December Jobs Report Is Disappointing!

Chuck Butler’s: A Pfennig For Your Thoughts  

  January 8, 2017

* It’s an Opposites Day!

* Eurozone prints strong data!  

Good Day… And a Marvelous Monday to you ! Well, I know right from the start today that this will be late… not as late as Friday’s letter, which ran into technical difficulties, but late, as I did something this morning that I’m not proud of… I hit “snooze” when the alarm went off…  That’s not something I hope begins to happen on a regular basis!  The frigid cold finally lost its grip on us yesterday, and we saw temps above freezing for the first time in a fortnight.  All my bags are packed, I’m ready to go, I’m standing here outside your door, already I’m so lonesome I could cry…  Yeah, I head south tomorrow, so no Pfennig tomorrow, and I’ll pick it up from S. Florida on Wednesday morning.. Eric Burdon & the Animals greet me this morning with their song, that’s very apropos for me… We Gotta Get Out of This Place..   

Well, what can I say? the markets played a game of “opposites day” on Friday and in the overnight markets last night… What am I talking about? Well, Friday saw the Jobs Jamboree disappoint BIG TIME, with only 148,000 jobs created in December, when 290,00 was expected.. That, in the old days of trading on fundamentals, would have sent the dollar to the woodshed for the day and more until something brought it back out. But that’s not what happened… Instead we saw the dollar rally on Friday, and through the overnight markets last night…  UGH!  

The BLS jobs report was very disappointing on Friday, and on top of that the BLS kind of came clean on their birth/ death model as they actually subtracted jobs in December to the turn of 38,000…  Recall on Friday, I was proposing a scenario that had the BLS coming completely clean and wiping out a large portion of the jobs they had added for no apparent reason during 2017.  The BLS did surprise me with a negative number of jobs for the month, but only 38,000?  In Rocktober they added 216,000 jobs!  So, to just take away 38,000 was like removing a bucket of sand from a beach…  Or me losing 10 lbs.. nobody notices! 

If I were a BIG TIME trader on Wall Street, I would have seen the disappointing number and the fact that the BLS “kind of admitted” that they were overanxious with their additions each month, as a sign that the dollar needed to get sold…  But that’s not what happened! 

What is going on here? SERENITY NOW! I’m dead serious here folks! Oh! But wait, Chuck! Don’t forget that there are “powers that be” out there lurking in the dark, ready to defend the dollar whenever it appears that its headed for a the woodshed.   Oh, silly me! Of course that’s what has happened, because there’s no other explanation for this market reaction…

Someday, this will al come crashing down on the dollar and those “players that lurk in the dark” Until then, we have to deal with them, and the dollar that refuses to go directly to jail, without passing Go, and without collecting $200!  And that brings us to this morning, where the euro has lost the 1.20 handle, and Gold lost $3.20 on Friday and is down another couple of bucks in the early morning trading today. 

This is a far cry from where we began last week, with the currencies, metals and Oil all chasing the dollar down the street. But it is what it is, and I can’t do anything about it, so I’ll leave that stress for someone else to feel!  

The Eurozone printed some encouraging data this morning, which should be underpinning the euro right now, but as I said above the markets are playing a game of opposites…  November Eurozone Retail Sales beat the expectations as they rose 1.5% vs 1.3% expected, this from the Rocktober print. The Year-on-year Retail Sales were strong too with a 2.8% increase VS 2.2% expected.  In addition, Business Climate as measured by a German think tank also beat expectations on the upside.  So, as you can see, the euro should be basking in the warmth provided by the sun’s rays shining on it this morning…  

We’ll have to wait until Thursday for any additional economic data from the Eurozone, so it’s on its own until then.  Speaking of Thursday, we’ll see the Aussie Retail Sales for November (I know, these reports seem so old and stale at this point, eh? ) The data prints for Australia in recent weeks have been good and bad, and the Aussie dollar (A$) needs a good strong Retail Sales report to help it continue its current rally. 

The GATA folks were kind enough to send me a note on Saturday highlighting another weak COT weekly report. COT stands for Commitment of Traders, and is used to get the pulse of how traders feel about an asset. In this case we’re talking about Silver…  And they got it from my longtime friend, Ed Steer!  Ed wrote the piece for his newsletter on Saturday, so I received it twice!   The COT report showed the number of short positions in Silver dropped last week… Not by the total it should drop, but it dropped nonetheless, and that’s a good thing in my book! 

Sentiment has replaced the combing through of the COT reports each week, but they’re still useful.  For, if this dropping of short positions in Silver continued week after week, one would get the warm and fuzzy that they should be long Silver…   Of, course, in my humble country bumpkin opinion, everyone should be long Silver!  

Speaking of being a country bumpkin I got back to my roots last night… I was going through the cable channels and came across the old TV show, Hee Haw! My mind immediately flipped to Saturday nights in my parents home, where at the kitchen table they watched Hee Haw! So, I kept it on the channel for a couple of minutes, in their honor…  

At our old house in S. St. Louis, life revolved around the kitchen table.  Our house was small, and the “dining room” was actually a bedroom! 7 kids, a couple of adopted one in addition, in a 2-family flat… So, the kitchen table was the only place we could gather…  

And meanwhile, back at the ranch, the dollar continues to gain VS the currencies this morning!  I would look at this as a potential opportunity to buy the dips.. 

Today’s U.S. Data Cupboard only has one print, and it’s Consumer Credit (read debt) for November, the pre-December buying bonanza that I think will really add to this number which showed $21 Trillion in Rocktober…   We won’t see “real economic data” here in the U.S. until Friday, when Retail Sales will print. PPI (wholesale inflation), which really shot higher in November will see if it can match that rise of 0.4% (I doubt it) And the stupid CPI (consumer inflation) will follow the next day. But like I said, no real data until Friday.   

To recap…  The Jobs report for December showed that only 148,000 jobs were created in the month, which was far below the 290,000 expected, but the dollar didn’t lose ground. Instead it has rallied since the jobs report, and has Chuck all frenzied!  The Eurozone printed some strong data reports this morning, but it hasn’t helped the euro, and Gold has lost some ground since Friday.  

For What It’s Worth… the link to this story was sent to me by dear reader Bernard, and I thank him for that… It’s an article on zerohedge.com that discusses Pakistan ditching the dollar, and can be found here:https://www.zerohedge.com/news/2018-01-04/pakistan-ditches-dollar-trade-china-retaliation-trump-twitter-meltdown  

Or, here’s your snippet…  “Less than a day after President Trump slammed Pakistan on Twitter for failure to combat terrorism, stating, “It’s not only Pakistan that we pay billions of dollars to for nothing, but also many other countries, and others,” and after it was revealed that the US will withhold $255 million in aid, Pakistan’s central bank announced it will be replacing the dollar with the yuan for bilateral trade and investment with China.

“SBP has already put in place the required regulatory framework which facilitates use of CNY in trade and investment transactions,” the State Bank of Pakistan (SBP) said in a press release late Tuesday, ensuring that imports, exports and financing transactions can be denominated in the Chinese currency.

“The SBP, in the capacity of the policy maker of financial and currency markets, has taken comprehensive policy related measures to ensure that imports, exports and financing transactions can be denominated in yuan,” Dawn news, Pakistan’s most widely read English-language daily, announced while quoting the SBP press release.”  

Chuck Again…  And we can thank China for making this available to countries… Longtime readers will recall me telling them about 7 years ago that the Chinese leaders were calling for an end to the “dollar standard”, and me saying that the Chinese don’t say things they don’t mean…  

Currencies today 1/8/18… American Style: A$ .7837, kiwi .7178, C$ .8047, euro 1.1970, sterling 1.3547, Swiss $1.0228, … European Style: rand 12.4263, krone 8.08, SEK 8.2058, forint 257.98, zloty 3.48, koruna, 21.3216, RUB 56.91, yen 112.92, sing 1.3320, HKD 7.8221, INR 63.42, China 6.4884, peso 19.26, BRL 3.2280, Dollar Index 93.30, Oil $ 61.70, 10yr 2.46%, Silver $17.19, Platinum $ 970.44, Palladium $1,093, and Gold… $1,321.60   

That’s it for today and tomorrow, talk to you again on Wednesday… Well, the PICC-line came out on Friday morning, and I have no more getting up in the middle of the night to administer antibiotics to myself. YAHOO! It was a bad day for our local teams on Saturday with the Blues, and Mizzou both losing, and  the day was saved when  the St. Louis U Billikens won their game.  We had a nice family lunch yesterday to celebrate oldest son, Andrew’s birthday which will be this Friday (we’ll be gone!). Everyone was there except Alex, who was in Arkansas this past weekend… I gave my little Delaney Grace an extra long hug yesterday when we said goodbye, as I won’t see her until March, when they come down for spring training games! She is so darling to me, and I love her to pieces!  And with that, the Little River Band takes us to the finish line today with their song: Lonesome Loser…  I hope you have a Marvelous Monday, and be Good To Yourself!   

Chuck Butler

A Jobs Jamboree Friday!

Chuck Butler’s: A Pfennig For Your Thoughts 

January 5, 2018  

* Currencies hold their ground… for now.. 

* A Day of Reckoning for the BLS?

