Chuck Butler’s: A Pfennig For Your Thoughts 

September 20, 2017

* Currencies get back on the rally tracks!

* Chuck forgets talk like a Pirate day!

* The FOMC members talk “Risk”?

      

 

Good day… And a Wonderful Wednesday to you! Boy did I miss something yesterday that I always make a big deal of! I guess if I wasn’t up at 2 am writing the Pfennig, because I couldn’t sleep, gives me an excuse, right? HA! AS IF! Yesterday was “talk like a pirate day” What was I thinking mates? I tried to go the movies but couldn’t get in because the movie was rated ARRRRRRGH! HA! I have my pirate shirt and of course an eyepatch, but I completely let it slip my brain! Arrrrrgh! The three Amigos, Rick, Duane and Chuck, used to see an entertainer in Jupiter, actually on Singer Island, named Fritz, and he would do the Jimmy Buffett song: A Pirate looks at 40, and when he got to the part where he would sing: Yes, I am a pirate, the three Amigos would all throw our fists in the air and shout Arrrrrrgh! Good times… Oh well… I missed it… what a dolt! In honor of the day yesterday, and that song, I spooled it up on the iPod this morning and so: A Pirate Looks At Forty greets me this morning!  

Some conversations overheard as the Fed members assemble at the Eccles Building for their two-day meeting… “Hey! make sure you get the Risk game down from the shelf, that way we can tell people that we looked at Risk in the statement tomorrow.”  HAHAHAHAHAHA!  Boy, I sure have fun with these Two-Day FOMC meetings, don’t I? One thing the Fed might discuss in reality, is the fact that their preferred inflation calculator/ data print, the Personal Consumption Expenditures (PCE) has been moving in the wrong direction…  

That’s right PCE at its last print was 1.4062…  At last check, that’s not 2%, or even closing in on it, as the Fed members promised us it would in the second half of this year. No, wait a minute, they’ve been promising us that for the last 3 years, haven’t they?  Yes, the “Transitory” (the Fed’s words, not mine!)  slowing down of the economy seems to be more than “transitory” doesn’t it now?  Of course I could easily point the blame finger right back at the Fed, for hiking interest rates… 

I’ve said this before and I’ll continue saying it until someone shows me I’m wrong, and even then I’ll probably keep saying it because I’m a hard-headed Irishman!  But a Central Bank doesn’t hike rates in hopes that it fuels inflation and a growing economy… But that’s what the Fed has done, and now they’ll sit around the Eccles Building for two-days, scratching their heads and wondering why their “magic potion” for the economy and inflation didn’t work…   Don’t you feel for them? They’ve failed, and yet, some still think that their words are worthy, of moving markets…  

OK, Chuck, move on here, you could spend all day talking about the Fed and their failures…  Jackson Browne sings a song titled: These Days, and in it he sings: Don’t remind me of my failures, I’ve not forgotten them…  And that’s all I’m going to say about that today!   

The currencies, for the most part, are back on the rally tracks this morning. The upward move began yesterday afternoon, with the only things that could be pointed to as reasons for the dollar selloff would be the new expectations for the FOMC meeting, which is for no rate hike, Hey! come on board my wagon, there’s room for you here, glad you have finally decided to see things my way!  And the Current Account Deficit (CAD) which, I told you yesterday that I thought would be greater in size than the expected $117 Billion, and it was far greater in size than I even imagined, as the 2nd QTR CAD was $123.1 Billion!   YIKES!  

The biggest movers since yesterday afternoon are the Aussie dollar (A$) and kiwi, which makes sense to me, given that these two currencies are always thought of when investors / traders, think of currencies with positive rate differentials to the U.S.  And while A$’s and kiwi don’t have Huge positive rate differentials, they do have them, and proving that fundamentals still play a part in currency valuation, A$’s and kiwi were cooking gas last night and this morning. 

The Bid Dog, euro, came back into Trader’s focus yesterday afternoon, when everyone had a V-8 head slap moment and realized the Fed isn’t going to hike rates today, and sold dollars and bought euros… The Big Dog climbed back above 1.20…  Yesterday, I talked about the rarified air that 80-cents seemed to he for the A$, and you could say “ditto” for the euro and 1.20…  But both currencies are playing in the rarified air again this morning, let’s see how long they can remain there…   

Speaking of an asset that can’t seem to hold above a psychological figure… The price of Oil slipped back below $50 (just barely, but it is below $50) in the past 24 hours…  All the Petrol Currencies took on some water with the slippage of the Oil price.  One of the hardest hit in the past couple days has been the Canadian loonie. While I loved seeing the loonie soar to well above 82-cents after the Bank of Canada (BOC) hike rates 10 days or so ago, I never really felt like that level was sustainable…  For once again traders got ahead of themselves, and went a little too far on a 25 Basis Points rate hike… 

The .8150 level the loonie is trading around today looks a little more comfortable to me… But should the BOC hike rates again while the smoke clears from the previous rate hikes fireworks, that would warrant a stronger loonie for sure!  

Well, so much for the rate hike talk in the U.K. from last week… Yesterday, Bank of England (BOE) Gov. Mark Carney had this to say about BREXIT and the U.K. economy in a speech to the International Monetary Fund that BREXIT will boost inflationary pressures in Britain and undercut economic growth. He said there is “little the central bank could do to help because BREXIT represents a real shock about which monetary policy can do little.” So, higher inflation, but slower economic growth… I would not like to think that Carney would go down the same road as the Fed, and hike rates into a weakening economy, even without signs of runaway inflation!

But then Carney is a Central Banker, and logic, and doing the “right thing” sometimes eludes Central Bankers…  In honor of “talk like a Pirate Day” yesterday, I would make all Central Bankers walk the plank! Well, not all…  Elvira Nabiulina from Russia is a “cut above” the other Central Bankers, in my humble country boy opinion…  

Gold trading was choppy yesterday, but in the end the shiny metal was able to gain a few bucks, and has added a few more bucks of gains in the early morning trading today.  “the boys in the band” took it easy on Gold & Silver yesterday and decided to take a pound of flesh from Platinum and Palladium, which had been lucky to fly under the radar of “the boys in the band” until yesterday that is…  

I’ve not mentioned Gold researcher extraordinaire, Koos Jansen, lately, and it’s my fault, because I ten to forget about checking the bullionstar.com website for his latest research, but not last night! And so I have something here that’s quite interesting…  The article on the website goes through the explanations of Chinese Gold exploration and production, but the thing that caught my eye was this: “the 2016 mineral resource bulletin which now claims that at year-end 2015, China has a huge 11563.5 Tonnes of identified in ground gold reserves[8]. The Ministry of Land and Resources also claims to have discovered an additional 1130.3 Tonnes of gold reserves during 2016.”   

Looks like Chinese mining companies have a lot work to do, eh? But think about that… It’s now thought that the Chinese have already accumulated more than 5,000 Tonnes of Gold (and probably more), and then add to that the 11,563 Tonnes yet to come out of the ground and well, you’ve got the country with the most physical Gold… He who has the Gold, rules, right?  I’m just saying…   

Today’s Data Cupboard, is dominated by the FOMC meeting and press conference following the meeting…  So, we need to be somewhere else today at 1 o’clock S.T. , right? HA!   

To recap…  it’s FOMC meeting conclusion day, and Chuck is happy that everyone else has jumped on his bandwagon, which is the thought that Fed won’t hike rates at this meeting. And that V-8 head slap moment hit traders yesterday afternoon, and they began to sell dollars once again, with the A$ and kiwi the best performers because of their positive rate differentials VS the dollar.  Gold & Silver were spared yesterday, but Platinum and Palladium were the focus of “the boys in the band”…  

For what It’s worth…  Thanks to dear longtime reader Bob for this article that really should be all over our cable news, but you probably won’t see it there, because it’s about Russia…  The headline reads: Putin orders end to dollar trade at seaports…  And you can find it here: https://www.rt.com/business/403804-russian-sea-ports-ruble-settlements/   

Or, here’s your snippet: “Russian President, Vladimir Putin has instructed the government to approve legislation making the ruble the main currency of exchange at all Russian seaports by next year.” 

Chuck again…. That’s really all you need to know in the article. Talk about giving the ruble a major boost should this legislation be approved, which if Putin says “approve it” , I can’t imagine that it doesn’t get approved.    

Currencies today 9/20/17… American Style: A$ .8040, kiwi .7351, C$ .8150, euro 1.2010, sterling 1.3515, Swiss $.96, … European Style: rand 13.3130, krone 7.7866, SEK 7.94, forint 256.73, zloty 3.5594, koruna 21.7456, RUB 58.09, yen 111.34, sing 1.3448, HKD 7.8070, INR 64.35, China 6.5843, peso 17.77, BRL 3.1332, Dollar Index 91.68, Oil $49.97, 10-year 2.23%, Silver $17.39, Platinum $954.39, Palladium $911.03, and Gold… $1,317.60  

That’s it for today… A nice comeback win by my beloved Cardinals last night in Cincinnati, sure wish they could have had a couple of those in Chicago last weekend… UGH!  Well, I’m not home alone any longer, as Kathy got back from her trip to our place in S. Florida to inspect the damage, which thank goodness wasn’t much, and certainly not what was forecast… Whew! I just realized that the Pfennig is a bit shorter than usual today, so what are you going to do with those extra 2 minutes? HA! This will make my friend Rick happy… The Outfield takes us to the finish line today with their song: Your Love…  (80’s music…  there was some that was salvageable! HAHAHAHA! )  Time to go! I hope you have a Wonderful Wednesday, and Be Good To Yourself! 

 

 

 

BIS Joins “The Boys In The Band”

Chuck Butler’s: A Pfennig For Your Thoughts  

 September 19, 2017  

* Gold gets whacked again! UGH!

* Currencies drift ahead of FOMC

* Mexico to monetize silver coin?

 

Good day… And a Tom Terrific Tuesday to you! Well, here I am once again in the middle of the night, awake, and unable to get back to sleep, so I come downstairs to my writing desk and begin putting together the Pfennig for the day…  So, this should show up in your email box quite early this morning, that is if I can wake up the squirrels on the treadmill that generates the power for my email server! HA!  Styx greets me in the middle of the night with their song: Suite Madame Blue…  

The fears of what may happen with N. Korea are backing off once again, and that’s a good thing, I guess… But not for Japanese yen, Gold, Treasuries and euros…  And that’s our thought for the day. Thank for you coming, there’s a nice parting gift for you at the door!  

The currencies, for the most part yesterday, drifted about and there was no real conviction to buy or sell them VS the dollar. I have the feeling that this is the pattern we’ll see leading up to the FOMC meeting that will conclude days of board game playing tomorrow afternoon.  Currencies like sterling, loonies, Aussie dollars (A$), have slipped from recent highs, but on the other side of the coin, currencies like the euro, krone, krona, have gained VS yesterday morning’s levels.  

Gold got whacked again yesterday, losing $12… I was sitting here scratching my balding head, trying to figure out why Gold has become persona non gratis these days, when I received an email from the GATA folks explaining it all… Let’s listen in… “Gold swaps by the Bank for International Settlements, Dave Kranzler of Investment Dynamics writes today, correlate inversely with the gold price. That is, the more gold is swapped by the BIS, the more metal is made available to bullion banks for sale into the market and shipment to Asia to prevent demand there from boosting gold’s price.”

