That’s a Big 10/4 Good Buddy!

Rocktober 4, 2017  

* Not much movement in the currencies yesterday

* UK Only country with weak PMI’s… 

* Revisiting the Recovery & Reinvestment Act of 2009…

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

U.S. ISM Soars Higher…

Rocktober 3, 2017  

* RBA leaves rates unchanged…

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

* Venezuela to trade Oil with renminbi! 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

U.S. Data Shows More Weakness…

Rocktober 2, 2017

* Doll returns with vengeance 

* Ruble is best overnight performer… 

* Gold gets whacked! UGH! 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

September 29, 2017

Dollar Backs off again from its assault!

Gold has another good day!

The Data Cupboard wakes up today!

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thoughts Of Tax Reform Has Dollar Bugs Excited!

September 28, 2017 

Slip Sliding Away stops… 

RBNZ leaves OCR unchanged

Gold gets whacked! 

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Currencies Continue To See Their Gains Slip Sliding Away…

September 27, 2017

* Tax reform talk gives dollar another favor!

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

* Are we reaching Peak Gold?

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Slip Sliding Away… Slip Sliding Away..

September 26, 2017

* The dollar is back in the driver’s seat… 

* Thanks to all the saber rattling!

* Gold has a good day! 

Good day… And a Tom Terrific Tuesday to you! I don’t know what hit me yesterday, but right after hitting send, I began to get the chills, and all my energy was sapped, it was all I could do to climb the steps back to my bedroom. I put on not one sweatshirt, but two sweatshirts, a hat, and my hoodie, laid down and fell asleep until well into the mid afternoon! Then when I woke up I was burning up, and had to start shedding all that extra stuff I put on to warm me up! My head was till pounding last night… But I think I’m better today, YAHOO! And one of my all-time fave songs is playing right now, as Supertramp greets me with their song: Hide In Your Shell…

The rebound that the currencies saw on Friday, was quickly snuffed out with dollar buying yesterday, and the euro continued to slip further down in the 1.18 handle. But gold rebounded nicely closing up $13.20 on the day! I had a good friend send me a note and ask me if he should wait to buy more Gold, since it was up so strongly today… I always think about that, but who’s to say it won’t be up big again today, or the next day? I’ve never been a market timer, if I want something I buy it when I want it… I used to tell the story in my presentations about not buying when you want to buy… I would tell the audience about a man, who’s main objective is to get downtown, waiting for a bus… And when one comes along, he looks at it and decides that the next bus will be shinier and newer, and when the next bus comes it is indeed shinier and newer, but that get’s the man thinking again, and he decides not to get on the bus, because the next one will probably be high tech, etc. And indeed it was, but this went on all day, and the man never did get downtown!

So, where was I anyway? Oh, yeah, talking about Gold’s rise yesterday… And just as impressive was the rise in the price of Oil, which gained nearly $2! And I think that, along with N. Korea saying they will attack our planes in international airspace, got Gold moving upward yesterday. What does the price of Oil have to do with Gold? You see, if there is a rise in commodity prices, led by Oil, then that means the commodity traders see rising inflation, and guess what shiny metal does good in a rising inflation environment? You got it!, aw come on, that was too darn easy!

The currencies are seeing their gains slip sliding away, slip sliding away, you know the nearer your destination, the more your slip sliding away…  – Paul Simon…   And Oil backed off its lofty level above $52 yesterday in the overnight trading… All this saber rattling between the U.S. and N. Korea is wearing on the currency traders, and when they get that way, they buy dollars and wait for something to change. 

This doesn’t change my thought that the strong dollar trend has ended, this is the volatility I always talk about when it comes to there being no One-Way Street in currency trends. So, what does that mean for investors that recently bought currencies? Well, it means, in my humble opinion that is, that could be wrong, that you go back and buy more at cheaper prices to dollar cost your avg. downward!  

