Is A New Trade Agreement With China The Rabbit In The Hat?

February 5, 2019

* Currency rally falls flat, and dollar gets bought

* Largest Pension Fund loses boatloads of money… 

Good Day… And a Tom Terrific Tuesday to you! The day after the Super Bowl had people walking around like zombies, after staying up to watch that boring exhibition of pro football, that would have been much better represented had the Chiefs played the Saints! Even the half-time show was boring! (sorry Maroon 5 fans, it was boring!) Can you believe the singer wearing a fur coat is being blasted on social media for wearing a fur coat? I just don’t get where we as a country have gone down this rabbit hole of PC… I’m just saying… The great Otis Redding greets me this morning with his song: I’ve Been Loving You… Live from the Whiskey-a-G0-GO…

Well, the currencies tried to get back on the rally tracks on our Marvelous Monday, but just couldn’t get both feet o the train. And the problem I told you about in Australia is getting a lot of air play, but the Aussie dollar (A$) seems to shrug off this mess…  On top of all that… Remember me chastising the Reserve Bank of Australia (RBA) many times in the past couple of years for not hiking rates to put the kyboshes on the housing bubble there? Well, the housing bubble has found the pin in the room, and is being drawn to it…. Better watch out… If the bubble makes contact with the pin, I doubt the A$ will be able to shrug that event off… I’m just saying… 

The price of Oil couldn’t hold the $55 handle yesterday,  but it rebounded overnight to bring it back to the $55 handle… and Gold never recovered the early morning loss , of over $5,  to close down on the day. You know… My mind keeps flipping back to what I just talked about regarding the Aussie Housing Bubble… Why don’t Central Bankers read the Pfennig, and learn their mistakes before they become major financial blunders? I don’t make things up folks… Sure sometimes I project a conspiracy theory, but not about things like Housing Bubbles, and Central Banks that begin their rate hike cycle late in the expansionary cycle…

My good friend, the Retirementor, Dennis Miller, of: www.milleronthemoney.com asked me last week if I was up for an interview for his newsletter… After I finished, I had to say that I was not normally a gloom and doom guy… The problem with what I do, is that I tend to sound like a doom and gloom guy… Well, if Central Bankers weren’t  all dolts (Save for Elvira Nabuillina) I wouldn’t have to sound so gloom and doom! I could be spreading the word that Sunshine, Lollipops, and rainbows and the everything is what I feel when I write my letter…

OK… So, yesterday I was a little hard on the Beaver, (the BLS), but they deserved it, and that’s another thing that just gets my goat… Economic reports that you can’t trust… So, in my opinion, there ‘s not enough of the “business”  ( Eddie Haskel style) that can be given to the BLS… 

President Trump will finally give his State of the Union Address tonight, and from what I can see this morning, traders are thinking that this is going to be good for the dollar, visa-vi a new trade agreement with China will be announced during the address…  Now, someone in the White House had to “leak that info” other wise, who would think that this is going to happen tonight, when all reports are that the trade negotiations are not going well! 

I don’t know if pulling a rabbit (a new trade agreement with China) out of one’s hat at this point is going to save the economy, as it has slid too far down the slippery slope at this point. This morning, I was all prepared to talk about how the bond guys are on board with this sinking economy  as the yield on the 10-year Treasury had slipped yesterday to 2.69%, but that all changed in the overnight markets as the 10-year was sold off and the yield rose back to 2.73% this morning… 

I still believe that the bond guys are thinking like me with regards to the economy, but, the price action of the past 24 hours would tell me that they aren’t 100% on board with me…  There’s always a chance that there are actions that could be taken to save the economy from slip, sliding away, but those chances are slim… And as I like to say, “And Slim left town”… 

Longtime reader, Mickey, sent me a note yesterday, and basically said that if I had problems with the components of the Dollar Index, why didn’t I build a different Dollar Index with currencies that I felt were more representative of dollar moves?    WOW! That took me back to my days at my old place of business, when Frank Trotter and I would brain storm this exact same idea of a “new and improved Dollar Index”…  I can tell you that it’s not as easy as one would think it is…  And now that I’m retired… 

Well, I’ll let someone with time, energy, and a Bloomberg figure that one out! Until then, I’ll continue to say that with the euro having the largest weighting in the Dollar Index component, I’ll simply check on the euro to see how the dollar is faring…  And this morning the euro has slipped in value, so the dollar is stronger this morning. 

Japanese yen was trading with a 110 handle when I first turned on the computer this morning…  It was just a couple of weeks ago that traders were buying up yen by the truckload, and now, apparently, they are selling yen by that same truckload!  I cautioned you when the yen was being bought that it was NOT a safe haven, in my opinion… 

In the Eurozone, there were a few data prints this morning, with the spotlight on the Markit PMI, and Retail Sales, both of which printed stronger than expected, and VS the previous print. That should have been enough to push the euro higher this morning, but that hasn’t happened. It’s as if traders don’t believe the data outcomes…  Now, I have to ask this because Its clearly front and center on my mind…  They don’t trust Eurozone data prints, but they do trust U.S. data prints?  Really?  What on earth have these guys been smoking?  Well, as I’ve always said… It is what it is…  Let’s move along… 

As I told you yesterday, we will begin to see the delayed data prints from when the Gov’t was shut down last month. And yesterday we saw Nov. Factory Order, which were negative -.6%…  Weaker than expected for sure! Today, we’ll se current data from the Markit people on the services sector here in the U.S….  And the ISM nonmanufacturing (services) index will also print… One would think that… aw, never mind, nobody cares about when they print, Chuck! move along… 

To Recap…  The dollar staged a comeback once again yesterday, after the currencies attempted to rally, the word from a dinner meeting between the President and Fed Chairman, was that that Fed will remain autonomous , and that got the dollar bugs all excited once again.  In addition, the President will give his State of the Union Address tonight, and traders are thinking that he’ll have a rabbit to pull out of his hat by announcing a new trade deal with China…  I guess we’ll have to wait-n-see… 

For What It’s Worth…  I saw this mentioned on Twitter last night and knew right away that I had to look into it further… The largest Pension took an $136 Million hit… and it can be found here: https://www.zerohedge.com/news/2019-02-01/no-need-be-pessimistic-worlds-biggest-pension-fund-suffers-record-collapse-q4

Or, here’s your snippet: “The world’s largest pension fund – in the world’s most demographically-challenged nation – suffered a stunning record loss in the last quarter as its Abe-supporting domestic-stock-buying-spree crushed Japan’s Government Pension Investment Fund (GPIF).

Bloomberg reports that GPIF lost 9.1 percent, or ¥14.8 trillion ($136 billion), in the three months ended Dec. 31, it said in Tokyo on Friday. The decline in value and the rate of loss were the steepest based on comparable data back to April 2008. Domestic stocks were the fund’s worst performing investment, followed by foreign equities. Assets fell to 150.7 trillion yen at the end of December from a record ¥165.6 trillion in September.

While global central-bank-liquidity driven gains in global stocks helped the GPIF generate returns for the previous two fiscal years, December’s global rout underscored the risks facing the fund since it revamped strategy in 2014 to accumulate stocks and pare domestic bonds – something they vehemently deny is anything but prudent independent risk-managed behavior.

Bloomberg notes that the GPIF may have little choice but to invest in equities as fixed-income yields, especially those of Japanese government debt, are too low, said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co. in Tokyo.

“It makes sense for the GPIF to hold some risk assets in this environment because yields are low globally and bond investments don’t give good returns,” Fujiwara said. “Yet from a pensioner’s point of view, it takes too much risk on its investments.”

Chuck Again…  I can see it now… Pm Abe and Bank of Japan President, Kuroda pushing their nation’s “independent” pension fund administrators to keep buying the dip in domestic stocks…or else. 

Currencies today 2/5/19 American Style: A$.7245, kiwi .6892, C$ .7685, euro 1.1418, sterling 1.3011, Swiss $1.0011, European Style: rand 13.3838, krone 8.4668, SEK 9.1157, forint 278.04, zloty 3.7547, koruna 22.4928, RUB 65.56, yen 109.95, sing 1.3526, HKD 7.8445, INR 71.54, China 6.7431, peso 19.05, BRL 3.6637, Dollar Index 95.93, Oil $55.15, 10-year 2.73%, Silver $15.87, Platinum $821.57, Palladium $1,367.20, and Gold… $1,313.65

That’s it for today…  A much better night of sleep for yours truly last night…  I’ve been feeling very tired all the time lately, I believe it’s from an accumulation effect of the chemo I take every day…   I don’t like taking naps during a warm sunny days…  And when Spring Training games come there won’t be any daytime naps then!  We’re beginning to pack up stuff that we will be moving upstairs this coming week…  Good thing there’s an elevator! HA!  The sun is rising, which means it’s time to get this out the door…  My good friend, Rick, will be happy with this song… Modern English takes us to the finish line today with their song: I Melt With You… Now, got out and make this a Tom Terrific Tuesday, and Be Good To Yourself!

Chuck Butler

 

 

Currencies Get Stopped At The Gate…

February 4, 2019

* BLS says 304,000 jobs created in Jan. Chuck says hogwash!

* Eurozone PPI weakens… What will the ECB do? 

 

Good Day… And a Marvelous Monday to you! The rain finally gave way to sunshine yesterday, and it brought everyone outside to bask in the warm sun. I watched the 1st half of last night’s Super Bowl at a friend’s condo upstairs, but then came back to my place to watch what I could before sleep entered into the equation. So, congratulations to the cheaters, I mean the Patriots who won their 6th Super Bowl. We’ve begun February, so welcome to February, the month that pitchers and catchers report, and I’ll be visited by my Spring Training Buddies to start the Spring Training games at the end of this month. That means I’ll be on vacation the last week of February… I know, I know, it used to always be around the 3rd week of March, but this is when it all works out and so I’ll be absent that week. The Beatles greet me this morning with their song: Michelle… My bell, those are words that go together well, my Michelle…

Well, the currency rally that was going on late last week, got stopped at the gate by a false Employment Report by the BLS… They claim that 304,000 jobs were added in January… However the Unemployment Rate rose to 4.00% from 3.86% the previous month. And despite 800,000 furloughed Gov’t employees that were without jobs in January… When things like this happen, I refer to John Williams, of Shadow Stats (www.shadowstats.com) And he explains things for us…

“Unaffected by the government shutdown, despite 800,000 workers furloughed or forced to work without timely pay, January Payrolls gained a headline 304,000 jobs. Yet, that was in the context of the initial 312,000 December jobs gain revising lower by 90,000, to 222,000.”