They then went into just how much Gold is being used by the BIS… Again, let’s listen in, “Disclosures in the August statement of account published by the BIS indicates that during August the bank increased “substantially” (I put those quotation marks around the word substantially), the use of Gold swaps. An estimated 130 Tonnes of new gold were make last month, worth about $59 Billion at the month-end Gold price, and the total level of Gold swap a the end of August was close to 500 Tonnes”

Well, I wasn’t aware that “the boys in the band” had a new member to their group, but apparently they do! All I’ll keep saying over and over again is that these things give investors that want to buy Gold, an opportunity to buy it cheaper than it was a week ago, and so on… 

I was writing down the prices of the currencies and metals for the currency roundup when I came to Palladium and stopped… Yes, Palladium has gotten caught up in the metals selloff, but to a lesser degree… And that got me looking back at the price history of Palladium…  In January of 2016, Palladium had fallen to a price of $450, and this morning it has a price of $929.71… 

Earlier this year I wrote about the CEO of a mining company who made a bold prediction that the price of Palladium would exceed the price of Platinum by year end…  Well, right now Palladium is narrowed the spread to Platinum to less than $30…  

And one more thought about Palladium and Platinum…  These two are industrial metals that are used in the making of catalytic converters in new cars… Well, we all know, because I told you so, that the new car auto industry has been circling the bowl… But… here’s a sliver lining from all the flooding from the hurricanes… There’s bound to be a HUGE amount of new car buying when it’s all said and done, because those flooded autos, even if they start up again, won’t be worth holding onto…  And that would be good for Palladium and Platinum if new car buying ramps upward…   

So… the euro is knocking on the 1.20 handle’s door again this morning, which is interesting given the drifting of the other currencies. I would think that some of the euro’s strength is coming vis-a-vi the cross with sterling.  Yes, sterling which a couple of trading days ago, was soaring on the rate hike talk that come from the Bank of England’s (BOE) meeting last week. But then some calmer heads, using the logical thinking side of their collective brains, thought more about this rate hike talk, and decided that it was a little premature, and went back to sell sterling to fill in the gaps that it passed on its way to Mars last week…  

The Aussie dollar (A$) seems to get a little light headed every time it climbs to 80-cents… the 80-cent air must be difficult for the A$ to breathe, because every time, in recent days, the A$ get to 80-cents and above, it doesn’t last very long…  In reality, I would bet a dollar to a Krispy Kreme that the Reserve Bank of Australia (RBA) is intervening to keep the A$ from getting to strong…   

The price of Oil has reached $50 once again, and that has helped the Norwegian krone and Brazilian real to strengthen, but the other Petrol Currencies of Russian rubles, Canadian loonies, Mexican pesos, and pound sterling are not rallying along with Oil this morning… Sometimes the ruble seems to lag Oil’s price moves, which seems to be a prudent thing to do, given the price of Oil doesn’t stay at one level very long these days, and just as easily it could be heading downward again tomorrow… 

So, have you heard the news regarding the Libertad Silver Coin in Mexico? Apparently, there is a group making a plea to the Mexican congress to monetize the coin at a fixed rate, so that the Mexican people would have a coin they could invest in and save with…  The proposed plan would center around a fixed price that’s higher than the current spot price of Silver that would be held steady by the Central Bank even if the spot price of Silver falls, but would rise with the spot of Silver should Silver enjoy a rise in price. 

And Interesting plan, if I do say so myself, and one that has seen several attempts to  get the Mexican congress to agree to through the years.  It reminds me of the great Gold price reset scenario that James Rickards talks about in his book: A New Case For Gold. I won’t give the scenario away, but I will say that James Rickards has updated his scenario for the great Gold price reset…  And Gold holders will be happy as they can be IF his scenario comes to fruition…  

Let me give you a heads up…  IF you hear of a meeting of international heads at the President’s Florida Mar-a-lago, you might want to be calling Gold dealers and buying before everybody else wants to buy Gold… wink, wink…     

OK, Chuck enough of that stuff! It’s all up in the air, and we don’t really know if it’s going to come down to earth and reality… So, let’s talk about something else!  OK…  Well then, the retail Armageddon continues, as Toys ‘R Us filed Chapter 11 bankruptcy last night…  The company has been hurt by shrinking sales, online competition, and a massive debt load from a leveraged buyout more than a decade ago!  

The key word/ problem there “massive debt”…  Eventually it gets to everyone and when it does, there’s no turning back, either you just keep adding on debt like the U.S. Gov’t, or you cry out, “no mas”…  

The U.S. Data Cupboard today has the Housing Starts and Building Permits data prints for August, and the Current Account Deficit will also print for the 2nd QTR…  The deficit is expected to be around $117 Billion, but I think it will be higher than that…  

To recap…   Gold got whacked again and now we’re seeing a driving force behind the selling, with the BIS operating in the Gold Swaps arena BIG Time…  The currencies, for the most part, drifted about yesterday, with some selling in sterling, loonies, and A$’s…  The price of Oil is back to $50 this morning, and Chuck wonders for long it will stay there this time?  The so-called safe havens of yen, treasuries, Gold and euros are being treated rudely, except for euros, due to a backing off of the tensions regarding N. Korea…    

Before I head to the Big Finish… I wanted to highlight something that was sent to your email box yesterday evening from my good friends, and now publishers, Mary Anne and Pamela Aden of the Aden Forecast… They wanted to make sure that you dear Pfennig Readers were aware of the excellent newsletter that the Aden Forecast is each week. And they offered you a special price to subscribe, or take a 3 month trial…

Longtime readers know that I’ve very seldom asked you for things… your prayers, your support for my son Alex’s Ironman fund raiser, and that’s about it… I take our relationship very seriously, and wouldn’t want to mess it up with frivolous things. And so I wanted to make certain that you knew that I was aware of this and I wholeheartedly agreed that Pfennig Readers should have the research available to them in the Aden Forecast each week! So, I hope it was something that you found worth a couple of minutes to read, and that now you’re contemplating whether to subscribe or not… I think you will be very satisfied with your decision if you do decide to subscribe! Go forth now… onward and upward!  

For What It’s Worth…  I saw this on Ed Steer’s letter this morning (apparently he can’t sleep like me!) and thought it no not only be funny, but worth the read, so it’s about how large sums of euros were found in toilets, etc. in Switzerland… And can be found here: https://www.theguardian.com/business/2017/sep/18/dirty-money-mystery-over-shredded-500-notes-swiss-sewers   

Or, here’s your snippet: “Tens of thousands of euros have been flushed down the toilet in Geneva, leaving Swiss prosecutors scratching their heads over whether the money is dirty.

Wads of €500 notes were discovered cut to shreds in the sewer system of a branch of Swiss bank UBS, while three more large deposits turned up in the toilets of nearby bistros.

Prosecutors confirmed the notes were worth tens of thousands of euros in total but said they had yet to identify the person who felt flush enough to dispose of the bills.

Swiss investigators said the money appeared to have come from a safe deposit box in Geneva belonging to unidentified Spanish women.

A lawyer for the women appeared at a local police station, according to the Tribune de Genève, but only offered money to pay for plumbing work at the UBS branch and the three restaurants.”  

Chuck again… Can I say it? Go ahead and say it! No, Can I say it? Ok, I’m going to go ahead and say it… That’s what I call dirty money!  

Currencies today 9/19/17… American Style: A$ .7987, kiwi .7295, C$ .8131, euro 1.1996, sterling 1.3520, Swiss $ .96, … European Style: rand 13.3027, krone 7.8048, SEK 7.9385, forint 257.75, zloty 3.5763, koruna 21.7736, RUB 57.80, yen 111.71, sing 1.3482, HKD 7.8031, INR 64.21, China 6.5619, peso 17.77, BRL 3.1179, Dollar Index 91.81, Oil $50.24, 10-year 2.21%, Silver $17.24, Platinum $929.17, Palladium $929.71, and Gold… $1,312.50

That’s it for today…  No baseball for me last night, and I just can’t get into the NFL yet this year, maybe because we no longer have a team in St. Louis, or maybe because the NFL did nothing to address the antics of players on the sidelines during the National Anthem…  that’s all I’m saying about that..  Just a baker’s dozen of games left in the baseball regular season. After the Cardinals laid an egg in Chicago last weekend, there’s not much hope left the games left that they can rally to be a playoff team… UGH!   The Cure takes us to the finish line today with their song: Close To Me… And with that, I’ll get out of your hair today, and send you on your way to a Tom Terrific Tuesday… Be Good To Yourself!

U.S. Data Reveals That U.S. Economy Has No Legs…

Chuck Butler’s: A Pfennig For Your Thoughts 

September 18, 2017  

* What did traders know on Friday?

* Portugal gets upgrade from S&P

* FOMC meets this week!

 

 

Good day…  And a Marvelous Monday to you! Well, that was very, much a let down this weekend, sports-wise, as both by beloved teams decided to not come to play… The Cubs swept the Cardinals, and my Mizzou Tigers, looked like kitty cats… I flew my Mizzou flag, anyway…  I flew it when the won the Eastern Division of the SEC two years in a row, and I have to fly it now that they couldn’t beat “bye”…  A Flock of Seagulls greet me this morning with their song: Space Age Love Song…   

On Friday, last week, I tweeted the following:  “U.S Retail Sales are sluggish, Cap. Utiliz. falls, another sign that U.S. econ. has no legs” And so it was on Friday, the first day of the week with “real economic” data, that we saw disappointing results once more… When is someone at the Fed going to step up to the microphone and say, “We were wrong to hike rates with the economy weakening like it was, and now all we’ve done is weaken the economy more.”  HA! As if! That’ll happen with pigs fly, folks…  

The Currency traders saw the writing on the wall and pushed the dollar down on the day…  But then as we ended the day, things began to unravel, and the currencies and metals were sold as if they the traders “knew something”… The overnight markets haven’t brought us much movement and so we’re pretty much seeing the currencies trade in the same clothes as Friday morning before the data prints.  

So, let’s take a quick jog around the world this morning to bring us up to date…     In the Eurozone, Portugal got a nice surprise as S&P Global Ratings upgraded Portugal’s debt rating, and their 10-year benchmark Gov’t bond fell 27 Basis Points to 2.53%…  Something is wrong with this picture, or… maybe something’s not wrong with it… I’ll let you decide for yourself… The mighty U.S. 10-year Gov’t bond yields 2.21%, and Portugal, mind you, as a 10-year Gov’t yield of 2.53%…   Wait! What? You mean to tell me that you only get a bump up of 32 basis points to swap out of a U.S. Gov’t bond to a Gov’t bond in Portugal?     I’m just going to leave that out there to float around and let everyone chew on it a bit…  

Besides, this is supposed to be a quick jog around the world, Chuck, not an epistle on Gov’t Bond yields…  Sorry about that! OK, in the U.K. they had the excitement of a rate hike talk last week, that really pushed pound sterling higher, and this week they have PM May, to talk about BREXIT, and it’s here that we’ll hear for the first time the numbers associated with the exit…  I’m thinking that the rate talk excitement will have cold water thrown on it after the BREXIT discussion.  

In China, Consumer Confidence is rising to very high levels, and the Chinese are working on reform packages for the Chinese economy, and markets…  Pretty smart if you ask me…  What better time to introduce reforms than when consumer confidence is soaring?  I can’t think of any better time!  In other news from China, they reported that Chinese home prices fell last month, which is a sign that the measures that the Chinese put into place to cool the housing market have begun to take hold… 

Wouldn’t that have come in handy back in 2005 or 2006, when the U.S. housing sector was bubbling up?  To have had the Central Bank or Gov’t step in to say, “enough is enough” we’re putting an end to this bubble right now!  Of course that didn’t happen, and why would it, when the Fed Heads themselves say they couldn’t see the bubble until it popped?   I don’t know what they were looking at, but in 2003, in the white paper that I wrote, I pointed out that I saw a housing bubble forming in the U.S.  How in the world did they not see one, if little old me saw the housing bubble forming years before it popped? 

OK, that’s a discussion for the Butler Patio, so let’s take it out there, and leave the calm, adult,  discussions here…   Still working my way around the globe, brings me back to Canada…  The loonie, which really saw some major buying after the Bank of Canada (BOC) hike rates a couple of weeks ago, is slowly seeing the love for the loonie fade, and it appears that the loonie is going to lose the 82-cent handle, unless a change in direction can be brought about.  There’s no real data to rely on, so the loonie just drifts… UGH!  

And now, back home, the U.S. Fed’s FOMC meets this week to discuss rates… Recall that I’ve said for months now that the Fed will skip going to the rate hike table at this meeting…  We could hear them break down how they will begin to unwind their Balance Sheet…  And that brings me to how this is all explained in the press conference that will take place after the rate announcement on Wednesday at 1 o’clock CT…  I’m going to save some bits and pieces about the Fed’s meeting for the next two days, so that’s all I have to say here for now…  

Well, “the boys in the band” had their way with Gold on Friday… UGH!  Gold climbed out of the mud it had been throw in at 1,327 on Friday morning to $1,334, and then well, let’s just say, it got sold…  And the sellers drove the price of Gold down to the closing figure of 1,319.20… There were a whopping 306,000 contracts traded on Friday… The excuse given for all the selling was that it appeared that the U.S would go the extra mile in attempting to resolve the N. Korean tension with diplomatic discussions, and not resort to a war. 

I would like to think that for the sake of human lives that an agreement can be worked out… But the practical and logical side of me says, Chuck, you dummy! The N. Korean leader is hell bent and whisky bound to pick a fight with the U.S., so how will “diplomatic discussions” work? I guess we’ll have to wait-n-see, eh?   

The good part of the days leading up to a FOMC meeting is that there’s a silence from the Fed Heads that is quite refreshing! But a quick look at the Economic Calendar tells me that as soon as that “black out period” ends the Fed Heads will be coming out in droves to speak. 