So, this morning, the euro has slipped through the 1.18 handle and looks like it will end the day in the 1.17 handle.  The Petrol Currencies of Russia, Norway, Brazil, Canada, and others, weren’t able to rally on the jump in the price of Oil because the pull from the dollar was too strong, and overrode the price jump in Oil. Wouldn’t you just know that would happen? Oil jumps $2, and the Petrol Currencies aren’t able to rally on that move because the dollar was too strong… UGH! 

And the Canadian loonie could have used a boost, as it continues to give back nearly all its gains from the rate hike two weeks ago.  But the loonie isn’t alone there.. The Aussie dollar (A$) and kiwi have also given back huge chunks of their previously gotten gains.  The only currency, besides Gold, that had a good day yesterday VS the dollar, was the Japanese yen, and yen still has its rally shoes on this morning, thus proving once again that for some strange reason, yen is considered a so-called “safe haven currency”…  And the saber rattling between the U.S. and N. Korea has investors and traders buying safe havens…  

The weird thing about the safe haven buying is that the euro normally plays a large part of that buying, and not so much this time. The uncertainty that we talked about yesterday in German politics is weighing very heavily on the euro right now… 

Another safe haven is U.S. Treasuries, and the 10-year yield did drop by 1 Basis Point yesterday… Nothing to write home about here, so just move along, for these are not the droids we’re looking for!

I was doing some reading last night, because my Cardinals had already fallen behind, big time,  in their must-win game VS the Cubs, and I came across an article on the Puerto Rico… I read where no credit cards can be used because power is down throughout the island country. And that got me thinking… About the cashless society that I keep writing about… Take Puerto Rico, what if the country’s residents were using cryptocurrencies? Well, that’s not going to work… And what if they were using Apple pay or whatever pay? Well, that’s not going to work, and probably won’t work for several weeks… Ahhh, but if you had a pocket full of cash, you are first in line for meals, and what have you because, well, you have physical money… Just think about that for a minute, and then carry it over to here in the U.S. where people keep writing about how the power grid is vulnerable to N. Korea’s hydrogen bombs… That reminds me I need to get to the ATM and get some cash, as the stash in my pocket is getting thin!   

Oh, and the Cardinals lost that game last night 10-2… A real country beating as my dad used to say! Boy the game of baseball sure has changed since I was a kid… One Cubs player made a statement before the game that they will especially enjoy celebrating winning the division at Busch Stadium… Now back in the day, the player would have earned some chin music, and then one in his ribs…  Where are the Bob Gibsons and Don Drysdales these days? Of course maybe that all happened last night because I didn’t watch it after the first inning!  Sorry about going there, but I just had to get that off my chest!   

You know how I’ve been following the spread between Platinum and Palladium since the CEO of a mining company made a bold prediction that Palladium’s price would surpass the price of Platinum this year… When he made that statement I saw that it would either be a HUGE rally in Palladium or a significant drop in Platinum’s price, or both…  And that’s exactly what we’ve had… The spread today stands at $19… It’s come a long way, eh? 

The U.S. Data Cupboard has 3 data prints today that won’t necessarily move the markets but here they are anyway…  First up is the Case/Shiller Home Price Index for July… Then we’ll see Consumer Confidence, and finally August New Home Sales…. So, go ahead and knock yourself out if one of those is your cup-o-tea! HA!  

To recap… The Cardinals blew a tire last night, and all the saber rattling has got the markets all frenzied up again, and this time euros are not part of the safe haven buying, because of the uncertainty of German politics right now. Gold had a good day gaining $13, and the price of Oil jumped $2.  And Chuck goes on and one about old time baseball!    