Good Day… And a Happy Friday to one and all! The end of a short week. I love short weeks! Not that I want to see time fly by, it’s just a matter of getting to Friday! Well, the infectious disease doc was good to me yesterday, and she set me free to move about the country! The PICC-line comes out this morning, and let the countdown to Tuesday morning’s departure for warmer weather begin! Radiohead greets me this morning with their song: Karma Police…  

The currencies held their ground yesterday, and much like Ralphie did they fought back against the big bad bully, dollar. They didn’t gain much, but they sure didn’t lose ground either, so it was a day off the calendar and one less day of the dollar’s role as the reserve currency of the world. Boy, I didn’t beat around any bushes there did I? I went straight for the jugular of the dollar!

Yeah, I did that on purpose, for I could have said that it was one less day of the strong dollar trend that keeps helplessly holding on to its former position as lead dog. Right now, the dollar, to me, reminds me of an old baseball pitcher that still believes he can throw the ball by the young stud hitters, but when he’s called on to do that, it gets ugly for him… And that’s why I decided to just go straight to the jugular this morning. 

Of course it would have helped my thoughts this morning if the currencies had remained well bid throughout the night, but nooooooooo! It appears to me that some profit taking took place, as the currencies have backed off their figures from last night, but the downward move was very small… 

So, it appears that we’ll end the first week of the new year with the currencies up and the dollar down. The price of Oil is also up for the week, as are the precious metals, led by Gold, which has found its way back to the $1,300 level this week. 

Today’s trading in these assets could bet a little dicey, as it is a Jobs Jamboree Friday here in the U.S. And if the ADP Employment Report is any indication of what the BLS has in store for us today when they print their version of a Jobs report, then we could very well see the dollar rebound to end the week.  The ADP Employment Report showed 250,000 jobs created in December. WOW Of course a lot of them were seasonal workers, but 190,000 was expected, and 250,000 printed, that’s quite an upswing, eh?

So you see why I said if the ADP report was any indication of what the BLS prints then we could see the dollar rally to end the week. We have the same expectations for the BLS report this morning… 195,000 jobs are expected to have been created in December. I would think that given all the hedonic adjustments the BLS made to the jobs totals in 2017, that they have to have a day of reckoning at some point, and starting the year with one seems to be the logical and right thing to do. Of course not implementing the hedonic adjustments in the first place would be the “right thing to do”

But what IF the BLS does have their day of reckoning today? That would mean the risk is to the dollar for the jobs report totals wouldn’t be near the expectations on the downside. Oh, what I’m I talking about here? The BLS is NOT going to admit their hedonic adjustments were wrong throughout the year, so just move long here, for these are not the droids you’re looking for!  

In the Eurozone this morning we saw the color of their wholesale and consumer inflation prints for December… PPI year on year was up 2.9% VS 2.4% expected. So, quite an upward swing, and that should filter through to CPI(consumer inflation) as we go along in 2018. Eurozone CPI in December for a year on year look was up 1.4%…  which is down from the previous print of 1.9%, but with PPI burning a whole in CPI’s pocket, I believe December will be written off as a “one off” month. 

I don’t think the European Central Bank (ECB) will be fooled by this downward move in CPI in December, and their plans to begin to dismantle their balance sheet are all not going to be jeopardized. Speaking of dismantling the ECB’s balance sheet.. With the beginning of the New Year, that dismantling has begun. Recall the ECB told us that it will start out small and build to a large crescendo. 

Like I said yesterday, we’ve never, in the history of the world, had two major Central Banks implementing balance sheet dismantling at the same time before… This is going to get interesting folks… Time to get out those journals that we’ve used in the past to record the happenings in the markets…  

Well, there’s not much going on in Asia, the saber rattling has calmed down, and the data flow has pretty much dried up, until Sunday, when China will print their latest reading of their reserves, which should have remained above $3.1 Trillion.  I say that it should remain there because as far as I can see, and have read, the outflows of capital have slowed tremendously, thus removing the need for the Peoples Bank of China (PBOC) to defend the renminbi by selling their reserves and buying renminbi. 

That scenario is what was going on for a lot of 2017, but like I said above, that scenario has dried up tremendously, thus removing the need to defend the renminbi. 

Coming back over to this side of the oceans, either from the Eurozone or China, I had to laugh out loud when I read an article title this morning on Bloomberg… It read:  “Mexico’s peso expected to make a Big comeback”… I laughed and said, “why, is Mexico going to aggressively hike rates to double digits? Otherwise I see nothing behind this comment”…    

Gold had a nice day yesterday gaining more than $9 on the day, the shiny metal is down $3.80 in the early morning trading this morning, so the old metal trading shuffle is still being danced… Like I said yesterday, I’ll sit this dance out and just let the traders have the dancefloor until a steady trading patter forms, which will probably look like a conga line, to which I’ll gladly join…   

The U.S. Data Cupboard has some additional prints today… The Trade Deficit will print, along with the Nov. Factory Orders, which should reverse the Rocktober negative print of -1.7%…  But the markets will be focusing on the jobs numbers… So get ready for that!   

To recap…  The Currencies held their ground yesterday, but has seen some weak selling in the overnight markets ahead of the Jobs Jamboree that will take place this morning.  The Eurozone printed some mixed inflation numbers with PPI shooting higher, and CPI dropping, which Chuck thinks will be a one and one for CPI dropping. Gold had a nice day gaining $9 but is down $3.80 in the early morning trading today. 

For What It’s Worth…. I was sent a link to an article on Forbes.com yesterday that had quite a different take on the Retail Sales for Christmas.. I thought that this information was very FWIW worthy! And so, here’s a link to the article… it’s long, but it does get here eventually…https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.forbes.com%2Fsites%2Fpamdanziger%2F2017%2F11%2F29%2Fthanksgiving-weekend-retail-results-in-shoppers-will-have-merry-christmas-retailers-get-coal%2F%2342ad79081835&data=02%7C01%7C%7Cc0446748b7dc4818b8fd08d553d364a8%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7 C636507089755308525&sdata=28Eh%2BVXZ5K0%2FNBU7yT0AtrWRL7BuuMlHd%2FPDygXvt9I%3D&reserved=0 

First, let me set the snippet up… The article gets into how Retailers used huge discounts to sell their wares this year, and how those discounts will come back to hurt them, as they have tons of bond due in the next few years starting with this year, and their profit margins have been skimmed down… Will we see retailer defaults on bonds?    I apologize for no snippet, as the cut and past option isn’t working on the Forbes site this morning…

 Currencies today 1/5/18… American Style: A$ .7845, kiwi .7157, C$ .7996, euro 1.2053, sterling 1.3545, Swiss $1.0235, … European Style: rand 12.3683, krone 8.0787, SEK 8.1487, forint 256, zloty 3.4462, koruna 21.1945, RUB 57.05, yen 113.30, sing 1.3270, HKD 7.8203, INR 63.25, China 6.4966, peso 19.29, BRL 3.2331, Dollar Index 92.03, Oil $61.40, 10yr 2.46%, Silver $17.20, Platinum $963.57, Palladium $1,097.68, and gold… $1,317.86 

That’s it for today… I had grand plans to get this in your email box before the Jobs Jamboree started, but that didn’t happen! UGH! Our Blues made it two in a row with a win last night against Las Vegas, who for an expansion team has done quite well so far this year. No more getting up in the middle of the night to hook myself up to the antibiotics. YAHOO! Of course when you get right down to it, doing that was far better than dealing with the pain of the infection! My beloved Missouri Tigers host the Big Bad Florida Gators tomorrow, I won’t want to miss that basketball game! And the Beautiful voice of Dusty Springfield takes us to the finish line today with her song: Wishin’ and Hopin’..   And with that, let’s go make this a Fantastico Friday, and Be Good To Yourself!    Chuck Butler

 

Gold’s 8-Day Rally Ends…

Chuck Butler’s: A Pfennig For Your Thoughts   

January 4, 2018 

* Currencies fight back overnight!

* FOMC minutes say “go faster”

Good Day…  And a Tub Thumpin’ Thursday to you! I’ll hold off on the Tub Thumpin’ until I see the infectious disease doc this afternoon. If all goes well, then I’ll be Tub Thumpin’ into the night! My beloved Missouri Tigers got their SEC Conference Basketball schedule started on the right foot last night with a win in S. Carolina.. I forgot the game was on… UGH!  I was in 7th heaven though last night with the return to TV of the X Files… Before 24, there was the X Files show each Sunday that would hold my attention, imagination, and thinking for 1 hour… Last night didn’t miss a beat, after all these years being away…  The Killers greet me this morning with their song: Somebody Told Me…   

Another day, another day of the currencies losing some more ground that they had gained last week. It could have been the soaring ISM Index here in the U.S. but, in reality, shouldn’t that have been offset by the same kind of reports from the Eurozone and China? That’s logical which is how my mind works… And so it’s also logical that the powers that be, had seen to it that the dollar’s slide was halted… for now.

And Gold lost nearly $10 yesterday, after gaining more than $15 the day before. Two steps forward, one step back.. I guess that’s a dance that could be performed daily, but it’s not one that I would like to participate in. And it stopped Gold’s 8 day rally in its tracks… 8 days a week… it’s not enough to show Gold’s rally is for good! My apologies to the Beatles… 

But don’t panic! the overnight markets have brought us back to our Tom Terrific Tuesday’s levels, so in essence an overnight rally for the currencies has taken place. And the price of Oil moved to another handle in the past 24 hours, and now trades with a $61 handle.  But Gold is down in the early morning trading, $4.70… UGH!  This close… to having all three anti-dollar assets gaining against the dollar again. 