The U.S Data Cupboard on Friday had the disappointing prints of Retail Sales, Industrial Production and Capacity Utilization… here’s the rundown on those prints… Retail Sales for August were a negative -0.2%, with auto sales causing the majority of that drop… Industrial Production also saw a negative print for August with IP printing at -0.9%, and Capacity Utilization fell from 76.9 in July to 76.1 in August…  That’s a forward looking piece of data folks, and it fell by a large amount in August… 

The U.S. Data Cupboard doesn’t really have much for us this week… So, the markets  will be focusing on the FOMC meeting the concludes on Wednesday afternoon….  And I’m wondering how the markets will take the news of no rate hike…   Probably not kindly to the dollar, BUT, if Fed Chair, Janet Yellen describes the unwinding of the balance sheet, which is widely thought to be her main mission this week, in a way that that gives the markets the idea that the unwinding will be of the size that represents a rate hike, then the dollar might not be so vulnerable to the no rate hike talk… 

To recap…  The U.S. Data on Friday was very disappointing, with two negative prints and one falling by a large amount…  The currencies and metals tried to rally after these awful prints, but their rallies were met by strong sellers, that came out of the woodwork, and we ended the day with the currencies pretty much flat on the day, and Gold down $9.80 on the day…  The FOMC meets this week…   

For What It’s Worth…  I was doing some reading on Saturday morning, waiting for my Tigers and Cardinals games to begin, and I came across this article about Russia becoming the 2nd largest leading Gold producer and thought it to be worthy… You can find it all here: http://news.xinhuanet.com/english/2017-09/14/c_136609991.htm

Or, here’s your snippet: “Russia will become world’s second largest gold producer with the launch of a major mining and smelting facility in the Far East, said the press service of the Ministry for the Development of the Russian Far East Wednesday.

After the facility was launched by Russia’s gold producer Poluys to develop the Natalka gold deposit in the country’s Magadan Region, the volume of ore processing will exceed 10 million tonnes per year, while the volume of gold production will be 13 tonnes per year, which increases the country’s gold production by 5 percent, the ministry said.

This will make Russia the second largest gold producer in the world after China, the press service quoted Polyus CEO Pavel Grachev as saying.

Polyus officially launched the first stage of hot commissioning of Natalka on Sept. 5. Full production is expected before the end of 2018.”  

Chuck again… OK, so remember when I wrote about how Russia said they would retaliate the U.S Sanctions by ramping up their de-dollarization?  And one of the ways they will do that is to ramp up their Gold holdings, and now they’ll be the 2nd largest producer of Gold? That certainly helps their plans, now doesn’t it?  

Currencies today 9/18/17… American Style: A$ .8005, kiwi .73, C$ .8202, euro 1.1946, sterling 1.3550, Swiss $.96, … European Style: rand 13.2121, krone 7.8268, SEK 7.9587, forint 258.94, zloty 3.5893, koruna 21.8318, RUB 57.60, yen 111.27, sing 1.3465, HKD 7.8166, INR 64.15, China 6.5516, peso 17.69, BRL 3.1192, Dollar Index 91.91, Oil $49.96, 10-year 2.21%, Silver $17.58, Platinum $968.58, Palladium $935.16, and Gold… $1,318.20

That’s it for today…  The cleanups in Texas and Florida, Georgia, etc. from the hurricanes continues, and they’ll end up costing hundreds of Billions of dollars in the end… Like this country had that in their kitty, right?  UGH!  Darling daughter Dawn and Delaney Grace stopped by to see me yesterday and make sure I was OK, here by myself…  Delaney ran in, jumped on my lap and gave me the biggest hug… I needed that, and I think she knew that… we talked about all kinds of things before she had to leave. It’s an infusion week, so that means no Pfennig on Friday, just a friendly reminder…  Tyrone Davis takes us to the finish line today with his song: Can I Change My Mind…  And with that, it’s time to go!  I hope you have a Marvelous Monday, and Be Good To Yourself! 

N. Korea Fires Another ICBM Over Japan!

Chuck Butler’s: A Pfennig For Your Thoughts 

September 15, 2017 

* Sterling soars on rate hike talk… 

* Currencies rebound to end choppy week…

* What’s with traders these days?

 

Good Day… And a Happy Friday to one and all!  Let’s go ahead and proclaim that this is going to be a Fantastico Friday!  Cards and Cubs in a day game today, I had ice cream last night in the form of a shake, ymmmmmmy! And this is about a big of a 3-game series at this time of year as you can have! Go Cards!  And R.E.M. greeted me this morning with their song: The One I Love…  Back in the 80’s to the mid 90’s, you couldn’t find a more popular band than R.E.M…  But time waits for no one, and it didn’t wait for them…  

Whew! Yesterday, I watched the currencies and metals slog through a day with some gaining, some losing ground, and some trading sideways… Until… There was news that N. Korea fired another ICBM over the country of Japan. I think that N. Korea’s leader, wanted to show that he could do just what he was talking about earlier in the day, when he expressed anger and said that he would  sink Japan and reduce the US to “ashes and darkness” for leading the latest UN Security Council sanctions imposed on the country.  

Gold shot higher on the news, as it should, and the dollar sunk a bit more, not much but some.  In the overnight markets where they have to deal more with N. Korea, things were a bit more serious and trading picked up steam.   But the shiny metal ran into some problems in the overnight and early morning markets, and gave back all those initial gains…  

Wait! What? N. Korea shows it could sink Japan as they shouted out during the day, and traders are becoming numb to the goings on with N. Korea?  Well, that’s what it seems like to me… Yen got whacked, as it should when the missiles are directed at your country, but Gold couldn’t hold its gains, and U.S. Treasuries, which I’ll talk more about in a minute, didn’t see any love thrown its way?   I question the thought process here by traders, becoming comfortably numb with N. Korea… 

Tell me if you’ve heard this one before… The Bank of England’s (BOE) Gov., Mark Carney, said after leaving rates unchanged at yesterday’s BOE meeting, that “the majority of the members of the Monetary Policy Committee, myself included, see that the balancing act is beginning to shift, and in that order to return inflation to that 2% target in sustainable manner, there may need to be some adjustment of interest rates in the coming months.” -Mark Carney…     I’ve documented in these letters over the years how many times that Mark Carney, as Gov. of the Bank of Canada, and now the Gov. of the Bank of England has talked up the need to remove accommodation (rate hikes) and they never materialized. 

So, I was surprised to see pound sterling traders respond so favorably toward Carney’s rate hike talk…  the pound jumped from yesterday morning’s 1.3206 to 1.3390 in trading last night… That’s a HUGE jump in one trading session folks, especially for a currency that has so many questions marks around it with BREXIT, and Carney’s past promises to hike rates that never materialized!  

And traders didn’t stop at 1.3390, and took the pound even higher throughout the overnight markets to 1.3590! WOW!  While I find it refreshing that fundamentals weighed in here, I also find that this trade has been overcooked, in my opinion… which could be wrong, but what the heck, that’s what I’m here for! 

And on the opposite end of the spectrum, the Japanese yen got whacked once it was confirmed that N. Korea had fired an ICBM over the islands nation. Normally, you would see yen bought as a so-called “safe haven currency”, but when the missiles are flying over Japan, the yen gets left out of the so-called “safe haven currency” buying…  That left the safe haven buying to euros, Gold, and Treasuries…  And as I said above, traders have become comfortably numb with N. Korea, so there was no need for “safe-haven” buying…   I shake my head in disbelief, here folks…   

Speaking of Treasuries… Have you been noticing in the currency roundup that the yield of the 10-year Treasury has been rising again? Just 9 days ago the 10-year Treasury yield was 2.08%… And this morning it is 2.20%…  I don’t have a Bloomberg to do bond calculations on any longer, for if I did I would show you what that 9 Basis Points move in the 10-year’s yield would be in dollar price… I think it would amaze you how much the dollar price moves with each basis point move..  

But, overall the currencies, for the most part, have rebounded this morning, led by the euro, which is right back to where it was to start Tuesday morning trading…  Up, down, up down, it’s been quite a choppy week for the currencies, as they failed to display any of the signs that a new weak dollar trend has emerged… UGH! 

But that’s not anything to be concerned about, just yet…  You see, when these currency trends end, and a new one begins, it takes a while before everyone is on board with the new trend… There are always those die-hards that believe their strong trend will last forever. But trends don’t last forever, and the sooner they get that through their thick heads, the sooner we can get down to not having choppy weeks of trading!  

Now, mind you, that doesn’t mean we won’t see volatility in the currencies, for there’s always volatility inside a current trend… Sorry, but there’s no ONE_WAY Streets here… 

The Aussie dollar (A$) saw some selling yesterday that brought the A$ back below 80-cents, briefly, but below the figure nonetheless.. The A$ is back above the 80-cent figure this morning, looking none the worse for its trip through the gauntlet.  The A$’s kissin’ cousin across the Tasman, kiwi, is going through the paces of recovering after getting whacked earlier this week. Kiwi had climbed to 73-cents, and then it was as if a trap floor, sprung open under kiwi causing the currency to fall, quickly…  But, like I said, it is recovering, albeit at a slower pace than it fell! UGH!

The price of Oil is inching closer to the $50 figure once again this morning… talk about up, down and all around!  But then if you had signed up for the Dow Theory Letters (www.dowtheoryletters.com) and read my weekly letter that talked about the Oil price, this up, down and all around wouldn’t be a surprise to you…. 

What’s with all the bad-mouthing of BITCOIN lately? Earlier in the week I told you that JP Morgan’s Jamie Dimon called BITCOIN a fraud, and then yesterday, Mexico’s Hugo Salinas Price said that, “bitcoin is just another mass speculation that will burn a lot of people eventually.” And yesterday, Bloomberg ran an article that said that investors are calling BITCOIN the most overcrowded trade…   I’m just wondering why, suddenly, we have these statements, of which I’m sure there will be more, piling on, if you will. Oh, well, cryptocurrencies are not my bag baby, so I’ll just move along…  

Gold saw a HUGE number of contracts with its name on them yesterday… 325,000 to be in the ballpark of pile of contracts traded…  That’s HUGE folks, and of course there had to be quite a few short Gold paper trades submitted by “the boys in the band”…   In the end, Gold went up, and came back down and is trading in yesterday morning’s clothes this morning at $1,327…    

The U.S. Data Cupboard yesterday, had the stupid CPI, which printed with August in mind, and reflected a 0.4% gain in the month, which is HUGE for this data set…  But as I said yesterday that I thought it would, the Year on Year figure was still below 2% at 1.9%…  It’ll be interesting to see if September’s figure can add to the August gains in inflation…   

Today’s Data Cupboard finally gets back to yielding some real economic data prints..  Leading off an plying right field today is Retail Sales for August. The BHI (Butler Household Index) suggests that this report will disappointing…  And then two of my fave prints will show their respective colors, when Industrial Production (IP) and Capacity Utilization (CAPU) go down the cat walk…  And again, I think these two will be disappointing, as they are not expected to show much in gains.  

To recap…  N. Korea shoots an ICBM over Japan and initially Gold gains, but is later sold off, as traders appear to have become comfortably numb with N. Korea, which Chuck thinks is a mistake…  Mark Carney (BOE) is making promises again, and traders believe him, and the pound soars on rate hike talk..  But overall the currencies, for the most part, are recovering their losses this morning, after a very choppy week of trading…  

For What It’s Worth…  I thought I switch things up a bit today, since its a Fantastico Friday!  A few weeks ago in the Dow Theory Letters I wrote about the trend that’s taking us to a cashless society… And one reader sent me this response, which if it weren’t eerily what I was talking about, would be funny…   So here it is… enjoy!

 Hello! Gordon’s pizza?
– No sir it’s Google’s pizza.
– So it’s a wrong number?
– No sir, Google bought it.
– OK. Take my order please.
– Well sir, do you want the usual?
– The usual? You know me?
– According to our caller ID, in the last 12 times, you ordered pizza with cheeses, sausage, thick crust.
– OK! .
– May I suggest to you this time ricotta, arugula with dry tomato?
– What? I hate vegetables.
– Your cholesterol is not good.
– How do you know?
– Through the subscribers guide We have the result of your blood tests for the last 7 years.
– Okay, but I do not want this pizza, I already take medicine.
– You have not taken the medicine regularly, 4 months ago, you only purchased 30 tablets at Drugsale Network.
– I bought more from another drugstore.
– It’s not showing on your credit card.
– I paid in cash.
– But you did not withdraw that much cash according to your bank statement.
– I have other source of cash.
– This is not showing as per your last tax form unless you bought them from undeclared income source.
– WHAT THE HELL? Enough! I’m sick of Google, Facebook, Twitter, WhatsApp. I’m going to an Island without internet, where there is no cell phone line and no one to spy on me.
– I understand sir but you need to renew your passport; it expired 5 weeks ago……..    

Chuck again….  Yes, that’s the kind of world we’ll have when there’s no cash folks… think about it!  

