The Fed Heads Find A New Word!

May 3, 2018  

* Trade War talks heat up again… 

* Gold finds its way through the gauntlet!

  

Good Day… And a Tub Thumpin’ Thursday to you! I woke up this morning, and thought it was Friday, so…  I went back to sleep! UGH! then I woke up in a panic that I had overslept, as it was actually Thursday! Double UGH! I got to see a very well played game yesterday, with the Cardinals pitcher, Carlos Martinez, impersonating Bob Gibson, as he threw 7 shoutout innings and hit a home run! It was sunny, warm, and under a blue umbrella sky, I sat there watching day baseball, with friends… As the old commercial used to say: It doesn’t get any better than that! David Bowie greets me this morning with his song: Waiting For The Man… I watched a documentary the other day about David Bowie… He was quite the showman, so creative, and a very good songwriter…  

The Dollar continues to have its way with the currencies, the euro lost the 1.20 figure yesterday, the Aussie dollar (A$) gained back about 1/4-cent and the rest were either traded in very tight ranges, or slipped even more. There does seem to be a tourniquet wrapped around the currencies at this moment, as Trade Talks come back into focus…

The fears of an unscheduled rate hike at yesterday’s FOMC meeting,  were put to rest when the Fed decided to keep rates unchanged, but set the table for a rate hike in June…  I’m really surprised by the fact that the Fed is able to keep hiking rates, i thought by now, this whole rate hike cycle would have run its course, and the Fed would be contemplating a reversal  of previous rate hikes…

The U.S. economy continues to show signs of wanting to circle the bowl, but then somehow doesn’t find the bowl. I’m really shocked that this charade continues… But then, when have I not been so ahead of the curve on things? HA!  Seriously though, this doesn’t bode well for the currencies and metals… But I’m not changing my view, just the timing of it… I’m still convinced that the U.S. economy has run its course for this growth cycle, as muted as the growth was, it has run its course, and if the Fed Heads can’t see that, with their 1,000’s of economists, and they want to keep hiking rates, then those are just rate hikes that will have to be reversed when Humpty Dumpty finally falls off the wall…

I do have to point out something that was said by Fed Chairman Powell yesterday…  The Fed statement added the word “symmetric” as a qualifier to its inflation target. Fed officials have said this means inflation can move above or below target from time to time. Are you thinking what I’m thinking, if so, I feel sorry for you, but what I’m thinking is that Jerome Powell was reading his Reader’s Digest and the word of the month was Symmetric, and he thought, “how can I incorporate that word into my Fed Statement”?   HAHAHAHAHA!  

Gold found its way through the gauntlet of more than 350,000 contracts yesterday, to gain $1.00…  That’s right I said one dollar…  Everyday, Ed Steer prints a graph of the dollar movements from the previous days, and every day I look at and I can pinpoint when the short dollar paper trades hit the market by bundles, for the drop is so pronounced and at one time. The price manipulators are so brazen now that they don’t need to spread out their short paper trades, just throw them all at the market at the same time and watch the drop…   

And the dollar trading in the Dollar Index pretty much goes the same way, with the dollar buying happening in bunches, as the Plunge Protection Team (PPT) continues to hold the key to dollar strength or weakness… 

Now, i f the currencies were seeing their respective economies growing like weeds, and their respective Central Banks were hike rates, like the Fed, then they could muster enough strength that they could drive the PPT out of the markets, and it would be all about fundamentals again, and the respective currencies would be getting bought on those fundamentals… 

But, the currencies’s economies don’t have their back…  It looked like the Eurozone economy was coming out of the dark ages, but the European Central Bank (ECB) continues to drag out the stimulus and negative interest rates, and until that changes, the euro will struggle, especially with the dollar getting bought. 

Well, this certainly is the “volatility” within a trend that I’ve talked about, but in reality it was “engineered volatility” or “managed volatility” courtesy of the PPT, so it’s not an organic bout of volatility, which means that I’m having a problem figuring out when this volatility within the weak dollar trend is going to end. But it will… eventually, and when it does, we need to be ready to strike!   

Well, I mentioned above that the Fed’s FOMC Meeting ended with no rate hike, but some table setting for a June hike. In their statement the Fed Heads acknowledged that inflation was rising, and that it had hit their target rate of 2%. The Fed Heads also made a point of telling the markets that they will not panic should inflation continue to rise. Wait, What? If inflation was growing like a week, wouldn’t that be the time TO PANIC?

I shake my head in disbelief of the things that these people that should know better, say…  So, now we have more than a month of reading and listening to pundits talk about the rate hike in June… Blah, blah, blah… It’s going to be so much fun… NOT!    

The U.S. Data Cupboard yesterday had the ADP Employment Report for April, and it showed that 204,000 jobs were added in April, which is much better than the paltry 103,000 in March, but let me remind you that last month’s ADP report showed 241,000 jobs created in February, and the BLS said only 103,000, so unless this data begins to align with the BLS Jobs Jamboree, then I’m not going to pay attention to it any longer! 

The Data Cupboard today has some goodies for us… First up is a real economic piece of data, Factory Orders for March, expect this data to be basically unchanged and remain at 1.2%… Then we’ll see the data print that has been lagging, Productivity for the first QTR…  Productivity is supposed to measure the growth of labor efficiency in producing the economy’s goods and services. But in layman’s terms… it’s how much work you’ll do for the same wage…  The jobs increases have brought down the productivity levels here in the U.S.  

To recap…  The dollar continues to push the currencies around, but Gold was able to eke out a $1 gain (Big Deal, rigtht?)  The Trade War talks are heating up again, and this could lead the currencies right back to pushing the dollar around. The Fed kept rates unchanged but set the table for a June rate hike… Chuck does a mea culpa regarding this thought that the Fed would be contemplating reversing the rate hikes by now…  

For What it’s Worth….   I mentioned today that the Trade War talks were heating up, and it appears that China is the one turning up the heat. This article talks about how China is reacting to the tariffs, and it can be found here: https://www.zerohedge.com/news/2018-05-02/china-warns-trump-we-will-outlast-you-us-significantly-escalates-trade-war   

Or, here’s your snippet: “Beijing sent the first messaging salvo ahead of the Steven Mnuchin-led delegation to China (which will engage in trade talks over May 3-4) overnight when the PBOC fixed the yuan sharply lower than many expected. The signal was clear: push us hard enough, and we may just launch another devaluation. Or worse.

A little while later, Beijing did its best attempt at managing expectations, when it said that it’s “unrealistic” to expect to solve all issues between the U.S. and China at a single meeting, given the economic sizes of the two countries and their complex economic and trade relationship, foreign ministry spokeswoman Hua Chunying says at daily briefing.

While Hua tried his best to pay the diplomatic “good cop”, saying it was in the mutual interest of both countries to solve trade issues through consultation, just a few hours later, China’s foreign minister Wang Yi was the bad cop, who warned that whereas China would welcome a successful outcome from upcoming trade talks with the United States, it is “fully prepared for all outcomes and will not negotiate on core interests.”

Then the “worst cop” emerged in the form of yet another, unnamed official who according to Reuters said that talks must be held as equals and be mutually beneficial, echoing E.U. president Jean-Claude Juncker, saying that Beijing would not yield to any trade threats from Washington or accept any preconditions for talks.

He then uttered the most explicit warning yet: “In the event of a trade war, we have a much greater ability to endure (the consequences) than the U.S.,” the official said.”   

Chuck Again…  I want to thank Ed Steer for pointing me to this article. Ed does such a great job of putting together news articles that affect the metals…  I think that the last time I mentioned Ed Steer, and put his website in the Pfennig, I gave you the wrong web address, so in my attempt to rectify that here it is again: www.edsteergoldsilver.com/   

Currencies today 5/3/18… American Style: A$ .7530, kiwi .7033, C$ .7790, euro 1.2975, sterling 1.3585, Swiss  $ .9986, … European Style: rand 12.6132, krone 8.0543, SEK 8.8548, forint 262.30, zloty 3.5614, koruna 21.3524, RUB 63.69, yen 109.43, sing 1.3318, HKD 7.8495, INR 66.60, China 6.3616, peso 19, BRL 3.5274, Dollar Index 92.53, Oil $67.83, 10-yr 2.95%, Silver $16.50, Platinum $902.21, Palladium $973.10, and Gold… $1,312.50  

That’s it for today and this week… Saturday is Cinco de Mayo, and Kentucky Derby Day!  For years I’ve told readers the story of me in Cancun many years ago, and watching a street performer play his guitar, and me grabbing the microphone an begin singing along with his guitar playing, and Cinco de Mayo always reminded me of that time… Once a performer, always a performer…  That was a great day yesterday at the ballpark. And now the Cubbies come to town… And Saturday is also the wedding day for our good friend’s daughter.. So, the neighbors will all be there, and a good time will be had by all, I do believe! So, I’ll be busy this weekend… Hope you are too!  The Hooters take us to the finish line today with their song: All You Zombies…  one of the better 80’s music songs…   I hope you can make this a Tub Thumpin’ Thursday, and remember to BE Good To Yourself!  

Chuck Butler

The Fed’s Inflation Target Has Finally Been Met!

May 2, 2018

* Trump’s tariffs are getting watered down… 

* The Fed’s two-day meeting ends today…. 

  Good Day… And a Wonderful Wednesday to you, along with a putting out the welcome mat to May… Sorry I wasn’t here yesterday, but it was a travel day, which brought me back home, and now here I am at my writing desk! I got back and the temps here are warm! YAHOO! Much better than my earlier return and it was nothing but chills and rain. A nice walk-off win for the Cardinals last night in the 9th inning. The Cardinals had been stymied until the 9th, so better late than never, eh?  The Beatles greet me this morning with their song: Get Back…

Well, we’re still dealing with dollar buying… Yesterday, Gold got whacked again, as the “boys in the band” were busy. The euro is hanging onto 1.20 by the skin of its teeth this morning, and the “old reliable” Chinese renminbi has seen a week of losses.  The U.S. President, Trump, decided to soften up his tariffs for the U.S.’s allies, proving once again that it’s nice to have friends in high places! 

It does appear to me that all the Trade War talk was built to a crescendo, only to see them dissipate…  It was more talk than walk, as my dad used to say… And as far as I’m concerned, that’s a good thing for the U.S. economy, and bad thing for the currencies, as the dollar, which got sold during the Trade War Talks, is getting bought on the war drums beating fading away…

I told you last week that the short squeeze that was happening, and breathing new life into the dollar, could go on for some time, and it appears to be doing just that. You know… All the reasons the dollar was sold prior to the short squeeze are all still in place, which leads me to believe that once we get through all this short dollar buying, that new shorts will be placed and the dollar will once again be on the chopping blocks…    

I arrived home last night, and quickly set up my laptop to view what happened during the day.