I was doing some reading yesterday, and came across some interesting data… Between the U.S. Fed and the European Central Bank (ECB) global bonds will be seeing a HUGE withdrawal of liquidity starting now, as both Central Banks begin to duel each other to see who can reduce their respective balance sheets the fastest…  The World’s economy has never been through something like this before, so how it reacts is a real unknown… 

There are those out there that think they know something that everyone else doesn’t know, but hear me now and listen to me later, they don’t know squat about what’s going to become of this dual Central Bank tapering…  They may end up having guessed correctly, but they sure didn’t know for certain that their guess would be right! 

The only thing I know is that buying bonds reduces yield, and selling bonds increases yield… These two Central Banks had been buying bonds for quite some time, which kept yields quite low on those bonds. But now the buying has stopped and in some cases selling will occur, that’s why I believe that ending the bond buying stimulus program, will see interest rates rise without the Fed doing the honors…  

The Fed’s FOMC Meeting Minutes from their last meeting printed yesterday afternoon, and the minutes revealed that a few Fed Heads were talking about increasing the rate at which they are hiking rates… In other words, more frequent rate hikes…  I saw that and thought to myself, well, the dollar fought back today, and now should have the ammo it needs to fight back even more in the overnight markets… But, when I turned on the screens this morning, that’s certainly not what happened, as I explained above!  

OK… I give you a year’s free subscription to the Pfennig if you can tell me without looking it up, which Asian currency outperformed the Asian currencies last year?  Spool up the Final Jeopardy music…  If you said the S. Korean won, then you are a winner, winner, Chicken dinner!  And that got me thinking… I few years ago, when I was still “something” I came up with an idea for a MarketSafe CD that included the emerging markets, and I purposely included S. Korean won, only to have to take it out because one of our affiliates thought that S. Korea was going to get bombed off the face of the earth. Fair point… but now I think about that decision to take it out…  oh well, hindsight is 20/20 vision, eh?   Not my worries any longer either!   

Gold saw 245,000 contracts traded in the shiny metal yesterday… I haven’t been reporting the # of contracts each day because, well… I believe the size of the totals were beginning to have that Comfortably Numb feeling with readers…  I was beginning to think that the paper Gold Traders were simply trying to outdo the previous day’s count each passing day.  Maybe, maybe I’m wrong… to go on singing, singing this song…  We’ll have to see, but just so you know, I see the numbers every morning, so if you really need them just ask… and you shall receive! 

The U.S. Data Cupboard will have the ADP Employment Report for us to see today, look for a number of around 190,000 jobs created in December…  Remember I’ve said this for a long time now… This ADP Report is what the markets should refer to instead of the stupid BLS jobs report…  ADP does the payroll for nearly every business in the U.S. So, if there’s layoffs, firings, and hirings, they should be the first to know!    

To recap…  The currencies had another day of selling yesterday, but the moves were small, but overnight the currencies have come back strongly…  The Fed’s FOMC Meeting Minutes revealed that some Fed Heads are wanting the Fed to go faster with rate hikes. That news sent Gold down for the day, and the early morning trading today.  The ADP Employment Report should hold the traders’ attention today, but will it?  

For What It’s Worth… I found this on Ed Steer’s letter this morning and he got it from Reuters. It’s about German Gold Buying and can be found hehttps://www.reuters.com/article/us-deutsche-boerse-gold/germans-invest-heavily-in-gold-in-2017-deutsche-boerse-says-idUSKBN1ES10A?rpc=401&re:     

Or, here’s your snippet: “Germans are investing heavily in gold, Deutsche Boerse said on Wednesday, with holdings of a gold-backed security it offers rising almost 50 percent in 2017.

Gold is seen as a safe haven for investors during times of uncertainty. Spot gold prices gained about 14 percent during 2017.

Deutsche Boerse said its Xetra-Gold notes, which are backed by physical gold, rose in demand to a record 175.04 tonnes of gold at the end of 2017, up from 117.59 tonnes at the end of 2016. The total amount of assets invested in Xetra-Gold are worth €6.1 billion ($7.3 billion), Deutsche Boerse said.

“The increase is due above all to the high demand from institutional investors,” said Michael Koenig, managing director of Deutsche Boerse Commodities GmbH. “However, an increasing number of asset managers, family offices and retail investors are becoming interested in gold as an asset class.”    

Chuck Again… The Asians are doing it, the Indian people are doing it, the Russians are doing it, the Germans are doing it, but we are not doing it, and that is buying Gold as an store of wealth…  

Currencies today 1/4/18… American Style: A$ .7841, kiwi .7124, C$ .7985, euro 1.2065, sterling 1.3555, Swiss $1.0256, … European Style: rand 12.2929, krone 8.0856, SEK 8.1307, forint 255.78, zloty 3.4425, koruna 21.1180, RUB 57.36, yen 112.65, sing 1.3289, HKD 7.8176, INR 63.27, China 6.5001, peso 19.29, BRL 3.2508, Dollar Index 91.40, Oil $61.82, 10yr 2.47%, Silver $17.17, Platinum $953.30, Palladium $1,103.93, and Gold… $1,313.80

That’s  it for today… Longtime readers know how often I talk about the teachings my dad left me. Today was his birthday. We had a “thaw” yesterday as the temps rose to 24 degrees! But it’s back to the single digits today… UGH! Way to get the conference season started coach Martin, now keep those Tigers winning! 5 more days until I head south! It’s almost like waiting for Christmas again for me! I had a longtime friend send me a link to a YOU TUBE and it was former U.S. national soccer team player, Corbi Jones talking about how wrong it is to give kids trophies for participating…  He was preaching the choir! I’ve said that for years!   I think I’ll post the link to the website tomorrow…  Until then we have The Babys taking us to the finish line today with their song: Midnight Rendezvous…   I hope you are able to get out and do some Tub Thumpin’ today, and remember… Be Good To Yourself…  

Chuck Butler

Manufacturing Soars Worldwide!

Chuck Butler’s: A Pfennig For Your Thoughts  

 January 3, 2018  

* Currencies can’t hold onto gains… 

* But Gold rallies! 

Good Day… And a Wonderful Wednesday to you! I know, I know… This is very late today, and I apologize for that. No excuses, for they never won a ballgame for anyone! At least that’s what the old football coach used to tell us all the time! Well, I was wrong about the end of my antibiotics yesterday, the doc says to stay on them until she see’s me tomorrow. I said… UGH! OK…  You know these doctors, they love to collect those office fees! She’s been receiving the blood work reports every week for 6 weeks now, there’s nothing that she can’t figure out about my infection from seeing me in person, than she can from the reports! But, I’m a sheeple and just fall in line…  The Great Rev. Al Green greets me this morning with his song: Love And Happiness…  

 I left you yesterday wondering what the traders in NYC would think about the currencies and metals performances while they were gone, and if they would do something about them, or let them be… Well, it was neither! The currencies saw some slippage from their lofty levels of last Friday, but the moves were slight. And the metals led by Gold, did much better, gaining about $15 on the day. So we start today with the overnight markets having taken the currencies down a bit more, but the euro is still above the 1.20 handle, to give you some idea as to the amount of selling there has been.

And Gold is up another buck-or-two this morning… I read that Gold imports to India increased 67% in 2017… That’s amazing don’t you think? That there was that much buying going on in just India, and Gold struggled to carve out a 7% increase in 2017… Once again this illustrates that the old supply and demand isn’t in play because of the paper short Gold trades, that have nothing to do with physical trading at all!  One day, these paper traders will get theirs… And when they do, I’ll laugh out loud at their losses! No wait, I need to be a better person that that! I guess I’ll say I’m sorry for their losses and move along…  

Well as far as data from around the world, there just isn’t much this week… We did see that manufacturing indexes in both the Eurozone and China did better in December, which will eventually be another nail in the dollar’s coffin, as these countries around the world begin to normalize their monetary policies this year, and sentiment toward their respective currencies changes, the dollar will be getting sold. 

I just sent off my weekly letter for the Dow Theory Letters  that can be found on www.dowtheoryletters.com (but you have to pay for it!), and in the letter I talk about forecasts… And I bet longtime Pfennig Readers can easily figure out what one of my forecasts for 2018 is…  Pool up the Final Jeopardy music…  And the answer is… A weak dollar…   

I know, I know I sound like a broken record at times…  But my dad taught me at a very early age… Stick to what you know and you’ll always sound confident when you talk about it…  I always found that message from my dad as very useful as I began my speaking career…  Ahhh, my speaking career, that sure seems like eons ago!  At the peak of my speaking engagements, I spoke 35 times in 2006… 2007 I was well on my way to breaking that record number, but then I was diagnosed with cancer, and well, for those of you keeping score at home… My speaking career took a huge hit, and I was only able to do about 10 a year, then 5, then 1 and then none…  

My fave places to visit when speaking included: Vancouver, San Francisco, San Diego, and Orlando…  Ahem… Chuck… don’t you think you should get back to the task at hand here now?  Yes, I’m sorry, for going off on that tangent… UGH!  

