China & Saudi Arabia In Talks… Uh-Oh…

Rocktober 12, 2017  

* Catalans opt for negotiations…

* FOMC Minutes lead to rate hike thought slippage

* 2010 revisited… 

  

 

Good Day…  And a Tub Thumpin’ Thursday to you! Well, I’ve had to restart my laptop twice already this morning, and lost all that I had written, so here I go again…  The baseballs gods weren’t nice to the Cleveland Indians yesterday, and the team that I thought would go all the way, is out. Now, I’ll switch my rooting for a team to the Houston Astros, who used to be in the National League, and were big rivals to the Cardinals…  Midnight Oil greets me this morning with their song: Beds Are Burning…    

Everyone, well everyone that cared about the euro, were holding their collective breath yesterday, when the Catalan President, was to give a speech about the independence for Catalonia… But, instead the President, Charles Puidgdemont, decided to suspend the independence and instead rely on negotiations with the Spanish leaders in Madrid. And with that news out of the way, the euro added to its gains yesterday as the day went on, trading all the way up to 1.1875, last night during the Asian session.

I wrote an article for the FX Street on the whole Catalonia affair, and it can be found here: https://www.fxstreet.com/analysis/time-for-divorce-between-catalonia-and-spain-201710100749

I really think that you should check it out, that is if you own euros, or have any interest in this whole “divorce” thing going on with Spain and Catalonia… But for now, they’re talking and not fighting… Spanish police have surrounded the Catalonian Parliament building in Barcelona.. These two are going to need some very good divorce lawyers, or it’s going to get really ugly there…  

But the news from Spain / Catalonia wasn’t the only thing boosting the euro yesterday. The Fed’s FOMC Meeting Minutes  (FMM) printed and left the markets thinking that there may be some slippage in the thought that a December rate hike is in the cards. There was some lively discussion regarding a disagreement among a few Fed members about whether the low inflation is a “temporary things” or “here to stay”… 

And that discussion got the markets thinking that maybe, just maybe, the Fed will opt to skip the rate hike in December, because of the lower inflation…  Of course, you dear reader, know that I’m of the opinion that there will be no December rate hike, that by then, the Fed will be discussion how to reverse their stance on “this is a strong and robust economy”…  

The Antipodean currencies of Australia and New Zealand were able to ratchet up a higher on the FMM disagreement, and that was good to see, given that these two have been mired in the muck for a few weeks now, with New Zealand going through negotiations for a coalition government, and Australia seeing a slower patch of data recently. 

The Petrol Currencies gained as a collective bunch overnight when the price of Oil didn’t seem to slip much after the most recent Oil supplies report showed that supplies were gaining once again. The Mexican peso was one Petrol Currency that was unable to participate in the rally though… 

When 2017 is all totaled up, the Mexican peso will probably be at or near the top of the best performers for the year. But let me point out that all of that performance came early in the year as it moved from a pre-election in the U.S. level of 25, to a post-election level of 18…  And has basically stayed around 18 the rest of the year. It was a case of sell the rumor, buy the fact…  And in this case it was sell the rumor that there was going to be a wall built and Mexico would pay for it, and after the election, those words had cold water thrown on them…     

Enough on the peso, I’m not a fan and doubt that I will ever be one! Gold saw another day of “running up toward $1,300, and then “the boys in the band” showing up and bringing the shiny metal back down”…  But Gold was able to hold on to some of its early day gains, and ended up $3.60 on the day, with 265,000 contracts traded in the metal.  Gold is up in the early morning trading today, and is currently trading at $1,296.70.. We’ll see how much of that early morning gain is still around once “the boys in the band” show up.  

One of my “fave countries”, Singapore will soon see their Central Bank meet.  For readers new to class, Singapore has a unit of the Central Bank called the Monetary Authority of Singapore (MAS), and its their job to monitor inflation and economic growth, and make adjustments to the trading band that the Singapore dollar (S$) traded in…  I don’t think the MAS will be making any major changes to the trading band at this meeting, as the economic data has been choppy in Singapore, and inflation is non-existent, which is where the Central Bank wants to see inflation stay!   

Singapore is one of the countries in the world that uses the S$ as their tool to keep inflation in check. If inflation begins to rise, the MAS will adjust their trading band, and the S$ will strengthen to combat the rising inflation. I like this method much better than most Central Banks, including the Fed Reserve, that use interest rate hikes to combat rising inflation.  

In 2008, I was writing for the Sovereign Society on the side, and the letter was called: The Currency Capitalist…  And I was the first to break the news that China was signing currency swap agreements with countries they traded with, to remove the dollar from the terms of the transaction.  Well, these agreements kept getting signed, and I kept telling people that when China breaks the Petrol dollar hold, that it would signal the end of the dollar as the reserve currency of the world…   

Well, guess who China is talking to now? That’s right Saudi Arabia… the country that Henry Kissinger talked into agreeing to sell their Oil only in dollars back in 1973. Well, the Saudis aren’t too happy with the U.S. these days, especially after the courts ruled that the lawsuits against their country could continue (we talked about that last year)..  And I’m afraid that they will soon announce that they are going to start selling their oil and use Chinese renminbi in the terms of the trade…  Uh-Oh! 

If that were to happen, it would be a “Houston we have a problem” scenario for the U.S. dollar..  And IF that were to happen it would begin to take the reserve currency status away from the dollar. And this is where I’ll remind everyone that in 2010… That’s right 7 years ago, I told anyone that would listen to me (yeah there are a few of you out there, right? )  that by the end of this decade the dollar would no longer be the reserve currency of the world.   In fact, for a year in 2010, I titled my presentations “A Change In The Currency Regime”…   

OK, Chuck, we got the message, you said 7 years ago that IF China got the OPEC nations to agree to the currency swap agreements that it would be one of the last nail’s in the dollar’s reserve status coffin, you don’t have to drag it out and keep reminding us! HA!  

Of course, the negotiations between China and Saudi Arabia, could end up with no changes, there’s always the chance of that… But as I tell people all the time when they ask me about chances… I say they are “slim and none and Slim left town”…   

The U.S. Data Cupboard is still restocking today… We did have the FOMC Meeting Minutes yesterday, but today we’ll see the Weekly jobless claims and Sept. PPI, (wholesale inflation)…  The experts are calling for an increase in PPI of 0.4%, which would be strong move in the month. 

Tomorrow’s Data Cupboard has Sept. Retail Sales, which I’m afraid I’m going to get a bad reading from the BHI (Butler household index) because I do believe that Retail Sales will be fueled by auto sales.. Remember when I told you about all the flooded cars from the hurricanes, and new car purchase would be getting made? Well, here we go!  I saw on TV the other night, a large field filled with over 30,000 previously flooded cars that were abandoned…   Can you imagine showing up there and attempting to find your car?  So, just leave it, and buy a new one, and that’s going to fuel Retail Sales tomorrow…   

To recap…  The euro received a boost from two areas yesterday, first it was Catalonia opting for negotiations instead of a call for independence, and 2nd was the Fed’s FOCM Meeting Minutes, which had the markets thinking that there could be some slippage now in the Fed’s December rate hike…  The Antipodean currencies saw this and rallied, and the Petrol Currencies rallied when the price of Oil didn’t slide much on new supplies data…   

For What it’s Worth…  Since I spent some time on this subject this morning I thought the FWIW piece would be a good place to continue the discussion regarding Saudi Arabia and China. This link was sent to me from long time reader, Bob, and can be found here: https://www.cnbc.com/2017/10/11/china-will-compel-saudi-arabia-to-trade-oil-in-yuan–and-thats-going-to-affect-the-us-dollar.html   

Or, here’s your snippet: “China will “compel” Saudi Arabia to trade oil in yuan and, when this happens, the rest of the oil market will follow suit and abandon the U.S. dollar as the world’s reserve currency, a leading economist told CNBC on Monday.

Carl Weinberg, chief economist and managing director at High Frequency Economics, said Beijing stands to become the most dominant global player in oil demand since China usurped the U.S. as the “biggest oil importer on the planet.”

Saudi Arabia has “to pay attention to this because even as much as one or two years from now, Chinese demand will dwarf U.S. demand,” Weinberg said.

“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them.””   

Chuck again…  Currency diversifiers will be slapping themselves on the back for going this route when this deal between Saudi Arabia and China gets finalized… And that’s all I’m saying about that!  

Currencies today 10/12/17… American Style: A$ .7820, kiwi .7112, C$ .8020, euro 1.1855, sterling 1.3224, Swiss $ .9747, … European Style: rand 13.4849, krone 7.9070, SEK 8.0930, forint 260.79, zloty 3.6020, koruna 21.8161, RUB 57.84, yen 112.39, sing 1.3543, HKD 7.8077, INR 65.15, China 6.5859, peso 18.71, BRL 3.1722, Dollar Index 93.02, Oil $50.85, 10-year 2.34%, Silver $17.23, Platinum $934.19, $Palladium $967.89, and Gold… $1,296.70   

That’s it for today… With all the shenanigans with the restarts this morning, I know this is late again… UGH!  Oh, well, better late than never, eh? I received an email from the Money Show people yesterday, asking me for an updated photo of me for their website. I responded and said, what for? I haven’t spoken at a Money Show event in 4 years! The explained that now that I wrote under the Aden Research Flag, and the Adens did speak at Money Shows, that they needed an updated photo…  I’ll get around to sending them one sometime down the line… I’m sure the one they have is good, and probably better than any newer one! HA!  Redbone takes us to the finish line today with their song: Come And Get Your Love…  The soundtrack from the first Guardians of the Galaxy has so many great 70’s songs on it, and this one is one of those!  OK, time to get out of your hair today, I hope you have a Tub Thumpin’ Thursday, and remember to BE Good To Yourself! 

 

All This Saber Rattling Has Chuck Fearing The Worst!

Rocktober 11, 2017

* Saber Rattling ratchets up…

* Russia prints $1.2 Billion Surplus!

* Euro climbs back to 1.18!

 

Good day…  And a Wonderful Wednesday to you! I’m not ready for prime time today…  I can’t seem to fully wake up… I’ve tried eating something crunchy, which usually does the trick, and I’m even trying to drink a soda… UGH!   Maybe as I go along here something will click in! Jackson Browne greets me this morning with his song: Doctor My Eyes… 

Well the saber rattling is ratcheting up again… I was talking to my good friend Duane last night, and I was expressing my fear of all this saber rattling turning into something bad.  (Poor guy, was trying to watch the Blues hockey game and I’m carrying on about N. Korea, etc.)  The stock market doesn’t seem to be caught up in the saber rattling, as it continues to move higher and higher every day… I’m just going to say that this reminds me of something that my dad used to tell me all the time…  Trees don’t grow to the moon…  And that’s all I have to say about that!

I’m not even your last pick as someone on your stock jockey team… Even though the stock side of the business is where I began my career in investments…  Alrighty then, let’s get to what we do feel very confident talking about and that’s currencies, metals, economies and dolts! 

The currencies are still, for the most part, trading in the same clothes as yesterday and Monday. The euro however, has betting some love from traders, and yesterday I told you that it was knocking on the door to 1.18, and later in the morning, someone answered the door, and let the euro in, and the single unit is trading above 1.18 this morning. 

That darned price of Oil…  One day it appears to be ready to go for a ride on the slippery slope, and then along came John on his white horse, and the price of Oil jumps nearly $2 on the day.  However, it appears that the Norwegian krone is the lone ranger when it comes to Petrol Currencies that have responded favorably to the upward swing in the price of Oil. 

The Russian ruble is a trading just a bit stronger this morning, and the Brazilian real, who just last week, was putting together a nice stealth-like upward move, lost ground overnight. The Canadian dollar / loonie remained unchanged through it all. Hmmm… I wonder what’s going on with the loonie? Just last month, we saw the loonie trade well into the 82-cent handle, then settle back to the 81-cent handle. but in the last few weeks we’ve seen the loonie fall through 80-cents, and now it has settled in just below 80-cents…  Hmmm…  

I don’t know why journalists still go to this guy and think he has the answers…  I’m talking about economist, Paul Krugman. I read on the Bloomberg this morning that Krugman was asked about the probable Fed Chair replacement for Janet Yellen, Kevin Warsh, and Krug didn’t hold back his opinion which was that “He’s been wrong about everything”…   Krugman then went on to say, ” It’s kind of almost amazing, you could almost make money by taking whatever he thinks is going to happen, and betting the other way.”  