Currencies today 9/15/17… American Style: A$ .8016, kiwi .7265, C$ .8221, euro 1.1947, sterling 1.3575, Swiss $ .9606, … European Style: rand 13.1890, krone 7.8528, SEK 7.9635, forint 258.55, zloty 3.58, koruna 21.8209, RUB 57.64, yen 111.27, sing 1.3445, HKD 7.8158, INR 64.08, China 6.5524, peso 17.70, BRL 3.1295, Dollar Index 91.84, Oil $49.82, 10-year 2.20%, Silver $17.76, Platinum $975.15, Palladium $927.73, and Gold… $1,327.50  

That’s it for today and this week! Well, the BIG 3-game weekend series between the Cards and Cubs begins this afternoon…  I’ve been to Wrigley Field for Cards/ Cubs  3 times in the past, but they were in the years when the Cubs weren’t very good, and the Chicago fans were very friendly to us visitors, but I would have to think that’s changed with the tight race that’s going on now… But maybe not…  My beloved Mizzou Tigers attempt to get back on the winning side tomorrow when Purdue comes to play..  Both the Tigers and Cardinals will be on TV at the same time tomorrow, I guess I need to go get another outside TV! HA!  Elvin Bishop takes us to the finish line today with his song: Traveling Shoes…  That’s a real move in your chair song, and I’m bopping along with Elvin! OK, time to get out of your hair today, and send you on your way to a Fantastico Friday!  and please Be Good To Yourself!   Oh, and one more thing… Today… is a good day for a good day! 

 

 

UBS Trader Gets Charged In Metals Price Fixing…

Chuck Butler’s: A Pfennig For Your Thoughts 

September 14, 2017

* Tax reform talks deep sixes the currencies… 

* Chinese data slips in August… 

* Bank of England meeting today. 

 

Good day… And a Tub Thumpin’ Thursday to you! And I get to do some Tub Thumpin’ Today, so I’ve got that going for me! Hey! How about those Cleveland Indians! The won their new AL record 21st game in a row yesterday! WOW My beloved Cardinals start to act like they’ve been set adrift in space without a tether, when they win 3 in a row! UGH! 21 in a row, that’s just incredible in my book! Heartsfield greets me this morning with their song: House Of Living…    

Well, a couple of months ago, I mentioned one day that the dollar was getting sold because of the fact that the President’s plans for the economy hadn’t gotten off the ground. That’s not so, any longer… And while it’s all talk right now about tax reform, traders are taking that as a sign that we will see it go through and become a reality, and they’re buying dollars by the fistful…   The euro has fallen back through the 1.19 handle, and keeps going back and forth around that figure in the overnight sessions.   Speaker, Paul Ryan, had this to say about tax reform… “the plan is to have a new tax system functioning next year.” And when a Democrat, representative, Joe Manchin,  that attended a dinner hosted by the President to discuss tax reform was asked about the meeting he called them “productive”…    

OK, now I’m not the sharpest tool in the shed when it comes to figuring out what politicians mean when they talk, but that answer seemed to be a long way away from signaling any bi-partisan agreement on tax reform, but that didn’t stop the dollar bugs from throwing the currencies and metals in front of the tax reform talks bus…   I could spend all morning on this, but since I did that yesterday with my talk on debt, I think it best to move along, and just makes sure you realize that these talks could gain momentum, and keep the conn with the dollar… I’m thinking that they won’t gain momentum, but then I always look at things differently than most people…    Well, on top of the dollar getting love from the tax reform talk, it also saw some love come in its direction from the global growth currencies, (A$, kiwi, sing $ and others) last night as China’s latest prints on Factory Output and Retail Sales slumped last month… UGH!   

Chinese Industrial Production gained 6% in August VS the same period last year, and 6.4% in July…   The expectations were for a 6.5% gain, so even though Industrial Production was up from a year ago, the slippage VS last month was highlighted by the markets. It also happens that the 6% print was the slowest reading for China so far this year…   

In addition, Chinese Retail Sales was similar to IP, in that Retails Sales grew 10.1% in August VS 2016, but fell VS the July print which was 10.4%, and the expectation was for a 10.5% print… This print too was the slowest for Retail Sales so far this year…    

The Sky is Falling, The Sky is Falling, and al the Chicken Littles are running around with that “oh the humanity” look on their faces…  When if they just took a step back and looked at the data for what it was, and what caused this slippage they would be able to calm down and get back to work!   You see, I’m looking at these data print slowdowns as a reaction to the fact that the Chinese Gov’t has been closing capacity of those companies that don’t meet the environmental standards, and that enforcement has been much stricter there…  And to me that’s just something that the Chinese businesses will have to adjust to, and figure out how to get back to stronger prints..  

The near daily, appreciations of the renminbi have taken a breather this week, and the renminbi has see markdowns at each fixing so far this week. And that leads me to believe that the Gov’t was aware of the slippage in these reports… Hey! it happens here too! 

So… the Swiss franc is about the only currency with a gain this morning VS the dollar…  And here’s the skinny on how that comes about…  In Europe, the big cross is euro/ francs or francs/ euro, depending on whether you’re trading in Switzerland or the rest of the Eurozone.  The Swiss National Bank (SNB) while having dropped the peg to the euro a few years ago, continue to maintain a large position of euros so they can adjust the price of the franc and keep it weak to the euro for trade purposes…   So, when the euro rallies, the franc gets sold on the cross, and vice versa…  This cross trading carries over to the trading in dollar / franc, and thus the strength in the franc today, as the euro suffers from getting sold. 

The price of Oil is the only other asset rallying VS the dollar this morning, with the price of Oil in the $49 handle once again. Most of the Oil price move came from the reduced supplies of gas that were reported yesterday, where the refineries in the Houston area have been in operable for a couple of weeks.  There’s plenty of Oil, just no place to get it refined into gas…   

The Petrol Currencies (TPC) didn’t rally alongside Oil in the past 24 hours, and that has me shaking my head as I attempt to figure out just why that happened like that?  And the only thing I can find and figure out is that TPC traders just weren’t convinced that the move in the price of Oil was something that would last…  And can you blame them? The price of Oil has been up, down, sideways, and then rinse and repeat over and over again…  But nothing to really hang your hat on and say, “this move is for real” 

Well, Gold go t whacked again yesterday, as “the boys in the band” did tune up their instruments yesterday for the show that saw the early gains in Gold wiped out and more as the trading got going… Gold made it as high as $1,340.50 yesterday, before the rug was pulled out from under it, and closed down $8.90 on the day to $1,322.50…   

The GATA folks sent me a note yesterday that was very interesting and had an ironic twist to it…    Here’s the note that GATA sent me…  “A former trader at UBS Group AG was charged today with conspiracy and fraud over his suspected role in manipulating the price of precious metals.  Andre Flotron, who worked at the bank in Switzerland and Stamford, Connecticut, is the second person publicly charged in the U.S. investigation into the fixing of gold, silver, platinum and palladium prices. Flotron, a Swiss citizen, was arrested while visiting his girlfriend in New Jersey. He was charged with conspiracy, wire fraud, commodities fraud, and spoofing. He faces as many as 25 years in prison on the most serious charge. ” 

And here’s the ironic twist… are you ready for this? Well here it is anyway..   While the arraignment of Andre Flotron was happening…  CPM Group Managing Director Jeffrey Christian was telling Kitco News that complaints of gold market manipulation are “nonsense.”   

CPM is a commodities research, consulting, financial advisory and commodities management firm providing independent research, analysis and advisory services related to commodities markets, corporate and project finance, and the financial management of exposure to commodity oriented investments…   

OK, if that weren’t so sad, it would be funny, and I mean funny ha-ha! But it’s so sad that all this happens right under the CPM nose..  

OK, move on Chuck before you find your soapbox, and just keep saying to yourself that “the boys in the band” are doing everyone a favor by keeping the price of Gold at a level where it can be bought…  

The Bank of England (BOE) is meeting while I write this morning, but I doubt they’ll have any market moving news for us today… But then you never really know with these Central Bankers these days? 

The U.S Data Cupboard had the PPI (wholesale inflation) for us yesterday, and the August PPI didn’t meet the expectations of a 0.3% increase, printing instead at 0.2% VS July..  Annualized, PPI is 2.4% or 1.9% without food and energy, which I’ve always said I have no idea why anyone would look at it without the two major things that consumers use every day…  

Today’s Data Cupboard has the stupid CPI for August…  And I have no doubts that it will remain under 2% year on year (YOY)…  

To recap… It was another Dollar Day yesterday, as the tax reform talk got loud, and influenced traders into thinking that this is going to become a reality, and help the U.S. economy, therefore they bought dollars… The Global growth campers got a kick in the shins yesterday when China printed two data reports that showed slippage VS July…  Gold got whacked again by “the boys in the band”, but the price of Oil rallied on the drop in gas supplies.    

For What It’s Worth…  I came across this in Ed Steer’s letter today, and he took it from the German newspaper De Spiegel and it’s about Stanley Fischer getting in some last minute shots at the president before he leaves office, at least that’s how I viewed the article… It can be found here: http://www.spiegel.de/international/world/eu-worries-over-u-s-economy-grow-a-1166809.html#ref=nl-international   

Or, here’s your snippet: “History repeats itself, sometimes even within a single person’s lifespan. Now an American citizen, Fischer is currently witnessing another major power taking its leave of the world stage. Under the leadership of President Donald Trump, the United States is losing its status as a global hegemonic power, he said recently. America’s role as guarantor of global organizations like the International Monetary Fund (IMF) can no longer be taken for granted, Fischer says. “I had a picture of the world economy in which the United States was an anchor,” he recently told the Financial Times. “Not a source of volatility.”

The U.S. political system could take the world in a very dangerous direction, says the economist, who has held a number of powerful positions in his career. He has been the chief economist of the World Bank, deputy managing director of the International Monetary Fund and governor of the Bank of Israel. His resume makes him part of the caste of “globalists” despised by Trump supporters.

Fischer is seeing things today that he has never experienced in his entire professional career. For instance, he believes the current US government’s efforts to loosen regulation of the banking sector, hardly more than 10 years after the financial crisis, are simply “mind-boggling.”  

Chuck again…  Well, like I said, above, Fischer seems to be taking his last shots where he can…   

Currencies today 9/14/17… American Style: A$ .80, kiwi .7223, C$ .8212, euro 1.19, sterling 1.3206, Swiss $.9660, … European Style: rand 13.1514, krone 7.8955, SEK 8.0104, forint 258.92, zloty 3.5987, koruna 21.9338, RUB 57.73, yen 110.41, sing 1.35, HKD 7.8116, INR 64.09, China 6.5339, peso 17.76, BRL 3.1283, Dollar Index 92.34, Oil $49.64, 10-year 2.19%, Silver 17.82, Platinum $985.35, Palladium $938.95, and Gold… $1,327.10

That’s it for today…  Home Alone again… I’m actually, no wait, don’t say that Chuck! OK.. I’ll just say, being alone isn’t so bad, as long as I know it won’t be forever! Cardinals have a bummer game last night and lose ground in the division race… UGH! I always say in the early spring when baseball begins that the games you win then are games you don’t have to win late in the season, and this year is a prime example of that, as the Cardinals fumbled away so many games early this year, that now they HAVE to win every game…  My weekly letter at the Dow Theory Letters sight (www.dowtheoryletters.com) will print tonight… Last week I gave everyone there who are all new readers to my stuff, a history of Chuck, and this week I did a history of currency trends… There are some very good minds and writers at the Dow Theory franchise… You should check them out!  Van Morrison takes us to the finish line today with his song: And It Stoned Me…  And with that it’s time to go!  I hope you have a Tub Thumpin’ Thursday! And Be Good To Yourself!

 

Mnuchin Issues Warning To China? What’s He Thinking?

Chuck Butler’s: A Pfennig For Your Thoughts    

September 13, 2017

* Currencies & metals fight back!

* N. Korea does some saber rattling… 

* Oh, Lordy, Chuck talks about the debt! 

Good day…  And a Wonderful Wednesday to you! Another day yesterday, where I read articles, cleaned some dishes ( I haven’t used that many, while Kathy has been gone!) and before I knew it, the day was over. Kathy was home,  and the sunshine of the day had turned to dark clouds… Yesterday, I mentioned that the U.S. Current Debt was now over $20 Trillion, and I don’t feel I gave it justice, so… I’m going to spend a good portion of today’s letter talking about how awful this is for us… The Grassroots greet me today with their song: Let’s Live For Today… I remember when Busch Stadium II removed the astro turf and replaced it with natural grass, they brought back the Grassroots to play before the game! Now, that’s marketing!   

Before I begin to wail on our debt, I bring you up to date with what’s going on around the world… And that’s zilch! Well, there’s some saber rattling by N. Korea, who issued a warning that the new sanctions would propel them to a faster pace on becoming nuclear…  This is a situation that blows up, and then calms down, blows up and calms down, but one of these times when it blows up, I’m afraid that something bad is going to happen…   I’m just saying..    There’s also word that Jamie Dimon the Head Honcho of the largest holder of short paper trades in Gold & Silver, was out to call Bitcoin “a fraud”…   There’s some irony there, but I can’t quite put my finger on it…   

The currencies and metals fought back yesterday, and won some ground back from the dollar that it had lost on Monday’s Dollar Day.  To illustrate the small moves, the Dollar Index dropped to 91.77 from 91.89 yesterday morning.  Kiwi, rand, loonie, renminbi, and rubles all saw tiny downward moves though on the day…  

Gold was all over the place yesterday, up, down, sideways and then a rinse and repeat of the whole shooting match. But when all the dust settled, Gold had gained $4.40 on the day to close at $1,331.40…  The early morning trading today has Gold up to $1,338, so at least it’s starting out on the right foot and not the wrong one today! Are “the boys in the band” tuning up their instruments to put on a show today?  Alrighty then, you’re all up to date… let’s talk DEBT!