Well, besides the fact that there’s just not a lot going on overseas to talk about, I still need to find things to talk about that might move a market… 

You know, I did see a HUGE positive move in the Chinese renminbi overnight that will either be held steady Eddie or corrected by the People’s Bank of China (PBOC) But the move was good to see!  And when the renminbi is getting marks of appreciation, that’s good for the Singapore dollar (sing$)  As I’ve explained many times in the past, but not recently for new readers… These two currencies tend to move in tandem for they are in competition for exports, and can’t let their currencies get too far out of whack from the other currency.  And the sing$ is off to one of its best starts in 2018…  

Gold sure had a good day yesterday, and I do believe the weakness of the dollar and Bitcoin are playing into Gold’s rally, which is 8 days long now…  There were a ton of reports prior to this rally in Gold that talked about how the rise in Bitcoin was hurting the price of Gold. So, see what I did there? I just turned the tables, for if a rising Bitcoin was hurting Gold, a falling Bitcoin would help Gold…   But in reality, it’s probably more about the falling dollar against most commodities right now.  Copper is shining brightly, Oil is bubbling, and so on…  

The U.S. Data Cupboard has already printed the December ISM Index (manufacturing index that everyone else calls their PMI) and it was quite strong! the Dec. ISM Index was 59.7 VS 58.2 in November…  This is good news for the economy, which doesn’t get a lot of these happy face stickers…    

To recap…  The lofty levels of the currencies from Friday failed to hold yesterday and in the overnight markets last night, but the selling has been held in check and the euro still maintains a 1.20 handle. Gold bucked the move in the currencies and gained about $15 on the day…  Manufacturing indexes around the world are all moving higher, as the Eurozone, China and the U.S. all printed strong reports this morning.  

For What It’s Worth….  Well you can always count on the former administration to take shots at the current administration’s moves, and this is a case of it, as former Treasury Sec. Jack Lew talks to Bloomberg and discusses the tax cuts…   And can be found here: https://www.bloomberg.com/news/articles/2018-01-02/former-treasury-secretary-lew-says-tax-cuts-leaving-u-s-broke 

Or, here’s your snippet:”Former U.S. Treasury Secretary Jacob J. Lew said the Trump administration’s decision to add a significant amount of debt through last year’s tax legislation is leaving the country broke.

“It’s a ticking time bomb in terms of the debt,” Lew said in a Bloomberg Radio interview with Tom Keene and Jonathan Ferro. “You cannot run a fiscal policy by spending trillions of dollars you don’t have at a time that the economy is doing well.”

Having chosen to make tax policy without including Democrats in any of the conversation, now the administration probably can’t rally Republicans in Congress to do the basic business of government, such as making sure the country doesn’t default on debt and children don’t get thrown off health insurance, he said.”  

Chuck Again… Not that the doubling of the debt during the previous administrations terms should get in the way of his bashing the tax cuts… I’m just saying…   

Currencies today 1/3/18… American Style: A$ .7840, kiwi .7098, C$ .7984, euro 1.230, sterling 1.3555, Swiss $ 1.0242, … European Style: rand 12.3440, krone 8.1046, SEK 8.1679, forint 256.95, zloty 3.4590, koruna 21.2239, RUB 57.45, yen 112.23, sing 1.3287, HKD 7.8166, INR 63.34, China 6.4961, peso 19.36, BRL 3.2855, Dollar Index 92.05, Oil $60.90, 10-year 2.44%, Silver $17.21, Platinum $954.03, Palladium $1,091.85, and Gold… $1,317.80

That’s it for today… Again sorry so late… Until I’m off these antibiotics for good, my timing is all thrown off…  Ahhh, next Wednesday I’ll wake up with the ocean tide the sun coming up over the water, and warmer weather… I went out shortly yesterday, and it’s just too darn cold for me! Oldest son Andrew took his son Braden to his first hockey game last night, I wonder if they made it all the way to the end, which our Blues won 3-2 in Overtime.  Chris Gaffney was a longtime season ticket holder of Blues games and he would take his son to the game and at the end of the 2nd period he would tell him the game was over and they would go home, that is until his son figured it out!  OK… George Harrison takes us to the finish line today with his song:  What Is Life…     And with that, I hope you have a Wonderful Wednesday, and Be Good To Yourself!  

Chuck Butler

 

 

All Three Anti-dollar Assets Rally VS The Dollar!

Chuck Butler’s: A Pfennig For Your Thoughts     

January 2, 2018  

* Going back to 2001… 

* Palladium is star performer for 2017!

Good Day….  And Good New Year! 2017, wasn’t very kind to me, so I was glad to see it end… So, A Top of the morning, Tom Terrific Tuesday to you! I’m fighting a cold that all the people that were here on Christmas left me with, and yesterday, the cold won… But I got some decent sleep last night, and my antibiotics treatments ended at midnight last night, so I’m feeling better this morning, at least at this point!   The late, great, Alvin Lee, and 10 years after, greet me this morning with their song: I’d Love To Change The World…  As usual with Alvin Lee, he shows off his guitar playing ability in the song…  Man he was great, and I loved to hear him play, and watch his facial expressions while playing… 

Well, all my followers on Twitter (not a huge crowd by any sense of the imagination) received a Tweet from me on Friday…  Here it is…

Chuck Butler‏ 
@ChuckOButlerJr

More
what a day for the currencies and metals! And you can’t forget the other anti-dollar asset, Oil! The euro is back to 1.20, Gold is back to $1,300, and Oil has reached $60… Remember what the Bush tax cuts did to the dollar back in 2002?
8:08 PM – 29 Dec 2017

That pretty much sums up the Friday trading and the end of the year trading that I told you would be a lot of position squaring and so on… So, this morning, I was interested in seeing what had happened to this strong run of the anti-dollar assets now that year-end was over… And from what I can see, the currencies, and metals have continued to add to their levels of Friday, and Oil is flat…  So, it’s a “continue to party on Wayne!, Party on Garth, day”

I’ve Been Waiting for a girl like you, to come into my life… – Foreigner

We’ve all been waiting for the inflation that the Fed Heads have been talking about for a couple of years now… And I agreed that there was inflation in assets, and houses, and art, etc. But, wage inflation? Commodity inflation? It just wasn’t there.. But, it’s coming folks… And the Fed Heads will finally get to say, “see, I told you!” Never mind that it took 3 years for their prognostication to come to fruition… So, what has me thinking that it’s finally going to come to fruition? Think Tax cuts… And then sit back and let me tell you a story about the beginning of the last weak dollar trend that began in 2002 and ended in 2011.

It all began innocently with a news story in 2001 that President Bush, had announced that he was imposing tariffs on Japanese steel… I jumped all over that story and everyone around me thought I had gone nuts… but trade wars are not good for the host country’s currency, and I knew that, but apparently everyone else didn’t! So, I started writing the White Paper, The Decline of the Dollar… Our marketing guru, (who was and still is the best!) sent out a press release that I had called for a decline of the dollar. You should have seen the requests for interviews come soaring in to talk to the man who apparently was not paying attention to the currently strong dollar..

Then the second shoe dropped on the dollar… The Bush Tax cuts… And soon the dollar was losing a pound of flesh daily… And what do we have now, once again? Tax cuts… It’s déjà vu all over again, folks!  You see Tax Cuts open Pandora’s Box of inflation problems, and so here we go again… Inflation kills the value of a currency, especially one that only has a small pittance of interest to pay…  Oh, and those people that interviewed me before, wanted to interview me again to ask me how I knew the dollar was going to sink…   

Well, if they had just opened their eyes and gotten past the idea that the dollar was king, and it would be strong forever, they would have been “in the know”…  You know, like all the dear Pfennig Readers back in the day! My old boss, and longtime good friend, Frank Trotter, began calling me the “sage of the Mississippi”  But it took no crystal ball reading, or tarot card revelations, it just took someone to look outside the box, as they used to say, and make a call…  And that person was me!   

Not unlike the call I made last summer that the sentiment had changed for the euro and it was time to look at buying the currency again… At that time, the euro was 1.09…   Today, it’s 1.2065…  I’m just saying…  

OK, well the Aussie dollar and kiwi are firmly on the rally tracks this morning, along with the Sing dollar, pound sterling, Swiss francs, and the Euro-Wannabes…  those aren’t the only currencies with gains, just the ones with the more noticeable gains! I’ve been waiting for kiwi to get some legs under it and run, for a few months now. It IS 2018, right? So that means that the Reserve Bank of New Zealand (RNBZ) will be entertaining thoughts of the beginning of a rate hike cycle soon. So, that gives us something to look for as we go further into this year.  

The Petrol Currencies of Russia, Norway, Brazil, and Canada have all rallied/d alongside the move of the price of Oil back to $60.  It’s about time they traded like this! They had been bucking the trend in recent trading sessions, but on Friday, finally fell under the spell of a higher Oil price. 

So, Gold found its way back to $1,300 on Friday… It sure does help Gold’s ability to rally whenever the “boys in the band” are away… They’ll be back at their desks at some point this week, if not today, so it will be interesting to see if they go after the $1,300 figure or let it be…  I think they should listen to Paul McCartney’s mother and let it be, let it be, let it be, let it be, whisper words of wisdom, let it be…  

The star metal for 2017, was easily Palladium…  As it began the year around $672, and ended the year above $1,000…  When I wrote about the mining President that said that Palladium would overtake Platinum in 2017, in price mind you, I would have thought that readers who know how to read between the lines of what I was saying a year ago, would have gobbled up some Palladium…    Oh, yes, a year ago, when I was under wraps, so to speak… I guess that’s one good thing that happened to me in 2017! I guess it wasn’t all bad!  