For What It’s Worth…  Remember when the interim President in Brazil took over and I said that he was going to open up trade and get the economy moving again? Well, this is a part of that, as Brazil opens up their Oil industry and the article can be found here: http://www.marketwatch.com/story/brazil-lets-in-big-oil-firms-a-decade-after-ejecting-them-2017-09-26   

Or, here’s your snippet: Brazil will on Wednesday begin reversing what industry officials say was a costly and ultimately disastrous decision a decade ago: setting aside billions of barrels from the Western Hemisphere’s largest oil discovery in 30 years for its state-run oil firm at a time when deep-pocketed foreign companies were clamoring to invest.

Brazil removed key acreage from a 2007 auction that could have yielded $100 billion in signing bonuses plus hundreds of billions more in spending commitments when the price of oil was near record highs, according to several former executives at Western oil companies.

Now, Brazil may generate just a fraction of what it could have as it looks to exploit its oil potential and revive its economy.

“We are trying to put the country back on track,” Energy Minister Fernando Coelho told an oil conference in Houston earlier this year.””

Currencies today 9/26/17… American Style: A$ .7904, kiwi .7206, C$ .8070, euro 1.18, sterling 1.3454, Swiss $ .9715, … European Style: rand 13.3095, krone 7.8569, SEK 8.0836, forint 263.89, zloty 3.6305, koruna 22.0835, RUB 57.51, yen 111.71, sing 1.3537, HKD 7.8105, INR 65.52, China 6.6155, peso 17.94, BRL 3.1417, Dollar Index 92.88, Oil $51.93, 10-year 2.22%, Silver $17.11, Platinum $944.98, Palladium $914.93, and Gold… $1,307.70…  

That’s it for today… Boy I hadn’t had a day like yesterday in some time, and hopefully never again! But really, with regards to the drug that I get infused into my blood system every other week. I tolerate it pretty well, with only a few days here and there where I feel like death warmed over.. So, I consider myself lucky, because there are some cancer patients that feel like death warmed over all the time! UGH! I used to say that I was going to be stubborn and live so I would eventually see the “magic pill”… I’ve got to keep my focus on that day… I have some errands to run today, so I have to have my strength back! And I think I do… So that’s a good thing! Peter Gabriel takes us the finish line today with his song: Big Time…  And with that, it’s time to go! I hope you have a Tom Terrific Tuesday, and Be Good To Yourself! 

Political Uncertainty Deep Sixes Euros And Kiwi!

Chuck Butler’s: A Pfennig For Your thoughts 

September 25, 2017

 

* Japan to announce another stimulus package?

* # of short paper trades in Gold & Silver Increases!

* Petrol Currencies get on the rally bus! 

 

Good day… And a Marvelous Monday to you… I bounced back to life quicker than normal after my infusion last week, so that was a good thing… I got to watch my two grandsons play soccer (well, it kind of looks like soccer anyway). Both Braden and Everett play on the same team. Saturday, we went to St. Louis University, where they were celebrating their Homecoming… the “tailgate” was sparsely attended, but the men’s soccer game looked pretty packed! And Sunday, was the White Coat ceremony at St. Louis University. Alex received his white “doctor’s coat”, as the professional phase of his education to be a Physical Therapist, begins now. He’s actually a senior at SLU, but his program is a 6-year program where he’ll come out with a doctorate in Physical Therapy… The Ceremony was long, but I did take a short video of him getting his white coat put on him, and sent it to his siblings for them to see their “little brother”… Chris Issac greets me today with his song: Wicked Game… Love the guitar work in that song!

Well, I thought a lot about how hard I was on the Fed last Thursday, this weekend, and have decided that… It was all deserved! No taking back anything from me, no siree Bob! My weekly letter on the Dow Theory Letters (www.dowtheoryletters.com) this week will be about how the Fed keeps saying the Economy is strong and robust, and I keep saying… “I’m from Missouri, show me!” And believe me, I don’t hold back any punches in that letter either!