So… We passed $20 Trillion… And most Americans wouldn’t even know that we were close to $20 Trillion! Their day didn’t change, they pay didn’t change, and the cost of a 6-pack of their favorite flavor of beer, didn’t change. The dollars in their pocket didn’t disintegrate, like the tape at the beginning of the Mission Impossible TV Show. So why would they even care about this? Isn’t this something that’s good? As long as we’re spending money we don’t have, and people are lending it to us, what the heck? Party On Wayne, Party On Garth! Well, I hate to spoil the party so I’ll go… I would hate my disappointment to show… (Ahhh, The Beatles).. But in contrast to their song, I am not going to leave, I’m going to spoil the part, because, well… That’s my job! Hey! Wait a doggone minute here, Chuck, I thought you were retired, and no longer had a job… Ahhh, grasshopper, that may be true, but I still feel the need to keep everyone informed about real stuff, and not fake news that’s all over the cable news outlets.. So, there!

So… why should we be concerned with this debt? Well, just for starters, at $20 Trillion, our Current Debt is larger than our GDP! And while I’m thinking about this… Didn’t the Gov’t put a spending freeze on last March, that would last 6 months, until we extended it last week? So, if there was a spending freeze, why or how did the Current Debt continue to increase to surpass $20 Trillion? Well, have you ever heard of “extraordinary measures?” That’s what the Treasury Secretary said he was going to have to use… But let’s break that down a bit… in this case, extraordinary measures, means raiding Gov’t pension funds for money to keep the Gov’t going… And while it was kept going, tons of new loans were being held back until the freeze was over, and last week, once the freeze was over, all these deals got booked, and voila! We passed $20 Trillion!

OK, I’m going to borrow a line or two from Simon Black’s, Sovereign Man newsletter… Just Google Simon Black and you’ll find him to sign up for his letter… “Year after year after year, the US government spends far more money than it collects in tax revenue.

According to the Treasury Department’s own figures, the government’s budget deficit for the first 10 months of this fiscal year (i.e. October 2016 through July 2017) was $566 billion!

Now to be fair and balanced… If the economy grew rapidly, tax revenue would increase. And the national debt, at least as a percentage of GDP, would start to fall.

Here’s the problem: the national debt is growing MUCH faster than the US economy. In Fiscal Year 2016, for example, the debt grew by 7.84%.

Yet even when including the ‘benefits’ of inflation, the US economy only grew by 2.4% over the same period.” – Simon Black

So, when you find yourself digging a hole for no reason, or you’re digging in the wrong place, do you continue to dig? Well, not if you have half-a-brain… So, why is the U.S. continuing on this path of destruction? Because that’s what debt leads to… destruction! Now, like I said above, the rising debt hasn’t caused a flood of problems, unless you look at like I do, and the debt causes the Gov’t to have to deal with it and not deal with getting the economy back on track,  yet… But it will, eventually… and here I’ll use one of my fave phrases… What’s Evident, May Not Be Imminent… here’s a quiz for you… Name the top 4 line items in the U.S. Budget… Final Jeopardy music begins to play.. Ok, give up?

Well, it’s Social Security, Medicare, Military spending, and interest on debt…. Those 4 items by themselves equal 90% of the U.S. Budget… So, you want to make cuts to these? Let’s see, cutting Social Security and Medicare is political suicide, folks… (but if they followed Chuck’s debt solutions from a few years back it can be done) , and I just saw a proposal by the White House to increase Military Spending by 10%, so that’s not happening, and then the old interest on debt… Hmmm, the Fed has been raising rates, what does that do to the interest cost? That’s right it increases it! Looks like our deficit spending, which leads to the current debt, isn’t going to be reduced any time soon…

And finally… here’s the problems as I see them.. When you owe money to someone else, they are your master, you are their slave, and that’s why I’ve always said that Debt is Slavery! So, when you owe so much to China, per se, wouldn’t it be very easy for the Chinese to begin to dictate our monetary policy? All they have to do is not show up for a Treasury Auction, and all hell would break loose! I don’t like owing money to anyone, anytime, any place, and the U.S. should at least give it a try to achieve that goal! The other problem as I see it is this interest on the debt… Right now, tax receipts in the U.S. make up about 17% of our GDP… Think of it as the U.S.’s slice of the pie… But what would happen if all those tax receipts were used up in paying our interest on our debt? OH NO! 

And then, there’s this… Loss of faith… In 1985, finance ministers around the world met at the Plaza Hotel in NYC, to express their fear that the U.S. couldn’t pay its debts, which at the time were 2.5% of GDP…  Now they are more than 100% of GDP, where are the finance minsters now?  Well, they don’t have to physically meet anywhere to discuss their loss of faith in the U.S. and the dollar, folks… The show that with their wallets when it comes time to show up at the Treasury auction window…  I always have a hardy laugh at the pundits, economists, and what have you, that talk about how the Debt isn’t the cause of the dollar’s woes…   Like they could notice a man with a hatchet in his forehead walking down the street!  Of course it is one of the causes of the dollar’s woes… There’s no two ways about it! 

So, I gave you something to think about today… and why I’m such a debt watcher… I’m a debt watcher, I’m a debt watcher, watching the debt go high, my, my, my…  

The U.S. Data Cupboard yesterday had those two pieces of data that we only get to see once a year, and they were interesting in that the Median Household Income showed an increase to $59,039 in 2016, VS $57, 230 in 2015…  And the number of Uninsured Americans dropped from 29 Million in 2015, to 28.1 Million in 2016…   Yesterday, I talked about the increase in health care was bogging down Americans… These two data prints tie into that, perfectly…   

Today’s Data Cupboard has Aug. PPI (wholesale Inflation), and the August Federal Budget for us to see.. PPI is expected to rise by a small bit, and who knows what the Federal Budget will be? The July figure was a deficit of $107 Billion… There’s that darn deficit spending again…  

To recap…  Not much happened around the world yesterday… N. Korea did some saber rattling in response to the new sanctions the U.S. put on them, and Jamie Dimon called Bitcoin “a fraud”… Chuck is looking for the irony there coming from the head honcho of the largest holder of short paper trades in Gold and Silver… The currencies & metals fought back yesterday, and won back some of the lost ground they suffered in Monday’s Dollar Day…   

For What It’s Worth….  Since I spent so much time on the U.S. Debt today, this article stuck out like a sore thumb when I was looking through Ed Steer’s letter today. (www.edsteergoldandsilver.com) And it’s about the U.S. biting the hand that feeds them, and can be found here: https://www.rt.com/usa/403118-usa-china-sanctions-north-korea/     

Or, here’s your snippet: “The U.S. could impose economic sanctions on China if it does not implement the new sanctions regime against North Korea, the U.S. Treasury Secretary has warned. Steven Mnuchin said the restrictions could involve cutting off Beijing’s access to the U.S. financial system.

“North Korea economic warfare works,” Mnuchin said Tuesday at the Delivering Alpha Conference in New York City. “We sent a message that anybody who wanted to trade with North Korea – we would consider them not trading with us.”

The Treasury Secretary echoed the words of the U.S. envoy to the U.N., Nikki Haley, by calling the fresh round of sanctions against Pyongyang “historic.” Mnuchin added “if China doesn’t follow these sanctions, we will put additional sanctions on them and prevent them from accessing the U.S. and international dollar system.”

Washington has, so far, been reluctant to impose economic sanctions on China over concerns of possible retaliatory measures from Beijing and the potentially catastrophic consequences for the global economy.” 

Chuck again…. Wait! What? I’m shaking my head in disbelief here, to think that the U.S. that owes China so much money would be taking this stance… What do they expect China to do now? China does not appreciate being backed into a corner, folks…  In my humble country boy opinion, this invites China to start exchanging their dollar reserves to Gold… 

Currencies today 9/13/17… American Style: A$ .8040, kiwi .7295, C$ .8237, euro 1.1986, sterling 1.3278, Swiss $ .9595… European Style: rand 13.0610, krone 7.8329, SEK 7.9645, forint 256.53, zloty 3.5583, koruna 21.7714, RUB 57.42, yen 109.97, sing 1.3419, HKD 7.8110, INR 63.97, China 6.5353, peso 17.75, BRL 3.1103, Dollar Index 91.77, Oil $48.32, 10-year 2.16%, Silver $18.01, Platinum $986, Palladium $951.48, and Gold… $1,338.50 

That’s it for today… Well, were you ready for my dissertation on debt today? HA!  The letter will be going out a bit earlier than usual today, as I need to get ready to take Kathy and her sister to the airport early this morning. So, more “alone time” for Chuck this week…  My beloved Cardinals remain 2 games back this morning, as they won last night but so did the team in front of them. They’ve put themselves into a position of having to win every night…  The great James Brown takes us to the finish line today with his song: Get On Up…  Fellas can I take it to the bridge? I’m gonna take it the bridge now…  taste… the piano…  You’ve got to love James Brown’s stuff through the years!  And with that, I’ll send you on your way today. I hope you have a Wonderful Wednesday, and Be Good To Yourself!

The U.S. Current Debt Reaches $20 Trillion!

Chuck Butler’s: A Pfennig For Your Thoughts  

September 12, 2017

* Monday was a “dollar day”

* With the brunt of its move VS euros

* Credit card debit nears $1 Trillion! 

 

Good Day.. And a Tom Terrific Tuesday to you! Boy, am I ever “draggin’ the line” this morning, and I have no idea why! I slept fairly well last night, but this morning, is a different story… Oh well, chances are that this will be short-n-sweet this morning, given my state of mind.. But we’ll see, won’t we? HA! Mamma’s Pride greeted me this morning with their song: Blue Mist…  Mamma’s pride was a St. Louis group, so that song may not be well known nationally… But, it’s a good one!  

The dollar came roaring back yesterday, and brought the euro back to the level it was trading before the European Central Bank (ECB) meeting last Thursday. This was strictly a “buy the dollar” event yesterday, because things in the Eurozone are quiet. The Dollar Index, which as I’ve explained previously, is heavily weighted with euros, rose in the past 24 hours from 91.50 yesterday morning to 91.89 this morning…  That’s a significant move in the index number, folks, and in reality it’s all tied to the dollar/ euro cross.  

The proof is in the pudding folks, because as I look at the currencies this morning, the Aussie dollar (A$) is still holding to its gains made on Friday, and kiwi is cooking with gas this morning, reaching 73-cents! The Canadian dollar / loonie holds its gains at .8250, and the Petrol Currencies push the currency appreciation envelope across the dollar’s desk.   

There is some noise coming from the U.K. where the BREXIT talks continue, and apparently, things aren’t going very smoothly… The Bank of England meets this week too, but there’s nothing going on here. I surprised that sterling has held its gains, with the noise from the BREXIT talks, but, I guess until we find out the color of the talks, there’s no reason to panic… 

Euros and Gold took the brunt of the dollar’s rally yesterday…  From what I saw in the Gold trading yesterday, the shiny metal got off on the wrong foot yesterday, and “the boys in the band” decided that it was an excellent time to put the pedal to the metal and sell some Gold short using the paper trades… 279,000 contracts were traded yesterday in Gold, which isn’t as bad as 353,000, but darn near it! As they used to say on the farm, I’m so close to you, I could spit in your back yard!  All I can say is that this action by “the boys in the band” is giving everyone that has been procrastinating when it comes to buying Gold, an opportunity to buy at cheaper prices this morning…

 I read a piece from James Rickards yesterday, that confirmed my thoughts for the direction in the price of Gold… He sees a major repricing of Gold coming…  If you’re hesitant about that, I suggest you check it out, because it sure makes sense to me! In his book, A New Case For Gold, which is an update from the original by Ron Paul, he takes you through the steps… Check it out!     

OK… Yesterday, I mentioned that last Friday, the U.S. Consumer ran their personal debt up to $18 Billion in July, from $12 Billion in June. I have more details on that in the FWIW section today, so stayed tuned, for that!

But first, let’s take a trip to the U.S. Data Cupboard, which, oh, no! It’s empty again today! Well not really empty, there just isn’t any “real economic data” to talk about, and we won’t see any until Friday morning… But there’s two new pieces of data that will print today… These ought to be quite interesting, as the first one will be the Median Household Income for 2016… It’s expected to be $50,516… No growth there…  And the second piece of data is the total of uninsured citizens in 2016, which is expected to be 29 Million…   Shoot Rudy, it could end up being that many in Texas and Florida as they attempt to dry out from recent hurricanes.  