The Burning Platform (www.theburningplatform.com) had this to say, which I agree with wholeheartedly…. “There Are Lies, Damned Lies, Statistics and The Employment Report”

Oh, woe is me… the problem with all this is not so much that fact that the BLS lied to us, but that the markets bought the numbers and swallowed them hook, line and sinker! Shouldn’t someone with an ounce of brains say, What a minute here, these numbers don’t seem kosher? But nooooooo! They decided that they would buy what the BLS was selling them. Don’t worry they’ll figure out later that is was snake oil…

The Dollar Index, which I’ve explained through the years is not the  best example of how to value the dollar, because it is so heavily weighted with euros, has bounced around a bit lately, and is stronger this morning at 95.70, reflecting the weakness of the euro after Friday’s walk down “cheaters’ lane”…  

To Illustrate what I’m talking about, the Petrol Currencies, which aren’t a part of the components that make up the Dollar Index, are all on the rally tracks with the price of Oil above the $55 handle. The Russian ruble, Brazilian real, Canadian loonie, and Norwegian krone are all looking perky this morning… 

Gold however, is getting sold in the early morning trading, and is down $7.50, after losing $3.60 on Friday. That’s $11 in the past two days, after Gold had been on a good run to the upside… I would say that this is normal given the quickness with which Gold moved upward. But then NOTHING is normal about the price action in Gold these days…  And haven’t been since the fellow at the price manipulation controls woke up from his nap on September 8, 2011…  Because all’s fair in love and war, and price manipulation… I would have to say for those that don’t believe in that stuff that it was about the time the dollar was strongly entrenched in its current strong dollar trend, that began when the hidden debts of the Club Med countries were discovered. 

Normally I would say that this pull-back in the price of Gold would be an opportunity to buy at a cheaper level than last week… And I still want to say that, but who knows what the price manipulators are going to do next? 

Have you been keeping up with the news from a financial system review that’s been going on in Australia?  Well, it came to a head with a final report last week, with 76 regulation problems… But with no suggestion to beak up the powerful Aussie banks… This news brought some selling pressure to the Aussie dollar (A$)…  This is important stuff so I have highlighted an article on it in the FWIW section today… 

Earlier this morning, the Eurozone printed their latest PPI (wholesale inflation) and on a year on year basis it has slipped to 3.0% from 4.0% last January…  This is not good for consumer inflation that the European Central Bank (ECB) has held out to be the carrot on the string. The ECB wants inflation above 2% before they’ll move their deposit rates out of negative territory.  And this print explains the slippage in the euro from Friday… 

It appears that this week will be the week that the Gov’t uses to print all the delayed economic reports of the past month… For instance, today, we’ll finally see the Nov. Factory Orders… Seems like it’s really not useful at this point doesn’t it?  But it will print anyway, and when it does, I expect it to be negative. 

We’ve still never seen Retail Sales for December…  I wonder if there’s a problem with the data, in that, it stinks, and the Gov’t doesn’t want the public to know? I wouldn’t put it past the bean counters at the BLS and other Gov’t agencies that report on economic data.  You would think that the Gov’t would have had enough time to massage the data or just let it print, as the difference between humor and tragedy is time… 

To Recap…  the currency rally of last week came to an abrupt halt for most of the currencies on Friday, when the BLS printed what I consider to be a farce of a jobs report saying that 304,000 jobs were created in January. Recall that they said 312,000 were created in December, but quietly, under the cloak of darkness, they BLS “revised” December’s number by 88,000 jobs to the downside!  There are problems in Australia with their banks, and the way they do business, and that’s weighing on the A$, while the price of Oil ratchets higher and the Petrol Currencies get bought. 

For What It’s Worth… I gave you a teaser earlier in the letter…  And now here it is… An article about the Financial system review in Australia… And you can find it here: https://www.reuters.com/article/us-australia-banks-inquiry/australia-vows-to-clean-up-financial-sector-after-landmark-misconduct-inquiry-idUSKCN1PT099

Or, here’s your snippet: “A special government-appointed inquiry excoriated Australia’s financial sector for misconduct on Monday, referring two dozen cases to regulators for possible legal action but leaving the structure of the country’s powerful banks in place. 

Regulators will be subjected to a new oversight body and the financial industry’s pay will be overhauled to remove conflicts of interest, according to the recommendations of the so-called Royal Commission. But the recommendations stopped short of measures that would threaten the A$400 billion ($289 billion) industry’s dominant position.

The recommendations come after the public inquiry heard 11 months of shocking revelations of the financial industry’s wrongdoing, including that fees were charged to the accounts of dead people and that cash bribes were paid over the counter to win mortgage business, wiping A$60 billion from the country’s top finance stocks.

The conservative government, which was initially opposed to the setting up of the inquiry, promised it would act on all the 76 recommendations.

Chuck Again… When I read the part of charging fees to dead people, I thought of all the shenanigans that Wells Fargo has been involved with these past couple of years… They didn’t cause the dollar to get sold…. I’m just saying… 

Currencies today 2/4/19: American Style: A$.7226, kiwi .6890, C$ .7660, euro 1.1430, sterling 1.3055, Swiss $1.0026, European Style: rand 13.3750, krone 8.4622, SEK 9.0694, forint 277.39, zloty 3.7405, koruna 22.4705, RUB 65.44, yen 109.88, sing 1.3526, HKD 7.8465, INR 71.74, China 6.7432, peso 19.15, BRL 3.6575, Dollar Index 95.70, Oil $55.33, 10-year 2.69%, Silver $15.74, Platinum $818.88, Palladium $1,348.73, and Gold… $1,310.63

That’s it for today…  I kept wondering when my daily dose of chemo was going to catch up with me, and I wonder no more, as it hit me at 1 o’clock in the morning last night… UGH!  That was a nice run I had…  Oh well, it is what it is… I can’t complain, for it’s kept me alive!  so… pitchers and catchers report to spring training in about 20 days… I’m ready for some baseball!  I received a video of my darling granddaughter, Delaney Grace, singing the National Anthem. She had sent it to Roger Dean Stadium as an audition tape to sing at a Spring Training Game…  I was so happy to hear her hit every note and belt it out! Fingers crossed now…   Aerosmith takes us to the finish line today with their song : Dream On…   I hope you have a Marvelous Monday, and remember to Be Good To Yourself! 

Chuck Butler

 

 

Powell Ties The Dollar To The RR Tracks!

January 31, 2019

* Currencies rally along with Gold & Silver!

* Chuck does lots of explainin’! 

Good Day… And a Tub Thumpin’ Thursday to you! Once again, in my new found better health, I’ll be doing some Tub Thumpin’ myself this afternoon… I hope you can too! We had a nice dinner, out, with our friends from down here last night… A grand time was had by all! I got home in time to watch my Mizzou Tigers on TV, lose yet another basketball game… Oh well, that’s my team, through thick and thin… And these past few years for basketball have been quite thin! Our Blues haven’t played since last weekend, and don’t play again until this coming weekend! Doucette greets me this morning playing his song: Mama Let Him Play…

Well, the Fed’s FOMC meeting yesterday came and went without a rate hike, and from what I heard from Fed Chairman, Jerome Powell, we might have to get used to these kinds of sans rate hikes meetings, and by 2020, he believes we’ll see a rate cut! Talk about tying the dollar to the railroad tracks… Ala Snidely Whiplash… And the beautiful Nell… And the currency traders saw the same thing I saw, and started selling dollars… for what good are they, if the Fed is going to stop hiking rates, and by next year, be cutting rates? Not very good, if you ask me!

The Fed Heads seem to be reading the Pfennig these days, for they are finally seeing the economy for what it is… But Powell wouldn’t go without mentioning that he still believes the economy is “somewhat strong”… Here’s a sample of what Jay had to say… “We are now facing a somewhat contradictory picture of generally strong U.S. macroeconomic performance alongside growing evidence of cross-currents. Common sense risk management suggests patiently waiting greater clarity.”

So, the currencies rallied and Gold added about $8 on the day… The euro is nearing 1.15 again, and the Aussie dollar (A$) soared above 72-cents on the day. Could this be the beginning of a long term run in the currencies VS the dollar? Well, if the next move by the Fed is a rate cut, then I would say chances are… cause I wear a silly grin, the moment you come into view… No wait! I apologize Johnny Mathis, but these chances are that the rate cut could very well spell out bad things ahead for the dollar…

If this plays out like I think, and so far, it’s been playing out just like I said it would, then we’ll see starts and stops in the currencies and metals, and eventually the dollar bugs will give up, and a full blow weak dollar trend could very well be the result… However, having said that, I must also admit that I’ve seen a couple of false dawns in the past, so I won’t exactly go out on a limb too far with this…

On a sidebar… late last week, LinkedIn sent out a 20 year work anniversary for me at EverBank… I thought I had changed my job on their site, but I guess I hadn’t put in an “end date”, for of course EverBank is no longer around, so it would be difficult for me to have celebrated 20 years there, and 2… I was shown the door 2 years ago! I’ve received quite a few congrats on your work anniversary notes, only to have to tell them the honest truth… Oh, and I’ve entered an “end date” now, so hopefully we don’t experience this next year with 21 year anniversary notices!

OK… Back to the markets… The Bond Boys think that there will be no more rate hikes, as the yield on the 10-year Treasury dropped to 2.66%… This has got to be helping mortgage rates drop, but at this point, the housing sector is circling the bowl once again… Will it get flushed down? Good Question, and one that I’m not ready to answer just yet… I’ll just say I’m warming up my singing voice!

I received a lot of notes in the Pfennig Replies box the past two days regarding my thought the other day that maybe, just maybe, cause you never know, the U.S.’s claim to have 8,100 tonnes of Gold, may be exaggerated… I had people telling me I was wrong, and that Ft Know held 100oz bars, of which you don’t see people walking around with those… Well, if I’m so wrong… Why won’t the “audit Ft. Know” go off smoothly? Why does it take months to get one’s safekept Gold back from the Fed, and when you do receive your Gold, the serial numbers on the bars don’t match those that were put into safekeeping all those years ago? I could sit here all day and come up with reasons why we need to audit Ft, Knox…

Remember Koos Jansen? I used to talk about him all the time, because he had his finger on the pulse of physical Gold in China… Well, I haven’t checked on Koos Jansen very often until this week, and wouldn’t you know it… www.bullionstar.com has an article printed by Koos, talking about the audits that have been performed at Ft Know… Let’s listen in…

“Among other problems, since inspections commenced at Fort Knox in 1974:
• Most physically verified and sealed vault compartments have been re-opened, for which the auditor can provide no valid explanation.
• Auditing personnel has proven to be utterly incompetent and did not follow the auditing policies and procedures.
• Repeatedly metal has been excluded from verifications.
• Many of the audit and assay documents have been destroyed.
• The US government goes to great lengths in withholding information and spreading false information.
In conclusion, the audits have been executed with an inadequate degree of integrity.

I don’t know about you, but I don’t get a warm and fuzzy when I read that! And therefore I’m still questioning whether or not the U.S. Gov’t has the physical Gold they say they do…

I also received a lot of email from readers that questioned idea that I put forth on the reason the Pacific Gas & Electric (PG&E) filed for bankruptcy, and therefore I need to explain… Yes, I knew that the PG&E had filed bankruptcy to protect them from all the lawsuits that will come their way as a result of the forest fires in California late last year.  The Point I was  trying to make is that they had $50 Billion in debt, that now under the Bankruptcy law, that they will now be excused from paying off…   I thought that this would hurt the economy of California, which is the in the top 5 of economies of the world! 