The Currencies and metals gained some last ground back on Friday, but the moves were small with the euro only gaining about 1/3rd of a cent, and Gold gaining about $6… The dollar bugs are still scampering about the floor, having come out of the floorboards when the lights were turned off, and giving us that old, “The dollar is the best currency in the world” stuff.. And I just point to the scoreboard… For what currency is worth more than the dollar? Come on quick, it’s a layup! Of course it’s the euro! And of course the precious metals! But, they don’t look, nor do they listen, thsee dollar bugs are a pesky lot… 

But that was Friday… In the overnight markets last night and into this morning’s European session, the dollar has won back that lost ground on Friday, and continues to reap the rewards of having a “perceived” hawkish Central Bank. I’m really at wit’s end with this “hawkish Fed talk”, but there are times you have to just swallow your pride, put your tail between your legs and go to the back of the room and keep your head down as to not gain any attention.  And it looks like this is one of those times for me!  

It appears that both the euro and kiwi are taking on water this morning from the old “uncertainty bug”…  The uncertainty comes from elections held in Germany and New Zealand this past weekend, where the party that won, is going to have to deal with a coalition government, since the winning party wasn’t able to gain a majority seats in the government. 

In Germany, Chancellor Angela Merkel won again, but her party was knocked to their knees and so the negotiations for a coalition government will begin, and that brings about uncertainty for the Eurozone’s largest economy, and that is not a good thing for the euro. 

In New Zealand, the incumbent National Party won 58 of the 120 government seats, and the opposition party, the Labor Party won 45 of the seats, so now both parties are going to have to woo the New Zealand First Party, to form a ruling government. So, here in New Zealand, the uncertainty is even greater than it is in Germany, and this process could take a coupe of weeks!  And just when kiwi was getting some legs under it… Hmmm…  

I had to laugh out loud when I read that Japan’s PM is rumored to be ready to announce yet another stimulus package for Japan… Crazy, isn’t it? I mean they’ve been doing stimulus packages of some sort since the mid 90’s. I know, because, well, I was writing the Pfennig back then and thought at that time that they were a little off their collective rockers in Japan…   But then that was just the beginning of a long love relationship between whatever Gov’t is in, and stimulus packages in Japan… But, yet the yen continues to hold ground below 1.20?  I don’t get it folks… And that’s saying a lot for me to say/ admit, eh?   

The Petrol Currencies are, for the most part, the currencies with something to say this morning VS the dollar, with gains that aren’t great, but gains nonetheless. The Price of Oil, which started to rise late last week, and continued throughout the overnight session, and sits at $50.60 this morning, which has given the Russian ruble, Norwegian krone and Brazilian real a reason to believe they can gain VS the dollar even when the Big Dog euro, is not participating. 

One Petrol Currency not participating with its kissin’ cousins is the Canadian loonie. I told you all last week that the loonie had to go back and fill in the gaps that it skipped through on its way to .8250, after the rate hike a couple of weeks ago, and that I think the 81-cent handle is more where the loonie should be trading right now… And I guess loonie traders think so too! 

Well, “the boys in the band” took a pause for the cause on Friday, and there were no major selloffs during the day or in the after hours markets for Gold.  The shiny metal has slipped back below $1,300 on all the volume from last week.  In Ed Steer’s Saturday letter each week he puts in a graph of the concentration of short paper trades and how many days of production of each metal it would take to fill all those short paper trades…

And for the longest time Silver’s number of days of production needed to fill the short paper trades would be 180 days… But this last weekend I noticed that the number has grown to near 200 days!   And Gold, which stood at around 85-90 days, has moved to 100 days!   And the thing that just really piles on here is the fact that Platinum and Palladium make the list and have more days of production needed than Gold!  

That’s shameful, that we allow this to continue and not only continue but get even larger! And that’s where I’m going to end this discussion on the short paper trades because I’m just not ready to go all Rambo on them this morning! 