It was, of course, May Day, which is also workers day… Hmmm… I talked to a friend the other day about when we were youngsters and the nightly news on May 1st, would show us the military parade in Russia… Remember that? Well we don’t have that going any longer, but… what we have these days is the workers in Paris, France, setting the town on fire… That kind of stuff always boggles my mind… You’re upset with something, so go burn down the city… Makes so much sense to me… NOT! The city is flooding, let’s go loot the local TV store! NOT! And so on… I just don’t get that mentality, so I guess, I have officially crossed over to “Old crabby guy, that yells at his kids to “get off my lawn””…     

I mentioned the Aussie Bank scandal on Monday, but totally forgot to explain what the scandal was all about. Thank Goodness for Bloomberg who gave a quick snippet on the subject… “he most startling revelations relate to financial planning and wealth management. Banks have provided poor and inappropriate investment advice, charged fees without providing any additional services, siphoned fees from the estates of deceased clients, impersonated clients or forged their signatures on documents, and generally failed to act on legitimate client grievances.”

THE WRITER WROTE ABOUT HOW THIS TYPE OF SCANDALOUS STUFF IS GOING ON ALL OVER THE WORLD RIGHT NOW, AND THAT INCLUDES THE U.S…..     

Scary stuff, eh? And even more reason for the “boys in the band” to be busy, propping up the dollar VS Gold, because when I read stuff like that, I immediately think, “Do I have enough Gold?”  Oh, well, Gold lost $11 yesterday, with 268,000 contracts traded… Crazy, eh?    

Well… I would love to say that this story made my day yesterday… But then I would probably receive a letter of cease and desist! HAHAHAHA.. But, I’m Chuck Butler, and I don’t care, because the more that Lola gets noticed that their practices earn the name that Matt Taibbi of Rolling Stone magazine bestowed upon them several years ago… the Great Vampire Squid… The more I feel better… But, as usual NO ONE WENT to JAIL! So with no further ado, here’s what I’m talking about…

Goldman Sachs Group Inc. has agreed to pay about $110 million to resolve allegations that its foreign exchange traders improperly shared information about client orders on an electronic chat room, putting clients at a disadvantage.

The firm will pay roughly $55 million each to New York’s Department of Financial Services and the Federal Reserve Board. As part of its settlement, Goldman Sachs Bank USA, the state-chartered unit overseen by the New York agency, will provide its regulators with a plan to improve its internal controls and compliance program.  

But again… nobody went to jail! And that’s all I’m going to say about that! 

The U.S. Data Cupboard today will have the ADP Employment report, which is the appetizer for Friday’s Jobs Jamboree…  On Monday, we saw Personal Income and Spending, and the PCE report for March… Personal Income is on the rise in the U.S. which is a good thing as long it’s a steady and even rise. And don’t get all caught up in the comparisons to last year’s data, because that data was so darn weak, that it makes this year’s print look even stronger than it is.  

But Personal Spending continues to lag Income…  I would have to say that given the Vehicle Sales of more than 17 million, that consumers must be concentrating on autos…     The ISM also printed earlier this week, and it slipped from 59 to 57… A sign of things to come? That’s difficult to say for sure until we see next month’s print…    And the Fed’s preferred inflation calculator the Personal Consumption Expenditures report showed that inflation has finally reached the Fed’s 2.0% target, on a year on year basis…  Once again the data a year ago was so weak that the increases to last year are a little skewered, but nonetheless, the target has been reached… What will the Fed Heads do now?

I saw this article on the Bloomberg, and them MarketWatch also sent it to me and it’s about a Billionaire investor that has over half of his total investments in Gold…  I bet he yells at the walls, and sets off a string of curse words directed at the price action in Gold, every time the “boys in the band” begin playing….   But that’s quite an investment in Gold, eh? 

Now, I would never suggest to any investor that they have over half of their net worth in any particular investment asset class.  Diversification is the key, and it should be conservative and spread across several asset classes that have little to no correlation with other investments in your portfolio.

That would include currencies and metals… Longtime readers have heard this preaching by me so many times, they probably grow tired of hearing it! But this won’t be the last time I get up on my soap box and preach about diversification!    

Oh, and I almost forgot!  Today the Fed will tell us what their two days of playing board games got them thinking about…  the two-day FOMC meeting will end this afternoon, and the wisdom for all (NOT!) will be passed on to the markets… Recall that on Monday this week, I told you that there were some rumors going around that someone’s underground, no wait! the rumor was all about the Fed hiking rates at this meeting… I don’t see that happening, but then again nothing surprises me coming from the Fed any longer… 

To recap…  The dollar buying continues, and Gold has gotten caught up in the dollar buying. The euro his hanging onto 1.20 by the skin of its teeth, and Gold lost $11 yesterday. Trump’s tariffs are getting watered down, and the Trade War drum beating has faded The Data Cupboard has been good and bad with PCE reaching 2.0%, the ISM sliding backwards, and the Personal Income and Spending reports mixed…   

For What It’s Worth… This article is from zerohedge.com and is about how the U.S. booked debt in the first quarter that we haven’t seen the likes of since the Financial meltdown..  And it can be found here: https://www.zerohedge.com/news/2018-04-30/us-just-borrowed-488-billion-one-quarter-most-financial-crisis  

Or, here’s your snippet: “For months, analysts have been warning that the U.S. is set to borrow an unprecedented — for a non-recessionary period — amount of money…and on Monday afternoon this was confirmed, when the U.S. Treasury announced that in the quarter ended March 31 (the fiscal year’s second quarter), the U.S. borrowed $47BN more than its had anticipated three months ago, or $488BN to be precise.

This was the single biggest quarterly amount of debt sold by the U.S. Treasury since the record $569BN in debt borrowed in Q4 2008 when the financial system nearly collapsed, and Treasury had no choice but to raise a gargantuan amount of money during the biggest financial crisis in modern U.S. history.

What is scary is how fast the U.S. is raking up the debt: as a reminder, just a few weeks ago we reported that in the first six months of the fiscal year, the U.S. budget deficit rose to $600 billion as spending increased at three times the pace of revenue growth in the October-to-March period. At that run-rate, the U.S. deficit will soar to $1.2 trillion for fiscal 2018, far above the $804BN projected budget gap and resulting in an even greater amount of debt borrowed.”   

Chuck Again… Can you believe this? But not to worry folks, the Tax bill is going to cure all that ails the U.S. according to the Treasury Dept…  Somebody please check the foreheads of the Treasury Dept folks, as they must be running a temperature!    

Currencies today 5/2/18… American Style: A$ .7511, kiwi .7022, C$ .78, euro 1.2003, sterling 1.3657, Swiss $.9963, … European Style: rand 12.62, krone 8.0728, SEK 8.8590, forint 261.54, zloty 3.5518, koruna 21.3235, RUB 63.25, yen 108.83, sing 1.3347, HKD 7.8495, INR 66.64, China 6.3392, peso 18.98, BRL 3.5042, Dollar Index 92.35, Oil $67.51, 10-year 2.99%, Silver $16.39, Platinum $898.95, Palladium $960.40, and Gold… $1,311.70  

That’s it for today… Well, there’s a day game at Busch Stadium today, so that means I’m going to the game! Good Friend, Duane took care of getting the tickets, and it’s supposed to be 86 degrees today, perfect for a baseball game! The flights home yesterday were non-events, no hassles, no problems, and Alex picked us up at the airport right on time… Which meant I needed to buy Alex’s dinner! But we had a good time together, and the brisket sandwiches we had were yummy!  And with that, The Blues Image takes us to the finish line today with their song: Ride Captain Ride… I hope you have a Wonderful Wednesday and remember to Be Good To Yourself!  

Chuck Butler

What Lola Wants, Lola Gets…

April 30, 2018

* N & S Korea agree to denuclearize!

* The dollar continues to be bought… 

   Good Day…  And  a Marvelous Monday to you. Not so much for me this morning, as I’m having some stomach problems to start the day. Hopefully they will dissipate and I can join you in this Marvelous Monday! What a bad trip to Pittsburgh for my beloved Cardinals last weekend UGH! I  hear that my oldest son, Andrew, has some handicapped tickets to the game Friday night for me. YAHOO! You know me, I prefer day games, but an invitation to a game can’t be dissed! There’s a lot of stuff going on, I doubt I can get to all of it… Oh! And no Pfennig tomorrow, it’s a travel day for me…  the Allman Brothers greet me this morning with their song: Blue Sky…    

Well, here we go! We’ve got a Fed monetary meeting this week, the Jobs Jamboree on Friday for April, we had North & South Korean leaders shaking hands this past weekend, we’re still waiting for a definitive decision from the U.S. President on the Iran nuclear deal, and there’s some money missing in Philadelphia. These and maybe some more thoughts from me today, and maybe I won’t even be able to get to these!  So, let’s get started and when my battery runs out, well, we’ll cross that bridge when if we get there!  

First, the Fed meeting On Wednesday, i read some research this past weekend that talked about how the Fed just might hike rates at this meeting, given the sudden spike in PCE (Personal Consumption Expenditures) The Fed’s preferred inflation calculator.  There’s been little talk from the Fed Head speakers about a rate hike in May, instead most talk about a rate hike in June. So, moving like this unexpectedly, could prove to be damaging for the psyche of the markets, in my humble opinion that is…   I see a rate hike in two days to be the Fed signaling that they are behind the 8-ball with regards to rising inflation…  Now, that’s a calming thought isn’t it?  

  The currencies continue to get sold VS the dollar this morning. This really burns me up… A couple of weeks ago, the dollar was ready to go on a very long trip on the Slippery Slope, but then the “gentle hands” stopped the dollar selling, a short squeeze started, and now after all that, the panic sets in among investors in the currencies that this dollar buying isn’t going to end…  Whoa, there partner! I’ve always told you that a trend is not a ONE-WAY Street, that there can be volatility within the trend haven’t I?  Why, yes, Chuck, you have probably said that 100 times through the years… 

Of course this doesn’t make the dollar buying go away… And now Lola, aka Goldman Sachs is saying the Aussie dollar is going to fall to 72-cents! You see there’s a banking scandal in Australia that’s being played out on TV in OZ…  It’s a nasty banking scandal, that might stretch its tentacles to other countries before it’s all said and done…  I’m watching it unfold, and thinking… I would bet the same thing is going on all over the world, including the U.S.!   Well, we all know that what Lola wants, Lola gets, so hold onto your hats,  and get ready for a storm in the Aussie dollar (A$)… 

The dollar buying is so strong right now that even the second consecutive  month of the price of Oil rising isn’t enough to offset the dollar strength, and the petrol currencies are thrown in with the rest of the currencies seeing weakness. The Norwegian krone, which when the euro was rising along with the price of Oil, was looking very good, but now that the euro has hit a speed bump, the krone has seen enough selling to bring it back to an 8 handle… UGH!  