Well, as we used to say in the old South St. Louis neighborhood… “It takes one to know one!” And that’s all I’m going to say about Krugman’s opinion on Kevin Warsh…  Except to say that in MY opinion, now that Krugman has dissed Kevin Warsh, I’m all for Warsh gaining the Fed Chairmanship!   

Gold was on a roll yesterday and ready to move back to $1,300, trading all the way up to $1,296.70, but then seeing “the boys in the band” enter the markets and immediately flood the market with paper trades that were selling Gold short, and at the end of the day, Gold was able to hold onto $3.90 of its gains it had earlier in the session, to close at $1,287.50… 

This will eventually stop folks… And all those paper short trades will be thrown in the trash can.  When that will be is a guess that if you knew the answer to, you would become rich and be sitting on your own island with an umbrella drink! 

Moving along… As I don’t like to get stuck on any one subject too long, as it could make for a read that puts you to sleep! Which is what I just did, for a few minutes!  

Well, Bill Gross, the former Bond King, who now runs a bond fund at Janus, had some things to say about the Fed yesterday…  I guess his mother never taught him about how if you don’t have something nice to day about someone, don’t say anything at all!   On Monday this week, Gross said that,”financial markets are artificially compressed, in the process distorting  because of the U.S. Federal Reserve’s loose monetary policy.” And he wasn’t finished there, going on to say, “think we have fake markets.”   

OK, Bill, what do you propose we do about this problem? I really don’t like it when someone has something to say that makes sense, but then doesn’t offer up a remedy…   If he had said, I propose that we get rid of the Fed altogether and let the markets set the interest rates. I would have been all over that with a bunch of “atta boys!”   

Moving on…  there’s not much happening around the world data wise today..  But we did see a very good print in Russia this morning… The Russian Current Account for the 3rd QTR 2017 was a SURPLUS of $1.2 Billion. In 2016 for the same period the SURPLUS was 0.4 Billion.. So, a very nice print from Russia, and that along with the near $2 jump in the price of Oil should be good news for the ruble?  

The Fed’s Minutes from the last meeting will print this afternoon… This is the meeting where the Fed announced their plan to unwind their balance sheet of bonds. I’ll be looking for any Fed members that voted no to this idea…  And that’s it for the U.S. Data Cupboard today…  

To recap,,,, The saber rattling continues to ratchet up the volume scale, and has Chuck feeling very uneasy about what could happen… the currencies for the most part, are stuck in the mud, but the euro has found some loving from traders the last two days and is back above 1.18 this morning. Paul Krugman does a little of the “look who’s calling the kettle black” talk, and Chuck can’t hold back his dislike for this guy’s opinions!

For what It’s Worth… Hey! my template has been fixed, and I’m good to go with a FWIW story today… this one is about Kobe Steel’s problems after admitting they fudged the steel figures for cars, etc.  and can be found here:  http://www.zerohedge.com/news/2017-10-10/kobe-steel-collapses-37-after-admitting-falsifying-data-could-destroy-international-   

Or, here’s your snippet: “Japan’s third-biggest steel producer is in trouble. After admitting falsifying data about the quality of aluminum and copper it sold, shares in Kobe Steel have collapsed 37%, -20% limit down yesterday and another -17% at the open today following news that the falsification also involved iron powder product, in the biggest bloodbath the company has ever seen.

Bloomberg provides a quick Q&A:

1. What exactly did Kobe Steel falsify? — Data related to the products’ strength and durability. Kobe Steel says it discovered the falsification in inspections on goods shipped in the 12 months through August, affecting some 4 percent of shipments of aluminum and copper parts as well as castings and forgings. As yet, the company, which employs about 37,000 people, says there have been no reports of safety issues.

2. Was this a rogue event? — Hardly. The fabrication of figures was found at all four of Kobe Steel’s local aluminum plants in conduct the company described as “systematic.” For some items, the practice dated back some 10 years ago, according to executive vice president Naoto Umehara. Details have yet to emerge.

3. What do its customers say? — Here’s a taster. Toyota is “rapidly working to identify which vehicle models might be subject to this situation and what components were used,” according to spokesman Takashi Ogawa. “We recognize that this breach of compliance principles on the part of a supplier is a grave issue.” Toyota found the materials in question in hoods and doors, as did Honda Motor Co. Boeing, which gets some parts from Kobe Steel customer Subaru Corp., said there’s nothing to date that raises any safety concerns. Hitachi Ltd. said trains it has exported to the U.K. contained compromised metal as well as bullet trains in Japan. Mazda Motor Corp. also confirmed it uses aluminum from the company, while Suzuki Motor Corp. and Mitsubishi Motors Corp. all said they were checking whether their vehicles are affected.” 

Chuck again…  Corporate Scandals just keep mounting… Last year it was VW, this year its Kobe Steel, who’s next? because I’m certain that there is at least one Corporation with scandal written all over it, and just waiting for someone to call them out!   

Currencies today 10/11/17… American Style: A$ .7789, kiwi .7067, C$ .7990, euro 1.1816, sterling 1.3193, Swiss $ .9735, … European Style: rand 13.5728, krone 7.9295, SEK 8.0590, forint 262.12, zloty 3.6236, koruna 21.8870, RUB 58, yen 112.24, sing 1.3568, HKD 7.8056, INR 65.28, China 6.5861, peso 18.76, BRL 3.1802, Dollar Index 93.21, Oil $51.30, 10-year 2.35%, Silver $17.16, Platinum $928.70, Palladium $938.04, and Gold… $1,2791.04    

That’s it for today…  Well, I got through it! YAHOO! But I’m still yawning like I haven’t slept in days! Oh well, life goes on, Chuck…  How our Blues?  That’s now a 4 game winning streak to start the season after beating the Rangers in back-to-back games in NYC. Cubs / Nats got rained out yesterday, and Indians / Yankees play a game 5.. Good stuff!  Go Indians! Nazareth takes us to the finish line today with their song: Holiday…  don’t know that one? You would if you heard it! Momma momma please no more face lifts, I don’t know which one you is…  And with that it’s time to get this out the door, it’s late I know… sorry about that!  I hope you have a Wonderful Wednesday! And be Good To Yourself!

 

N. Korea Sends Chilling Message To Japan…

Rocktober 10, 2017

* Thinly traded markets yield no big winners.. 

* Gold has a good two day run going… 

* Political uncertainty in N.Z. is driving Chuck to drink! 

 

Good day… And a Tom Terrific Tuesday to you!  What a day yesterday for sports! 4 Playoff Baseball games, and a noon start hockey game! My head was spinning from all the channel changing! But I got through it, thank you for checking on me! HA! I don’t believe they fixed the problem with the website template yesterday, but the email is going out, so that’s a good thing, eh?  Steely Dan greets me this morning with their song: Rikki Don’t Lose That Number… We lost one of the great song writers and musicians in Walter Becker of Steely Dan last month… I wonder who Donald Fagen will find to fill in for Becker, or if he will even continue on with the Steely Dan legacy…   

Well, I told you yesterday that with the U.S. Banks closed for the Columbus Day Holiday, that we could see either a real doozy of a day, or a real dud… Well, we ended up with the latter of the two options, and so we traded in the same clothes all day yesterday, with Gold doing bucking the currencies trading slowdown, with a nice gain on the day.

But in the overnight markets, the euro has been the favorite currency of investors to buy, as it has gained about 1/2- cent overnight and is knocking on the door of 1.18 once again. And Gold has come along for the ride moving up nearly $9 in the early morning trading today.  I can’t say that the rest of the currencies are following the Big Dog at this point, but maybe they will as the day goes on.   The folks at FXStreet, who are still so kind to post my Pfennig to their site every day, asked me to give them some “Chuck thoughts” on the goings on in Catalonia, and their effects on the euro. 

I don’t want to spoil the soup here so I’ll just mention that overnight, the Catalonia President, said that he would prefer jail over remaining Spanish…  Those are some stinging words for the leaders in Madrid. But, as I said in my article for the FXStreet people, I believe the euro has already taken on some selling from this mess when it was first announced that Catalonia would hold a referendum… 

So… how was your Leif Erickson, I mean Columbus Day? I ask that, because with everything going on these days, I don’t know how I would have gotten through it all if I were still working… And so, having a day off thus making it a 3-day weekend would have been grand for me! But since I’m somewhat retired, it didn’t mean much to me, and I got to watch our Blues win a game in a shootout, which I don’t like! I’m old school hockey, where you aimed for a Gordie Howe hat trick, which was a goal, a fight, and an assist on a goal.   A tie on the road was a good as a win at home…  Oh well, the game moves on, leaving me in its dust!

So, Gold didn’t hold onto all of its early morning gains yesterday, but was able to book $7.50 of the early morning $9 gain. But that was under very light volume, as only 190,000 contracts traded yesterday. Today the boys and girls at the bullion banks that house “the boys in the band” will return to their desks, and see that Gold has gained $8.70 in the early morning trading, and inches closer to $1,300, as it trades at $1,293.70 as I write this morning. 

The price of Oil tried like the Dickens to get back above $50 yesterday, but failed in doing so, and this morning the Oil price sits just below $50…  Did you hear the news about Saudi Arabia’s call on Oil production? Yeah, the Saudi’s have decided to make even larger cuts to their production of Oil in an effort to help boost the price of Oil..   And once again, the definition of insanity is doing the same thing over and over again with a hope of achieving a different outcome…  

Hey! Wait a minute there, Chuck! That’s exactly what you were doing yesterday morning with the Pfennig template for the website! You just kept going to the piece you had written on Sunday for the Pfennig, and copying it, and then going to the Template and hitting “paste” with nothing happening…  OK, maybe that was bordering on insanity, but I eventually figured out it was not going to work and then went in another direction!   

On the data front today, I saw a very good, and strong Industrial Production print in the U.K. this morning, and that has helped pound sterling get up off the canvas and do a little rope-a-dope. Sweden is expected to print their latest CPI, which should show an increase of around 1%, and that would be a good figure for Sweden, who hasn’t seen consumer inflation in a month of Sundays. Sort of like Goldilocks’ search to find the “just right” porridge… That’s what Sweden is doing, trying to find the “just right” inflation rate… 

This political uncertainty in New Zealand is driving me to drink! Which I don’t need! Except on every other Friday! HA!  It’s been over two weeks and still not a word from New Zealand about the process, or if there has even been any progress! UGH!  And while nothing goes on, kiwi continues to get taken to the woodshed on a daily basis. Double UGH! 

And I saw an article on Bloomberg this morning talking about how hedge funds are fighting with Lola aka Goldman Sachs, on the direction of the Aussie dollar (A$)… Seems that the hedge funds want to take the A$ higher.. You can almost hear them doing their best Sly and the Family Stone imitation… “I want to take you higher!”  But Lola always gets what Lola wants, and Lola thinks that the A$ is overpriced.  

In Japan overnight they received a start warning from N. Korea, and printed a worse than expected Current Account Deficit… N. Korea sent Japan a message overnight saying, “You Can Never Be Safe”… Uh Oh! Was that an indication that N. Korea is about to start something? I sure hope not!  Every time things calm down with regards to N. Korea, and people / investors begin to put them in the back of their collective minds, something like this wakes them up!  Right now Japanese yen isn’t moving much, but I would think that as everyone in NY arrives at their desks that trade yen, will see to it that it gets sold on this N. Korea news… 

The U.S. Data Cupboard remains, for the most part, empty today, with only one minor Tier 4 data print on the docket.. And the Data Cupboard will remain this way (basically empty) until we get to Friday, when September Retail Sales will print.. The BHI is warming up right now, and I’ll have the results soon…  

Before I head to the Big Finish today… I’m getting a kick out of this Tweeting stuff! On Friday, I tweeted: Spin doctors are out in force today on jobs number. Check out the Pfennig on Monday I point out a discrepancy with the BLS numbers…   Now if you don’t have a Twitter account, you probably should, because it’s a great way to get news before the TV stations report on it. And you get to decide who you want to follow…  

To Recap…  The Columbus Day holiday yesterday has the markets trading very thinly, and the currencies remained in their same clothes as the day before all day. Gold was able to hold onto most of its early morning gains, and then the overnight markets saw traders throw some love the euro’s way, and Chuck believes the other currencies will follow once the euro shows that this move toward 1.18 is for real. Japan receives a dark warning from N. Korea overnight, and just can’t get past the fact that N. Korea has an axe to grind with them. 

