Eurozone GDP Beats Expectations…

April 30, 2019 

* Currencies continue to inch higher VS the dollar…

* Are the Big Boy new outlets seeing things Chuck’s way? 

Good Day… And a Tom Terrific Tuesday to you! What a night for me, as both St. Louis teams were playing on the road… The Cardinals in Washington, D.C. and the Blues in Dallas… I had both on, trying to pay attention to one or the other at various times… And both teams won! WOW! Oh, What a night… I saw yesterday, that Wall Street broke a record… See? What I mean about putting out trumped up economic reports? Investors swallow them hook, line and sinker and buy, buy, buy… And when the following month’s downward revision comes through, it’ll be done under the darkness of night, and no one will make a Big Deal out of it, except me! OK, more on that later… Right now… Jimmy Cliff greets me this morning with a very apropos song… Hello Sunshine… With all the rain we’ve been getting we need some sunshine.

The currencies continue to move higher in small moves though, but higher nonetheless… Yesterday I told you how the Dollar Index had dropped in price from 98.30 to 98.02… Well this morning the Dollar Index is trading at 97.58… I know, I know I’ve told you through the years that the Dollar Index isn’t the best way to follow the currencies, but for this time, it’s been a good indicator to me, that is, that the currencies, led by the Big Dog euro, have been inching higher VS the dollar. 

Speaking of the euro… In the Eurozone this morning we had a check on Eurozone 1st QTR GDP, which beat the expectations of 1.1%, the same as the 4th QTR 2018, and printed at 1.2% instead… That’s not a great report card, but… it’s far better than the reports that the Eurozone was going into a recession…  Of course, 1.2% isn’t that much of a cushion… 

Gold had a bad day yesterday, but not as bad as Palladium! Gold lost $6.50 yesterday, but has gained that amount right back in the early morning trading today…  But poor Palladium, it lost $95 yesterday! That’s right, I said $95… OUCH! Now that’s going to leave a mark! 

Getting back to my tirade yesterday… The Fed will meet today and tomorrow (time to get the board games out again!), and while I believe they will keep rates on hold for now… I do believe that when Fed Chairman Powell gives his press conference on Wednesday afternoon, he’ll probably casually mention that the Fed Heads are teeing up a rate cut for later this year… Of course later could technically mean at their next meeting, but I digress…

So, while I was just sitting here thinking about the hold the Fed has on the economy these days, I came across a thought that all Central Banks around the world have an equal footing on the way their respective economies run, too… And that got me thinking ( you know the thigh bone is connected to the knee bone, etc. ) that what we have in the world today is not what we used to have, which was free markets… We now have managed economies by each country’s Central Bank… Oh, heaven help us, for we do not know of the things that we have allowed to happen…

I say that because… These Fed Heads are not out in the real world, they have no idea what’s going on from day to day in the economy. Sure they get their regional reports, but those are written by underlings to the Fed Heads, what do you expect them to say… That the whole economy is crashing around us?… it’s a Mad, Mad, World out there, and you had better be street wise and savvy to be a Fed head in my opinion… Take this reversal of their previous thoughts that they would be hiking rates all this year and some more next year… That certainly has been throw to the curb, now hasn’t it? The problem here is that what happens if they “went too far” with consecutive rate hikes? And then when they panic and begin to cut rates again, do they go “too far” that way too?

The thing is, that we have to live with these moves… We have to adjust things, our spending habits, our savings, our investments, etc. Because the Fed managed the economy too much? That’s crazy folks… And I’m going to stop there because… Well, because…

Well, it’s almost all out of my system, except I keep seeing more and more looks under the hood of that dangblasted  U.S. GDP revision last week… This one is from David Rosenberg, once again, who looks under hoods as much as I do, or even more! This is from his Twitter feed… “The weak surprise in Q1 GDP was the consumer – a 5.3% annualized plunge in big-ticket spending! The bulls were telling everyone to expect a consumer boom based on surging tax refunds. But guess what? The average refund was 2% lower this year than it was last!”- David Rosenberg on Twitter.. 

On Bloomberg this morning that have three charts that they say are very good indicators that the economy is headed downward… They talk about the lack of Industrial production, Capital spending, and that gasoline prices are within 10-cents of last year’s peak, and are up 30% since the start of the year…  There was nothing new here to regular Pfennig readers, as I’ve talked about all these things, including how gas prices were going up now, as we near the start of the summer driving season… 

The reason I brought these things up from Bloomberg this morning is that the major media outlets are beginning to “see the light”… And come around to Chuck’s way of seeing things for what they are, and not pulling any punches! 

I just saw a news flash that in Venezuela this morning, the opposition is attempting to overthrow the Maduro Gov’t with a military uprising…  This will be something to watch today… 

Well, I haven’t talked about the Trade talks lately… And I’m here to correct that! HA!  The U.S. negotiators are in China and there’s word that a trade deal might be close to being done.  Well, I’m from Missouri… You’ll have to show me… I’ll believe it when I see it! 

To Recap…  The Currencies continue to inch higher VS the dollar with the euro leading the charge. Eurozone GDP beat expectations but those expectations were watered down, so the beating of them wasn’t exactly a moon shot… But the euro rallied nonetheless.  Hey! Bloomberg is coming around to Chuck’s way of seeing the economy for what it is and not what the Fed Heads and Gov’t think it is…  That’s a big step for Bloomberg, folks…  Because most outlets don’t want to be associated with the likes of Chuck! HA!

For What It’s Worth… Well this article plays well in the sandbox with my thought earlier this morning regarding the Fed overacting with rate cuts/ hikes. And this article talks about a new program that the Fed is thinking about and can be found here: https://www.cnbc.com/2019/04/29/fed-looking-at-a-program-that-could-be-version-of-quantitative-easing.html

Or, here’s your snippet: “Federal Reserve officials are considering a new program that would allow banks to exchange Treasuries for reserves, a move aimed at ensuring liquidity during difficult times that also would help the central bank decrease the size of its nearly $4 trillion balance sheet.

The so-called standing repo facility is in its early discussion phases. Respected St. Louis Fed economists David Andolfatto and Jane Ihrig have authored two papers on the plan, which they say would ease the regulatory burden for banks that feel pressured into holding ultra-safe assets.

In some quarters, the idea is viewed as a natural extension of current Fed policy. Others, though, think it in essence could be a repackaged form of quantitative easing and thus yet another iteration of the Fed’s decade-long tinkering in financial markets.

The idea comes as central bank policymakers look for ways to cut the bond holdings on its balance sheet without being disruptive to markets.”

Chuck again…  There they go trying to improve things that were bad to begin with… I mean wouldn’t it be a good idea to see if the markets could function without intervention/ manipulation? I’m just saying…

Currencies today 4/30/19 American Style: A$.7057, kiwi .6677, C$ .7440, euro 1.1212, sterling 1.3009, Swiss $.9808, European Style: rand 14.3143, krone 8.6210,  SEK 9.4825, forint 287.97, zloty 3.8216, koruna 22.8817, RUB 64.57, yen 111.25, sing 1.3603, HKD 7.8450, INR 69.64, China 6.7312, peso 18.90, BRL 3.9324, Dollar Index 97.58, Oil $63.30, 10-year 2.53%, Silver $15.07, Platinum $903.00, Palladium $1,377.00, and Gold… $1,286.60

That’s it for today… A late night for me, but I couldn’t turn the hockey game off, the Stars kept scoring to tie the game and the Blues would storm back and move ahead, until the horn sounded and the Blues had won!  My beloved Cardinals are on a roll, but the gauntlet of good pitchers is lining up to face them the next 3 games… Their work will be cut out for them for sure! My darling daughter, Dawn, called me last night to see if I was OK… She always checks on me when I’m all by myself… And I truly appreciate that!  Son, Andrew tells me that the State playoffs begin this Saturday, and I think I’ll attempt to get to the game. His team is the 3rd seeded team in the state, Good luck to the Flyers!  Good luck to the Cardinals, and Let’s Go Blues! Stevie Nicks (old heart throb!) and Fleetwood Mac take us to the finish line today with their song: Landslide…  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

 

What’s The COMEX COT Report Telling Us?

April 29, 2019 

* 1st QTR GDP is revised upward and Chuck takes exception to its print! 

* Currencies and metal Traders don’t buy the GDP report! 

Good Day… And a Marvelous Monday to you! Man have I got a bone to pick with the Gov’t bean counters this morning… They actually put a damper on my weekend, and so, I’m going to take them to the woodshed this morning! Our Blues got the 2nd round of the playoff started on the right foot with a win on home ice Thursday night, but lost the second game on Saturday, and Now the series moves to Dallas, where I saw on TV that they are prohibiting sales of tickets to Missouri residents… So, Blues fans, if you want to go to see your Blues play in Big D, then you’ll have to buy them 2nd hand… No biggie, people are used to using Stub Hub to buy tickets these days… Paul Young greets me this morning with his 80’s song: Every Time You Go Away… Very apropos for me today, since I’m alone again now… Whenever this song plays I think of a former Mark Twain Bank colleague, Janet Young, who loved this song… I wonder where Janet, now Rogers, is these days?

OK… let me first say that even though the Government accountants tried to pull a fast one on us last week, the currencies and certainly not Gold traders didn’t fall for it, and neither should you… The currencies are trading a bit stronger this morning as evidenced by the Dollar Index, that is trading at 98.02 this morning and it was 98.30 last Thursday morning… No big moves, but a general direction that’s promising for non dollar holders… 

Gold finally got unleashed, and gained over $9 on Friday…  And Palladium kept going with its renewed interest gaining appeal.  Well, the COMEX issued a report last Friday, like they do every Friday, called the Commitment of Traders, or COT report… These COT reports are what technical traders use to see if their charts align with what the COT report is telling them… In this case, is the bottom in for Gold & Silver? Well, The GATA folks sent me a note yesterday explaining why they believe the COT is telling them the bottom is in for Gold & Silver… Let’s listen to a short piece from the GATA folks… “These positions are reported weekly in the CoT (Commitment of Traders) report issued by COMEX. Followers of this report have seen instances of the Managed Money long positions turning to or near short (or at least ‘bottoming’) and the Commercials short positions nearing nil or even long (or at least ‘bottoming’) preceding substantial market rallies.”

