The U.S. Government Shutdown Ends!

Chuck Butler’s: A Pfennig For Your Thoughts  

January 23, 2018

* Kicking the can down the road… again!

* Revisiting 2004, and 2005…  

Good Day… And a Tom Terrific Tuesday to you! I’m just so-so this morning, as I had a rough night of trying to sleep more than 2 hours at a time. UGH! So, I’m getting started on the letter a little later than usual today, so I apologize up front and center for the tardiness, and what will most likely be the shortness of the letter today. The early rendition of the band Journey (pre Steve Perry) greets me this morning with their song: Of A Lifetime…   

Well, the government shutdown didn’t last too long now did it? And guess what got the government spending money we don’t have going again… Yes, just like I said would happen… The lawmakers would find a way to kick the can down the road, and promise to work on this spending impasse diligently during those next couple of weeks… The new and improved deadline is Feb 8… 

The news of a new and improved extension/ deadline didn’t rattle the cages of the currency traders, and the currencies continued to drift about aimlessly. The euro slipped a little, so did the Aussie dollar (A$), but the New Zealand dollar / kiwi and Sing dollar gained a little.. The price of Oil gained a few shekels on the day, but remains trading with a $63 handle this morning. 

Do you recall 2005? Better yet, do you recall 2004? Well, I’m going to talk about both of those years so grab a cup of Joe, and let’s get to discussing these years..   First, I can’t begin to tell you how I keep having these feelings of Deja vu. In 2004, the Fed was tightening their Fed Funds rates, just like they are now, but the rest of the world was growing too, and so the U.S. debt took front stage and the dollar got whacked all year long… 

Fast forward to 2018… The Fed, as we just discussed, is hiking rates, but the rest of the globe is growing faster than the U.S. Shoot Rudy, the Eurozone the region everyone likes to diss, has out paced the U.S. for two years running. And I reported last week that China’s GDP is back to growing. The question remains, like the rest of the year, Does the dollar get whacked the rest of this year, like it did in 2004?  

If you asked me, and I don’t know if you did or not, but since this is my letter you’re going to hear me now, and probably listen to me later… I believe that all things being equal, the dollar is in for a ride on the slippery slope…   But there’s 2005, and this could throw a spanner in the works of this dollar sell off…  

In 2005, the U.S. implemented a tax amnesty for Corporations doing business overseas to repatriate their earnings to dollars an bring them home at a reduce tax rate… This brought back Billions and propped the dollar up for the whole year, but when the tax amnesty window closed on 12/31/2005, the dollar went right back to the underlying weak trend in 2006.  

Apple has already announced that they were going to repatriate hundreds of Billions… But the dollar hardly budged… So the question here is: Will this current tax amnesty prop up the dollar like it did in 2005? Well, given what we know about 2005, there’s certainly that possibility…  And that leaves us with battling themes… 

In one corner we have the results of 2004, and in the other corner we have the results of 2005, please come to the center of the ring and shake hands before you begin this brawl.  I think this brawl will yield conflicting results for the dollar this year… While I believe the dollar will lose ground in 2018, I also see periods of dollar strength sprinkled in which astute currency buyers will see them for what they are, which is an opportunity to buy at cheaper levels! 

The price of Gold gained a whopping $2.50 yesterday, but it had all kinds of gyrations during the trading session, that had the shiny metal stronger and then weaker, and stronger, and so on, and when the dust settled on the day, Gold was $2.50 higher… Gold is up $4.70 in the early morning trading today, but we all know what can happen to those early morning gains once the “boys in the band” arrive at their desks, now don’t we?

Sometimes, the “boys in the band” just let it go, and see where it lands, so let’s hope for some of that today! 

The U.S. Data Cupboard is empty today, so no data to speak of, and like I said yesterday, we won’t see real economic data until Friday. The dollar, Gold and Oil are all trading on their own merits until then… Would somebody get ahold of the steering wheel and stop this drifting by the currencies?   

To recap… The lawmakers agreed to kick the can down the road again yesterday, to stop the government shutdown. Feb 8 is the new and improved deadline… Doofusses and clowns… no, I’m calling the lawmakers names, I’m just saying that Doofusses and clowns could have figured this all out months ago…  put your petty differences aside, and your personal agendas and do what’s right for the country. Now does that seem so difficult to do?  The currencies are drifting about aimlessly, Gold gained just $2.50 yesterday and the price of Oil inched higher.  

For What It’s Worth…  This was sent to me by dear reader, Bob, who knows how intrigued I am with the economic growth in Russia. This is about the ruble’s readiness for global expansion, and can be found here:https://www.rt.com/business/416636-russia-ruble-dollar-dependence/   

Or, here’s your snippet: “The ruble can play a greater role in the former Soviet republics, according to the Central Bank of Russia. The Russian currency is seeking to compete with the US dollar in trade with the Eurasian Economic Union and CIS countries.

The country’s central bank says by 2035 the ruble can expand in the EEU, a trade and political bloc uniting Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan. It can also develop in the Commonwealth of Independent States (CIS), the bank says. 

The BRICS countries are also among the key markets for promoting the ruble. In Russian-Indian trade, the share of foreign currencies, mostly the dollar, has dropped from 96 to 80 percent. Moscow and Beijing have increased the share of ruble-yuan trade from 13 to 16 percent in the matter of a year.”  

Chuck Again…  Who’da thunk it, right? Russia, the country with all the economic sanctions placed on it, is ignoring the sanctions and keeping the pedal to the metal so to speak…   

Currencies today 1/23/18… American Style: A$ .7964, kiwi .7316, C$ .8010, euro 1.2250, sterling 1.3945, Swiss $1.0406, … European Style: rand 12.1369, krone 7.8775, SEK 8.0397, forint 252.86, zloty 3.4065, koruna 20.7378, RUB 56.56, yen 110.40, sing 1.3194, HKD 7.8175, INR 63.74, China 6.4017, peso 18.82, BRL 3.1970, Dollar Index 90.43, Oil $63.75, 1oyr 2.62%, Silver $16.96, Platinum $991.15, Palladium $1,090.45, and Gold… $1,336.60   

That’s it for today.. Here’s proof that you can’t please all the people all the time… I received about the same number of emails from those agreeing with me about being tired of the Patriots, as I did from those calling me names because I don’t like their beloved Patriots… Two Big Games will be taking place in St. Louis tonight… Our Blues will attempt to reverse that ugly loss Saturday night, and the SLU Billikens face VCU… Kathy & Chuck will meet the lady that found this beautiful location on the beach for us 6 years ago, for lunch today. Sharon has been a Pfennig reader for a number of years now, and we always enjoy meeting up with her!  And with that, Jethro Tull takes us to the finish line today with their song: Locomotive Breath…  Now go out and have a Tom Terrific Tuesday, and be good to yourself!  

Chuck Butler

 

U.S. Government Is Shutdown!

Chuck Butler’s: A Pfennig For Your Thoughts 

January 22, 2018

* Gold can’t take advantage of Gov’t shutdown!

* ECB & BOJ meet this week

Good Day… And a Marvelous Monday to you! Well, winter is over here, thank goodness, and we can get back to warmer days with sun filled skies, and all that goes with spring in the deep south! The U.S. government is in shutdown right now, but has worked throughout the weekend to end this impasse that they’ve arrived at, and so, they’ll take another vote today to see if anyone has changed their minds…  The Gov’t has “emergency funds” to keep things going for now, but when you’re fighting a war you certainly don’t want to not make your payroll to the military!   Uriah Heep greets me this morning with their song: Stealin’   

There are some great stories about the American revolution and how the U.S. military almost quit, because they weren’t being paid, but along came some funding from France of all places, who would have loved to see the Brits lose, and well, you know the rest of the story…  

Well, what else is going on besides all this stuff with the lawmakers not being able to come to an agreement? Nothing comes close to the magnitude of a U.S. government shutdown folks… With the government having it tentacles extended in just about everything these days, it stands to reason that the shutdown will affect just about everything… 

One of the assets that has NOT taken advantage of this government shutdown is Gold… I would think, that Gold would be high stepping it to the Sly Stone song, I want take you higher! But Gold was only able to add $4.20 on Friday, and is up a couple bucks in the early trading today.  The “boys in the band” have made certain that Gold doesn’t get away from them, as another 224,000 contracts traded in Gold on Friday.  I hope I’m still on the right side of the daisies on the day that the “boys in the band” become irrelevant…  I long to see that day!  

The currencies have drifted about since our Tub Thumpin’ Thursday.  At times trading gets a little choppy, and the rest of the time there’s just no conviction to go one way or another.  I would have thought that Friday’s disappointing Consumer Confidence number (94.4 VS 95.9 previous month and 98 forecast) would have been enough to send the dollar to the woodshed for a little while… But come on Chuck! Think about it, you’re not only stuck in the 60’s with your music, you’re stuck in the thought that fundamentals rule currency moves… UGH! You’re right, other Chuck, thanks for reminding me! 

The European Central Bank (ECB) meets this Thursday. This could be the meeting that spins the Eurozone monetary policy out of business… But I doubt it will… Everything seems to be moving along without any major obstacles in the Eurozone right now, and I don’t see the ECB wanting to upset that applecart.  But keep in mind that ECB President Mario Draghi, will speak after the rate announcement, and he has a tendency to throw the euro under the proverbial bus whenever the single unit begins to look strong again.  