For What it’s Worth…  Well here goes… this will be the cheese that binds, as this is where the template kept balking yesterday… I found this article on zerohedge, regarding the financial system in the world… And apparently nothing was done to correct this problem. So, if you want the URL link you’ll have to read the Pfennig email… for it’ll be there!   I hope this doesn’t ruin your day…  But technical glitches will do that, right?

Currencies today 10/10/17… American Style: A$ .7787, kiwi .7071, C$ .7996, euro 1.1798, sterling 1.3190, Swiss $.9767, … European Style:  rand 13.6928, krone 7.95, SEK 8.0770, forint 263.65, zloty 3.6420, koruna 21.96, RUB 58.25, yen 112.34, sing 1.3570, HKD 7.8038, INR 65.38, China 6.6256, peso 18.58, BRL 3.1670, Dollar Index 93.31, Oil $49.98, 10-year 2.35%, Silver $17.18, Platinum $927.77, Palladium $932.36, and Gold… $1,293.70  

That’s it for today…  Not much else to talk about today… As I said above, yesterday was a dud, and today is lining up to be another one for me… I tell the oncologist about my days, and she says, that rest and relaxation is  what I need while I’m receiving treatments… I say hogwash! Well, at least I would like to say “hogwash”!  Our Blues are off to a good start to their season, but there are over 6 months of regular season games left so I won’t get giddy over the start…  Marvin Gaye takes us to the finish line today with his song: Inner City Blues…    And with that, it’s time to go… I hope you have a Tom Terrific Tuesday, and Be Good To Yourself! 

 

 

Weak Aussie Data Sends The A$ Downward…

Rocktober 5, 2017

  * ADP report says job creations lagged…

* ECB is meeting as Chuck writes this morning… 

* No videos from Chuck!

 

Good day… And a Tub Thumpin’ Thursday to you… By now you should know the routine… Every other Thursday, is an infusion day, and that’s today, which means there will be no Pfennig tomorrow… Blame it on “infusion confusion”… With which, if I’m lucky, will have cleared my head by late afternoon on Friday, and if I’m not lucky, the weekend will be a bummer! The Marshall Tucker Band greets me this morning with their song: Heard It In A Love Song… There was a time, back in the 70’s when I would predominantly listen to Marshall Tucker, The Allman Brothers, Charlie Daniels, Elvin Bishop, and a few more, what they called “Southern Rock”…

OK… Well, Front and Center this morning we have the ADP Employment report to go over, and trust me you’ll get the real news on this report and not what the “Spin Doctors” gave you when the report printed yesterday. ADP said that Companies only added 135,000 jobs in September, period. ADP doesn’t get into spinning reports so that the markets will feel good… They leave that for the “Spin Doctors” who must have pre-written their responses to the slowest report in nearly a year… The “Spin Doctors” immediately hit the news wires saying that the Hurricanes Irma and Harvey had reduced the number of new jobs that Companies would have hired people for during September. OK, I’ll give them some slack in that, sure in the Houston area, and the Jacksonville area, where flooding was just awful, there was no new hiring going on, but then who knows IF there was even going to be some during the flooding? Only the Shadow Knows

One of these days, Alice! I would like to load all these “spin doctors” up in a rocket ship and send them to the moon!

I have to stop and laugh out loud here… The Buddy Fuller Four’s song: I fought the law, is playing right now, and many years ago, before cancer, I used to do all the grass cutting, trimming, aerating, fertilizing, etc. And I wrote in the Pfennig that I changed the words to that song to: “I Fought the Lawn, and the Lawn Won!” And a Pfennig reader sent me a T-shirt with that saying on the front of it! I wore it proudly while “fighting the lawn”!  

There was some selling of the dollar after the ADP report yesterday, but in reality, the moves were small, and it appears what I said yesterday about how traders are looking for the next “something” to give them directions for the currencies, is holding true… In fact, I saw on Bloomberg this morning a writer there saying the same thing… I wonder where he got the idea?  Oh, move along Chuck!   People don’t want to hear about how you think Pfennig Readers that also write for websites, use your thoughts…    

Besides, even if that were true, it would be a form of flattery, right?  OK, back to reality, for we can’t remain in “Chuck’s world” too long, it’s not good for our health! HA!   The Aussie dollar (A$) slipped a bit overnight, as they printed two reports that didn’t sit well with traders… As they shouldn’t have!  Aussie August Retail Sales were negative 0.6%, which marked two consecutive months of negative results for Retail Sales. In addition, Australia’s August Trade Deficit widened to A$989 Million VS A$ 808 Million in July.   

These are the first pieces of data for Australia that have caused traders to rethink their rate hike call for later this year. I think that traders are getting ahead of themselves, and these two prints are just a small sample, and that they should wait to see further data before making such a rash decision!  

The euro ticked higher by a small amount throughout the day and overnight… The euro has had two body blows that it has had to deal with in the past 10 trading days. First we have the political uncertainty in Germany, the Eurozone’s largest economy, and then the Catalan vote to leave Spain hanging over the euro like the Sword of Damocles!  Speaking of the Catalans, their president is scheduled to speak today, and I think this is the time that he will give us the results of the vote that took place over the weekend…  (I guess they still do it the old fashioned way… manually. I wonder if any “hanging chad” was a problem for them! HA!)

Come on Chuck, this Catalan vote is nothing to joke about! Get your head on straight!  Yes, I’m well aware of how important this vote is, but can’t a guy have a little fun to keep the moment from getting so serious?  

The price of Oil slipped below $50 in the past 24 hours, but has regained the figure as I write. The U.S. reported record amounts of Oil shipped out of the country, thus causing the price of Oil to drop, given the thought that the U.S. supplies must be huge! I want to point out something that I’ve talked about a lot in the past 9 months, and that is the Norwegian krone, and how its so tied to the euro… And last night was a good illustration of that, as the price of Oil slipped below $50, the krone didn’t budge, and in fact gained a small amount as the euro rose…   

The Brazilian real has been really stealth-like with its recent rally. I noticed this yesterday, when I was recording the currencies for the currency roundup. Every day, the real is a bit stronger than the next day, and at first I thought, no biggie, but now the move has seen the real move from 3.1777 on 9/28 to 3.1352 this morning…  I know, I know, not a major move, but when the rest of the currencies are struggling to find a bid, the real has moved stealth-like stronger without much fanfare. I sure hope didn’t just give the real the kiss of death! UGH!    

Gold held its early morning gains yesterday, for the most part, and closed the day up $3.50. Gold is up another $3.70 this morning and as I write, the shiny metal is trading at $1,280.50…  Reuters ran an article on Gold at the Perth Mint, let’s listen in to hear what they had to say… “The Perth Mint’s sales of gold products doubled in September from a month earlier, while silver sales surged 78 percent, the mint said in a blog post on its website on Tuesday.

Sales of gold coins and minted bars jumped to 46,415 ounces in September from 23,130 ounces a month ago, the mint said. Silver sales during the month also rose to 697,849 ounces, compared with 392,091 ounces in August.

The Perth Mint refines more than 90 percent of newly-mined gold in Australia, the world’s No. 2 gold producer after China.”   Hmmm, very interesting… I love reading about physical Gold trading figures!  So, have you taken advantage of this recent pull-back in the price of Gold?  If not, what are you waiting for?  

And a story caught my eye this morning regarding Solar panels..  Why would that catch my eye? Well, Solar Panels use silver, and a lot of it to boot, and the article suggests that Solar Panels out sold every other form of alternative energy this past year…  Well, if that were to continue it would provide a nice underpin for Silver… 

Well, bust my buttons! I’ve gone on this far this morning, and haven’t mentioned the European Central Bank (ECB) meeting that’s going on as I write! Recall, that this was the meeting that ECB President Draghi, told us he would spill the beans regarding the Unwinding of their balance sheet…  But as the days drew near for this meeting, the chances of that happening grew slim and none, and Slim left town!  So, the ECB meeting today is probably just a routine matter, and that’s why I crept out of my mind this morning!   

Not that I need to make excuses for where I put things in the letter! No, one part is more important than another.  In fact I always intend to sprinkle things of importance throughout the letter, so that readers don’t just go to one piece of the letter to read…   

The U.S. Data Cupboard will have a piece of real economic data for us today when Factory Orders print for August… the last couple of Factory Orders prints have been negative, so I expect this one to at least print with a positive tone…  

Have you ever received one of those emails that tell you to watch this “short video” about some market moving idea, and you click on the “short video” only to be taken on a 1/2-hour tour of the writer, his credentials, and why he thinks you need to sign up for his “special letter” to find out the name of the asset he’s selling, and then get so upset that you wasted the time to sit through that?  Well, I’m here to tell you  that I won’t be sending you any of those “special videos”!   

And on that thought, it’s time to wrap this up with a neat bow and get it out there, so I can get ready for my visit to the infusion center… UGH!

To recap…  The ECB is meeting as I write today, but don’t expect anything from them, as they previously promised. The ADP jobs report yesterday showed just 135,000 jobs created in September, and the dollar got sold a little bit… Some of the currencies have carved out gains, but for the most part, it’s a pajama party for the rest of the currencies, as they trade in yesterday’s PJ’s!  Gold held its early morning gains yesterday and is up again in the early morning trading today. The price of Oil slipped below $50 overnight, but has regained the figure this morning.  

For What It’s Worth.. Thank goodness for Ed Steer’s letter! I found this on his letter this morning and it’s an article about Gold, and can be found here:https://www.sharpspixley.com/articles/lawrie-williams-metals-focus-still-sees-gold-hitting-$1-400-average-in-2018_272411.html 

Or, here’s your snippet: “In his presentation at the launch of this latest publication, Neil Meader, the group’s Research and Consultancy Manager, reflected on a slightly disappointing performance for the [precious metal] complex, despite great promise earlier in the year. The report thus suggests only a 2% average rise in the metal price this year compared with 2016. An earlier 5 year analysis of the precious metals complex by the consultancy had predicted $1,400 gold this year, and while this has not been totally ruled out, the latest analysis suggests that this price level may now not happen until next year unless some worrying geopolitical event (North Korea looks to be the most likely instigator) causes the metal price to spike again.

Writing here a week or so ago, we had suggested keeping a close eye on the largest gold ETF (GLD) to see the trend in institutional investment in gold in North America, which seems to be a great indicator of U.S. investment demand and thus of the overall trend in the global gold price level. After a strong couple of months, the past two days have seen 10.35 tonnes withdrawn from the ETF which is perhaps indicative of weak institutional demand for gold in the light of the recent price falls, although much of these can be put down to some recovery in the dollar index over the past few days.”

Chuck again… What can I say? Nothing new here, but at least we know that people are talking about Gold, and that’s a good thing!  

Currencies today 10/5/17: American Style: .7821, kiwi .7155, C$ .8017, euro 1.1765, Sterling 1.3193, Swiss $ .9767, … European Style: rand 13.6422, krone 7.9585, SEK 8.1022, forint 264.79, zloty 3.6640, koruna 21.9395, RUB 57.70, yen 112.60, sing 1.3623, HKD 7.8087, INR 65.09, China 6.6624, peso 18.26, BRL 3.1352, Dollar Index 93.49, Oil $50.14, 10 year 2.32%, Silver $16.68, Platinum $913.38, Palladium $928.75, and Gold… $1,280.50   

That’s it for today, and this week… I’ll talk to you again on Monday, God willing…  Well, our Blues got off on a somewhat good foot to their season last night in Pittsburgh. The Blues had a 2 goal lead in the 3rd period, and saw that lead go the dumpster, but then won the game in overtime! The last two years, I’ve gone out on a big fat limb and said that “this is going to be their year” only to see it not be their year!  So, this year, I’m keeping my big fat trap shut! I was switching the TV channels back and forth between the hockey game and the NL Wildcard game, which the Diamondbacks eventually won… Again, why do they need to start games so late? I wonder what the oncologist will have to say today…  The Doobie Brothers take us to the finish line today with their song: Natural Thing… I hope you have a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!    And today, looks like a good day, to have a good day… 

 

That’s a Big 10/4 Good Buddy!

