excellent piece every week, and it’s free! If you haven’t signed up for it yet, you’ll have to , to read what I’m saying about Central Banks and Central Bankers! go here to get that done: www.milleronthemoney.com 

By the way, I talk about guys like Dennis Miller, because I believe in what he’s talking about. And… I have no financial deal with him, so I endorse his letter free of any conflict of interest… 

Tom Petty is singing a song right now on the iPod, I Won’t Back Down… And that’s pretty much me in a nutshell… I won’t back down from all the scenarios I’ve talked about… I’m a big man, so it takes a bit to move me off my position… HA!  Things can look as bleak as the Hindenburg blowing up, but I’ll still be there with my thoughts on the economy, Central Banks, Debts, dolts, and the fate of the dollar…

In early data printed in Europe this morning, the Eurozone Consumer Confidence remained at a negative -1.9 in August, same as July… So, there aren’t all the Happy Days are here again crowds in the Eurozone like there are here… In addition to that report, we also saw Business Sentiment from the European Commission, that showed some slippage in the current month.

I would think all these reports for the Eurozone would turn on a dime if the European Central Bank (ECB) would get off their duffs and start to dismantle their stimulus policies…

The U.S. Data Cupboard is chock-full-o-data today with the two most important prints being Personal Income and Spending for July…  Right now the so-called experts are calling for Income to rise 0.3% and Spending to rise 0.4%…  I’m thinking we could see some weakness here in the Spending component, as everything else we’ve seen from a July standpoint, has been weaker than expected.

We’ll also see Core Inflation for July, which is expected to rise just 0.1%, and that has to be on the Fed Head’s collective minds, don’t you believe?  As I’ve said for 3 years now, going back to when the Fed first hike rates and said they wanted inflation to rise… “that’s an you know what backwards statement if you ask me… You don’t hike rates to allow inflation to rise, you hike rates to squash rising inflation!  And from all accounts of inflation lately, it looks like the interest rate hikes are beginning to take a toll on inflation… I’m just saying…

To Recap… The currencies and metals rally and then get sold off, it’s all a very tight trading range that we’re seeing these days, as if Traders are waiting for something BIG… Hmmm…   Canada comes to the negotiations and appears to have come to an agreement on Trade, and that’s a good thing in Chuck’s eye!  Chuck goes through a long discussion about SDR’s, and  an investment idea…  

For What It’s Worth…  I saw this article and it caught my eye for sure! And since it’s the end of the week for me, I thought we could have a little fun with the FWIW piece… And this one is about how beer revolutionized math… and probably saved the world!  My good friends know that I have a thirst for a nice cold beer every now and then, so this one’s right up my alley, so to speak, and it can be found here: https://agfundernews.com/beer-revolutionized-math-just-might-save-humanity.html

Or, here’s your snippet:Amazon, Google, Microsoft, and every other firm heavily invested in big data all owe their success to beer. The pioneering work of Irish brewers a century ago made today’s big data and artificial intelligence gold rush possible. And the advances in genetics, technology, and mathematics may well be the key to humanity’s survival.

Back in 1899, William Sealy Gosset would have no idea how important his work would prove to be. He turned up on the doorstep of the Dublin headquarters of Guinness one day in 1899, hoping to secure an apprenticeship. As a newly graduated Oxford University chemist, Gosset was a natural. He began what turned out to be a 38-year career devoted to perfecting a pint of stout. Brewing, agriculture, and the entire field of statistics would never be the same again.

Gosset began with a singularly practical mission: finding a way to achieve a consistently high-quality beer at a lower overall cost. This was no small task at the world’s largest brewery, which at the time pumped out 100 million gallons of beer annually.

The basics of beer are simple. The flavor and aroma come from yeast, malt, and hops, the ingredients responsible for the difference between a Belgian ale or an American wheat, a Munich lager or an English stout. Guinness knew that it could use breeding techniques to improve its ingredients, but it would have to conduct tests to know how well or poorly newly-developed hybrid barley varieties performed. “

Chuck again… a little fun on a Tub Thumpin’ Thursday! Why not get the weekend started early? HA!