Speaking of Central Bank meetings, the Bank of Japan (BOJ) will meet tomorrow night… Wouldn’t that be something if the BOJ joined the U.S. and Eurozone in Quantitative Tapering?  (selling the bonds they’ve been buying for years now)  Nah… I don’t see that happening, and with BOJ Gov. Kuroda probably nearing the end of his reign, that could mean the next BOJ GOV could be a “bond buyer”, and that would be that! 

The Japanese yen has recently come back a bit in value VS the dollar, as it hangs onto the coat tails of the euro. But I’m just not a fan of the yen, too much debt, too many demographics problems, and a current Gov’t that believes they haven’t done enough to help the economy, keeps me thinking that yen is just a day away from falling from grace…  That’s only 24 hours away! HA!  But seriously, how does this currency remain relevant with all those problems I just talked about, and more that I didn’t talk about? Only the Shadow Knows!  

After a couple of weeks of increasing its value almost daily, the price of Oil has been stuck in the mud for the last week. After rising above $64 on supply problems the price of Oil has fallen back to the $63 handle and can’t seem to find a bid.  Over the weekend, Russia and our friends at OPEC (NOT!) had a joint announcement that their alliance will go through 2018, which means that the production cuts will remain in place for now. 

With the price of Oil stuck in the mud, the Petrol Currencies from Russia, Brazil, Norway, and Canada have not been able to add to their gains either. The Norwegian krone has gyrated the most because of its association with the euro, but other than the krone, the rest of the Petrol Currencies are non-movers, once again.  Start and stop, start and stop, rinse and repeat, is the norm for the Petrol Currencies these days.

 I already talked about the one and only economic print from the U.S Data Cupboard on Friday above, so, all that’s left to do is to look at the data prints we’ll see this week!  And looking at the schedule, I really don’t see anything that will move the markets until Friday, when Durable and Capital Goods Orders will print.  And with the Gov’t shutdown going on, the other scheduled data might not be timely this week… 

Before I head to the Big Finish I’ve got a couple of thoughts for you today…  The first being how significant this week is historically… Well, as we start the week, let me remind you that there are some historical things that happened within the next week 45 years ago… 45 years ago this week: Within a period of 72 hours, Nixon was re-inaugurated, LBJ died, Roe v Wade was decided, and the Vietnam settlement was announced. Bet you didn’t know that!   

And Second…For all of you out there, that despise Paul Krugman the way I do, you’ll really get a kick out this website that my former colleague, and friend, the metals guru, Tim Smith, sent me last week… It’s called Contra-Krugman! And these two guys, Tom and Bob, take issue with just about everything that comes out of Paul Krugman’s mouth. ( I usually just pick out the Big Ones he makes) You should Google: Contra-Krugman, and check it out!

I was looking at an email that was sent to me from the Contra-Krugman guys yesterday and came across some data that blew my mind! Jumpin’ Jehosephat! (when was the last time you heard that phrase?) But in a recent survey, consumers were asked what percentage of a dollar earned by corporations is kept by them after expenses, and taxes? The average for the total answers was 36%… Boy is that far off base, so far, even a righty could pick him off! The answer is… drum roll please… 7.9%, and only 6.9% when you take out the financials… Walmart’s is only 2.1%…

Oh, the things that are going to mount up to bring down the financial system… I’m just saying…   

To recap… The U.S. Gov’t is in shutdown mode, but lawmakers have worked all weekend to come to an agreement, but seem to be at an impasse… They will take another vote today to see if they can end this shutdown. In the meantime, Chuck wonders why Gold isn’t high stepping it with the Gov’t shutdown, bringing about so many things that could upset the economic applecart. The ECB and BOJ meet this week, and Chuck doesn’t expect much out of either of these two Central Banks. And Chuck reminisces about this week 45 years ago…    

For What It’s Worth…  i found this on Ed Steer’s Saturday letter, and thought it to be FWIW. It’s about Latin American Gold and how it’s being brought to the U.S. and can be found here: www.miamiherald.com/news/local/community/miami-dade/article194187699.html  

Or, here’s your snippet: “When Juan Granda ventured into Peru’s Amazon rainforest to score another illicit load of gold, he boasted that he felt like legendary Colombian drug lord Pablo Escobar.

“I’m like Pablo coming … to get the coke,” he told two co-workers in a text message in 2014.

A 36-year-old Florida State University graduate who once sold subprime loans, Granda was no cartel kingpin. But his offhand comparison was apt: Gold has become the secret ingredient in the criminal alchemy of Latin American narco-traffickers who make billions turning cocaine into clean cash by exporting the metal to Miami.

The previous year, Granda’s employer, NTR Metals, a South Florida precious-metals trading company, had bought nearly $1 billion worth of Peruvian gold supplied by narcos – and Granda and NTR needed more.

The United States depends on Latin American gold to feed ravenous demand from its jewelry, bullion and electronics industries. The amount of gold going through Miami every year is equal to roughly 2 percent of the market value of the vast U.S. stockpile in Fort Knox.”  

Chuck again… pretty neat article from the Miami Herald, hope you have time to read it..   

Currencies today 1/22/2018… American Style: A$ .8016, kiwi .7308, C$ .8022, euro 1.2261, sterling 1.3905, Swiss $ 1.0410, … European Style: rand 12.0310, krone 7.8476, SEK 8.0218, forint 252.32, zloty 3.40, koruna 20.7077, RUB 56.67, yen 110.69, sing 1.3187, HKD 7.8176, INR 63.76, China 6.4006, peso 18.57, BRL 3.1951, Dollar Index 90.42, Oil $63.32, 10yr 2.65%, Silver $17.06, Platinum $1,108, Palladium $1,105.69, and Gold… $1,332.90

That’s it for today…  Well, the Super Bowl teams were decided yesterday… I don’t think I’ll even watch the game, for I’m tired of the Patriots…  Not that I’m a Jaguars fan, but I know a lot of people who are… only 24 days until pitchers and catchers report, and a little over a month until the first spring training game! YAHOO! Our Blues got thumped on Saturday… UGH!  I’m glad that game didn’t get broadcast down here! My good friend, Duane, and I think the Blues play to their competition…  The Yardbirds take us to the finish line today with their song: For Your Love… I hope you have a Marvelous Monday, and Be Good To Yourself!  

Chuck Butler

 

Will The Gov’t Shutdown Today?

Chuck Butler’s: A Pfennig For Your Thoughts 

January 19, 2018

* Dollar to end the week down

* For the 6th consecutive week!   

Good Day…  And a Happy Friday to one and all! I don’t know what’s going on in your life, but I sure hope to make this a Fantastico Friday, and hope that you can too! Our Blues won last night in Ottawa, setting today up for a good day! Will the U.S. Gov’t shutdown today? I doubt it! I heard yesterday that a plan to extend the deadline and keep the Gov’t running was being worked on. So, expect to hear that good news later today…  Paul McCartney and Wings greet me this morning with their song: Band On The Run… 

My weekly letter for the Dow Theory Letters (DTL) printed last night, and in it I talk about China… And then this morning, I read some more good stuff on China, and thought, “darn it Chuck, once again you talked about something before you should have!”  Yes, that’s usually the case, but better early than late to the party don’t you think?  It’s just a pain in the rear end waiting for what I said would happen to actually happen! UGH! 

So, since I opened with talk about China, I’ll go through the recent data a little later this morning, but first, we’ve got to talk about the U.S. Gov’t shutdown that’s scheduled for today… Because of this threat to our economy, the dollar is getting sold this morning, and the currencies are looking spiffy, and Gold is looking like something out of Gentlemen’s Quarterly! HA!  

The Aussie dollar (A$) finally knocked on the door of 80-cents and the door opened wide for the A$, and the currency stepped through! Running after the A$ is its kissin’ Cousin across the Tasman, kiwi, which also made a strong move past 73-cents in the overnight markets. The Big Dog, euro, is off the porch, chasing the dollar down the street, but it appears that all the little dogs (other currencies) are going to outrun the Big Dog… 

One of those little dogs outrunning the euro, is British pound sterling. This currency has really taken off for higher ground in recent weeks. Of course it doesn’t hurt the pound that the dollar has seen 6 consecutive weeks of losses… That’s right 6 consecutive weeks the dollar has ended down on the week, now that’s the makings of a weak dollar trend if I’ve ever seen one, and I’ve been around long enough that not only were rainbows in black and white when I was a boy, but I’ve seen 4 different trends since I began writing the Pfennig! 

One currency that has me a bit befuddled is the Swiss franc, which normally moves in opposite directions of the euro, well, when I say “usually” I mean since the Swiss National Bank (SNB) decided to tie the franc to the tracks, I mean the euro about 10 years ago.. But not this time… the SNB has remained on the sidelines, and I haven’t heard a peep out of them as the franc has been pushing the envelope of currency appreciation across the desk. 