The U.S. Data Cupboard gets going right out of the starter’s blocks this week with a Jobs Jamboree on Friday! Until then though there’s just pre-jobs Jamboree prints, like the ADP Employment Report, etc.    We’re going to have to be very vigilant about keeping our eye on the data reports this year, so that we have a clue as to when the tide is beginning to turn on the economy… I know, I know, I thought that the tide would have already been turning by now, but it’s hanging out around the reef, and waiting for the right time to come to shore…     

Saturday, was a day of being down with a cold, and being cold! And that brought me to do some reading… And longtime readers know that when I read… things could become dangerous! HA! Well, in this case I read a line that was passed over in the article, but struck me as something that’s quite scary… According to the last Census report (June 2017), The Median value of a regular checking account was $1,000… OK, now lets go back to statistics class and recall what Median means… According to Google, Median means: denoting or relating to a value or quantity lying at the midpoint of a frequency distribution of observed values or quantities, such that there is an equal probability of falling above or below it.

So, that means the $1,000 figure is the midpoint… The Warren Buffetts, Bill Gates, and so on are brining that figure up, and to me, the normal Joe six pack, probably doesn’t have two nickels to rub together in his checking account. And how is that going to work when the next downturn comes? I’m just saying…    

To recap, Friday was a day for the anti-dollar assets of euros, Gold and Oil to all join together and take their frustrations out on the dollar, and the overnight trading is keeping that thought pattern going for now…  Gold has reached $1,300 again, and the price of Oil is above $60!  Chuck takes us back to 2001 and the two things he believes were the straws that broke the dollar’s back.   

For What It’s Worth…. Well, just because we turned the calendar page on 2017, doesn’t mean that all the risks that were out there went away… And so in my reading this weekend I came across this article on MarketWatch, that goes through those risks… I thought, oh well, we might as well ghttps://www.marketwatch.com/story/what-should-investors-worry-about-in-2018-heres-a-big-fat-list-of-risk-factors-2017-12-28?link=MW_popularet them out there for everyone to see! And you can find the article here:  

Or, here’s your snippet… “We’ve never had QE like this before, [and] we’ve never had unwinding like this before. Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.”

That was J.P. Morgan Chase & Co. JPM, +0.65% CEO Jamie Dimon back in July, arguing that investors simply don’t know what to expect as the Federal Reserve and other major central banks unwind their multi-trillion-dollar bond-buying programs.  

Some analysts are cautioning that a bubble is forming in credit markets and that companies are overextended to a degree that could spell trouble.
Stock valuations

Strategists at Société Générale have said they expect “stretched valuations and rising bond yields to limit equity-index performances in 2018 and the prospect of a U.S. economic slowdown in 2020 to further cramp returns in 2019.”   

Chuck again… I understand if you don’t want to start the year going through a list of risks that are out there, but if you do, this is a good one to go through!   

Currencies today 1/2/18… American Style: A$ .7834, kiwi .7113, C$ .7976, euro 1.2065, sterling 1.3560, Swiss $1.0297, … European Style: rand 12.3363, krone 8.1075, SEK 8.1478, forint 255.69, zloty 3.4496, koruna 21.1260, RUB 57.67, yen 112.14, sing 1.3286, HKD 7.8138, INR 63.37, China 6.5096, peso 19.84, BRL 3.3108, Dollar Index 91.84, Oil $60.47, 10-year 2.44%, Silver $17.11, Platinum $938.05, Palladium $1,081.24, and Gold… $1,313.10   

That’s it for today… did you have a nice New Year’s celebration?  We were here with neighbor friends, and had a blast!  And how about that Oklahoma/ Georgia football game yesterday? WOW! Condolences to my good friend, and Clemson alumni, Rick… As Clemson couldn’t muster any offense against Alabama, and lost…  My beloved Missouri Tigers couldn’t muster any offense either last week and lost their bowl game. UGH!  The NFL playoffs teams are set, if anyone cares…  I don’t!  As we turn the calendar page it means its near the time for Chuck to head south for the winter to get away from this frigid cold weather! And next Tuesday is my day (I can’t wait!)  The Pousette-Dart Band takes us to the finish line today with their song: Amnesia…  I hope that it’s only amnesia, believe me I’m sick but not insane…  For those of you who know the song…   And with that, it’s time to get this first letter of 2018 out the door… I hope you have a Tom Terrific Tuesday, and Be Good To Yourself!  

Chuck Butler

 

 

 

A One And Done This Week!

Chuck Butler’s: A Pfennig For Your Thoughts

December 27, 2017

* All Three Anti-dollar assets rally!

* Kicking the can down the road again… 

* Tax Bill is ready to put in place… 

Good Day…  And a Wonderful Wednesday to you! I hope your Christmas celebration was grand, mine was! And yesterday was Kathy’s birthday. We were celebrated out, and spent a quiet night at home. Alex has been here with us for the weekend, for now, it’s nice that he’s here. Gerry & the Pacemakers greet me this morning with their 60’s hit song: Ferry Cross the Mersey… I used to sing that song to Alex when he was a baby to help him fall asleep…  That was 22 years ago, and the song was old then! HA!

Well, remember when we came back from the Thanksgiving holiday and I talked about how nice it was that the NY traders were out for a few days, as the currencies and meals rallied in their absence?  Well, so far this week, this is a rinse and repeat of those days after Thanksgiving.

The currencies, led by the Big Dog euro, have all gotten off the porch to chase the dollar down the street. Yesterday, the first day back from the Christmas holiday, saw widespread dollar selling. The euro is knock, knock, knocking on heaven’s door, no wait! The euro is knocking on the 1.19 handle this morning, and Gold found a way to carve out an $8.50 gain yesterday…

Friday, last week, I sent out a tweet, regarding the lawmakers once again, kicking the can down the road. They still don’t have a budget, and they are still playing around with a possible government shutdown. I told you when they “extended” the negotiations the last time for two weeks, that it was ridiculous to think that these guys and gals could come up with a budget in two week’s time, given they had all year up to that time to do it!

And, they didn’t! So, now we’re looking at the deadline being in two weeks… But what says that the negotiations will be finished by then? I just shake my head and wonder what it will take to bring the two sides together to make a budget? It’s a sad, sad state of affairs, if you ask me!

And this morning I came across an article on the Bloomberg that was titled: Subprime Auto Defaults Are Soaring…  Not that these Subprime Auto loans are any near the size of the problem with the subprime Home Loans back in 2007, when that meltdown began.

But yet, Consumer Confidence is soaring higher and higher with every new print… Man, this reminds me of 2000 all over again… The stock market led by the Tech stocks, was soaring, but there were all these problems going on that should have affected the stock market, but it didn’t, and Consumer Confidence was soaring back then like it is now…  And then we drove our Chevy to the levee but the levee was dry… And all the King’s horses and all the King’s Men couldn’t put the stock market back together again until all the excesses were cleaned out…

Can you imagine h9w nasty this correction will be given how high the stock market has run? OUCH! Now that’s going to leave a mark!  But a lot of pundits are waking around with egg on their faces right now, because they’ve been calling for this correction in the stock market for months now and it just hasn’t come to fruition…  I’m not putting any timeline on this thought, instead, I’m just saying that it will be nasty when it happens…

I’m already on the hook for saying that I thought the Fed’s rate hikes were over, and by now they would be talking about the reversal of their previous rate hikes… I still think it’s coming… sort of like the old 3 Dog Night song. Eli’s coming…  And as usual I’m out in front on this call, and my timing is ahead of the crowd…  I wouldn’t be a good comedian, because my timing has shown that it needs a lot of work!

The price of Oil hasn’t taken any passes on all this dollar selling, and has moved to the $49 handle. Last week’s supplies numbers were lower than expected, and that got the price of Oil moving in the right direction, and the momentum is moving in Oil’s favor right now…

So, all the anti-dollar assets, Gold, euros, Oil, are kicking some dollar tail this morning, and taking names later. It’s been awhile since I could talk about all three anti-dollar assets moving against the dollar at the same time.  As I said above, Gold carved out an $8.50 gain yesterday, and is looking ready to move past $1,300 to end the year…

I gave my grandkids some Silver coins for Christmas… Of course the coins didn’t match their legos and American Dolls, but one day… maybe when they’re going off to college, and need some dough, they’ll ask their parents for those coins, and find out that the present from me all those years ago, was something special…

Last week I was reading an article from Ted Butler (no relation that I know of) the Silver Guru, and he was talking about how JP Morgan got into the short paper trades in Silver… They inherited the business from Bear Stearns, when they bought the failing company back in 2007… Ted Butler’s thought was that the agreement to take on the short paper trades was a 10-year deal that would be expiring soon. And guess who probably has the largest holdings of physical Silver?  That’s right, JP Morgan…  Do, you see the reason they not only took over the short paper trades in Silver business but enhanced it?   Ah, said the blind man as he spit into the wind, “it’s all coming back to me now”…

Of course that’s Ted Butler’s opinion, of which I agree with wholeheartedly…  What do you think?