OK… too much explainin’ to do this morning Lucy! And no… You can’t go to the club! Waaaah….   Well… The U.S. Data Cupboard is still a big data vacuum , but with the Government employees going back to work this week, all those data prints that have been delayed will get printed… Tomorrow is supposed to be a Jobs Jamboree Friday… And yesterday, the ADP Employment Change report for January printed and was way down, from December, which was 263,000, and January was just 213,000…  

If the jobs numbers from January do get printed tomorrow, I would expect them to have fallen quite a bit from December’s blowout month of 312,000, which of course, included tons of temporary jobs for the Christmas season…  I’m thinking somewhere around 175,000… And the spin doctors will be out in force, talking about the bad weather keeping the number much lower…  

To Recap…  Well, the Fed’s FOMC meeting ended  with no rate hike and with a short speech by Fed Chairman Jerome Powell. And it was this short speech that got the dollar tied to the railroad tracks, ala Snidely Whiplash, while the currencies and metals ran over it…  Powell was talking about how the rate hikes might be on pause for a while and that he see the first rate cut in 2020… That’s right… it’s bang on what I’ve been talking about for some time, although, I said that by the end of 2018, the talk would be about reversing the rate hikes, so I was a month early… sue me! HAHAHAHAHAHA! 

For What It’s Worth… This is different today, in that it’s a video that I want you to watch, and not a website to visit to read an article… This video is from Mike Maloney, giving the reasons why we’re about to see QE4, and QE5… The only thing I would argue with him on, is the use of the term Quantitative Easing or QE… I was told a couple of years ago, that Congress told the Fed they didn’t care what they called it, but that they couldn’t use the term QE again…

And I might add, if the Fed has to resort to QE4 and QE5, out the window goes their remaining thread of credibility… For how does an economy that’s supposedly “strong and robust” go from that to needed money printing, bond buying, or demonetization of the debt? Again I hear Ross Perot in my head, saying… Do you hear that sucking sound? That’s the Fed’s credibility being sucked out the window of the Eccles Building!

Anyway… here’s the link where you can watch this presentation… please have your speakers on, and allot the time to view it… https://www.youtube.com/watch?v=U6fVLXALJPw

Chuck again… not that I went anywhere! But Mike Maloney is guy that people should listen to… He’s normally talking about Gold & Silver, so that’s why he tied this video to those assets…  But this talk of the economy needing more stimulus is old news on the Butler Patio… I’m just saying… 

Currencies today 1/31/19: American Style: A$.7275, kiwi .6912, C$ .7613, euro 1.1485, sterling 1.3138, Swiss $1.0072, European Style: rand 13.3005, krone 8.4092, SEK 9.0266, forint 275.12, zloty 3.7213, koruna 22.4242, RUB 65.86, yen 108.65, sing 1.3455, HKD 7.8466, INR 70.99, China 6.7138, peso 19.13, BRL 3.7108, Dollar Index 95.38, Oil $54.07, 10-year 2.66%, Silver $16.07, Platinum $820.56, Palladium $1,373.00, and Gold… $1,322.46

That’s it for today, and this week… The Artic Polar Vortex sure has a grip on the Midwest, where temps remain very low and dangerous, according the weather people…  In my old job, we had a foot bridge from the parking lot to the building, and it used to be so darn cold crossing that bridge this time of year… I can honestly say I don’t miss that one iota! It was another of those bad nights for my teams… I already talked about the Mizzou loss, but the St. Louis U. Billikens also lost last night. UGH!   So, this Sunday is the Super Bowl.. Who are you going to root for?  I despise both teams for different reasons, so I doubt I pay much attention to it at all… But I guess I despise the Patriots more than Rams…   I’ll watch it, for the commercials! HA!  Yes, that’s the ticket!  OK… Steely Dan takes us to the finish line today with the title song of my fave album from them… Aja…   A perfect morning song I must add…..  With that taken care of, it’s time to tell you that I hope you have a Tub Thumpin’ Thursday and Fantastico Friday tomorrow! And while having all that fun, please Be Good To Yourself! 

Chuck Butler

 

It’s A FOMC Day!

January 30, 2019… 

* Currencies hold gains, ahead of Fed announcement

* U.S. data that does print is not good… 

Good Day… And a Wonderful Wednesday to you! I can’t go a sentence further without wishing my old colleague, which I called “my little Christine”… Later, when I realized she wasn’t there just to help me each day, I changed it to “our little Christine”… A Happy Birthday! Christine came on board when it was just me doing World Markets sales and trading, and Cheryl Harper doing the operations side. Jen Evans (now McClean) was doing brokerage, and helping with currencies when I needed some help… So… our little Christine was a very young lady when I hired her. I watched her get married, have 3 kids, and now she plays Uber driver for her boys’ sporting events… So… Happy Birthday Christine… I miss seeing your smiling face each day… The Marshall Tucker Band greets me this morning with their song: Heard It In A Love Song… It can’t be wrong!

Well, on our Tom Terrific Tuesday, the currencies decided to take a breather, a pause for the cause, if you will… Gold though added more than $6 to its price from the morning gain of $4… In other words, Gold had a good day… I said yesterday that the about face that Fed Chairman, Jerome Powell has made was just sinking in to traders and investors… The Fed’s FOMC ties a bow on a two-day meeting this afternoon, with an announcement around 1 pm… Like I said yesterday, we’ll know for sure just how many Fed heads are shaking in their boots, when the meeting’s minutes get released in a few weeks… But I wouldn’t rule out a statement by Powell, that doubles down his previous dovish comments…

If only, all those PHD’s in economics from Ivy League schools that work at the Fed, had just signed up for the Pfennig, where they would have learned that the Fed picked a bad time to start a rate hike cycle, so late in an expansion cycle. They would have learned that the economic data did NOT warrant rate hikes… And that inflation has been beaten down, so no need to keep hiking rates, and finally, they would have learned that Chuck knows all! HA!

I was talking on the phone with good firend, and the Retirementor, Dennis Miller, of www.milleronthemoney.com yesterday, and he said that he know that I’ve said that historically we need at least 4% in rate cuts to make during a recession, and that since we’re only at 2.5%, when the recession hits, what will the Fed do? I said… well, they’ll cut rates down to zero again, and then either implement negative interest rates (like they have in Switzerland, Sweden, Eurozone and Japan) or they will implement another round of Quantitative Easing, which won’t be called that but it will be the same thing… And Dennis replied, or we might see both! And I agreed saying that may heaven help us if we get that far deep in the rabbit hole…

I had a dear reader the other day send me a note, and ask me why the euro was valued higher than the dollar, and did I think the euro had better fundamentals than the U.S. … Good Question! Well, I responded by saying, it’s not a euro story, it’s a dollar story. And since the U.S. currently posses the largest economy in the world, their bad fundamentals get a brighter light shown on them… And then don’ forget what I’ve said for years now… And that is the euro is the offset to the dollar, and dollar weakness will show up in euro strength… With or without Eurozone good fundamentals…

Got it? Good!

I should say that about Gold too… Got it? Good! Because if things go like I believe they are going to go these next two years, A lot of investors are going to be turning to Gold… That’s my opinion, and I could be wrong, but think about it… When the recession comes, this year or next year, interest rates are going to get cut, right? And Gold will have removed that governor from its ability to gain value VS the dollar…

And I don’t see the appetite for Gold from Central Banks being satisfied this year… Take Russia for instance… They’ve been taking their Oil revenues, which are in dollars, and exchanging those dollars for physical Gold… Now take the article I highlighted the other day about how the shale oil producers are slowing down, and then come back to Russia, and their Oil production. They’re going to be seeing lots of dollars coming in, and I don’t see them stopping their dollars for Gold exchange… 

There were 2 pieces of data that printed yesterday… First, the Case/Shiller Home Price Index printed for November, and like I said I thought it would the price index grew at 5.2%, down from 5.3%, which means home prices dropped more in November… The other piece of data was the stupid Consumer Confidence report for this month, and the index fell from 124.6 in December to 120.2 in January… That’s quite a drop folks… If it keeps dropping, then watch…. Out… below!

This morning, earlier, the Eurozone printed their latest version of Consumer Confidence, and well… it was ugly… It was so ugly I would have touched it with YOUR ten foot pole!  But the data didn’t budge the euro… Traders seem to be focused on the Fed’s announcement on rates that will be made this afternoon, after the European markets go home…  I don’t think the European traders will be sitting on the edges of their respective seats waiting for the Fed’s announcement, because there’s nothing expected to happen here… Move along, these are not the droids we’re looking for!

OK, I’m stepping up on the soap box now, I have something to get off my chest… I hope I don’t make anyone mad, but if I do, I’m sorry… But this is my letter, and I need to get this off my chest…  So, testing, one, two, is this mic on? OK, can you hear me in the back?  Alright then, let’s get to this… 

Oh, what a wicked web we weave…. I’ve read so many articles in the past month about tax rates going higher, and how a group of people believe that affixing high tax rates on the wealthy will help things… I’ve got a memo for all those that think that’s the way to go… 1. Either the wealthy will simply just find ways to skirt the higher taxes, and 2. Think about this for a moment if you will… If we pooled all the money of the richest Americans to pay down the deficit, It wouldn’t make a dent in the total, now near $22 Trillion! And after you took their money, they wouldn’t have any more to add to it the following year, so you’re back to square one!

Taxing to get out of debt, worked after WWII, but only because the country went to work after the war, and the soon the debt was paid off… with nominal tax rates I might add… There was a time in our past that the top tax rate was 90%… But the mental giants that implemented that tax rate, soon figured out that the wealthy had found ways around paying the tax rate, and so, it was dropped… And out debt back then wasn’t near what we have as a yearly deficit now… and we didn’t have nearly 1/2 -the population receiving assistance like we do now… So, it’s all kind of apples and oranges… But I wanted to throw that out there, for anyone that believes this malarkey…

Margaret Thatcher said it best when she said, “The problem with socialism is that eventually you run our of other people’s money”… I’ll drop the mic there, and let that sink in…

To recap… The currencies took a day to catch their breath but Gold had a good day, gaining about $12 total on the day. The overnight markets didn’t move things much either, it as if Traders are too focused on the Fed’s FOMC meeting that will end this afternoon with a rate announcement. I don’t expect anything to come from the meeting, and think the real meat of the meeting will come when the minutes are printed in a few weeks. The Eurozone’s consumer confidence is negative, and so awful, Chuck said he wouldn’t touch it with YOUR ten foot pole! 

For What It’s Worth… Well, I’ve always said, we would see pigs fly before we saw spending cuts in the U.S. But bust my buttons, this report I found on Reuters tells me that there’s a chance we could see spending cuts in the next budget… That is, if the Democrat controlled House of Representatives approves it, which right now seems very unlikely… This article can be found here: https://www.reuters.com/article/us-usa-shutdown-budget/white-house-to-seek-big-domestic-spending-cuts-budget-will-be-late-idUSKCN1PN2QP

Or, here’s your snippet: “The White House will propose significant non-defense spending cuts in its 2020 budget proposal, officials said on Tuesday, but it will miss the Monday, Feb. 4 deadline for submitting its plan to U.S. Congress, where the new Democratic majority in the House of Representatives plans to oppose it.

White House National Economic Council director Larry Kudlow told Fox Business Network that the administration would propose a “very tough spending” budget “in a few weeks” and call for at least 5 percent across-the-board cuts in domestic spending. “Let’s minimize government where possible,” Kudlow said.

A senior White House budget official who asked not to be named cited the 35-day partial government shutdown as the reason for the delay in submitting its 2020 budget proposal.

The administration’s proposal will face stiff resistance from Democrats who have repeatedly opposed across the board spending cuts, congressional aides said.

Chuck again… Well… I was beginning to send some blueprints to D.C. that would show them how to affix wings to pigs, and then aero-training to show them how to fly… Oh well, back to the drawing board…

Currencies today 1/30/18: American Style: A$.7200, kiwi .6840, C$ .7558, euro 1.1435, sterling 1.3100, Swiss $1.0030, European Style: rand 13.5822, krone 8.4822, SEK 9.0882, forint 276.81, zloty 3.7510, koruna 22.5290, RUB 66.16, yen 109.40, sing 1.3506, HKD 7.8442, INR 71.08, China 6.7344, peso 19.14, BRL 3.7432, Dollar Index 95.80, Oil $53.84, 10-year 2.72%, Silver $15.92, Platinum $818.55, Palladium $1,344.94, and Gold… $1,313.34

That’s it today…  I sure hope Christine has a grand day! Happy Birthday to you…  I’d sing, but then people would leave…  Another night of nothing, sports-wise that I want to watch, on TV… So, I spent the night reading my new book… I’ve read 4 books this month… All murder mysteries, as that seems to be my bag baby…  I like the Harry Bosch books, and C.B Strike books, and so on…  I’m venturing away from my normal authors with a book written by David Baldacci… So far, so good…  What a beautiful day yesterday here… I know the arctic polar vortex has the Midwest in its ice cold grips right now, and I’m so happy to not be there!  Redbone takes us to the finish line today with their great 70’s song: Come And Get Your Love…  That about does it today… I hope you have a Wonderful Wednesday, and you remember to Be Good To Yourself!

Chuck Butler

Powell’s About Face, Begins To Sink In…

January 29, 2019

* Currencies and metals rally in the overnight markets

* PG&E Files for Bankruptcy! So much for the so-called robust economy! 

 

Good day… And a Tom Terrific Tuesday to you! Well, the sun finally made its way from behind the clouds yesterday, while it was off and on, it still felt good, when it was on! Other than gathering up some overdue warm sun yesterday, I really didn’t do much… But then I think that’s what retirement is supposed to be about, eh? I don’t want to be busy any more… I was busy for many years, as I worked from being a mailroom clerk at a local brokerage firm, to holding the most important job in a Brokerage Operations, and then onto banks, and bonds, and then currencies, and metals… 13 hour days, dinner at the office, 7 -days a week, I’ve done it all, and now I don’t want to be busy any longer! I have friends that can’t sit still… But having cancer for the last 11 years has taught me to stop and rest when I needed to, and now… well, I have no problem sitting still! The Allman Brothers greet me this morning with their song: Whipping Post… Which I used to sing the words to, back when I was working 13 hour days… Sometimes I feel…. Like I’ve been tied to the whipping post…

Well, the currencies didn’t exactly light up the scoreboard yesterday, but they also didn’t short out… The euro bounced around in a tight range, but above 1.14, and the Aussie dollar (A$) lost its momentum from last week, and sold off in a tight range. Gold held steady Eddie above $1,300 and the 10-year Treasury’s yield fell 2bps to 2.74% on the day. Remember when bond yields go down, the price of the bond goes up… and when the price of the bond goes up, it means investors are buying bonds… Stocks don’t know what to do… Is the economy robust and strong like the Fed Heads kept telling us previously? Or… Is it heading for a recession?

Speaking of a recession, let me be perfectly clear here…. Stocks, historically do NOT perform well in a recession… I’m just saying… And as far as IF a recession is coming, as I believe it is, and earlier than most economists are saying (they say 2020, I say this year!) Here’s another thing that leads me to believe we’re heading to a recession faster than most economists thing… I pulled this from Danielle Di Martino Booth’s Twitter feed last night…

“For 2018 as a whole, there were 1,452 changes among corporate chieftains, just shy of the highest annual total on record in 2008, when 1,484 CEOs left their posts; these figures are highly unusual in an economy that is purported to be expanding”- Danielle Di Martino Booth on Twitter

I would call that akin to rats jumping ship…  HAHAHAHAHA! 

Back to the currencies… In the overnight markets, the dollar has been sold more and the currencies have rallied a bit more… Gold is up over $4 in early morning trading, and there was word out overnight that the largest power utility, Pacific Gas and Electric (PG&E) filed for bankruptcy. Really? I did say the “largest power utility” has filed for bankruptcy, and you would have to think that their $50 Billion in debt had something to do with it, right? 

This has really got to get to the Fed Heads… I’m just saying…  How can an economy be strong and robust if the largest power utility can’t make a go of it any longer? 

With regards to what I said yesterday, when I said that ECB President Mario Draghi, was going to throw the euro under a bus again when he gave his speech at the DAVOS conference… I’ve highlighted his speech in the FWIW section today… But as a teaser, I will tell you that he tried like the dickens to sound like a two handed economists… “On one hand we have this, and on the other had we have that”… He tried to throw the euro under the bus, but…. He stumbled and didn’t get the single unit near the bus…

The Fed’s FOMC starts a 2-day meeting today, culminating with an announcement tomorrow afternoon..  At no time, when the Fed was deeply entrenched in their rate hike cycle, this meeting held the chance of a rate hike… So, the meeting will be more important in a few weeks when the meeting minutes are printed… Did the Fed Heads discuss pausing their rate hikes, and Quantitative Tightening? Or, the resort to what I used to call their boardgamepallooza?  By George, you’ve sunk my battleship! HA!

Word is that U.K. PM May has torn up her divorce papers from the European Union and is starting over…  Of course I’m taking about BREXIT, and with all the questions about the proposed agreement, pound sterling has removed the shackles that bound the currency during the previous negotiations, and is on the rally tracks.  I’m not completely sold on the idea that no news is good news for pound sterling, but that’s what traders are going with, and so be it…  

I saw plenty of headlines yesterday and last night talking about how the U.S. is going to borrow more than $1 Trillion for the 2nd year in a row… No, that’s not a record, as you may recall that the previous administration had a string of 4 years of Trillion dollar deficits.. But, as I say, things continue to deteriorate here in the U.S. and it won’t be long (a couple of years) before we’re booking $2 Trillion in deficits per year… It matters not who’s in charge, the writing is on the wall, folks… 

I have to go to the data calendar each day and see what prints will be delayed and which prints will actually get through the road block… Today, we should be able to see the Case/Shiller Home Price Index for November, and if there really is a trend here, we’ll see Home Prices slip once again as they have the previous two months to November.  

November seems like ages ago doesn’t it? What give with the folks at Case/Shiller, needing 2.5 months to print some home price data?  Doesn’t anybody want to work any longer? HA!   The folks on my old trading desk, would get a laugh out of that, because that’s one of  my fave lines whenever someone wanted to take off…  

Speaking of my old job… I started receiving messages from LinkedIn yesterday from people congratulating me on what LinkedIn said was my 20 year anniversary at EverBank…  I laughed out loud! First and foremost EverBank is not in existence any longer, and  on my personal profile I had changed it to me writing for Aden Research… But somehow in the bowls of LinkedIn they think I’m still at EverBank!   Now that’s funny if you stop to think about it… 

Gold only gained 20-cents yesterday, but this morning the shiny metal is up more than $4, as the about face of Fed Chairman Jerome Powell has finally begun to sink into commodity traders and investors…  I’ve been reading all kinds of articles about the Russian Gold horde, and how they tend to use it in the future…  One of the thoughts is that Russia will use their Gold reserves as a payment system on trade…  I would caution them on that, considering what happened here in the U.S. in the early 70’s…  Again, I’m just saying… 

To Recap…  The about face of Powell has finally sunk into the thoughts of traders and investors, and that has the currencies and Gold on the rally tracks today. This is a nice follow up to the move last Friday.   The FOMC meets today, so get out the board games, and PG&E has filed for bankruptcy! WOW!  

For What It’s Worth… I thought that the euro had a lot riding on the ECB President, Mario Draghi’s speech yesterday, so when I saw it in text, I thought why not use it for the FWIW piece today? So, this is the Draghi speech, but I only highlighted the important part, and it can be found in its entiretyhere:https://www.ecb.europa.eu/press/key/date/2019/html/ecb.sp190128~8b43137b4f.en.html

Or, here’s your snippet: “Thanks to the collective efforts of all European citizens, the euro area has emerged from this crisis. The results of their and their representatives’ determination have been tangible: 22 consecutive quarters of economic growth, the unemployment rate at its lowest level since October 2008, and wages and incomes on the rise.

However, over the past few months, incoming information has continued to be weaker than expected on account of softer external demand and some country and sector-specific factors. The persistence of uncertainties in particular relating to geopolitical factors and the threat of protectionism is weighing on economic sentiment.

At the same time, supportive financing conditions, favourable labour market dynamics and rising wage growth continue to underpin the euro area expansion and gradually rising inflation pressures. This supports our confidence in the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term. Significant monetary policy stimulus remains essential to support the further build-up of domestic price pressures and headline inflation developments over the medium term. This will be provided by our forward guidance on the key ECB interest rates, reinforced by the reinvestments of the sizeable stock of acquired assets. In any event, the Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation continues to move towards the Governing Council’s inflation aim in a sustained manner.”

Chuck again… See what I’m talking about… On one hand, things don’t look so good, but on the other hand, things over here look good… Strange, but the good thing is that the euro didn’t get thrown under a bus, which had been the MO of Draghi… 

Currencies today 1/29/19: American Style: A$.7185, kiwi .6845, C$ .7605, euro 1.1438, sterling 1.3154, Swiss $1.0073, European Style: rand 13.6337, krone 8.4915, SEK 9.0595, forint 277.20, zloty 3.7550, koruna 22.5080, RUB 65.99, yen 109.45, sing 1.3518, HKD 7.8458, INR 71.01, China 6.7381, peso 19.02, BRL 3.7579, Dollar Index 95.70, Oil $52.45, 10-year 2.74%, Silver $15.89, Platinum $817.80, Palladium $1,337.11, and Gold… $1,307.89

That’s it for today…  I’ve always referred to January as “the longest month”, as it seems it drags on, with cold shortened days for sun, and so on… But we’re almost to the end of it… 17 days until pitchers and catchers report to spring training… the first sign that winter is coming to an end… YAHOO! Our construction project is beginning to look like there’s a light at the end of the tunnel… I can’t believe how long this has taken…  My house was built in 3 months!  I’m just saying!   Talk about inflation… I looked online for movie tickets the other day, and found them for the movie I wanted to see, and they were $19.80! I said, forgetaboutit! I’ll wait for it to come out and I can watch it at home!  The last movie I’ve seen was The Big Short…  Pink Floyd takes us to the finish line today with their song: Learning To Fly…  And with that… I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!

Chuck Butler

 

 

Gold Jumps Higher On Powell’s About Face….

January 28, 2019 

* Currencies rally on Friday… 

* Will Draghi throw the euro under a bus today? 

Good Day… And a Marvelous Monday to you! It was a washed out weekend for yours truly, as S. Florida received as much rain in 2 days as they normally receive in 1 month… And… It’s supposed to be the “dry season”! But, I don’t let that get me down, for I know the sun will be out sooner or later! Both the college basketball teams I follow lost this past weekend too. How does a team hold a 14 pt advantage with 1:40 left in a game and lose the game? Well, I saw how it was done, and I didn’t like it at all! Mizzou Senior QB, Drew Lock, performed well in the Senior Bowl… If that has any consolation in it… UGH! Neil Young and Crazy Horse, greet me this morning with their live from The Fillmore East recording of: Down By The River… This version is over 12 minutes long, so it’ll still be playing as I write…

Well, how about that performance of Gold on Friday? Gold gained $22, and forged over the $1,300 road block that has been in place for some time now… But Gold’s gains were outpaced by Palladium which rose more than $41` on the day… We’re seeing some profit taking early this morning in both, but for now, Gold is holding above $1,300…

So, why the big move on Friday, I hear you asking? Well… as the Fixx once sang, one thing leads to another… But that’s too simplified… When actually the thing that got Gold moving in the right direction, was another chink in the Fed’s credibility armor… You see, Fed Chairman Powell, is now talking or hinting if you will, about slowing down the Fed’s Great Balance Sheet Unwind… Powell has already made overtures about pausing the Fed’s rate hike cycle, and now if he’s talking about pausing the Unwinding of the Balance Sheet, or Quantitating Tightening, if you will… Then that would mean that interest rates aren’t going to go any higher, and all the previous talk about getting back to “normal rates” and so on, is being thrown out with the bathwater…

So, why wouldn’t Gold have a field day with that news? One of my fave economists, Danielle Di Martino Booth, had this to say on Twitter about Powell’s about face with rate hikes…. “it is undeniable that there was a huge about face on the part of Jay Powell…at no time in history have the fortunes of the U.S. stock market been so tethered to the real economy.” – Danielle Di Martino Booth on Twitter.

You see, it’s not just the physical act of pausing rate hikes that got Gold on the rally tracks, instead, it’s all about “why the Fed is pausing”… And that my friends is the thing that I’ve been talking about for some time now, and that is the Fed Heads pushed the economy into a corner with their double barreled rate hike cycle, and now, they have to stop because the economy can’t take any more rate hikes, and out with the bathwater goes the Fed’s Credibility… For haven’t they been the ones talking about how “strong and robust” the economy is?  Well… look again Fed Heads, did you hear that? In doing my best Ross Perot imitation…That’s your credibility creating a great sucking sound… do you hear it? 

So…Gold and Palladium weren’t the only winners on Friday… The currencies led by the euro, started winning back the lost ground they had lost in the past 10 days… 10 days ago, I thought for sure that the tide was turning on the dollar, but then it fought back… And now it will have to fight back again if it wants to regain some momentum…

The Aussie dollar is pushing the currency appreciation envelope to close to 72-cents, the Russian ruble in on the rally tracks, and so too are a number of other currencies this morning… The Big Question will be can they hold their gains, and not give them back like they did last week? Now that would lead one to believe that more good things are in store for the currencies VS the dollar… But like I said, we’ll have to wait-n-see…

I had an email blurb sent to me from the GATA folks this past weekend, and in it was something that I’ve heard whispered about, but with no one ever really coming out and saying it’s true… Here it is from the GATA Folks… “At this distance in time it’s just hearsay but Swiss gold fund manager Egon von Greyerz tells King World News tonight that reliable sources tell him that French President Charles de Gaulle was sure a half century ago that the United States had already exhausted its gold reserve through its price-suppression policy.”

Now, I’m sure that we could get hundreds of pictures of Gold Bars in Ft, Knox if we wanted to… But there are two questions one should ask about the pictures…. 1. Are we certain that we’re looking an pure physical Gold, or Gold plated, whatever? And 2. Are we certain that the U.S. has claim to all the Gold in Ft. Knox? Could it be that most of it has been swapped out and we’re just holding it in safekeeping for the actual owner? And one more bonus question… What did it take so long for the Fed NY to give Germany back its physical Gold bars, if….. the Gold was sitting there unencumbered by any swaps or liens?

OK… enough of that, one of these days though, this is going to make one hell-a-va movie, no?

European Central Bank (ECB) President, Mario Draghi, is giving a speech today, and the currency traders will be all ears to hear his take on how the ending of the bond buying program is going that ended with the old year on 12/31/18.  I think that Draghi, in his normal Operating Mode, will throw the euro under the buss with this speech, for he too sees what’s going on in the U.S. and knows that once the total trader sentiment changes and they begin to sell dollars by the truck load, the euro will benefit from that, and with the Eurozone economy teetering right now, he feels he can’t let the euro start rising…   That’s my take on Draghi’s mindset, and his fears, and I of course could be wrong… Let’s hope, for the euro’s sake, I am wrong!

The U.S. Data cupboard is still having a data vacuum, as on Friday, the Durable and Capital Goods Orders data was “delayed” and didn’t print as scheduled.  

Before we head to the Big Finish today… I wanted to drag something out from the past, that I made a BIG Deal about at the time, and that is the Tax Reform Act of a year ago… I said at that time that the $1.5 Trillion tax cut was not for you and me, but more for Corporations and Big Business to make capital improvements and expenditures…. But… and it was a Big BUT, I said then that I doubted that the tax cut would be used like that, and instead, these corporations would use the tax cut revenues to buy back their company’s stock…     

Well, here are 1 year after the announcement of the tax cut, and today I saw this in Reuters.com   “The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October. “

So… I’m slapping myself on the back and I’m not liking it… for I was afraid that this would happen, and the aid to the economy wouldn’t happen, and that’s exactly what’s happened… Well, 84%, which is a pretty large number, don’t you think?  UGH!   Sometimes I don’t like it when I’m right! 

To recap…  On Friday last week, Jerome Powell did an about face on the Fed’s Great Balance Sheet Unwind, or Quantitative Tightening, and talked about the need to pause… This added with his previous comment that physical rate hikes may need to be paused, got everyone thinking that the economy must really be showing signs of depression, and with that thought Gold rallied $22 on the day! The dollar got sold, currencies were bought, and we went back to two Fridays ago, when the non-dollar assets all rallied, only to give back their gains the next week… Will this be a wash, risnse, repeat of that? 

For What It’s Worth… I couldn’t believe my eye when I read this article last week, it’s telling us that the Shale Oil Production (Fracking) could be diminishing, and it can be found here: https://oilprice.com/Energy/Energy-General/Warning-Signs-Flash-For-US-Shale.html?mc_cid=de2e01b50b&mc_eid=a7dfedec44

Or, here’s your snippet: “The shale tidal wave may finally be starting to ebb.

The largest oilfield services company in the world says that shale drilling activity is slowing, creating an uncertain outlook for 2019.
The recent volatility in oil prices has created “less visibility and more uncertainty” on spending by shale companies in 2019, Schlumberger’s CEO Paal Kibsgaard said on an earnings call on January 18. Shale drillers are “generally taking a more conservative approach to the start of the year, again delaying the broad based recovery in the E&P spend that we expected only three months ago,” he said.

Kibsgaard said that spending from the shale industry could be flat or down this year relative to 2018. That could translate into lower drilling activity, while E&Ps focus on drawing down the enormous backlog of drilled but uncompleted wells (DUCs). Companies working through DUCs could keep production aloft even as drilling slows, but output would likely fall relative to 2018, while decelerating further in 2020.

Schlumberger’s chief executive also warned that the shale industry could see other problems going forward that could be even more significant. Shale drilling suffers from a precipitous decline in output soon after a well is completed. After an initial burst in output, wells see a rapid decline in production.”

Chuck Again… WOW… I was very surprised to see this… I’ll keep my opinion on this to myself, regarding Fracking, but to hear that it’s petering out, is quite interesting in my opinion….

Currencies today 1/28/19… American Style: A$.7175, kiwi .6835, C$ .7555, euro 1.1415, sterling 1.3145, Swiss $1.0073, European Style: rand 13.6505, krone 8.5235, SEK 9.0620, forint 278.47, zloty 3.7568, koruna 22.5405, RUB 65.97, yen 109.55, sing 1.3540, HKD 7.8458, INR 71.05, China 6.7456, peso 19.06, BRL 3.7672, Dollar Index 95.83, Oil $52.72, 10-year 2.76%, Silver $15.72, Platinum $811.60, Palladium $1,354.58, and Gold… $1,300.05

That’s it for today, except…  A Great Big Happy Birthday to Chris Gaffney! I’ve known Chris since the 80’s… We worked together at Mark Twain Bank and EverBank, he was always “there” for me…  So, Happy Birthday buddy, and I hope you have a Grand Day!  Saturday was my younger sister Joan’s birthday… I hope her day was grand! Our friends from New Jersey, Jack and Loraine arrived here this past weekend, So hail, hail, the gangs all here! And with that the great band, Chicago, takes us to the finish line today with their song, and one of my faves: Hard Habit To Break…   I hope you have a Marvelous Monday, and that Chris has a blessed birthday! Remember to Be Good To Yourself!

Chuck Butler

 

Chuck Recalls The End of 2001…

January 24, 2019

* Currencies rally, then fade in the overnight markets

* Waiting for Gold… 

Good Day… And a Tub Thumpin’ Thursday to you! I plan on doing some Tub Thumpin’ this afternoon, so let the good times roll! I have to hope that the wind settles down a bit here, today, because we’re expected to have a day of rain, and if the wind is blowing like it has been, it’s going to feel like a hurricane-light… Isn’t this sibling fight going on too long now? The President wants to make his State of the Union Address, which happens every year at this time, and the House Speaker says, “no you can’t have it my house!” Ridiculous… Can’t we all just get along? My goodness, we’ve gone a down a dark, dirty rabbit hole with regards to Compromise and Civility… But I can’t do anything about it, so let’s move on… Neil Young greets me this morning with his song: Southern Man, which spurred the Sweet Home Alabama song in response…

The currencies found a way to remove one of their legs from the mud they’ve been stuck in recently, during yesterday’s trading… But they didn’t make much progress in doing so… The euro bumped up a bit, and left the door open for the rest of the currencies to move out of the mud, but…. They failed to do so. So, it sure looks like we’re going to go into the weekend with currencies mired in the mud, and unable to pull themselves out, because in the overnight markets, the 25 ticks upward move the euro made yesterday, was wiped out and a downward move replaced it. 

Reminds me of late 2001… The currencies were reacting the same way, day in and day out, until I was about to pull my hair out (yes, I had hair back then… not much but some)… And then it began in February of 2002, the euro began to move higher first, then the other currencies followed along, and they didn’t stop moving higher until a one year pause for the cause in 2005, only to get moving again in 2006-2008… Then the sky fell on the earth in 2008, and it wasn’t until March 2009 when the Fed first announced Quantitative Easing, that the dollar got sold again, and that went on until the end of 2010, when the hidden debts of the PIIGS were discovered, and it’s been all about the dollar since.

I recall our old Marketing Guru at the time, telling me in 2001 that I was crazy for writing a white paper titled: The Demise of the Dollar… But then when things began swinging in the right direction for me, he came back and asked me to write another one late in 2002… This one was titled 2003, The Year of the Euro… And once again I had nailed the pitch and sent it soaring into the gap, cleaing the track, wall and into the seats!