I believe that this is a tell-tale sign that a weak dollar trend is in place, when currencies that have closets full of skeletons like the franc and pound sterling can keep the closet door shut, and rally like there’s no tomorrow… 

Ok, I promised above that I would go through the Chinese data that has printed since I wrote my DTL article that printed last night. So, here you go… For the first time since 2010, Chinese GDP grew in 2017 to 6.9% from 6.7% a year earlier. December Retail Sales were strong with a 9.4% figure attached to them, and December Industrial Production (IP) also printed strong at +6.2%, and finally, China reported that they created 13 Million new jobs in 2017… 

No wonder the Global Growth Revival has taken off in the past 6 months! Yesterday I told you about how the Tent Revival for Global Growth that I talked about seeing take place 6 months ago, had really taken off for higher ground, and now I see what has underpinned this Global Growth… A recovery of the Chinese economy… 

Now, you make be one of those naysayers that believes that China cooks their books, and none of this growth is really there… But if that’s the case, why then hasn’t the Chinese economy collapsed like so many economists and pundits wrote about the past 5 years? And then there’s the thought that the U.S. also cooks their books, so it all evens out in the wash, eh? 

My good friend, Dennis Miller, the Retirementor, and creator and editor of his newsletter that appears on: www.milleronthemoney.com, wrote a very good article for yesterday’s release, on Social Security, here in the U.S. and this is where the cooking of the books really is seen, as the cost of living  (COLA) increases haven’t kept pace with inflation or the increased Medicare costs.  If you’re retired or nearing retirement, or just plain interested in what he has to say, I strongly suggest you visit the link above and then read away! 

But the inflation calculator for Social Security payments  certainly is a case of cooking the books, don’t you think? Alrighty then, let’s move on from this before I begin to yell at the walls and wake everyone in the building up! 

Gold saw a choppy day of trading, with a very large 280,000 contracts traded, but it ended the day down just 20-cents… Every up-tick was met with a paper short trade, and it went on like that all day. But as my mom used to tell me all the time… “Chuck there’s a silver lining in everything”, so where is the silver lining in Gold you may be asking?  Well, the early morning trading sees Gold up $8 this morning! This possibility of a Gov’t shutdown today, has Gold moving higher as it should when something like this exists in the economy.  

The U.S. Data Cupboard just has the stupid Consumer Confidence index today, and it’s expected to have risen again this time from 95 to 98, and why not since MarketWatch is reporting that more than half of S&P 500 stocks are up 20% or more since Trump took office.   And the stupid Consumer Confidence Index is nothing more than a check of the pulse of stocks…  Don’t these people realize that the U.S. Gov’t could be shutdown today? Shouldn’t Consumer Confidence fall because of this threat?

Well, it should, but it won’t… And that’s why I call it the “stupid Consumer Confidence Index”  My grandkids would be all over me like white on rice if they heard me say that, or knew that I wrote that! But, I tell them all the time, I’m old, and when you’re Old you’re allowed to say things that little kids are not allowed to say!  And when they’re old they will be able to say stupid again too!

It‘s all about not wanting to hurt someone’s feelings…  But when I was a kid, if you got your feelings hurt, it encouraged you to do something about it, to better yourself.. Our moms loved us, but they sure didn’t think we were God’s gift to the world, and, wait a minute Chuck, that’s a Butler Patio discussion, not a Pfennig discussion.. Whew! saved by my conscience!   

To recap…  The U.S. Gov’t shutdown looms today, will it happen? Chuck doesn’t think so, as another extension is in the works already! But if it does, watch the dollar get taken to the woodshed! The dollar has had 6 consecutive weeks of losing ground on a weekly basis. This morning, the currencies have the conn, and Gold is up $8 in the early morning trading…

For What It’s Worth…  Here’s another case of a BIG BANK getting fined for breaking the law but no one goes to jail… This article was found on Reuters and you can find it here: https://www.reuters.com/article/us-hsbc-settlement/hsbc-to-pay-100-mln-to-settle-u-s-probe-into-currency-rigging-idUSKBN1F739N   

Or, here’s your snippet: “HSBC Holdings today agreed to pay $101.5 million to settle a U.S. criminal probe into the rigging of currency transactions.

The payment includes a $63.1 million fine plus $38.4 million in restitution to a corporate client, according to a deferred prosecution agreement filed today with the U.S. District Court in Brooklyn, New York.

In the settlement with the U.S. Department of Justice, HSBC also agreed to bolster its internal controls, and admitted and accepted responsibility for wrongdoing underlying two criminal wire fraud charges filed today against the bank, according to the agreement.

Deferred prosecution agreements let companies avoid criminal charges so long as they comply with the terms.” 

Chuck Again… And nobody goes to jail… That should be the title of a country-western song… it could go like this: I worked at a bank that taught me how to trade, and I done a client wrong, it was what I was taught to do, but now I’m without a job, but at least Nobody goes to jail!  

Currencies today 1/19/18… American Style: A$ .8020, kiwi .7302, C$ .8057, euro 1.2274, sterling 1.3908, Swiss $ 1.0461, … European Style: rand 12.15, krone 7.8394, SEK 8.01, forint 251.88, zloty 3.40, koruna 20.7115, RUB 56.62, yen 110.64, sing 1.3196, HKD 7.8180, INR 63.69, China 6.4241, peso 18.60, BRL 3.2154, Dollar Index 90.31, Oil $63.66, 10-year 2.63%, Silver $17.09, Platinum $1,012.75, Palladium $1,112.87, and Gold… $1,338.20  

That’s it for today… Sorry for that rant I started to go on near the end today… I need to keep this on the tracks! Happy Birthday tomorrow to my good friend and former neighbor, Kevin Yanker aka Webbie…  How about our Blues? They’ve won last night, making it 2 consecutive games won on the road… I sure hope they can keep this edge through the playoffs this year…  It’s now less than one month before pitchers and catchers report for Spring Training! YAHOO! Spring Training games start earlier than usual this year, which means the games will end earlier than usual, and I’ll have to go back home earlier than usual! UGH! Easter is the first Sunday in April this year, and that’s the reason for my earlier trip home than usual! Oh well, it is what it is!  Hey! today looks like a good day, to have a good day! right? Now, let’s go out and do everything we can to make this a Fantastico Friday, and Be Good To Yourself!   

Chuck Butler

Backing Away From The Treasury Auction Window!

Chuck Butler’s: A Pfennig For Your Thoughts

 January 18, 2018  

  * Bank of Canada hikes rates!

* U.S. prints strong data… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m still waiting for the infusion center down here to call me to come in. I can’t imagine what the holdup is, but when you deal with insurance companies, they sure know how to elongate things. I’m just saying…  It was a good night, for my teams, as both the Mizzou Tigers, and the SLU Billikens won their respective basketball games. I actually was able to watch the Mizzou game VS Tennessee, as the beauty of Cable TV shown brightly! Steely Dan greets me this morning with their song from the album of the same name: Aja

Instead of Turnaround Tuesday, today we have a Turnaround Thursday! Yesterday saw the dollar continue to gain throughout the day, with the euro falling through the 1.22 handle, and Gold losing over $11 on the day. But all that bad stuff has turned around in the overnight sessions, and the euro is back above 1.22 and Gold has gained $3 in the early morning trading.  It’s a Turnaround Tub Thumpin’ Thursday…   

The Bank of Canada (BOC), did indeed go ahead and hike rates yesterday, which happened to be their 3rd rate hike since last summer! Yesterday, I told you how the markets had soured on the thought of a rate hike, and thought that the BOC would still talk like a hawk. But I was holding to my guns, and said the BOC would hike rates, and they did, moving their internal rate to 1.25%.  

This is a step in the right direction to throw some cold water on the housing bubbles in Toronto and Vancouver, but there’s a lot more work to be done there, and I hope the BOC is up to it!  The Canadian dollar/ loonie didn’t rally on the rate hike, as it had already been priced in weeks ago, back when the markets did believe that the BOC would hike rates, and before their confidence in the BOC waned.  

So, the BOC is moving in the right direction now, and I’ll stop dissing BOC Gov. Poloz, as long as he sticks to the rate hike cycle now in place… Remember last year when I kept talking about the Tent Revival for Global Growth? I was out in front of this idea that the economies of the Globe were healing and Global Growth was going to return.  And now it’s coming to fruition right before my eye!  

OK, the dollar pulled itself off the canvas yesterday, first to do a little rope-a-dope, and then come out of that defensive position, swinging and landing some heavy blows on the currencies and metals. This all took place after the morning U.S. Data prints, that included a very strong Industrial Production print for December.  And when I went to bed last night, the dollar appeared to have wrestled the conn back from the currencies.  But when I turned on the currency screen this morning, the overnight markets had turned things around, and the dollar is back to doing the rope-a-dope again.

Shoot Rudy, even the price of Oil, you know Black Gold, Texas Tea, slipped after enjoying a nice uninterrupted run higher in price. Black Gold slipped below the $64 handle, and looked like it was going to slip even further through the handle, but the turnaround Tub Thumpin’ Thursday stopped the slide and Texas Tea is recovering lost ground this morning. 

I was very disappointed in “the boys in the band” yesterday…  Just when you think they’ve slipped under the rocks they live under, they pop out and cause havoc in the price of Gold… Yesterday, Gold had climbed to $1,344, and then you should see the price graph with a line straight down. Even a novice graph watcher would look at that move and say, “what the hell just happened?” And they would soon figure out that it was an engineered take down by the price manipulators. 