I read this weekend (thanks Bob!) that China now has more Billionaires than the U.S….  Now you may be thinking , so what? Well, think of it this way… The wealth of the people in the nation, keeps the nation wealthy…  And when China’s # of B’s flew past the U.S. it passed the U.S. like it was a statue on the side of the road! China has 609 B’s, and the U.S. has 552 B’s…  I just happen to think that shows how far China has come in the past two decades…  

The U.S. Data Cupboard was a BIG dud last week, but gets back into the swing of things this week with some real economic prints like: Durable and Capital Goods Orders, and Personal Income and Spending… There are some housing prints, and other not-s0-important prints this week. As far as Durable Goods, which printed a negative -6.8% in July, I would expect that the number would be a positive this month, but coming from a -6.8% that’s not saying much!  

To recap…. The currencies and metals rebounded on Friday, but have seen, for the most part, a reversal of fortune in the overnight markets, with the dollar getting bought. The euro and kiwi are seeing selling based on uncertainty from the elections held in Germany and New Zealand this past weekend. Both countries will have to negotiate a coalition party to rule and there’s uncertainty in that, and the markets don’t like uncertainty. And Japan is ready to announce yet another stimulus package! 

Where are you Rick Monday? That’s all I’m asking/ saying about that!

For what It’s Worth… Thanks to longtime reader, Bob, for this article on just how much Gold Russia is hording these days… The article can be found here:http://russiafeed.com/how-big-russias-gold-reserves-are/

Or, here’s your snippet: “The amount of monetary gold in Russia’s international reserves increased by 0.9 percent in August and totaled 56.1 million ounces (1,744.9 tonnes) as of September 1, the Bank of Russia reported on Wednesday.

The value of gold in reserves in August increased by 4.94 percent up to $73.5 billion as of September 1, 2017, while the share of gold in international reserves increased to 17.34 percent from 16.74 percent a month before, according to the report.” 

Chuck again… that’s it on the story there, it was short-n-sweet! Here’s the number, deal with it, was what it basically was saying!  

Currencies today 9/25/17… American Style: .7960, kiwi .7282, C$ .8112, euro 1.1887, sterling 1.3514, Swiss $ .9736, … European Style: rand 13.2536, krone 7.8195, SEK 8.0230, forint 260.94, zloty 3.5892, koruna 21.8977, RUB 57.50, yen 112.02, sing 1.35, HKD 7.8128, INR 65.18, China 6.5959, peso 17.77, BRL 3.1294, Dollar Index 92.45, Oil $50.60, 10-year 2.23%, Silver $16.99, Platinum $937.92, Palladium $922.80, and Gold…. $1,298.30   

That’s it for today…  Another dagger for the Cardinals as they dropped a pair of games in Pittsburgh over the weekend… UGH! The come home how to play the last 7 games of the regular season at Busch Stadium! They have to win all 7 to have a chance to make the playoffs… This will mostly likely mark the second consecutive year of not making the playoffs…  And that’s a reflection of management, the GM down to the manager. The ownership may be wearing blinders, but the fans know it in their heat of hearts that this is not a “Cardinals” team…  Kathy, Chuck and Alex went to lunch yesterday after his White Coat Ceremony”. We tried to stay around St. Louis University, but parking was a major problem…  But we finally found a place to go!  There sure were a lot of very proud parents in the Church yesterday for the ceremony, of which we were part of for sure!  Mitch Ryder and the Detroit Wheels take us to the finish line today with their song: Jenny Take a Ride…   I hope you have a Marvelous Monday, and Be Good To Yourself!

 

 

 

The FOMC Experience… Are You Experienced?

Chuck Butler’s: A Pfennig For Your Thoughts  

September 21, 2017    

* Fed leaves rates unchanged… 

* But wins back the markets! 

* And Chuck goes crazy! 