I was younger then, and this was pre-cancer… I had lots of energy, and made time during my busy days to research items for those white papers. Now, it’s time for someone else to take up the charge… I’m what we used to call old football players… “has beens”…

Back in the day, it was far easier to make a call on a direction of a market, because everything was based on fundamentals… Trends resulted from fundamentals, and the Technical stuff just told you what happened inside the trend… For instance, there was not ONE technician that called for the Weak dollar Trend back in 2001… It was all about fundamentals… which included: interest rate spreads, Debt, Trade, leadership, stability, whether a country had something that other countries wanted or needed, and so on…

Jeff Opdyke from the Wall Street Journal was in town years ago, wanting to write an article about me and my Pfennig newsletter, and during the time he was there, the Norges Bank (Norway’s Central Bank) had hiked interest rates, and the currency had climbed higher by a good amount… I then pointed out to him that I had written a month earlier that it appeared to me that the Norges Bank was ready to hike rates and that it would behoove currency investors to own some Norwegian krone ahead of a rate hike… He didn’t believe it at first, but when Chris Gaffney pulled out the copy of the Pfennig from a month earlier, and then showed him the number of people that had bought krone, ahead of the rate hike, he stepped back and said, “how did you know this was going to take place?” And I replied… Fundamentals…

Speaking of fundamentals… Well, while there’s not a lot to talk about that’s not BREXIT related from overseas… We all know China’s economy is slowing down, and Russia’s is going along just fine. And the Eurozone is teetering toward a recession, and the Emerging Markets are in shambles…

But here at home we did see some data sneak through and one of the minor prints was the Philly Fed Index, non-manufacturing was one of them… I normally don’t pay too much attention to the non-manufacturing sides of these Regional indexes, because, everyone knows that we’ve become a servicing based economy, and our service sucks eggs!

But then I was going through Twitter yesterday afternoon and came across this Tweet from one of my fave economists: David Rosenberg, who tweeted : To little fanfare yesterday, the Philly Fed released its nonmanufacturing index for January and it fell through the trap door. Look at the charts — have the recession label all over them. As if the housing report wasn’t bad enough!

Chuck again… Yes, I told you about the housing report the other day, and how it was exposing the rot on the vine of housing little by little… In the FWIW section today I have an article from a guy that I debated with on Bloomberg radio many years ago, and he’s come around to see the light! HA But it’s more talk about a U.S. recession, so you wont’ want to miss that!

The currencies can’t find a bid, and neither can Gold… Going into the year-end, I really thought that Gold was looking like it was ready to breakout to the upside, and certainly past $1,300… But then the New Year came along, and out the window went that strong move in Gold and now it stuck in the mud like the currencies. Something here just doesn’t seem right folks…  There’s madness all around the world, Interest rates for the most part are still low, and recessions loom everywhere… And Gold can’t find a bid… What’s up with that?  I guess greater minds than mine will figure that one out!  Gold, for the record, lost $2.40 yesterday, and is down more than $3 in the early trading this morning…  

Recall yesterday, I told you about investment legend, Sam Zell, buying Gold for the first time in his life… Well, I guess he’s getting a nice cheap price, compared to where I believe Gold is eventually going… I’m just saying… 

We still haven’t seen Retail Sales for December that report was expected a week ago… But other reports have made it through the data vacuum, and today, we’ll get the Markit versions of ISM with their manufacturing index… Since data has been lacking the market will be looking at this piece of data a little more closely, to see if the weakness that was recorded in manufacturing last month, carried through to the year-end. My thought is that it did, but then I think logically, and not the other way… 

To Recap… Another day of little movement in the currencies. The euro tried to step out of the mud, but was brought back down in the overnight markets last night. Gold is also stuck in the mud, and Chuck is scratching his balding head more and more these days!  Chuck goes through the timing of the last weak dollar trend, and the difference between now and the way things used to be valued, just for general consumption… 

For What It’s Worth… I always know when something is important enough to report on, when I received it directly from the news source, and from longtime reader Bob… And so it is with today’s FWIW article, which is about Gary Shilling, calling for a recession ahead of other economists… And it can be found here: https://www.marketwatch.com/story/contrarian-who-called-the-2008-housing-crash-expects-a-global-recession-this-year-2019-01-23/

Or, here’s your snippet: “Still, economists overwhelmingly expect slower growth this year but no recession. More than half of those surveyed by The Wall Street Journal in January saw recession coming by 2020.

One well-known independent economist thinks it will happen even sooner—he’s looking for a global recession to start in 2019. A. Gary Shilling, president of his eponymous consulting firm, made two of the best contrarian calls of recent decades: he saw the mega-bull market in bonds at its very outset in 1981, and in the years before the 2008 financial crisis and Great Recession, warned repeatedly that the housing bubble would turn into a bust and would take the whole economy down with it.

Now he says it’s once again time to batten down the hatches. Although he concedes that financial excesses aren’t what they were a decade ago and that the Federal Reserve is not raising rates willy-nilly—the two principal causes of recessions since World War II—he thinks the global economy will die a “death by a thousand cuts” in 2019.”

Chuck again… Many years ago, during the last weak dollar trend (2002-2010) I was asked by Bloomberg radio to talk about the falling dollar, and they had Gary Shilling on the other line to debate me on this subject… Let’s just say, he may have won the battle, but I won the war… So, it’s good to see him on my side this time!

Currencies today 1/24/19: American Style: A$.7100, kiwi .6773, C$ .7487, euro 1.1348, sterling 1.3023, Swiss $1.0053, European Style: rand 13.8160, krone 8.5720, SEK 9.0705, forint 280.85, zloty 3.7844, koruna 22.6630, RUB 66.23, yen 109.75, sing 1.3605, HKD 7.8466INR 70.96, China 6.7880, peso 19.05, BRL 3.7954, Dollar Index 96.40, Oil $52.38, 10-year 2.73%, Silver $15.29, Platinum $792.51, Palladium $1,348.41, and Gold… $1,279.80

That’s it for today, and tomorrow… No 4 day weekend this week, UGH! I like those because I actually do lose track of what day of the week it is! It was a mixed bag of results for my teams that I follow last night… Our Blues won big 5-1, but both the Mizzou and SLU basketball teams lost… I just took a peak outside at the sunrise, and see that the wind has diminished greatly… Thank goodness for that! Another cold front is supposed to come our way today, and keep the temps over the weekend from not getting any higher than 70… Oh, the humanity! HAHAHAHA!   The Guess Who takes us to the finish line today with their song: These Eyes…  A classic rock song for sure! The Guess Who featured one of my fave singers, Burton Cummings…  And with that, I hope you have a Tub Thumpin’ Thursday and Fantastico Friday, and remember to Be Good To Yourself!

Chuck Butler

 

 

Another State Looks To Add Gold & Silver To Their Reserves…

January 23, 2019

* Russia not only books a Surplus, but also reduces its debt!

* Currencies are stuck in the mud… 

Good Day… And a Wonderful Wednesday to you! It was a long day yesterday for yours truly, that began with a trip to Roger Dean Stadium for an exchange of tickets that they gave me in error… I made the person at the window pull out my order sheet, to confirm that they made the error, and not me! Not that I pointed any blame fingers! I just needed them to exchange them for the right tickets with a smile and a thank you for my business… Went to dinner with our good friends, Gus and Vivi last night, and it was a great night! The late Great Tom Petty greets me this morning with the song from his band, the heartbreakers: Last Dance With Mary Jane… which happens to be my favorite Tom Petty song, and the Good Lord knows he had a lot of them!

Well, another day, another day of no movement in the currencies… I’m really at a loss as to why the dollar isn’t getting sold like funnel cakes at a state fair, but then who does know why? All I know is that the currency markets seem to be stuck in the mud right now, waiting… for something to break out one way or the other… Could it be the 33 day Gov’t shutdown here in the U.S. that’s causing the problem? Or could it be the Trade War with China that continues on taking no prisoners, that’s causing the problem? Or could it be whether or not the U.S. economy is heading to a recession or not?

See? There are a truckload of things that could be putting its foot on the brake right now, and I’ve just talked about a few of them! Yesterday, I told you that Russia had booked a Current Account SURPLUS for 2018… And a longtime reader sent me a note and said, that it wasn’t just a SURPLIS, but also had reduced their Gov’t Debt in 2018… here’s the note from the RT; “Russia’s external debt has fallen by $64.4 billion or 12.4 percent from the beginning of last year, amounting to $453.7 billion as of January 1, 2019 – the lowest level since April 2009, according to Central Bank of Russia data.”

I would love to meet CBR Gov. Elvira Nabiullina one of these days… You know, I’ve told you all this story many times in the past, but years ago, I met the Gov. of Reserve Bank of New Zealand, Don Brash, face to face… He knew all about our tiny bank (Mark Twain Bank) as the buyers of huge amounts of his Gov’t issued bonds… And we talked, and he gave me his personal business card, with his direct phone number on the card… And told me to to call him, any time I had questions about NZ monetary policy… I put that offer to test a few months later, and called him… He answered the phone! And thus began a long distance relationship that remains to this day!

So, don’t begin to tell me that coming face to face with Elvira Nabiullina is out of the question! And if I did meet her, I would commend her for years of battling high inflation, and for changing the face of the CBR to a gold reserve accumulation Central Bank…

Normally, the Russian ruble would be strutting around like a 20-game winner… But with the price of Oil in the dumpster, and the U.S. defaming anything Russian these days, it’s difficult to move higher VS the dollar for the ruble… but it will, in my humble opinion, eventually… and that gives a lot of investors the opportunity to buy at cheaper leavels, and earn a very nice rate of interest… that’s above most countries in the world!

Oh me, oh my, I just checked the currencies again, and they still seem to be wearing the same clothes as yesterday…  I’m not kidding when I tell you that… For instance, the Dollar Index traded yesterday morning at this time at 96.34, and this morning it’s trading at 96.32…   I looked across the board and didn’t see any of the Dollar Index currencies on the rise today, so I’m wonder where the heck the .02 gain came from?  Oh well, it is what it is… let’s move along.

Yesterday, I told you about how the state of Wyoming was introducing legislature to make Gold & Silver a part of their reserves…  And today, I have another announcement from a different state that I’ll talk about in the FWIW section today.  Just a little teaser, if you will… 

Well, there’s a lot of optimism in the markets this morning that a Trade Deal is going to get done soon…  I sure hope they don’t get disappointed, because that could cause a major ripple to the markets, that seem to have calmed down now, after a few weeks of manic selling. The 10-year Treasury’s yield has settled in around 2.75%, and  Gold just can’t get past the $1,300 goal post. 

Speaking of Gold… Did you hear the news last week that Sam Zell, the mortgage guru, multi-millionaire that’s an investing legend, announced that he was buying Gold for the first time in his life…  I’ll step back and let that sink in a bit…    

I’m not saying he’s the leader, and we need to following the leader here… I’m just saying that I believe he knows something that we don’t…   so, you won’t hear me singing: We’re following the leader, the leader, the leader, we’re following the leader wherever he may go!  That’s one of those songs that if you just now sang along with, will be in your head the rest of the day… So sorry about that! 

The Great Data Vacuum here in the U.S. continues today… The only piece of data that has gotten through in the past week was the Existing Home Sales for December, which fell to 4.99 Million VS 5.33 Million in Nov.  The rot on Housing’s vine continues to be exposed, little by little folks…  And I think the Fed Heads are finally starting to wake up and smell the coffee here… At least I hope so! 

An finally, the only things I’m hearing from the World Economic Forum in Davos, Switzerland, is gloom and doom…  Hmmm….  These boys and girls are not the people to be expressing gloom and doom, but instead, they should be spreading the love…  But they’ve chosen a different path this year, and that scares me a bit, not that they know any more about what’s going on right now than the rest of us… It’s just that when I say something, the markets don’t listen, but if one of those guys say something, well now that’s a horse of a different color, my friends… 

A funny, ha-ha, note here… Years ago, when I was on the trading desk and writing each day, I had a dear reader who was absolutely positive in his research that I “moved the markets with my letter each day”…  Wait, What? Yes, that’s what he claimed I did…  Nice to think that my letter would have held that much clout, but it didn’t, no way, no how! 

To recap…  It’s another day of wallowing in the mud, that the currencies are stuck in right now… They can’t get out of the mud, and there’s nothing out there right now that would cause them to get out of the mud! Gold is also being held back, and the Ten year Treasury yield is around 2.75% and holding steady Eddie. There’s still a data vacuum, but some housing data did slip through and showed that the rot on housing’s vine is being exposed little by little… 

For What It’s Worth…   So, like I said above, yesterday I told you about the state of Wyoming, and today, comes word that Arizona is also looking to introduce legislature to include Gold & Silver in their reserves, and the article can be found here: https://www.moneymetals.com/news/2019/01/22/arizona-silver-gold-reserve-fund-001701

Or, here’s your snippet: “An Arizona legislator has put forward a bill to de-risk the state’s financial holdings with a modest allocation to physical gold and silver in the state’s reserve fund.

Introduced by Representative Mark Finchem (R-Tucson), the Arizona Sound Money Stabilization Act (HB 2500) requires that at least 10% of Arizona’s Budget Stabilization Fund be held in the monetary metals in a secure depository.

Arizona’s Budget Stabilization Fund has almost $500 million in assets but is currently invested in debt instruments and the stock market. The state owns no gold or silver.

Finchem’s past sound money initiatives have been successful. In 2017, Rep. Finchem passed the ground-breaking House Bill 2014, a measure which removed all income taxation of gold and silver at the state level.

Gold and silver do not have the default or inflation risks that bonds and other “fixed income” investments carry. Most importantly, physical gold and silver held in a depository carry no counterparty risk – or risk of failure or default – unlike stocks, bonds, and other financial assets.
In support of the measure, Rep. Finchem said, “it’s high time to safeguard the state’s assets and taxpayers against the volatile dollar.”

Chuck Again… He’s darn tootin’ right when he says that Gold and Silver do not that default risks of other investments!  OK, which state is next on the docket to get this done? 

Currencies today 1/23/19 American Style: A$.7138, kiwi .6790, C$ .7508, euro 1.13 60, sterling 1.2995, Swiss $1.0016, European Style: rand 13.8550, krone 8.5936, SEK 9.0295, forint 280.08, zloty 3.7735, koruna 22.5926, RUB 66.44, yen 109.65, sing 1.3593, HKD 7.8458, INR 71.21, China 6.8029, peso 19.10, BRL 3.7705, Dollar Index 96.32, Oil $53.62, 10-year 2.76%, Silver $15.41, Platinum $792.00, Palladium $1,346.02, and Gold… $1,285.17

That’s it for today… It got very windy here yesterday, and from what I can hear going on outside, it’s still very windy this morning!  UGH, the wind sure curtails outside activities! And that’s what I come here for, to be outside soaking in Vitamin D!  Oh well, I’m sure you don’t care, especially if it’s below freezing where you are! I got to watch our Blues the other day on TV down here, and the lost! UGH! It’s been an ugly season for Blues fans, but that’s our team, and we can’t stop rooting for them!  It’s been a few years since I’ve attended a hockey game, so my rooting comes from a recliner! HA!  Badfinger takes us to the finish line today with their song: Come And Get It….    I hope you have a Wonderful Wednesday, and continue to Be Good To Yourself! 

Chuck Butler

Russia Prints A Surplus For 2018!

January 22, 2019 

* Currencies still giving back gains to the dollar… 

* China’s 4th QTR GDP was 6.4%. Signs of Trade War damage?

Good Day… And a Tom Terrific Tuesday to you! What a nice weekend for yours truly… Except that the Chiefs didn’t win on Sunday! I actually wanted the Saints and Chiefs in the Super Bowl, and neither of them made it there, with both losing in overtime! UGH! Now, it’s Rams and Patriots, and I doubt I’ll even turn it on, for I despise both teams! I once was a Rams fan, but then they kicked the St. Louis fans to the curb, and moved… So, there! I heard a lot of the country got very deep cold and snowy weather this past weekend, just to remind everyone that winter still exists… Most people had the day off yesterday, so this will be a short week… So, let’s get going, eh? Chicago greets me this morning with their song: Movin In… It’s from their second album, and a real good one if you’ve never heard it.

Well… The news from this past weekend was different in different parts of the world… First we had China printing their slowest GDP since 1990, and then we had Russia reporting that they had booked A Current Account Surplus for 2018… That’s right, I said Surplus, with a capital “S”! Now, that’s not something you hear talked about very much in this day of debts, and deficit spending with no governor on the spending… I’ve said this for a couple of years now, and it still rings trued if not ever louder today, and that is that the Central Bank of Russia (CBR) Gov. Elvira Nabiullina is the best Central Bank Gov. since the days of Don Brash at the Reserve Bank of New Zealand. And the best going right now… She’s done a wonderful job of dodging the potholes caused by economic sanctions, has grown the country’s Gold reserves, and brought in a Surplus for 2018! All the while beating back inflation that had been a major problem in the country for years!

The Chinese on the other hand, while we know they book HUGE Trade Surpluses, they are in a Trade War with the U.S. and if there’s any sign that there’s a problem it’s going to be seen in the GDP numbers… And China’s GDP print of 6.4% is a level that hasn’t been seen there in more than a decade! In fact if you take out 2009, when every country in the world was ailing and attempting to gain a heartbeat again, the last time China’s GDP was this low it was 1990… Where were you in 1990? Funny to think about that, eh?

The National Geographic Channel had a documentary about the 90’s this past weekend that I watched while looking for something to do besides listening to pre-game talk. And it was about the 90’s… Remember the white Bronco? The Macarena? And so on… Well, if that seems like a long time ago, then that’s how it feels in China right now…

So, the Chinese and President Trump are negotiating again… China says that if the U.S. listens to them they can tell them how to get out of their Trade Deficit problem… Interesting don’t you think?

I apologize for waiting so long to talk about the currencies… Sometimes, there are things that need to be discussed first! Besides, the currencies haven’t really moved since dropping some last week, and giving back the gains they had made the previous week. Of course with yesterday’s U.S. Holiday, the currency markets were thinned out, once the English lads and lasses hit the pubs, which was about 1 pm our time. There have been times in the past where thinned out markets had a major effect on the dollar, but not yesterday… So, we move along at snails speed with currency movements, as investors still don’t have a clue as to which way this whole economic mess is going to turn, and what direction it heads…

Everyone has their opinion, I have mine, and I’ve told you it previously, but in the end, nobody really knows anything in concrete… So, that’s what’s bringing about the questions… And when there are questions, investors sit on their hands… The best people like me can do is put together all the facts and figures and sentiment in the market and come up with an opinion…

For instance, Credit Card use in the U.S. is skyrocketing… What does that tell me? It tells me that consumers are strapped for cash, and that they can’t stop spending, so pretty soon they’ll max out their card, and apply for another one, and do the same with that one… It’ll keep the heart beating on the economy, but the heart beat will be weak, and ready to give out at a moment’s notice…

And fundamentals take a back seat to sentiment these days… That’s a real shame too, because with fundamentals you have real numbers on a score card that you can keep, that leads you to an investment decision, but this sentiment, you have the whims of Traders… Fundamentals may influence their sentiment, but in the end, sentiment is like perception… And we all remember that we are what we are perceived to be… That same goes for the dollar… 

OK… The IMF announced this past weekend that they were downgrading their forecast for World Economic Growth (GDP)…  Welcome to my bandwagon, IMF… I’m sure you’re highly paid economists will want a seat near the front of the wagon, but not today, for your tardiness to joining the bandwagon, you get what seat you can find!  And you’ll like it! 

Pound sterling is one of the few currencies gaining on the dollar today, as wage growth surprised to the upside in November… Wait, What? Traders are falling for the old, “the data looks good, even though its stale” trick? I guess so, I guess traders haven’t heard of BREXIT or the near removal of their PM last week?  So, I water down the pound sterling’s move, because I don’t think it’s something that can last…. I’m just saying.

The World Economic Forum, AKA known as the Davos boondoggle is going on as I write, and while there are quite a few absences from the boondoggle this year, it still has some heavyweights in attendance… So, we might get a quote or two from the boondoggle, that is if they can get off the slopes long enough to make one! 

Boy, you sounded really sarcastic there Chuck, is there something on your mind that’s bothering you?  Well, yes, there is, thank you for noticing…  In the summer we have Jackson Hole, and in the winter we have Davos, and what do these boondoggles ever deliver to us?  As Edwin Starr used to say in his song… Nothing, absolutely nothing, say it again! 

The U.S. Data Cupboard is something of a mystery these days… As we still haven’t seen the color or last Wednesday’s scheduled report on Retail Sales. There are some reports that slip by the road block but I would be surprised to see anything of real importance like Durable Goods print while the Gov’t shutdown continues…   So, there’s nothing here to see, move along for these are not the droids we’re looking for… 

When I left you last Thursday, Palladium was slipping from the moon shot it took earlier in the overnight markets, where it shot up $70… But by the time I hit send on Thursday morning, Palladium was giving a lot of that $70 gain back…  Later that morning I Tweeted: “Well, the moon shot move in Palladium overnight (up over $70) has settled down, and is back to reality… I still think it was probably a the reversal of a flash crash in pricing that caused the moon shot move.”