Well, I received a notice yesterday that the U.S. had crossed $20 Trillion in current Debt…   Now, there, doesn’t that look impressive? $20 Trillion…  NOT!  I don’t like to play politics here, so I’ll just say we can blame both parties for this…  But, I will point out that the last 8 years we saw more debt added than in any other 8 year period in our history, and the momentum for more debt is adding strength…  My good friend, and former colleague, Chris Gaffney, sent me a cartoon that about said it all, with the Capitol building being held up with playing cards, and a voice caption coming from the building saying, “It’s OK, we’ll just raise the debt ceiling”…  

I’m not the sharpest tool in the shed when it comes to technical stuff, and our tech team sent me the instructions for adding media to the Pfennig.. I read them and put them aside, for I knew I would never get “there”..  Otherwise I would have just posted the cartoon I just described, but NOOOOOOO! Chuck is too old school to figure out how to do that!  And there’s something to be said about being an old stick in the mud, old school person, isn’t there?  OK, be nice… HA!  And with that, I had better get this out the door and go back to bed!  

To recap… It was a “dollar day” yesterday, and most of the move against the currencies came VS the euro, for the other currencies held their gains from Friday, but not the euro, which saw the 1.20 handle lost and the single unit end up trading in Thursday’s clothes before the ECB meeting, that sent it soaring.  Gold got of on the wrong foot on Monday, and that gave “the boys in the band”  the idea that it was time to “pile on” , which they did, and Gold ended up down $19 on the day!  UGH!   

For What It’s Worth… Well I teased you a bit above with a small preview of what I would be featuring in the FWIW section today… This is an article that appeared on zerohedge.com  about the Consumer Debt in July that posted an $18 Billion figure, and can be found here: http://www.zerohedge.com/news/2017-09-11/2q-credit-card-debt-soars-back-2008-highs-delinquencies-start-tick-higher 

Or, here’s your snippet: “With credit card data in for Q2 2017, American households look to once again be on a collision course with the ever-elusive $1 trillion goal that narrowly escaped their clutches in 2008.  With nearly $940 billion in credit card debt outstanding, 2Q 2017 marked the second highest consumer revolving debt balance since the previous peak in 2008.  Per WalletHub:   

All of which adds up to nearly $8,000 of credit card debt per household, up 5% YoY versus flat-ish wages. Of course, the more surprising component of the 2Q 2017 credit card data is not that banks continue to trip over one another for the ‘opportunity’ to underwrite Americans’ purchases of fidget spinners, but rather that they continue to do so despite the rather ominous recent rise in charge-offs.”

Chuck again…  Well, apparently, rising credit card debt and delinquencies have something to do with the stagnant wages, rising health-care costs, and rising rents…   The link above takes you to the article which has some very revealing graphs that illustrate the problem with rising credit card debt… check it out!  

Currencies today 9/12/17… American Style: A$ .8025, kiwi .73, C$ .8248, euro 1.1948, sterling 1.3250, Swiss $.9574, … European Style: rand 12.9507, krone 7.86, SEK 7.9785, HUF 256.38, zloty 3.5568, koruna 21.8328, RUB 57.19, yen 109.73, sing 1.3467, HKD 7.8131, INR 64.02, China 6.5171, peso 17.74, BRL 3.0901, Dollar Index 91.89, Oil $47.81, 10yr 2.15%, Silver $17.86, Platinum $988.02, Palladium $940.14, and Gold… $1,330.30  

That’s it for today… You know there are days like this, when there’s just not that much going on, and so we take them for what they are and move along! I’m still all by myself here at home, and I can’t tell you what I did yesterday, because I don’t recall what I did! UGH! My beloved Cardinals get back on the ball diamond tonight, and start these last twenty games, 2 games out of the division lead. And they have 7 games left with the division leader… Could there be some magic in these last 20 games?  I guess we’ll see! The Counting Crows take us to the finish line today with their song: Mr. Jones..   I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

 

 

 

 

Bank Of Canada Hikes Rates!

Chuck Butler’s: A Pfennig For Your Thoughts

 September 11, 2017

* Draghi’s hints push euro higher…

* Fischer announces resignation from Fed

* 353,000 paper contracts in Gold! 

 

Good day… And a Marvelous Monday to you! Today marks the observance of our second day of infamy, when terrorists, oh I don’t want to talk about it because it gets me all riled up!  I don’t want to make such a Big deal out of the gorgeous weather we had here this past weekend, with Florida getting hammered by Hurricane Irma… I do believe, though I haven’t really heard for sure, but I do believe that the shift west of the hurricane, saved my little place from some major problems, and for that I am thankful. I don’t wish it on anyone else though, so it’s kind of not so good too… So, how many of you forgot about me not writing on days following an infusion last Friday?  I bet it was a lot of you! Blackfoot greets me this morning their song: Highway Song… It’s a 7:30 minute song, so I’ll well into the Pfennig when the song is over!

Speaking of getting hammered… That’s what happened last week to the dollar, and when I went to bed last night, the currencies were hanging on to their gains…And the overnight markets saw some slippage in the euro and some other currencies, but for the most part, the currencies held their ground gained. The metals on the other hand… Well, let’s just say that 353,000 Gold contracts, were enough to keep Gold and Silver from gaining any ground on Friday, and in the early morning trading today, the metals are taking on more water… 

The euro continued its rally that had begun on Wednesday overnight, and into Thursday morning, and ended the day on Thursday above 1.20! I’m going back to Thursday, because that’s when the European Central Bank (ECB) met, and propelled the euro higher. ECB President, Mario Draghi, left rates unchanged and stressed the need to keep them in check while they begin the unwind of their balance sheet. Yes, their balance sheet, is going to begin to be unwound probably by year-end. He said that the very early discussions have begun, and that more information would be available at the Rocktober meeting. Now, you may be scratching your head right now, and saying, “what in that statement would propel the euro higher?” Ahhh, grasshopper, you have to go back to my explanation on the unwinding of the U.S. Balance Sheet… For every $500 Billion of bonds unwound from the balance sheet, it equals 1/4% rate hike… So, now take that same explanation over to the Eurozone, and now you can see why the euro was propelled higher!

Now, speaking of the U.S. and the Fed’s next meeting that will occur this month on Sept. 19&20… The old two day meeting, when all the board games are removed from the shelves and put on the table for use! HA! For new readers, that’s just an old thought I had years ago, when someone asked me what the Fed did for two days? By Joe, you’ve sunk my battleship! HA! OK, back to reality now… I’ve said for several months now that the Fed will not hike rates in September… But, what they will do in the press conference following the meeting, is have a real adult discussion about the unwinding of their balance sheet… And that might give the dollar some wiggle room, but in reality, I doubt that the true unwinding of their balance sheet ever really gets going down the tracks.

You see, I told you last week that Vice Chairman Stanley Fischer, had resigned, and now President Trump has 4 Fed members that he needs to nominate. He has one in the process, but that’s a lot of Fed members that will change, and then in Feb 2018, Janet Yellen’s term expires, and I would be shocked if she was kept as Fed Chair… James Rickards thinks that the next Fed Chair will be Kevin Warsh, who was a Fed member a few years ago. And if that’s the direction of the Fed, then I doubt seriously, that the “great balance sheet unwind” gets going strong… So, there you have it all in a nutshell… And for free! HA!  

 The Bank of Canada (BOC) surprised the markets last week with a second rate hike this year! After hiking rates in July, the BOC came back this month with another 1/4% rate increase, to bring their internal rate to 1%! And the loonie soared on the hearing the news! The loonie did reach 82-cents briefly on Thursday, but settled back under the 82-cent figure to end the day… The move higher was swift, and strong, proving that fundamentals still do play some part in currency valuation! I’ve long said that I like the loonie, but was very concerned with the housing bubbles in Toronto and Vancouver, but with these two rate hikes, the BOC is addressing those housing bubbles, and that gives me a warm a fuzzy about the loonie, which by the way is at its highest level since 2015, and then it was going down! 

Look at that loonie go! The loonie got right back in the saddle of the rally horse overnight and is up to .8250 this morning! Boy there must have been some pent up frustrations let loose when the BOC hike rates on Thursday, last week! 

The tensions over N. Korea have calmed a bit since late last week, and that probably has a lot to do with the selling of Gold & Silver. But 353,000 contracts? One of these days, we’ll get to see the makeup of the contracts, i.e. how many where long buys, how many were short sales, etc. Since Gold was on a roll earlier last week, I would have to think that “the boys in the band” were ordering boat drinks, along with their large number of short Gold paper trades.

Darn it! I hate when this happens! I was rubbing my eye, and inadvertently popped my eye shell out, and now it sit here on my desk looking at me.. Kind of creepy, but also pretty cool when you think about the science and medicine that went into replacing my cancer stricken left eye 7 years ago!

OK… enough of that! the price of Oil slipped from nearly reaching $50 last week, to a $47 handle this morning. That means the rallies in the Petrol Currencies were put on hold, except the Canadian loonie, which is on a rocket headed for planet Mars! I can’t stop looking at the loonie and smiling!  Kiwi also had a great day on Friday, and in the overnight markets, pushing the currency appreciation envelope to the doorstep of 73-cents!  

The Aussie dollar is no slouch at the currency appreciation table, and has crossed 82-cents…  So, on Friday, when I woke up from my fogged brain nap, to find my head cleared, and ready to read stuff, I decided to start my DTL letter for this week, and in it I wanted to focus on the thought that a new weak dollar trend had begun… I asked my former colleague and good friend, Jen McClain, to look something up for me, and my suspicions were correct… Here’s the role call of the major currencies YTD VS the dollar…  

The Swedish krona, euro and Danish Krone (which is pegged to the euro) lead the pack with 14% gains, the loonie is next with an 11% gain, Norway’s krone and the A$ with 8% gains, and kiwi with a 5% gain…  The lead currency with gains VS the dollar is the Mexican peso, but in reality that all game in one fell swoop, after the peso dropped in value after the Trump election. And ever since that evening out of the peso, it’s been stuck around the 18 figure, or just below it.  So, if you were brave enough to buy pesos when they fell to 25, then you have a nice gain, otherwise, it’s not moved…   

Well, President Trump  signed into law a bill that extends the debt ceiling and that provides emergency funding for hurricane relief. The measure will give the U.S. government  enough money to remain in operation for three months. There! Now, doesn’t that give you a warm and fuzzy feeling know that we have enough money to last another 3 months? I don’t want to go down that road again where I get all upset with the lawmakers in this country for their inability to stop spending money that we don’t have, won’t have, and will never have! I was a little rough on the Beaver last week, and don’t want to get to that point again, at least not today!   

You put your left foot in, you put your left foot out, you shake it all about, and you do the hokey pokey and turn yourself around!  Well, that’s what Greek PM Tsipras must be thinking the IMF is doing these days, when it comes time to be serious about the Greek bailout… Tsipras was quoted as saying tha the International Monetary Fund needed to decide whether it will continue to participate in the country’s bailout. “What we cannot do is live with the IMF setting one foot in and leaving one foot out,” Tsipras said, commenting on the IMF’s stance that it will support the ongoing effort in principle.   I can’t believe that Tsipras hasn’t caught on to the IMF’s operendi modus, which is to come in, be a hero to the nation, and when it comes time for more heroism, the step back and make the nation beg, until the agree to certain measures that turn the nation into a, well, a Greece! 

So, I talked about Gold above and how there were 353,000 contracts traded last Friday… I read in Ed Steer’s letter (www.edsteergoldandsilver.com) on Saturday, that it appears that China will be importing 2,000 tonnes of Gold this year… that would equal a 4.5% increase from their imports a year ago…  That’s HUGE folks, and will keep “the boys in the band” very busy, trying to keep a lid on Gold, when the physical demand is so strong!  

The U.S. Data Cupboard today is empty… That’s right empty! But on Friday, the Gov’t tried to sneak a data print by us without anyone noticing, and if the fog hadn’t cleared in my head by noon, I don’t know if I would have caught it…  But the U.S. Consumer ran up their debt by $18 Billion in July…  That was up from $12 Billion in June…  I know, I know the propeller heads will tell me that there are more people in the U.S. so the debt is spread out more..   But did we really add that many people between June and July?

The U.S. Data Cupboard will have some minor data prints and then the stupid CPI print this week, and that will go on until Friday, when Retail Sales, and two of my faves, Industrial Production and Capacity Utilization print… So, the dollar is on its own for most of the week, and in recent trading that hasn’t been a good thing for the dollar…  I’m just saying… 

To recap…  It’s our 16th observance of our 2nd day of infamy, and Chuck still gets ill thinking about it… Hurricane Irma shifted West, but is still hammering Florida. The dollar also got hammered late last week, and while it attempts to fight back early this morning, the currencies for the most part are holding their gains… The Best performer since Thursday is the Canadian loonie, which is on a rocket ship headed for the planet Mars, and the Bank of Canada hiked rates last Thursday.  ECB President Draghi, left rates unchanged, but did talk balance sheet unwinding, and that pushed the euro past 1.20 where it sits this morning!  

For What It’s Worth…  Well, this was one of the featured articles on Ed Steer’s letter Saturday, and I thought it to be very FWIW worthy, ad it talks about an iconic company’s financial woes, and can be found here: http://www.zerohedge.com/news/2017-09-07/greatest-fiscal-crisis-our-citys-history-hartford-warns-it-will-be-broke-60-days

Or, here’s your snippet… Here’s the title of the article: “Greatest Fiscal Crisis In Our City’s History”: Hartford Warns It Will Be Broke In 60 Days”  OK, do I have your attention now?  Here’s the skinny: “

Just two months after Standard & Poor’s downgraded its general obligation debt to junk status, warning that the historic Connecticut capital could soon follow other once-proud cities like Detroit into bankruptcy, Hartford city officials confirmed as much when they warned on Thursday that the city could be forced into insolvency within two months if the state doesn’t provide emergency financial relief, the WSJ reports.

“City officials warned Gov. Dannel Malloy, a Democrat, and state lawmakers that Hartford, which has a deficit approaching $50 million, wouldn’t be able to pay all of its bills within 60 days. Hartford officials said it would file for bankruptcy at that point unless the state legislature passes a budget that gives the city more funding or otherwise provides it with more cash.
 
‘We face the greatest fiscal crisis in our city’s history,’ officials said in a letter signed by Mayor Luke Bronin, Treasurer Adam Cloud and Thomas Clarke II, president of the court of common council.”  

Chuck again….  I wonder what the Big Buck is thinking right now… 

Currencies today 9/11/17… American Style: A$ .8050, kiwi .7285, C$ .8250, euro 1.2012, sterling 1.3190, Swiss $ .9493, … European Style: rand 12.8825, krone 7.7829, SEK 7.9572, HUF 255.09, zloty 3.5356, koruna 21.6904, RUB 57.30, yen 108.50, sing 1.3428, HKD 7.8141, INR 63.87, China 6.4978, peso 17.68, BRL 3.1047, Dollar Index 91.50, Oil $47.80, 10-year 2.09%, Silver $17.93, Platinum $1,005.25, Palladium $952.50, and Gold… $1,342.50 

That’s it for today… Well, I was all alone all weekend, a probably will be again later in the week.. nobody likes me, everybody hates, me think I’ll eat some worms! HA! My beloved Cardinals are out to prove me wrong about not making the playoffs this year, but I’ll gladly say I was wrong, if that were to happen! What the heck happened to my beloved Mizzou Tigers on Saturday night? I read where the evacuation of Florida was the biggest evacuation ever done… And still I’m sure that a large majority of the people hunkered down to ride the hurricane out… Just be safe, please…  Jackson Browne takes us to the finish line today with his song: For a Dancer… the song has these two lines in it that are pretty powerful…  In the end there may be a reason you were alive, but you’ll never know… And… In the end there one dance you’ll do alone…  Please take a moment to think about, our folks in the military, the awfulness of 9/11, and the devastation left behind by Hurricanes Harvey and Irma, today…  And with that, I’ll sign off for today, and hope you have a Marvelous Monday… Be Good To Yourself! 

 

 

 

Let’s Play A Game Of Kick The Can… Down The Road That Is…

Chuck Butler’s: A Pfennig For Your Thoughts   

September 7, 2017    

* Let’s try this again in December?

* Russian inflation falls to record low!

* Currencies rebound in the overnight markets… 

 

Good day… And a Tub Thumpin’ Thursday to you… I’ve got a right out of the starters blocks appointment this morning with my oncologist, and then my usual every two weeks infusion. So, I’ve got to get this out the door this morning and be on my way… I personally like the “first to the gate” appointments with doctors, because… That way, you don’t show up and have to wait because the doctor is “backed up”… So, let’s play a game of kick the can, but add, down the road… That’s my focus today… that and Irma… I feel so helpless here… knowing that my little place is going to get hammered… Oh, well, I hope Bob Marley’s song that greets me today takes over my mind today… the song is: Three Little Birds… People don’t worry, about a thing, cause every little thing is gonna be alright…

I knew in my heart of hearts that when it came down to the cheese that binds, that the U.S. lawmakers would find a way to kick the can down the road, which is exactly what’s going on, or better yet, what’s been proposed by the President, and endorsed by the Democratic leaders… And that is to pass a three-month government spending bill and raise the debt ceiling for the same amount of time. That would put the next timetable of problems at December 15th… Oh great, right before Christmas, we’re going to be dealing with the debt ceiling again… Just raise it! Because that’s what you’re going to do in the end anyway! You bunch of irresponsible, only wanting to get reelected bunch of dolts! And I say that with the utmost respect for them as people, but not as lawmakers… 

The currencies and metals didn’t have such a good day as the previous day, yesterday, as I guess there was some profit taking in the gains the currencies and metals had made…  I looked up at one time during the day to see the Aussie dollar pushing toward 80-cents again, and thought, “well that’s all fine and dandy until the Reserve Bank of Australia (RBA) comes in and sees that!”  Well, they came in, and…. the A$ continued on through 80-cents! So, there! RBA!  It was just like the “old days” when the markets decided that they wanted to move an asset, they moved it, and didn’t worry about any Central Bank intervention! 

The euro, however, wasn’t so much loved yesterday as the A$… The single unit, without any meaningful data to move it, saw a lot of profit taking, and while it didn’t move down much from yesterday morning’s 1.1947 figure, it did move down…  

But that was yesterday… In the overnight markets the dollar has gotten taken to the woodshed, and the currencies and metals have regained the ground the lost during the day… I guess the foreign traders saw the deal to kick the can down the road, for what it was, and decided that the dollar wasn’t going to gain on that kind of news! 

For the most part, all of the currencies are participating…  those that weren’t invited to the rally party include: kiwi, francs and yen…  And once again we could play, “one of these currencies is not like the others” here, and come up with kiwi, who at least has a Central Bank that most likely will be hiking rates by year-end or 1st QTR of next year. The other two currencies’ Central Banks are so far from that point, they would need binoculars to see a rate hike in their future! 

Did you hear the news? Fed Vice Chairman, Stanley Fischer announced his retirement from the Fed effective October 13th, just a mere month away… Fischer was in the “inner-circle” that Janet Yellen formed when she became Fed Chair… Fischer, Dudley, Yellen and Brainard… This “inner circle” made all the decisions, and then let the other voting members in on the vote…

When I was an alderman in my little river town, we were never allowed to have separate meetings outside of the public… I’m just saying…  

Well, the retail Armageddon continues as the GAP announced yesterday that they will close 200 Gap and Banana Republic stores in the next 3 years, giving the excuse for the closing as they want to shift its focus to Old Navy and Athleta stores… yeah, and if you believe that one, I’ve got some wonderful ocean front land for sale in Tumbleweed, Az.! They’re closing them because they aren’t making any money! Let’s call a rooster a rooster and not a frying hen!  I’m sick and tired of these spin doctors, and not the ones on my iPod, giving us these excuses and stretching the truth, and so on…  When I was first diagnosed as a Stave IV metastatic renal cell carcinoma (kidney cancer that spreads) I was told straight to my face, eye to eye, by my very good friend, and primary doctor at the time, Jeff Atkins, that I had cancer.  Yes, the news was difficult to deal with, and probably just as difficult for him to deliver, but it’s the only way to deal with bad news/stuff like that! 

Moving on before I get on the soapbox and really start hammering away at something… 3 months ago, it appeared the CBR was ready to cut rates a few more times in 2017… But at their last meeting I found it to be a bit suspicious that they held rates steady Eddie… And now this… Russia reported yesterday that their inflation had fallen by 0.5%, % in August, which brought the annual rate to 3.3% a record low for the post Soviet Union era.. Now that’s good news for ruble investors, because, it means that inflation isn’t eating away at their investments.  I’ve said it before, and I’ll say it again, now… Elvira Nabiulina is the best Central Banker going right now… However, she doesn’t get such high marks in Russia from the media and economists that think that she could have been all over inflation in Russia sooner than she did…

I guess these guys making these claims don’t recall that the ruble was on the ropes and ready to say “no mas” to the markets, when Ms. Nabiulina stepped in to defend the currency with high rate hikes, which eventually helped strengthen the currency, and gave the economy the one-two punch against inflation that it needed, with the left hook being the stronger currency, and the right being the put away punch of the higher than the average bear interest rates. In my eye, Ms. Nabiulina hasn’t done any wrong… But then I’m just a country bumpkin out here in the Midwest… Nobody is a smart as those guys on Wall Street! HA! As if! I would like to think that I’ve forgotten more about things like margins, than they’ll ever know! And that’s that! 

The ruble didn’t really move on that news, which surprised me, given that the thought here is that inflation has fallen… One has to wonder if interest rates will retain their HUGE positive differentials to not only the dollar, but euros, yen and just about any other liquid trading currency that isn’t pronounced: real…  

Did you hear the news that was announced yesterday by the Gap? Well the retail Armageddon continues as the GAP announced yesterday that they will close 200 Gap and Banana Republic stores in the next 3 years, giving the excuse for the closing them as they want to shift its focus to Old Navy and Athleta stores… yeah, and if you believe that one, I’ve got some wonderful ocean front land for sale in Tumbleweed, Az.! They’re closing them because they aren’t making any money! Let’s call a rooster a rooster and not a frying hen! 

Gold struggled yesterday… and so did Silver, Platinum and Palladium… When all signs point to higher ground for all these previous metals… And in the overnight markets Gold has recovered the $5.90 that it lost yesterday to close at $1,333.50… There were another 280,000 contracts traded in Gold yesterday…  I read yesterday that the GLD ETF, added a HUGE amount of Gold to their supposed holdings… Yes, I said “supposed” because I’m not convinced the trust company the manages GLD actually has the physical Gold to match the positions…  I know, that would be illegal for them not to have the match…   And I’m not accusing them of doing something illegal, I’m just saying that I’m not convinced that it’s all there… 

The Peoples Bank of China (PBOC) got back to the appreciation table at last night’s fixing and had a a nice strong appreciation for the renminbi.  Boy, did China throw a Cat among the Pigeons this week when they announced that ICO’s (initial coin offerings) were illegal or what? It’s the first blow to the cryptocurrencies in a while…  I was reading the Daily Reckoning yesterday and James Rickards was explaining the difference between an atom bomb and a hydrogen bomb, that N. Korea tested over the Labor Day Weekend…  Here’s the piece of his explanation that scared the bejeebers out of me…  from the D.R (www.dailyreckoning.com)

“Finally, a hydrogen bomb gives North Korea the ability to unleash an electromagnetic pulse (EMP). In this scenario, the hydrogen bomb does not even strike the Earth; it is detonated near the edge of space. The resulting electromagnetic wave from the release of energy could knock out the entire U.S. power grid. Good luck with your bitcoins in that scenario.
Got gold?”    – James Rickards      

My article for the Dow Theory Letters subscribers last week, was on the cashless society, and I actually talked briefly about the cryptocurrencies, and mentioned how our power grid has been under attack for years, and then Rickards writes that about the EMP…  Tonight’s letter is the history of Chuck, how I arrived at my thought process on economics, and everything else…  I know, I know it costs money to read my letters there, but come on, a 3 month trial is only $68!  

Thanks to my longtime friends, and now publishers, Mary Anne and Pamela Aden, they are now sending the Pfennig to their Aden Forecast subscribers… I welcome you to the Pfennig… Please, remain readers and hear me now and listen to me later… I’m one to call a heart a heart, and a club a club, I don’t beat around the bush, and I certainly don’t hole the Fed Reserve members in high regard, going back to Big Al Greenspan! The Aden research Group is a great place for my Pfennig, and I hope you become loyal readers and send me notes pro or con regularly! 

The U.S. Data Cupboard yesterday had the Trade Deficit, which was $43 Billion, and not the $44 Billion I thought it would be… And the ISM Services Index, which rose in August, but did not meet the expectations for the rise in the index number…  Today’s Data Cupboard has the stupid Productivity for August… I’m no fan of this data, as you might be able to tell… HA!  

 To recap…  The currencies and metals saw a day of profit taking yesterday, but in the overnight markets they’ve gained back those profit taking losses…  Fed Vice Chairman, Fischer announced his retirement, GAP announces more store closings, and it appears the Gov’t will kick the can down the road further, and come back to decide what to do with the debt ceiling in December… UGH!  Russia’s inflation falls to a record low post the Soviet Union, and James Rickards joins our discussion this morning!  

Before I head to the Big Finish today I want to apologize for an omission I made yesterday.. Please forgive me for only telling you about one technical guru that I use, that’s out there yesterday… I was so happy that my friend and former colleague, Sean Hyman, had sent me a note, that I completely forgot to mention the horse we have in our own stable! His name is Omar Ayles, and he’s our Gold technician at Gold Charts r’ us… And he can be found at www.goldchartsrus.net and this is what he had to say yesterday… “ our strategy this week is to sit back and enjoy the ride. We’ve been waiting for this moment all year long” I would add to that, that we need to back up the truck while we still can… otherwise by the end of next week we could very well see Gold pushing toward $1,400! Of course that’s just my opinion and I could be wrong!