I get so, frustrated, depressed, and worn out knowing that the “boys in the band” did what the did yesterday…  Gold is attempting to gain back some of the lost ground that happened in one fell swoop yesterday. But the shiny metal has its work cut out for it once again. This isn’t the first engineered take down of the price of Gold, and each time it’s happened in the past, the shiny metal has been able to eventually, move even higher than it was when the takedown occurred. 

Have you been tracking the 10-year Treasury’s yield advance lately? the 10-year hit 2.60% yesterday, and quite frankly I don’t see what’s holding it back!  We have the U.S. Fed stepping away from the auction window, and China contemplating doing the same… The U.S. continues to increase its debt, and that debt has to be financed with the sale of Treasuries, and the two of the biggest buyers are nowhere to be found… 

There’s only one place for Treasury yields to go…  UP!  I’ve got a very telling article for you in the FWIW section today that highlights this whole scenario of countries backing away from buying Treasuries… Be sure to stick around for that! HA!   

The U.S. Data Cupboard goes back to producing non-market moving data today. But boy did they turn the markets attention toward the data prints yesterday… I already told you that Industrial Production was a very strong print for December, but in addition to that strong print for IP, was an equally strong print in Capacity Utilization (CAPU).   This data, CAPU, is important in my eye, because it’s one of the few forward looking pieces of data, and it gives you an indication of how corporations are feeling about the economy… 

I do believe that this euphoria over the U.S. economy is going to be short-lived, as the Fed has been hiking rates and says they will continue to do so, which is going to squash any hopes of an economic recovery here in the U.S.  Now, I say that with the thought that interest rates here in the U.S. are still very low, historically speaking that is, and they’ve got some ground to cover before they become a burden on the economy…   

To recap… The dollar had its way with the currencies and metals yesterday, but things have turned around in the overnight markets. The euro fell below 1.22 yesterday, but has climbed back over the figure in the overnight markets. Gold got taken down by “the boys in the band” yesterday, and is attempting to recover some lost ground, with a mini-rally this morning. The Bank of Canada hike rates, as Chuck said they would, yesterday.  

For What It’s Worth… I pulled this from Ed Steer’s letter this morning, and he got it from Zerohedge.com and like I said above, it’s about countries reducing their Treasury holdings at a time when, well we need for them to increase their holdings! This article can be found here: https://www.zerohedge.com/news/2018-01-17/chinese-treasury-holdings-slide-lowest-july  

Or, here’s your snippet: “In the aftermath of Bloomberg’s report from last week that China may slow down or reverse its Treasury purchases should the U.S. trigger trade war with Beijing, pundits were closely watching today’s TIC report from the Treasury to see what China did November. And according to the just released Treasury International Capital data data for the month of November, Chinese Treasury holdings dropped from $1,189.2BN in October to $1,176.6BN in December, the lowest since July’s $1,166BN.

China wasn’t the only seller in November: the total value of foreign investors Treasury coupon holdings fell $18.825 billion in November on top of a $22.264 billion decline in October, but foreign holdings of corporate debt surged $28.699 billion in November, following a $10.447 increase in October. There was also a net increase in the value of GSE/MBS holdings of $12.267 billion in November after the $9.971 billion increase in October. These totals do not include adjustments for non-marketable Treasuries, ABS repayments and stock swaps.

Some other notable foreign holders of U.S. paper:
* Japan holds $1.08t, a decrease of $9.9b from last month
* Belgium holds $115.3b of U.S. Treasuries, a decrease of $0.7b from prior month
* Russia holds $105.7b of U.S. Treasuries, an increase of $0.7b from prior month
* Cayman Islands hold $269.4b, a decrease of $0.5b from last month
* Saudi Arabia holds $149.0b, an increase of $3.8b from last month 

Chuck again… I found it interesting that Saudi Arabia saw an increase in their holding. A few months ago, they were one of the Biggest sellers of Treasuries. You don’t suppose that the U.S. and Saudis kissed and made up do you?   

Currencies today 1/18/18… American Style: A$ .7985, kiwi .7293, C$ .8037, euro 1.2228, sterling 1.3860, Swiss $1.0414, … European Style: rand 12.26, krone 7.86, SEK 8.0370, forint 252.19, zloty 3.4070, koruna 20.7582, RUB 56.63, yen 111.26, sing 1.3218, HKD 7.8178, INR 63.75, China 6.4328, peso 18.69, BRL 3.2289, Dollar Index 90.67, Oil $63.94, 10-year 2.60%, Silver $17.09, Platinum $1,001.90, Palladium $1,106.82, and Gold… $1,329.90

That’s it for today… That cold front that has dipped so far south, has even touched down here in S. Florida. The weather people were reminding parents to bundle their kids up for their wait at the bus stop this morning, as it was going to be cold (according to them) at 40 degrees! HA! Today is our winter, that’ll be it…  We said goodbye to our friends yesterday, after their short-stay. It was fun while it lasted, their stay that is! Our Blues are on the road and play in Ottawa tonight. Well, I needed to hear the song that’s taking us to the finish line when I first woke up this morning, because I really didn’t want to answer the bell, but did, and so now I get to hear the late, great Alvin Lee, play his guitar as his band Ten Year After, play their song: Choo, Choo Mama…  I hope you’re able to have a Tub Thumpin’ Thursday, and remember to always, Be Good To Yourself! 

Chuck Butler

Economists Calling For A Dollar Slide in 2018…

Chuck Butler’s: A Pfennig For Your Thoughts

 January 17, 2018  

* BOC meets today what will they do?

* Chinese rating agency lowers U.S. rating… 

Good Day… And a Wonderful Wednesday to you! Well, my wishes that my stomach problems would leave me once our guests arrived yesterday, came true! Well, they went away for the day and evening, which was fine with me. Our Blues won in overtime in Toronto last night, so, it was a good day all-around! England Dan and John Ford Coley greet me this morning with their song: Nights Are Forever…  Those two guys sure had some great mustaches… 

Well, as i left you yesterday, the European session was taking some profits on the currencies that had been well bid throughout the night to that point. When the U.S. market opened, the profit taking stopped and the currencies rallied once again, only to see the profit takers come back at the end of the day.  the overnight markets haven’t seen much movement, and so we start the day with the currencies and metals off their lofty levels of yesterday, but not by much, so don’t panic!

The Bank of Canada (BOC) will meet today, and it was once through in the markets that the BOC would follow the Fed’s rate hike, with one of their own at this meeting. But recent data has caused some hedging of those rate hike thoughts, and now the so-called experts are saying that the BOC will not hike rates, but talk hawkishly today…  Hmmm… I’m going to go out on a limb here, no worries, a big fat limb to hold me, and say that the BOC will go ahead and hike rates today. 

The only thing in my mind that could stop BOC Gov. Poloz from hiking rates is the fact that the loonie has moved past 80-cents in recent trading… And Poloz does not like a strong loonie! Of course it’s all relative, as I wouldn’t consider a 80-cent loonie to be strong… Back in the day when the loonie was at parity to the dollar, was a period when I would have considered the loonie to be strong! 

But given the fact, that just a year ago, the loonie was fighting to get back to 72-cents, today’s 80-cent figure looks pretty good, and to Poloz, it looks too strong.  And a rate hike could very well push the loonie even higher, and so… That’s the bugaboo for Poloz today as the BOC meets. 

The euro saw choppy trading yesterday, when at time it appeared ready to move forward to 1.23, and other times when it appeared it would lose the 1.22 handle, and finally settling in around 1.2230.. I read a piece this morning that had economists increasing their calls for a stronger euro and price of Oil this year.  A Trader at JP Morgan made the call that the euro would be 1.24 by year-end… 

Hmmm… that sure appears to me to be a safe call considering the euro traded near 1.23 on Monday, and there’s still 11+ months to this year!  I would have been more impressed if he had said the euro would be 1.30 by year-end…  But he didn’t, and so we go along with the thoughts that the strong dollar trend is over, and a new weak dollar trend is forming and where the euro ends up only the Shadow Knows!  

Back in June I was ahead of the crowd with the euro, as it was trading at 1.09, and said that the sentiment had changed toward the dollar/ euro, and the euro was ready to break out on the upside…  I always love it when the markets catch-up with what I’ve been saying for months… 

Well, the U.S.  Gov’t. is getting close to a shut-down again… I don’t see it happening, instead I see either a deal is closed or they kick the can down the road further, and extend the talks… Remember the last time they extended the deadline and I said, it make me laugh because what makes them think they can get a deal done in two weeks, when they’ve had all year to get it done? 

Gold closed down $1.60 yesterday to end the day at $1,338…  In the early trading this morning, Gold is down  a couple of bucks.  I’m a very impatient man when it comes to the price of Gold.. I truly expect to see it moving higher on a daily basis, given every thing that’s going on in the world these days, including negative interest rates in Sweden, Switzerland, Japan and the Eurozone, and the U.S. with negative “real interest rates”, which I’ve explained before, but here goes again… “real interest rates” are the net of the current Fed Funds rate minus inflation… And when doing that, the U.S. rates are negative. 