Currencies today 8/30/18… American Style: A$ .73, kiwi .6662, C$ .7737, euro 1.1692, sterling 1.3015, Swiss $1.0305, European Style: rand 14.6065, krone 8.3223, SEK  9.1150, forint 278.88, zloty 3.6670, koruna 22.0310, RUB 67.97, yen 111.50, sing 1.3660, HKD 7.8489, INR 70.80, China 6.8175, peso 19.03, BRL 4.1286, Dollar Index 94.61, Oil $69.92, 10-year 2.88%, Silver $14.66, Platinum $794.16, Palladium $982.85, and Gold… $1,204.07

That’s it for today… and this week of course… I have a big treat coming my way today, as I’m going to meet up with two of my fave people in the world for lunch today…  And then tomorrow is “cooking day”, as my Big Green Egg will be working overtime! A Big weekend for me… I hope you have Big plans too, as this is the last holiday of the summer… Soon we’ll be getting the woolies out, and standing around bonfires… and while that’s nice, I prefer to get my warmth from the sun and not a fire!  Man! the injury bug has been turned loose on my beloved Cardinals… 3/4’s of the infield was missing last night!  Next man up!  And finally, College Football begins this weekend, with lots of good first games on tap… Go Tigers! The Allman Brothers takes us to the finish line with my fave Allman Bros. song: Melissa…  Now, let’s get out there and make this a Tub Thumpin’ Thursday! And remember to Be Good To Yourself!

Chuck Butler

 

Feeling Left Out Are We, Canada?

August 29, 2018 

* Currencies see slippage on Tuesday

* Increased contracts see Gold fall on the day… 

Good Day… And a Wonderful Wednesday to you! Well… I was right about my oncologist “being a stickler about staying the course”… She did allow me to stop taking the chemo until the new dosage that she lowered arrives. So probably about the time I start to feel human again, the drug will show up at the door! Oh well… I tried… and feel as though she “compromised with me”… So I have that going for me! My beloved Cardinals remained on a roll last night. I felt so comfortable with a win that I went to bed before the end of the game! Paul Revere and the Raiders greet me this morning with their song: Kicks…

Well, the currencies and metals took a breather yesterday from their nearly 10 day run VS the dollar, and the euro slipped along with Gold on the day. Not exactly a good way to start the week, but then it’s not every day that the stupid Consumer Confidence Index prints a record high number… I told you yesterday that we could probably see that given the stock market’s setting of a new record level late last week.

And that my friends, is why there was slippage in the currencies and metals… The people that were surveyed, must have been singing “happy days are here again, the skies above are clear again, Happy Days are here again!”

And to that I would retort a Beatles song… It wont’ be long, yeah, it won’t be long, yeah… But let ‘em sing their song, it won’t be long before they’re singing a different tune…

In other data, the Case/ Shiller Home Price Index for June printed and showed a slippage in home prices as the index fell to 6.2 from 6.4… 

Yesterday I talked about another country, Germany, that’s looking into a payments system, ala SWIFT, that’s outside of the U.S.’s control… And then I saw that France was joining up with Germany on this… In the aftermath of a report that Germany was working on a global payment system that is independent of the US and SWIFT, on Monday Germany and France said they’re working on financing solutions to sidestep U.S. sanctions against countries such as Iran, including a possible role for central banks.

China was first… Then Russia… now Germany and France… Pretty soon, the writing will be on the wall for the dollar… But then I’ve always thought that President Trump was a low interest rates, weaker dollar kind of guy… So, he won’t be upset if the dollar gets weaker because of the ability of Central Banks around the world, to deplete their dollar reserves…

The euro, which was so close to 1.17 yesterday morning that it could spit in 1.17’s back yard, gave back some gains yesterday, but remained in the 1.16 level. But I get it… As long as the European Central Bank (ECB) continues to provide stimulus the euro will struggle to garner a lot of interest from buyers… But, the thing is… you want to buy something when the price is cheap, and you know something is about to change… In this case, we know that the ECB will unwind their stimulus, we just don’t know when…

But we live in an instant gratification world… Patience? That’s for doctors! HA!  Seriously though, most investors are looking for the quick buck and hitting the jackpot on any asset they buy within 2 weeks! 