Rocktober 4, 2017  

* Not much movement in the currencies yesterday

* UK Only country with weak PMI’s… 

* Revisiting the Recovery & Reinvestment Act of 2009…

 

Good day… And a Wonderful Wednesday to you! 10/4… That’s a 10/4 good buddy! How was your Tom Terrific Tuesday? Well, I hope it was grand. Mine was a little subdued. I tried to stay awake to watch the AL Wildcard Game last night, but that wasn’t happening! Why do they have to start these games so late at night? The NL Wildcard Game is tonight, same deal with that one! UGH!  Graham Nash greets me this morning with a song from his solo album, Songs For Beginners… The song today is titled: I Used To Be A King…  And while I wasn’t a “king”, no wait, Chuck, they don’t want to hear about that! Just back away from the keyboard slowly, with no intent to rush back to it! HA! 

Well, as I look at the currencies and metals this morning, I get the feeling that traders are now waiting for “something” to give them further direction in which to take these assets. Gold gained 60-cents yesterday… The euro is trading in the same clothes as yesterday, and the Dollar Index is down just 9 ticks from yesterday morning’s price. Gold has added nearly $4 in the early morning trading today, but we all know what can happen cone “the boys in the band” arrive at their desks, now, don’t we?

I was perusing through the Bloomberg stories this morning and came across one that caught my eye. Let’s see if it would catch yours as it printed as: $1 Trillion Fund Doubts Dollar Rally Will Last…   In the article the writer gives this piece of info that I think is very important… “Hedge Funds increase dollar shorts to most in 4 years”  I haven’t seen the IMM positions report lately, which reminds me that I need to go out and look for it each week, you dolt!  Nonetheless, dollar shorts have been increased to the most in 4 years, folks…   It’s good to see that other minds think the way I do regarding this rally by the dollar, that’s it will be short-lived, and soon will return to losing ground like it has for most of this year!  

The euro is receiving another half-baked hug from traders this morning after the Eurozone  harmonized PMI printed and saw a small increase from 55.6 to 55.8, and the composite print, which is manufacturing and services remained at 56.7 …  Not great shakes, but also not a step backward that would have to be dealt with! 

The Eurozone also saw their August Retail Sales data, which was NOT, good, but it was August, when most of Germany is on holiday, and things basically slow down to a crawl. The markets are aware of this, as it happens every year, and so the August print for Retail Sales of 1.25%, down from July’s 2.3%, didn’t ruffle any feathers this morning. 

Overnight, Japan printed their September PMI, and even Japan saw an increase in the index number from 53.2 to 53.7. Thus, the U.K. is the only major country to print their September PMI and see it lose ground. But wouldn’t we expect that, given the on going BREXIT  discussions? I think so! 

Boy, kiwi just can’t seem to even buy a bid these days…  The Political uncertainty here is just dragging kiwi through the muck. And I have to admit I didn’t see this one coming… I really thought that the National Party would win a majority of the seats and we could go on with our happy lives. And the problem with this is that this dragging out the Political uncertainty could go on for weeks, if not months…  But eventually it will iron itself out, and when the rumors begin to spread that a coalition gov’t could soon be formed, kiwi will rebound like Paul Silas!  

I’ve got a some thoughts this morning on the U.S. economy, so I might as well get to them before it gets too late!  So… 

Longtime readers know that I call myself a “Fed Watcher”, I’m a Fed watcher, and so on… In that light, I sign up for all kinds of reports from the Fed. St. Louis, and most of the time it’s the same old Fed rhetoric, about saving the world and all that… But yesterday’s Fed note caught my eye, and soon I was reading something that just made my blood boil… You see the article was about the funding that was earmarked for highway and infrastructure improvements back in 2009… Remember 2009? The first year of Quantitative Easing, and TARP, and this little thing called The American Recovery and Reinvestment Act of 2009… or just the Recovery & Reinvestment Act…

The major component of the bill targeted infrastructure, particularly the nation’s highways, and provided the states with $27.5 Billion in grants. This amount totaled 44% of all highway improvements made by the states in the previous year! But something happened to that money, as highway projects spending remained flat for the next three years. 40% of Americans lived in states that spent less on highway infrastructure in 2010 than they did in 2008, before the grants were made! Where did the money g

Ahhh grasshopper, the funds were “overcrowded”… In other words, the funds were needed elsewhere in each sate… If you recall at that time the States were hurtin for certain with tax revenues down big time, and so the States used the funds for other things… Like administration salaries! I kid you not! Anyway, here we are 8 years later, and those same highways still need improvements, but we have well paid administrators to tell us that the latest tax increase bill is needed! Here’s the link to the article on the Fed… I don’t know if you’ll be able to get to it or not, if you don’t have a sign on to the Fed’s site, but we’ll give it a try anyhoo… click here: https://research.stlouisfed.org/publications/economic-synopses/2017/09/22/why-the-2009-recovery-act-didnt-improve-the-nations-highways/?utm_medium=email&utm_campaign=201710A%20Research%20Newsletter&utm_content=201710A%20Research%20Newsletter+CID_3cb87ec7819ef51804e4c63181c2ba62&utm_source=Research%20newsletter&utm_term=Read%20why%20the%202009%20Recovery%20%20Reinvestment%20Act%20didnt%20improve%20the%20nations%20highways

Brother! I just shake my head in wonder of how in the world these state leaders got where they are?      OK, I’ve got to move on here, don’t want to get bogged down on one subject…  

I was reading my Daily Reckoning (www.dailyreckoning.com ) And James Rickards was talking about the U.S. being in a Depression, and I sat up and thought, “Hey, I’ve said that since 2010!” And I said it right here in the Pfennig! And the old Review & Focus. Well, Rickards thought the best way to get people thinking like him on this was to give them the John Maynard Keynes description / definition of a depression… Keynes said a depression is, “a chronic condition of subnormal activity for a considerable period without any marked tendency towards recovery or towards complete collapse.”

Hmmm… Very interesting don’t you think? I say that because that’s exactly what we’ve had since the financial meltdown in 2007-2008. Keynes didn’t say that a depression was negative GDP, he didn’t mention GDP at all! Instead he chose his words carefully, and said that a depression was a considerable period of Chronic subnormal activity… Isn’t that exactly what we’ve had since 2008? I talk about it all the time, how the economy is just muddling along, and not growing at the pace associated with an economy that’s nearly 10 years into its so-called recovery…

Yes, we’ve recovered from the depths of the economy after the financial meltdown, but recover beyond that? I say no! And if it weren’t for Gov’t spending, GDP would probably be negative! So, put that in your pipe and smoke it, Federal Reserve!

Oh, and one more thing that I’ve said about this depression over the years is that: “one might not associate this economy with a depression because there are no soup lines…  Well, that’s because the government assistance checks are mailed directly to the participant now. Their debit cards are sent directly to the participant. The days of soup line are over, and replaced by government assistance going directly to the participant.”  

Ed Steer tells me this morning that “all 4 precious metals put in intraday lows yesterday”…  YIKES! And like I said above, Gold gained just 60-cents yesterday, with just 200,000 contracts traded, which leads me to believe that’s why Gold’s move was so small… wink, wink… 

Yesterday’s Data Cupboard had a BIG SURPRISE for us… Sept. Auto Sales soared to 18.8 Million from 16.1 Million in August.  Auto Sales had seen monthly declines for more than 6 straight months until this September print, but then again I warned you a few weeks ago that this is what we could see as a result of all the flooded cars…   I figure we’ll se another strong month in Rocktober, but after that, we’ll return to the monthly declines..  

Today’s Data Cupboard has the ADP Employment Report, which is supposed to be an indicator of what the BLS Jobs report will be on Friday…  But most times it doesn’t work out that way, and it’s not the ADP report’s fault… It’s the hedonic adjustments that the BLS puts into their Jobs report that’s to blame!  So, anyway, the ADP report today is expected to be around 140,000 for September…  And that’s not a good number, folks…   

To recap…  Not much is going on with the currencies and metals in the past 24 hours folks… The Eurozone printed a strong harmonized PMI (manufacturing index) this morning, but their August Retail Sales fell, and Chuck explains why that happened.  All 4 precious metals put in intraday lows yesterday, as “the boys in the band” were busy!  And Chuck explains why he thinks we’re still in a depression…  

Before I head to the Big Finish today, I wanted to send out a HUGE THANK YOU! To longtime reader Bob T., who I met in Chicago during the years I participated in the FX University Tours. Bob came across some Pfennig coins, and sent them to me… and now they are displayed on my desk wall! Thank you so much Bob! 

For What It’s Worth… I was searching for a rainbow (Marshall Tucker) this morning, which would be FWIW worthy, and really didn’t find much, but did see this on Ed Steer’s letter, and he borrowed it from NASDAQ, and I’ll do the same. It’s about banks getting fined for FX manipulation, and so on, and can be found here: http://www.nasdaq.com/article/hsbc-deutsche-bank-pay-penalty-for-fx-rate-manipulation-cm853954

Or, here’s your snippet: “Two major foreign banks, HSBC Holdings plc and Deutsche Bank AG, resolved legacy business misconduct matters in the United States. The banks were accused of rigging foreign exchange (FX) rates.

HSBC was fined $175 million for its “unsafe and unsound practices in its foreign exchange (FX) trading business” by the Federal Reserve. The bank was accused of failure of oversight and internal control of its FX traders who buy/sell currencies “for the firm’s own accounts and for customers.”

The banking regulator alleged that the bank’s dealers shared confidential information about client orders and matched up trades to benefit them. The bank was also accused of attempting to manipulate FX rates.

HSBC is now required to improve control and fix shortfalls in “governance, risk management, compliance, and audit policies” pertaining to its FX trading operations. The company spokesman Rob Sherman said, “We are pleased to have resolved this matter related to practices in the FX market from 2008-2013.”

Chuck Again… I’m totally convinced that this type of stuff will go on and on until somebody goes to jail for their wrongdoing!  These fines, are like a light slap on the wrists for these Big Institutions… Go To Jail, go directly to Jail, do not pass GO, do not collect $200!   

Currencies today 10/4/17… American Style: A$ .7852, kiwi .7163, C$ .8017, euro 1.1755, sterling 1.3267, Swiss $.9738… European Style: rand 13.5652, krone 7.9580, SEK 8.1175, forint 264.63, zloty 3.6555, koruna 21.9915, RUB 57.91, yen 112.53, sing 1.3603, HKD 7.8064, INR 65.35, China 6.6514, peso 18.16, BRL 3.1495, Dollar Index 93.45, Oil $50.14, 10-year 2.32%, Silver $16.77, Platinum $915.89, Palladium $921.55, and Gold… $1,278.50

That’s it for today…  I see that the Yankees move on in the AL with their win last night. My dad taught me as a young kid, to not root for the “coast teams”. He said they had all the money, and could get whomever they wanted to play for them. So, I grew up always rooting against the “coast teams”, except the California Angles. I loved the halos on the tops of their baseball caps! HA! The Allman Brothers take us to the finish line today with their song: Southbound…  “Oh you can tell your other man, sweet daddy’s on the way”  Love it!  And with that, I’ll get out of your hair for today, and send you on your way to a Wonderful Wednesday!  Be Good To Yourself!

 

U.S. ISM Soars Higher…

Rocktober 3, 2017  

* RBA leaves rates unchanged…

* U.K. PMI drops, so does pound sterling!

* Venezuela to trade Oil with renminbi! 

Good day… And a Tom Terrific Tuesday to you! Well, it’s either feast or famine with me, with regards to sleep… Last night I slept through the night, well sort of, and when the alarm went off this morning, which I normally never hear because I get up before it goes off, I turned it off and went back to sleep!  I kind of wish I were still sleeping this morning, but that doesn’t work with regards to the Pfennig, so, here I am!  And I’m full of you know what and vinegar this morning, so watch out!  The Gap Band greets me this morning with their 80’s song: You Dropped A Bomb On Me…  At our Labor Day BBQ Party, this song played and good friend, Rick, requested it be played again!  (he’s a child of the 80’s)…  

Get the women and children and head to the basement or storm cellar, for the U.S. economy is on its way through town and its kicking tail and taking names later!  And No, I haven’t changed my song… I’m just telling you what the pundits out there are writing about this morning, as one piece of economic data in the U.S. rose, and you would think that it was the Tell-All for the economy!  