In other words… I thought that someone had mistakenly entered a trade to buy Palladium that had a bad decimal placement, and that made everyone jump and buy into the rally… But buy noon, Palladium had seen the best price of the day, and was experiencing a sell off.  it still gained a very nice $34 on the day… Which was $38 off its high..   Just to bring this back around to something concrete… there seems to be a shortage of Palladium that’s used in the catalytic converters on gas powered autos, which seem to be more in demand these days than electric cars…  

Gold on the other hand, lead a boring life compared to the trading in Palladium…  And speaking of a shortage, there sure has been a documented shortage of Silver for a couple of years, but has that gotten the everyday man’s Gold (Silver) anywhere?  No… it hasn’t! And it won’t either as long as their are still over 185 days of Silver production needed to equal the number of ounces of Silver sold short on paper trades… 

To recap… Russia prints a Current Account SURPLUS for 2018, and Chuck sends flowery notes to the CBR Gov…. China on the other hand printed a weaker than expected GDP of 6.4%, and that scared the bejeebers out of most of the Global Growth currencies… The U.S. is still shutdown, and that means there’s not much in the way of economic data slipping through the road block.  And Gold is attempting to keep up with the Joneses (palladium)

For What It’s Worth…  Well, I grew up on a street named Wyoming in South St. Louis, and I always thought as a kid that Wyoming sounded like a cool place, with the cowboys and wide open spaces… Well, now I can think about Wyoming as a cool place for another reason… The Wyoming Gov’t wants to buy Gold & Silver…  Really? Yes, and the article can be found here: https://www.soundmoneydefense.org/news/2019/01/17/wyoming-derisk-gold-silver-000205

Or, here’s your snippet: “A group of Wyoming legislators have introduced three bills this week to de-risk the state’s financial holdings with modest allocations to physical gold and silver in the state’s pension fund, reserve fund, and mineral trust fund.

Introduced by Representative Roy Edwards (R-Gillette) and co-sponsored by 15 others, the Wyoming Sound Money Trust Act (HB 174) empowers the State Treasurer to hold at least 10% of the Permanent Wyoming Mineral Trust Fund in the monetary metals in a depository in or near the state of Wyoming.

The Permanent Wyoming Mineral Trust Fund is the state’s oldest and most well-funded permanent fund with over $8 billion in assets.

Last year, Rep. Edwards successfully passed the ground-breaking Wyoming Legal Tender Act, a measure which reaffirmed that gold and silver are constitutional money and removed all state taxation of them.”

Chuck Again… Wow! Now if more states would get to using this idea for their own needs that would be tre cool!  And would go a long way toward ending price manipulation… I’m just saying… 

Currencies today 1/22/19 American Style: A$.7123, kiwi .6713, C$ .7506, euro 1.1360, sterling 1.2910, Swiss $1.0038, European Style: rand 13.9217, krone 8.5935, SEK 9.0320, forint 279.89, zloty 3.7705, koruna 22.5388, RUB 66.35, yen 108.45, sing 1.3610, HKD 7.8462, INR 71.28, China 6.7894, peso 19.22, BRL 3.7501, Dollar Index 96.34, Oil $53.02, 10-year 2.76%, Silver $15.29, Platinum $793.51, Palladium $1,347.68, and Gold… $1,283.65

That’s it for today…  A cold snap filtered its way down here in S. Florida yesterday, but that just meant that the air conditioner got a break! Our construction project is finally beginning to take shape. I know one thing and that is that people move at a much slower pace down here in the deep South…  I was going through my Spring Training Tickets, and noticed that the NY Yankees are coming to Roger Dean Stadium this year… It’s been a bout 10 years since we last saw them play the Cardinals at Roger Dean…  That was a memorable day, 10 years ago, as it was also St. Patrick’s Day… I’m just saying…  OK, time to get going… And the Guess Who is singing their song: No Time!   How about that for timing? HA!   I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

Palladium… On A Moon Shot!

January 17, 2019

* Front and center today with the Palladium move… 

* Danielle Di Martino Booth, talks about the recession train!  

Good day… And a Tub Thumpin’ Thursday to you… This is also going to be a start to a 4-day weekend for yours truly, as Monday is a National Holiday… YAHOO! I need to get my sleep pattern ironed out, and not having to get up so early will help with that.. I went to Roger Dean Chevrolet Stadium yesterday to pick up my spring training season tickets… They know me at the ticket window now, and they had them waiting for me before I even told them who I was! For 11 years now, I’ve said something when people say, “it’s good to see you”… I always respond, “it’s good to be seen”… And I was “seen” at Roger Dean yesterday! HA! They did mess up my order on additional game tickets, so I’ll have to return to sort that out… Blues Image greets me this morning with their song: Ride Captain Ride… 73 men sailed off from the San Francisco Bay…

Front and Center this morning, take a peek at the currency roundup and check out the Palladium price… Ok, back now? Boy that’s a head scratcher, isn’t it? But from what I can figure out, the buying of Palladium began with a hammer, on news that there’s a shortage of the metal, and that hammer turned to a sledgehammer and Palladium is up over $70 in the past 24 hours! 

That’s a great move, right? But I have to take a step back, and wonder if this is like a flash crash in reverse? Did someone enter a trade to buy that got the decimal in the wrong place?  I mean, shortage, I get that move, but not $70… Shoot Rudy, there’s been a shortage of Silver for a few years now, and we haven’t seen a breakout move in Silver!  Watch this today, to see if there’s a trade problem that’s identified, or if this was the real McCoy… 

Well, the real economic data (Retail Sales) we were looking forward to seeing yesterday, was delayed, because of the Gov’t showdown… That’s one way of keeping the bad news out of the markets minds… Have you seen the earnings reports from JP Morgan and Citi? They aren’t good, but that’s not stopping the stock jockeys from hiking up stock prices once again. I can hear the stock jockeys saying: Things can’t possibly be THAT bad can they?

I’ll bet a dollar to a Krispy Kreme that they are!

Another day of dollar buying and I have no idea why… Bloomberg had a good headline yesterday, they said, “ China is stuck. Theresa May is stuck. The U.S. government is stuck. Sears is stuck. They could just as easily added the Fed, and the economy… But you get the picture, Things around the world are a mess right now, but the things that affect our daily lives are the things that go on here in the U.S. I wouldn’t worry too much about China… Theresa May is a different story, she did survive a vote of confidence, which surprised me, but her problems are just beginning…  Sears is a real problem, and the U.S. Government? If you look up the word (stuck) in the dictionary, it’ll have a picture of Uncle Sam… And right under that would be pictures of the Eccles Building (Fed’s HQ), and a chart of the U.S. GDP going downward…

Gold struggled all day yesterday to get out of the red, but right at the end, a white knight rode in and pushed the price of Gold higher on the day, by $4… And like I said above, Silver trudges along, trying to avoid the potholes that are represented as short Silver paper trades… I was telling a dear reader yesterday, that it takes more than 180 days of Silver production to equal the ounces represented in short paper trades… That’s redonkulous!  But here we are… 

Well, Russia and other OPEC members came forward yesterday, and announced that they are behind the production cuts that the Saudis have proposed for the Cartel… That should have been fuel to move the price of Oil higher, but it doesn’t appear to have worked… The price of Oil is trading in the same clothes as 24 hours ago.  

Funny (not funny ha, ha) that this news on production cuts, did help the Russian ruble to rally, but not any of the other Petrol Currencies… I guess that would be more filed under Strange, not funny… 

It sure is pile on the Eurozone week… I’ve seen more articles this week that talk about how the Eurozone is headed for a recession… Eventually, if they keep saying that, it will become reality…  The euro has been stuck around the 1.14 handle, with no ammunition to move higher at this point. 

Speaking of a recession… Well, well, well… looky here… One of my fave economists, Danielle Di Martino Booth, had this to say on her Twitter account yesterday: “Are we headed to a recession? I think we are. I think the train has left the station….

Chuck again… Now where have I heard that said before? Oh, that’s right I said it! Those are my exact words, the recession train has left the station! Does this mean that Ms. Booth is a Pfennig Reader? I doubt it, but it does show that great minds think alike! Boy am I being egotistical today or what? Me, having a great mind? HAHAHAHAHAHAHAHA!  Now, that would be funny HA HA! 

Another dear reader cut-n-pasted something I said yesterday about how the world would return to a Gold currency regime… And asked me how in the world that would happen, and I replied, ” It would require a major reset in the price of Gold, upward, and then held at that price” Just something to think about… What would the knuckleheads in D.C. do if they had limits to their spending?  Now, that’s something I would pay to see! 

Well, there’s no data to report today, as D.C. is a mess right now, because three people can’t get together and agree on an issue… Compromise, that’s the key…  But that’s a word that’s been missing in D.C. for years now… 

To recap…  The moon shot mover in the past 24 hours has been the price of Palladium… Chuck wonders if the move came about from a flash crash in reverse?  The currencies are stuck in tight ranges, with the Russian ruble the best performer overnight.  With the Gov’t. shutdown, data prints are being delayed, which means the dollar has to trade on its own… That’s usually not a good thing for the green/peachback… 

For What It’s Worth…  Well, this was sent to me from the GATA folks, so there’s no link that I can share with you, but it was taken from the Financial Times, which is also restricted to subscribers only… But I have a snippet for you, so not all’s lost!   This is an article about how investors are being drawn to Gold because of all the mess around the world… 

And here’s your snippet: “If gold is anything to go by, investors are increasingly anxious about the state of the world.Volatile equity markets and fears of a global economic slowdown have helped gold rally 10 per cent from its August lows, putting it among the best performing metals over that period.

It is a sharp contrast to much of the past two years, when rising U.S. interest rates, a strong dollar, and buoyant equity markets hurt gold bugs and the shares of miners such as Barrick Gold, Newmont Mining and Goldcorp. And when there was a correction in U.S. stocks in early 2018, the gold price failed to benefit.

Almost a year on, the big question is whether 2019 could prove a profitable year to own gold, which is typically bought as hedge or haven by investors.

The amount of physical gold in exchange traded funds has risen to 71.9 million ounces, close to the record high of 72 million touched in May 2018.

“We haven’t seen flows like this since the first half of 2016, when the gold market really took off,” says Joe Foster, a portfolio manager at VanEck in New York.”

Chuck again…  Boy if that was really going on, eh? I say that because if it were happening as stated, Gold’s price would be on the move upward… I’m just saying… 

Currencies today 1/17/19 American Style: A$.7175, kiwi .6744, C$ .7530, euro 1.1405, sterling 1.2875, Swiss $1.0081, European Style: rand 13.7025, krone 8.5572, SEK 9.0165, forint 281.20, zloty 3.7565, koruna 22.3957, RUB 66.64, yen 108.80, sing 1.3556, HKD 7.8437, INR 70.91, China 6.7571, peso 18.91, BRL 3.7216, Dollar Index $96.04, Oil $51.63, 10-year 2.71%, Silver $15.59, Platinum $813.64, Palladium $1,436.18, and Gold… $1,294.29

That’s it for today and tomorrow, and Monday! Today, I do believe is my good friend, and former neighbor, Kevin Yanker’s birthday! Happy Birthday Webbie!  OK, important stuff here… I saw a line yesterday that Pitchers and catcher report in 29 days…  Now that’s important stuff! I did something to my left elbow… OMG! It hurts! and swollen, you would think I was a crafty old left handed pitcher with elbow problems!  I can’t imagine what caused this, but I’m a hurtin’ bird for sure! UGH!  I’m not alone here any longer…  My darling daughter Dawn, sent me a link to a video that highlighted the performance of her daughter, my little d, Delaney in the Music Man production at the school… She’s going to break hearts boys… Just so yo know now…  She performed like a professional actress and singer! WOW!   OK… Blackfoot takes us to the finish line today with their song: Highway Song…   That’s one of the top 10 Highway driving songs!  I hope you have a Tub Thumpin’ Thursday and a Fantastico Friday! And please remember to Be Good To Yourself!

Chuck Butler