 

Good day… And a Tub Thumpin’ Thursday to you!  Well, I’m in one of those moods this morning… Full of you know what and vinegar! I sure hope I don’t write something that gets me in deep dookie…  It’s also an infusion day, so I need to wrap this up and get out of here this morning in a timely manner… Someone sent me a note the other day, and said that he admired how I talk about chemo infusions like they’re a walk in the park…  It made me think about my infusions… I certainly don’t like them, I don’t like going to the infusion center (it’s so depressing), and I figure that no one wants to hear that stuff, so… It’s an infusion day for me, and that’s all I’ll say about that!   We’ve got lots of stuff to get to today too, so let’s quit dawdling here!  Steely Dan greets me this morning with their song: Deacon Blues…    

Well, Vini vidi, vici…  You can say that the Fed came, saw, and conquered the markets yesterday…  The won back the credibility that they had lost with all their flip-flopping around, with a bold statement yesterday, about how they are on track to hike rates one more time this year, and 3 more times in 2018, and while all that’s going on, they will be unwinding their balance sheet, with Treasury sales or redemptions of $10 Billion per month, and increasing the monthly total as we go along until they are at $600 Billion per year…  

The markets were impressed, and thought, “I guess we were wrong to ever doubt the Fed’s word.”  And then they went about buying dollars, and selling the currencies and metals…  It got very ugly yesterday afternoon and in the overnight markets, with the euro losing one full cent, and the other currencies following the lead of the Big Dog. 

Gold is $18 cheaper this morning than it was yesterday morning, as “the boys in the band” saw the selling of Gold as an opportunity to “pile on”… I  just don’t “get it” folks…  One day, the markets are convinced  that the Fed doesn’t know what they are doing, and are selling dollars like funnel cakes at a State Fair, and the next day the markets are down on their collective knees and bowing to the Fed saying, “We’re not worthy, we’re not worthy”…    Well, here I go, I’m getting up on my soapbox now, better protect the kids ears, or hide them out in the cellar!    

Distortions, lies and omissions… That was the title to an article regarding the journalists explanation of the conflict between Russia and Ukraine, a few years ago… I dug that up because it rings true these days, with all the talk of a “strong economy”, and “we’re on a roll” and “we’re still on the lookout for rising inflation”… And so on. I sit here in my basement at my writing desk in utter amazement that these contortions to the truth, just keep getting repeated, and the markets believe them… Just last Friday, we had Industrial Production and Retail Sales both print NEGATIVE! And Capacity Utilization, one of the few forward looking pieces of data that we see, fell from 76.9 to 76.1? And that’s just the most recent data prints! Factory Orders, Durable & Capital Good Orders have all been weak to disappointing, and yet, we keep getting told that the economy is strong… Well if it so dang strong, why didn’t the Fed hike rates yesterday? I’ll just leave that one out there floating around and maybe someone has an answer.

I have an answer, but nobody likes to hear it! But guess what? You’re going to get to hear it because, well this is what you pay for! Wait! Chuck, have you begun charging readers for the Pfennig? No, why do you ask? Because you said “this is what you pay for”… Ahhh, grasshopper, the pay part is in their time in reading the Pfennig, which I’m now causing them to have to read and take up their time! HA! But the Fed didn’t hike rates yesterday, saying that they will hike them one more time in 2017 (Yeah, right, and I’ve got some land for sale that situated between North and South Korea), because they’re finally seeing what they have done… They hiked rates into a weakening economy, and they did so hoping that inflation would rise… What were they thinking? If you want your economy to grow you don’t hike rates! If you want inflation to rise, you don’t hike rates! And when you’ve dug yourself a hole, and realized you dug it in the wrong place, you don’t keep digging in the same hole!

Let’s look at GDP here in the U.S. Well, the Fed Atlanta has a computer system they call GDPNOW, and it throws all the factors together and projects quarterly GDP… Guess what they projected for the 3rd QTR here in the U.S.? They projects 2.2% GDP…. And my old pals at Kipplinger recently posted a projection of 2.1% GDP for the whole year 2017! Now, let me ask you, and be honest with yourself and me, here… Would you call 2.1% GDP a strong, growing economy? Or would you call it an economy that is just muddling through, year after year after year? OK, I’ve said enough here, I need to quit before I either say something I’ll regret, or begin yelling at the walls, which wouldn’t be a good thing at this time of the morning with Kathy sleeping upstairs!