For What It’s Worth…  Well this is more Retail Armageddon for you this morning, this time it’s Toy’s R Us in the news, and the article can be found here: http://nordic.businessinsider.com/toys-r-us-considers-filing-for-bankruptcy-report-2017-9/   

Or, here’s your snippet:  “The retailer is considering bankruptcy as a part of its potential plan to restructure roughly $400 million in debt due in 2018, CNBC reported on Wednesday. Toys R Us has hired lawyers from the firm Kirkland & Ellis to help address the issue of restructuring the debt prior to the holiday season.

“As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,” a Toys R Us spokesperson said in a statement.

As CNBC notes, many companies hire law firms to help restructure debt, and doing so does not necessarily mean that Toys R Us plans to file for bankruptcy in the near future.

Toys R Us has struggled in recent years, as budget retailers like Walmart and e-commerce giants like Amazon have begun selling more toys at greater discounts. Toys R Us’ refusal to slash prices to competitors’ levels contributed to a disappointing 2016 holiday season – a crucial period for any toy seller.”     

Chuck again… Who’ll be next?  That’s the only question here, because there will be a “next”…    

Currencies Today 9/7/17… American Style: A$ .8016, kiwi .72, C$ .8195, euro 1.1983, sterling 1.3071, Swiss $ .9524, … European Style: rand 12.84, krone 7.7753, SEK 7.9586, HUF 255.10, zloty 3.5438, koruna 21.7918, RUB 57.41, yen 108.89, sing 1.3445, HKD 7.8177, INR 63.97, China 6.5283, peso 17.77, BRL 3.1106, Dollar Index 91.89, Oil $48.95, 10-year 2..09%, Silver $17.98, Platinum $1,005.84, Palladium $945.05, and Gold… $1,344.50

That’s it for today… Whew! right near the end of the letter today, my laptop froze up, and I thought I had lost everything I had written…  I would have just punted then, because I don’t have the time to rewrite the letter, but not to worry, it was all there! Whew! The NFL gets started tonight, do you have your fantasy team all loaded? My beloved Cardinals found a way to win again last night, and have moved into 2nd place in the division, 4 games behind the Cubs… We have 7 games left with the Cubs… I’m just saying…   Chicago takes us to the finish line today with their song: Colour My World…  Which was the slow dance song of the early 70’s! And part of the Ballad for a girl in Buchannon, that when I first heard it on my turntable, I was blown away! (circa 1971?) OK, time to go… I hope you have a Wonderful Wednesday, and Be Good To Yourself!

 

What’s Chuck Worried About Today?

Chuck Butler’s: A Pfennig For Your Thoughts  

September 6, 2017  

* Brainard sends the dollar reeling… 

* Irma to cause major problems for the U.S…

* Oil closes in on $50… once again! 

 

Good day… And a Wonderful Wednesday to you! WOW, what an absolutely beautiful day here yesterday! Chamber of Commerce weather, that as I always say, can’t stay like this, for if it did, it would cost too much to live here! I’m really concerned about the new hurricane that’s about to hit the U.S., Irma… As you know, I have a second home in S. Florida, and I’m not very concerned about that, but also the direct hit, the U.S. will take on the back of Harvey…  More on that in a minute, but first, Paul McCartney and Wings greet me this morning with their song: My Love…  I loved the music that Paul put together with Wings, back in the 70’s…  

The currencies and metals had a decent day yesterday, and really ratcheted up the pressure on the dollar in the overnight markets. The euro popped up over the 1.19 handle late yesterday, and has added to its gains in the overnight markets.  Most of the currencies around the world followed the euro’s lead and carved out gains of their own. Last night I was checking the currencies out, and noticed that the Aussie dollar (A$) was pushing the currency appreciation envelope to the 80-cent handle. But when I loaded the currencies up this morning, the A$ had slipped back to yesterday’s price just below .7980. UGH!  

I have to think that the Reserve Bank of Australia (RBA) was in the markets performing some intervention. The RBA has stated in so many words, in the past, that they are concerned with the A$’s strength, as their economy heals… So, that’s like a confession of intervention to me! And 80-cents apparently is a roadblock for the A$ right now… So, we’ll have to keep an eye on that. 

One of the things that probably set the currencies and metals on their way to gains late yesterday afternoon was a speech by Fed Member, Brainard…  I was minding my own business yesterday, when along came a Fed member and disrupted my day! But this time it was a good disruption, because, this Fed member, apparently has been reading the Pfennig, and finally came out and said that the Fed needed to stop the rate hikes… Gold sure noticed, and took off for higher ground… I want to thank the GATA folks for sending me the link to this story that can be found here: http://www.reuters.com/article/us-usa-fed-brainard/brainards-warning-signals-fed-cautious-on-inflation-idUSKCN1BG1O3?il=0

But for those of you who are strapped for time, and need a quickie here… Here’s what Fed Member, Lael Brainard had to say… “We should be cautious about tightening policy further until we are confident inflation is on track to achieve our target,” Boy, was I a happy camper when I heard that, because I’ve been saying that all along! And one thing that I think she was alluding to was the fact that the Fed had been hiking rates, and hoping that inflation would rise… Kind of like trying to cook ice on a grill! I’ve said this over and over again… When you want to lower inflation, you raise rates… And when you want inflation in your economy you lower rates, not raise them! I shake my head and wonder what the Hy Minkskis, and Frederich Von Mises, and Carl Mengers, and any other Areal economics schooled economist would be saying right now about what the Fed has been doing…   

I put my fave economist, Hy Minski, in with those famous Austrian Schooled economists, because, well, he’s my favorite!  The price of Oil moved past the $48 handle yesterday and this morning is knocking on the door of $49…  But I think the Petrol Currency traders are well aware of the fact that this could be a short-term rise in the price of Oil due to the disruptions caused by hurricane Harvey. 

Speaking of hurricanes, as I said at the top, I’m really concerned about this new one, Irma.  The devastation that Harvey caused two weeks ago, was massive, and Irma could very well match that or exceed it with a hit of the Florida Peninsula.  Can the U.S. economy withstand two direct hits like this if they were months apart? How about two weeks apart?  Oh, and FEMA is broke, folks…  Harvey is going to cost $120 Billion, and who knows the total that Irma will rack up?  And the loss of lives… I’m just really upset with Mother Nature, folks…  

And… the fact that this is what happens when a country doesn’t have reserves to tap into… The only reserves we have here in the U.S., monetary-wise that is, is the ability to add zeroes to our debt…  Later this week, we’ll see the color of the latest Consumer Credit (read debt) report, which will most likely confirm that the U.S. consumer is up to its eyeballs in debt…  I read last night that 8 of 10 middle class consumers are so much in debt that they don’t have any reserves set aside for emergencies, or even worse, don’t have any money saved for retirement…  That’s almost unbelievable isn’t it? That can’t be true, can it?  Ahem, Chuck, check it out, it’s true, now go onto whatever it is that you were going to talk about next and quit questioning these numbers!   

OK, I think you get the picture that the recession that I’ve been saying is coming or maybe already here, is going to get a HUGE push down the tracks to Recessionville with Irma coming so close to Harvey…  

The Chinese renminbi finally saw a fixing without an appreciation last night… I’m so reminded of the run up in the renminbi that happened from 2003 through 2008, and then again 2009-2014..  The Peoples Bank of China (PBOC) would throw a markdown in the mix every now and then just to keep the markets from thinking that the renminbi was a ONE-WAY St.  Last week, I told you that my spider sense was telling me that the Chinese had something up their sleeve, and unlike Bullwinkle, who always pulled something out of the wrong sleeve, the Chinese are using the renminbi as a tool of response to any tariffs or taxation the U.S. might put on their exports to the U.S.  By allowing the renminbi to appreciate by a wide margin, they could then do a psychological devaluation in response to any tariffs, and in the end the renminbi would be right back to where it was before…

Investment guru, economist and author, James Rickards believes the Chinese are gearing up for a HUGE devaluation of the renminbi… So, as always, I like it when someone else has come out on the limb with me! HA!  

Gold  found a way to add a few bucks yesterday at the end of the day that saw a HUGE number of contracts traded, 360,000! Any-old-way you look at it, Gold was as high at $1,349 on the day and ended the day at $1,339.40… The shiny metal has added to that small gain yesterday with a bump higher to $1,345.10 as I write this morning…  I look at Gold’s moves in $25 increments… So, $,1350 is the next level to take out…  My good friend and former colleague at the Sovereign Society, Sean Hyman, who I consider a technical guru, sent me a note yesterday that said that, well I’ll let him tell you himself! “GLD chart shows it broke a 6-year long downtrend line. Great for gold/metals but another bad sign for the ailing dollar.” – Sean Hyman     

Thank You Sean! Sean and I connected immediately back in the day, because he’s a down-to-earth buy that’s not full of himself, which is what I think I am..  You can connect with Sean and his charts and technical expertise by going here: https://www.themaven.net/seanhyman 

The U.S. Data Cupboard yesterday printed another disappointing economic data print, when July Factory Orders printed a negative -3.3%. That marks two consecutive months of negative figures for Factory Orders… But the ISM Manufacturing Index increased in July…  Hmmm, I have to think that there’s something going on in the ISM that I don’t know about… Anyway,  the U.S. Data Cupboard today has the July Trade Deficit, which should be around $44 Billion, and the Fed’s Beige Book this afternoon, which doesn’t amount to a hill of beans in my book! 

To recap, The dollar is on the ropes doing the rope-a-dope this morning, as the overnight markets really pushed against the green/peachback.  Fed Member Lael Brainard, was speaking “Chuck talk” in a speech yesterday, questioning the Fed’s rate hikes while inflation is still below their target, and that really got the currencies and metals rolling on the day and through the night.  Was there intervention goin on by the RBA last night? And the PBOC reminded traders that the renminbi is not a one-way street!  

For What It’s Worth…  Well, looky here… I have something from the Daily Reckoning this morning… The folks at the D.R. post my Pfennig each day, so I love it when I can return the love…  This is an article by Nomi Prins about the Fed, and can be found here: https://dailyreckoning.com/decade-central-bank-collusion/  

Or, here’s your snippet: “Since late 2007, the Federal Reserve has embarked on grand-scale collusion with other G-7 central banks to manufacture a massive amount of money. The scope and degree of this collusion are historically unprecedented and by admission of the perpetrators, unconventional in approach, and – depending on the speech – ineffective.

Central bank efforts to provide liquidity to the private banking system have been delivered amidst a plethora of grandiose phrases like “unlimited” and “by all means necessary.” Central bankers have played a game with no defined goalposts, no clock rundown, no max scores, and no true end in sight.

At the Fed’s instigation, central bankers built policy on the fly. Their science experiment morphed into something even Dr. Frankenstein couldn’t have imagined. Confidence in the Fed and the U.S. dollar (as well as in other major central banks globally) has dropped considerably, even as this exercise remains in motion, and even though central bankers have tacitly admitted that their money creation scheme was largely a bust, though not in any one official statement.

On July 31, 2017, Stanley Fischer, vice chairman of the Fed, delivered a speech in Rio de Janeiro, Brazil. There, he addressed the phenomenon of low interest rates worldwide.
Fischer admitted that “the effects of quantitative easing in the United States and abroad” are suppressing rates. He also said there was “a heightened demand for safe assets affecting yields on advanced-economy government securities.” (Actually, there’s been heightened demand for junky assets, as well, which has manifested in a bi-polarity of saver vs. speculator preference.) What Fischer meant was that investors are realizing that low rates since 2008 haven’t fueled real growth, just asset bubbles.”  

Chuck again…. OK, this article actually printed on August 29th, but just because something is a week old doesn’t mean it’s not worthy of a read!

Currencies today 9/6/17… American Style: A$ .7977, kiwi .7223, C$ .8075, euro 1.1947, sterling 1.3038, Swiss $.9534, … European Style: rand 12.9280, krone 7.7772, SEK 7.9484, HUF 256.44, zloty 3.5533, koruna 21.8568, RUB 57.64, yen 108.71, sing 1.3514, HKD 7.8250, INR 64.13, China 6.5401, peso 17.88, BRL 3.1287, Dollar Index 92.20, Oil $48.90, 10-year 2.08%, Silver $18.03, Platinum $1,010.82, Palladium $964.55, and Gold… $1,345.10 

That’s it for today… I totally forgot to mention the sad news I got Sunday night, when I heard that Walter Becker had died… Walter Becker along with Donald Fagan were Steely Dan…  Cardinals win another one last night out on the West Coast. Of course I can’t stay up to watch the games out there that start so late, but when I was up walking the floors at 1 o’clock in the morning I checked out the score! And yesterday I mentioned the great Al Stewart, only to find out later in the day that it was his birthday yesterday!  Stevie Wonder takes us to the finish line today with his song: My Cherie Amour…  What a pretty song!  And with that I’ll get back to tracking Irma…   I hope you have a Wonderful Wednesday, and Be Good To Yourself!