Well, the Tax Reform Bill did get sent to the President who signed it before Christmas.. I was shocked that it got done that quickly or so it seemed.  I’ve dived deep into the tax bill, and I just don’t see it turning around the economy like it’s billed to be… And it certainly isn’t revenue/ spending neutral like it was supposed to be. $1.8 Trillion and probably more once they get going, will be added to the National Debt in the coming years…  So, much for it being neutral, eh?  

So, it’s all finished, signed, sealed, delivered it’s yours…  Happy Days are here again, the… no wait! Let’s see what this does for us first, eh?  

There’s not much in the Data Cupboard this week for us to look forward to seeing. We will see the Consumer Confidence for the first two weeks of this month today, but besides that, it’s all non-market moving data, which is a good thing, because I’m convinced that the major players in NYC are still away, and we don’t need any wild swings going into the end of the year.  

We will see book squaring, and positions close outs going into the end of the year, but those shouldn’t cause too much volatility. So, it’s all about the currencies, Gold and Oil this week as far as I can tell, as the major players are still opening presents and filling their stomachs with pumpkin pie. 

And with that thought, it’s a good week to end early for me… Tomorrow morning is an infusion morning, so no Pfennig Tomorrow or Friday…  But check your Tweets, for you never know when I’m going to send out a Tweet! 

To recap… The U.S. lawmakers had to kick the can down the road again on Friday, as they avoided a Gov’t shutdown, but still couldn’t agree on a budget. This got the currencies and metals moving and yesterday they really took a pound of flesh from the dollar, and Chuck thinks this will be the theme for the week. All three anti-dollar assets, Gold, Oil and currencies are moving against the dollar for the first time in a while..   

For What It’s Worth… Longtime dear reader Bob, sent me this since I’ve been talking about China’s moves against the dollar for a long time he thought it played nicely in the sandbox with my previous thoughts… It’s about China’s petrol-renminbi move and can be found here: http://www.informationclearinghouse.info/48497.htm   

Or, here’s your snippet: “Petrodollars have dominated the global energy markets for more than 40 years. But now, China is looking to change that by replacing the word dollars for yuan.

Nations, of course, have tried this before since the system was set up by former US Secretary of State Henry Kissinger in tandem with the House of Saud back in 1974

Vast populations across the Middle East and Northern Africa quickly felt the consequences when Iraq’s Saddam Hussein decided to sell oil in euros. Then there was Libya’s Muammar Gaddafi’s pan-African gold dinar blueprint, which failed to create a splash in an oil barrel.

Fast forward 25 years and China is making a move to break the United States petrodollar stranglehold. The plan is to set up oil-futures trading in the yuan, which will be fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets. ”  

Chuck again… nothing new to regular Pfennig Readers, but a good recap of what’s going on… 

Currencies today 12/27/17… American Style: A$ .7770, kiwi .7075, C$ .7917, euro 1.1894, sterling 1.3410, Swiss $1.0111, … European Style: rand 12.4303, krone 8.2926, SEK 8.2993, forint 261.41, zloty 3.5221, koruna 21.7173, RUB 57.82, yen 113.23, sing 1.3394, HKD 7.8146, INR 63.98, China 6.5448, peso 19.78, BRL 3.3248, Dollar Index 93.04, Oil $59.45, 10-year 2.47%, Silver $16.66, Platinum $922.75, Palladium $1,057.90, and Gold… $1,289.10  

That’s it for today, this week, and this year! Yes, when I come back next week it will be 2018! I’m getting around much better these days and the pain has, not gone away, but has weakened… YAHOO!  I heard from some longtime friends over the weekend.. Ed, and Jack, and Lauren, and Suzanne, and I can’t forget about Kathy G! Now, please be careful this weekend going out and about… Kathy’s dad used to call New Year’s Eve, “amateur’s night”…  And let’s all think a lot about how to make 2018, a better year…  I’m so ready for 2017 to end, I had some major steps backward with my health in 2017, and 2018 had better be better or I’ll not be here next year at this time! I’m just saying…  Steely Dan takes us to the finish line today with their song: Aja…  from my fave Steely Dan album of the same name…  I hope you have a Wonderful Wednesday, and fun filled New Year’s Eve, and Be Good To Yourself!  

Chuck Butler

 

 

Chuck’s Annual Christmas Letter

Chuck Butler’s: A Pfennig For Your Thoughts 

December 25, 2017   

Good Day… And Merry Christmas, or a Happy holiday for those of you who don’t celebrate Christmas…  Here’s the annual Christmas letter, it’s not as long as usual, as I don’t have colleagues to acknowledge any longer…  So, enjoy, and may the light of faith and the warmth of heart be your gifts this year… 

T’was the morning of Christmas Eve
And as usual I had something up my sleeve
It would be another Christmas letter
Longtime readers know there’s nothing better!
The year has brought many changes for me
And for the first time in 44 years…
I no longer have a “job to go to each day.
But that’s OK, I found another way
To get the Pfennig to you, and say Hurray!
Two dear friends, Pam and Mary Anne are their names
Came to the rescue , and no longer are there games
Played with the Pfennig before it goes out
And for that I have to give a BIG SHOUT!
My health took a step backward this year
But with all the dear readers / friends prayers
I give a big Cheer!
My little buddy, Alex, who used to sit on my lap
And help me write, is now working toward a doctorate
All I can do is clap…
Oldest son Andrew has made a name for himself coaching his sports
Water polo and swimming, now that’s quite an art!
Darling daughter Dawn is just as darling as ever
I still recall her and I dancing at her wedding to
The way you look tonight!
I have 3 grandkids and I adore them all
But Delaney Grace has my heart, all wrapped up in ball.
Braden and Everett are 6 months apart, but are real fun
When they get together, they are terror under the sun!
So, I miss my colleagues and would call them out by name each year
But now I’ll just skip over that part, before it brings a tear.
Each year, in this letter, I hope and pray
For calmer heads to figure out this
Growing Debt, that some still say
Makes no difference, but I say no way!
Mr good friend, the Great Mogambo Guru says
We’re all freakin’ doomed, and I say we had better
Do something before the debt goes Boom, Boom!
But, it’s Christmas, and it’s time to be nice
So, with that I’ll say…
Merry Christmas to all and to all A Good Night!

Chuck Butler

 

 

Riksbank Changes To Bond Buying-lite…

Chuck Butler’s: A Pfennig For Your Thoughts 

December 20, 2017 

* Currencies & metals trade in tight ranges

* krona is best performer overnight!

* A special treat awaits you in the letter today… 

Good Day… And a Wonderful Wednesday to you! Tomorrow I start my traditional winter vacation, albeit a shortened version of it, as I plan to be back, writing again next Wednesday. It’s Christmas time and no one wants to be working, I can tell you that from years of being in an office, before I had the seniority to take vacation at this time of year. This is going to be a short-n-sweet Pfennig today too, as I’m busy as a bee today with appointments, etc.  So, since it’s going to be a short one, I had better get to the meat of the letter, eh? Jimmy Cliff greets me this morning with his song: Hello Sunshine… Which is exactly what I would like to see today, instead of these steel gray skies…   

The action in the currencies and metals are allowing me to print a short-n-sweet letter today, as there’s just nothing going on, and the movements are so small it’s as if they are playing a part in the new movie: Downsizing…  The Big mover overnight is the Swedish krona, as krona traders and investors took the notice by the Riksbank (Sweden’s Central Bank) that they were ending their bond buying that began 3 years ago, as an indication that they needed to buy krona. And buy it they did! 

But, I think calmer heads will enter the picture soon, and some profit taking  will begin, as the Riksbank didn’t exactly go “all-in” on ending their bond buying program, saying that they would reinvest maturities all next year, and probably into 2019…  So, just like we did here in the U.S. for a couple of years, when we did a bond buying ending-lite…  

Trading ranges in the other currencies are very tight… Yesterday, for instance the euro was 1.1820, and today it’s 1.1845, and the same can be said for the metals, as Gold lost a whopping 60-cents, and Silver lost 1-cent! And then the Dollar Index yesterday was 93.58, and this morning it’s 93.44…  And to take one day further back, on our Marvelous Monday the Dollar Index was 93.69…   I told you on Monday that this week could yield some volatility with the senior traders heading home for some homemade pumpkin pie, but that volatility just hasn’t materialized, but we still have 3 trading days, including today, this week, so don’t write off that scenario just yet…   

And besides, I’ll be “gone” Thursday and Friday this week, and as they used to say on the trading desk, “When Chuck is away, the currencies rally”..   Longtime readers know that I like to send out a Christmas poem on Christmas Eve, so look for that in your mailbox this Sunday… I’ve working on the poem this year, and I have to say that it gets more difficult every year to come up with something different…  I had a dear reader send me her own version of a Christmas poem mimicking T’was The Night Before Christmas last year that was just AWESOME!   And she already sent me this year’s effort, which is just as good as last year’s…  She’s allowed me to share it with you all, so that’s how I’m going to finish the Pfennig today… 

I was putting together my weekly letter for the Dow Theory Letters that goes out on Thursdays, yesterday, and tried like hell to keep the letter from getting down and dirty, given what’s going on, and that it’s Christmas time…  And I’m going to do that here too… No beating on the twits and dolts that keep spending money we don’t have. Or anything else like that… in fact, I think I’ll go to my dear reader’s Christmas poem right now, and then sign off for the week…  here you go, I hope you enjoy it like I did! 