I’m talking about the U.S. ISM (manufacturing index) which took a large step forward yesterday rising from an index number of 58.8 in August to 60.8 in September,  thus beating the estimates which was for the index number to back off the 58.8 August number.  I told you yesterday that the U.S. was not going to be shown up by the strong PMI (same thing, different name) prints in the Eurozone, which by the way, is set to print tomorrow, not today, as I reported yesterday…  

Any way, the dollar was able to retain its gains and carve out a couple more, but the Dollar Index is reflecting a flat performance in the past 24 hours, and that’s how I see it too, but to read the articles out there, you would think someone paid these guys $20 to say that the economy was soaring just like Janet Yellen said it was, along with saying nice things about the dollar!

I chuckle at the thought that all it would take would be $20!  Reminds me of the best we used to make on the trade desk at the old Mark Twain Bank…  A shiny quarter would be the amount we bet when we would have a disagreement on something…  Frank Trotter would be the arbiter of any questionable outcomes… Good times… memories…   

The currencies weren’t able to gain any ground on the dollar yesterday, except small moves here and there, but Gold got whacked once again, and this is beginning to look like a pile on, which used to be a penalty in the NFL, to me. Gold lost $8.90 yesterday, but has not taken on any additional water in the early morning trading today, so maybe a bottom has been put in, but I kind of doubt it, given all the negative rhetoric about the shiny metal vis-à-vis the U.S. economy and rate hikes… 

In my Dow Theory Letters / DTL (www.dowtheoryletters.com) article last week, I went through all the “real economic data” and showed that the economy is NOT strong, and robust as Janet Yellen continues to tell us, so she can rationalize her rate hikes. The Lone Ranger, is the Manufacturing Index, which raises more questions than give answers for me… How can Manufacturing be so strong, when Factory Orders are weak if not negative each month, and Durable and Capital Goods Orders can’t find any terra firma?  So, we’re making stuff, and just putting it in inventory? I say that because Personal Spending is not at the rate that would say, this economy is heading up!   

Speaking of Janet Yellen… I read this last weekend that President Trump and Treasury Sec. Mnuchin, met with former Fed member Kevin Warsh recently… And they weren’t meeting him regarding what tee time the three of them would have the next day! And although it was not discussed as to what they really talked about, but come on… it’s not rocket science, even a country bumpkin like me can figure this one out! They met with Warsh to discuss taking over the Chairmanship of the Fed… It’s been long rumored that Warsh would be Trump’s candidate to take Yellen’s place. And even though Yellen’s term as Fed Chair doesn’t end until Feb… Trump could strongly suggest that she step down (she would still be a Fed member for a few more years), and then Warsh would step in.

The reason I believe that President Trump would want to move things up is that the Fed is beginning their “great unwind of the balance sheet” Or in honor of my good friend, the Great Mogambo Guru, GWOTBS… , which I’ve explained will be the same after reaching $600 Billion as a 1/4% rate hike, and Trump is no fan of higher interest rates, folks… So, watch for a Presidential announcement soon… At least that’s how I see this happening! 

OK, enough of all that U.S. economic stuff! The Reserve Bank of Australia (RBA) met last night (today for them) and decided to keep rates unchanged. But RBA Gov. Lowe, sounded very upbeat and optimistic about the Aussie economy saying that, “Over recent months there have been more consistent signs that non-mining business investment is picking up. A consolidation of this trend would be a welcome development.” Lowe also pointed to “a large pipeline of infrastructure investment” which is “also supporting the outlook”.  

OK…  If you feel that good about what’s going on in the country, why not hike rates? All the data has been supportive of a rate hike, except wage growth, but Shoot Rudy, I think that’s a just a laggard, and will come along…  The Aussie dollar (A$) saw a little love, well maybe a half-baked hug from the markets after the rate decision and statement…  

Pound sterling got whacked yesterday, as they printed their latest PMI and things didn’t turn out so good for them as they did in the Eurozone and the U.S.!  UK Sept. PMI saw the index number drop from 56.9 in August to 55.9 in Sept… 

It’s nice to see the Norwegian krone get back under the 8 ball/ figure this morning, as the krone takes it cues from the direction of the euro. It sure didn’t get any positive vibes from the price of Oil, which slid further yesterday, losing the $51 handle… So, in the last week, we’ve seen the price of Oil jump from the $50 handle to $52 and change, and then reverse its rise each day sliding to $50.47 this morning… 

A few months ago in a DTL article I wrote about how I saw Oil doing this two steps forward, two steps back for some time… As the U.S. shale producers step in when the price of Oil rises, and they increase the supply, which causes the price of Oil to drop, and then they cut production, and then rinse and repeat the whole scenario again and again and again… And this is exactly what we’re seeing right here, right now…

I already talked about the drop in Gold yesterday, but wanted to share with you this article that appeared on Bloomberg regarding Russia’s 10-year Itch with Gold…  The article talks about how Russia has doubled its previous amounts of Gold brought into the country, and in the 2nd QTR of this year, Russia’s Gold buying was 38% of the total Central Bank buying in the world!    Their Gold buying is quite impressive, folks, and they are going to use this Gold stash for something, that will hurt the value of the dollar, I can feel it in my bones, and titanium femur! 

Oh! I can’t forget to mention that it was announced last night that Venezuela has decided to stop selling their Oil for dollars, and will now accept Chinese renminbi for payment…  Is this the tip of the iceberg, which could be tipped over with China’s fixing Gold to their Oil futures?

Let’s say you’re an Oil producing country, and you can sell Oil to China… which in the past would require dollars be in the terms of the trade, but now China will pay you Gold for your Oil… Hmmm…  Gold or dollars? I’ll take what’s behind door number 3, Monty… HA!  Remember all those old game show hosts? Monty Hall, Gene Rayburn, Bob Barker, Chuck Woolery, Allen Ludden, and Wink Martindale, among others?  OK, Chuck get back to work!  

The U.S. Data Cupboard yesterday was all about the ISM and how great it was… And today’s Data Cupboard just has one print… Auto sales in September…  We’ve seen auto sales take the dead man walking routine the last 6 months, and from the looks of the expectations, the so-called experts believe that Auto Sales in September will rebound…  I talked about this a few weeks ago, when I talked about the flooding in Texas, Florida and other states from the hurricanes, and how cars were flooded out, and people would probably take the insurance money and buy new cars, thus propping up the auto sales business for a few months…  

To recap… The U.S. Sept. ISM was very strong and Chuck is seeing tons of articles about how ISM print proves that the economy is as strong and robust as Janet Yellen keeps telling us, and that allowed the dollar to retain its recent gains.  HOGWASH is what I think of when I hear the words strong and robust in relation to the U.S. economy, but then that’s just little old me, and not Goldman Sachs saying it! The RBA left rates unchanged but sounded very upbeat in the statement following the rate decision. Gold lost $8.90 yesterday and the price of Oil slid below $51.. 

Before I head to the Big Finish this morning, I wanted to stop and think about yesterday, we began to hear the news from the shooting at a Las Vegas country music festival. As of the time I’m writing this, 58 are dead and hundreds had been wounded. Then as the day went on, I saw a news flash that rock-n-roll legend, Tom Petty, 66, had died. Wait, what? Tom Petty, is gone? Yes, apparently, he had a heart attack… Two sad events on the same day, instead of rainy days and Mondays always getting one down, Shootings and heart attacks always get me down… I don’t know where to start with this Las Vegas shooter… So, I’ll just say a prayer for those he changed the lives for. I guess we’ll hear more about Tom Petty’s health as time goes on. But shoot Rudy, watching him perform would have had me believing that he was the most mellow rock-n-roller out there.. But I wouldn’t pretend to know his personal life, and don’t care to, at this point. Tom Petty… R.I.P.  

For What It’s Worth…  A few years ago, I wrote about how I thought China’s Gold reserves were much greater than what was being reported by them. I even threw out a figure that I thought it could be… It was 12,000 to 14,000 Tonnes of Gold…  Well, this article that Reuters took from the Chinese newspaper, Xinhua, can be found here: http://www.reuters.com/article/china-gold/china-proven-gold-reserves-at-12100-tonnes-at-end-2016-xinhua-idUSL4N1MD2NN

Or, here’s your snippet: “China’s proven gold reserves reached 12,100 tonnes at the end of 2016, the state news agency Xinhua reported on Monday quoting an official with the national gold association.

China has been the world’s biggest gold producer for 10 years and the largest consumer of the metal for four years, it said. China aims to increase its annual gold output to 500 tonnes by 2020 from around 450 tonnes currently, it said.

Last year, 70,000 tonnes of gold were traded in China on spot exchanges, futures exchanges and over-the-counter at banks, and that amount was expected to exceed 100,000 tonnes by 2020, Xinhua quoted Zhang Yongtao, vice chairman of the China Gold Association (CGA), as saying.”

Chuck again… WOW! I love it when eventually I’m proved to have been correct! And that’s all I’ll say about that! But for all you naysayers out there that doubted me… neener, neener, neener! HA! 

Currencies today 10/3/17… American Style: A$ .7820, kiwi .7180, C$ .80, euro 1.1758, sterling 1.3260, Swiss $ .9740, … European Style: rand 13.6753, krone 7.9880, SEK 8.1360, forint 265.05, zloty 3.6650, koruna 22.0533, RUB 57.78, yen 113, sing 1.3623, HKD 7.8114, INR 65.63, China 6.6515, peso 18.27, BRL 3.1598, Dollar Index 93.54, Oil $51.47, 10-year 2.37%, Silver $16.64, Platinum $ 914.86, Palladium $913.39, and Gold… $1,273.90   

That’s it for today… I know this is a little later than usual, I’m sorry, but I just couldn’t deny myself the sleep I needed! Little d, (Delaney Grace) was here yesterday, as she wasn’t feeling well, and had to leave school. I could tell she wasn’t right, as she just laid on the couch and didn’t sing, or talk! I was talking to my friend yesterday, and she asked me how was feeling, and I said, “well I’m 10 days from my last infusion, and 3 days before my next one”…  “Does that answer your question? ” The Turtles takes us to the finish line today with their song: It Ain’t Me Babe, which I believe was a Bob Dylan song that they re-recorded. And so, we end today’s letter, and I hope you have a Tom Terrific Tuesday! and Be Good To Yourself!

U.S. Data Shows More Weakness…

Rocktober 2, 2017

* Doll returns with vengeance 

* Ruble is best overnight performer… 

* Gold gets whacked! UGH! 

Good day… And a Marvelous Monday to you! It’s the middle of the night again… I just don’t get it… Went to the park Sunday evening to watch my beautiful granddaughter play soccer. Delaney is a tiny thing for her age, but she sticks her nose in the middle of everything out there on the pitch…  A real bulldog with pink socks and bows in her hair!  Rocktober is here, so welcome to Rocktober! Longtime readers know that I change this month to Rocktober.  Pink Floyd greets me this morning with their song: Us and Them…  Which is what I feel it’s like at times…   

After two days of healing for the currencies and metals, the dollar fought back on Friday, which was kind of strange, given that the economic data wasn’t exactly the prints that would give the dollar the edge…  Personal Income and Spending were weaker on both fronts than the expectations, but the dollar rallied anyway. Makes you wonder, and I’m not talking about who wrote the book of love, no… I’m talking about what/ who was driving the buy the dollar trade on Friday?  My spider sense is tingling, and I moved the Ouija Board to the “The PPT intervenes” answer…  

The saber rattling took a back seat this past weekend, and that’s a good thing, as the words were beginning to lead me to think that something bad was going to come of them. I checked the currencies and metals prices Sunday night before going to bed, and noticed that the euro was losing ground, but still held a 1.18 handle… But, then the news came through overnight that the Catalans (of Spain) had voted, and the results of their vote will be known in a couple of days, and the leader of the Catalans said that their independence from Spain could come as quickly at 48 hours after the vote reveal.. 

This vote really sunk the euro’s battleship overnight folks… And without the Big Dog getting off the porch to chase the dollar down the street, all the little dogs stayed in their allotted places until their time had come for them to visit the woodshed, and one by one they took their punishment in the woodshed, and returned to their allotted places with their collective tails between their legs.  But should this “vote” bring about a demise of the euro’s rally? I don’t think so, and would think that by next week, this Catalan vote and independence news will be water under the bridge for the euro.  

Since January this year, I talked about how the Norwegian krone was not only benefitting from the rebound in the price of Oil, but also the rally going on with the euro, and that was all peachy, until the euro rally was stopped, and the rebound in the price of Oil stalled…  The krone has backed off and has returned to trading with an 8 handle, and I don’t like seeing that, but understand why that is. The Swedish krona had been one of the best performing currencies so far this year, but they too had already slipped to the 8 handle, and these two currencies need something to jolt them from this funk that they are presently in. 

Earlier this morning, Germany, France, Spain and Italy all reported their PMI’s for September, and all were at least bang on with August’s number or Spain had a big jump in their PMI (manufacturing Index) and saw their Index number rise from 52.4 to 54.9… Tomorrow we’ll see the color of the “harmonized” PMI, which will be reports from all the countries of the Eurozone, melded together for one report.. I expect the harmonized report to be just as Steady Eddie as the reports from Germany, France and Italy were this morning.  

Not to be shown up by strong PMI’s, the U.S. will print their own version of a PMI, (we call it the ISM) today, and it will be just as strong and impressive as the Eurozone’s prints…  There not much going on data-wise in  Asia today, so we’ll just move along here… 

Before we go though I need to talk about Russia a bit… This past week Russia reported that they would have a record grain harvest, beating the old record held by the Soviet Union. So, let’s see now… Russia is either a leader or near the top in nuclear, military, oil, natural gas, minerals, geopolitical ability, and now wheat harvesting… And all while dealing with the effects of economic sanctions placed on them by the U.S. and the Eurozone.

And the ruble is rallying this morning despite the problems the other currencies are having, the ruble the top performing currency overnight, and it’s not because the price of Oil has jumped again… In fact, the price of Oil has slipped a little from Friday morning’s price. So, we have a winner, winner, chicken dinner today, and it’s the ruble!   

No news from either Germany or New Zealand about respective progress with forming a coalition gov’t.  I was talking with Frank Trotter last week, at lunch, and we were discussing these Governments and the problems they will have in forming coalition Gov’ts.  And I offered up that New Zealand will have the more difficult time since the 3rd Party that’s needed by either side (National Party VS Labor) has a leader that dislikes both parties attempting to woo him and his party to join them… And if little old me in St. Louis can see this, then kiwi traders should be all over it like white on rice, and they are, taking kiwi lower every day… 

In the U.K. the uncovering of details in the BREXIT stuff continues and last week it was the reveal that when you take out Gold, exports to the European Union are more than 50% of the U.K.’s total exports.  (you have to take Gold out, because London is a major Gold hub, and Gold can’t be included in the other nonfinancial exports… I think this news will weigh heavily on pound sterling…  I don’t really believe that anything good is going to come out of the BREXIT discussions, and that will continue to be a cross to bear for pound sterling. 

Speaking of weighing heavily on something… The short Gold paper trades weighed heavily on Gold on Friday, and in the early morning trading today…  Gold lost $7.30 on Friday, and is down another $10 this morning to trade at $1,274.70…  I’m just not buying the story going around that Gold is getting sold because the Fed sounded hawkish at their last meeting, and the President’s tax reform will make American Great Again… 

First of all I think the Fed will have to eat those hawkish statements come December, and who knows what gets passed these days in this country that has leaders that are so divided on everything.  And besides, the tax plan on the table right now, is nothing more than a debt gatherer…     Don’t get me wrong, I would love to have less taxes taken out of my money… But, that’s not what this tax reform is all about…  And that’s all I’m saying about that!   T

he U.S. Data Cupboard was interesting on Friday, in that we had the Personal Income and Spending data prints that didn’t meet expectations, and we actually saw a small slip in the Consumer Sentiment report for September…  The really bad news came from inflation readings as the core PCE price index (Persona Consumption Expenditures), which is the Federal Reserve’s central inflation gauge, inched only 0.1 percent ahead while the year-on-year rate fell backwards, down 1 tenth to 1.3 percent for the weakest result since November 2015.  This data print is better than the stupid CPI, but it still has its flaws, and I prefer to see what John Williams at Shadowstats.com says about inflation… And he has CPI near 6%..  

To recap…  It’s all about the dollar, for the most part, today, and this dollar buying started on Friday and hasn’t stopped. The Russian ruble is the only currency that I follow that has a gain VS the dollar this morning. Gold got sold on Friday and in the early morning trading today, Gold has given up $10…  It’s PMI week around the world, with the Eurozone seeing individual country reports today, and the harmonized report tomorrow, and the U.S. to print their version of a PMI when our Sept ISM gets printed.  Friday’s Data Cupboard saw Personal Income and Spending not gain any ground, Consumer Sentiment slip, and the PCE inflation calculator see an annual drop to 1.3% from 1.4%…   

For What It’s Worth…  Longtime reader, Bob, sent me this on Saturday, and I knew from reading the headline that it would be FWIW worth! It’s about stagnation, which is what we are currently in here in the U.S. and it can be found here: http://www.blacklistednews.com/Stagnation_Is_Not_Just_the_New_Normal–It%27s_Official_Policy/61050/0/38/38/Y/M.html   

Or, here’s your snippet: “Although our leadership is too polite to say it out loud, they’ve embraced stagnation as the new quasi-official policy. The reason is tragi-comically obvious: any real reform would threaten the income streams gushing into untouchably powerful self-serving elites and fiefdoms.

In our pay-to-play centralized form of governance, any reform that threatens the skims, privileges and perquisites of existing elites and fiefdoms is immediately squashed, co-opted or watered down.

So the power structure of the status quo has embraced stagnation as a comfortable (except to those on the margins) and controllable descent that avoids the unpleasantness and uncertainty of crisis. We all know that humans quickly habituate to gradual changes in circumstances, and that if the changes are gradual enough, we have difficulty even noticing the erosion.

So wages/salaries stagnate, inflation eats away at the purchasing power of our net income, junk fees, tolls and taxes notch higher by increments too modest to trigger protest, fundamental civil liberties are chipped away one small piece at a time, healthcare costs rise every year like clockwork, and the gap between the bottom 95% and the top 5% widens, as does the gap between the top .1% and the bottom 99.9%, productivity stagnates, the growth rate of new businesses stagnates, but it’s all so gradual that we no longer notice except to sigh in resignation.” 

Chuck again…  This article was written by Charles Hugh Smith, who always writes stuff that I want to read!  

Currencies today 10/2/17… American Style: A$ .7804, kiwi .7178, C$ .7980, euro 1.1745, sterling 1.3333, Swiss $.9722, … European Style: rand 13.6385, krone 8.0070, SEK 8.1812, forint 265.30, zloty 3.6727, koruna 22.1253, RUB 57.52, yen 113.02, sing 1.3623, HKD 7.8121, INR 65.69, China 6.6544, pes0 18.29, BRL 3.1614, Dollar Index 93.56, Oil $51.39, 10-year 2.37%, Silver $16.60, Platinum $910.17, Palladium $933.59, and Gold…. $1,274.70   

That’s it for today… My first Sunday of not watching any pro football, I have to say I didn’t miss it! Of course I watched my beloved Cardinals last game for 2017, and they lost… UGH!  I’m pinning my colors to the Cleveland Indians to win it all this year… I sure hope I didn’t just jinx them!  My friend and former colleague, Aaron Stevenson, came out to my little river town to see me last Friday… It was great to see him, hear about the folks back on the World Markets Trading Desk. I guess I’ll attempt to go back to sleep now that this is finished, so good night! HA!  The McCoys take us to the finish line today with their classic song: Hang On Sloopy… And with that… Welcome to Rocktober, I hope you have a Marvelous Monday, and I also hope you are Good To Yourself!

U.S. Dollar To Get Its Clues From Renminbi?

September 29, 2017

Dollar Backs off again from its assault!

Gold has another good day!

The Data Cupboard wakes up today!

 

Good day… And a Happy Friday to one and all! It’s the middle of the night, so I’m not so sure about how the day will go along, but I’m sure going to attempt to make it a Fantastico Friday, and I hope you do too! The Cubs ended the Cardinals pipe dream last night, and so the season comes to an end this weekend, with no playoffs for a team that didn’t miss them very much in the past decade, and this makes the second consecutive year of no playoffs…  Hello? Mr. DeWitt? Yes, please fire the GM and manager, I’ll hang us now so I can listen to your reasons why that won’t happen…     The Temptations greet me this morning with their song: The Way You Do The Things You Do…  I’ve got a story to tell you someday about my first band…   

The dollar stopped swinging its mighty hammer on the currencies on Wednesday, and that continued through yesterday’s trading and through the overnight markets.  The euro has climbed back to the 1.18 handle, and Gold had another day without major selling yesterday, so we’ve got those two things going for us today, eh?  Man, I looked at yesterday’s Pfennig and thought, Chuck, that’s too long of a letter! But I can’t help it, if I’m feeling good, and had a nice night’s sleep, watch out!   I feel Ok right now, but like I said above, it’s the middle of the night, so, so much for the nice night’s sleep!   The Eurozone  saw some data this morning, so let’s go there and see what’s happenin’!    

The Eurozone saw August results in CPI (consumer inflation), which rose to 1.1% from 1% previous, Producer Prices increase 0.4% in August, and Consumer Spending fall -0.3%.    Germany also printed their August Retail Sales, which were unchanged from July at 2.8%…  The Eurozone economic data has all been showing a trend to getting stronger in recent weeks, and that should help the European Central Bank (ECB) in their decision as to when to remove their accommodative Monetary Policy… 

Recall, the Eurozone has negative deposit rates, and those have got to go! And the ECB meeting in Rocktober, is when ECB President, Mario Draghi, told us he would give the details on their unwinding of the ECB’s balance sheet of bonds…  See, Mario? I remembered what you said, in case you were hoping that everyone forgot that the Rocktober meeting is the one you said you would reveal your plans for unwinding the balance sheet! 

I was doing some reading tonight and came across an article on Bloomberg.com that talked about how currencies trades have their eye on the Chinese renminbi fixings, as to their clue of when the dollar might slip back into the underlying weak trend, that it climbed out of last week with the hawkish statements by the Fed, and now the tax reform talk…  The idea here is that the Chinese, which had allowed appreciations nearly every day until a couple of weeks ago,  and that coincided with the dollar climbing out of the weak dollar trend…  Hmmm…   So, if China decides to stop the night mark downs of the renminbi, the dollar will retreat once again… Hmmm, Interesting take, and I’m buying it, for now…  

Well, let’s take trip down the yellow brick road… Yes, we can bring Dorothy along, but not that pesky dog! HA!  Gold, as I said above was able to avoid major selling once again and added $4.30 on the day to close at $1,286.70… The shiny metal has followed that gain yesterday with another gain to bring Gold to $1,291.80 in the early morning trading. 

It’s a Friday, so that means today is the day we get to see the latest COT (commitment of Traders) report on Gold & Silver… I used to work with a guy that thought the COT was the only thing on earth, that was reliable to trade on… And he stuck to his guns through the years, always recording the COT numbers each Friday and charting them…  I’ve never really gotten into the COT, because by the time it comes out, sentiment with traders could have already changed…  

Can you believe that this is the end of the 3rd QTR? Man, this year has gone by fast…  But then I was dealing with a change of jobs, and the transfer of the Pfennig to the Aden Research Group, all the while dealing with chemo infusions every two weeks! So, most of the summer was just a blur to me!  So, with it being the end of the quarter, we could very well see some volatility today as traders square up their books for quarter end reporting….  and that means if an asset has been sold short in recent weeks, then those short positions are closed out…  

This quarter end stuff is tricky, so be careful out there today…  The 4th QTR here in the U.S. is going to be one to remember…  That’s what I’m thinking, and I’ve told you all what I think will go on in the 4th QTR, but add to that the Gold price reset, that James Rickards keeps talking about, and when the 4th QTR is all said and done,  the dollar should be getting sold like funnel cakes at a State Fair, and Gold should be on a moon shot!

And if all that doesn’t take place, then I’ll be like Puff the Magic Dragon, and you’ll hear my mighty roar no more!   Hmmm…  do you really think that you’ll stop spreading your opinion, Chuck?  Nah… I doubt it seriously… But then in the words of the great Joaquin Adujar, You never know! 

The U.S. Data Cupboard yesterday, had a couple of interesting data prints, and so we’ll talk about them, briefly that is…  The Advance Trade Balance saw the figure narrow in August from $65 Billion to $63 Billion…  I’ve explained this data before, but for all of you new to class, here goes again…  The Advance Trade Balance is printed at first to show the trade that went on in the month, but in about a week, the figure will be brought down to the total Trade Deficit…  The data in the advance goods report are accounted for on a census basis and can differ slightly from subsequent data in the international trade report where goods data are accounted for on a balance of payment basis to adjust for changes in ownership that can occur without goods passing into or out of the US. 

But the reason I brought this up is that the total amount fell, which means the U.S. either didn’t export as much, or we didn’t spend as much on imports…  So, you can usually point to the dollar’s performance as to the reason the Trade Deficit narrows or widens…  I know clear as mud, right? Oh, well, I tried…     

Today’s Data Cupboard has two of my fave pieces of data, with August Personal Income and Spending data to print…   We’ll also see the color of the latest Consumer Sentiment…  Which I don’t really care about, because they never call me for my opinion! HA!   

To recap….  Another day of the dollar backing off its assault on the currencies & metals  yesterday, and through the overnight markets too! The dollar has hung its hat on the hawkish statement by the Fed last week, and the president’s tax reform… Seems to me that those will become quite stale by next week… hint, hint… wink, wink… 

For What It’s Worth…  I got sent this note from the folks at MarketWatch yesterday, and I thought it to be FWIW worthy, given all the talk about the Tax Reform…  So, here it is, and it can be found here: http://www.marketwatch.com/story/why-trumps-tax-plan-could-be-a-big-win-for-retirement-savers-2017-09-28?link=MW_popular

Or, here’s your snippet: “Whatever you might think of our current president, you can’t say he doesn’t think big.

The Trump-GOP tax plan just announced has the potential to affect retirement savers in fundamental, long-term ways that could be positive for many Americans. The plan is a long way from reality and is likely to see some changes before becoming law. 

Now, about taxes. Some will grumble that the corporate rate is low enough, or that the effective taxes paid by companies is low already.
Read: Trump’s tax plan: It’s not great, but it could have been worse
But consider what a corporate tax cut means for retirement savers with investments in the stock market. Sure, lower taxes might mean more jobs. But one thing it means without a doubt is higher corporate income — money that goes to the owners of U.S. corporations.” 

Chuck Again… Well all that’s fine and dandy, but what happens when the stock market has a correction and those “savers” that are in stocks get their hats handed to them?  And besides, I’ll come out and say right here, right now that I’m no fan of larger deficits, and that’s what this plan will result in…    UGH!   

Currencies today 9/29/17… American Style: A$ .7850, kiwi .7220, C$ .8050, euro 1.1802, sterling 1.3412, Swiss $ .9705, … European Style: rand 13.48, krone 7.9418, SEK 8.1078, forint 263.27, zloty 3.65, koruna 22.0457, RUB 58.07, yen 112.14, sing 1.3560, HKD 7.8104, INR 65.42, China 6.6622, peso 18.14, BRL 3.1817, Dollar Index 93.05, Oil $51.54, 10yr 2.31%, Silver $16.90, Platinum $925.31, Palladium $938.60 and Gold… $1,291.80    

That’s it for today and this week!  I’ll have to drown my sorrow over my beloved Cardinals tonight at my fave watering hole! I have a joke for you today… What’s the difference between Tire American and the Fed Reserve? Tire America understands disinflation!   HAHAHAHAHAHA!  I tell ya, I’ve got a million of them! HA!  My Mizzou Tigers are on bye this week, which is good because after that last game, bye was about the only team they could compete with!  My Sundays are now free! Baseball is coming to an end, and I really don’t have a dog to hunt in the NFL, so I don’t care to watch two teams play that I don’t have a dog in the  hunt… The performance of my Fantasy Football Team will keep me up to date with who’s good and not…  Journey takes us to the finish line today with their song: Girl Can’t Help It…  And with that… You know.. it’s a Good day, to have a Good Day!  I hope you have a Fantastico Friday, and Be Good To Yourself!

Thoughts Of Tax Reform Has Dollar Bugs Excited!

September 28, 2017 

Slip Sliding Away stops… 

RBNZ leaves OCR unchanged

Gold gets whacked! 

 

Good day… And a Tub Thumpin’ Thursday to you! I want to send a Thank You note to the Cardinals, or the schedule maker, for moving their game up an hour, so I could watch my team lose again to the Cubs! Everything was going along just fine, and the it didn’t! And the season was lost… There are 4 more games to be played, but in reality there’s nothing to play for but their pride, which I would have called into question back in April… I had a great lunch with Frank Trotter yesterday, more on that in the last paragraph, and The Blue Jays have the perfect song this morning to greet me… The Blue Jays were a spinoff from the Moody Blues, with Justin Hayward, and John Lodge starting the Blue Jays, and producing one album, which is one of my fave albums… Anyway their song this morning is: When You Wake Up… See? Perfect title for an early morning letter!

The dollar bugs took a breather yesterday, and the currencies’ values stopped slip sliding away. The Big Dog euro dug in at 1.1750 and remained there all day. Gold on the other hand, it nearly gave back the $13 it gained the day before, losing $11.20 on the day… It was as if “the boys in the band” took a pause for the cause on Tuesday, and when they came back they saw what had happened, and decided they needed to do something quick! And do something they did, as the volume in Gold contracts traded yesterday was a monstrous 330,000… 

The President’s tax reform plan was presented yesterday, and so far, it appears to be something that as they used to say on the farm… “that dog ain’t gonna hunt”…. So, the boost the dollar got the previous day when it was announced that the President was ready to present his plan, didn’t get wiped out, but I think as the days go on, and more and more people/ traders/ hedge fund managers/ etc. See, that over $1 Trillion in deductions for tax payers will be eliminated, in order to pay for the tax rate reductions, I believe the dollar will give back those gains… A classic buy the rumor, sell the fact… of course, once again for any new readers, that’s my opinion and I could be wrong!

In the overnight markets the euro has carved out a small gain, and I mean small! But at least the slip sliding away has stopped for now… And I have to think that how the markets view the President’s tax reform will be the determinate of whether or not the currencies get back to the underlying trend of weak dollar / stronger currencies. 

The Bank of Canada Gov. Poloz, spoke yesterday, and I was thinking that this was going to be his chance to really take a large portion of the air out of the housing bubbles in Toronto and Vancouver, by saying something like, the rate hike last week was just the beginning of a new rate hike cycle…  But NOOOOOOOO!  Instead he has this to say: ““There is no predetermined path for interest rates from here,” the Governor concluded. “Monetary policy will be particularly data dependent in these circumstances and, as always, we could still be surprised in either direction. We will continue to feel our way cautiously as we get closer to home, fostering economic growth and keeping our inflation target front and center.”   

Hmmm…  Well, longtime readers know that I’m not a fan of Poloz, as he still allows his roots as a “trade guy” to influence his rate decisions. Trade Guys don’t like a strong currency because it makes it more difficult for them to promote trade of goods and services.  I recall talking about this the day after Poloz was named Gov. of the Bank of Canada…  And I’ve talked about it just about every opportunity I’ve had since!  So, the loonie lost move ground yesterday, because the markets were really wishin’ and hopin’ and thinkin’ and prayin’ that Poloz would let down his guard, and talk about a new monetary policy…  But that didn’t happen, so we move on from here, for we’ve spent far too much time in Canada this morning!

I don’t know if you’ve been paying attention to the U.S. Treasury 10-year yield moves in recent days?  But, September has not been kind to 10-year Treasury owners, as the yield has risen from around 2.09% in early Sept. to 2.34% today… That’s a move that’s been flying under the radar, that is unless you own the bond, or are a bond trader/ salesman.  And for all of you new to class, bond yield/ price move in opposite directions, so as the yield on the bond rises, the bond price drops, and vice versa… 

I would imagine that there are some young bond guys out there that have never next a bear market in bonds. I’m not sayin that this is what this move represents, but I’m just saying that these young guys have only really see bond prices rise… Yesterday the yield dropped 7 Basis Points, and that drop had to be tied to the Tax Reform talk … 

As I said above if the markets like the tax reform plan, and think it will give the economy the boost it needs, then the dollar will get bought, stocks will shine and bonds will go dark…  I’m just saying… 

Things have been pretty quiet In the Eurozone, but they did print some data today that is responsible for helping the euro carve out that small gain I talked about above…   Eurozone Business Climate and Economic Sentiment both saw increases in their index numbers with the Business Climate rising from 1.08 to 1.34… And the Economic Sentiment index rose from 111.9 to 113 last month…   

Germany will also auction off their 10-year Gov’t Bond today… Guess where you can buy a 10-year German Gov’t Bond?  I’ll give you a hint… It’s yield is lower than the 10-year U.S. Treasury!  2.19%!  Is that amazing or what?   I was talking with Frank Trotter yesterday, and I mentioned that the I was surprised that Angela Merkel won her reelection, given that she was responsible of the immigration mess in Germany (and the rest of the Eurozone), and Frank replied… Well, Germany’s economy is doing very well, and that pretty much tells you why she was reelected.  

See? I told you he’s the smartest man I ever met! I should have been able to put two and two together there, and not be so surprised that Merkel won, but I didn’t, and Frank did at the drop of a hat! 

And in Japan today they are going to empty out their Data Cupboard in one day, and print August data for Inflation, Industrial Production, Retail Sales and their Unemployment Rate…  Whew! Couldn’t they break those up some? Do that have to all print on the same day?  Oh well, I don’t see any of these scream, “buy yen”!    I see inflation, and Industrial Production falling from July’s prints, with Retail Sales rising a bit, and the Unemployment Rate remaining Steady Eddie at 2.8%…  

Norway’s Norges Bank met last week, and while I had tiny hopes that the Norges Bank would step up and hit the ball out of the park, by saying that with inflation rising they are going to meet it head on, but that didn’t happen and the Norges Bank remained with a neutral bias, and then we had the political uncertainty in Germany this past weekend with the election results, pulling the euro down, and we had the price of Oil jump $2… And the krone got pulled by the euro weakness, and not the Oil price rise…  UGH!  

And the Reserve Bank of New Zealand (RBNZ) met overnight (Friday morning for them) and they left their OCR unchanged. For those of you new to class, in New Zealand the OCR is the Official Cash Rate, like our Fed Fund rate…  I didn’t see any major change in the leadership of the RBNZ, as former Gov. Wheeler stepped down this month and the acting Gov. Spencer, basically said the same things that Wheeler has been saying the past couple of meetings… That the economy is growing nicely, with the help of a weaker currency…    And he just basically flicked the housing bubbles going on in New Zealand off his shoulder, like it wasn’t a problem… I shake my head and wonder if Central Bankers can see anything any longer!   

Well, my thoughts for interest rates in New Zealand haven’t really changed I still think the RBNZ will be moving to a rate hike cycle by year end, and hike rates in the 1st QTR of 2018… 

Well, IT HAPPENED! Just like the CEO of the mining company said it would this year!  Yes, I’m talking about the rise in price of Palladium that took it above the price of Platinum! It happened in the past 24 hours, and Palladium pulled past Platinum (that’s a lot of P’s in a row!)  and the spread between the two now goes in the opposite direction!  Hey! it feels good to cheer on something, and watch it go in the direction your cheering for, doesn’t it?    

I said above that Gold sold off by $11.20 yesterday with another day of monstrous volume in paper contracts, of 330,000…  So, Gold is below $1,300… I would think this to be an excellent area to look to buy, but then that’s just my opinion, and so on…  Given everything that’s going on in the world right now, I don’t see how “the boys in the band” can continue to fight the tide of physical Gold buyers too much longer…  At least that’s what I’m hoping!   

The U.S. Data Cupboard saw Durable Goods Orders for August attempt to climb out of the negative -6.8% hole from July, and rose 1.7%…  A nice try, but no cigar!  Capital Goods Orders were lower in August than in July, so no gains there…   Today’s Data Cupboard will have the latest revision to 2nd QTR GDP…  And they are going to attempt to get us to swallow a 3.1% 2nd QTR GDP…   Yeah, and I have some… oh never mind, you know how I feel about Gov’t data reports…  

To recap… The Slip Sliding Away for the currencies came to a stop yesterday, and the euro has carved out a small gain in the overnight markets. The rest of the currencies haven’t really gone with the euro yet…Gold nearly gave back the $13 it gained the previous day, and Palladium has seen its price rise pas the price of Platinum! 