Speaking of the price of Oil…  It’s not as perky in price as it was last week, but it still has booked another monthly gain, marking two consecutive months of gains for the bubbling crude, black Gold, Texas Tea… A lot of the thing that’s helping the price of Oil to get bid upward, is this Iran Nuclear Deal…  Apparently, May 12, is the cutoff, and there are Oil buyers that won’t book deals after that day, not knowing what the end process is going to be for the U.S. in the deal.   

Did you see the leaders of N. and S. Korea shaking hands and acting like longtime buddies? Well, they supposedly, signed a deal to denuclearize the peninsula of Korea, which is a good thing in my book, but can we really trust the leader from N. Korea? I tend to doubt that we can… But I guess this is a wait-n-see, eh?  

Gold continues to get hammered almost daily these days. The shiny metal did gain $6.30 on Friday, as the price manipulators must have taken the day off, as only 232,000 contracts traded. Unfortunately, Gold is back on the chopping blocks in the early morning trading today, and is down $8…

I had a dear reader send me a note last week, with his opinion that the main culprits in the Gold price suppression game is China and Russia, for they continue to back up the truck and buy large amounts of physical Gold each month, and they love it that the price of Gold remains stuck in the mud and unable to trade past $1,350…    I told him that while I’ve thought of this before scenario before, I just can’t get my arms around it, for there has been no “claims to this scenario by anyone other bloggers” And I’ve got the proof of U.S. involvement from the WikiLeaks memos I’ve printed before and given readers the links to.     

The U.S. Data Cupboard is chock-full-o-data this week, culminating in a Jobs Jamboree on Friday. Tomorrow we’ll see two of my fave prints, when Personal Income and Spending for March prints.  Last Friday, the first reading of GDP for the 1st QTR printed, and I was laughing so violently when I saw the headlines that I about fell out of my chair…  Apparently, somewhere along the way, we are being led to believe that 2.3% annual growth is to be considered as “strong”, for that’s what the report called this print!  You’ve got to be kidding me, I said out loud! And let’s not forget that the first print of GDP usually gets brought down with the revisions that will come in the coming weeks.  

It’s the trophy for everyone scenario, the dumbing of America, the let’s settle, that’s taking hold of this country, folks… 2.3% is strong?  I have to tell you that it isn’t, and shouldn’t ever be considered strong again! But it will, because we’ve grown to be accepting to this babble… I shake my head in disgust…   

I received a treat on Friday last week, from my good friend, and longtime boss, Frank Trotter… Back in the 90’s websites were just beginning to become something that every company needed to have, and the old Mark Twain Bank was no different. So, Frank built the website for the bank, and decided that the website needed content that changed daily to keep brining people back to the site. And that’s wen he decided that my Daily Pfennig letter would be perfect!  Before that, the Pfennig was being sent to readers via fax machines… Pretty archaic, eh?   Any way, Frank sent me a link to the old Mark Twain Bank archives, and in it were  a month of Daily Pfennigs!  You should see them! They were short and to the point, and included a picture of me, which shows me with hair! HAHAHAHA! 

I highlight one of those Pfennigs from May 1997, in this week’s Dow Theory Letters that will print this coming Thursday.  That picture of me from 1997 is worth the price of admission folks! And I hear that the Aden Research people are still offering an introductory price of $69 for 3 months, hint, hint… check it out at www.dowtheoryletters.com  

That Frank was always full of surprises!  When I talked to Frank a couple of weeks ago, he sure looked relaxed and enjoying his retirement!  Good for him!   

To recap…  The dollar is still being bought as we start the week, and the currencies are getting sold along with Gold. The price of Oil will book a 2nd consecutive month of gains this month, but even this rise in the price of Oil can’t help the Petrol Currencies. Lola says that the A$ is headed south, and what Lola wants, Lola gets, right? N and S Korea agree to end nuclear development, who here thinks that the N. Korea leader had his fingers crossed behind his back?   

For What it’s Worth… I talked last week about the scenario where sanctions to Russian aluminum could be removed, and the folks at zerohedge.com ran this story last week, thus removing the barrier that was holding up the removal of sanctions on Russian aluminum…  And it can be found here: https://www.zerohedge.com/news/2018-04-27/deripaska-agrees-resign-rusal-will-sell-controlling-stake   

Or, here’s your snippet: “Just 24 hours ago, Bloomberg reported that “Oleg Deripaska Plans on Keeping Control of Rusal”, a move which suggested that the Russian oligarch would remain defiant in face of U.S. demands that he sell his stake and/or step down as head of United Co. Rusal – the world’s biggest aluminum producer outside of China – even as the Russian aluminum giant battles for survival having lost capital markets access following the sanctions.

Or maybe not: overnight we got a first indication that Bloomberg’s report was incorrect when Rusal published a Facebook post denying the Bloomberg claim that Deripaska was intent on keeping control over Rusal, and threatened to take “legal action”

And then, moments ago, we got definitive confirmation when EN+, which holds a controlling stake in Rusia, announced that Deripaska had in fact agreed “in principle” to cut his stake in EN+ to below 50%, and that the sanctioned Russian billionaire had agreed with the proposal that he will resign from board.

As EN+ also adds, the company is seeking an urgent response to the formal request submitted to OFAC, and notes that without an extension of “authorization period for General License No. 13″, the ability of the company to maintain GDR listing on LSE will be materially impacted.”

Chuck Again… Maybe this news will help the ruble to wrap a tourniquet around the currency to stop the bleeding?    

Currencies today 4/30/18… American Style: A$ .7540, kiwi .7040, C$ .7768, euro 1.2078, sterling 1.3724, Swiss $.9912, European Style: rand 12.4426, krone 8.00, SEK 8.6962, forint 259.45, zloty 3.4972, koruna 21.1432, RUB 62.15, yen 109.37, sing 1.3258, HKD 7.8482, INR 66.44, China 6.3333, peso 18.73, BRL 3.4567, Dollar Index 91.84, Oil $67.39, 10-year 2.96%, Silver $16.39, Platinum $905.48, Palladium $969.97, and Gold… $1,314.70  

That’s it for today, and I’ll talk to you again on Wednesday…  We didn’t get everything we came down here to do accomplished but it wasn’t any of our lack of trying… Red tape, and dolts is all I’ll say about that… I might be spending the month of June down here, we’ll have to wait-n-see how everything progresses at this point. Where have the bats gone? Someone please find them and return them to the Cardinals!   The White Sox come to town for a quick two-game series this week, and interleague play begins for the Cardinals. Bad Company takes us to the finish line today with their song: Can’t Get Enough…  I hope you have a Marvelous Monday, and please Be Good To Yourself…

Chuck Butler

The U.S. And Iran To Butt Heads?

April 26, 2018    

* Riksbank leaves rates unchanged, and ECB meets…

* Oil rises on Iran deal talk… 

 

Good Day… And a Tub Thumpin’ Thursday to you! I bagged the alarm again this morning, UHG! Good thing I’m no longer working for a wage, eh?  Of course back when I was working for a wage I would go to bed at night and sleep through the night, so getting up before the rooster crows wasn’t a BIG Deal. My beloved Cardinals’ bats came alive last night. This team just can’t find any consistency in the early part of the season so far…  I hope they figure it out soon, otherwise it’ll be a long summer…  Lynyrd Sknynyrd  greets me this morning with their song; The Ballad of Curtis Lowe…    

Well, the short squeeze, that has turned the dollar into a world beater once again continued yesterday and in the overnight markets. The euro has given up the 1.22 handle, and the rest of the currencies fall in behind the Big Dog euro. I do want to say that I’m getting the sense that this short squeeze is nearing an end, in my opinion, because the downward moves in the currencies were small yesterday, which indicates to me that the depth of the trade is thinning out.  That’s how I see it, so let’s see how it unfolds, eh?   

If I’m correct, then we need to be finding the keys to our truck that we’re going to back up to buy the currencies and metals once the short squeeze is over. We’re going to want to be ready to move when the time comes, right?  I hope I’m not doing a Will Farrell in his movie when he’s streaking down the middle of the street, and thinks there’s a whole mass of people streaking behind him, only to find out he was by himself…   

Alrighty then… The Big News overnight is that France’s President Macron, told reporters yesterday that he believes the U.S. is going to pull out of the Iran Nuclear  Deal, which got the Iranians irritated and they responded that if the U.S. pulls out, they will too… Well, that got the juices flowing with Oil traders and investors, and they began to buy Oil and drive the price up over the $68 handle on the day.  

I had a longtime reader send me note the other day, and wondered why I stopped adding the link to the Debt Clock each week?  I sat back and said to myself… “I don’t have an idea why I that happened!”  So, in honor the former longtime tradition on Fridays to list the Debt Clock link, I’ll try my best to recall to do it every Thursday now… So, here you go!http://www.usdebtclock.org/        Did you know that the Debt Clock is also an app for your smart phone?  I have it, and whenever I’m out and someone begins to spout off about the debt or whatever, I pull out m iPhone and click on the app and soon am able to right his wrong with proof!    

Go ahead and click on the link… Now  scroll down and you’ll see the two things that scare the bejeebers out of me… The Unfunded Liabilities which are $112.9 Trillion and the Unfunded Liabilities per Tax payer… $930,348!  WOW! and that’s not a good WOW! And Professor Lawrence Kodlikoff believes that the real Unfunded Liabilities is more than $200 Trillion!  And as I’ve explained many times before, but will do so again because well, I want to…  The Unfunded Liabilities represent the so-called Entitlements, and with 10,000 Baby Boomers retiring every day for the next 10 years, thee strain on the Unfunded Liabilities is going to be tremendous… 

Now, doesn’t that scare the bejeebers out of you too? Or are you one of those people that believe the U.S. could just print enough money to cover the debt and start over?  Well, the U.S. could do that, but what would that do to the value of the dollar? Yes, that would ruin the dollar’s value and bring it to its intrinsic value… Ok, you say, that wouldn’t be the end of the world, now would it? Well, let me ask you this… All your investments, your home, etc. are denominated in dollars, so if you don’t mind that your net worth gets bashed and bruised, and your purchasing power has gone to hell in a hand basket, then you’re good to go!    

Alrighty then, enough of that!  The Riksbank (Sweden’s Central Bank) surprised observers this morning by leaving their interest rates unchanged. It was thought that the Riksbank was going to hike rates at this meeting, and thus get out of the negative interest rates game… But that didn’t happen and the krona is paying for it…   

The European Central Bank (ECB) is meeting while I write this morning, but there’s nothing here to mention… The ECB is stuck in the mud, for the euphoria they had a couple of months ago with the economy, has faded, and with that fade, is the possibility of the ECB also getting out of the negative interest rates game… No wonder the euro can’t seem to find a bid these days… 

So, if anything, look for the ECB President, Mario Draghi to be a real Eeyore this morning and not give the euro any ability to rebound…  

Gold wasn’t able to put tow days of gains together yesterday and lost $7.20 on the day, closing at $1,322.60… There weren’t as many contracts traded yesterday in Gold, with a good amount still of 258,000.. Up one day, down the next, no trend to speak of here, and that really surprises me in that with all the geopolitical stuff going on Gold should be racking up gains on a daily basis… I’m just saying… 

The U.S. Data Cupboard was empty yesterday, but gets restocked today with the real economic data prints of Durable Goods and Capital Goods Orders for March.. .I expect these two pieces of data to fall from February’s print of 3.0% and 1.4% respectively.  There are some other minor pieces of data to print today, but these two are definitely the cat’s meow of data prints today.. . 