You don’t have to be a Technical guru, or someone who is very aware of the COT reports, all you have to do is to stop and listen to people that see these things for what they are, and that is a rally in Gold & Silver is coming… Is the bottom in? That’s difficult to say, but I would think that given this info, that the bottom if not in, is near an end… I’m just saying!

OK… I can’t hold my breath any longer, I’ve got to let it out… What a bunch of BS! 1st QTR GDP was revised upward, yes, I said upward, to 3.2% from a previous reading of 2.3%… What a bunch of hogwash! Yes, the March numbers are coming in a little better than previously thought, but that’s just one month of the quarter, the first two months were horrendous with data!… And a little better than previously thought March, brings the 2.3% print to 3.2%? I’m not buying it, and you shouldn’t either folks… I’ve come to the realization that whenever we see a negative or weak print one month, that the boys in the back room that count the beans get called on the carpet and told to not let that happen again… And thus, we see immaculate turnarounds in data from month to month… I know there’s nothing I can do about it, so I’m not going to let this get me all ticked off and such… I’ll just say my piece and move along… 

Oh, and let us not forget that the U.S. Gov’t was shutdown for a period of time during the 1st QTR… Are the bean counters telling us that it had no effect what-so-ever on economic growth? Or did they forget, that we have long memories and would remember the shutdown? I’m betting that it was the latter of the two! These guys that put together the economic reports have become so brazen, with their reporting, that someone, somewhere with a strong identity, should stand up and be heard that it’s all a bunch of hogwash! Pig slop, road pizza, whatever it’s all getting on my nerves, and it should be getting on yours too!

And don’t just take my word that the GDP print was hogwash… Let’s listen to what one of my fave economists, David Rosenberg, had to say about it… “This was a low-quality GDP report. All one-offs – lower imports, higher inventories & Pentagon spending. Real final private sales a puny 1.3%. Removing more lipstick from this pig shows cyclically-adjusted GDP contracting at a 2% annual rate; deepest decline in nearly a decade .” – David Rosenberg from his Twitter feed.

And did you hear this one? Global Growth has dipped negative in the first quarter of the year on a year on year basis, this is the first time that’s happened in over a decade! And we’re supposed to believe that a negative Global Growth in the first quarter, led to an upward revised GDP of 3.2% here in the U.S.? Come on, what do you guys take us for a bunch of dolts? 

I guess using the fact that they printed the number and didn’t look back, that they do undoubtedly take us for a bunch of dolts!  Well, I’m mad as hell and I’m not going to take it any longer!  Or something like that… 

But as Neil Young sang… Don’t let it get you down, it’s only castles burning…  

I’ve been so keyed up about writing this morning regarding the upward revised 1st GDP report, that I’ve spent the whole letter, just about on just that!  But you can see from my talking about it so much that it means something to me, that these things happen for a reason, and the reason is… to keep everyone happy, and from grabbing their shovels and pitchforks and rakes and marching on their respective state house… Oh? What’s that you say? People don’t do that any longer because they’ve become so about themselves, that they wouldn’t report a crime if it happened in their front lawn?  Oh, I don’t believe that for one minute! But it sure seems that we, as a people, are heading in that direction, to ignore these types of things, instead of proactively writing or calling one’s representatives and giving them a piece of their minds…  I’m just saying…

The U.S. Data Cupboard gets this week started with a bang this morning as it will yield the Personal Income and Spending reports from March, along with core inflation…  The spending for March was probably better than the average bear, given the lead up to Easter, and spring and St. Patty’s Day, and so on…   And we’ll end the week with the April Jobs Jamboree, which at this point is being forecast to have added  190,000 jobs…  The BLS is another of those brazen bean counters that just gets my dander up! 

To recap… The 2nd QTR GDP was revised up from 2.3% to 3.2% last Thursday, and they threw a ticker tape parade down Wall Street for happy days were here again!  Not so fast there bucko…  Chuck has his bone to pick with the guys and girls that put together the reports…  But the currency and metals traders didn’t buy the report, and they have seen rallied since the report was printed…  And the COMEX printed a very favorable COT on Friday that the GATA folks believe is an indication that the bottom for Gold and Silver is in… 

For What It’s Worth….  Well, since I talked about the question of whether the bottom was in or not for Gold in today’s letter, I thought that this article that talks about demand for physical Gold at the Perth Mint had surged in March was apropos… And it can be found here: https://www.coinnews.net/2019/04/26/perth-mint-gold-and-silver-bullion-sales-surg

Or, here’s your snippet: “Australian gold and silver bullion sales advanced sharply in March from February but they declined in the first quarter 2019 compared to the same period in 2018, according to figures from The Perth Mint of Australia.

The Mint’s gold sales in March was the highest in four months after logging an eight-month low in February and demand for its silver coins and bars climbed to a five-month high after sliding to a six-month low.
March increases happened against a backdrop of plunging precious metals with LBMA prices registering losses of 1.8% for gold and 4.5% for silver.
Bullion Sales in March 2019

March sales of the Mint’s gold coins and gold bars reached 32,757 ounces, posting gains of 67.8% from February and 9.6% from March 2018.”

Chuck Again… Well that’s two signs that Gold is preparing for a upward run… That’s good enough for me! 

Currencies today 4/29/19 American Style: A$.7050, kiwi .6666, C$ .7423, euro 1.1150, sterling 1.2924, Swiss $.9801, European Style: rand 14.3119, krone 8.6829, SEK 9.5068, forint 289.20, zloty 3.8490, koruna 22.0250, RUB 64.75, yen 111.77, sing 1.3621, HKD 7.8435, INR 69.91, China 6.7283, peso 18.94, BRL 3.9240, Dollar Index 98.02, Oil $63.19, 10-year 2.51%, Silver $15.05, Platinum $899.00, Palladium $1,460.00, and Gold… $1,281.30

That’s it for today…  And nice homestand was completed by my beloved Cardinals yesterday, with a win… They seem to have righted the ship with hitting, but now injuries are mounting for pitching… Uh-oh…   Our Blues are back on the ice, tonight, they need to win one of the two that will be played in Big D…   I did some cooking on Friday and Saturday for the Lindbergh H.S. Water Polo Tournament. I was told that what I cooked was a hit!  Well, even a blind squirrel can find an acorn! HA!  This took me much longer to write today because I kept going back and deleting some things I said… Better not said, here but on the Butler Patio, would be just fine!  I read a thing this weekend that we as writers use the ! too much… Well to that I say, I don’t care!!!!!!!   The great Elvis Presley takes us to the finish line today with his song: One Night…  ( I love this song version of the song!) I hope you have a Marvelous Monday and will Be Good To Yourself!

Chuck Butler

 

Currencies Take Another Dive Downward On Wednesday…

April 25, 2019 

* No more Black Fridays here any longer? 

* Halleluiah! Gold finally found a bid yesterday! 

Good Day… And a Tub Thumpin’ Thursday to you! I’ve been pretty tired lately throughout the day, needing a good long nap to get through the rest of the day… I know it’s the chemo wearing on me, as it accumulates in my system… I’m lucky that I’m now retired and the kids are out of the house, for I have quiet time whenever I need it. So, having said all that, I’m going to try to do some Tub Thumpin’ tonight, but then one never knows! Son, Andrew stopped by last night, to drop off tons of meat he wants me to cook for him for Saturday, as Saturday is the main day of the water polo tournament that he hosts each year at this time… So, I’ll be busy tomorrow and Saturday morning for sure! Steely Dan greets me this morning with their song: Black Friday… When black Friday comes I stand down by the door And catch the grey men when they Dive from the fourteenth floor… Long before the term came to denote the shopping frenzy on the day after Thanksgiving, Steely Dan released this song about the original “Black Friday,” when on Friday, September 24, 1869 a failed ploy left many wealthy investors broke. The investors tried to corner the market on gold, buying as much of it as they could and driving up the price, but when the government found out, it released $4 million worth of gold into the market, driving down the price and clobbering the investors.

Strange how things come and go, eh? We still have investors (mainly the bullion banks) that are trying to manipulate the price of Gold. But only this time they want to bring down the price of Gold… Only this time, if my thought prove to be correct, the Gov’t already knows about and condones it!

Whew! What a way to start the day, eh?

Well, it was better than having to tell you that the euro lost another ½-cent yesterday, bringing its total loss so far this week to 2 cents… HEY! Currency Traders! Enough is enough! Since the euro is the offset currency to the dollar, when the euro gets sold, the dollar rallies… and it has moved quite high this week, as evidenced by the move in the Dollar Index, which on 4/17 it stood at 97.02, and this morning it is trading around 98.30… That’s over 100 index points in less than 2 weeks, with a couple of days missing because of the Easter holiday…

I had a very nice long conversation with my good friend Dennis Miller, the Retirementor, who can be found at: www.milleronthemoney.com And we were discussing an idea about updating an article I wrote for the Dow Theory Letters back in June of 2016! I won’t spoil the soup here… But those of you who were kind enough to follow me to the DTL will be able to find the letter and see what it was I was talking about back then…

I was reminded about this conversation when I clicked on the Bloomberg site and saw an article titled: “What If The Bull Market In Stocks, Never Ends?” well, with all things manipulated these days, I don’t see how, even a recession can knock the stuffing out of the stock market right now… Historically speaking, recessions have always been a dark cloud over stocks… But what I’m saying now is that given the manipulation, and Central Bank buying (yes, Central banks buy stocks, like the Swiss National Bank) I’m wondering the same thing that the Bloomberg writer was wondering and writing about.

OK, letting discretion be the better part of valor, I was typing a spiel about the deep state, when something hit me and said, “Chuck, don’t go there”.. And so I erased it, and went on… Aren’t you proud of my new sense of right things to talk about and wrong things not to talk about? HA!