So, the Fed didn’t hike rates yesterday, but you dear Pfennig Readers knew that was going to be the result of their two-day meeting, months ago, when I told you that there would be no rate hike in September! However, the Fed DID make an announcement that they will begin to unwind their balance sheet in Rocktober to the tune of $10 billion in assets in Rocktober and slowly raise the rate of sales in the months to come.

OK, let’s say that Chuck got transported to the Eccles Building yesterday,  and had the opportunity in the Q & A session to ask a question I would have asked this: “Ahem, if I don’t pronunciate very clearly, please excuse me I have a tumor in my mouth… But what I would like to ask you is this… When you first announced that the balance sheet unwinding talks were underway, you said that there would be no selling of Treasuries, just allowance of the bonds that mature to run off with no replacement bond purchased… So, why now, are you going to sell $10 Billion per month?”

Oh, I’m sure I would get some cockamamie response like, “well when we first talked about the unwinding of the balance sheet, the economy wasn’t as strong as it is today, and therefore we have changed out minds about how to unwind the balance sheet”

And I would say, “OK, a follow up question then, if I may… Please show me where Factory Orders, Durable & Capital Good Orders, Industrial Production and Retail Sales, to name a few, illustrate this “strong economy” you speak of.” And then these guys with guns on their hips and body camera came and asked me to go with them. Shoot Rudy, I thought I was going to get to go basckstage and meet Ms. Yellen in person! But NOOOOOOOOOO! As the great comedian Ron White says… The police said I was drunk in public, but I was in the bar, and they threw me out into “public”, I wanted to be drunk in the bar! I was thrown out the doors and asked to never come back… Fine, with me, because all I got out of the day was Distortions, lies, and omissions… 

I admit that using the word, Lies, is a little harsh, and I don’t mean to say that anyone is telling lies… It was just part of the phrase that I dug up… So, there’s the “nice Chuck” coming out, which one do you like better? HA!    I’m just so riled up about this change of mind for the markets, that I could spit!  I guess, we’ll have to deal with this change of heart for the markets, which means dollar strength, until the economic data begins to pile up showing them that there is no economic strength that the Fed speaks of…  Looking at past months’ prints didn’t help here, so like everyone else, the markets are a “what have you done for me lately” group… UGH!   

The stock market didn’t seem to care about what the Fed has to say yesterday, but the stock futures are down a little bit this morning, so it will be interesting to see what direction the stock jockeys take stocks today… 

The price of Oil gyrated back above $50 in the past 24 hours, and for now that appears to be the trading pattern… Go above $50, get sold back below the figure, and then rinse and repeat…   When will this change? Good question! I don’t think it will change until “something” happens to disrupt the apple cart…  Let me see, I would need a calculator to add up all the things up in the air right now, that could disrupt the apple cart!  

The Petrol Currency traders have taken the tact that they aren’t going to get caught up in the price of Oil’s daily gyrations… Good for them!  These guys have gotten drug through a mile of broken glass in recent years, and there’s no need for them to keep going back over the trail they trudged… 

Speaking of the Petrol Currencies…  I read an article this morning that said that the Norwegian Sovereign Wealth Fund (SWF) had reached a total value of over $1 Trillion!   The SWF is officially known as the Government Pension Fund…  Remember last year, when I told you that the SWF had announced that they were increasing their purchases of stocks? And I questioned their sanity? I guess I was the one that needed a sanity check, eh?  The SWF is now the owner of  on average 1.3 per cent of every listed company in the world!  I still question the increased stock buying by the SWF, for what goes up, must come down, spinning wheel got to go around. No wait! Now, there’s some lyrics I haven’t used before from Blood, Sweat and Tears…  But really, what happens when the “correction comes”?    Will the SWF panic and sell into the correction?  I sure hope not!   