Before I head to the Big Finish today I wanted to acknowledge that Hugh Hefner has passed on…    And then in the order of this letter… 

On a sidebar… I read last night that the U.S. has fallen from the number 1 position for countries’ ability to feed their people. Ireland moved in front of the U.S., and when you factor in climate, the U.S. falls to 4th! I don’t know why I thought this was important to write about, but it’s a part of the overall weakening that I see, I guess…

For What it’s Worth…  Well, this article has been around the block a couple of times, and had different names on it… But this is the original, and it’s about the dollar being doomed, and can be found here: http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=313   

Or, here’s your snippet: “In 1934, through the Gold Reserve Act, President Roosevelt devalued the dollar from $20.67 dollars per ounce, to $35 dollars per ounce.

The devaluation was excessive, meaning that at $35 dollars per ounce, the world considered that it would rather own American dollars – as undervalued – rather than gold; for this reason, and because of fears regarding another World War, the world shipped enormous quantities of gold to the US, in exchange for US dollars.

The consequence was that the stash of American gold, at the end of WW II, was about 22,000 tons of gold.

The huge error which the American administration committed at the Bretton Woods, N.H., international monetary conference in 1944, where the monetary order of the post-war world was determined, was to force upon the world a defective monetary system: gold was to be the foundation of the post-war world economy, supported by the US dollar, which was to be considered – like it or not – as good as gold.

This huge mistake has brought the US and the world to an enormous economic distortion: all production in all countries of the world, today, and all economic relations, both internally within nations and with regard to their international relations, are disconnected from reality.”

Chuck again… This article goes on with some very well written thoughts by Hugo Salinas Price…   

Currencies today 9/28/17… American Style: A$ .7820, kiwi .7192, C$ .8016, euro 1.1775, sterling 1.3390, Swiss $.9742, … European Style: rand 13.6037, krone 7.9594, SEK 8.1404, forint 264.26, zloty 3.6617, koruna 22.1294, RUB 58.04, yen 112.72, sing 1.3607, HKD 7.8096, INR 65.65, China 6.6384, peso 18.19, BRL 3.1777, Dollar Index 93.33, Oil $52.74, 10-year 2.34%, Silver $16.84, Platinum $923.36, Palladium $934.40, and Gold… $1,286.50  

That’s it for today… Whew! I almost threw my laptop in the waste basket this morning… There I was writing the Pfennig, and it froze up…. I tried rebooting, and nothing, everything I had was lost! And so I tried rebooting one more time, and this time everything came back, and I was able to finish writing the letter! Whew!  Had a great lunch with my good friend, Frank Trotter yesterday… I have to say that retirement looks good on him, he looked so relaxed, and free of all the things he couldn’t tell me! We talked about everything under the sun and moon and couple of hours later, we parted… Congrats to the Cubs for winning the Central Division last night… I have two good friends that are HUGE Cubs fans, Charlie, and Dennis, I know they are happy this morning, while I cry in my coffee!  Neil Young takes us to the finish line with his classic rock song: After The Gold Rush… And with that it’s time to get out of your hair for today, and hope that you have a Tub Thumpin’ Thursday!  Be Good To Yourself!  

 

Currencies Continue To See Their Gains Slip Sliding Away…

September 27, 2017

* Tax reform talk gives dollar another favor!

* Gold get whacked, with 346,000 contracts traded!

* Are we reaching Peak Gold?

 

Good day, and a Wonderful Wednesday to you! It’s the middle of the night, and I’m awake… So, I decided to read a little, and begin to put the Pfennig together. My beloved Cardinals hung on to win one last night, holding off the celebration of the Cubs. Apparently, the Cardinals gave up 4 late runs, after I had gone to bed! Loggins & Messina greet me this morning with their song: Your Momma Don’t Dance…  the song goes: Your momma don’t dance and your daddy don’t rock-n-roll… When darling daughter Dawn, was a little girl, she used to sing:  My momma does dance and my daddy does rock-n-roll!  Memories…  

Yesterday, I told you that the currencies had been seeing their recent gains slip sliding away, and our Tom Terrific Tuesday didn’t change any of that, as the currencies’ gains kept slip sliding away…  I also told you yesterday that all the saber rattling between the U.S. and N. Korea was adding to the dollar’s favors, with the first favor coming from the Fed’s statement last week about how the U.S. economy is strong and robust. Well, we can add a 3rd favor for the dollar now in the form of a the announced tax reform from the President.  

Even a comment from Fed Chair, Janet Yellen, that should have stopped the dollar in its tracks, was just treated like water off of a duck’s back… Yellen told reporters that, “the rate hike path is not set in stone”…  Now, if you were to ask me what my take on that statement was, I would tell you, no wait! I am telling you…  That this is the Fed’s way of laying words between the lines, as songwriters used to do.  This way, when December comes along and the Fed skips the rate hike again like they did last week, they’ll be able to point to that statement and say, “well, we gave you a hint 3 months ago”… 

So…  Saber rattling, exaggerations about the economy, and talk of tax reform, has the dollar firmly on the rally tracks with the Big Dog euro slip sliding down to 1.1750 this morning, and the yen giving back its so-called safe haven gains. Gold, which had gained back some of the previous day’s losses has run into a buzz saw in the early morning trading today, and is down $7 in the early trading.  Is this all the Plunge Protection Team (PPT) stepping in to the markets to keep the dollar from falling too low?  Or, is this simply the dollar rallying on the items I mentioned above?  

Well to be fair and balances, I’ve got to say that It’s a little bit me, and a little bit you, no wait!  Come on Chuck, people don’t want to read about Monkeys lyrics!  OK, I get it… but what I was trying to get at was that it’s probably a lot of the fundamentals causing traders to rethink their recent switch of sentiment away from the dollar, and some PPT trading sprinkled in just to smooth out the rough corners!  

And, let’s not forget the fact that political uncertainty in Germany couldn’t have come at a worst time for the euro… I’ve read that current German Chancellor Angela Merkel, is having difficulty negotiating a coalition government, and the longer this plays out the more the euro will suffer…   

The political uncertainty in New Zealand is much the same with regards to not getting anywhere, and here the task will be much more difficult, and could end up taking 3 or 4 weeks to finalize, and all that time kiwi will suffer, because I’ve told you dear readers that traders don’t like uncertainty, and New Zealand and Germany are poster children for uncertainty right now. 

There’s a good article on the Bloomberg this morning asking the question, Have we reached peak Gold?…  The head of the World Gold Council (WGC) was interviewed for the article and he talked about the unsustainable demands from countries like India and China, and how miners can’t keep up with the demand if it were continue. The WGC head also talked about the U.S. political uncertainties, and how when you add up all things going on right now that it “seems like very fertile ground for investors to get into Gold”   He also went on to talk about how he saw Gold’s price rising to $1,400 in the next year…

 I’ve always questioned the WGC’s reports on gold holdings but this guy seems to be “with it”, at least from what I read in the article!   Peak Gold… Hmmm, now that’s something to think about, eh?    When I was doing my reading earlier I came across two things that I think will eventually come to everyone’s attention and they’ll say, “how’d this happen so quickly?”  When in reality it took a long to time, they just weren’t paying attention…   

The first thing is a little ditty that I came across and it made me think of how it was pointed out to me when I was making such a big deal out of household debt rising that the population had increased and therefore the increase wasn’t to be worried about…  Well, in 2016, the U.S. population only grew 0.7%, the smallest annual increase in population in 80 years! So… I guess now we CAN worry about the increase in household debt, eh?

 And the second thing is all this talk of unwinding the Fed’s Balance Sheet has got a lot of people talking. But one person that I do listen to when he talks is Lacy Hunt, well respected investment analyst, and “go-to guy” for John Mauldin…  Lacy Hunt says that the unwinding of the balance sheet will only cause the yield curve to flatten out…  And then I look at the yield curve and I see it has already begun to flatten!

The spread between the 10-year and 2-year Treasury bonds  stood at 78 Basis Points yesterday which was the flattest the yield curve spread has been since the current expansion has begun, which was 2009!  The spread widened a bit to 82 Basis Point in the past 24 hours, but still you see what’s happening here, and once a yield curve is flat, it doesn’t take much for it to go negative, and when that happens, you might as well write down that the economy is in a recession, or will be in one soon! 

Gold got whacked good yesterday, after fighting in the early morning trading to rebound. But that was not to be, for long that is, and soon the short paper trades were swirling around the shiny metal and when all the dust settled there were 346,000 contracts traded yesterday, which pushed the price of Gold down $16.70 on the day.  In the early morning trading this morning Gold is getting off on the wrong foot again. UGH! 

And for those of you keeping score at home, the spread between Platinum and Palladium is just $9 this morning… Just $9, that’s what I said!  But getting back to Gold for a minute… I just keep thinking about James Rickards call for a price reset for Gold that will come around the time we change our calendars to a new year… I sure hope he’s bang on with that call!  

The U.S. Data Cupboard today finally gets some real economic data in Durable and Capital Goods Orders for August…  Like I said yesterday, I think it was, that Durable Goods Orders, which were a negative -6.8% in July are expected to print a positive number, but based on the previous month’s figure, which isn’t going to say much…    

Yesterdays Data Cupboard saw August New Home Sales drop from July’s print, and the same with Consumer Confidence, while the Case/ Shiller Home Price print ticked higher from 5.8% to 5.9% increase… Maybe that’s why New Home Sales dropped?   

To recap…   The gains the currencies have made keep slip sliding away, as now the dollar has another favor, which is the unveiling of the President’s tax reform plans… And the euro and kiwi continue to have to carry around political uncertainty like an albatross around their necks! The WGC mentions peak Gold.  But Gold gets whacked good on Tuesday, and is set for more losses today. The Platinum to Palladium spread is just $9 this morning! WOW!    

For What It’s Worth…  Since I talked about Gold in two different places in the Pfennig today, this makes sense to carry the Gold talk on with this article about how Gold is money, and can be found here: http://www.internationalman.com/articles/gold-as-the-monetary-sun   

Or, here’s your snippet: “For millennia, people believed that the sun revolved around the earth, appearing, as it did, on the eastern horizon in the morning and setting on the western horizon in the evening.

Greek astronomer Aristarchus of Samos is generally credited with the concept that the universe is heliocentric, with all the planets revolving around the sun. Yet it took a further eighteen centuries before Nicolaus Copernicus came along and convinced people that this was the case.

So, we can be forgiven if we educated modern-day people sometimes have difficulty in understanding that gold is the monetary sun.

Even those of us who have been tracking gold’s progress for decades frequently give in to the ease of quoting gold’s value in terms of fiat currency—most commonly in US dollars.

And yet, we have it the wrong way round. Gold is in fact the centre of the economic universe, and all the fiat currencies (including cryptocurrencies) revolve around gold.”  

Chuck again… I think this is a very good article that all Gold holders should read, and even non Gold holders so that they might be moved to actually buy some Gold!   

Currencies today 9/27/17… American Style: A$ .7851, kiwi .7192, C$ .8075, euro 1.1750, sterling 1.3384, Swiss $.9738, … European Style: rand 13.4545, krone 7.9194, SEK 8.1410, forint 265.38, zloty 3.6610, koruna 22.1371, RUB 57.65, yen 112.74, sing 1.3586, HKD 7.8084, INR 65.84, China 6.6294, peso 18.04, BRL 3.1612, Dollar Index 93.37, Oil $52.13, Silver $16.87, Platinum $925.39, Palladium $915.89, and Gold… $1,294.70   

That’s it for today…  Well, I recovered from my Monday shut down enough yesterday to get my errands taken care of. memo to self… Don’t go to license bureau the last week of the month for ANYTHING! And today will be a special treat, as my longtime friend, and former boss, Frank Trotter and I are meeting for lunch! I can’t wait to hear about what he’s been up to, and what’s next for the smartest man I ever met. Boy I’m glad I went to bed before the Cubs nearly tied the game last night. I would have been fitted for a white suit if I had watched that! I’ve decided that I don’t care to watch another NFL football game again. I don’t have a team to root for, and now with all this going on, I just don’t need them any more. College football will be my main focus this year…  Yes, takes us to the finish line today with their song: Time And A Word…  And with that I hope you have a Wonderful Wednesday… and please Be Good to Yourself!