Well… The currencies didn’t fare much better in the overnight markets either, so we begin the day with all the currencies, including the ruble, on the downside of their values VS the dollar. It appears that the boys in the band have gotten what they wanted from shorting Gold, as the shiny metal was able to eke out a $3.80 gain yesterday, and is up a buck in the early morning trading today… Halleluiah, halleluiah, halleluiah, I was beginning to believe that we might not see a day of Gold being bid higher every again!

Palladium is still being bought though, as its price is back above $1,400 this morning… This is a strange one to me… Because auto sales are slowing, and in fact they just posted the slowest beginning of the 2nd QTR in years, and Palladium is tied to auto sales… Hmmm….  Something is fishy here… Do you smell it? It’s yesterday’s fish! Something is awry here I can feel it in my bones!

The U.S. Data Cupboard has the previously mentioned Durable and Capital Goods Orders for March this morning… Reminder, I say they’ll be negative!  Tomorrow’s Cupboard will have the next revision of Q1 GDP, if you recall this original number was around 3%, and I told you then that it was hogwash, and to look for downward revisions, which have come and the last print was 2.3%…  Given that Q4 2018, ended up at 2.2%, I would think that Q1, 2019 will be even lower, but even if it’s not…  Our over 10 year run in the economy, has generated just 2.3% of GDP growth in that time…  

To Recap…  The currencies sunk further to the dollar yesterday, and in the overnight markets… This is getting ugly folks… Time to pull down the hatches and lock them tight! Halleluiah, Gold finally found a bid yesterday, and gained $3.80… About time, eh? Now, let’s hope it wasn’t just a one and done!  It’s all about manipulation and price supports these days folks, and a Bloomberg writer wants to know if the Bull market in stocks is ever going to end?  

For What It’s Worth…  Well, I had this sent to me by a dear Pfennig reader, and thought it to be quite FWIW worthy, in that it covers a topic I had in the FWIW last week, regarding the Retail Apocalypse… And it can be found here: https://wolfstreet.com/2019/04/19/retails-existential-threat-is-private-equity/

Or, here’s your snippet: “Since I first wrote about private equity’s looting and ultimate devastation of Mervyn’s (“On Private Equity and Real Estate” September 2012, behind paywall), retailer after retailer has been similarly gutted. Payless Shoes, Toys ‘R’ Us, Gymboree, Sears Holding, Mattress Firm and Radio Shack — all companies at one point owned or controlled by private equity firms — have since filed Chapter 11.

In fact, Debtwire, a financial news service, calculates that about forty percent of all US retail bankruptcies in the last three years were private equity backed.

How do the private equiteers do it? Simple, the leveraged buyout. The LBO is the financial world’s pick and roll, that is, a highly effective play that is difficult to counter, especially if the PE firm takes the prudent first step of bribing its intended victim’s CEO into going along with their acquisition.

In short, the PE firm pays top dollar for a given retailer, often even overpaying, but using as little equity and as much debt as it possibly can. It then improves the company’s profitability by cost-cutting beyond prudence and, as with Debenhams, says, “What a good boy am I,” rewarding itself with a major dividend, often recovering not only its entire initial investment, but a substantial profit to boot.”

Chuck again… this snippet is just the tip of the iceberg in this article, and if you’re tired of hearing that the internet is causing brick and mortar businesses to close, then this explains it as just one of many reasons for the Retail Apocalypse…  

Currencies today 4/25/19 American Style: A$.6996, kiwi .6588, C$ .7405, euro 1.1125, sterling 1.2866, Swiss $.9781, European Style: rand 14.5217, krone 8.6838, SEK 9.5497, forint 289.71, zloty 3.8590, koruna 22.1290, RUB 64.07, yen 111.90, sing 1.3652, HKD 7.8432, INR 70.36, China 6.7200, peso 19.14, BRL 3.9469, Dollar Index 98.30, Oil $66.21, 10-year 2.52%, Silver $14.87, Platinum $880.35, Palladium $1,419.29, and Gold… $1,276.63

That’s it for today, and tomorrow of course! I’m going to rest up today, to be ready for being busy tomorrow and Saturday… What an ugly day here yesterday, but they got the game in downtown, which the Cardinals won, completing their sweep of the Brewers, so it wasn’t all bad…  Our Blues begin the 2nd round of the playoffs tonight… The game doesn’t start here until 8:30 which is ridiculous, I’ll probably barely get through 1 period before feeling the calling of sleep! On Saturday, I’ll be all by myself here once again for about 10 days…  Matthew Sweet takes us to the finish line today with his song: Girlfriend…  I saw Matthew Sweet in concert probably 20 years ago now… Many where does the time go?   I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday and will Be Good To Yourself!

Chuck Butler 

 

 

SNB Talks Of Taking Their Negative Rates Further Into Negative Territory!

April 24, 2019

* The dollar gains VS almost all currencies and metals yesterday…

* Russian ruble is lone wolf currency gaining VS the dollar yesterday… 

Good Day… And a Wonderful Wednesday to you! From 13 runs one night to barely able to sneak across a run or two last night, was the roller coaster ride for Cardinals fans… That’s baseball! Today is a day game, and I thought I was going, but a death in the family of a friend, put those best laid plans of mice and men to rest… It’s supposed to be a day with periods of rain, so, I guess it’s better this way. I had a great lunch yesterday with longtime friend Frank, who told me all about his recent journey through the mountains and wilderness in Argentina, on foot! WOW! Led Zeppelin greets me this morning with their song: All Of My Love…

Well, stuck in the mud no more was the scene for the currencies yesterday, as they lost more ground throughout the day… Not HUGE moves but still downward moves and that’s not what I would expect given the rotten data that has been shooting out of the pipeline here in the U.S. I really don’t get it, but then all my magical powers of yesteryear have seen to have drifted away from me… And when I see something that appears evident, it turns out to be that it’s not imminent!

Here’s the explanation of the dollar strength yesterday from Reuters… “The dollar hovered near a 22-month high against its peers on Wednesday, after strong U.S. housing data further eased concerns of a slowdown in the world’s biggest economy.”

Really? Strong data? Currency traders are pinning their colors to the mast of “housing data”? Well, bust my buttons (which is what I’ve been doing latey, as I gain more weight once again! UGH), I would have never thought that Currency traders would be so thin skinned… and dumb! But I digress, here… Let’s talk about something else!

In something that should count as a reason for a currency to rally, much more than a split decision on Housing Data (recall yesterday I told you that Existing Home Sales dropped big time) and that is the German sentiment index as measured by the think tank IFO, was up for this month VS March… Shouldn’t that be a more of a reason to buy euros, than the split decision in housing data was to buy dollars? Well, yes… I’ll answer my own question, because you know what I was getting at!

Yesterday, I mentioned the Swiss franc and how it was losing ground because of the euro’s inability to find a bid… But there’s more to the story than that, and it came across my desk yesterday, in the form of an email… That stated that the Swiss National Bank (SNB) was seriously thinking about taking their current negative rates even further into negative territory! What on earth, are these dolts at the SNB thinking? I guess they want to see the franc get Smack, crack, bushwhacked Tie another one to your racks, baby…. (thanks REM!)

The price of Oil continues to ratchet higher each day, and this morning its trading with a $66 handle…  I haven’t had to fill my gas tank since I’ve been back (I just don’t drive much any longer) So, I not aware of the price gouging in refined gas, but I’m sure it’s there!  Higher gas prices as we draw nearer to the summer driving season, is a sure way to put a crimper on consumer spending for other things… I’m just saying… 

Hey! I’ve got a great piece on metals manipulation in the FWIW section for you today, but before we get there I have this… Did you know that…. There was a recent interview in which former CFTC Commissioner Bart Chilton confirmed that JPMorgan took over Bear Stearns’ short positions and dominated and controlled the short side of COMEX silver despite CFTC demands that it cease is a case in point. Did I make myself celar there, the CFTC demanded that JPMorgan cease their short paper trading in Silver, and JPMorgan chose to ignore this demand from the commodities regulator?

What On earth is going on here? OK… here’s my take on this, if you don’t want to hear this I suggest you skip ahead, for I’m going to go down a very dark rabbit hole on manipulation… OK, everyone that wants to hear this with me now? OK, opening up the hatch on the rabbit hole, and here I go! I’ve long told you all that I believed the U.S. was behind the manipulation, for the reason that is so evident right now, they can’t have people/ countries/ central banks leaving the dollar… Ok, got that?
Now skip to this new revelation that the CFTC did see a problem with the shorting of Silver, but having demanded that JPMorgan stopped, they did nothing, tells me that I was correct for years now that JPMorgan etal, may be the executor of the short trades, but they are given the wink and nod from the U.S. Government, all the while knowing that (JPMorgan) wouldn’t be penalized by the CFTC, because the Government had their back!

OK, I know that’s a lot to take in so early in the morning, and believe me, if I were still employed by a bank (any bank not just my former bank) they wouldn’t have allowed me to say all that… Remember when Bart Chilton of the CFTC would go on TV and tell the world that the CFTC couldn’t find any sign of price manipulation? I would say that that time that he was lying between his teeth! And now, there’s proof!

The U.S. Data Cupboard gets past its dates with housing,  and gets to take a breather today, with no data prints on the docket…   But… tomorrow the Data Cupboard gets to some real economic data this morning with the March print of Durable and Capital Goods Orders… Recall this data for both was negative last month, and as I told you two days ago, I suspect the March data will also be negative… That will print very soon, so we don’t have to wait long for that! 

Gold and the other precious metals still can’t find a bid anywhere, and when one does surface, it gets snuffed out by the short Gold paper trades… Dirty rotten scoundrels! 

To recap…  The currencies finally moved out of the mud but went downward VS the dollar, to Chuck’s amazement, given all the rotten / weak economic data that’s been shooting out of the Data Cupboard lately…  He even goes as far as to compare how the markets treated the German IFO VS the split decision in Housing here in the U.S. …  Strange days indeed, so peculiar momma… 

For What It’s Worth… Thanks to the GATA folks who sent this to me yesterday… It’s Dave Krantzler taking on the writer at KITCO for saying something very stupid about the Gold selloff Monday, that I told you yesterday was manipulators… And it can be found here:

Or, here’s your snippet: “At 8:39 a.m. EST 523,200 ozs of paper gold were unloaded onto the Comex in the space of less one minute:

Anyone who’s traded big positions on a trading desk knows that the best way to unload a position that is larger than the immediate liquidity of the market in which the security trades (yes, Comex contracts are “securities,” not actual physical gold) is to feed it out over time.