To Recap… The Riksbank left rates unchanged, surprising observers who thought they would hike them. the ECB is meeting as Chuck writes this morning, and the dollar continues to swing its mighty hammer as the short squeeze nears an end, in Chuck’s opinion…  The U.S. and Iran seem to be headed in the wrong direction, and that has the price of Oil rising again this morning…   

For What It’s Worth…  I saw this in Ed Steer’s letter today, and when he said it was Ambrose Evans-Pritchard writing it I knew I would want it for the FWIW section today…  This is about the price of Oil rising to $100, and can be found here: http://business.financialpost.com/commodities/energy/oil-shock

Or, here’s your snippet: “The world risks a full-blown oil shock within months as three geostrategic crises come to the boil and Saudi Arabia hints at US$100 crude, setting off a speculative scramble by commodity hedge funds.

Brent crude has surged this week to a 40-month high of almost US$75 a barrel even though the global economy is losing momentum. This price spike is different from earlier China-driven episodes over the past 15 years. It reflects a constriction of supply and a rising “political premium.” Such a context makes it more threatening.

It is now highly likely that Donald Trump will reinstate oil sanctions against Iran on May 12, this time adding extra curbs on distillates. Japan and South Korea will almost certainly join the Americans. Most European firms will fall into line whatever the policy of their own governments since it is dangerous to defy the U.S. Treasury. Most insurers and shippers will steer clear of Iranian cargoes.

“We are pretty confident that oil will be in triple digits by next year,” said Jean-Louis Le Mee from Westbeck Capital. By then the oil market will be feeling the delayed effects of a 40 per cent slump in investment from late 2014 to early 2017, storing up a structural shortfall of 8 million barrels a day (b/d).”    

Chuck Again…  And what was the driving force of last month’s rise in auto sales? SUV’s and Trucks.. in other words, gas guzzlers, just in time for the price of gas to go through the roof again… How many of those purchases will be abandoned on the side of the road in the future?   I’m just saying….

  Currencies today 4/25/18.. American Style: A$ .7576, kiwi .7075, C$ .7788, euro 1.2182, sterling 1.3960, Swiss $1.0166, … European Style: rand 12.3711, krone 7.9453, SEK 8.5760, forint 256.76, zloty 3.4744, koruna 20.8975, RUB 61.98, yen 109.22, sing 1.3260, HKD 7.8473, INR 66.74, China 6.3166, peso 18.82, BRL 3.4830, Dollar Index 91.17, Oil $68.32, 10-year 3.0%, Silver $16.60, Platinum $912.16, Palladium $975.96, and Gold… $1,324.60  

That’s it for today…  My new chair was delivered yesterday… I had long wanted a recliner down here in my winter home, and last week I finally bit the bullet and bought one… Man is it comfortable! I may not get out of it all day now! HA!  Day game at Busch today, wish I were there to go to the game, but I’m not, so I’ll have to miss it… I saw it was raining while the game was going on last night… UGH!  Should be a good day for a day baseball game today… I know it will be nice an warm here!  And with that thought, it’s time to get this out the door! Steely Dan takes us to the finish line today with their song: Black Friday…  I hope you will go our and make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler

A Short Squeeze Is Propping Up The Dollar!

April 25, 2018    

* The Indian rupee is worst performer.. 

* Gold finally sees some love and gains $5.60 on the day… 

 

Good Day… And a Wonderful Wednesday to you!  OOPS I did it again. UGH! I was up walking the floor after midnight, in the moonlight last night And once again I failed to obey the alarm clock. I think that this change in my MO is concerning to me, as I’ve never been one to just “let it be”…  But maybe this semi-retirement I’m in, has caused this change in me… Oh well, The Strawbs greet me this morning with their Rock Classic song: Autumn…  

Right out of the starters blocks this morning, I’ll tell you that the dollar continues to take no prisoners…. I read that it’s a short squeeze, that everyone an their brother was short dollars, and this short squeeze could end up being rock star status… That wouldn’t be good for the currencies, so we’ll have to wait-n-see just how far this short squeeze goes, eh? It won’t be over until it is, is the saying I used to tell the folks on the trading desk at m old place of business… 

One of the worst performing currencies in recent weeks has been the Indian rupee… I mentioned the other day that a banking scam/ scandal was scaring investors here, and that remains, but there’s also this fear that the calm that fell over the Indian economy when Oil prices dropped, is going to reverse, now that Oil prices are moving higher again.  So, if you own rupees I suggest you batten down the hatches, and wait for a sunny day to buy some more at cheaper prices, and if you don’t own any, you don’t care about any of this! HA!  

A couple of years ago, when I was still sitting on the trading desk, I was talking with one of our dealer friends at Morgan Stanley, and I told her the next BIG problem for the U.S. was going to be a Lack of Liquidity, and she was very doubtful that a Liquidity problem was going to come upon us. But I pointed out that with the Fed in the markets every day, buying bonds (at that time) that there would come a day when the Fed stopped buying, and liquidity would begin to dry up… 

I tell you this because there’s an article on Zerohedge.com  this morning that talks about a liquidity problem showing signs of becoming  the real deal…  Let’s listen in… “As The Wall Street Journal recently noted, worsening liquidity comes as banks have reduced inventory of riskier assets and investors more closely track bond indexes, making it harder and harder to buy or sell when they want (let alone when they need)…


The liquidity problem has been worsening for years. Investors say it began nearly a decade ago, when post-financial-crisis regulation prevented banks from trading for themselves, and forced them to hold larger amounts of capital – thereby shrinking their inventory of riskier assets.

This, in turn, reduced banks’ ability to serve as intermediaries between buyers and sellers.”    Chuck again… Crazy, eh? People as me all the time how I see these things happening long before they come to fruition… I tell them, I have no idea, for I use logic to form my thoughts, and logic told me years ago that if you have an entity buying large sums of bonds, and then stops buying, that you’ll have a liquidity problem…  That, my friends is what you get when you read the thoughts of someone that has been around the markets for 45 years… 

I know you’re saying, but he doesn’t look that old, right? HA!  The price of Oil slipped downward to the $67 handle from the lofty $69 handle in the past 24 hours… I would imagine that there was plenty of profit taking going on here.. 

Gold finally saw some love yesterday, and was able to carve out a $5.60 gain on the day, to close at $1,329.80, after the dust settled on the 268,000 contract traded in the shiny metal. It’s a shame, the way the price manipulators keep playing this game of allowing Gold to run up to $1,350 and the whack it back down, and then rinse and repeat over and over again…  One of these days, Alice! To the Moon!  Ralph Kramden would know what to do with the “boys in the band”… 

That’s an oldie but goodie, eh? The euro continues to get battered as the offset currency to the dollar when the dollar is rallying like this. But when things turn around…  I’m just saying, which begs the question, should we be looking to buy some euros at these cheaper prices?  I think we should probably wait and see where this short squeeze for the dollar goes, but when it ends, THAT would be the time to back up the truck, so to speak… 

Beep, Beep, Beep…   No, put it in park, we’re not ready to be backing up yet!

The  U.S. Data Cupboard is empty today, but yesterday’s cupboard had the stupid Consumer Confidence report for April, and it showed a HUGE jump in the index number from 125.9 in March to 128.17 in April…  Weren’t we talking about a possible Trade War this month? How could these people be so darn confident? I just don’t get it…  

We also saw  The Case/Shiller Home Price Index for Feb, and it grew 6.3%, and then the New Home Sales data printed for March, and showed that it beat the expectations by a large margin, showing that 694,000 new Homes were sold in the month, VS 630,000 expected…  I thought that a month ago, there was all this talk that home prices were getting too high and driving away buyers.. Hmmm… I wonder what happened to change that?

Oh well, I’m not going to lose any sleep over the change, go ahead and go deep into debt with that house that cost a bazillion dollars and see how that works out for you when the next financial crisis comes along..  I’m just saying…  

To Recap…  The dollar continues to rally and now it has been revealed that there is a short squeeze going on, and how long it will continue to go on is the $64 question this morning. Higher Oil prices aren’t helping the Indian economy any, and the rupee is getting sold as a result. Gold finally saw some light and was able to gain $5.60 on the day yesterday, but the euro and the price of Oil slid downward.   

For What It’s Worth..  When the Shanghai Gold Exchange began trading Gold in 2014, I said then that it would eventually change the way Gold was traded and priced… Well, this article catches that spirit, and can be found here: https://www.chinadailyhk.com/articles/20/163/245/1524473885382.html   

Or, here’s your snippet: “Led by China, the global gold market has moved from the West to the East, the CEO of the World Gold Council, Aram Shishmanian, told an industry forum on April 19.

And building on that position, China is assuming leadership in the world of gold, he said at the Global Gold Market Summit 2018 in Xiamen, East China’s Fujian province. “Your leadership, I have no doubt, will determine or help determine the structure and form of the evolving international gold market.”

The summit, the third of its kind, was organized by the Shanghai Gold Exchange (SGE) and the Xiamen Municipal People’s Government and gathered about 700 industry heavyweights and professionals from across the world.

Shishmanian noted that China was small in the gold industry 20 years ago but has gone through “spectacular transformation” – the result of a “very careful and deliberate strategy” supported by the People’s Bank of China (PBOC), the central bank.”  

Chuck Again… Whoever didn’t see that China would take this all over eventually once they put their collective minds to it is blind as a bat!  Well, maybe not that blind, as there are investors out there that continue to believe that China’s Communist spirit will overtake this capitalist movement…  I guess we can always have a little fear of that happening in the back of our minds, but not allow it to come forward!    

Currencies today 4/25/18… American Style: A$ .7575, kiwi .7087, C$ .7767, euro 1.22, sterling 1.3945, Swiss $1.0177, … European Style: rand 12.46, krone 7.9470, SEK 8.5444, forint 256.67, zloty 3.4560, koruna 20.8574, RUB 61.60, yen 109.10, sing 1.3277, HKD 7.8479, INR 66.91, China 6.3074, peso 18.99, BRL 3.4581, Dollar Index 91.03, Oil $67.92, 10-year 3.01%, Silver $16.61, Platinum $921.66, Palladium $967.38, and Gold… $1,325.40

That’s it for today…  I don’t know why I did that, but I stayed awake to watch the whole baseball game last night, and to eventually see the Mets win in extra innings.  UGH! For the first time this year, the Cardinals young ptiching stud, didn’t pitch out of jam…   I have some calling to the insurance company to do today, UGH! They are a bunch of knuckleheads and getting my point across to them has to be a lot like Hell would be..  Oh well, if life were easy we’d all be living to 100!  The O’Jays take us to the finish line today with their song: The Backstabbers…   What they do!  I told longtime readers a few years ago when this song played that it always reminded me on someone… And that’s all I have to say about that!  I hope you have a Wonderful Wednesday! And Be Good To Yourself!  