But that’s not what is happening with Gold’s price right now… It’s not to say that it couldn’t happen in the future.  And if you’re like me, you’re just too impatient to wait for that to happen! HA! 

Well, I  told you yesterday that the U.S. Data Cupboard would have two of my fave real economic data prints today… Industrial Production (IP) and Capacity Utilization (CAPU) both will print with their December results today. Throughout 2017, these two data pieces were just atrocious, and so I think that with everything else that was moving along nicely in December with all the deficit spending, that these two will show better results for December…  

Oh, and did you hear that a ratings agency in China lowered the credit rating of the U.S. from A- to BBB+?  Ok, they aren’t Moodys or S&P or Fitch, but at least someone out there sees what I see regarding the debt and now tax cuts coming… 

To recap…  A choppy day of trading for both the currencies and metals left them all lower in value than they were yesterday morning, as we start today. Chuck thinks that for the most part the selling has been profit taking, which should end today, if that’s correct.  The Bank of Canada meets today to discuss rates, and while the markets have abandoned their call for a rate hike today, Chuck keeps the pedal to the metal on the rates hikes in Canada.  

For What it’s Worth…  well this article came to me curtesy of longtime reader Bob and it’s an article on Zerohedge.com about the coming collapse of the dollar, and can be found here: https://www.zerohedge.com/news/2018-01-15/dollar-collapsing 

Or, here’s your snippet: actually there is no snippet, because the article is all chopped up with some great graphs in between, so you’ll have to click the link to see what’s going on with the dollar…  

Currencies today 1/17/18… American Style: A$ .7981, kiwi .7271, C$ .8033, euro 1.2242, sterling 1.3785, Swiss $ 1.0387, … European Style: rand 12.3060, krone 7.8691, SEK 8.0437, forint 252.48, zloty 3.4087, koruna 20.7883, RUB 56.40, yen 110.74, sing 1.3229, HKD 7.8192, INR 63.85, China 6.4370, peso 18.77, BRL 3.2196, Dollar Index 90.61, Oil $63.57, 10yr 2.55%, Silver $17.21, Platinum $1,003.60, Palladium $1,110.65, and Gold… $1,336.40   

That’s it for today…  A little shorter than normal, but chock-full-o-information, eh?  A friend of mine back in frigid and snowy St. Louis sent me a cartoon yesterday that had me laughing out loud… It was a man all bundled up with snow shovel in hand, telling his wife… “I’m going back out to shovel 24 inches of global warming”… HAHAHAHAHA!  Had a blast with our guests, Gary and Diane yesterday and last night… Their visit is a short one, as they leave this afternoon… UGH!  We love visitors to our winter home! Maple Leaf Gardens, is where our Blues won their game last night, good for them! I’m going to go to Roger Dean Stadium today and pick up my spring training tickets. I always get excited to receive them! Alrighty then, the Guess Who takes us to the finish line today with their song: Undun..  Now, got out and make this a Wonderful Wednesday! And don’t forget to be Good To Yourself! 

Chuck Butler

China Changes Its Pricing Regime…

Chuck Butler’s: A Pfennig For Your Thoughts 

January 16, 2018

* Currencies go on a rampage VS the dollar!

* The price of Oil continues to steadily rise…  

Good Day… And a Tom Terrific Tuesday to you! And welcome back from the 3-day Holiday weekend, that is if you were able to enjoy it. I know that there are some that don’t get to celebrate 3-day Holiday weekends, and that’s just how it is…  I’ve been down the past two days, with a stomach problem that is just plain awful. I’m not eating just to help save myself from problems and even then I still have problems! UGH!  Oh well, hopefully it gets out of my system today in time for our good friends, Gary and Dianne, who are coming for a short visit. The O’ Jays greet me this morning with their song: Love Train…   

The currencies sure have taken off for flight since last week, and without the U.S. and the PPT (plunge protection team) around to save the dollar, the currencies kept taking liberties with the dollar. The euro is trading in the 1.22 handle, and the Aussie dollar (A$) is knocking on the door to 80-cents! As I look at the currency screen I don’t see one currency with that hasn’t gained VS the dollar in the past few days.  So, it appeared at first,  that the overseas markets weren’t afraid of the Big Bad Wolf (U.S. traders) and kept the pressure on the dollar all night long. I should know, because here I am in the middle of the night, checking currency prices! UGH!

But… Sooner or later love is gonna get ya. No Wait! Sooner or later some profit taking was bound to come along, and in the European session, that’s were we found it.  At first glance last night the euro was 1.2280, and now it’s trading around 1.2225…  Still with a 1.22 handle, but not as lofty as it was entering the overnight sessions. 

Gold isn’t sitting this dance out either! The shiny metal has moved, albeit slowly, but moved up against the dollar in the past couple trading sessions, and is trading above $1,330 this morning. What on earth is causing all this dollar weakness, I hear you asking? Well, I’ve laid this all out before, but let me go through it again for any new readers to class…

You see, tax cuts, lead to unknowns. And traders don’t like “unknowns”… The BIG unknown here with the tax cuts is just how much it will help the U.S. economy… Some believe that it’s the medicine that will cure the economy’s inability to grow 3% on a an annual basis. And some, like me, believe that it’s too much show and not enough go! So, until the proof of a stronger economy is in the pudding, I think we’ll continue to see the dollar in the woodshed on a more frequent basis… Notice I didn’t say, daily basis?

Well, a trend may be your friend, but a trend is not a ONE-WAY street, there’s always volatility in the trend, so please, when the volatility shows its ugly head, don’t panic and think the trend is over…

Currency trends are long sweeping moves, as witnessed by the last two trends… The weak dollar trend that went from 2002 to 2011, and the strong dollar trend that went from 2011 to 2017…

So, did you hear that Germany’s Bundesbank announced that they were going to begin accumulating Chinese renminbi as part of their currency reserves? That was the BIG new yesterday, but really shouldn’t be a surprise, as the markets led us on to believe it was… Remember in 2016 when the IMF added renminbi to their reserve currencies that make up Special Drawing Rights (SDR’s) I told you then that Central Banks around the world that owned SDR’s, would have to buy renminbi per the IMF’s allocation ratio, but that they didn’t have to do it right then and there? Well, this is the Bundesbank doing their part.

Speaking of China… Last week, the Peoples Bank of China (PBOC) announced that they had changed the regime that was used to price the renminbi on a daily basis.  The banks that help in the “fixing” of the renminbi were told to “adjust their use of the counter-cyclical factor in such a way that it didn’t have any impact on the mechanism.  OK, Ok, let me explain what that means… China has taken back some of the control of the fixing…   period.   But what about China moving to an eventual float of the currency?   

Ahhh, grasshopper, that’s still in the plans.. As I see it, and I could be wrong, the Chinese want to get all their ducks in a row with the renminbi, and having control of it will be the answer. Once everything is calmed down, and the renminbi is moving along without outside interference, the PBOC will spring a surprise on the markets with an announcement of a dirty float!  

All currencies now a days are traded with a dirty float, which means that they are valued by the markets, but… the Central Bank can buy or sell the currency to direct it in the direction it wants.  That’s a dirty float. 

The price of Oil has climbed over the $64 handle since we last talked on Friday, and I just read a blurb that said that Hedge Fund managers were increasing their bets for a higher priced Oil. Hmmm… I certainly don’t like those guys getting their hands in the cookie jar, so hopefully their “interest” is not strong at this time!  

With the price of Oil steadily moving higher, and the euro trading with a bid these days, the Norwegian krone is looking strong again, as it finally shed the 8 handle. The rest of the Petrol Currencies aren’t looking shabby either… The Russian ruble has moved toward 53, the Canadian loonie is above 80-cents, and the Brazilian real is stronger. Shoot Rudy, even the Mexican peso moved below 19 for the first time in a month of Sundays! 

And let’s not look past the pound sterling that is trading with a 1.36 handle this morning!  The Big Dog euro has left the porch! Sort of like, “Elvis has left the building”…  Speaking of Elvis, on Sunday it was the 44th anniversary of his world-wide TV special from Hawaii… He was, “Elvis” that night… I’ll always remember watching it with my mom… 

Ok, back to work…  The U.S. Data Cupboard today just has the Empire Index, which is a pulse of the manufacturing in the NY region, and is not a market mover. Tomorrow’s Data Cupboard has two of my fave economic prints. Industrial Production and Capacity Utilization will print for December, and that should get things rolling! 

To recap… The dollar has taken a ride on the slippery slope and only some profit taking in the overnight session last night has given the dollar bugs something to cheer about. The Dollar Index is trading with a 90 handle, which should tell you just how far the dollar has fallen in the past couple of trading sessions. Gold has moved higher, and the price of Oil is steadily moving upward. China changed the way they price the renminbi last week, and Chuck thinks it just a precursor to a dirty float.   

For What It’s Worth… At first glance I didn’t think much of this article, but then it began to get to me, and say, “Chuck, this is just another example of how the Gov’t’s of the world manipulate the markets” So, it’s about how 9 Canadian banks are being accused of manipulating interest rates… And it can be found here: https://www.reuters.com/article/us-canada-rigging/lawsuit-in-u-s-accuses-nine-banks-of-rigging-canadian-rate-benchmark-idUSKBN1F42IN    

Or, here’s your snippet: “A cluster of big banks has been named in a new lawsuit alleging manipulation of a key benchmark lending rate in Canada, opening up a new front in a global scandal that has led to billions of dollars in fines and penalties.