In that chart above, why wouldn’t the seller try to sell its position in a way that would enable it to get a price for the entire position that was in the vicinity of the market price at the time the sell-order was executed? After all, the market has clearly rebounded to the price level at the time massive sell-order bombed the trading systems, suggesting that the seller could have achieved much larger sell proceeds with a little bit of patience in its selling

This is all rhetorical, of course, because the all-too familiar “fishing line” 1-minute chart is the blatant footprint of market manipulation. Of course, Kitco’s “reporter” on the scene chose to attribute the sudden price plunge to a market “hamstrung by not much risk aversion in the world marketplace” Kitco.com.

It’s hard to believe an educated person wrote that commentary (“Gold Prices Sink To 4-Month Low On Scant Risk Aversion” by Jim Wycoff). Honestly, that headline makes me chuckle. Well then, Jim, the Dow is now up 153 points as I write this 5 hours later, which by your logic would imply there’s even less risk aversion than the “scant” risk aversion at 8:39 a.m. How come, Jim, the price of gold rebounded to the level where it was trading when fear of “scant” risk aversion triggered someone to unload 16 tons of paper gold in less than 60 seconds if indeed fear of scant risk aversion was the catalyst for sell order?”

Chuck Again… Way to point that out Dave! But still we have naysayers to price manipulation, like the CFTC (the commodities regulator) and others who by now have to believe somewhat that Gold (&Silver etal) are getting sold to manipulate the price downward… It’s a sad, sad world we live in that allows stuff like this to happen folks… sad, sad, world, indeed…

Currencies today 4/24/19 American Style: A$.7030, kiwi $.6620, C$.7430, euro 1.1208, sterling 1.2942, Swiss $.9820, European Style: rand 14.3564, krone 8.5720, SEK 9.3679, forint 286.40, zloty 3.8260, koruna 22.9475, RUB 63.74 (the lone wolf currency that gained a bit vs the dollar yesterday)yen 111.86, sing 1.3591, HKD 7.8416, INR 69.97, China 6.7186, peso 18.95, BRL 3.9329, Dollar Index 97.69, Oil $66.07, 10-year 2.54%, Silver $14.86, Platinum $891.88, Palladium $1,392.04, and Gold… $1,273.36

That’s it for today… A lot to say today for sure! Cardinals pull out a back and forth game late for a win last night… Day game today, but like I said above, I’m grounded! HA! Our Blues will be playing the Dallas Stars in the 2nd round, which will begin tomorrow night here in St. Louis! Let’s Go Blues! It’s a late game which makes no sense given it’s in the Central Time Zone… But TV dictates the start times… UGH!  On Sunday, grandson Everett was very proud of his dollars he found in the egg hunt. I pulled out my Mogambo Guru one oz. Silver Coin and asked him which would he rather have, and he chose the coin… smart kid, either that or he just like bright shiny things! HA!   Chris Issac takes us to the finish line today with his haunting song: Wicked Game…  Which is apropos today given my explanation of the manipulation scheme going on… that I think is going on, I should say!  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

The Currencies Are Stuck In The Mud Once Again!

April 23, 2019

* Easter Monday saw trading volume thin yesterday… 

* Existing home sales sees a HUGE drop in March… 

Good Day… and a Tom Terrific Tuesday to you! Man! I completely forgot to mention that yesterday was Earth Day! I hope everyone did something good for the Earth! I recall when I was a young lad, that the album rock stations, and their listeners, were the only people that celebrated Earth Day… I’m just saying… Another sunny, blue umbrella sky day here yesterday, but I spent most of the day watching episode after episode of the new Season 5 of Bosch… Styx greets me this morning with their song: Too Much Time On My Hands… Fits me perfectly, these days for sure!

Well, no real data, except housing data, and I’m not sure that qualifies as real data as it could very easily be manipulated each month, for the markets to go on, and so the currencies were stuck in the mud with only some marginal winners on the day… The price of Gold was up in the early trading, but then gave that back and then some as the day closed with Gold down $4 on the day… I guess the salami slicers aren’t finished yet…

The price of Oil hit a 6-month high yesterday at $65.70,  and has continued to climb in price overnight… but the Petrol Currencies weren’t able to generate enough enthusiasm about their values and ended the day stuck in the mud with the rest of the currencies. Oil’s move is all tied to the story I told you about yesterday, regarding the U.S. dropping the Iranian Oil waivers, come May 2nd. If you’re a not-so-big country, and you are importing Oil from Iran, you’re going to be getting economic sanctions put on you by the U.S. come May 2nd… So, either they shut off the Iranian Oil imports, and the price of Oil goes higher because there’ll be less supply available, or… they continue as is, and the Global Growth Slowdown gets another member…

One of the reasons that the currencies didn’t move much yesterday is the fact that it was Easter Monday around the world, which means the Christian countries all had a holiday… We didn’t here in the U.S… and that’s all I’m going to say about that!

Circling back to the housing data yesterday, Existing Home Sales for March were down big at 5.21 Million VS 5.48 Million in Feg, and 5.31 Million expected… I read where the smaller more affordable houses didn’t see a major slowdown, but the big, swanky, McMansions did… Hmmm, that’s go to tell me something about this market, doesn’t it?

Today, we’ll see the New Home Sales for March, and again the expectation for this data is that it will come in weaker than the Feb number of 667,000…

Well… there I was thoroughly enjoying watching my beloved Cardinals turn up the heat on the Brew Crew last night, when I saw an email come through from longtime reader Bob… These are always good, so I read them when I can… This one was a report about the recent report by the Social Security Board of Trustees, who consist of: United States Secretary of the Treasury, Secretary of Labor, Secretary of Health and Human Services, etc. (certainly not Chuck Butler and his conspiracy theorists here!)

And this is an excerpt of what they had to say… “The Board of Trustees itself calculates Social Security’s long-term shortfall at a mind boggling $43+ TRILLION.

Simply put, the trust funds don’t have enough money to keep the programs going, at least under the current promises.

They admit right at the beginning of their report that, starting 2020, Social Security’s cost will exceed the money it earns in from interest and taxes. “
OK, is anyone else alarmed at this report? 2020, is not “years away”, it’s next year! If you would like to read the gory details of this report you can find it here: https://www.ssa.gov/oact/TR/2019/tr2019.pdf

Like I said yesterday… Oh brother can you spare a dime?

Manipulations, coercion, price rigging, flying by the seat of one’s pants, and other descriptions that I use to explain the price actions these days, are beginning to really get on my nerves… I can’t do anything about them, and that’s killing me!  I write about them, in hopes that a lawmaker or two reads my thoughts and does something about all this, but I know that’s not going to happen, because, upsetting the applecart is not in the bloodlines of our lawmakers… 

I’ve been doing some reading regarding the proposed additions to the Fed Reserve… There’s been two vacancies there for quite a few years now, and now the President has some people in mind to nominate, and already they are being casts as “no goes” by the media and lawmakers… I just don’t get it… These vacancies need to be filled… Let’s get it done, OK?  

Sorry about that trip down a side road…  Let’s get back to what’s up… 

The British Parliament returns to work today, and soon they will go to work with PM May on a new BREXIT deal…  Yesterday, the pound had fallen below 1.30, but today with the renewed hope of a new deal , the pound has pushed back above 1.30…  

The Swiss franc sure has seen better days, as it lost the parity handle to the dollar last week, and has been slowly, inch by inch, crept lower as the week as gone on…  I believe this is all tied to the fact that the euro just can’t find a bid these days… It’s not that the franc is tied to the euro any longer, that cross was broken years ago now, but it still trades like there is a relationship, which it should given that most of their trade is with the Eurozone… 

Speaking of the Eurozone… in Germany, I’m waiting to see the results of the latest sentiment index from the think tank IFO that was scheduled for release this morning.  Germany is the Eurozone’s largest economy, and therefore it’s all about Germany… 

The Aussie dollar (A$) is slipping again, after touching 72-cents last week, it has slowly moved downward again…  I have an interesting piece on Australia’s 28-year run without a recession in the FWIW section today, so I won’t spoil the soup here, and leave you with the thought that the A$, as I’ve said for years, is the proxy for Global Growth… And I’ve been talking about a Global Growth Slowdown for months now…  I’m just saying…

The U.S. Data Cupboard has the aforementioned New Home Sales data today, and that’s it! Tomorrow, we get dialed up for more data that will be real economic data, so make sure you come back for that! HA!  

To recap… The currencies are stuck in the mud again, and while a couple of currencies found some solace in the rising price of Oil, their moves are muted at best…  Gold still can’t find a bid, and can’t hold onto any gains it generates… The Social Security Board of Trustees give a sobering report on the condition of Soc. Sec., and we only have data from New Home Sales today… 

For What It’s Worth… Good friend, Dennis Miller, sent me this last week, and it took me a couple of days to read through it, with interruptions, holidays and what have you… But it’s an article about Australia’s lengthy growth period without a recession… And it can be found here: https://www.smh.com.au/business/the-economy/what-australia-s-economic-miracle-is-teaching-the-rest-of-the-world-20190408-p51bu4.html

Or, here’s your snippet: “I had flown 25,000 kilometers not to study economic malaise, but its opposite: the remarkable resilience of the Australian economy, which has gone nearly 28 years without a recession.

The government, with elections to take place next month, recently announced an expected surplus in the next budget year.
Surely this grand economic success story would hold lessons for the United States and the rest of the world, right?

Yet instead of giddy enthusiasm, what I found in Sydney was a pervasive sense of caution and wariness — and not just involving real estate, though housing does loom large in discussions about the economy. In conversations with Australian businesspeople and college students, economists and government officials, I detected no sense of triumphalism.