On the night before Christmas

As I sat in my chair

I was thinking of memories of this past year.

Changes were many

That opened new doors.

Should I step through them

Or should I ignore?

One story was ending

Leaving some true friends behind.

They’d carry on working

The work I’d defined.

The future was pending

Oh what should I do?

My readers would miss me

And I sat in a stew.

Along came some sisters

That were quite the gurus.

Financial advisors

For many, not few.

I considered my options

And now was my time.

To semi-retire

And write things on my mind.

My schedule is flexible

The Adens are great.

The currencies are slow

Not quick on the take.

The children are older

All grown and a blast.

My wife is as beautiful

As she was in the past.

I love my music

My guitar and my songs.

BBQ cookouts

Are where I belong.

I’m as feisty as ever

And I feel mentally strong.

My readers and friends

Keep me moving along.

So as I sit here

And reflect on this year.

I know that I’m blessed

And I’ll keep my good cheer. 

To Recap… The currencies and metals are in very tight trading ranges and the volatility that I told you might come to fruition this week, is nowhere to be seen. Sweden’s Riksbank announced a semi-end to their bond buying program and the krona soared.  Gold lost 60-cents on the day, but is up $4 in the early trading today, and Chuck gave us his kinder, gentler self for the Christmas week today…    There will be no FWIW today, as the dear reader’s poem will act as the FWIW for today! 

Currencies today 12/20/17… American Style: A$ .7679, kiwi .6980, C$ .7785, euro 1.1845, sterling 1.3410, Swiss $ 1.0124, … European Style: rand 12.6705, krone 8.3272, SEK 8.3635, forint 263.90, zloty 3.5480, koruna 21.6725, RUB 58.66, yen 113.23, sing 1.3455, HKD 7.8242, INR 63.94, China 6.6068, peso 19.24, BRL 3.2914, Dollar Index 93.44, Oil $57.78, 10-year 2.48%, Silver $16.25, Platinum $919.98, Palladium $1,035.38, and Gold… $1,268.50    

That’s it for today… and this week… I hope you have a blessed Christmas, and hope that you’re not offended by me using the Merry Christmas saying instead of Happy Holidays…  My beloved Missouri Tigers eked out a win last night in basketball.. And Kathy came home last night, after being gone for 10 days… And the house is all lit up again! YAHOO! I’m listening to Pandora’s smooth Jazz Christmas station, and their playing a guitar solo version of It Came Upon A Midnight Clear… I wish I would have learned to play guitar like that! Oh well, too late to teach an old dog new tricks, right?  So, Merry Christmas to everyone, I hope you get to spend time with family and friends, and that the spirit of the season fills you up… Now go out and make this a Wonderful Wednesday, and Be Good To Yourself!  

Chuck Butler

 

 

The Sky Won’t Snow, and The Sun Won’t Shine…

Chuck Butler’s: Pfennig For Your Thoughts    

December 19, 2017  

* Currencies make small moves… 

* S. African rand soars on election results…

* More problems for Toys “R” Us

Good Day…  And a Tom Terrific Tuesday to you!  Well, I’m back to being later this morning, sorry… But when I can get sleep without alarms going off to tell it’s time for another antibiotic infusion, I take the opportunity and run with it! HA! That’s funny sight, me running!  In the great Eagles song, Desperado, they sing about how the sky won’t snow and the sun won’t shine… That describes the past two days around here, to a T! If the sky is going to look like this it might as well snow! Of course I say that now, because I’m stuck at home and don’t have to go out in it!  Seals and Crofts greet me this morning with their song: Summer Breeze…  Now doesn’t that sound good right about now?  

The potential wild swings in the currencies and metals this week, didn’t exactly get off to a strong start yesterday, as there just wasn’t much conviction to move either of these two assets.  Gold did gain $6 and change on the day, but $6 of that was in the early morning trading, so the rest of day only yielded some pocket change…  

The dollar wasn’t able to gain any ground on the day, and the euro climbed back above the 1.18 handle..  The euro alternative currencies like the Hungarian forint, Polish zloty, and Czech koruna all had strong moves on the day, and to me that’s always an indicator of a run on the dollar, but… these thee, that I coined the phrase and called them “Euro-Wannabes” about 15 years ago, need to add to those gains for their moves to be considered serious..  

Aussie and kiwi held their gains from the past couple of trading sessions throughout the overnight market sessions, and look to add to those previous attained gains. Remember what I kept telling you months ago about how the Reserve Bank of New Zealand (RBNZ) had indicated that they would begin to hike rates in 2018, but the markets weren’t paying attention, and it gave us  investors an opportunity to buy “ahead of the markets”, which wasn’t something that we got to do very often… 

Kiwi has seen a recent bout of selling, because of the narrowing rate advantage VS the green/peachback, but if the RBNZ is actually going to begin to hike rates in 2018, and we’re now within a fortnight of turning the calendar to 2018, the focus shifts to kiwi…  

I was all prepared to talk about the positive move in the S. African rand yesterday, and then got to the end of the letter, and well, forgot it! UGH! I was prepared to tell you about how the rand had rallied nicely ahead of the general election for a new leader of the ruling party. Seems traders and investors were bullish that their candidate, Cyril Ramaphosa, would win the election VS the current leader’s wife.  I don’t have to tell you that this was really going out on a limb, as the polls showed the election to be quite close.  But you have to give those taking positions in rands credit for being so bold… Some might say, That’s stupid Charlie Brown…  But they made a call and put their money behind it… I’ll give them credit for that!  

And…  It paid of for them, as Ramaphosa won the election and is now sitting pretty to be the next President of S. Africa… And the rand continued to book gains on the news.  I’ve never been a fan of the rand, as it is quite volatile. But when it’s good, it’s good, and when it’s bad, it’s bad.. I used to say that I wouldn’t touch rands with your ten foot pole! But like I said, when it’s good, it’s good…  In this case though, I would be careful, as these rallied on political gains usually don’t have legs to go very long in the race…   

Take the Indian rupee… Remember when the hoopla was all about how the rupee was going to soar on the election of Modi? But eventually, that all settled down. I did notice yesterday that the rupee had finally moved below the 64 handle… Hmmm…   

In other currencies…  I wonder what Swiss National Bank (SNB) President, Jordan, is thinking with this recent move higher in the Swiss franc?  The SNB met last week and kept everything, negative rates, and all, in place. And yesterday, Jordan reminded the markets that the SNB has no plans to remove any of the stimulus that’s in place right now.  I think that the markets have developed a deaf ear with regards to what Jordan has to say…  And that’s a bad thing for a Central Bank…    I’m just saying…  

Well, I told you above about how Gold gained $6 and change yesterday above, but forgot to tell you that the shiny metal is flat to down a few shekels in the early morning trading today…  I wonder what James Rickards is thinking right now, after his call for a Gold price reset by year end…  Hmmm…  We’re running out of days, right?   

The U.S. Data Cupboard is full of housing data early this week, but there’s something else I want to talk about here with regards to data and the economy, and that is that, Bloomberg reports that Toys “R” Us is considering closing at least 100 U.S. stores – and as many as 200 – in the face of weak holiday sales. According to Bloomberg’s sources, the store closures are coming after a sharp contraction in sales which declined 15% this Christmas-shopping season from a year earlier.  OMG!  Remember when Toys “R” Us filed Chapter 11 in September, and they told the markets that once they restructured their debt that everything would be kosher? Well, I guess not…  And during the Christmas shopping season?  

To recap…  The dollar is drifting, and some of the currencies are taking advantage of that drifting in the dollar.  The S. African rand is soaring after the markets’ choice of candidates won the election to lead the ruling party. The euro has climbed back above 1.18, and Chuck points out the moves in the euro Wannabes…  Gold gained $6 and change yesterday, and Toys “R” Us appears to be having some major problems!  

For What It’s Worth…  I found this on Ed Steer’s letter today, and thought it to be FWIW worthy. It’s about Bitcoin, so it should grab your attention…  And the article was put out by the good folks at GATA, so there’s no link to it, but I’ve got the gist of the article here:   

And here’s your snippet: “Bitcoin.com is one of the world’s largest bitcoin sites, having grown its profile thanks to the insane price surge of the cryptocurrency this year. But its co-founder and CTO, Emil Oldenburg, a Swedish native, is extremely skeptical of bitcoin’s future.

“I would say an investment in bitcoin is right now the riskiest investment you can make. There’s an extremely high risk,” he says in an interview with Swedish tech site Breakit.

“I have in fact sold all my bitcoins recently and switched to bitcoin cash,” says Oldenburg, referring to the problems with bitcoin’s high transaction costs and lead times.

“The old bitcoin network is as good as unusable.”

While buying, selling or trading in bitcoins is not an issue today, according to Oldenburg, the problems surface when bitcoin transactions are recorded on the blockchain, the digital ledger that records each transaction.

The problem centres on the limited amount of transactions per second you can make in the bitcoin network, which in turn depends on the formation of the memory “block size” that store the transactions. This, according to Oldenburg, makes for a very illiquid and unusable cryptocurrency.” 