Each day I spend an enormous amount of time reading and doing research for this letter and my DTL pieces. And what I’ve been reading the past couple of days is something that makes me smile… The rest of the world of writers and economists, analysts, etc. are coming around to my thought I had long before the 2nd QTR GDP first printed… 

People are beginning to notice what I told was going to happen… And that is that the 2nd QTR GDP would be like a star burning out, and be the brightest right before it happens… And that the data would begin to show cracks in the 3rd QTR…  Well, I told you the other day that the data is doing just that, with most not meeting expectations, and some even printing negative results for July…   And now, I’m reading reports that are talking about that scenario…  As if they read the Pfennig! 

Speaking of 2nd QTR GDP, the 2nd print / revision of the data will print today, and with the first print at 4.1%, I would think it would slip a tiny bit to 4%… Nothing to write home about yet… 

The U.S. Data Cupboard also has the Pending Home Sales for July for us to see today, but this is a non-market moving piece of data, but I wanted to get it out there to clear the Cupboard and get ready for Personal Income and Spending tomorrow. 

Well, did you hear about the extension of time that the BREXIT negotiators are asking for? Yes, the deadline for final negotiations was approaching, and seeing that they were nowhere near the end, the negotiators requested an extension…  This has got to unnerve those that were hoping for a good outcome here for the U.K. and  pound sterling. 

The much heralded tentative agreement with Mexico has taken a beating since first being announced and thought to be a good thing for the U.S….  It appears to be nothing but smoke and mirrors, and isn’t going to give the economy the boost it was thought to have in its tank…  But that’s not stopping Canada from saying that they’ll now join the negotiations… I just shake my head and wonder who’s in charge of these negotiations, is it a carnival barker? Or how about PT Barnum?  The circus is coming to town, the circus is coming to town! 

Come on Chuck, don’t be so negative toward this process and those that are working so diligently to achieve a goal…   Sorry…  But I’m still going to say that the whole thing reminds me a three ring circus!

And just when it appeared that it was safe to get back in the short Gold paper infested waters, they returned to take Gold down $10 yesterday, and stopping short of driving the price below $1,200…   Yesterday I told you there had been only 211,000 contracts traded on Monday. Well, Tuesday saw 288,000 contracts traded… The difference?  Short Gold paper trades…  Gold is up $2 in the early trading today, so maybe the shiny metal can push back? 

To recap… Apparently, consumers are dancing in the streets and singing Happy Days are here again… The Consumer Confidence Index rose to a record level in July, and the dollar fought to gain back some of its losses in recent days. The euro was ever so close to 1.17, but fell short and now has slipped downward as the dollar fought back. Canada was feeling left out, and decided to join the negotiations on trade… And the scenario I painted for you dear readers a couple of months ago, is beginning to be talked about in the markets…  See there? Even a blind squirrel can find an acorn! HA!

For What It’s Worth… Since I talked about how many article I’ve been reading that are picking up my scenario for the economy, earlier this morning, I have one of those articles for you! And it can be found here: https://www.fxstreet.com/analysis/has-the-us-economy-peaking-out-too-many-indicators-are-going-in-the-wrong-direction-201808241259

Or, here’s your snippet: “After an excellent second quarter, data for the third quarter begin to disappoint.
The circus around Trump diverts attention from the data.
The Fed may begin noticing it soon and this may hurt the US Dollar.

The US economy grew at an annual pace of 4.1% in Q2 2018 according to the initial read. President Donald Trump took a victory lap on the fastest growth rate in four years. Some had noted that the accelerated pace in Q2 might be related to a front-running of the tariffs on China.

Once the rush is gone, we may see some moderation. And with these duties serving as a tax on consumers. There is nothing wrong in a sub 4% quarter. But this may be somewhat worse than that.

Tariff-related or not, the data released in mid-August are not so promising.”

Chuck again…  And it all starts today with a revision of 2nd QTR GDP… 

Currencies today 8/29/18… American Style: A$ .73, kiwi .67, C$ .7762, euro 1.1665, sterling 1.2885, Swiss $1.0237,…  European Style: rand 14.3787, krone 8.36, SEK 9.1720, forint 278.28, zloty 3.6730, koruna 22.0755, RUB 67.58, yen 111.28, sing 1.3675, HKD 7.8492, INR 70.62, China 6.8050, peso 19.13, BRL 4.1014, Dollar Index 94.84, Oil $68.96, 10-year 2.88%, Silver $14.70, Platinum $790.05, Palladium $944.62, and Gold… $1,202.92

That’s all for today…  I’m really dragging the line this morning…  My lobbying for a break in the taking of chemo didn’t exactly work out my way, but there was a compromise I guess… Stop taking it for now, and wait for a lower dosage of the medicine to arrive. Ok, I guess I can live with that! Maybe with the lower dosage, the damage to my skin will cease, and I will be able to stay awake all day!  Alex has moved back home for the last two years of his studies/ Grad School… So, I have someone moving around here in the morning… I’m not used to that! I asked him if he wanted to sit down and add something to the Pfennig, like he used to do 20 years ago! One of my fave Chicago songs, Hard Habit To Break, takes us to the finish line today… So, please go out and make this a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

Please Sign On The Dotted Line…

August 28, 2018

* Currencies & metals continue to gain VS the dollar!

* U.S. & Mexico reach a “tentative agreement”… 

Good Day… And a Tom Terrific Tuesday to you! Well, I hit the proverbial wall yesterday, and all I could do was sleep the day away… The chemo I’m on is making me lethargic and has me dragging the line most days. I meet with my oncologist today, and I’m going to lobby for a break… I told my good friend, Dennis Miller, yesterday that I like her a lot, but… she’s a stickler for staying the course, which means I doubt my request is going to be met with approval, but I’m going to try anyway! No baseball last night for me, so I spent the night getting caught up with the new season of Suits… Cheap Trick greets me this morning with their song: The Flame…

The currencies and metals continued to move positively VS the dollar yesterday with the euro moving higher and closing in on a return to 1.17, and Gold adding $5 on the day. The BIG NEWS yesterday was about the “tentative agreement” with Mexico… But here’s something that seems to be a reoccurring theme… There was no signed agreement… And Where’s Canada with this “tentative agreement”? Is this “NAFTA Light”?

But the media was excited to report the agreement, and make it sound like it was in a signed agreement, but we now know that it wasn’t… But a country’s word is supposed to mean something, right? I just can’t help but think that this goes the way of N. Korea’s denuclearization… Recall that was an agreement by N. Korea to denuclearize but nothing was ever signed… And have we heard any word about this denuclearization since the meeting of the leaders from the U.S. and N. Korea in Singapore earlier this year? I’m just saying…

But let’s just say the agreement is in stone, and the U.S. is good with it. That means the U.S. received some wins in trade… And that’s a good thing, right?

So, getting back to the currencies and metals, the traders of these asset classes didn’t seem to care what was happening, and continued to focus on Fed Chairman Jerome Powell’s Jackson Hole speech where he turned from a hawk to a dove… Well, at least he sounded dovish, and that was all the traders needed to change their sentiment from buying dollars to selling dollars.

The Dollar Index, fell to a level that it hadn’t seen in 3 weeks, and hit it’s 50 day moving avg. (DMA),,, Will we ever see a long trading trend again? As I’ve explained many times in the past, but will do so again here for new readers… Currencies, historically, traded in long sweeping trends… for instance when Nixon took the dollar off the Gold standard in August 1971, the dollar began a weak trend that lasted 7 years, and then a strong dollar trend began, and ended with the Plaza Accord in 1985. And so on… The last strong dollar trend began with the uncovering of debts in Greece in 2011, and appeared to have ended last June when the currencies began to put together an impressive move VS the dollar..

That led me to believe that a new weak dollar trend was beginning, which would have meant that the dollar would be weak for anywhere from 7 to 10 years… Now, a trend can have volatility, and that’s what I thought we were seeing a couple of months ago, but historically these bouts of volatility never lasted for more than a few weeks… And then the weak underlying trend would return. There was one exception, but it had extenuating circumstances. In 2002, a weak dollar trend began, but in 2005, there was a tax amnesty signed that allowed U.S. corporations doing business overseas to return their profits at a reduced tax rate, and that supported a dollar rebound that last the whole year, but once the deadline for the tax amnesty ended on 12/31/05, the dollar strength ended, and the dollar returned to the underlying weak trend that lasted until 2011…

Well, that was how things went… the dollar would enter a trend based on a FUNDAMENTAL reason, and wouldn’t end the trend until the FUNDAMENTAL reason was corrected, or there was a sea change of events… So, I don’t believe I can be blamed for calling for a weak dollar trend last year, when FUNDAMENTALS no longer are used in determining trends… Not that I’m afraid to say I was wrong… I’m wrong a lot… But… oh well, you get what I’m saying here, right?

Now that was a long-winded explanation of what I’m talking about when I say when I say that FUNDAMENTALS are by-products of currency evaluation these days, it’s all about trader sentiment… with some Fundamentals thrown in to help explain their sentiment…

Over in Singapore this morning, the Monetary Authority of Singapore (MAS) has signaled a stronger Singapore dollar (S$) because inflation is rising.  Singapore is one of the countries I have always liked especially because of the way they deal with fighting inflation. They use their currency. You see, currency strength goes a long way toward calming rising inflation, and I admire the MAS for their work in keeping price stability in their country! 

And looky there! The Bank of England (BOE)has extended an invitation to BOE Gov. Mark Carney to extend his contract one year. I’m not sure I get what they see in this guy to run a central bank, but then that’s just me, and I’ve watched him do his thing at the Bank of Canada, and now the BOE, and quite frankly, I’m not impressed… But the folks at the BOE are, and so the U.K. economy can continue to have the Mark Carney and his bag-o-promises at the helm for another year.

The pound sterling has gained VS the dollar the last two days, but it’s not because of the BOE’s announcement. The gains have more to do with the dollar sell off that I’ve talked about…

Gold was allowed to gain $5.50 yesterday, and is up another $4 in the early morning trading today.  There hasn’t been a boat load of contracts traded in recent days, which tells me the short Gold paper traders aren’t generating another takedown of Gold.  Contracts traded yesterday was 211,000… A strong number, but not the 300,000 plus we see on days when the price movement is greater.

I saw an article come across my screen that talked about Russia using Gold to back their ruble, thus making it the most attractive currency on the earth. Now, this is the scenario I’ve always imagined China pulling off, but if Russia wants to go first, be my guest, be my guest, put our service to the test… HA!

The ruble sure could use some help these days, as the economic sanctions on anything Russian, has begun to weigh on the ruble… That and the overall drop in Emerging Markets Currencies that we saw begin last month with the Tariff war going on between the two largest countries, economy size-wise, haven’t been kind to the ruble..

Remember a week or so ago, I told you about the political turmoil going on in Australia? Well, it came to a head in the last couple of days, and last night a new Prime Minister was named. Now, maybe the Aussie dollar (A$) can join in with the other currencies rising VS the green/peachback…

And in China overnight, the renminbi saw the first mark down in over a week. I guess the Chinese were feeling Left Out since the U.S. and Mexico came to a “tentative agreement” on trade, and the discussions between the U.S. and China have gone nowhere. Basically, I don’t believe in my heart of hearts that the U.S. wants a trade agreement with China… I believe they want to push China to the brink of collapse, to teach them a lesson about intellectual property theft…  This won’t be good for China, but it also won’t be good for the U.S.  nobody wins, folks… I’m just saying… 

The U.S. Data Cupboard will see something in the way of a data today, when the Case/Shiller Home Price Index prints for June… In addition, we’ll also see the color of the stupid Consumer Confidence Index. With the U.S. stock market reaching new heights and setting new records for length of time in a bull market, I doubt we’ll see Consumer Confidence wane…

To recap…  The currencies and metals continue to move positively VS the dollar with the euro nearing 1.17 and Gold back above $1,200. Yesterday’s BIG NEWS was all about the “tentative agreement” with Mexico that will replace NAFTA… Nothing was signed, and that’s all I’m saying about that! Singapore’s MAS sees inflation rising, so the S$ will also be allowed to rise.  Australia has a new Prime Minister, and China’s consecutive days of appreciation in the renminbi came to an end last night. 

For What It’s Worth…  The GATA folks sent me this article and it talks about how the anti-dollar awakening could come sooner than most realize and can be found here: https://www.cnbc.com/2018/08/27/the-anti-dollar-awakening-could-be-ruder-and-sooner-than-most-economists-predict.html

Or, here’s your snippet: “The United States is currently waging economic warfare against one tenth of the world’s countries with cumulative population of nearly 2 billion people and combined gross domestic product (GDP) of more than $15 trillion.

These include Russia, Iran, Venezuela, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others on which Washington has imposed sanctions over the years, but also countries like China, Pakistan and Turkey which are not under full sanctions but rather targets of other punitive economic measures.

From a U.S. perspective, each one of the economic entities is targeted for a good reason be it human rights violations, terrorism, crime, nuclear trade, corruption or in the case of China, unfair trade practices and intellectual property theft.

But in recent months it seems that America’s unwavering commitment to fight all of the world’s scourges has brought all those governments and the wealthy individuals who support them to a critical mass, joining forces to create a parallel financial system which would be out of reach of America’s long arm. Should they succeed, the impact on America’s global posture would be transformational.”

Chuck Again… Yes, those payment systems that are outside the control of the U.S. are the rage these days… I dove deep into that subject of this week’s DTL piece.. 

Currencies today 8/28/18…  American Style: A$ .7350, kiwi .6708, C$ .7755, euro 1.1698, sterling 1.2896, Swiss $1.0242,   European Style: rand 14.1668, krone 8.3160, SEK 9.1135, forint 276.72, zloty 3.6515, koruna 21.9860,  RUB  67.29, yen 111.06, sing 1.3627, HKD 7.8497, INR 70.12, China 6.8132, peso 18.75, BRL 4.0902, Dollar Index 94.66, Oil $68.97, 10-year 2.85%, Silver $ 15.05, Platinum $806.42, Palladium $950.67, and Gold… $1,213.33

That’s it for today… Looks like we’re going to get rained on for the next few days… As long as it stops before Saturday! It doesn’t appear that we’ll have as many folks this year for the BBQ, but no worries on my part, that just means more leftovers! Good friend, Duane, always lends a hand in the cooking and that’s much appreciated, and the folks that come bring a dish, and there’s more food than you can imagine… I always say, that’s enough food to feed a boat family! Alrighty then, my Cardinals get back on the field tonight… Gotta keep winning… Remember what I said back in April and May when they were losing so many games? Games you win in the spring are games that you don’t HAVE to win down the stretch… But they didn’t win in the spring, and so, now the HAVE to win to remain in the playoff race…  Soft Cell takes us to the finish line today with their song: Tainted Love…  Another 80’s song for Rick!  I hope you have a Tom Terrific Tuesday and remember to Be Good To Yourself!

Chuck Butler