An entire generation of young adults has grown up without experiencing a protracted downturn. But in Australia, as I came to learn, nobody really acts as if they’re the stars of an unprecedented three-decade success story. They’re aware that the good times could end. The mood is more practicality than pessimism.”

Chuck Again… Well, why don’t we try some of that practicality, and not so much sunshine, lollipops, and rainbows all the time here in the U.S. ?

Currencies today 4/23/19 American Style: A$.7112, kiwi .6660, C$.7478, euro 1.1250, sterling 1.3007, Swiss $.9807, European Style: rand 14.1894, krone 8.5175, SEK 9.3340, forint 285.24, zloty 3.8105,  koruna 22.8734, RUB 63.82, yen 111.90, sing 1.3570, HKD 7.8438, INR 69.76, China 6.7088, peso 18.87, BRL 3.9263, Dollar Index 97.35, Oil $65.92, 10-year 2.58%, Silver $15.03, Platinum $889.00, Palladium $1,388.00, and Gold… $1,272.60

That’s it for today…  What a awesome display of power put on by my beloved Cardinals last night as they broke the 13-run pool…  Did you ever have a group of people that organized a 13-run pool? Fun stuff, for sure! That Brewers lineup is scary though…  And it was just one game… gotta come back tonight with more of the same!  Hey! I’m so excited about my lunch date today! I’m going to meet up with longtime friend, and the birthday boy this past weekend, Frank!  YAHOO!  So, I have that going for me today…  I forgot to mention yesterday just how darling my little Delaney Grace looked on Sunday… The two grandsons looked sharp too! All dressed up for Easter… The school year is almost over, and next year, little Delaney Grace will be in middle school! Oh No! That can’t happen, can it? I’m afraid so… I sure hope she doesn’t fall into that “middle schooler funk”…  The Blue Jays take us to the finish line today with their song: I Dreamed Last Night…  (one of my all-time fave songs!)  The Blue Jays consist of Justin Hayward and John Lodge of the Moody Blues… And their music sounds just like the Moody Blues!  I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!

Chuck Butler

 

Back-To-Back Quarters Of Negative Sales, Here In The U.S….

April 22, 2019

* That doesn’t stop the dollar bugs from buying dollars!

* U.S. appears to be ready to drop Iranian Oil Waivers… 

Good Day… And a Marvelous Monday to you! I trust everyone that celebrates Easter, had a grand day, it was probably one of the nicest days, weather-wise, for Easter that we’ve had here in a while… Simply beautiful, as was Saturday too… I broke in my Big Green Egg on Saturday, it took me a couple of hours to get it ready to cook in… How about our Blues! What a thrilling game 5 win with 15 seconds left in the game, and then a natural hat trick by Jaden Schwartz in a Game 6, series winning game! On to the second round! We sent Alex off to his home the next 10 weeks in Montgomery Ala, for clinical work. He texted us last night that he made it… 9 hours drive, alone for the first time… OK… the band Yes, greets me this morning with their song: Rhythm Of Love…

So much for when Chuck’s away the currencies rally, eh? Last Thursday and Friday were awful days for the currencies… As Retail Sales, on the outside, were stronger in March than expected, as they rose 1.6%, and ex-autos rose 1.2%… But there was something interesting in the report that the media failed to uncover, and therefore the markets went bananas over the strength of the report, and that “something ” is better explained by economist David Rosenberg on his Twitter handle… “Strong March for retail sales but look at the entire first quarter. Down to +0.2% SAAR from 1% in Q4, 4.3% in Q3 and 6.1% in Q2. REAL sales in Q1 were -0.7% and followed -0.5% in Q4, first back to back contraction since the first half of 2009.”

Chuck Again… Hmmm… Makes you go Hmmm, doesn’t it? This sure paints a different picture of the report than the markets swallowed hook, line and sinker… Back to back quarters of negative Sales…  Hmmm…. 

The price of Oil has moved upward and past the $65 handle again in the last 24 hours, as it appears the U.S. is going to drop the Iranian waivers come May 2nd…  These waivers are in place for countries that import Iranian oil, so if they get dropped on May 2nd, then economic sanctions would go into place for the countries that import Iranian Oil…  Very interesting, eh? 

And did you see the article in the WSJ this past weekend? Now, how can the markets ignore this… The article was talking about what would make the Fed heads decide to cut rates… Here’s the headline from the WSJ: “Federal Reserve officials are starting to talk about the conditions under which they would cut interest rates, including a scenario where inflation drifts lower even if the economic growth doesn’t falter.”

Chuck again… Didn’t see the major media outlets talk about this? Of course you didn’t!

Just when I thought it was safe to go back to Twitter and see what economists are saying again… I was hit with this Twitter feed by Fred Hickey, who retweeted a post from Jesse Felder, of The Felder Report.com who talked about what could be the biggest thing out there that he fears the most right now, and it is not just the number of short positions in the VIX (volatility index) but the number of leveraged 2x the short in VIX… That’s crazy folks… This is what I would call “extreme positioning” and puts their risk way out on the limb… I’m with these two guys who say this is scary… Something to think about for sure!

Well… things aren’t that rosy around the world either folks… While China printed some better than the average bear data last week, it still wasn’t what you would call, a sign of renewed Global Growth, and like I said last week, I doubt this is enough to slow the momentum of the Globlal slowdown. And in Germany last week, they didn’t print strong data… When you have China, the U.S., Japan, and Germany all having problems generating economic growth, you might as well pick up the phone and call Houston… Hello, Houston, we have a problem…

And Gold… Well at least this morning in the early trading Gold is up almost $4… But it was a wild and whacky week for the shiny metal last week… for sure! Gold a lost a lot of ground, and the salami slicers, (as Ed Steer calls them) Were working overtime to push the price of Gold downward and away from any moving averages that were out there. I just don’t know what’s happening here, folks… It could be a couple of things in play here…  1. The selling of Gold to pay for margin calls is already happening… (I doubt that but who knows right now?  2. The Boys in the Band can’t stop what they started a couple of weeks ago, when Gold looked like it was ready to take out the so-called maginot line of $1,350…  (probably more likely) or 3.  I have no idea… (probably the most likely! HA!)

The U.S. Data Cupboard starts the week very slowly with housing data Monday and Tuesday. On Wednesday, there’s no data scheduled to print. So we won’t be dealing with data until Thursday when March Durable and CAPEX Goods Orders will print… Recall those were negative in Feb… I truly expect both of these to be negative again in March…  I went on and on about CAPEX a couple of weeks ago, if you missed class that day, may I suggest you simply go to www.dailypfennig.com and read the archives… 

To recap…  It was a weird reaction by the currency traders to the U.S. Retail Sales data last week, and the dollar got on the rally tracks and hauled rear down the tracks, taking bits and pieces from all the currencies… Even the Petrol Currencies didn’t get to rally alongside the price of Oil where the news of a drop of the Iranian waivers got the price of Oil on the rally tracks.  Germany prints some very weak data late last week, and feeds into Chuck’s thought of a Global Slowdown, led by the U.S.  for, the U.S., China, Japan, and Germany are all having much difficulty generating economic growth. 

For What It’s Worth…. This came to me last week from longtime reader Bob… It’s about the retail Armageddon that’s been going on in brick and mortar stores. And it can be found here: http://theeconomiccollapseblog.com/archives/its-only-april-and-u-s-retailers-have-already-closed-more-stores-than-they-did-all-of-last-year

Or, here’s your snippet: “If the U.S. economy is in good shape, why have retailers already shuttered more stores than they did in all of 2018? Not only that, we are also on pace to absolutely shatter the all-time record for store closures in a single year by more than 50 percent.

Yes, Internet commerce is growing, but the Internet has been around for several decades now. It isn’t as if this threat just suddenly materialized. As Internet commerce continues to slowly expand, we would expect to see a steady drip of brick and mortar stores close, but instead what we are witnessing is an avalanche. If the U.S. economy really was “booming”, this wouldn’t be happening. But if the U.S. economy was heading into a recession, this is precisely what we would expect to see.

Last year, U.S. retailers closed 5,864 stores.

That was a rather depressing number, but here we are in April 2019 and we have already surpassed it. The following comes from CNN…

This year, US retailers have announced that 5,994 stores will close. That number already exceeds last year’s total of 5,864 closure announcements, according to a recent report from Coresight Research.

Once again, you can’t blame this on Internet commerce. Foot traffic was rising for quite a while, but now what we are seeing is perfectly consistent with an economic slowdown.

Sadly, this could be just the beginning. In fact, one expert quoted by CNBC expects total store closures in the U.S. to hit 12,000 by the end of 2019…
“I expect store closures to accelerate in 2019, hitting some 12,000 by year end,” Deborah Weinswig, founder and CEO of Coresight, said.
If that happens, we will shatter the old yearly record by about 4,000.
We are in the early innings of America’s “retail apocalypse”, and it is going to get much, much worse.”

Chuck Again… Brother can you spare a dime? That’s all I could think of when I was reading this article… But not to worry, folks… The economy is doing just fine, right? NOT!

Currencies today 4/22/19 American Style: A$.7135, kiwi .6675, C$ .7483, euro 1.1250, sterling 1.2988, Swiss $.9855, European Style: rand 14.1095, krone 8.5008, SEK 9.3045, forint 284.20, zloty 3.8037, koruna 22.8298, RUB 63.99, yen 111.92, sing 1.3565, HKD 7.8444, INR 69.80, China 6.7032, peso 18.79, BRL 3.9257, Dollar Index 97.34, Oil $65.29, 10-year 2.57%, Silver $15.05, Platinum $909.36, Palladium $1,428.54, and Gold… $1,279.30

That’s it for today…  Yesterday was not only Easter, but it was also the birthday of my longtime friend, Frank Trotter! And I can’t forget that former colleague, Mike Harrel also celebrates his birthday on 4/21! Well, my beloved Cardinals found a way to take 2 of 3 from the Metropolitans this past weekend…  And our Blues! WOW! After the awful way they played in the first half of the season too! Hockey playoffs are so about who’s healthy, with good goalie play, and on a roll come the playoffs, it doesn’t matter what you did in the regular season, if you don’t have those 3 things, you can start packing your golf clubs! And the Blues… well, they have those 3 things going for them… I’m just saying…   Todd Rundgren takes us to the finish line today with his song: It Wouldn’t Have Made Any Difference…  That song was featured in the movie: Almost Famous, about a rock band in the early 70’s… (I lived that life!)   I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

 

A Little Late, But Better Than Never!

April 17, 2019 

* Currencies see some slippage VS dollar… 

* Chuck looks at another recession indicator….

 

Good Day… And a Wonderful Wednesday to you! Here I am… back from the heart doctor, and I’ll share with you a few thoughts I have for today… Nothing big like a regular letter, just a few thoughts, and a recap… No FWIW, just keeping the juices flowing… I’m greeted as I begin to write today by Paul McCartney and Wings and their song: Band On The Run…

OK… One of the things I want to talk about today is this thought I’ve had for some time now that we are heading for a recession, not that in normal times that would be that big of a deal, but in today’s world, it could be the snowflake that causes the avalanche, if you will… A couple of weeks ago, I told you that the U.S. Treasury yield curve had inverted, and that historically when this happens it’s an indicator that a recession is on the way… But yesterday, I received an email from the St. Louis Fed Research team, and in it they looked for other indicators of a recession…

One such indicator was Manufacturing employment… In the past when Manufacturing employment begins to drop steadily, it’s a very good recession indicator… So, then I went to my research and found that Manufacturing jobs dropped by 6,000 in March… No biggie, but the start of something Big? I guess we’ll have to wait-n-see, eh?

The U.S. Data Cupboard yesterday had another brick for our wall… Industrial Production for March, was negative -0.1%, and Capacity Utilization fell from the previous month. I was hemming and hawing about being negative here, but then I saw one of my fave economists, David Rosenberg, tweet something, and thought he would do it far better than I… So, here’s econoguy David Rosenberg from his Twitter feed: “The three-month trend in production of consumer durable goods has collapsed to a -15% annual rate – this takes out 2016 and takes us back to the late stages of the 2008-09 recession. Shhh! Don’t tell the stock market that the recession may have already started!”

You know me… I like to be right, so that that people listen to me, but I also don’t like to be right, because that means bad things are going to happen… In this case… I told you months ago that most economists were calling for the recession to hit the U.S. in 2020, but I had gone out on a limb and said it would hit us this year…

Maybe, just maybe, ‘cause you never know… I’ll be right on that one too!

The currencies yesterday (Tuesday) and today, have really not done much, a little slippage Vs the dollar, but that’s not the kind of movement we used to see in the currencies… Everything is muted these days… I’m just saying…

Gold got whacked by over $10 yesterday…  this is getting ridiculous folks… I really don’t want to go down that rabbit hole right now, so I won’t… 

China printed some good data this morning… Retail Sales were up, GDP was up, and a report said that they were producing more steel now than in the past… I still don’t think this is enough to stop the momentum of a global slowdown, but China does have this in their back pockets when negotiating with the U.S. on Trade… 

Currencies today 4/17/19 American Style: A$.7180, kiwi .6728, C$ .7493, euro 1.1305, sterling 1.3040, Swiss $.9898, European Style: rand 13.9692, krone 8.4870, SEK 9.2394, forint 282.37, zloty 3.7784, koruna 22.6998, RUB 64.21, yen 112.05, sing 1.3524, HKD 7.8445, INR 69.37, China 6.7094, peso 18.79, BRL 3.8826, Dollar Index 97.02, Oil $63.76, 10-year 2.59%, Silver $14.94, Platinum $889.00, Palladium $1,398.12, and Gold… $1,273.97, 

That’s it for this afternoon… Sorry it’s later than planned… I came home, sat in my recliner, turned on the baseball game, and fell asleep… And slept all afternoon! Slacker!  HA!…  Heart doc told me to keep doing what I’m doing…  Hmmm….   Tomorrow I’ll see my oncologist, and she’ll tell me something different…  Cardinals win today, and come back home for a weekend series with the Metropolitans!  AC/DC takes us to the finish line today with their song: Back In Black… I hope you have a Wonder Wednesday evening and night…  No Pfennig tomorrow, talk to you again next week… and Be Good To Yourself!

Chuck

 

 

A One And Done Rally For The Currencies…

April 16, 2019 

* Another economist gets on Chuck’s bandwagon… 

* Forbes: Russia is hot, but investors are still cold… 

Good Day… And a Tom Terrific Tuesday to you! What is it with my beloved Cardinals who seem to be on a roll, but get siderailed by the Brewers? It happened again last night, darnit! Oh, well the Cardinals play them again tonight, and Our Blues play in game 3 of their best of 7 series. We’ll have both TV’s hooked up for viewing both games, as we did last Wednesday night. I don’t believe I’ll be able to get a Pfennig out tomorrow, as I have a very early heart doctor appt. And then on Thursday, I have a very early oncologist appt. So, this will be the last letter of this week… Sorry, but I haven’t seen a doctor in 4 months, and I’m somewhat leery going into the appointments, therefore I want to be well rested… But maybe… and here’s an idea… when I come home, I could sit down and write a few thoughts! Sounds like a plan… And I love it when a plan comes together! The late Great, Leon Russell, greats me this morning with his bluesy song: Stranger In A Strange Land…

Well, well, well.. It now appears that last Friday, while I was away, and the currencies rallied, is going to be a one and done deal… From the looks of the trading on Friday, and the comments that traders were making at the time, I was getting the feeling that this could have been the beginning of something lasting much longer… But that’s not to be, apparently! Yesterday, didn’t see the currencies lose any additional ground to the dollar, but they didn’t gain any ground either… And since they don’t do a shootout in trading , like they do in hockey and soccer… The tie goes to the dollar…

Last week, I told you about how the IMF had chopped their forecast for Global Growth to a very low level… And then yesterday, I talked about Global Growth and how it was really slowing down, despite some upbeat Chinese data last week. And today, we have well known economist Mohamed A. El-Erian, formerly CEO of PIMCO and now with Allianz, send out a note that said: “With the return of Europe’s economic doldrums and signs of a coming growth slowdown in the United States, advanced economies could be at risk of falling into the same kind of long-term rut that has captured Japan.”

OK, how long have I been singing, Turning Japanese, I really think so? Because the U.S. just keeps following the missteps that Japan made in the mid 90’s… Remember back then? Everything was about Japan and the Japanese, their stock market was soaring, And they kept coming up with new budget ideas to stimulate the economy that was slip sliding away… slip sliding away… You know the nearer your destination, the further you’re slip sliding away…

About 15 years ago, a former colleague and I sat down and started putting together yield curves, and growth curves and so on, and everything we printed out that was Japanese, the U.S. had something that was heading in that direction… And here we are 15 years later, our economic growth has stalled, Yields have been zero, and will be back there real soon… And debt has grown to unsustainable levels… I say unsustainable knowing all too well that Japan and their debt has continued to exist all these years… But the unsustainable I’m talking about is the need to finance the debt, and the interest payments that go along with the debt.. For us, here in the U.S. it’s going to get very ugly, when bond servicing takes up a majority of the tax revenues… And there won’t be enough to pay for other things… What will the Gov’t do then?

Last gasp… they default… but not before they go down the road with more Quantitative Easing, negative deposit rates, buying stocks, and raising taxes… We will NOT grow our way out of this mess folks… Japan hasn’t, and we won’t either!

Another thing that caught my eye the past couple of days, is how the mainstream media are warming up to Russia… As an investment not a buddy, buddy… Longtime reader Bob, sent me this last night from Forbes… Titled: Russia Now Best Stock Market After China. But Investors Still Cold…

I’ll, at this point, stop, and point out that Russia has falling inflation that’s below their key interest rates, which means they have positive interest rates! I’ve pointed this out before, but I guess since Forbes is jumping on my bandwagon, that investors should be looking at Russia, I guess it’s as good a time as any, to go back over these things…

Now, the Russian ruble hasn’t exactly gotten on its horse and rode back to the levels the currency traded before they annexed Crimea, and some Ukrainian land… That’s when the economic sanctions on Russia began, and they’ve only gotten worse since 2014. But that hasn’t stopped the Russian economy from working through the rough spots, with economic growth between 1.2 and 1.7%, inflation in control, and a deposit rate over 5% (their key internal rate is 7.25%, is like our Feg Funds rate)

I’ve always looked at the Russian ruble as a play on Oil… If you believe the price of Oil will be supported at current levels, then the ruble should be stable too. But if you believe the price of Oil is to go higher, then the ruble should be the beneficiary, and vice versa if the price of Oil goes down from current levels. With the OPEC countries all practicing patience with their production cuts, the price of Oil has rebounded a bit, but still is trading within a range, and when you’re dealing with a deposit like a CD denominated in rubles, that’s ideal because the currency isn’t volatile during times like that, and then you’re reaping the rewards of a stronger interest rate VS another other country in the world, much less the U.S.

Ok, I didn’t mean to make this a Russia only letter today, but that’s how things go when you write from a stream of consciencousness! Yes, I’ve always said that about how the letter gets put together each morning… So, now that I’ve realized where that was going, I’m prepared to go off in a different direction!

Gold still is unable to find a bid, I’ve searched high and low, far and near, under rocks, around stars, and everything in between, and still no bid for the shiny metal…  Gold was down $2.60 yesterday, but is down another $4 in the early morning trading…   UGH!  

This morning we’ve already seen the Economic Sentiment for April, as put together by the think tank ZEW… And it printed… And the Economic Sentiment was stronger than expected, but the current expectations wasn’t… A kind of mixed bag-o-results, eh?  Maybe that’s why the euro is stuck in the mud once again. 

The U.S. Data Cupboard, that I previously mentioned (yesterday)  has Industrial Production and Capacity Utilization for March… I told you yesterday, and I’m not about to change my mind! HA that both of these would be weak… So, we’ll see a little later this morning… and then on Thursday this week, we’ll see March Retail Sales… This should be interesting in that, you may recall that February’s Retail Sales were negative -0.6%… I’m here to tell you right now, so you can listen to me later that there’s no way in hell that this data will print negative again this month! No way, it ain’t gonna happen, no way Jose’! the BHI (Butler Household Index) indicates to me that it will be a so-so month… nothing great, but nothing bad… So, we’ll see that print on Thursday this week.

To recap…  Friday’s rally in the currencies appears to have been a one and done, as all the euphoria by traders has been thrown to the side of the road.  Forbes has come around to Chuck’s way of thinking that the ruble is undervalued. We got a visit from a very famous economist, who believes that the global growth showdown is for real, and Gold still can’t find a bid anywhere… UGH!

For What It’s Worth… For longtime readers this will ring a bell… sometime ago, I spoke about how I believed the IMF would eventually be forcing the use of the Special Drawing Rights (SDRs) as world money instead of dollars… And now, all these years later, I came across an article that’s talking about it! And it can be found here: https://www.project-syndicate.org/commentary/imf-special-drawing-right-global-currency-by-jose-antonio-ocampo-2019-04

Or, here’s your snippet: “This year, the world commemorates the anniversaries of two key events in the development of the global monetary system. The first is the creation of the International Monetary Fund at the Bretton Woods conference 75 years ago. The second is the advent, 50 years ago, of the Special Drawing Right (SDR), the IMF’s global reserve asset.

When it introduced the SDR, the Fund hoped to make it “the principal reserve asset in the international monetary system.” This remains an unfulfilled ambition; indeed, the SDR is one of the most underused instruments of international cooperation. Nonetheless, better late than never: turning the SDR into a true global currency would yield several benefits for the world’s economy and monetary system.

The idea of a global currency is not new. Prior to the Bretton Woods negotiations, John Maynard Keynes suggested the “bancor” as the unit of account of his proposed International Clearing Union. In the 1960s, under the leadership of the Belgian-American economist Robert Triffin, other proposals emerged to address the growing problems created by the dual dollar-gold system that had been established at Bretton Woods. The system finally collapsed in 1971. As a result of those discussions, the IMF approved the SDR in 1967, and included it in its Articles of Agreement two years later. “

Chuck Again… Nothing more to add… just that the IMF had gone silent on this for a few years now, and I had almost forgotten that I talked about this previously…

Currencies today 4/16/19 American Style: A$.7163, kiwi .6761, C$ .7478, euro 1.1305, sterling 1.3090, Swiss $.9942, European Style: rand 14.0470, krone 8.4822, SEK 9.2553, forint 282.92, zloty 3.7806, koruna 22.6955, RUB 64.28, yen 111.93, sing 1.3540, HKD 7.8425, INR 69.60, China 6.7065, peso 18.88, BRL 3.8752, Dollar Index 96.93, Oil $63.53, 10-year 2.57%, Silver $14.95, Platinum $888.02, Palladium $1,369.18, and Gold… $1,284.04

That’s it for today…  And quite possibly this week, although I do believe I will attempt to get to writing tomorrow afternoon… We’ll see… I also believe that the warm weather will return today, after a few days of very chilly, if not downright cold days were here.  Well, this weekend is Easter Weekend, with Good Friday in a couple of days. The stock market is closed on Good Friday, and everything else will shut down around noon that day…  All three grandkids were here on Sunday for egg dying…  Grandson Braden stayed with us Saturday night. I hadn’t seen him in 4 months, and he appeared to have grown a foot in that time! Poco takes us to the finish line today with their song: Just For You And Me…  I was always a fan of the music from Poco…  I hope you have a Tom Terrific Tuesday, and well Be Good To Yourself!

Chuck Butler

 

It’s Tax Day!

April 15, 2019 

* Currencies rally on Friday, but give some back last night… 

* Chuck uncovers a jobs report that tells the truth… 

Good Day… And a Marvelous Monday to you! It’s also April 15th, Tax Day… and Pfennig Tradition says I need to sing this song by the Beatles… Let me tell you how it will be, There’s one for you, nineteen for me, ‘Cause I’m the taxman, yeah, I’m the taxman…
Man, do I dislike taxes… When I was a young man just starting out and didn’t have two nickels to rub together, I would say, “Give me the income, I’ll gladly pay the taxes”… And then when I began to earn the income, I would say, I hate taxes! At least now, that I no longer have any income stream, my tax burden has reduced tremendously… So, I’m back where I was in 1973! Man, did I see a fun game on Thursday last week! My beloved Cardinals finally broke out their bats, and scored 11 runs! Of course the Dodgers helped with some of those runs… Longtime fave, Billy Squier greets me this morning with his song: In The Dark…

Well, while I was gone on Friday, the currencies decided to get off the porch and chase the dollar down the street… The euro popped back over the 1.13 handle, the Aussie dollar (A$) closed in on 72-cents, and so on… There was good and bad news from the Eurozone on Friday… First, the February Industrial Production printed a negative -0.3%, but that was better than expected which was for a much deeper negative -0.6%… That was the bad news…. The good news was that Speculators were buying the euro in response to reports on Mitsubishi UFJ Financial Group’s planned purchase of the aviation financing business of Germany’s DZ Bank, dealers said. The transaction was announced on March 1 and MUFG said the it was expected to close after June.

Now, I’m sure some of you are scratching your heads and wondering why in the world would that news help the euro? Well, you see when these major merger deals take place across borders, the company in one country has to buy the currency of the other country to fulfill the terms of the transaction… So, based on the news that Mitsubishi is going to be buying the German Bank, they’ll have to be buying euros, and that got the buying in euros started…

However, before we, as non-dollar holders, rejoice, the overnight markets last night took the currencies to the woodshed… How, could, on Friday, the currencies rally so much, and in the overnight markets last night, they give it all back? Well, not all, but most… Did something happen this past weekend that would generate this kind of dollar buying? Well, no… So, I go to my back pocket and pull out my “expose the PPT card”… That’s all I’ll say about that!

OK… so, like I said, “not all the gains, but most of them” were given back last night… The euro is still above 1.13 this morning, but the pep and vigor that the currencies were trading with on Friday, just isn’t there this morning… 

The price of Oil has slipped back below $64 in the past 24 hours so that means that the flyer the Petrol Currencies were trading on last week, as the price jumped higher, is no longer in play…  UGH! Not that I want to see Oil prices soar, but a rise to $70 would do wonders for the Petrol Currencies… 

Gold hasn’t been able to find a bid for a few days now… Last Thursday and Friday were both down days for the shiny metal, and today in the early trading Gold is down $3.80…  I’m finding this downward direction of Gold to be very interesting… My longtime friend, Ed Steer of www.edsteergoldandsilver.com tells me that: “there was another monster decline in the Commercial net short position in that precious metal as well, as it fell by a whopping 42,637 COMEX contracts, or 4.26 million troy ounces of paper gold.”

So, one has to reason that if the short positions are declining, that Gold should be rallying, right?  And if it isn’t, what else is there to move the price of Gold downward? And that my friends, is the $64 question. Could it be, oh, no it couldn’t, could it be? Oh, no, not that! The humanity! But, I guess it could be physical Gold owners selling…   People do the strangest things, folks… 

Last Monday, I spent the day talking about the Jobs report the previous Friday, that just didn’t make any sense to me… And now this whole charade is being exposed… There’s a report that called the JOLTS report, and it shows Job Openings… And it reflected that for the March there were 133,000 less new hires… And this report has now been down 3 of the last 4 months…  Which leads me to believe that the surveys that are done are probably reflecting the proper numbers, but then the BLS adds their “magic”, and things get all out of whack. 

Late last week, China printed some decent economic data that had everyone thinking that things in China aren’t so bad, and that got the Global Growth folks all lathered up… But remember just a week ago. the IMF downgraded their Global Growth forecast, to the lowest level it’s been since 2006-7…  So, I’m not going to get tricked into thinking that Global Growth is going to rally… And I would think it to be prudent that you not think that too!

I just had a chuckle to myself when I was typing the word “prudent”, and thinking of Dana Carvey doing his SNL impression of President Bush back in the 80’s… “No, it wouldn’t be prudent, and we have all these points of light”…  funny stuff!

OK… The Data Cupboard here in the U.S. last week had a late week surprise, when March PPI (wholesale inflation), which had been on a downward plane, surprised everyone with a 0.6% gain in March VS Feb which was just 0.1%, and the expectation for March of 0.3%…  We also saw the Consumer Confidence Index fade a bit this month from 98.4 to 97.5… Still stronger than it should be, in my humble opinion! 

This week’s Data Cupboard starts the week with the Empire State PMI (New York region manufacturing index)  And tomorrow we’ll see two of my faves, Industrial Production and Capacity Utilization for March… I’m better a free undercoat right now that these both will be very weak… 

To Recap…  The currencies had a day in the sun last Friday, but in the overnight markets last night they have given back most of their gains from Friday. Chuck has no explanation for this move last night, expect to pull out his “expose the PPT card”…   Gold can’t find a bid and this is getting very weird… And Chuck points out that the JOLTS report tells us a different story than the BLS tries to pull over our eyes each month… 

For What It’s Worth…  OK, going a different direction this morning and give you something that the GATA folks sent me… And it’s about all the stuff the Central Banks are pulling and getting away with and since it’s the GATA letter I can’t share with you the link to it…  But, I do have a snippet! 

Or, here’s your snippet: “Central banks get away with the flaming hypocrisy illustrated below because mainstream news organizations don’t dare to put a critical question to them.

Here, if David Lawder and Leika Kihara of Reuters were serious journalists, and their editor, Paul Simao, had the wit for his job, someone from Reuters would have asked the managing director of the International Monetary Fund, Christine Lagarde — in the name of the “accountability, transparency, and effective communication” she purported to be advocating — to identify the markets in which her member central banks are surreptitiously trading and when they are surreptitiously trading, and to explain the objectives of their surreptitious trading.

Instead Reuters makes itself a mere press-release service, like PR Newswire.

How easy it would be for any news organization to show central bankers up and shut them up. A single critical question would do it, but there isn’t one in all of Earthly journalism.”

Chuck Again… Yes, wasn’t it just complaining last week about the lack of real journalism?  There’s a whole article on Reuters that is being referred to above, and you can find it here: https://www.reuters.com/article/us-imf-worldbank-lagarde/imf-chief-calls-for-central-bank-accountability-communication-idUSKCN1RP0KW?il=0

Currencies today 4/15/19 American Style: A$ .7177, kiwi .6763, C$ .7510, euro 1.1315, sterling 1.3112, Swiss $1.0028, European Style: rand 13.9570, krone 8.4913, SEK 9.2436, forint 283.18, zloty 3.7760, koruna 22.6458, RUB 64.31, yen 111.95, sing 1.3523, HKD 7.8389, INR 69.45, China 6.7035, peso 18.76, BRL 3.8805, Dollar Index 96.82, Oil $63.23, 10-year 2.56%, Silver $14.89, Platinum $886.81, Platinum $1,369.28, and Gold… $1,286.64

That’s it for today… A bit late, I know…   Well, our Blues won Friday night, and then came home and lost in front of a raucous home crowd last night…  They’re up 2-1 in the series, but, last night was very disappointing to say the least…   My beloved Cardinals played in Mexico this last weekend and split their two-game series… Good thing they weren’t here, because it was downright cold here! I even saw snow falling in Columbia, Mo. yesterday morning! UGH!  My little d… granddaughter Delaney Grace, received the news that she will sing the national anthem at the Independent ballpark across the river, and in St. Charles this summer! WOW!  Well, I have some doctor appts this week, it’s been 4 months since I’ve seen a doctor here! YAHOO!  But that all changes this week! OK, Steely Dan takes us to the finish line today with their song: Kid Charlemagne… Is there gas in the car?, yes there’s gas in the car..   I hope you have a Marvelous Monday, Tax Day… and are you will Be Good To Yourself! 

Chuck Butler

 

 

The IMF Says, “The Global Economy Has Reached A Delicate Moment”…

April 11, 2019 

* Currencies for the most part remain in yesterday’s clothes… 

* EU gives May a 5 month extension for a BREXIT deal… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m heading to the Cardinals day-game with the Dodgers a little later today, so I’m a happy camper, and no amount of manipulation, PPT, or weak data is going to upset me this morning, because…. I’m going to baseball heaven for a day game! OK… I laughed so much yesterday at something that my stomach hurt! CNBC sent out a news article and misspelled the word “refinance” And they had the gaul years ago to tell me to take my thoughts on manipulation to Hollywood? What a bunch of dolts! Mr. Excitement, Jackie Wilson, greets me this morning with his song: Your Love Keeps Lifting Me Higher… They don’t write songs like that any longer, I’m just saying…

Well, it appears that the folks at the IMF are getting on board with me, regarding a global slowdown, led by the U.S. They downgraded their forecast for 2019 global growth yesterday… And I never saw one mention of this on TV, except when I switched over to a show on the markets… But econoguy, David Rosenberg, didn’t miss it. So, let’s hear what he had to say about what the IMF did yesterday… This from his Twitter handle: “The permabull trollers may have missed this, but the IMF just took another hatchet to its 2019 global growth forecast, down to the slowest pace for the cycle. In just two words, the Fund politely concluded that we have reached a “delicate moment”

I have to say front and center this morning, that the comment about having reached a “delicate moment” is a real classic in my book… Now if I were on the journalists team following the IMF, I would have asked them to explain that comment… “Ahem, what do you mean by a delicate moment?” Would it have hurt anyone’s feelings, because we all know we have to be careful not to hurt anyone’s feelings these days, to have asked that question?

Are there any “true journalists” out there these days?

OK, well, there were two currencies that saw gains yesterday… The Norwegian krone, which I talked about yesterday, as having gained recently VS the euro, made strides against the dollar when it was made clear that consumer inflation in Norway is rising, with the March print at 2.7% VS expectations of 2.5%… This has traders thinking that the Norges Bank will hike rates soon…

The other currency to show some gains was the Aussie dollar (A$)… no data here, just people looking at inflation and how it’s probably going to begin to go higher sooner or later around the world, and that spells good times for the commodities, and the further the commodity currencies, led by the A$.

There was also some minor positive moves in the Russian ruble, but they were very small… But gains nonetheless…

Gold found a way to push and shove its way to a $3.80 gain on the day, only to see it given back in the early trading this morning.  The gain yesterday had pushed Gold above its 50-day moving average, and seeing that, the price manipulators couldn’t let that happen, and well, they brought Gold back below the average this morning. UGH!

The European Central Bank (ECB) met yesterday and left rates unchanged, and ECB President Draghi, tried to throw the euro under the bus, but his Eeyore impression didn’t cause too much damage to the euro, and the single unit was able to recover quickly after falling following the meeting. Eeyore, I mean Draghi, had this to say… “The risks surrounding the euro area growth outlook remain tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets.”

Notice how he took the opportunity to take a shot at President Trump’s Trade War? I did, and I’m sure that the folks at the White House did too… But it was like water off a duck’s back to the folks at the White House… They don’t care who the Trade War is hurting, including themselves… I’m just saying…

OK… The EU gave U.K. PM May until Roctober to come up with a BREXIT deal that everyone would accept…  That’s more than 5 months to get a deal done… But let’s see here, they’ve had a couple of years prior to now to get a deal done, and nothing has been accepted, what makes the markets believe that something will get done in 5 months?  I ask that question because just about every article I’ve read talks about how this extension of time is like Manna from Heaven…  And I view it as a stay of execution…

The U.S. Data Cupboard had an interesting print in the Stupid CPI yesterday, with consumer inflation growing in March at 0.4%, which was double the previous month’s print and the expectations.  There was one piece of data that usually gets combed over but I think it’s telling us something, and that is Real Hourly Earnings for March which were negative -0.3%… Wait, What?  I thought earnings were growing? I guess not, eh?  

Oh, and as far as putting another brick on the wall, I had a reader send me a note highlighting an analyst’s comments on the Trucking industry…  It doesn’t look good folks… layoffs, empty trucks, etc. are beginning to pop up, in yet another sign that the economy is heading to recessionville… 

But like I said above, all that stuff isn’t going to dampen my mood this morning!   So, before I ruin that thought with something else to talk about, I had better head to the Big Finish, and hopefully I won’t run into any rabbit holes to fall down the rest of the letter!  Hmmm, but Chuck, what about that FWIW article on derivatives that’s coming up?  Oh, darn it, I knew there would be a rabbit hole I wouldn’t be able to avoid! 

To recap…  The U.K. received a stay of execution, and has until Rocktober to come up with a BREXIT plan that will be accepted… Chuck has his doubts… The ECB met yesterday, and left everything unchanged, while ECB President Draghi, did his best impression of Eeyore! The currencies pretty much remained in the same clothes as yesterday, except the krone, which was bought after a strong CPI printed than expected…   And Chuck is heading to the baseball game today!  

For What It’s Worth…. Longtime readers of the Pfennig, know that I’ve been warning them about how many derivatives there are in the markets these days, and how no one knows what happens if they begin to get execution… There are more derivatives ( and here I mean bad derivatives) now than were on the books of financial institutions in 2007… When their mere existence almost caused a financial collapse, but instead we had a financial meltdown… Well, this is an article on Bloomberg.com that talks about the mess we have in derivatives now, and can be found here: https://www.bloomberg.com/opinion/articles/2019-04-10/derivatives-are-still-too-dangerous

Or, here’s your snippet: “Financial regulators have done a lot to reform the derivatives markets that helped turn the financial crisis of 2008 into a global disaster. But their work is unfinished — and there’s even a danger that, in one way, they might have made things worse.

Derivatives are bets on the performance of something else, such as stocks, interest rates or creditworthiness. They can be useful in mitigating risks and expanding investors’ choices: A bank, for example, might use an interest-rate derivative to protect itself against rising borrowing costs, or a hedge fund might use a credit derivative to bet against a company’s bonds. But because they enable big wagers with little money down, they can quickly generate losses and cash demands large enough to destabilize the entire financial system.

For a long time, governments left the derivatives market largely to its own devices. At best, only the parties to the contracts knew who owed what to whom, or how much collateral had been posted to cover potential losses. The folly of this approach became apparent when, in the darkest days of the 2008 crisis, it emerged that a single company — insurance giant AIG — owed billions on subprime-mortgage bets to several of the world’s largest banks and didn’t have the cash to pay up. Taxpayers had to provide $182 billion to keep the company afloat and avert a broader collapse.”

Chuck Again… This is a good article, and talks about how the Gov’t tried to step in to prevent another 2007, but probably only made matters worse…
Reminds me of the old quote from Ronald Reagan… “The scariest words ever spoken are: “Hi, I’m from the Government, and I’m here to help”…

Now, that wasn’t THAT bad was it Chuck?

Currencies today 4/11/19 American Style: A$.7160, kiwi .6755, C$ .7487, euro 1.1279, sterling 1.3085, Swiss $1.0020, European Style: rand 13.9862, krone 8.5010, SEK 9.2506, forint 284.86, zloty 3.7962, koruna 22.6996, RUB 64.56, yen 111.15, sing 1.3532, HKD 7.8440, INR 68.99, China 6.7147, peso 18.88, BRL 3.8373, Dollar Index 96.90, Oil $64.07, 10-year 2.48%, Silver $15.15, Platinum $900.74, Palladium $1,376.17, and Gold… $1,304.23

That’s it for today…  Another win by my beloved Cardinals over the Dodgers last night… Suddenly, they’ve found their bats… but they are facing the Dodgers’ young stud pitcher today, so their found bats might be lost again after today, but then you never know, right? That’s why they play the game!  Our Blues got the playoffs off to a great start with a comeback in the 3rd period to win on the road! Alex and Chuck had two TVs set up so we could watch the baseball game on one and hockey on the other…   Pretty cool set up…  Alex is going to the game with me today, along with a couple of my spring training buddies, so a good time should be had by all…   The Strawbs takes us to the finish line this morning with their song Autumn…  “hold on to me… I’ll hold on to you… The winter long I will always be with you”…    I hope you have a Tub Thumpin’ Thursday, and will Be Good To Yourself!      Let’s Go Blues!

Chuck Butler