Chuck again… Uh Oh…   

Currencies today: 12/19/17… American Style: A$ .7671, kiwi .7006, C$ .7773, euro 1.1820, sterling 1.3351, Swiss $1.0142, … European Style: rand 12.7239, krone 8.36, SEK 8.4235, forint 264.82, zloty 3.5490, koruna 21.70, RUB 58.66, yen 112.75, sing 1.3468, HKD 7.8184, INR 63.93, China 6.6128, peso 19.06, BRL 3.2909, Dollar Index 93.58, Oil $57.52, 10-year 2.42%, Silver $16.19, Platinum $915.10, Palladium $1,022.28, and Gold… $1,264.50

That’s it for today…  Well, I believe that Kathy is coming home tonight… Please don’t tell her I talked about her! So, to Jen and Christine, I made it, I survived by myself, and you didn’t think I would be able to! I even had added problems to deal with these past 10 days, but here I am!  I have been beating my head against the wall trying to think of a good present for Kathy, and I’ve got nothing! She’s one of those people that if she wants something she buys it… She doesn’t wait for birthdays, etc.   Speaking of birthdays, her birthday is the day after Christmas… Our first Christmas together, I made the mistake of buying her a present and saying, Merry Christmas and Happy Birthday.. She informed me that was not acceptable, and I’ve been good about that every since…  That was Christmas 1972… WOW! OK, The Cure takes us to the finish line today with their song: Pictures of You… And with that, it’s time to go… I hope you have a Tom Terrific Tuesday and Be Good To Yourself! 

Chuck Butler

 

 

The Fed Hikes Rates, But What’s Next?

Chuck Butler’s: A Pfennig For Your Thoughts 

December 18, 2017  

* Was Yellen holding something back?

* Kiwi begins to rally

* A possible volatile week?

Good Day… And a Marvelous Monday to you! Well, a lot has happened since I last talked to you (last Wednesday)… I had a return of the pain this past weekend, which was a wake up call to me, to slow down… It’s been 4 weeks on the antibiotics and I would have thought by now, they would have wiped out the infection, but I guess not! Christmas is in the single digits of days away now. The month sure has flown by, which is a good thing, given that it gets me closer to my winter vacation, and… my annual trek to S. Florida for the winter…    The great Dionne Warwick greets me this morning with her song: Walk On By…   

Well, the Fed did hike rates last Wednesday… The Fed Funds rate is now a whopping 1.5%!  I had a dear reader send me a note the other day, asking me if the Fed was just hiking rates so they had rates to cut when the recession hits…  This is a thought that my longtime friend John Mauldin first talked about when the Fed began hiking rates two years ago…  This whole idea of having arrows in one’s quiver for a rainy day, is just weird to me, and reminds me that the Fed Funds rate is just a rate that is arrived at because the Fed Clique says so.. It’s a willy nilly rate, that would be far better arrived at if this rate setting ability was stripped from the Fed and given to the markets…  

Janet Yellen’s press conference following the rate announcement last week, was a non-event…  She did indicate that 3 more rate hikes are on the docket for 2018, but failed to mention that she will not be at the helm in 2018 past February, and therefore there are questions about those 3 rate hikes in 2018…The Fed could very well ignore another inflation shortfall in 2018 and keep  the projection of three rate hikes.  As long as they can continue to explain inflation weakness as temporary and continue the rhetoric that they see an inflation “down the road”.  

I really don’t think that will end up being the Fed’s concern in 2018, the lack of inflation, that is… Wage inflation is about to go hog wild in my humble opinion, which could be wrong of course, but it’s what I’m seeing and hearing…  

So, the dollar should have taken off for higher ground on Wednesday after the rate hike, right? Well, not if you were paying attention in class last Wednesday when I said that the rate hike had all been priced in, and the only thing that would give the dollar some love is a hawkish press conference, and that really didn’t happen, as Janet Yellen  sounded as if she was “holding back” her thoughts… 

The dollar, got sold on Wednesday afternoon and into Thursday, but by Friday the selling had dissipated, and we were back to range trading in the currencies. The euro found its way to the 1.18 handle again, only to lose in profit taking on Friday, and a negative reaction to the European Central Bank’s (ECB) meeting on Thursday morning, when ECB President, Mario Draghi, told the markets that while the ECB may be unwinding its balance sheet, it reserves the right to stop the unwinding and begin adding to the balance sheet again, should the economy stumble. 

That gave mixed messages to the markets and euro traders, and traders don’t like mixed messages, and brought the euro back below 1.18, where it trades this morning.  I guess Draghi had to say what he had to say, to be fair and balanced, but there comes a time that one has to make a stand… When will that come for Draghi?  I don’t know the answer to that, but when it does happen, that’s when the euro will once again establish its ability to gain VS the dollar.   Again, that’s my opinion, and I could be wrong…   

The New Zealand dollar / kiwi is the star performer of the past couple of trading sessions, as the currency has risen above the 70-cents handle.  The Aussie dollar (A$) couldn’t gain any traction from the Reserve Bank of Australia’s (RBA) meeting last week, but kiwi sure has found some terra firma…  As we close in on 2018, traders are reminded that this is the year that the Reserve Bank of New Zealand (RBNZ) targeted for their first rate hikes in a few years… 

Gold’s two-day rally came to a halt on Friday, as the shiny metal lost a whopping $2 and change… Gold is up over $4 in early trading this morning, but the “boys in the band” haven’t arrived at their desks yet today…  Historically (since I’ve followed the currencies and metals) this week before Christmas can prove to be quite volatile, as the senior traders have all headed to their homes in Tennessee for some homemade pumpkin pie! HA!  So, be aware of that…   

The U.S. Data Cupboard was busy last week, with PPI, the stupid CPI, Industrial Production and so on… The indication I got from the data last week was that the economy is still muddling through… For instance, Industrial Production last month was only 0.2%, when it was projected to be 0.4%… Capacity Utilization showed no gains and PPI (wholesale inflation) was much stronger at 0.4% for the month…  Wholesale Inflation feeds into consumer inflation folks… So, it’s coming… can you feel it? 

This week’s Data Cupboard will also be busy, with the first part of the week printing Housing data, and the end of the week, when no one will be around in the markets, and I’ll be on my winter vacation, we’ll see a piece of real economic data when Nov. Durable Goods and Capital Goods orders print…  

To recap…  The Fed did hike rates last week, but the dollar received no love for the move, as the rate hike was already priced in. Janet Yellen’s press conference was a non-event, which Chuck thought was strange, and that she appeared to be holding back her thoughts…  Gold’s two-day rally ended on Friday, but it has picked it back up in the early morning trading today, and kiwi is the star performer of the past few trading sessions… 

For What It’s Worth…  I’ve talked about this consumer indebtedness until I’m blue in the face and that’s not a good look for me! But when CBS News picks up on it, then the mainstream media is beginning to take notice… So, this article can be found here: https://www.cbsnews.com/news/the-united-states-of-indebted-america/  

Or, here’s your snippet:”By many measures, the American economy is booming. Yet that’s not always translating into stronger financial health for a large share of US consumers.

One-third of Americans are weighed down by overdue debt, meaning their outstanding payments are in arrears and have been handed off to debt collectors, according to new research from The Urban Institute. That’s not a healthy situation for households because overdue debt can lower one’s credit score, making it harder to finance purchases such as a home or car while also making it more expensive to borrow money. 

The problem is worse in some regions of the country, especially those where health insurance coverage is sparser, incomes are lower and the share of nonwhite households is higher, according to the Urban Institute’s data. Almost one in five households have medical debt in collections, a sign of how many Americans struggle with the cost of health care, including those insurance. 

That’s not only a personal challenge but a community issue because those indebted households may struggle to pay their property taxes or rent on time.”   

Chuck again…  Yes, as I’ve been saying, for months now, the U.S. consumer is in debt up to their eyeballs, and they just keep taking on more… Ugh! 

Currencies today 12/18/17… American Style: A$ .7662, kiwi .7006, C$ .7767, euro 1.1791, sterling 1.3360, Swiss $ 1.0120, … European Style: rand 12.8495, krone 8.3557, SEK 8.4522, forint 265.93, zloty 3.5685, koruna 21.79, RUB 58.80, yen 112.53, sing 1.3483, HKD 7.8168, INR 64.12, China 6.6097, peso 19.06, BRL 3.2934, Dollar Index 93.69, Oil $57.53, 10yr 2.38%, Silver $16.14, Platinum $900.60, Palladium $1,016.94, and Gold… $1,261.70   

That’s it for today… Yesterday was a former colleague and good friend’s birthday… Happy Birthday Jen!  And Ty Keough also celebrated a birthday this past weekend! Thursday night, good friend Mike Kettler brought me my dinner (gumbo, that was yummy!) and Saturday, oldest son, Andrew brought me lunch…  I ventured out for a short trip yesterday.. Very adventurous! HA!  Alrighty then… Tradition holds that I start my winter vacation on the 17th.. But since I’ve missed so much time recently, I decided to cut back on that time away, by starting my vacation on Thursday this week… So, you get me for two more days! HA!  Alrighty then I’ve got things to do this morning before the visiting nurse shows up… Ambrosia takes us to the finish line today with their song: How Much I Feel…  ( this song was popular when we lived in Des Moines, Iowa)  I hope you have a Marvelous Monday, and Be Good To Yourself!  

Chuck Butler