The plaintiff, the Fire and Police Pension Association of Colorado, is accusing nine banks of colluding over a period of about seven years in the manipulation of the Canadian Dealer Offered Rate (CDOR), in order to boost profits for their derivatives trading businesses.

CDOR, a benchmark created by the Canadian Bankers’ Association, is supposed to reflect the cost of borrowing Canadian dollars in North America, according to the lawsuit, which was filed last Friday in the southern district of New York.

Instead, the suit claims, the banks conspired to “suppress” CDOR by making artificially low submissions that did not reflect the actual rates at which they were lending.

On “hundreds” of days during the period in question, the suit adds, the banks’ submissions were identical, suggesting a pattern of collusion through electronic message platforms, phones, and e-mails.” 

Chuck again… I’ll say it again here… With all the scandals of manipulation that have been exposed in recent years, how is it so difficult to grasp the idea that Gold is being manipulated?   Think about that for a minute and it will sink in…    

Currencies today 1/16/18… American Style: A$ .7950, kiwi .7277, C$ .8045, euro 1.2235, sterling 1.3760, Swiss $1.0372, … European Style: rand 12.25, krone 7.8715, SEK 8.0288, forint 252.29, zloty 3.4111, koruna 20.8527, RUB 56.43, yen 110.70, sing 1.3230, HKD 7.8232, INR 64.02, China 6.4369, peso 18.75, BRL 3.2045, Dollar Index 90.65, Oil $64.07, 10-year 2.54%, Silver $17.15, Platinum $992.99, Palladium $1,119.76, and Gold… $1,336.60 

That’s it for today… I had a mathematical error last week… I was thinking at the time that is was still 2017, and said that son Andrew was 35, when he’s actually 36… UGH! I don’t like it when I make errors with math! Well, how’s your NFL team doing in the playoffs? The Jacksonville Jaguars are still in the hunt, but they have to play New England next, and I know I’m going to tick off quite a few people with this thought, but here goes any way… The Jags will have to play two teams, the Patriots and the referees… I’m just saying…  And with that I had better get this out the door, before I say anything else about the Patriots…  Triumph takes us to the finish line today with their song: Fight The Good Fight…  Please attempt to make this a Tom Terrific Tuesday and Be Good To Yourself!  

Chuck Butler

 

Surprise, Surprise, Surprise!

Chuck Butler’s: A Pfennig For Your Thoughts 

January 12, 2018

* German coalition Gov’t is close!

* Big Dog euro leads the charge today! 

* Gold soars in the early morning trading!  

Good Day… And a Happy Friday to one and all!  Well, as Gomer Pyle used to say, Surprise, Surprise, Surprise! I know, I know, I told you no Pfennig today, due to infusion Confusion, but, there was no Infusion yesterday, so here I am! The infusion center down here didn’t have enough time to clear everything with the insurance, etc. for the infusions to switch down here, so I’ll be called back next week sometime. Seals & Crofts greet me this morning with their song: Summer Breeze..  

So… Don’t look now, actually I don’t care if you take a sneak peek, but the trapdoor was sprung under the dollar yesterday afternoon, and this can be witnessed in two ways… First, the euro has hit a 4-year high of 1.2120, and second, the Dollar Index has fallen from 92.42 yesterday morning at this time to 91.39 this morning. It’s not often that we see a full figure move in the Dollar Index in a trading session, but yesterday, was that day…

The dollar selling began slowly and quietly yesterday but when it was announced that German was every so close to forming a coalition gov’t, all hell broke loose for the dollar, and it began to fall through the trap door. It will be interesting to see if all that dollar selling yesterday and throughout the night continues once the NYC traders arrive at their desks this morning. 

So, the Big Dog euro is once again off the porch, where it likes to lay around in the shade all day, and it’s chasing the dollar down the street. Longtime Pfennig readers know that when the Big Dog gets off the porch, the rest of the little dogs/ currencies, can begin to chase the dollar down the street too, and often these little dogs outrun the Big Dog. But this morning it’s all about the Big Dog, euro. 

Remember when the German election results revealed that a coalition gov’t would have to be formed, and the euro got the stuffing knocked out of it?  Because… Traders don’t like “unknowns” and that was a HUGE unknown… Well, it only makes sense that now that it appears that there will be a coalition gov’t, the “unknown” is being taken out, and the euro is free to move about the country!  And the euro is trading at a 4-year high…

Back in 2014, though the euro was trading downward, so the 1.2120 figure was on the way down, this time it’s on the way upward! So, when do you figure European Central Bank (ECB) President, Mario Draghi, throws the euro under the bus, as he’s been apt to do every time the Big Dog, euro, gets off the porch. Eurozone economic data has been good and strong latterly, which helps the euro once it gets going like it’s doing now, and I believe that Draghi, is one of those Central Bankers that strong currency hurts economic growth… 

A strong currency does combat rising inflation, and Draghi won’t like the strong euro for that reason, utmost. 

The Norwegian krone is seeing the euro rise and that helps the krone to also rise.  I know I said the other day that it appeared that the krone was stuck in the mud at 8.08, but at that time, traders were trading with an “opposites day” mentality, and the euro couldn’t find a bid…  But not any longer! There’s a strong bid for euros this morning, and the krone is right alongside the single unit. 

And how about that move in Gold this morning?  With the dollar getting sold like funnel cakes at a state fair, Gold began to move higher mid afternoon, after spending the morning in a choppy trading session. Gold initially lost the $8 gain it had in the early morning trading, only to come back and close up $5.60 on the day to $1.321.90…  But this morning in the early trading Gold is up $10 to begin the day at $1,332.60. This is the highest level in Gold since last September, when it appeared then that Gold was heading to $1,400, as many forecasters had said it would by year-end, 2017…  

But, that’ when the “boys in the band” stepped in and engineered a takedown of the Gold price. I’m not saying that the “boys in the band” couldn’t step in again, I’m just saying that Gold’s move is strong, and appears to be without an shackles attached to it this morning. The Jefferson Starship is playing on the IPod right now, and it’s my fave song by them. Miracles, which seems to be what we need for the “boys in the band” to stay away from this move by Gold…   

I was sent a link to an article by longtime reader, Bob, yesterday, that talked about Russian President, Putin, talking glowingly about how the Russian economy is growing. GDP had just printed a 1.9% gain, which I don’t think I need to remind you, but will anyway, is held down by the economic sanctions that the U.S. and European Union has placed on Russia…  Russian consumer inflation printed yesterday and year on year the December inflation only grew 2.5%!  That’s a HUGE improvement for the Russian economy. And once again I point your attention to the Central Bank of Russia Gov. Elvira Nabiullina, as the shepherd of the Russian economy, and what a great job she has done steering it around all the pit holes that the sanctions, and a lower Oil price could have caused. 

Back in the 90’s there were two Central Bankers that I lauded all the time for their work in steering their respective economies to higher ground… Germany’s Hans Tietmeyer, and the Reserve Bank of New Zealand’s Don Brash…  Elvira Nabiullina is the new version of these former stalwart Central Bankers.  

Well, the U.S. Data Cupboard finally gets restocked this morning, and we get to see the color of the December Retail Sales…  I expect nothing more than a good positive number from this data print, as we were in the Christmas and other holidays spending period… If we can’t mustard a positive Retail Sales in December, then we should pack up the bags and go home! 

So, it looks like a good strong Retail Sales print could wrap a tourniquet around the bleeding by the dollar to end the week, which would be fine with me, given that the dollar’s lasting effect would only last one day. Remember, when the markets come back next Tuesday here in the U.S., they will have long forgotten about a good strong December Retail Sales print.  

To recap…  The trapdoor was sprung underneath the dollar yesterday afternoon, after it was announced that Germany was ever so close to forming that coalition gov’t that cost the euro quite a bit of real estate back when the elections took place. So, the Big Dog euro is back to getting off the porch to chase the dollar down the street. Gold had a choppy day of trading yesterday, but is up a solid $10 in the euro morning trading today.

  For What It’s Worth…  In a “sign of the times” this article comes to us courtesy of USA Today, regarding the closing of many Sam’s Clubs, and can be found here:  https://www.usatoday.com/story/money/2018/01/11/sams-club-closing-dozens-stores-reports-say/1024986001/  

Or, here’s your snippet: “Sam’s Club, the membership warehouse owned by retail giant Walmart, is shutting down or converting 63 stores.

The company attributed the decision to the need to better fulfill online orders, less population growth than expected in some markets and too many competing locations.

The Sam’s Club closures were confirmed the same day Walmart said it would lift the hourly minimum wage in the U.S. to $11 and give out bonuses of up to $1,000.

Of the Sam’s Club locations, about 50 will be going out of business for good. Roughly 10 of those locations are closing their doors as of Thursday, while the remainder will be shuttered over the next three to four weeks.

About 10 to 12 of the stores are slated to be closed temporarily as the retailer converts them to regional distributional centers to help fulfill online purchases. Workers previously employed at those sites are not guaranteed one of the new positions.”  