I was taught at an early age in the business that you buy into weakness and you sell into strength…   If you do that with every investment you make, you’ll be doing alright!  But going back here, and circling the wagons, kudos to the Norwegian Sovereign Wealth Fund for reaching $1 Trillion in value..     I know that I’ve talked about this before, but this is a good time to talk about it again since the SWF was in the news…  Norway’s pension fund gives every single person in Norway a pension fund from the time they are born till they die. And a few years ago now, they even started a pension fund for “yet to be born Norwegians”…  it’s quite costly to live in Norway, but you have this pension fund… Pretty cool if you ask me!    See? more nice Chuck for you to go along with the upset Chuck!    

Yesterday’s U.S. Data Cupboard had the FOMC experience, and Existing Home Sales, which were down in August, but hardly anyone noticed given the goings on at the Eccles Building! I heard that there was some dude there giving Janet Yellen a difficult time, and then was escorted out of the building and thrown into public… I wonder if that was true! HAHAHAHAHHA!   

Today’s U.S. Data Cupboard has a couple of economic prints for us, but the only “real economic print” will be the Leading Indicators…  It will be interesting see what this data shows today…   

To recap…  The Fed left rates unchanged yesterday, but pointed to another rate hike this year, and 3 more next year, and announced their plans for unwinding their balance sheet… Chuck wonders what the stock jockeys will think about this unwinding…. And Chuck goes DEFCON 4 regarding the description of the economy… You won’t want to miss that! And Gold has lost $18 since yesterday morning…     

For What It’s Worth….  this is really good stuff folks, and I hope you have to time to read through it… The GATA folks, sent me a note yesterday that talked about how the Russians know all about Gold price manipulation, and then gave me the link to an article on the subject that can be found here:https://sputniknews.com/business/201709201057560325-who-manipulates-gold-prices/   

Or, here’s your snippet:  “When the gold price manipulation started on August 5, 1993, these were central banks that initiated the process, and namely the then head of the US Central Bank Alan Greenspan. He did not want to let the gold price rise over $400,” Speck said, adding that Greenspan feared that a significant increase in gold prices might affect the “inflation thermometer.”   

Chuck again… that’s all I have for you, as I don’t want to spoil your appetite! Read the article and get the  “rest of the story”…    

Currencies today 9/21/17… American Style: A$ .7950, kiwi .7351, C$ .8105, euro 1.1910, sterling 1.3493, Swiss $ .9714, … European Style: rand 13.3394, krone 7.8237, SEK 8, forint 260.24, zloty 3.5964, koruna 21.9127, RUB 57.99, yen 112.35, sing 1.3511, HKD 7.8051, INR 64.90, China 6.5132, peso 17.81, BRL 3.1303, Dollar Index 92.41, Oil $50.41, 10-year 2.28%, Silver $17.01, Platinum $941.89, Palladium $913.75, and Gold… $1,298.20

That’s it for today and this week… Cards’ bats come alive last night, but one has to wonder why that doesn’t happen against the “good teams”…  I like my new oncologist ( I liked my old one too!)  she’s a no-nonsense, tell it like it is doctor, and I appreciate that, for I don’t want someone spraying me with Febreeze just to make me feel better!   This was quite the long Pfennig today, after my soapbox speech! But that’s not too bad considering no Pfennig tomorrow!  The band, Lighthouse takes us to the finish line today with their classic rock song: One Fine Morning…    Not familiar with that one? YouTube it, I think you’ll like it!   And with that, I’ll get out of your hair for today, and send you out to make this a Tub Thumpin’ Thursday!   And please Be Good To Yourself! 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

September 20, 2017

* Currencies get back on the rally tracks!

* Chuck forgets talk like a Pirate day!

* The FOMC members talk “Risk”?

      

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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