Chuck Butler

U.S. Gives Russian Aluminum A Path Out Of Sanctions…

April 24,2018   

* The dollar continues to swing its mighty hammer

The price of Oil closes in on $70… 

 

Good Day… And a Tom Terrific Tuesday to you! Well, it finally happened… I  told you yesterday that the waking up several times each night had returned, as one of the evil side effects of the chemo drug I take settles in. Well, last night, I was awake for a lot of it, and then about 4 this morning, I fell asleep and when the alarm went off an hour later, I turned it off and made an executive decision, to go back to sleep…  I really didn’t think I would ever do that, but I did it this morning, and thus, the tardiness of the letter…  Journey greets me this morning with their song: Only the Young… 

I think that subconsciously I just didn’t want to face the music of what the news overnight was telling us… The dollar is still swinging its might hammer, and even with the price of Oil closing in on $70, the currencies can’t muster any kind of rebound. The currencies look sick, and the dollar looks like it could do this all day, every day…  It won’t, but you get the idea… 

The Big News overnight is that the U.S. has thrown a life-line to Russia’s Aluminum sector. Here’s the skinny on the whole thing, which to me sounds as if the U.S. is targeting an individual and not a company.. I’ll let the folks at Zerohedge.com to take it from here for this description of what’s going on here…  

“That didn’t take long: just one day after we reported that “in a surprise twist”, most of Europe was pushing the Trump administration to ease Russian sanctions due to growing concerns of stagflation and outright recession should supply chains remain crippled, on Monday morning the U.S. appears to have caved, and in a notice the Treasury announced it would provide sanctions relief to the world’s largest aluminum maker outside of China, United Co. Rusal, if Oleg Deripaska relinquishes control and sells his controlling stake, while extended the deadline for companies to wind down dealings with Russian aluminum producer.

In the notice, the Treasury said that for Rusal, “the path for the United States to provide sanctions relief is through divestment and relinquishment of control of Rusal by Oleg Deripaska.” – www.zerohedge.com    

So, the price of  aluminum, which the president was attempting to prop up with his tariffs, dropped like a rock as the supply of Aluminum would get large given the sanctions being dropped…  

Gold lost another round to the price manipulators yesterday, and after 277,000 contracts traded, the shiny metal posted an $11 loss for the day, closing at $1,324.00.   What in the world is going on here? I would like to say that I’m not losing any sleep over it, but maybe I am! UGH!   

So, guess what’s in the news from the Eurozone this morning?  If you guessed that yet another round of debt problems have shown up at the European Central Bank’s (ECB) door, you get a Gold Star! It seems that the banking sector in the Eurozone has more bad loans than you can shake a stick at, and while the ECB was planning on bringing a requirement for the Banks to add to their loan loss reserves, the Italians, you knew it would be the Italians, right?, balked, and now the ECB is going to shelve this requirement, and instead attempt to have Bank Supervisors work on brining the bad loans up to date…    

I laughed at that decision because if it were as easy as a bank supervisor calling the owner of a bad loan on the telephone and asking them to deposit a large amount of money, then they wouldn’t have the bad loan problem to begin with!  But silly people do silly things, right?   or as Forrest Gump said, Stupid is and Stupid does…      

Anyway… the euro continues to slide VS the dollar, and this news of bad loans that total more than $1 Trillion, hasn’t helped the single unit one iota…    

So, I mentioned above that the price of Oil was closing in on $70, as it trades with a $69 handle this morning. This rise hasn’t helped the Petrol Currencies any, as the leader of the Petrol Currencies, the Russian ruble, can’t muster a rally on a day when Oil rises, and they’ve been given a path to remove Aluminum sanctions…   

That pretty much, right there, indicates the strength the long dollar trades are…  And when the dollar is trading like this, the pimples on the currencies become large zits! Take the Indian rupee for example, the last couple of weeks, the rupee has been slip sliding away, and it’s all been about the banking scams that have been going on there… But, with the rupee slip sliding away, it was confined to small moves, that is until the dollar started swinging its mighty hammer again, and then suddenly, the rupees problems get a floodlight shined on them and they become a real problem!    

The Russian ruble isn’t the only Petrol Currency getting sold in the face of a rising Oil price this morning…  The Norwegian krone, Canadian dollar/ loonie, and Brazilian real are all seeing their values go down this morning. UGH!  

The U.S. Data Cupboard saw the Markit ISM (manufacturing index) rise in March to 56 from 55…  Yesterday we saw the Eurozone manufacturing index also rise, so this seems to be a global thing right now, and not just a U.S. thing.  Today’s cupboard brings us the stupid Consumer Confidence for this month, and the Case/Shiller Home Price Index for Feb, which I’m not sure matters to anyone what home prices were doing in February, which seems like a year ago to me!    

To recap… Chuck slept in, and the Pfennig is later today… Shame, shame, shame!  The dollar continues to swing its might hammer, and all the currencies are getting sold this morning. Gold lost $11 yesterday but is up $3 in the early morning trading today. And the price of Oil is closing in on $70… but it’s not help to the Petrol Currencies, yet…   

For What It’s Worth… I thank longtime reader, Bob, for sending this link my way… It’s James Kuntsler  and his view of the U.S. economy, which I have to say is bang on in my opinion, and it can be found here: https://www.zerohedge.com/news/2018-04-23/kunstler-america-has-become-alzheimer-nation   

Or, here’s your snippet: “We really have reached limits for an industrial economy based on cheap, potent energy supplies. *The energy, oil especially, isn’t cheap anymore. The fantasy that we can easily replace it with wind turbines, solar panels, and as-yet-unseen science projects is going to leave a lot of people not just disappointed but bereft, floundering, and probably dead, unless we make some pretty severe readjustments in daily life.

We’ve been papering this problem over by borrowing so much money from the future to cover costs today that eventually it will lose its meaning as money – that is, faith that it is worth anything. That’s what happens when money is just a representation of debt that can’t be paid back.

This habit of heedless borrowing has enabled the country to pretend that it is functioning effectively. Lately, this game of pretend has sent the financial corps into a rapture of jubilation. The market speed bumps of February are behind us and the road ahead looks like the highway to Vegas at dawn on a summer’s day.

Tesla is the perfect metaphor for where the US economy is at: a company stuffed with debt plus government subsidies, unable to deliver the wished-for miracle product — affordable electric cars — whirling around the drain into bankruptcy. Tesla has been feeding one of the chief fantasies of the day: that we can banish climate problems caused by excessive CO2, while giving a new lease on life to the (actually) futureless suburban living arrangement that we foolishly invested so much of our earlier capital building. In other words, pounding sand down a rat hole.” 

Chuck Again… And in the whole article he really goes off on stuff, but you get the drift… This House of Cards built on deficit spending is really becoming a problem folks… Whew! I’m tired!  

Currencies today 4/24/18… American Style: A$ .7611, kiwi .7124, C$ .7792, euro 1.2216, sterling 1.3955, Swiss $1.0227, …. European Style: rand 12.32, krone 7.8861, SEK 8.4998, forint 256, zloty 3.4380, koruna 20.8225, RUB 61.67, yen 108.81, sing 1.3220, HKD 7.8467, INR 66.42, China 6.3069, peso 18.84, BRL 3.4267, Dollar Index 90.90, Oil $69.06, 10-year 2.97%, Silver $16.68, Platinum $917.28, Palladium $972.18, and Gold… $1,327.40  

That’s it for today…  I apologize for the tardiness of the Pfennig, but I’ll go with the old saying today of: Better late than never, eh?    Cardinals and Metropolitans for a three games series starting tonight… It’ll be interesting to see if the Cardinals can beat a team other than the Reds… I got dragged all over God’s creation yesterday looking at things, and my hip pain flared up on me last night, it’s still feeling a bit iffy this morning, so I had better nip that in a bud!  And with that, Neil Young and Crazy Horse take us to the finish line today with their live version of: Cowgirl In The Sand, recorded at the old Filmore East…  It’s 17 minutes long… I hope you have a Tom Terrific Tuesday and Be Good To Yourself…  

Chuck Butler

The Dollar Swings Its Mighty Hammer…

April 23, 2018    

* Trade War talk softens…

* Gold gets whacked at $1.350, again!

 

Good Day… And a Marvelous Monday to you! Another good weekend for my beloved Cardinals, as they’ve proved one thing so far this early season, and that is that they can beat the Reds… The Mets come to town now with their great pitching staff…. A good test…  I get to watch the games down here in S. Florida because I subscribe to the MLB package…  We had a good meeting with our guy who will do some construction for us down here on Saturday…  I got the old “price shock” but it is what it is…  GULP! I’m still dealing with the side effects of the new chemo that has wiped out the tumor in my mouth. so some bad with the good…  America greets me this morning with their song: Sandman…  I used to play that one on my guitar, but that was a long time ago!    

Well, when I left you on Thursday, the currencies were rebounding from their previous two-day selloff… But that didn’t last very long and soon the dollar was back on top of the heap, swinging its mighty hammer. And the overnight markets last night kept things going for the dollar. i’m really surprised and then I’m not surprised… I would have thought that all that’s going on that should be putting the dollar on the chopping block, the dollar would be getting sold… So, I’m surprised that it’s not… But I’m also not surprised because the Plunge Protection Team (PPT) exists, and they live for the times when the dollar is getting sold and looking iffy, for that’s when they come in with both guns blazing…  I’m just saying…  

So, the Dollar Index is one full point higher than it was Thursday morning, and trades this morning at 90.71. The Big Dog, euro, has seen its lofty level of 1.24 of last week go bye-bye, and the two big movers have been the Aussie dollar (A$) and kiwi… The A$ had briefly traded up to 78-cents last week, and  it starts the week trading with a 76-cent handle… Same for kiwi, which had briefly touched 73-cents, is trading this morning with a 71-cent handle…   

Even the Chinese renminbi, which had been on a mission to prove that Trump’s sanctions weren’t going to hurt them… You know the old, sticks and stone may break my bones but tariffs won’t hurt me!  But that was last week, this week we saw the renminbi get priced at a much weaker level in last night’s fixing.  A

n update on the Honk Kong Monetary Authority’s (HKMA) attempt to stop the selling of the honker (Hong Kong dollar)…  I read this weekend that the HKMA  has spent $6.5 Billion intervening, and trying to turn the honker around.   That’s $6.5 Billion with a capital B!  Somebody is bound and determined to keep the honker weak, but imagine if the HKMA hadn’t spent $6.5 Billion keeping the honker from going into a real tailspin?  

The talk of a Trade War have softened quite a bit, as the two main combatants, the U.S. and China, have stepped back to see what they nearly caused, and have had second thoughts about it… That’s a good thing, folks… And one of the reasons that the price of Gold has also stepped back…   

The 10-year Treasury is seeing some selling so heavy that the yield on the 10-year is 2.98% this morning ahead of a week packed with economic data and new debt supply. The 3%  level, which was last briefly touched in 2014, is seen as the end of the bond rally, if the level is met and holds…  And holds is important, because 4 years go, we thought that bond yields were heading to the stars, only to find out that it was a false dawn.   

The Eurozone saw a good economic print this morning, but so far it hasn’t helped the single unit fight off the dollar’s might hammer.  The March PMI, (manufacturing index) rose to 55.3 from 55.1… I slight move higher, but a move higher nonetheless, and another sign to the European Central Bank (ECB) that they should be implementing plans to unwind their stimulus…     

The price of Oil slid down from its lofty price of $69 on Thursday, and is trading this morning at $68…  I read a report this weekend that hedge fund managers are forecasting an Oil price of $80 this year…  WOW That would certainly help the Petrol Currencies, eh?  

On Thursday morning I pointed out that Gold was trading right on top of the line in the sand $1,350… and wondered out loud when the “boys in the band” would show up to rectify that!   And show up they did…  And trading 270,000 contracts they got Gold to fall $10.10 on the day to close at $1,335.20…  And now we have the aforementioned softening of Trade War talk going on, and it has pushed the price of Gold even lower to start the day today, with the shiny metal losing $5 to start the week   

I mentioned above that this week is packed with data like our own PMI, that we refer to as the ISM (manufacturing index), Consumer Confidence, Durable and Capital Goods Orders, and to round out the week we’ll get out first look at 1st QTR GDP…  Look for it to have fallen from the 4th QTR’s final print of 2.9%… I’m thinking somewhere around 2%, which wouldn’t be very good, or be an indication that interest rates need to go higher, but then will the FED be paying close attention?  I doubt it… 

To recap… Well the currency rally that began on Thursday morning crumbled and the dollar was on top of the heap swinging its mighty hammer by the end of the day. And has continued to rule the roost in the overnight markets. We have a plethora of data this week to comb through, and I’m not of the opinion that any of it will help the dollar maintain this pressure. The 10-year is oh-so-close to 3%, which could be a line in the sand that indicates the bond rally is over for good, and Gold got whacked once again after trading to $1.350 on Friday.. 

For What It’s Worth…  this is a quick and dirty article about China enlarging their footprint in Europe… and can be found here:  https://www.bloomberg.com/graphics/2018-china-business-in-europe/?cmpid=BBD042318_MKT&utm_medium=email&utm_source=newsletter&utm_term=180423&utm_campaign=markets

Or, here’s your snippet: “For more than a decade, Chinese political and corporate leaders have been scouring the globe with seemingly bottomless wallets in hand. From Asia to Africa, the U.S. and Latin America, the results are hard to ignore as China has asserted itself as an emerging world power. Less well known is China’s diffuse but expanding footprint in Europe.

Bloomberg has crunched the numbers to compile the most comprehensive audit to date of China’s presence in Europe. It shows that China has bought or invested in assets amounting to at least $318 billion over the past 10 years. The continent saw roughly 45 percent more China-related activity than the U.S. during this period, in dollar terms, according to available data

The volume and nature of some of these investments, from critical infrastructure in eastern and southern Europe to high-tech companies in the west, have raised a red flag at the European Union level. Leaders that include German Chancellor Angela Merkel and French President Emmanuel Macron are pressing for a common strategy to handle China’s relentless advance into Europe, with some opposition from the EU’s periphery.: 

Chuck Again..  Longtime readers will vouch for me when I say this.. You can’t say I haven’t been warning you about how the former sleeping Giant, China woke up and decided to run the world…  

Currencies Today 4/23/18… American Style: A$ .7638, kiwi .7173, C$ .7817, euro 1.2232, sterling 1.3962, Swiss $1.0236, … European Style: rand 12.2362, krone 7.8682, SEK 8.4797, forint 254.63, zloty 3.4257, koruna 20.7743, RUB 61.35, yen 108.25, sing 1.3230, HKD 7.8436, INR 66.44, China 6.2950, peso 18.70, BRL 3.4131, Dollar Index 90.71, Oil $68, 10-year 2.98%, Silver 16.94, Platinum $922.89, Palladium $1,019.60, and Gold… $1,330   

That’s it for today…  Well, I’m having sleep issues again… I was up at least 5 times during the night, and  our little place down here, is just that little, which means I can’t walk the floors…  I go out walking, after midnight… – THE GREAT  Patsy Cline! My old colleague at Mark Twain Bank, used to ask me to play that song whenever he got a good sale completed…  We had morning rain yesterday, and then it turned to another beautiful day here, much better than those chilly days back home, where it has finally begun to warm up…  Earth, Wind and Fire take us to the finish line today with their song: After The Loving Is Gone…  I have a thought there that I had better keep to myself!  I hope you have a Marvelous Monday, and please Be Good To Yourself!    

Chuck Butler

Palladium Continues to Soar!

April 19, 2018    

* Chuck tells us why we should look to buy euros…

* Silver finally gets back above $17!   

Good Day…  And a Tub Thumpin’ Thursday to you! Another cold and snowy day in Chicago yesterday, caused yet another postponed baseball game… My beloved Cardinals lose an “off day” today, to attempt to get the game in. I went out for baseball my freshman year in high school, the weather was quite like it has been this year, but with much more snow… I hated playing in the cold, so I said, “I think I would prefer playing with my club team that doesn’t start practice until May! And so I feel for these guys out there trying to play a warm weather game in the cold! ( I know they get paid millions to do so, but sill, cold and snowy is not meant for baseball!  The Blue Jays greet me this morning with their song: Remember Me My Friend… The Blue Jays were two guys that split from the Moody Blues, so the music sounds very much like its the Moody Blues playing, and longtime readers know how much I enjoy the Moody Blues!    

The dollar’s attempt to fight back didn’t last long, (just overnight on Tuesday) And the currencies were back at work gaining VS the dollar yesterday and overnight. The big movers on the day were the Aussie dollar (A$), Norwegian krone, Brazilian real, and stretching out Gold gained $2.00, and the price of Oil is trading this morning with a $69 handle… (Ok spring training buddies this is not the time or place to correct me! HA) 

Regarding the price of Oil rising nearly daily in recent weeks, the latest weekly supply report surprised Oil traders as it showed a huge withdrawal, and that has propelled the price of Oil higher.  And with Oil bubbling out of the ground like black gold, Texas Tea, the Petrol Currencies, for the most part, including the Brazilian real have picked up the pace of appreciation… I also read this morning that Lola, AKA Goldman Sachs is telling their clients that the real is read to soar, and to buy the currency.  And we all know that what Lola wants…. Lola gets! right?    

I’ve been watch the euro’s rally that began last June when the currency began to get some love from traders. The single unit was trading at 1.09 at that time, and overnight last night, the euro traded as high as 1.24, it has seen some profit taking since hitting 1.24, but that’s a good sign, get all those old shorts out of the way, so the next move higher won’t have them weighing it down!  

I’m very impressed, that the euro has been able to gain VS the dollar give they still have negative  deposit rates, and the U.S. is hike rates about every 6 months, soon to be every 3 months if you believe new Fed Chairman Jerome Powell.  All signs point to the European Central Bank (ECB) to begin to unwind their stimulus they have used to bring the Eurozone economy back from the flat line they were showing a couple of years ago, after having had to deal with Greece. 

My good friend, Dennis Miller, the Retirementor, and  author of his weekly letter Miller On the Money, is going to issue his newest letter today, and in it is an interview with me!  It’s the first of two parts, with the second part coming next week. if you’re retired or thinking about retiring you should be reading Dennis’s letter each week, that can be found here: www.milleronthemoney.com    I said all that to tell you I said in the interview that the first currency a diversifier should look to own is the euro, because  it’s the offset currency to the dollar… So, as the dollar slides, investors, traders, hedge funds, all look to buy euros.. I’m just saying…   Oh, and this morning there’s news that Iran was switching their reporting that was done in dollars, to euros… Interesting, eh? 

I’ve been wring some very long letters so far this week, but today’s will be the end of that! The ideas just aren’t flowing in my brain this morning, so this will be more of a this is what happened kind of letter to end the week for me… Sorry, but I’ve given you so much stuff to think about these past few Pfennigs, that you should be kept busy with those, and not need another homework assignment! HA!   

Have you been watching the metals prices in the currency roundup each day? I talked a little about the huge jump in Palladium last week, and this week it continues. The price of Platinum is also in rally mode, and yesterday, Silver finally got back above $17 spot! WOW Gold is trading right at $1.350 this morning, so watch that carefully… For this is the level that the “boys in the band” aka the price manipulators have drawn a line in the sand, and they bring out the big guns to short Gold… But I would have to think that shorting Gold right now, with Syria, and dozens of other hot irons in the fire going on, this is Gold’s bag baby!   

Inside looking out, was a hard driving rock song by Grand Funk Railroad from the early 70’s, and  I’m reminded of that song when periods of time like right now are going on… And I think the “boys in the band” are inside looking out at the strong demand for physical Gold and thinking it would be hazardous to one’s wallet to short Gold right now… 

But as I say that, I’m reminded just how brazen these guys have been with their “all-in shorts”…  So, maybe I should dial back my Inside looking out statement right now…  NAH! Longtime readers know that’s not my style, it’s shoot from the hip and don’t get in my way!  But with age comes a softer demeanor, I’m just saying…   

The U.S. Data Cupboard  will have two non-market-moving data prints today, but ones that are interesting… Leading Indicators for March which seem like an oxy moron, as the report is looking forward, but it’s for last month… go figure…   Any way Leading Indicators is a composite of 10 forward-looking components including building permits, new factory orders, and unemployment claims. The report attempts to predict general economic conditions six months out.  And along with Capacity Utilization are the only real forward looking pieces of economic data that aren’t backward views…

 Another print that’s interesting today is the Philly Fed Index, ,which is a measure of the manufacturing activity in the Philadelphia region, and long ago, a trader showed me how it corresponds to commodity trading, and so each month I check that out to see if his hypothesis remains…  I find that it does some months and not in others.. So, much for that, eh?  

To recap…. The dollars 8 hours of recovery came to an end yesterday, and the currencies turned the tables on the dollar.  The real bright spot in recent weeks in Palladium, which once again is on a rampage…  the price of Oil is kicking tail and taking names later, and Silver is trading above $17 again, YAHOO!    

For What It’s Worth…  I did a deep dive into what I call the Retail Apocalypse in my DTL letter that will print tonight, and so when I saw this article come across my screen, I knew it had to be a FWIW article! So, it’s about the Retail Apocalypse and can be found here: https://www.washingtonpost.com/news/on-small-business/wp/2018/04/16/more-retailers-are-going-bankrupt-than-ever/?utm_term=.869171417637        

Or, here’s your snippet: Ask anyone running a store and they’ll tell you that it’s tough to be in the retail business. Merchants big and small are struggling to meet the demands of a customer base that is demanding better service, lower prices and products both in-store and from the comfort of their homes. A new report from investor research firm Moody’s certainly confirms that.

According to last week’s report, bankruptcies in the retail sector were at a record high during the first quarter of 2018.

There were nine defaults in the sector — including Sears and Claire’s – during the three months ended March 31. Tops Friendly Markets, a supermarket chain, and the Bon-Ton, department store chain, also filed for bankruptcy during the period. The only non-U.S. default that occurred in the first quarter was Britain-based BrightHouse Group, which sells rent-to-own refurbished sofas, televisions and refrigerators.

Defaults on corporate debt from the retail sector in the past three months made up almost one-third of defaults by corporations in all industries.
“Stresses in the retail sector have weighed on the operating earnings of department stores, discount stores and drug stores in particular,” a Moody’s spokesman said in the report. “A year ago, we noted that 14 percent of retail debt issuers were distressed and predicted that both the U.S. and European retail sectors would have the highest one-year default rates among all corporate sectors.””

Chuck Again…  I know what you’re thinking, that it’s all the e-commerce’s fault, but that’s not all and I explain it all tonight! Wait! What? you haven’t bitten the bullet and subscribed to the Dow Theory Letters?  Shame, shame, shame… HA!   go to: www.dowtheoryletters.com should this interest you…    

Currencies today 4/19/18… American Style: A$ .7798, kiwi .7313, C$ .7925, euro 1.2370, sterling 1.42, Swiss $1.0325, … European Style: rand 11.9625, krone 7.7526, SEK 8.3893, forint 250.87, zloty 3.3690, koruna 20.4873, RUB 61.31, yen 107.36, sing 1.3093, HKD 7.8488, INR 65.72, China 6.2787, peso 18.17, BRL 3.3933, Dollar Index 89.67, Oil $69, 10-year 2.89%, Silver $17.18, Platinum $947.85, Palladium $1.051.55, and Gold… $1.350.90  

That’s it for today, and this week, of course!  No problems with my Southwest flight down here, and the Uber ride was just fine… I was remiss in forgetting to say RIP Barbara Bush, the former first lady, died on Tuesday. The wife of a president, and the mother of a president… WOW!  the sun is out, something I hadn’t seen much of back in St. Louis the 3 weeks I was home, so that’s a good thing! The coffee is brewing, and once I finish this letter, I take my cup of coffee out to the deck, and watch the ocean,,. The Counting Crows takes us to the finish line today with their song: Round Here…  I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow! And remember to Be Good To Yourself! 

Chuck Butler

Tax Day 2…

April 18, 2018   

* Platinum is shining once again!  

* Chuck treats us to a snippet of his DTL writings… 

 

Good Day… And a Wonderful Wednesday to you! Well, if you are a tax preparer procrastinator you received a gift yesterday…  The IRS’s online tax filing system crashed on them, and so they had to announce an additional day for tax returns. So today is Tax Day 2…  To me, it’s like a say of execution from the Gov. But some people love it, so there you go! I saw a funny cartoon where the guy was not happy while putting his tax return in the mail because he was thinking of all the expenditures the previous administration piled up for personal stuff…   In 3 years the cartoon will be redone with the present administration piling up expenditures…   The Allman Brothers greet me this morning with their song: Midnight Rider…  Hey! I just realized that I have something in common with the Midnight Rider… He carried a Silver dollar coin, and so do I !   

Before I get into the letter today, since it’s Tax Day 2, I found this… In a follow up to what I was talking about yesterday I came across the quote, that sums it up quite nicely, in my opinion… A thief is more moral than a congressman; when a thief steals your money, he doesn’t demand you thank him. – Walter Williams

The currencies fell backward in the overnight trading last night. I last checked on them around 6pm yesterday, and all looked as though yesterday’s trading didn’t exist, but this morning, it’s a different look, and it’s not one I would have expected, given all the bad things that’s facing the dollar, it’s being propped up by someone, or some entity, because everything I read form traders around the world is that they don’t like being long dollars at this time…  So, what gives? All I can figure out is the PPT (Plunge Protection Team) is doing the dirty work…  I wish the PPT would take a less from Steely Dan and tell the powers that be that they don’t want to do their dirty work anymore…   

But that’s not going to happen, so just move ahead here Chuck…  I don’t believe the gain in Industrial Production was the key to the dollar’s rebound, because the report had some ugly stuff in it… In fact, let’s talk about it now…   

The U.S. Data Cupboard had two pieces of real economic data for us yesterday… Industrial Production (IP) and Capacity Utilization(CAPU) printed for March, and IP was not as strong as expected, but did carve out a nice 0.5% gain for the month. There is one troublesome piece of the IP that caught my eye… Industrial production has been consistently held back by weakness in the report’s manufacturing component and that is the expectation for March, at a consensus 0.4 percent gain overall but only a 0.2 percent increase for manufacturing.

And that led me to think about something that had come across my writing desk this week… Zombie Corporations… This all surrounds my economics mentor, Hy Minsky, and his thoughts on the phases that the economy goes through… For you readers of my Dow Theory Letters this wlll all sound familiar as I highlighted the great Hy Minksy in a letter a couple of months ago. But let’s listen in from what I said, then…

Chuck Butler: Dow Theory Letters 1/25/18…
1. Stability is Destabilizing. Minsky believed that during periods of economic stability, banks and firms can generate shocks through their own internal dynamics, because after becoming complacent with their current situation, they begin to take on greater risks in pursuit of further profits. Thus firms sow the seeds for the next financial crisis.

2. There are three stages of debt. Minsky believed in a theory called “financial instability hypothesis,” which says that lending goes through three distinct stages. He called them the Hedge, the Speculative and the Ponzi stages. You won’t believe how similar this is to now…

During the first stage, after the crisis, banks and borrowers are cautious. Loans are made in modest amounts, with borrowers known to be able to repay both the principal and interest.

As confidence grows, banks begin to make loans in which borrowers can only afford to pay the interest. The collateral on the loan is usually an asset that’s rising in value. When the memory of the past crisis has faded, and is almost forgotten…

The Ponzi stage begins. At this point banks make loans to firms and households that can afford to pay neither the interest nor the principal. This is done according to the idea that the asset that’s used as collateral will continue to rise in value. When the asset held as collateral stops rising, the loan is called. Thus begins a very bad circle of foreclosures, failures, and bailouts.

3. The Minsky Moment. This occurs when the Ponzi stage of lending is in place. Everyone is complacent with the situation, the asset held as collateral is still rising, and the borrower even adds to his debt because this stage can’t ever end, right?

When the assets begin to lose value, the lenders believe that there is debt on their books that will never be repaid. The collateral begins to get sold, causing an even larger fall in prices. Think about this moment as the classic cartoon, where the character is running, and runs off a cliff. He keeps running for a while, still believing he’s on solid ground, then he realizes that there’s nothing below him but thin air… That’s a Minsky Moment!   

So… how about that! I treated you with some of my writing in the Dow Theory Letters… You should see what I wrote about this week that will print on Thursday!  But let’s get back to something that is more current…  I saw a report yesterday that U.S. shipments overseas gained over 11% VS last year…  And that got me thinking…  Let’s see, didn’t I tell you recently that the dollar, as measured by the Dollar Index, had gained 13% in the past year? See the connection?  You don’t need any of those rose colored glasses that the Fed and Treasury use on a daily basis to see the connection…   

Speaking of the U.S. Treasury, I wonder if they felt like they got their toes stepped on yesterday, when President Trump decided to tweet that “Russia and China were playing the devaluation game, and that’s not acceptable” You see, the dollar is the Treasury’s baby to talk about… Remember Robert Rubin when he was Sec. of the Treasury and his daily message to the markets about how the U.S. believes in a strong dollar…  Yes, he had is fingers crossed behind his back, I do believe… HA!    

Speaking of China…. China has taken another step to opening up its futures markets to the world, announcing that it will allow foreign investors to trade domestic iron-ore futures as of May 4. The move follows the debut of China’s first renminbi-denominated crude oil futures last month in Shanghai, signaling the country’s ambition to have a say on the global pricing of commodities, don’t you think? I do!    

 Gold saw another day of plus 250,000 contracts traded, and at the end of the day it had moved very little… At least yesterday’s gain was more than one thin dime like the previous day! Yesterday’s gain was a whopping $1.70, but Gold continues to quietly creep toward the line in the sand dollar amount of $1,350… In fact, the shiny metal has creeped closer to $1,350 in the early morning trading…  

I mentioned the surge in price of Palladium yesterday, and the alternative metal to Gold has seen its current surge take a trip above $1,000 again…  And Silver, as I’m told by Ed Steer, is trading pennies above its 200-day moving avg. this morning…   

The U.S. Data Cupboard also had the IMF’s outlook on the U.S. economy, and bust my buttons there it is right there! I’m sorry for throwing shade on you, this morning, PPT… The reason for the dollar rally is all right here! The IMF gave the U.S. economy a upgrade in outlook and stated that the tax cuts will be the reason the economy grows in 2018…   For those of  you who are new to the Pfennig… I’m being very facetious here…   

To recap… the currencies saw a dollar rally in the overnight trading last night, the move wasn’t huge, but did stop the 2-day rally that the currencies had put together VS the dollar.  Trump steps on the Treasury’s toes yesterday, Gold gains just $1.70, but Palladium is the big winner on the day, and Chuck treats us to  a piece of his writings in the Dow Theory Letters…   

For What it’s Worth…  I was absolutely furious when I read this article last night, good thing my beloved Cardinals were beating up on the Cubs, or else I would have gone bananas over what Paul Ryan said in this article about old people… And it can be found here: “https://www.dailykos.com/stories/2018/4/16/1757506/-Ryan-No-way-to-avoid-trillion-dollar-deficits-because-of-all-the-old-people?detail=emaildkre   

Or, here’s your snippet: “Speaker Paul Ryan wants you to know that it is not his fault at all that we’re going to have a trillion-dollar deficit. It’s the fault of old people.

That was going to happen. The baby boomers retiring was going to do that,” Ryan said on NBC’s “Meet the Press” of projections that the country will start running trillion-dollar deficits as soon as 2020. […]
“These deficit trillion-dollar projections have been out there for a long, long time. Why? Because of mandatory spending which we call entitlements,” he said when pressed by NBC host Chuck Todd on Corker’s criticism.”  

Chuck Again… Of course they are, but haven’t guys like me, Bill Bonner, Addison Wiggin, Doug Casey, Frank Trotter, and more been pointing out the growing problem for years now? So why haven’t you, Paul Ryan, or anyone else drawing huge salaries and benefits, including a golden parachute retirement plan, done something about it?  Just think if you guys had bitten the bullet years ago, we would be well on the path of thinking about the future in a better way…   But with 10,000 Baby Boomers retiring every day for 10 more years, Trillion dollar plus deficit spending will continue won’t it?  Don’t answer that Mr, Ryan, I already know the answer and have for over a decade, but don’t let me ruin you attempt to pass the buck…  

Currencies Today 4/18/18… American Style: A$ .7751, kiwi .7310, C$ .7947, euro 1.2363, sterling 1.42, Swiss $1.0328, … European style: rand 11.9617, krone 7.7780, SEK 8.4140, forint 250.65, zloty 3.3730, koruna 20.4553, RUB 61.43, yen 107.25, sing 1.3110, HKD 7.85, INR 65.58, China 6.2798, peso 18.01, BRL 3.4096, Dollar Index 89.66, Oil $67.08, 10-year 2.83%, Silver $16.86, Platinum $943.91, Palladium $1,021.96, and Gold… $1,348.70    

That’s it for today…  I briefly mentioned above that my beloved Cardinals won in the frost bowl two last night in Chicago, where more snow is expected today. The Cardinals try to get in a day game before the snow falls and will attempt to add to their winning streak of 5 games now… I’ve got to skedaddle this morning, as I’m leaving on a jet plane, don’t know when I’ll be back again…  No worries, I’m taking my laptop, that drives me berserk every time I use it!   The aforementioned Steely Dan takes us to the finish line today with their song from my favorite Steely Dan album: Black Cow…  Ok, now let’s try to make this a Wonderful Wednesday, and Be Good To Yourself for crying out loud! 

Chuck Butler

 

Tax Day…

April 17, 2018  

  * Chuck goes down a rabbit hole… 

  * HKMA spends $1.7 Billion with a B to defend honkers… 

 

Good Day… And a Tom Terrific Tuesday to you! Cold, blowing snow, and it was April 16th! What gives, Mother Nature? Crazy weather, eh? Oh well, eventually it will get warmer here and stay that way. But I’m not sticking around until “eventually”, I’m heading back to S. Florida tomorrow and wont’ return until May Day! Well, it’s Tax Day. I sure hope you haven’t procrastinated! The Beatles take us to the finish line today, with one of my all-time favorite Beatles songs: In My Life…   

With today being Tax Day, pfennig tradition calls for some lyrics to lighten the day… Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman, yeah, I’m the taxman
– The Beatles… 

I read an article yesterday about taxing social security, and how to avoid such, and one of the statements in the article sounded as if I were writing it… It went something like this… Consumer taxes are only going to go up in the future, and if I were writing it I would have added, as the Government attempts to find ways to drain the turnip and pay for their deficit spending…   Since dipped our toe in this rabbit hole we might as well go all-in it, so come on, come with me, or see you on the other side…   

First off, how many of you recall me saying through the years, when I was warning readers about the U.S. debt picture, and that China held a good portion of those debts, represented by U.S. Treasury holdings, that one day we would rue the day we allowed “people that ran this country into the ground, debt accumulation wise, for once China has a floating currency, they would be able to demand the U.S. did this and that, and direct the value of the dollar.

I truly believe that this is what the Chinese renminbi denominated Oil Futures Contract is all about… The dollar gets a majority of its support from the fact that it is THE petrol currency that Central Banks around the world need to hold to pay for their Oil imports (unless of course they themselves produce enough Oil for their respective country’s needs)… So, if you take away the need to hold dollars to pay for Oil, what’s going to support the dollar then? I’m going to borrow a statement from Grant Williams’ Things That Make You Go Hmm…. Let’s listen in…

“A successful CNY oil contract gives the PBOC (and by extension, the world) the ability to completely neutralize the weaponized USD that has become Washington’s weapon of choice in the ongoing global “currency wars.” In plain English, if CNY is convertible under the contract, the PBOC can control the international trade value of the USD through the ratio of CNY gold & oil contracts.” – from Things That Make You Go Hmmm….

I don’t need to tell you what a disastrous scene this would be for the dollar, inflation in this country, and our loss of purchasing power… But I will nonetheless, because, well, I’m that way! No wait, I just did that yesterday! Oh well, see what getting older does to one’s memory? Anyway… This is not a good thing that’s happening right before your eyes, folks… And the media? They don’t have their eye on the ball on this one, they would rather cover stories that have nothing to do with our economy, the dollar, Gold, etc.

So, aren’t glad that you subscribe to the Pfennig? And unlike Cable charges, The Pfennig doesn’t cost you a dime!    

Another thing to not let this go too far astray, and we’re down the deficit will hurt the economy and dollar rabbit hole,  is that now that the U.S. is energy independent, China has become the world’s largest Oil importer…

And with that, they can demand that the Arab countries price their Oil in renminbi, because, well, they are the largest importer! What? Did you think that the Arabs would honor their agreement with the U.S. back in the early 70’s to price Oil in dollars, and tick off their biggest customer? Well, if you do, you’re living in a paper doll world, living ain’t easy, loving’s twice as tough… No Wait! Why, Chuck, oh why, do you always have to slip into a song when your talking about something so serious? Well, it’s my way of keeping things in perspective. If you’re done your homework and read the Pfennig through the years, and have diversified your investment portfolio using currencies and metals (mainly Gold or Silver) then none of this trashing of the dollar that China will cause will come as something to panic about. But if you haven’t done your homework, you had better get to work on it, because, this Chinese renminbi Oil Futures contract is here to stay… And soon China will be demanding that the countries it buys Oil from, denominate the contract in renminbi…   

You know… part of the deal that the Nixon administration made with the Saudis back in the early 70’s to price their Oil in dollars, and then in turn use those dollars to buy Treasuries (Yes, the Saudis have been the enabler to deficit spending… Think about that) has another side of the coin that a lot of people forget about… And that is… with this new found reserve currency status, the U.S. promised to maintain a strong dollar… how’s that working for you Arab countries? And that in a nut shell is the main reason that China has decided that the world needs another currency to step up and become the reserve currency of the world. 

WOW! I’ve gone pretty deep down this rabbit hole, and I’m at 950+ words and haven’t mentioned the currencies and metals performance yesterday and in the overnight markets! Well, there’s not much to talk about here… The currencies saw minor gains, sort of like the one Gold had yesterday that when the 252,000 contracts were booked, Gold had a one thin dime gain on the day. That’s right 10-cents! Big Whoop, eh?   The currencies did no better, as the Dollar Index went from 89.57 to 89.51… 

I mentioned the other day about the problems the Hong Kong dollar or honker has been experiencing, and how it was at the bottom of the range the Monetary Authority of Hong Kong (HKMAA) uses. I read this morning that the HKMA has spent $1.7 Billion to defend the honker…  That’s some amount of bread, eh? And they didn’t get any traction out of their stolen money, I mean hard earned money… Governments don’t make money, the take it from the people of the country that work hard for their money…  So I say that they “steal it”…  You know what I mean… right?    

The price of Oil remains steady Eddie through all of these fires that are going on around the world, and the Steady Eddie price of Oil has allowed the Petrol Currencies some breathing room. Petrol Currencies like the Russian ruble has gained back a small portion of the ground they lost in the past two weeks, when first it was a dip in the price of Oil, and then came the news that the U.S. was adding sanctions on the Russians… 

Well, I read this morning that U.S. President Trump, has pulled back those additional sanctions, for now…  Maybe someone with an ounce of gray matter, stepped in and persuaded the President to not go forth with his additional sanctions. Any way that it happened, it did bring a sigh of relief from the Russian Traders, and the ruble has gained some of its lost ground…  

Like I said above, Gold gained one thin dime yesterday, and not a pre-1965 dime that at least had 80% silver content…   But have you noticed the HUGH jump in the price of Palladium this week?  OK, here’s the skinny on that, in my opinion…  

The U.S. Data Calendar had the March Retain Sales data for us yesterday, and the print showed that Retail Sales had gained 0.6%, but only 0.2% minus car sales..  So, car sales in March must have been tremendous, (I hear that truck and SUV sales have skyrocketed) and with those car sales, the car makers see nothing but seashells and balloons for the future, and ramp up car production, which means the demand for Palladium goes higher, and does the price of the metal! 

See, how I can pull al that together for less than one thin dime? HA!

To Recap…  It’s Tax Day! And it’s a sad day for me, as I had to once again write checks… UGH!  Oh well, I guess it’s better to have to pay than to have no income to tax! The currencies and metals traded in a very tight range yesterday, so thin was the range that it almost appear that these two assets are trading in the same clothes as yesterday… And Chuck goes down a deep rabbit hole, did you go with him?   

For What it’s Worth…   Here’s a novel idea… that countries repay their debts in Gold… Well that’s the idea of the President of Turkey, and it can be found here: https://ahvalnews.com/imf-turkey/imf-loans-should-be-paid-gold-not-dollars-erdogan  

Or, here’s your snippet: “Turkish President Recep Tayyip Erdoğan on Monday suggested that IMF loans should be paid in gold instead of dollars.

“What I’m saying is that these debts should be in gold. Because at this point the karat of gold is unlike anything else. The world is continually putting us under currency pressure with the dollar,” the Turkish president was quoted as saying by business news site patronlardunyasi.com in a speech in Istanbul. “We need to save states and nations from this currency pressure.”

The president said Turkey had attracted $180 billion of international investment between 2006 and 2017.

“This despite the 2008 global financial crisis, events unfolding in Iraq and Syria, the uninterrupted attacks we have been subjected to since 2013 and the July 15 coup attempt,” Erdoğan said, referring to the 2016 failed military bid to topple his government.”  

Chuck Again…  as they say, out of the mouth of babies…  Or in this cas, out of the mouth of dictators, we might get a good idea… I’m just saying.. 

Currencies today 4/17/18… American Style: A$ .7774, kiwi .7340, C$ .7960, euro 1.2370, sterling 1.4350, Swiss $1.0395, … European Style: rand 12.03, krone 7.7650, SEK 8.4164, forint 251.33, zloty 3.3616, koruna 20.4162, RUB 62.03, yen 107.05, sing 1.3080, HKD 7.85, INR 65.67, China 6.2786, peso 18, BRL 3.4216, Dollar Index 89.51, Oil $66.29, 10-year 2.84%, Silver $16.61, Platinum $926.33, Palladium $992.45, and Gold… $1,344.70  

That’s it for today…  I mentioned yesterday that my beloved Cardinals were heading to Chicago and wondered if they would play at all, given the weather up north (for me)… Well, the game was postponed to July, last night, and there are questions about tonight’s game… All the plans of mice and men, eh? The MLB wanted to start the season earlier to have more days off during the summer, and instead the game will be made up on those scheduled “off days”…      Yes, takes us to the finish line today with their song: It Can Happen…    I hope you have a Tom Terrific Tuesday, and that you remember to Be Good To Yourself!   

Chuck Butler