Chuck again…  it’s one thing when the high-end stores close, but when an outlet like Sam’s Club closes doors, it’s quite telling folks…  

Currencies today 1/12/18… American Style: A$ .78807., kiwi .7260, C$ .7992, euro 1.2127, sterling 1.3616, Swiss $1.0305, … European Style: rand 12.3894, krone 7.97, SEK 8.1050, forint 254.29, zloty 3.4374, koruna 21.0352, RUB 56.80, yen 111.03, sing 1.3273, HKD 7.8229, INR 63.55, China 6.5024, peso 19.20, BRL 3.2237, Dollar Index 91.39, Oil $63.46, 10yr 2.55%, Silver $17.15, Platinum $997.04, Palladium $1,089.92, and Gold… $1,332.60    

That’s it for today… Again, I went through this yesterday, but since I’m here writing today… Happy Birthday to my son, Andrew!  This is a 30day Holiday Weekend, so I hope you get to have a day-off on Monday! It was absolutely beautiful here yesterday, I knew the clouds and rain wouldn’t be around too long! Daughter Dawn sent us a short video of granddaughter, Delaney Grace in her latest performance on stage in the local theater production of Mary Poppins… She’s so darn cute! Love her to pieces! Kathy was up early this morning and already brought me a cup of coffee! YAHOO! Now I’ll head out to the deck that overlooks the beach and ocean and watch the sun rise over the ocean with my coffee, and my phone playing some classical music to start the day…  Since it’s a 3-day holiday weekend, there’ll be no Pfennig on Monday. Consider this one a “bonus Pfennig”! Now go out and make this a Fantastico Friday! And it appears that today is a good day to make it a good day!  Be Good To Yourself!   Chuck Butler

China Send Out A Warning…

Chuck Butler’s: A Pfennig For Your Thoughts 

January 11, 2018  

* The Bond Gurus send out a warning!

* Eurozone prints strong data again! 

Good Day… And a Tub Thumpin’ Thursday to you! If I were back in St. Louis, I wouldn’t be writing this morning, I would be preparing for my visit with the oncologist and my infusion. My appt. with the oncologist here, isn’t until this afternoon, so here i am!  But, tomorrow will be an infusion confusion day for sure, since I’ll be receiving my infusion so late in the day. So, no Pfennig tomorrow, infusion confusion Friday… Got it? Good! The Guess Who greest me this morning with their song: These Eyes…  (be your humming or singing the words to that one now!)  

The trading mentality that was brought upon the currencies and metals after last week’s disappointing jobs report, remains in place, but really, we just have some drifting by the currencies and metals. This is getting old in my opinion… No data anywhere, to speak of, and no conviction to move the currencies one way or the other. 

The euro found a way to have a mini-rally yesterday and close back in on 1.20, but then the rug was pulled on the single unit, and it came back and stayed well below 1.20 through the night and the morning sessions.

Yesterday mid-morning I sent out a Tweet that said: Hey Twitter followers, did you see where a Chinese official announced that the Chinese would consider either slowing down or halting U.S. Treasury purchases? Now, that’s a scary thought for the dollar, eh?

For those of you on Twitter that haven’t added me as someone you follow, what are you waiting for? HA! But seriously, you should check it out, as you’ll get these little tid-bits before I write about them in the Pfennig the next day! #ChuckOButlerjr  

But…  Those words by the Chinese official didn’t move the dollar one iota…  Those words didn’t even move the U.S. Treasury market, as the 10-year Treasury saw a mini-rally with its yield moving from 2.59% yesterday morning to 2.54% this morning.  What gives with that? the former Bond King, but still a bond guru, Bill Gross, issued a statement saying that the Treaury’s  25 year long bull market has come to an end…  And the new Bond King, Jeffrey Gundlach basically said the same thing, saying that, “The moment of truth has arrived for [the] secular bond bull market! [Bonds] need to start rallying effective immediately or obituaries need to be written.”  

So, there you have it two bond guys that should know the end of a bull market when they see one, are calling for an end, and Treasuries rally… I told you on Monday that traders were trading with an “opposites day” approach. Thinking further about their words, leads me to think that these two guys head HUGE Bond Funds, so if they want to make their comments come to fruition, they certainly have the ability to make that happen… 

OK, enough on bonds…  Longtime readers know that I have a background in bond trading, so bonds get my attention very easily!  Well, the price of Oil continues to ratchet higher each day, and this morning the price of Oil is knocking on the door of a $64 handle…  Commodities, as a whole, continue to move higher as an indication that inflation is going to be a problem in the future. 

Gold was up $8 in the early morning trading yesterday, and added to that figure as the morning went along… And then voila! “The boys in the band” saw to it that the $1,328 figure that Gold had reached, was cut back, and on the day Gold only gained $3.70 to end the day at $1,316.30… The shiny metal is once again up today in the early morning trading another $3, but as we’ve seen time and time again, the early morning trading no longer is an indication of how the day will go for Gold… 

Once again today, the euro saw a strong piece of real economic data print, and it couldn’t gather any steam from the print.  Eurozone Nov. Industrial Production rose 1.0%  VS an expectation of 0.8%, so not only did the data print beat expectations, it was strong… But did it help the euro?  We’ve been through that already this morning. UGH!   

Yesterday, the Petrol Currencies weren’t going along with the rise in the price of Oil, except the Canadian dollar/ loonie. Today, things have flip-flopped, as the Petrol Currencies led by the Russian ruble are on the rally tracks, but the loonie is getting sold…  I’m telling you this now, so you can listen to me later… This trading mentality that is so prevalent in the markets right now, is for the birds! I can’t wait for it to end, and go away, it doesn’t have to go away mad, just has to go away! 

The U.S. Data Cupboard still doesn’t have much to look at. UGH! Yesterday, I stepped up to my soapbox and railed on about consumer debt accumulation. Then later in the day, I received a tweet from my fave economist, Danielle DiMartino Booth, who said, “U.S. Households May Rue the Binge of 2017—Americans will soon find out they have been living beyond their means.”

I was glad to see that she was talking about the same thing I was!  As you know, besides this writing that I do, for the Pfennig and the Dow Theory Letters, I’m basically retired, and I find that nothing has changed for me, other than the flow of income in… I’ve always been someone that likes to spend money, but doesn’t… I save up for things I want, and when I have saved enough, I go and buy what I wanted…  It’s too bad that consumers, for the most part, don’t work their finances that way, eh?  Oh well, they’ll all learn one day…  

To recap… It was another day of opposites trading in the currencies and metals. the euro tried to mount a rally, only to see it collapse, and the same with Gold. Bong Gurus, Gross and Gundlach, both issued statements that warned investors that the bond market’s 25 year bull run has come to an end. And Treasuries rallied! see? opposites! 

For What it’s Worth… Fed member, Kashkari, was talking to CNBC yesterday, and I have the video for you…  He sounds a lot like me regarding interest rate hikes, and the video can be found here: https://www.cnbc.com/2018/01/10/minneapolis-fed-proposes-massive-regulation-change-for-big-banks.html  

Or, here’s your snippet: “The Minneapolis Federal Reserve proposed a set of sweeping new regulations Wednesday aimed at reducing the risk big banks pose to the economy.

At the core of the recommendations are higher capital requirements for the nation’s largest financial institutions as well as a reduction in burdens for smaller regional and community banks. The proposals also take aim at so-called shadow banks — nonbank lenders — which are targeted for sharp taxes on the bigger firms.

In total, the proposal offers a contrast with the current regulatory aims of the White House, which is seeking to reduce many of the banking rules imposed by the Dodd-Frank reforms, adopted in the wake of the 2008 financial crisis. Incoming Fed Chairman Jerome Powell also has indicated that a lighter touch is likely for regulations.”   

Chuck Again… watch the video, please… I think you’ll see what I mean about him sounding like me…    

Currencies today 1/11/18…  American Style: A$ .7875, kiwi .7227, C$ .7963, euro 1.1947, sterling 1.3495, Swiss $1.0217, … European Style: rand 12.44, krone 8.06, SEK 8.1880, forint 258.52, zloty 3.4956, koruna 21.3680, RUB 56.93, yen 111.62, sing 1.3330, HKD 7.8222, INR 63.57, China 6.5118, peso 19.29, BRL 3.3411, Dollar Index 92.42, Oil $63.96, 10-year 2.54%, Silver $17.03, Platinum $977.46, Palladium $ 1,079.98, and Gold… $1,319.80

That’s it for today…  I just remembered that Monday is a holiday, so no Pfennig until next Tuesday… Tomorrow is son Andrew’s Birthday, Happy 35th Birthday Andrew… The day you were born, we had snow storm that dropped 9 inches of snow , but I had gotten your mother to the hospital before the snowfall began, so no dicey stories there! 3 weeks later we would have the most snowfall at one time that I had ever seen, 24 inches, that shut down the city for 3 days!  1982…  The Cardinals also won the World Series later in 1982, and on my writing desk back home, I have a picture of me holding Andrew at the World Series parade… I got to see my beloved Missouri Tigers on TV last night beat Georgia in Basketball.. That was a hoot for me, down here! Nazareth takes us to the finish line today with their song: Holiday…  And with that it’s time to go! I hope you have a Tub Thumpin’ Thursday, and Be Good To Yourself! 

Chuck Butler

 

 

Consumer Debt Accumulation Soars!

Chuck Butler’s: A Pfennig For Your Thoughts 

January 10, 2018 

* Currencies drift on Tuesday…

* Chuck gets on his soapbox today! 

Good day… And a Wonderful Wednesday to you… My travel day yesterday went along like clockwork, which was a welcome thing in m book. That’s not high on anyone’s list of fun days, when your travel is disrupted, delayed, cancelled, and all the other things that CAN go wrong, does! But, like I said, it all went just fine. YAHOO! It was a bad night for St. louis sports, as both our Blues and SLU Billikens lost their games. UGH! I’ve got some stepping up on the soapbox to do today, so get ready for that… The band Missouri greets me this morning with their song: Moven’ On…  

Well, when i left you Monday traders were having an opposite day with the currencies and metals, after the very disappointing job report for November printed on Friday. And that trading mentality remained in the currencies and metal yesterday, as the euro slipped further down in the 1.19 handle, and Gold lost $7.10 on the day. 

The price of Oil was the only anti-dollar asset to gain yesterday, and this morning Oil trades with a $63 handle… Seems there was what was called a “monster draw” of Oil supplies last week, and that has given the Oil traders a reason to believe that Oil can return to $70… That may take some time to achieve, but from the looks of things that could very well happen, eventually. 

The Petrol Currencies didn’t exactly celebrate the price of Oil’s move to $63 yesterday, and for the most part they lost ground, with the Canadian dollar / loonie remaining well bid above 80-cents!  The Russian ruble saw a dip blow $57 on Monday, but has traded back above that figure as there had to be some profit taking going on. 

The Norwegian krone continue to trade with a double edged sword. With one side tied to the price of Oil, and the other side tied to the performance of the euro.  And since yesterday saw one side go up and the other go down, the krone just can’t get any traction, and seems to be stuck in the mud around 8.08. 

The Aussie dollar (A$) and its kissin’ cousin across the Tasman, kiwi, have been very stealth-like with their moves higher VS the green/peachback  It was under the cover of darkness that kiwi moved past the 72-cents figure, and the A$ looks like it want to take out 79-cents… So, I’m hoping these two can remain stealth-like, and the short paper traders don’t catch on to what they are doing! 

Alrighty then, I’ve been champing on the bit this morning waiting to get up on my soapbox, and it appears that now is as good a time as any… So, give me a minute here to get up on the soapbox and test the microphone…  Testing 1,2…   OK, here we go!  

Well, I told you Monday that the Consumer Credit (read debt) for Nov. was printing and while it should be a doozy, I thought it would be just a precursor to what I expected to be a blow out month of December deficit spending… November’s headline went like this: Consumer Borrowing Grows At Its Fastest pace in 16 years! The total was $28 Trillion, or an increase of 8.8% annually! According to MarketWatch: Credit-card borrowing powered the increase. Revolving credit, which is mostly made up of credit-card loans, accelerated to an annual rate of 13.3% in November, the fastest pace since last December and well above the 9.9% gain in October. Nonrevolving credit, which covers loans for education and cars, rose at an annual rate of 7.2% in November, the fastest pace since October 2016 and above the 5.3% rate in October. The data excludes mortgage debt.

OMG! We can’t be that hmmm… my grandkids go ape on me whenever I use the word “stupid”, But hey! I got it from watching the Charlie Brown movies! So, I won’t use “stupid”, or any of the other descriptors we “used to use” to say someone wasn’t very smart…

I’m writing this week’s DTL letter and have some very scary data in there. It’s about household net worth VS income… Take this with the debt numbers we just saw from November, and well, something’s gonna explode! In the early years of the great band Chicago, they sang a song titled: It Better End Soon My Friend… That song was about what they felt was social injustice (back in the 70’s, and today’s millennials thought they were the first to protest this!) Oh, well, I’m going to borrow that song title, and use it to describe this accumulation of debt that U.S. consumers are going through right now… It had better end soon, my friend.

I’ll stepdown now, and give someone else an opportunity to dispute my thoughts on the accumulation of debt…  I welcome that! 

Well, we arrived here yesterday and it was a rainy day, which from the weathercast it will continue to be rainy for the next two days… Oh, well, the temps are warm and the sun will eventually come out again, it’s not like I’m only here for a couple of days and have to leave! 

I told you above that Gold lost $7.10 yesterday to close around $1,313… But not to fret! Gold has recovered that lost ground in the early morning trading today, gaining $8 to 1,321 and change! The short Gold paper traders had their fun with Gold yesterday, but once again the shiny metal proves that you can’t keep a good metal down!  Palladium has climbed back over the $1,100 figure, as it maintains its position on the pole as the start performer in the metals for the past year. 

Palladium has supply problems, the same with Silver, but Silver can’t get on the rally tracks like Palladium, because of all the short positions that have been taken in Silver.  Ed Steer always puts the charts for number of days of production to meet the short positions’ total in his Saturday letter, and this past week shows the following: 188 days of Silver production is needed to cover the short positions…  This is just ridiculous to me! 

The Hunt brothers were prosecuted for attempting to corner the Silver Market back in the 70’s… So, why aren’t these bullion banks that have all these short positions not be prosecuted?  Well, according to the Silver guru, Ted Butler (no relation that I know of), he believes that immunity from the law was given to JP Morgan back in 2007 for buying Bear Stearns, who used to have a fledging short silver business…  Ted Butler believes it was a 10-year deal, which would mean that it’s now up, and what did I tell you on Monday that the COT showed last week? That the short positions had dropped… Hmm…  Maybe, just maybe, because you never know for sure, Ted Butler is on to something?   

The U.S. Data Cupboard is basically empty today, so unless something crazy happens, we’re stuck with what’s going on right now to continue the rest of the day.   

 For What It’s Worth…  longtime reader, Bob, sent me this link yesterday and I immediately thought it to be FWIW worth, after reading it! it’s about how the Fed deals with foreign intelligence, and can be found on Reuters, here: https://www.reuters.com/article/us-fed-accounts-intelligence-specialrepo/special-report-how-the-federal-reserve-serves-u-s-foreign-intelligence-idUSKBN19H198   

Or, here’s your snippet:”The Federal Reserve’s little-known role housing the assets of other central banks comes with a unique benefit to the United States: It serves as a source of foreign intelligence for Washington. Senior officials from the U.S. Treasury and other government departments have turned to these otherwise confidential accounts several times a year to analyze the asset holdings of the central banks of Russia, China, Iraq, Turkey, Yemen, Libya and others, according to more than a dozen current and former senior Fed and Treasury officials. The U.S. central bank keeps a tight lid on information contained in these accounts. But according to the officials interviewed by Reuters, U.S. authorities regularly use a “need to know” confidentiality exception in the Fed’s service contracts with foreign central banks. Some 250 foreign central banks and governments keep $3.3 trillion of their assets at the Federal Reserve Bank of New York, about half of the world’s official dollar reserves, using a service advertised in a 2015 slide presentation as “safe and confidential.” Other major central banks and some commercial banks offer similar services. But only the Fed offers direct access to U.S. debt markets and to the world’s reserve currency, the dollar. In all, the people interviewed by Reuters identified seven instances in the last 15 years in which the accounts gave U.S. authorities insights into the actions of foreign counterparts or market movements, at times leading to a specific U.S. response.”  

Chuck Again… And you thought our Fed was only concerned with inflation, employment and asset valuation!   Notice I slipped that asset valuation in there? Pretty coy of me, eh?  

Currencies today 1/10/18… American Style: A$ .7860, kiwi .7225, C$ .8042, euro 1.1987, sterling 1.3537, Swiss $ 1.0223, … European Style: rand 12.4927, krone 8.0880, SEK 8.1924, forint 258.51, zloty 3.4840, koruna 21.3226, RUB 57.01, yen 111.34, sing 1.3320, HKD 7.8229, INR 63.51, China 6.5167, peso 19.27, BRL 3.2415, Dollar Index 92.32, Oil $63.40, 10yr 2.59%, Silver $17.10, Platinum $966.57, Palladium $1,101.02, and Gold… $1,321.70

That’s it for today… no sunrise to watch today, as it’s blocked by the cloudy skies… UGH!  Oh well, it’s days like this that make you appreciate the sunny days that will come! I heard from our little Christine the other day, and she informed me that January was her second most disliked month, following November. I thought, Yeah, I used to be with you on that, but no any longer! It’s nice when my former colleagues contact me, for I spent many hours by their side through the years, and to just walk away, was difficult for me… So, keep those cards and letters coming!  Marcy Playground takes us to the finish line today with their song: Sex and Candy…  Threw that one at you from left field, eh?  You never know what’s going to come up on my shuffle play list!  And with that, it’s time to go! I hope you have a Wonderful Wednesday, and Be Good To Yourself! 

Chuck Butler

December Jobs Report Is Disappointing!

Chuck Butler’s: A Pfennig For Your Thoughts  

  January 8, 2017

* It’s an Opposites Day!

* Eurozone prints strong data!  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler