Author: admin

July 9, 2019 

* Dollar bugs continue to apply pressure to the currencies & metals…

* Chuck pulls out the Big Guns, with a visit from Murray Rothbard! 

Good Day… And a Tom Terrific Tuesday to you! Another day of sun and no rain here, boy it looks like things are drying up, finally! I love the sunshine, and warmth, I don’t think I’ve ever wavered on that! The Home Run Derby last night was something special! The participants were hitting home runs as easy as Grant took Richmond… (That’s just an old saying, I hope I don’t offend anyone in the South) But my dad used to say that all the time, and I’m just a chip off the old block, that’s for sure! Have I ever told you that my dad had lung cancer (yes he smoked) and that it had mestastized to his right hip? He ended up being confined to a wheelchair. I was diagnosed with kidney cancer that had mestastized to my right hip… So, far, so good with not being confined to a wheel chair for me though, thank God! OK… I’m usually not one for instrumentals, because I love to sing along with songs, but this one titled: Samba Pa Ti by Santana is one of my faves, and it greets me this morning!

Well… The markets just don’t know what to do… They’re confused about the signals that the Jobs Jamboree gave them last week. I would think that they would be concentrating more on the negative print of Factory Orders that printed the previous day to the Jobs Jamboree, last week… But then I think logically, and I sure can’t say that the markets do that! Oh, sure I hear some of you saying, but that’s just one print, Chuck… And to that I would say, but what about the negative print in Durable Goods Orders, and the very weak Capital Goods Orders, or the weakness of Retail Sales that printed 10 days ago or so? A recession is pulling into the station, whether the stock jockeys, or interest rate campers are ready for it or not! Let’s listen to economics guru, David Rosenberg who had this to say on his Twitter feed:

“ Real GDP on a monthly basis has completely stagnated in the January-May period. ZERO growth! This has only happened 3x in the past 14 years, two of those in 2008 and 2009. So what is this “strong US economy” all about?”

I shake my head in disbelief that more and more people aren’t seeing this economy for what it is… An economy that has seen its growth cycle remain weak for more than 10 years, and is now turning negative… But I digress…

The currencies didn’t move much yesterday, but in the overnight markets they have continued their slide from the lofty levels of last week. The euro, for instance, is in danger of losing the 1.12 handle this morning, and the Aussie dollar (A$) saw 70-cents briefly last week and has gone on the slippery slope since. 

Gold can’t find a bid once again….  Mom… He’s doing it again!  Ah, the silly ness of an old TV commercial advertising a rock station here in St. Louis, is what I’m thinking of right now…  But in this case we’re talking about how the price manipulators have retaken the conn on Gold trading, and not about how some guy is playing air guitar to the song Brown Sugar! 

I DO know what the markets are thinking with regards to Gold, for the shiny metal got sold again yesterday, and fell back below the $1,400 handle… UGH!… Just when it looked to me that Gold was getting ready for a major move to the upside… It got shot down…. In the 70’s there was a band called April Wine… And they sang a song titled: Shot Down… I had a former colleague back when I was at a  regional brokerage house, and his name was Vinnie, and he loved that song… So, to this day whenever I type the words, Shot Down, I think of him and that song!

I worked with a trader back in the early 80’s that used to say about a stock that was falling… “Hey, you liked the stock at $60, you’re going to love it at $55! And I think of him whenever I say buy the dips like I did yesterday… At this point you may want to wait out this selling of Gold to see where it bottoms out before buying more… But then again, remember how quickly the shiny metal turned around a couple of weeks ago… The turnaround could be swift…. I’m just saying…

The U.S. Data Cupboard had the May Consumer Credit print yesterday… Of course we all know that this in reality is debt… And Consumer Debt remained at $17 Billion in May… In the report there was something that I found that scared the bejeebers out of me…. Try this on for size: Revolving credit, primarily credit cards, rose 8.2% in May, just a bit above the 7.9% gain in April. Ahhh, yes, those credit card debts… Those are just lovely creatures aren’t they? Just fill them up with purchases, and then apply for a new one, and rinse and repeat… It’s the American way… No wait, it’s the American way since 1971…. When the whole new age of Credit became the norm…

Have you ever imagined what it would be like here in the U.S. and the world on the side, if Nixon hadn’t removed the Gold backing from the dollar in August 1971? Well, we wouldn’t have had the economic growth, that was built on credit… Salaries wouldn’t have grown like they did, and the stock market wouldn’t have grown to 25,000… So, that’s all good, eh?

Not so fast there Tim! The U.S. would not be in debt to the tune of over $200 Trillion and growing each day… We wouldn’t have had the tech stock collapse, nor would we have had the housing markets collapse, and near collapse of our financial system… We wouldn’t have Banks that are too Big To Fail… and their Trillions of dollars worth of derivatives! And I could go one, but won’t… 

Whenever I begin to question my stance on money… I go to Murray Rothbard, of the Mises Institute. His book titled: What has Government Done to our money? Always sets me straight… Sort of like going to confession, I guess… (I was brought up in the Catholic church, but never converted, so no confession for me!) In fact, let’s listen to some wise words from Murray Rothbard this morning.. ….

“As we face the future, the prognosis for the dollar and for the international monetary system is grim indeed. Until and unless we return to the classical Gold standard at a realistic Gold Price, the international money system is fated to shift back and forth between fixed and fluctuating exchange rates, with each system posing uncolved problems, working badly, and finally disintegrating. And fueling this disintegration will be the continued inflation of the supply of American dollars and hence American prices which show no sign of abating.”- Murray Rothbard, of the Mises Institute

Smart guy that Murray Rothbard…    These Austrian school of economics guys are all very smart, indeed!  Like I’ve told you before I walk in those same circles as the Austrian economics guys do, but I’m not an expert in the school so I refer to the guys that are from time to time… 

Wait, what did I just do there? Did I give myself a backhanded compliment? I think I did… What a dolt!  I can tell you straight up, that I didn’t mean to do that! But my fat fingers started typing, and the next thing I knew… 

Well, maybe Fed Chairman, Jerome Powell, can sort all this stuff out when he talks to Congress today…  We all know that he has a rate cut in his back pocket, that he can pull out if the going gets tough on the hill…  But will he?  Yesterday, I played the Fed Chairman in some role playing, that was fun… Wouldn’t it be a hoot, if Powell, gave his speech and repeated what I said he should say word for word?  OMG! That would be too much, I would roll out of my chair, and laugh hysterically until the men in the white suits came to take me away!  

To Recap…  The dollar bugs continue to slap down the currencies and metals, which has gotten out of hand, in my opinion, for it was just a stupid hedonically adjusted BLS Jobs report that turned everything around and the euro has lost 2-cents, while Gold has dropped $40 from its high last week…  Why not base the trading on the weak data prints that come out every week?  

For What It’s Worth… I received this over the weekend, and quite frankly, I didn’t pay much attention to stuff this past weekend, and so I spent the day yesterday, going back over all of it, and in the pile of emails there was this… Publishing guru, Bill Bonner, was talking about the founding fathers last week (the 4th of July) and this is what he said, and it can be found here: https://bonnerandpartners.com/the-founders-warned-us-about-the-evolution-of-power/

Or, here’s your snippet: “Many of the founders of the American Republic were readers and scholars. “I can’t live without books,” said Jefferson.
He, Monroe, Madison, Adams, and others were much more aware of Roman history than our leaders today. Most had studied Latin and/or Greek.

In the same year that the Declaration of Independence was adopted, Edward Gibbon published the first volume of his masterpiece, The History of the Decline and Fall of the Roman Empire.

The Founding Fathers were well aware of the transition – natural, and perhaps inevitable – from republic to empire. They had studied it in the Roman example. They had seen how it drew power into a few hands… and corrupted them.

They tried to prevent it from happening in the New World, putting in place limits… circuit breakers… and checks and balances… to keep the government from becoming too big, too ambitious, or too powerful.
Even then, they were doubtful that it would stick. “We give you a republic…” Benjamin Franklin wrote to posterity, “if you can keep it.”

Chuck Again… Well, we couldn’t “keep the republic” and instead turned into another Empire… And Empires all fold eventually… I’m just saying….

Currencies today 7/9/19 American Style: A$ .6930, kiwi .6612, C$ .7620, euro 1.1200, sterling 1.2460, Swiss $.9949, European Style: rand 14.2050, krone 8.6610, SEK 9.4971, forint 290.47, zloty 3.8056, koruna 22.7985, RUB 63.69, yen 108.81, sing 1.3613, HKD 7.8096, INR 68.46, China 6.8832, peso 18.92, BRL 3.8123, Dollar Index 97.50, Oil $57.99, 10-year 2.06%, Silver $15.02, Platinum $808.27, Palladium $1,547.00, and Gold… $1,389.48

That’s it for today…  Boy I really went off some tangents today, eh? Oh well, you never know what you’ll get when I start my fat fingers typing! I used to say that it was a stream of consciousness, but then I was writing the letter earlier in the morning, before my mind was moved by coffee! HA!  I have no idea what Jerome Powell will say today, I do know what he should say, but then that’s me… And I don’t have the President looking over my shoulder telling me what to do!  Robin Trower takes us to the finish line today with his song: Bridge of Sighs… Robin Trower was the lead guitar player in the band Procol Harum before going solo…  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself! 

Chuck Butler

 

July 8, 2019 

* Congrats to the USWNT for their World Cup victory!

* Currencies and Gold get whacked badly on Friday! 

Good Day… And a Marvelous Monday to you! No short week for me this week, but I have to say that I really enjoyed my 4th of July holiday weekend so much, that… Nah… Better hold that thought for some later time, Chuck… We enjoyed a marvelous sunny day on the 4th until later that night, and had an old fashioned fish fry, with all the fish that my youngest son Alex caught while in Alabama… Yummy! My beloved Cardinals ended the 1st half at .500… Which is basically what I see for this team the rest of the year… they break my heart each time they blow a game, and either it will have to stop, or I’ll begin to not stay up late to watch them! I watched a TV show last night that was a tribute to one of my fave musical artists of all time, the late Dan Fogelberg… The Outlaws greet me this morning with their near 10-minute song: Green Grass And High Tides…

Well, lies, hedonic adjustments, and all other kinds of names I could call the BLS report were on the agenda on Friday, after the BLS said that 224,000 jobs were created in June… When will these lies ever stop? OK, move along here Chuck… there’s a bit to talk about today!

Well, the dollar rebounded VS the currencies, and Gold got whacked by more than $16, and what do you suppose was the cause of these moves? The Jobs Jamboree surprised the markets, and had the dollar bugs dancing in the streets, when it printed a report that showed 224,000 jobs were created in June… Well, one could say, that June traditionally is strong because of all the graduating college students finding jobs… And then on the other hand you could point to the 102,000 jobs that were added to the total after the surveys were received, showing that only 122,000 jobs were created…. And then you could just throw up your hands, ala Marvin Gaye, and just say forget about it, because it’s all hogwash! And that’s where you’ll find me… It’s too darn bad that markets don’t see things they way I do… Even the usually gung-ho market web site, Bloomberg, said, “Don’t let the June numbers fool you; the job market is weak” Couldn’t have said it better myself!

The markets immediately took the stance that this jobs report would put the Fed’s rate hike in July on hold… Really? As I said last week, before we broke for the independence day holiday weekend, that I really didn’t think it would behoove the Fed Heads to only pay attention to the hedonically adjusted BLS Jobs report… For instance, on Wednesday U.S. Factory Orders in May fell 0.7% and marked the 3rd decline in the past 4 months, and to top it off May’s negative was revised downward to -1.2%… But don’t let that get in the way of a trumped up jobs report!

So the currencies got hit badly on Friday, but not as badly as Gold… I knew when I saw the jobs number being bandied about on cable TV that it was going to be a bad day for Gold… And it ended up being as such… Throw in the fact that the markets had thought it was a sure bet that the Fed heads would cut rates later this month… Throw in the fact that the markets were blindsided by the jobs number, which came out of nowhere, and the swallowed it hook, line and sinker… And then throw in the price manipulators, and some profit takers, and you mixed up a recipe for a sell off in Gold…

But, not to worry, folks… In fact, use this dip in price to buy… I think that’s what I’ll do, well… maybe not… I think I have enough! But I doubt you do, so use this dip in price to your advantage! There! That’s my public service announcement for you today!

Funny story…. A week ago, I was heading into the local grocery store, when I bumped into a neighbor, who reads the Pfennig… She had her mother with her, and introduced me to her mother… After pleasant greetings, I walked away and when I did I heard her tell her mom… he’s the man that wirites the market letter I read, and he’s always telling us to buy Gold… I laughed… and kept walking… At least somebody is listening to me, although they might not hear me till later!

So… did you hear that Deutsche Bank (Germany’s largest bank) is going to send 14,000 employees home with a pink slip?  That includes their U.S. offices folks…  A couple of years ago, I wrote in the now defunct Review & Focus about Deutsche Bank’s problems, and how I thought that this time would have come before now…   I would think a bank the size of Deutsche Bank would have a major impact on the markets should the problems continue after the layoffs, which I’m sure they will… This is window-dressing folks… It makes them look like they’re on top of a their costs, but in reality all they’re doing is dressing up the house for sale…  of course that’s my opinion, and I could be wrong. 

Fed Chairman, Jerome Powell, will be speaking this week (tomorrow) and I would suspect the markets will get more out of what he has to say, as opposed to gleaning anything out of a stupid hedonically adjusted BLS labor report…  What do I expect him to talk about?  Well, this would simply be me shooting in the dark, for I have no idea what Powell will be talking about… But just for grins, let’s say, I was Jerome Powell, what would I be preparing to say tomorrow?  Ahhh…  

Thank you for this opportunity to speak to you today, I’m always amazed that anyone listens to us any longer…  But since you’re here, you might as well know that the Fed intends to reverse its rate hike cycle, and it could come this month at our meeting, and if not, then definitely 6 weeks from our July meeting. We badly miscalculated the economy’s strength, and that’s our bad… But we’re willing to swallow our pride and reverse our rate hike cycle to address this ongoing problem with little to no growth in the U.S. economy…  Yes, we truly believe that we are the Masters of the economy, and all we have to do is apply a little magic elixir, and sprinkle some eye of newt on the economy and voila! 

A couple of Fed Chairmen ago, Big Al Greenspan used to have this magic elixir named for him… The markets called him “The Maestro” and said that he had the “Greenspan put” in his back pocket…   I’m here to tell you that too much praise was bestowed on Alan Greenspan, but I’m now here to make everything right….   

Chuck back to being Chuck… Man, that was fun! I had Powell, admitting the Fed’s blunder, swallowing their pride, and dissing Big Al!  

The markets for the currencies this morning hasn’t changed, and the dollar bugs are still roaming the floor…  I have a funny for you… How many roaches does it take to change a light bulb?  No one knows, because when you turn on the lights they all scatter!  HA!   A little bug humor this morning… 

The U.S. Data Cupboard gets a pause for the cause this week, and doesn’t have much for us… The Fed’s Meeting Minutes from their June meeting will print tomorrow, the same day that Jerome Powell speaks…  Consumer Credit (read debt) will print today… This number just boggles the mind at how large it has become…  And unless we had an election, and someone that wants to give away everything including the kitchen sink, for free, this Consumer debt will just continue to grow… and grow… and grow… 

To recap…  The Jobs Jamboree sent the currencies to the woodshed on Friday, along with Gold, and the currencies are still getting sold this morning, as the markets now believe that Fed’s rate cut is on hold… The stock jockeys saw a bad day, but Gold was the biggest loser, which Chuck says is OK, as it is now a dip in price that should be taken advantage of! And Chuck plays Jerome Powell, just for grins… 

For What It’s Worth… This article was sent to me from longtime reader Bob (thanks!) and it’s an article from Paul Craig Roberts, that talks about how weak the current expansion is, and it can be found here: https://www.foreignpolicyjournal.com/2019/06/25/the-diminishing-american-economy/?utm_source=ActiveCampaign&utm_medium=email&utm_content=Washington+s+Infatuation+with+the+MEK&utm_campaign=Washington+s+Infatuation+with+the+MEK

(Don’t be surprised if he says something that you’ve heard me talk about for years)

Or, here’s your snippet: “Since June 2009 Americans have lived in the false reality of a recovered economy. Various fake news and manipulated statistics have been used to create this false impression. However, indicators that really count have not supported the false picture and were ignored.

For example, it is normal in a recovering or expanding economy for the labor force participation rate to rise as people enter the work force to take advantage of the job opportunities. During the decade of the long recovery, from June 2009 through May 2019, the labor force participation rate consistently fell from 65.7 to 62.8 percent.

Another characteristic of a long expansion is high and rising business investment. However, American corporations have used their profits not for expansion, but to reduce their market capitalization by buying back their stock. Moreover, many have gone further and borrowed money in order to repurchase their shares, thus indebting their companies as they reduced their capitalization! That boards, executives, and shareholders chose to loot their own companies indicates that the executives and owners do not perceive an economy that warrants new investment.

How is the alleged 10-year boom reconciled with an economy in which corporations see no investment opportunities?

Over the course of the alleged recovery, real retail sales growth has declined, standing today at 1.3%. This figure is an overstatement, because the measurement of inflation has been revised in ways that understate inflation. As an example, the consumer price index, which formerly measured the cost of a constant standard of living, now measures the cost of a variable standard of living. If the cost of an item in the index rises, the item is replaced by a lower cost alternative, thus reducing the measured rate of inflation. Other price increases are redefined as quality improvements, and their impact on inflation is neutralized.

Real retail sales cannot grow when “for most U.S. workers, real wages have barely budged in decades.”

Chuck Again… Mr Roberts continues on and on in the article listing several things that I’ve been through with you before on… But I thought it was a good thing to let you hear this from someone other than me every now and then!

Currencies today 7/8/19 American Style: A$.6983, kiwi .6640, C$ .7653, euro 1.1218, sterling 1.2515, Swiss $.9919, European Style: rand 14.1537, krone 8.6240, SEK 9.4405, forint 289.36, zloty 3.7917, koruna 22.7403, RUB 63.73, yen 108.60, sing 1.3597, HKD 7.8004, INR 68.53, China 6.8926, peso 18.98, BRL 3.8203, Dollar Index 97.29, Oil $57.43, 10-year 2.04%, Silver $15.08, Platinum $814.39, Palladium $1,562.58, and Gold… $1,405.41

That’s it for today… Except to congratulate the U.S. Women’s National Team for their World Cup victory yesterday… They Women’s team is the Gold standard for Women’s soccer, that is certain!  The All Star proceedings got started last night with the Futures game, tonight is the Home Run Derby, and then the All-Star Game is tomorrow night. There will only be one Cardinal on the All-Star team…  Congrats to Paul DeJong for being named to the team…  A chance to dry out this week, for the weather is in store, and it’ll be nice to have days without rain!  Cheap Trick takes us to the finish line today with their song: The Flame…    I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

July 3, 2019

* Currencies see a non-movement day… 

* Strange couple of days for the price of Oil… 

Good day… And a Wonderful Wednesday to you! The day before our country’s Independence Day, on the Fourth of July. On July 4, 1776, the 13 colonies claimed their independence from England, an event which eventually led to the formation of the United States. My dad fought in WWII as an army infantryman, and was always very excited to celebrate the 4th of July… The shooting off of fireworks had become illegal in the city of St. Louis, but that didn’t stop my dad, he always would say that as a true patriot, he had the right to shoot fireworks! So, however, you celebrate it, be careful, but have fun… Three Dog Night greets me this morning with their song: Mama Told Me Not To Come… ( a great song from the 70’s!)

OK… I do believe that the senior currency traders have already squared their books and headed to the Hamptons, for there was little to no movement in the currencies yesterday. The metals traders have to hang around to combat the short paper traders… And on Monday we saw Gold get whacked badly, only to see it all reversed on Tuesday, and the shiny metal added to its level on the day in a BIG way, closing at $1,418, and the buying continued after the close to a show Gold last night trading at $1,431…. I didn’t believe my eye at first, so I checked both Bloomberg and Kitco for the current Gold price and was pleasantly surprised to see that the reports were correct! Things did begin to come unglued after the markets closed, and the $1.431 level didn’t hold…  but Gold is up $5 in early trading today at $1,423.72, so we have that going for us! 

Nice move, eh? I sure liked to see it rebound from Monday’s whacking! Remember about 10 days ago, when I told you when Gold got to $1,400 that I was scared that the price manipulators would have something to say about this upward move? Well, I guess they had their say on Monday… And on Turnaround Tuesday, they were nowhere to be found!

So, it’s only fitting that I take the rest of the week off, since traders are doing the same, eh? But until tomorrow, we have to get through today, which I think will be the same result as today for the currencies… Gold, will have a different story of course…

The Price of Oil has had two consecutive sessions that have been quite interesting… First Oil suffered one of the worst 1-day losses on record, which was very strange, given that the OPEC boys confirmed that they were maintaining their production cuts… But, I guess traders don’t care about supply and demand, eh?   But then the price of Oil won back some of the lost ground in the second session, when it was announced that Oil supplies in the U.S. had dropped…  So, like I said, a very strange couple of days for Black Gold, Texas Tea! 

I wonder how many dear readers, or attendees of my many presentations in 2009, remember me telling them about the Chinese swap agreements with other countries that would eliminate, eventually that is, the need for countries to hold so many dollars to settle the terms of trade?
Well, I thought it would interesting to see just how many countries had signed these agreements… The total is…. Drum roll…. 34! That’s right 34 countries, big and small have signed these agreements with China that removes the dollar from the terms of transactions!

Yesterday, good friend, Sharon, sent me a link to a YOUTUBE from Mike Maloney… I’ve always liked Mike Maloney, and his ideas, as they, for the most part, followed my own… He tells us in this video that China has created “instex” which they will use to replace SWIFT… (SWIFT is the U.S. controlled system for passing funds across borders) You have to be a member in good standing to belong to SWIFT… We know that Europe and China have been working on their own versions of SWIFT, and now they are in place… That starts the sand trickling through the hour glass that marks the end of time for the dollar as the reserve currency…

Yesterday, I told you that the EU was using their new system to continue to trade with Iran and not use dollars… The Trump administration immediately called for new tariffs totaling $4 Billion on Cheese, whiskey, coffee and pasta… hey! It’s not like your trips to the grocery store are getting cheaper, eh? Why shouldn’t we increase prices for food even more? The Fed removes food and energy from their inflation calculations anyway! UGH!

That’s two paragraphs in a row that started with the word: Yesterday… So… yesterday, all my troubles seemed so far away… Now it looks as though they’re here to stay, Oh I believe in yesterday…

So, let’s keep this going…  

Yesterday, the Dollar Index was 96.75 and this morning its 96.67, so that will pretty much tell you that the currency books have been squared and not much will happen today… That is unless we get a rogue data print today… 

Speaking of data prints… The U.S. Data Cupboard showed that auto sales were still strong in June, and that amazes me…  Today, we’ll see the ADP Employment Report for June…  And then Friday, we’ll see the Jobs Jamboree for June…  I read a report on Bloomberg this morning that they believe the Fed’s decision on a rate cut will be determined by the Jobs Jamboree number on Friday…  Really?   

The Fed Heads maybe dolts at times, but they, as a whole, are pretty smart cookies, and I can’t see them getting all caught up in the Trumped up BLS jobs report…  I would rather like to think that they use the ADP report… 

To recap… Well, it was a no movement day for the currencies yesterday, as Chuck believes the senior currency traders have already squared their books and headed for the Hamptons… Gold fought back bravely yesterday, after spending the previous day in the woodshed, it was turnaround Tuesday for the shiny metal, and it gained $34 on the day…  

For What It’s Worth… Way back in 2003… 16 years ago, I wrote about the lack of funding in state Pensions, and private pensions… That’s right 16 years ago… I recall it because, I was riding in a convertible Mustang with two of my Spring Training buddies for the first time, and I talked to them about my latest Review & Focus article… Well, over the years, the problem hasn’t gotten any better… In fact it’s gotten worse, so bad, that now a mayor wants a Gov’t bailout for the state of Illinois’ pension problem… I shake my head in total disgust because, this could have all ben eliminated long ago, but Corporation leaders took cash and ran… State leaders gave more stuff away free, and interest rates went to hell in a hand basket…. So, after all that’s been said and done, here’s the article about the pension bailout that got me all lathered up! And it can be found here: https://www.zerohedge.com/news/2019-07-01/new-chicago-mayor-wants-state-taxpayer-bailout-chicago-pension-debts

Or, here’s your snippet: “t didn’t take long for new Chicago Mayor Lori Lightfoot to propose a plan that would wash her hands of Chicago’s pension crisis altogether. According to a recent report in Crain’s, Lightfoot wants the state to take over Chicago’s pension debts and merge them with the other pension plans throughout the state. The move would make all state taxpayers responsible for paying down the city’s debts.

The plan to shift city debts to the state would bail out the mayor from having to raise about $1 billion in additional taxes to pay for increasing pension costs by 2023. A massive tax hike is something she’s desperate to avoid.

But while Lightfoot may think the cost-shift is a solution, it will only make things worse for Illinois. She should expect significant pushback from many sides.

Start with downstate and suburban residents. Sure, their public safety pension funds would get consolidated under the state, too, but it’s the Chicago funds that are some of the biggest and worst-funded in the state. The four city-run funds are collectively funded at just 27 percent and face an official shortfall of $28 billion.

In contrast, the 650 downstate pension plans are 58 percent funded and have a shortfall of nearly $10 billion. The end result of any statewide pooling of pension funds will be a net bailout for Chicago.”

Chuck Again… I talked to a former colleague of mine last Friday, and she told me that her family was moving to Missouri, from Illinois… She listed a ton of reasons why Illinois was going to hell in a hand basket, and why they wanted to move out of the state… I didn’t even attempt to talk her out of it!

Currencies today 7/3/19 American Style: A$.7025, kiwi .6690, C$ .7635, euro 1.1296, sterling 1.2570, Swiss $.9844, European Style: rand 14.1097, krone 8.5525, SEK 9.3032, forint 285.60, zloty 3.7577, koruna 22.5306, RUB 63.17, yen 107.65, sing 1.3562, HKD 7.7964, INR 68.80, China 6.8632, peso 19.03, BRL 3.8426, Dollar Index 96.67, Oil $56.77, 10-year 1.96%, Silver $15.27, Platinum $833.84, Palladium $1,558.38, and Gold… $1,423.72

That’s it for today, and the rest of this week! Happy Independence Day tomorrow and basically all weekend long! Can you believe that we’re already this far into summer already? WOW! Cardinals played too late for me to watch the whole game last night, but they ended up losing… UGH! Does any team want to win the Central Division? Because none of them are playing like they do! We’re about 3 weeks away from my annual summer vacation… I’m not going to wish for it to get here fast, because that would mean the summer month of July was about to end!  A quick update on my cellulitis in my leg… It still won’t heal… I believe the chemo I’m taking is keeping it from healing.. A losing battle… But in the end I think I’ll win the war!  Blood Sweat & Tears take us to the finish line today with their song: You’ve Made Me So Very Happy…   I hope you have a Wonderful Wednesday, and an Intergalactic Independence Day weekend!  But be careful out there! And please Be Good To Yourself!

 Chuck Butler

 

 

 

 

July 2, 2019

* Gold bugs continue to wipe out gains by the currencies

* Markets seem to believe the Trade War is over? 

Good Day… And a Tom Terrific Tuesday to you! A travel day for my beloved Cardinals as they head for a 3-game series with the Mariners, in Seattle… Two teams going nowhere this year, so far, that is… My Cardinals are only 3.5 games from first place in their division, but they’re only a .500 team that can’t hit! And now their best hitter, so far this year, is hurt and will miss some time… Uh-Oh! Well, things got back to normal around here yesterday… While I don’t mind time alone, I do however, like for someone to be here, just in case, I fall or get sick or something of that nature… Creedence Clearwater Revival greets me this morning with their song: I Pull A Spell On You….

OK… So, there are no details coming from the G-20 meeting between Trump and Xi, other than Trump called off additional tariffs on $300 Billion of Chinese goods, and allowed U.S. companies to deal with Huawei… There was nothing mentioned about the previous tariffs on Chinese goods, and that has me worried, and thinking that the dollar bugs have gotten ahead of themselves, with all their dollar buying the past two sessions… So, my advice, which you can listen to now and hear me later, or don’t, would be to buy the dips in both the currencies and metals, for this could turn out to be a false dawn in the hopes of a Trade War ending…

But… having no details didn’t stop the sellers of Gold from piling on short sale after short sale, to the tune of 390,000 contracts on the day, and $25 taken off the price of Gold… Why? Well, I believe it was because the short sellers saw this brief let up in the Trade War pressures as their opportunity to pile on the short paper trades…  That’s my story and I’m sticking to it! 

I read this morning that Dr. Doom, Nouriel Roubini, the famous economist has called for a Global Recession…  So… either his words don’t carry the weight that they once did, or no one is paying attention, because  back in the day, if Roubini had these things to say, Gold would have soared… I’m just saying… 

Well, the shiny metal is trying to win back some lost ground this morning as it is up $8 in the early trading… Maybe some too much, too fast selling being reversed?  Or maybe some WAS listening to Roubini… 

Many years ago, Chuck and Frank Trotter, called Roubini to see if he wanted to work together on a project, but he was too busy at the time… I always thought that he was just saying that, but maybe he was… 

I sure wish I had access again to the Pfennig Replies box so I could see what everyone is saying these days… But there’s a glitch in it right now, that I thought would be corrected by now, but isn’t, so I carry on…

Remember how I’ve told you time and again about how the regional manufacturing indexes don’t seem to have anyting to do with the national ISM manufacturing index? Well, this past month was a prime illustration of that, as each region (NY, Richmond, Chicago, etc. ) printed some very ugly numbers, but the ISM bumped higher in June from 51.3 to 51.7… Now, I want someone from the gov’t to call me and explain how this works… The regionals numbers are ugly, but combined, the national number improves on the month… Explain away, will you please… Hello? McFly? Is anyone home? I’m talking to you, the government, give me an answer, today! I demand it! HA… As if!

So, the currencies drifted lower still during yesterday’s trading, with the euro losing the 1.13 handle, that it had fought so long to win about 10 days ago! I sure hope the Fed Heads are receiving the message from abroad loud and clear… The global growth has gone to hell in a hand basket, because of the Trade Wars, and Central Banks around the world will begin to follow the lead of the Reserve Bank of Australia (RBA) in cutting rates…

Back in the day…. If you wanted yield over what you could get in the U.S., Japan or Europe, you simply looked to the South Pacific, where the Aussie and kiwi dollars were always dependable yield advantage currencies… But not any longer… Rates in these two countries are lower than they are here in the U.S. and that’s saying something, now isn’t it?

Well, is there a BREXIT deal or no deal?  This question is what’s keeping a lid on the progress of pound sterling… One day I read that there’s a new and improved BREXIT deal and the next day I read that there isn’t anything of the sort… So, what’s it gonna be boy?  Inquiring minds need to know!   

And while I’m talking about the U.K….  I want to give a shout out to Bank of England Gov. Mark Carney, for his call that interest rates would be going up soon.  (I’m being sarcastic here in case you didn’t catch on!) He made those comments last year, and, well, have we seen a rate hike in the U.K.? No… and I have to slap myself on the back for pointing out that Carney had made these promises while the Gov. of the Bank of Canada, and never carried through with them… And so therefore I was sure that this time was just hot air… 

The Canadian dollar / loonie continues to be Oil price driven, and has a lofty 76-cent handle these days…  So, while we’re talking about the price of Oil, the OPEC boys decided to hold their production cuts of Oil at current levels until 2020… That has helped the Petrol Currencies like the loonie, and the Russian ruble along with the Brazilian real, and the Norwegian krone to hold recent gains and gain bits and pieces when they can… 

The aforementioned Data Cupboard print of ISM (manufacturing index) yesterday, dominated the data front… Today, we’ll get a little break, but will see the total Auto sales in June…  About 6 months ago, it appeared that the auto industry was about to do a face plant once again, but then lack of interest in new cars disappeared…  I was as surprised as anything to see this, as I was thinking that everyone that wanted a new car had gotten one, by every possible financing method…  Strange turn around here, is all I’m saying, and one that doesn’t make a lot of sense… 

To recap…  Gold got whacked badly yesterday as the short sellers piled on 390,000 contracts…  The markets are seeming to forget that the Trade War that existed before Trump and Xi had a kumbaya at the G-20 last week, is still in place, all that was removed was the additional $300 Billion in tariffs…  But, you can’t fight city hall, and you can’t fight market sentiment… But one day, when no one is looking, someone will say, hey! The Trade War is still on!  And things will go back to where they were before the Kumbaya!

 For What It’s Worth… I told you last week that President Trump was changing horses in the middle of the stream by ending a Trade War and starting a Currency War, and his first opponent was Europe… Well, this article sent to me by longtime reader, Bob, appeared on Zerohedge.com and talks about what Europe is doing to combat the U.S… And it can be found here: https://www.zerohedge.com/news/2019-06-28/trump-unleash-hell-europe-after-eu-says-spv-circumvent-swift-and-iran-sanctions-now

Or, here’s your snippet: “With the world waiting for the first headlines from the Trump-Xi meeting, the most important and unexpected news of the day hit moments ago, when Europe announced that the special trade channel, Instex, that will allow European firms to avoid SWIFT and bypass American sanctions on Iran, is now operational.

Following a meeting between the countries who singed the Iran nuclear deal, also known as the Joint Comprehensive Plan of Action (JCPOA), which was ditched by US, French, British and German officials said the trade mechanism which was proposed last summer and called Instex, is now operational.

As a reminder, last September, in order to maintain a financial relationship with Iran that can not be vetoed by the US, Europe unveiled a “Special Purpose Vehicle” to bypass SWIFT. The mechanism would facilitate transactions between European and Iranian companies, while preventing the US from vetoing the transactions and pursuing punitive measures on those companies and states that defied Trump. The payment balancing system will allow companies in Europe to buy Iranian goods, and vice-versa, without actual money-transfers between European and Iranian banks.

The statement came after the remaining signatures of JCPOA gathered in Vienna for a meeting that Iranian ministry spokesman Abbas Mousavi called “the last chance for the remaining parties…to gather and see how they can meet their commitments towards Iran.”

Until today, Tehran was skeptical about EU’s commitment to the deal and threatened to exceed the maximum amount of enriched uranium allowed it by the deal after US had imposed a series of sanctions on the country.
Meanwhile, opponents of Instex – almost exclusively the US – have argued that the mechanism is flawed because the Iranian institution designated to work with Instex, the Special Trade and Finance Instrument, has shareholders with links to entities already facing sanctions from the U.S.
The announcement sent oil sharply lower, with crude futures falling about $1/bbl in closing minutes before settlement, extending daily loss, as it means Iran now has a fully functioning pathway to receive payment for oil it exports to anyone it chooses.”

Chuck Again… Oh me, oh my… what’s the U.S. going to do when they hear this? Recall that the U.S. said that they would punish any country with sanctions if they traded with Iran? Well, I think the Europeans just said neener, neener, neener to the U.S. So, what comes next? Only the Shadow Knows!  well, someone other than the Shadow does know that more tariffs are being suggested for the EU…  

Currencies today 7/2/19 American Style: A$.6993, kiwi .6663, C$ .7620, euro 1.1299, sterling 1.2625, Swiss $.9884, European Style: rand 14.1154, krone 8.5570, SEK 9.3405, forint 285.81, zloty 3.7550, koruna 22.5148, RUB 62.98, yen 108.27, sing 1.3555, HKD 7.8033, INR 68.99, China 6.8478, peso 19.08, BRL 3.8396, Dollar Index 96.75, Oil $58.86, 10-year 2.02%, Silver $15.16, Platinum $835.48, Palladium $1,555.58, and Gold… $1,392.44

That’s it for today…  The summer heat has FINALLY come to our area… June for the most part was a chillier than normal, and very wet month, but these past few days have seen the summer sun in all its glory appear! YAHOO! But the weather app shows that rainy days will be on the calendar again this week, UGH!  I get flood watch alerts daily on the phone… Too much rain! Do you have plans for this upcoming Independence Day holiday weekend? Be careful whatever it is you decide to do…  I don’t believe I’ll be going anywhere, but right here, and that’s a good thing in my book! Chilliwack takes us to the finish line today with their song: Fly At Night…  A song about being on the road with a band…  I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler

 

 

 

 

July 1, 2019

*The overnight markets haven’t been kind to the currencies & metals

* The RBA cuts rates… 

Good Day… And a Marvelous Monday to you!  Pfennig tradition calls for this today… There I was on a July Morning… I was looking for love… With the strength of a new day dawning, and a road of my own…  Welcome to July! I didn’t realize this last week, when I shortened the week with my appt. on Thursday… But this week will also be a short week, as the 4th of July will be on Thursday this week… So… Yay for me, eh? My beloved Cardinals finally found a way to score more than 1 or 2 runs a game yesterday. It did take them extra innings to win, but Hey! They’re not much of a team other than a .500 team, so any win is a good one! Alex came home on Friday after being away from home for 10 weeks, as he completed a clinical in Montgomery, Alabama. He begins another one immediately, but this one is near to hear, so, no biggie… A few of us celebrated Alex’s 24th birthday on Friday… How many of you remember when he was 3 and would help me write the Pfennig, and it looked a lot like this: !$##3456*^&^! Ah… Good memories of when he and I were so close and I’ll never forget watching his favorite shows on TV with him in 1998, during my “first retirement”…  REO Speedwagon greets me this morning with their song: Golden Country…

Well, Friday, it was announced that Trump and Xi are friends again, and have ironed out their differences that created a Trade War with China… I find this very difficult to believe that all’s well here, but if that’s what the two leaders want us to know… Then so be it! The damage to the U.S. economy has already caused the Fed to talk about rate cuts, instead of rate hikes, so that’s not a good thing, as far as I’m concerned… Yes, I told you that the Fed would be reversing itself, but I didn’t think it would take this long for them to do so!

So… the China / U.S. announcement on Friday didn’t change the currency levels much, and Gold only lost 30-cents on the day… So, to me, I look at this reaction, as the markets didn’t believe an agreement was reached either! President Trump then went onto N. Korea to meet his BFF Kim, and Trump became the first sitting president to set foot in N. Korea since who knows when! The great negotiator, they’ll be calling Trump soon… Not the opposing party, of course, but his own people…

But… in the overnight markets, the removal of the safe havens has begun to take place… Gold is down big in early trading, and the euro has slumped, along with the Japanese yen VS the dollar… So… Maybe after a little arm twisting, the markets now agree that the Trump / Xi deal is real… 

Well… The Reserve Bank of Australia (RBA) became the first Central Bank to cut rates in 2019 last week… The RBA was driven to cut rates, because of the slowdown in China due to the Trade War with the U.S. I wonder if the RBA would have liked to have waited until this past weekend’s meeting between Trump and Xi took place before they cut rates… But they didn’t, they went ahead and cut 25 Basis Points from their internal rate, which now stands at 1.25%…

The Aussie dollar (A$) traders liked the news at first and ran the A$ above 70-cents on Friday, but like everything else it has succumbed to the overnight markets and their buying of U.S. dollars…  I have to tell you though, when I saw that +70-cent level on the A$ I thought it looked very good…  

So, last week I thought that the dollar was going to be looking for a comfortable place to hang out in the woodshed, for it would be there for sometime… And then along came a spider and… well you know what happened, the powers that be rushed to the dollar’s aid, and now, this week, it looks like the dollar will avoid being sent to the woodshed for any prolonged period… 

The price of Oil is higher this morning and is trading with a $60 handle… How much longer will this last could be a question for our friends at OPEC (NOT!) and their decision to maintain the cuts in Oil production for longer…  Other than that, we’re in that same old cycle for the price of Oil… It bumps higher, the shale producers jump in, flood the markets with supply and the price goes back down, and the shale producers bow out again… Lather, rinse and repeat… 

I wonder what the dollar bugs will think when they hear this news…. 

There’s a rumor going ‘round, someone’s underground, no wait! The rumor I’m talking about is that a major U.S. Bank will fold in the near future… This from the folks at Agora, who have never been known as publishers that pull back punches! Remember when the folks at Agora told us that GM would collapse along with Fannie and Freddie back in 2007? And then ithose things all happened? Well, they won’t tell us what major bank is on the ropes, unless we sign up for a year subscription, but to me, just knowing that a major bank is teetering with all their derivatives, is scary enough! I don’t know about you, but I’m scared about what will happen here…

Last week I told you about how the Hong Kong Dollar / honker was on the rally tracks, which looked very weird to me, but this was happening while the people of Hong Kong rioted in the streets…

Reuters.com had a good piece on why the riots are happening this weekend, so let’s listen in… “More than a million people have taken to the streets at times over the past three weeks to vent their anger and frustration at Hong Kong’s Beijing-backed leader Carrie Lam, posing the greatest popular challenge to Chinese leader Xi Jinping since he came to power in 2012.

Opponents of the now-suspended extradition bill, which would allow people to be sent to mainland China for trial in courts controlled by the Communist Party, fear it is a threat to Hong Kong’s much-cherished rule of law and are demanding it be scrapped and Lam step down. “
I’m still of the belief that the honker’s rally won’t be a long lasting thing, so we shall see…” – Reuters

I guess we’re back to square one with regards to a currency and metals rally taking place. And so our attention will be switched from looking for news on the Trade War, to watching the data prints this week…  Of course this week will be shortened with the Independence Day holiday on Thursday, which means all the senior currency and metals traders won’t be in on Friday, as they’ll make a 4-day weekend with a trip to the Hamptons! 

I’m surprised though that the monthly Jobs Jamboree will still happen on Friday… I would have thought with the markets being so thin that day, that the powers that be would delay it to next week… But that’s not the case, and so on Friday this week the Jobs Jamboree featuring the June payroll numbers will take place. 

We start the data roll call today with the June ISM Manufacturing Index, which at the end of May was showing some weakness and it stood at 51.3, which the Markit version of the data showed manufacturing teetering at 50.1…  The ISM is primed to fall further, after all the regional reports have been very negative, so we shall see… 

In addition to the Jobs Jamboree on Friday, we’ll also see the most recent Trade Deficit (look for a jump higher), Factory Orders (a real piece of economic data) and the auto sales for June…  All could end up being market moving should they expose the economy even more… 

To recap… Trump and Xi are buddies again, and Trump is visiting his BFF, Kim, in N. Korea… All these pleasantries have turned the currencies and metals around, as the safe havens are being removed and the dollar bugs come back out to play.  Gold, which lost 30-cents on Friday, is down nearly $20 in the early trading this morning. And the euro has slipped further down the slippery slope. The RBA was the first central bank to cut rates in 2019… Will the Fed be right behind them?   Inquiring minds want to know! HA!

For What It’s Worth… I told you last week that Trump was turning the Trade War to a Currency War… He’s doing this by putting pressure on the Fed to cut rates and make the dollar less appealing… thus weakening… And this article from Bloomberg.com highlights this ongoing argument between the President and the man he nominated to be the Fed Chairman, and it can be found on Bloomberg.com… 

Or, here’s your snippet: “President Donald Trump wants a weaker dollar to help boost exports, and is counting on the Federal Reserve to help make that happen. But the central bank’s chairman, Jerome Powell, has made clear it’s not his job.

It’s a new twist in the broader pressure campaign the president has brought to bear on Powell to cut interest rates to energize the stock market and fuel growth.

Trump’s focus on the dollar surfaced last week after the European Central Bank said it might ease policy, prompting the euro to drop against the dollar. Trump seized on the move to say on June 18 that the Fed’s failure to lower rates was putting U.S. exporters at a competitive disadvantage. He later mused on June 26 he’d rather have ECB President Mario Draghi running the Fed.

Powell, once again, is finding himself on the defensive, trying to shield the Fed from political influence. He deflected Trump’s calls back at the administration.”

Chuck Again… Well, the Fed Chairman is right here on this subject, but on the other hand he’s totally wrong in his attempt to keep the stock market afloat… Neither of these two directives are in his job description… I’m just saying…

Currencies today 7/1/19 American Style: A$.6995, kiwi .6704, C$ .7630, euro 1.1325, sterling 1.2627, Swiss $.9838, European Style: rand 14.1408, krone 8.5490, SEK 9.3087, forint 284.93, zloty 3.7455, koruna 22.4768, RUB 63.19, yen 108.25, sing 1.3547, HKD 7.8080, INR 69.01, China 6.8655, peso 19.16, BRL 3.8469, Dollar Index 96.54, Oil $60.06, 10-year 2.02%, Silver $15.26, Platinum $834.54, Palladium $1,530.89, and Gold… $1,390.17

That’s it for today…  A great big belated Happy Birthday to youngest son, Alex who turned 24 this past weekend…  On Friday last week, I attended a retirement party for 2 former colleagues: Ty Keough and Mary Vance… It was great seeing most of the folks again… At one point in the proceedings someone mentioned that I had hired them, and I looked around the room and said, “well, I think that I hired nearly everyone one in this room!” And that got a big laugh…  OK, Alex is home… Kathy comes home today… The house won’t be so quiet any longer, but that’s OK… It was becoming too quiet! So… memo to Christine and Jen… That was two weeks alone for me, and I’m still standing, as Elton John sang…   Ok…  The great Otis Redding takes us to the finish line today with his song: I’ve Been Loving You… This was from his live from the Whiskey A-Go-Go recordings, from many years ago now…  I hope you have a Marvelous Monday… Welcome to July, and Please Be Good To Yourself!

Chuck Butler

 

June 26, 2017 

* Talk of a trade agreement allows the dollar bugs to return… 

* What the heck is going on with the honker? 

Good Day…. And a Wonderful Wednesday to you! What a beautiful day here yesterday, the sky was a blue umbrella, the sun was shining, and it warmed throughout the day. No rain, in there at all! YAHOO! I sat outside last night watching my beloved Cardinals blow another game… UGH! But the night was nice, the company even better, so it wasn’t all bad! I don’t know how much I’ve got to say today, so let’s just get started and see where we go, eh?  The Rolling Stones greet me this morning with their song: Can’t You Hear Me Knocking?  (some of Keith Richard’s best guitar work here)

Well, well, well…. What have we here?  Yesterday, the Fed Heads hit the streets by large numbers, to talk and give their opinions…  Why anyone would listen to them any longer is beyond me… But currency traders did, and what the Fed Heads were telling the markets is that we can forget at 50 Basis Points (1/2%) rate cut…  Shoot Rudy, even the biggest dove of them all, James Bullard, President St. Louis Fed, said a 50 Basis Point cut would be overdone….  

The currency traders took these messages at face value, and decided to take some profits in the currencies, for the run up had been pretty swift and strong… What the currency traders were missing from the Fed Heads talks is that while the Fed Heads said that a larger rate cut was out of the picture, they didn’t say that no rate cut was on the docket…  So, a rate cut is still on the docket, albeit the 25 Basis Points I’ve talked about for a month now… 

So, the currencies backed off their lofty levels, and Gold was only able to eke out a gain of $3.80 on the day… A couple of weeks ago, I would have been a happy camper to see a $3.80 gain in Gold, because that’s not what we were seeing then. The exact opposite was hitting the shiny metal nearly every day.  But a $3.80 gain now is sort of MEH…  Not after the daily moves we seen lately! 

OK Yesterday I told you that today I would talk about the Hong Kong Dollar (HKD) or (honker)…  I don’t know if you’ve been checking the currency roundup or not, but something strange has been happening to the honker… It’s gained steadily for a couple of weeks… at first I didn’t believe what I was seeing, and wrote it off as the blip like we saw last year, when the honker rallied big time, only to have it come back to reality soon after…  

But that’s not what’s going on here this time…  And the thing that has me scratching my balding head is that the honker is rallying while the Hong Kong people are rioting in the streets… Major civil disorder is going on in Hong Kong, and the currency is rallying… Is that not strange or what?  Well, yes it is…  Oh, by the way, the honker is pegged to the dollar so its gains will be limited, but then the peg could always be broken, right? 

This is a public service announcement….  I haven’t had the access to the Pfennig Replies box for over a week now, so if you’ve written me, asking me a question, and I haven’t responded…  Now you know why! I was not just ignoring your emails…  I suspect that soon this will all be corrected, and then I’ll be at my laptop all day, catching up on old email… 

OK…  Well, the economic data prints here in the U.S. are certainly screaming for a rate cut… Yesterday, was no different, with the Case/ Shiller Home Price Index coming in flat for April, after a few consecutive months of home prices falling…   And the stupid Consumer Confidence Index for June dropped from 130 to 121… A HUGE drop, eh? … And then there was this….. 

I’ll get to a real humdinger of a description of the economy from the Fed Heads in the FWIW section of the letter today, so don’t miss it! Until then I’ve got this little ditty for you to chew on regarding the economy…

The Richmond Fed collapsed in June to the lowest level since this survey began. Uh-Oh… And the Chicago region index printed negative again last month… I know I often tell you that these regional reports don’t seem to filter through to the National ISM report… But… the National ISM has been slipping in recent months… I’m wondering if… this month it slips below 50…

The Russian ruble was the only currency yesterday that didn’t see any slippage, and that’s because the ruble enjoys the highest interest rate in the industrialized world… And it doesn’t hurt things that the price of Oil added another buck to its price in the past 24 hours and this morning is trading with a $58 handle… 

I was looking up the price of Oil this morning, and seeing rising, and right next to the price there was an opinion piece that was titled: Here’s why Oil’s outlook could be bleaker than expected…. I had to laugh, because here I am watching the price of Oil rise, and there’s an article about how its outlook is bleak…   Made me laugh… But then that’s my sense of humor! 

On the Trade War front… The markets are getting that warm and fuzzy feeling once again, from talk that Trump and Xi will meet and iron out a Trade agreement at the G-20 later this week…  Really?  I mean talk about people that love to have the rug pulled out from under them! Dolts!  But this shiny happy people (REM) syndrome is helping the dollar fend off sellers… 

The U.S. Data Cupboard has two pieces of real economic data for us today in the form of Durable and Capital Goods Orders for May… You may recall that April’s reports for these two were both negative, and I pretty much expect that to repeat itself for May… 

On Friday this week, we’ll see the color of Personal Income and Spending… This will be a very important report, due to the fact that the economy seems to be teetering toward a recession and a drop in consumer spending could be the snowflake that sends the economy over the edge… We’ll see, and I’ll talk about it next Monday… 

To recap… The Fed Heads went out in force yesterday, and talked the markets down from thinking that a 50 BP rate cut is in the offering at next month’s meeting, and that pushed the currency traders to take some profits, after the currencies had moved swiftly and strong in the past two weeks…  The upcoming G-20 meeting will have Trump and Xi meeting, and the “shiny happy people” think something will come of the meeting, which is helping the dollar this morning… 

For What it’s Worth…. Well… I’ve been saying for sometime now that a recession was coming, and I’ve also told you about 10 days ago, that I saw the Fed cutting rates in July by 25 Basis points (1/4%) and that was BEFORE their last meeting… Well, I was pointed toward this article by economist Danielle Di Martino Booth, and it’s about the next rate move and can be found here: https://www.bloomberg.com/news/articles/2019-06-25/powell-reiterates-rate-cut-case-has-risen-amid-economic-risks

Or, here’s your snippet: “Federal Reserve Chairman Jerome Powell said the downside risks to the U.S. economy have increased recently, reinforcing the case among policy makers for somewhat lower interest rates.

“Crosscurrents have reemerged, with apparent progress on trade turning to greater uncertainty and with incoming data raising renewed concerns about the strength of the global economy,” Powell told the Council on Foreign Relations in New York on Tuesday.

“Many FOMC participants judge that the case for somewhat more accommodative policy has strengthened,” he added.”

Chuck again…. Well, well, well… it now appears quite evident that the Fed will cut rates next month, pulling an about face from their March rate hike, when they talked about how the economy was so strong and robust! We’re the driving the economy with blinders on? I think so… folks… And we should trust them how much? None if you ask me!

Currencies today 6/26/19 American Style: A$.6982, kiwi .6682, C$ .7605, euro 1.1365, sterling 1.2684, Swiss $.9771, European Style: rand 14.3298, krone 8.5078, SEK 9.2650, forint 284.60, zloty 3.7497, koruna 22.4290, RUB 62.71, yen 107.71, sing 1.3540, HKD 7.8074, INR 69.28, China 6.8786, peso 19.17, BRL 3.8328, Dollar Index 96.23, Oil $58.94, 10-year 2.02%, Silver $15.27, Platinum $807.35, Palladium $1,535.52, and Gold… $1,405.58

That’s it for today, tomorrow and Friday… recall I have somewhere I have to go tomorrow morning, so no Pfennig…   When I get back home, I’ll check on stuff and see if I need to Tweet anything… Otherwise, I’ll be back in the saddle on Monday morning!  Friday, early evening, I’ll be attending a retirement party for two of my former colleagues… Ty Keough, and Mary Vance… I guess others are getting to that age too, eh? I sometimes think what I would do if I had to go back to work… And then I say… “nah can’t happen”!  Shoot Rudy, it’s always noon before I get finished with my morning crossword puzzles!  The Alan Parsons Project takes us to the finish line today with their song: Time….   I hope you have a Wonderful Wednesday, Tub Thumpin’ Thursday and Fantastico Friday! And Please Be Good To Yourself!

Chuck Butler

June 25, 2019

* Currencies see profit taking in the overnight markets

* Russian ruble proudly displays its highest interest rate…. 

Good Day… And a Tom Terrific Tuesday to you! A night off for my beloved Cardinals last night. I will say something though about all the adoration the St. Louis fans showered on Albert Pujols this past weekend…. IF I was a Current Cardinal ballplayer, I would have viewed that, as…. “if I can perform for 11 years like he did, and bring 2 world championships to the city, I will get ovations like that when I return too”… So, maybe it lit some fires under the underachieving Cardinals… We shall see…. I watched some of the college World Series last night, I still can’t believe they still use metal bats… No wonder pitchers are the most highly drafted players, because you can’t tell if a guy has power or is it his metal bat? OK… Pink Floyd greets me this morning with their 17 minutes song: Shine You Crazy Diamond…

The dollar selling continued through Monday’s trading and into last night, as the euro traded past 1.14… We were here a couple of months ago, when traders were still trying to figure out if the dollar was ready for a multi year weak trend or not… Apparently, at that time it wasn’t, and now the questions come forward and want to know it the dollar’s ready now? I’ll let you know, if the euro continues to climb to 1.15…

And just to throw some spice in our soup… The euro saw some profit taking last night, nothing that would alter your taste buds, but just extra flavoring… The Profit taking brought the euro back below 1.14 this morning, but not a big deal as far as I’m concerned… Watch for today’s reaction to the profit taking… If the euro rebounds and brushes the profit taking off its shoulder, like a dandruff flake, then it’s all good… But should this profit taking trigger some additional selling, then all bets are off… So, watch the trading today… 

For those of you new to class…. The euro was introduced in 1999 at a price of 1.17, but quickly fell in value and throughout the year it traded in the low 90-cent range… By 2002, and traders were getting the idea that it was here to stay, they began offsetting it to the dollar, and the euro had climbed back to parity with the dollar… And then the weak dollar trend began in Feb. of 2002, and the first stop for the euro was 1.10, then 1.20, 1.30, 140, and eventually made it as high as 1.50…

I talked about Jeffrey Gundlach a couple of weeks ago, he’s now the new Bond King… And he was quoted yesterday as saying that the dollar bear market has begun… So… I’m not so sure as of that yet, and like I said if we see the euro trade past 1.15 then I’ll be the first to tell you that the multi-year weak dollar trend is now in place…

There was one other thing I forgot to mention yesterday when spelling out the things that pushed the dollar over the edge last week, and that is… The U.S. President, Trump, has decided to go from Trade War, to Currency War folks… Recall I was complaining about him chastising the Eurozone for keeping the euro cheap for exports, but at the same time was calling out the Fed Chairman and blaming him for the strong dollar…. Well, it’s gone on and on now all weekend, and Trump is not taking any prisoners here… he wants other currencies to be stronger than the dollar… Will he get his wish? Well, it sure looks like it…

And Gold? Well, I was reading an email from the GATA folks last night from Dave Kranzler, of whom I’ve quoted before… And he was saying something that I’m very fearful of… And that is the price manipulators getting together to pool up their short Gold trades and well, whack Gold once again… But, he pointed out that since Gold started this run last week, there’s been no success in brining the price back down yet, and that maybe, with all the foreign Central Bank, and investors buying of physical Gold, that their efforts to get the price of Gold down, may be diminished… But while that may be true… I think we should be prepared for some volatility going forward, which would mean to buy the dips in price, in my humble opinion!

And that talk about all the physical buying got me thinking about what I used to tell you dear readers all the time, and that was if we wanted to snuff out the short Gold trades, there needed to be enough demand of physical Gold so that the price manipulators couldn’t make a difference… So, it was nice to see someone besides me have that idea….

And add to those thought the fact that Gold is up another $8 in the early morning trading today!  Got Gold? 

The Russian ruble continues to move stronger VS the dollar, taking out the 63 handle finally, yesterday…  The ruble is now 62.83, which is a far cry from the rot on the vine that was a price of 70 from a year and a half ago, and it’s also a far cry from the 35 it traded before the conflict with Ukraine that began in 2014… So, it’s been a long slog for the ruble, but now it’s got an ace up its Bullwinkle sleeve…  Higher interest rates than any country in the Industrialized world, and with investors starving for yield…  Well, I think you can see where I’m going here… 

In the U.K. the frontrunner to replace former PM May, and become the Imperial Leader (HA!) of the U.K., Boris Johnson, was quoted yesterday as saying that there could be no BREXIT deal…  That hit the pound sterling traders in the gut… I have to think that he’ll backtrack and come up with some explanation of his comment, so that the pound can get back on the rally tracks. 

The U.S. Data Cupboard has the Case / Shiller Home Price Index for April this morning. I would look for more declines in the price index…  We’ll also see the color of the stupid Consumer Confidence for this month. Last month we actually saw a slide in this index number from 134 to 130, so will it continue to slide? I doubt it, because they don’t ask you and me!

To recap…  The currencies continued to move stronger VS the dollar all day yesterday, but there was some profit taking in the overnight markets, so the question for today, will be whether or not the euro shrugs the profit taking off or not…  Jeffrey Gundlach thinks it will and has called these recent moves the beginning of the bear market for the dollar!  Gold continues to move higher, without any roadblocks being thrown down by the price manipulators…  Has all the physical demand for Gold knocked the price manipulators for a loop? 

For What It’s Worth…. Well, I’ve heard some really strange ideas these past couple of months, I won’t mention them for they’re not even worth my time to mention them… But I did come across something that is just about the stupidest idea I’ve heard… It’s a call to have taxpayers pay for Medicare for everyone, even for illegals and it can be found here: https://dailycaller.com/2019/06/21/bernie-sanders-medicare-for-all-illegal-immigrants/

Or, here’s your snippet: “Vermont Senator and Democratic presidential candidate Bernie Sanders admitted Friday that his Medicare for All plan would cover the nearly 11 million illegal immigrants present in the United States.

Sanders has routinely campaigned on his plan to nationalize the U.S. health care system and provide so-called “free” health insurance to every individual. The plan is estimated to cost more than $32 trillion over the next decade.

“We’re gonna … create a Medicare for All health care system which guarantees health care to every man, woman, and child,” Sanders said during the National Association of Latino Elected and Appointed Officials’ (NALEO) presidential candidate forum Friday. “We will organize the American people around the idea that all people in this country have the right to health care.”

Chuck again… That’s $32 Trillion over the next decade folks… OK, now I change my tune from our annual deficits reaching $2 Trillion to them reaching $4 Trillion! And you and I know who’s going to pay for that right? And that’s all I have to say about that!

Currencies today 6/25/19 American Style: A$.6970, kiwi .6645, C$ .7589, euro 1.1382, sterling 1.2727, Swiss $.9769, European Style: rand 14.2931, krone 8.5052, SEK 9.2428, forint 284.60, zloty 3.7380, koruna 22.4505, RUB 62.83, yen 107.05, sing 1.3534, HKD 7.8063, INR 69.39, China 6.8752, peso 19.23, BRL 3.8217, Dollar Index 96.02, Oil $57.67, 10-year 2.01%, Silver $15.43, Platinum $814.22, Palladium $1,515.30, and Gold… $1,428.51

That’s it for today…  I woke up this morning and thought it was later in the week, and that I had to hurry to get to my Thursday morning appt. And then it hit me that it was only our Tom Terrific Tuesday!  Well, one week down, by myself, and one week to go! I think I’ll be just fine…  I say that just to get to my former colleagues, Jen and Christine, who don’t believe that a man can survive when his wife is away…  Of course we’re all getting older now, and for some it’s not a choice, unfortunately…  OK, I plan to talk about the Hong Kong dollar tomorrow, so be sure to come back for that…  The band Focus takes us to the finish line today with their great 70’s instrumental hit song: Hocus Pocus…  don’t remember that one? YouTube it, I think it will come back to you quickly!  I hope you have a Tom Terrific Tuesday and Please Be Good To Yourself!

Chuck Butler

 

 

 

 

 

 

 

June 24, 2019

* Currencies & Metals continue to move higher Vs the dollar

* Chuck gives us a history lesson about the beginning of the last weak dollar trend… 

Good Day… And a Marvelous Monday to you! What a week, it was last week for Gold, eh? That move above $1,400 sent me into the weekend smiling like The Cheshire Cat! A weekend that had the great Albert Pujols return to St. Louis for the first time since he left us for the Anaheim Angels after helping the Cardinals win the 2011 World Series. The St. Louis crowd gave Albert standing ovations for tying his shoes… And when he hit a homer in Saturday’s game the crowed called for a curtain call… The first time ever for a player on the opposing team! Albert gave us 11 of his best years in Baseball, and for that we remain grateful that we got to witness it. AC/DC greets me this morning with their song: Back In Black…

Well, someone finally said no mas, with regards to short sales of Gold dominating the markets… let’s recap… Last week we started the week knowing that the European Central Bank (ECB) had signaled for more stimulus, and deeper negative rates….. That got Gold moving in the right direction…. Then we had on the same day, news that a military drone was shot down by Iran, and that the Fed was signaling that a rate cut could come soon… Gold skyrocketed on the combo of those three items, and is still looking solid…

And the dollar bugs? They’ve not been seen nor heard from since last Wednesday morning… The euro was 1.1370 last night when I looked… and all the of the other currencies have followed in the euro’s lead… In the overnight markets the dollar selling has continued and now the euro is within spittin’ distance of 1.14, as we start the day today…

Oh, and to add insult to injury for the dollar, the price of Oil is spiking because of a fire at a Pennsylvanian Refinery…  the price of Oil is trading this morning with a $57 handle. So… all the summer drivers? You may have to buck up a few more Benjamins to cover the cost of your summer driving vacation…

There are lots of different directions I could take the letter this morning, but I think I’ll keep it going with the thought that the dollar is going to need some real PPT or Central Bank intervention to keep it from falling more at this point… I read a guy that says he’s not ready to believe that the dollar is ready for a multi-year weak trend, but…. He’s also not ready to add to his dollar holdings… And I would think that this is the idea that’s in a lot of traders’ minds, etc. because we’ve been here before…

A couple of years ago, I wrote about how Traders sentiments had changed and they were all on board for a euro rally, as it appeared that the ECB was getting ready to remove stimulus…  And a couple of months later, the sentiment had all changed again, and the dollar was ready to rebound… Proving that the weak dollar trend was not ready for prime time… 

Then last year, we had economic data report after report print and be disappointing, and people thought, “well this is not good” but then out of nowhere, the 4th QTR GDP had a rogue 4% print, and left investors, traders, economists, etc. scratching their collective heads over that print, but it was the end of the dollar selling….

And it was at that time I explained to readers that this is a pattern I had seen before, when the dollar went into a multi-year weak trend. I had seen the dollar bugs refuse to allow the dollar to get weaker, and when things got strange for them, they found a way, to renew the dollar buying, but each time the dollar didn’t regain everything  it had lost, and eventually it gave way to the multi year weak trend… So… is this it? Is this the take off?

Good question… And one that I’m not ready to answer, but like the guy I talked about above, I may not be ready to call the multi year weak dollar trend, but I’m not buying any dollars either… (of course I hadn’t been doing that for years!)  But… why wouldn’t investors begin to add to their currencies and metals before this does potentially take off? Come on, make a call, you’ll feel better that you did in the long run…  I do believe… 

I read this weekend that Fed Head Neal Kashkari had called for a 50 Basis Point (1/2%) rate cut at the last meeting… He’s always been a dove, but he was really showing his dovishness, eh? He was the only one I heard that called for that size of a rate cut, and now I have to wonder how many other Fed Heads will join him in his call? I’m still of the opinion that the July FOMC meeting will yield a 25 Basis Points (1/4%) rate cut… If the Fed heads go 50 Basis Points, it will signal that they are panicking and that the recession is not only evident but also imminent!

The thing that the talk of rate cuts does is fuel the stock market, as if it needed any further fueling!  A year or so ago, I wrote in the now defunct, Dow Theory Letters, that historically speaking, stocks do not perform well at all during a recession… So, is this going to be different?  I doubt it… The stock jockeys might be dancing in the street over the rate cuts now, but if I’m right and the recession train is pulling into the station, they won’t be dancing long…  Because I don’t believe in the “the time will be different” BS… Never have, never will… 

So… I had a conversation with former colleague Aaron on Friday last week, and he was telling me that he got the feeling that the currency and metals holders  had grown tired of watching the dollar be strong for so long… And I said, Shoot Rudy, didn’t I teach them that when the dollar is strong that’s when they buy more because the currencies are cheaper? Now, IF this is the start of a multi-year weak dollar trend, they will be buying back their currencies and it will be more costly for them to do so… When will we ever learn? When, will, we… ever… learn?

That’s not to say that now is too late…. Au Contraire Monfrere! This has all just started… And, it’s not too late baby, now, it’s not too late… So, swallow your ego, and make the call to buy back your currencies and metals…

And before you think there’s something fishy going on here…. Look, I’m a loner… I don’t work for anyone, and I don’t get paid for saying things… So, if I say something, you can darn well be assured that its coming from me… myself… and I…. and I’m not paid for saying anything! I only want to see you diversified, so that changes in markets don’t negatively damage your investment portfolio…

OK, now that we have that settled….Do you know what FOMO is? FOMO stands for “fear of missing out”… So, do you fear FOMO? I read an article last night that said that fear of FOMO was fueling the run up in the price of Gold… Well, I don’t know if that’s true or not, but I have FOMAS…. Fear of missing a story! HA!  

I think that the run up in the price of Gold is more tied to the 3 items I mentioned above, and the fact that Central Banks around the world have already begun to cut rates… So the interest advantage that the deposits had on Gold & Silver, is going away…  

I read this morning that India’s Reserve Bank Gov. Acharya had resigned, 6 months ahead of his term ending… He cited the reason for leaving early was personal reasons…  Of course those “personal reasons” came after a class with PM Modi about Central Bank independence…  Apparently, PM Modi was applying pressure on the Central Bank of act…  Hmmm, sounds familiar doesn’t it?  

Oh, that’s right, it’s happening right here in the Gold Ole U.S.A! So, do you think that Fed Chair, Powell, will take Acharya’s lead on this and resign? Nah… I think he’s sitting deep in the Fed Chairman’s chair, and his back is straight, and shoulders back, and ready to take on the President…  Memo to Jerome Powell…. If I were you, I’d get out of Dodge before the dam breaks, for when the dam breaks, you’re going to get all the blame for it, because you built the dam too fast, and now it can’t hold back the flood waters…  Get out now! That is if you know what’s good for your career!

The U.S. Data Cupboard gets restocked this week, but we’ll have to wait until Wednesday to see any real economic data… There is the Case/Shiller home Price Index (HPI) that will print tomorrow, but as always this report is old news, as it will print for April…  But as the week goes on we’ll see Durable and Capital Goods Orders, and Personal Income and Spending, but like I said that’s all later in the week…  So no economic data news is good news for the dollar, usually that is… So, we’ll see if that plays out today… 

To Recap…  We’ve not seen nor heard from the dollar bugs since last Wednesday, when the FOMC Meeting and the news of a drone getting shot down hit the markets and the barn door swung wide open and the currencies and metals came running out!  Chuck tells us his experience with the beginning of the last weak dollar trend…  And the RBI Gov. resigned over a clash with the PM for independence… sound familiar? 

For What It’s Worth… Last month, my good friend, Dennis Miller, of www.milleronthemoney.com wrote a very good piece and used Monopoly (the game) to illustrate his point about Socialism…  Well, I came across this article on MarketWatch.com and it’s about how they don’t use cash in Monopoly any longer… and it can be found here: https://www.marketwatch.com/story/the-grim-financial-lesson-children-will-learn-from-cashless-monopoly-2019-06-21?mod=MW_section_top_stories

Or, here’s your snippet: “Hasbro announced Wednesday it will release a version of the classic board game Monopoly designed for the digital age. But financial experts argue the game’s new design could deprive children of important financial lessons.

In Hasbro’s HAS, -0.58% latest edition of Monopoly, gone are the paper money and Community Chest cards. Instead, the board game now comes with a voice-controlled, artificial intelligence device shaped like a top hat.
Designed to prevent cheating, players will now press a button on the top hat and dictate commands, such as paying rent or trading properties.

This is not the first time Monopoly has reflected today’s cashless world. A 2006 edition of the game in the United Kingdom featured Visa-branded V, -0.17% credit cards instead of paper play money. Similar versions of the game are also available in the U.S. Last year, Hasbro even released a version called Monopoly for Millennials in which players compete to buy experiences rather than real estate.”

Chuck Again… Ok, buying “experiences rather than real estate”? Really? That’s what the world is coming to?  Where are the lessons to kids about how to manage money? And building wealth?  I’m shaking in my seat, shuddering, and thinking about the future of this country…  

Currencies today 6/24/19 American Style: A$.6955, kiwi .6610, C$ .7585, euro 1.1395, sterling 1.2756, Swiss $.9746, European Style: rand 14.3327, krone 8.4732, SEK 9.3055, forint 284.30, zloty 3.7320, koruna 22.4620, RUB 63.01, yen 107.30, sing 1.3540, HKD 7.81112, INR 69.37, China 6.8689, peso 19.12, BRL 3.8200, Dollar Index 96.00, Oil $57.77, 10-year 2.03%, Silver $15.38, Platinum $816.38, Palladium $1,516.02, and Gold… $1,409.73

That’s it for today…  Rain, rain go away!  I’m so tired of rainy, chilly days for June! I heard last night that this will be a weak of drying up, and I’m all for that! Last Friday, I had lunch with son Andrew and grandson Braden, of whom seems to be growing up suddenly… He’s only 8, but there was something there that caught my eye…  Well, I’m still surviving here alone! HA! Hmmm…  That’s all I’ll say about that!  OK… Cardinals take 2 of 3 from the Angels and the Albert Pujols Love Affair…   I was more excited to see the best player in baseball, Mike Trout, play, for I don’t get the chance to see him in action very often… He didn’t disappoint.  OK… Steely Dan takes us to the finish line today with their song: Rikki Don’t Lose That Number… I hope you have a Marvelous Monday and Please Be Good To Yourself!

Chuck Butler

 

 

June 20, 2019 

* Fed signals a rate cut is coming… 

* Currencies & metals soar on the Fed announcement… 

Good Day… And a Tub Thumpin’ Thursday to you! As Gomer Pyle would say…. Surprise, Surprise, Surprise! Yes, I told you I had something to do this morning, but… I got my signals crossed and it’s next Thursday that I’ll not be writing… So, here I am… Surprise, Surprise, Surprise… (in my best Gomer voice!) I watched our young pitcher, Daniel Ponce de Leon pitch his arm off last night, only to have the bullpen blow the lead… UGH Still no hitting for my beloved Cardinals though… UGH! Chicago greets me this morning with their song: Make Me Smile… I can tell you this, back in 1972, I sat there totally awestruck by the wall of sound coming from my record player, as I played the Chicago album that this song was from… I still get goosebumps when I hear something from that album…

The currencies continued to fight back yesterday, with the euro leading the way. The single unit moved steadily upward through the 1.12 handle yesterday, and guess what it was that had the dollar bulls running for the cover of the wallboards? The Fed’s FOMC Meeting came to an end, and Fed Chairman Powell spoke… And he gave the markets what they wanted to hear… That the Fed was basically greasing the tracks for a rate cut soon… Remember, I went out on a big fat limb, earlier this week and said the first rate cut will come in the July meeting… I sure hope I’m not proved wrong/ early… But if I am, it only feeds the other thing I’ve said about the Fed for years now, and that is they are always behind the curve…

And don’t look now, but the 10-year Treasury’s yield has fallen below 2%! The yield has recovered a bit and it sits at 2.01%, but for most of yesterday it was 1.98%…. Remember when the world was still wondering if Quantitative Easing (QE) was going to help the economy after the Financial Meltdown, and the 10-year’s yield fell to 1.38%? Well, if you ask me, I would think the 10-year will revisit that low in yield within the next year… I’m just saying…

I guess at this point, because of the quick reversal of the Fed, (It wasn’t that long ago, that they were telling us the U.S. economy was strong and robust) , the question now, and until the next FOMC Meeting in July, is… Will the first rate cut be 25 or 50 Basis Points? Well, since I’ve already gone on record as saying that I think there will be 2 more rate cuts after the July cut, before year-end, that I’ll have to stick with 25 Basis Points (1/4%)… Otherwise, the other 2 rate cuts that I’ve called for wouldn’t be necessary by year end…

The Big Celebration though, and I’ve been holding back on this, as I didn’t want to spend all my wad early… For there would be nothing else to need to read about! HAHAHHA! But the Big Celebration should be for Gold, which soared through the Maginot Line of $1,350 yesterday as it closed up nearly $20 on the day! When I looked at Gold last night to get a feel for how much of a strong move it had made during the day, given the Fed’s announcement, and it was up to $1,379.00 at 10pm last night, and it brought a smile to my face… For it was me who said yesterday, that I thought that Gold would find its way through the Maginot Line soon… And did so because I knew in my heart of hearts that the Fed was going to do a reversal on us yesterday…

And Silver traded above $15 for the first time in a month of Sundays! Silver, because of all the short positions that are on record (it would take 185 days of Silver production to match the ounces that are sold short right now) lags the types of moves that Gold can put on display… But I’m a big fan of Silver… So, to see it move above $15 also made me smile… I was smiling like the Cheshire Cat for sure! And my recent poetic waxing about Silver sure seems to be bang on now, eh?

OK… now I’m going to calm down a bit, and come back to talking about things that are bothering me… Remember earlier this week when I talked about how President Trump was upset with European Central Bank President, Mario Draghi, because Trump felt that the ECB was keeping the euro undervalued to help them with exports? And then we did the whole two-step with Purchasing Power Parity? Ok… here’s my problem… Recently, the President chided Fed Chairman Powell about the dollar being so strong, and that it was hurting exports… Wait! What? Didn’t he just bang on Draghi for his weak euro, and wanted the euro to be stronger, and in the same breath (not really, but for my freedom of expression), he banged on Powell for keeping the dollar stronger?

Do you see the problem with this folks? As opposed to what Bob Dylan sang in his song: Lay Lady Lay, you CANT have your cake and eat it too! 

OK… The currency that I’ve been highlighting for months now, the Russian Ruble, has moved stealth-like to stronger levels lately, and the upward move isn’t tied to the price of Oil, which was talked about the last time I highlighted the ruble… But think about this for a minute folks… The ruble has been steady Eddie with some upward moves, and it has the highest deposit rate among established countries… Now, you’re never going to hear me say that the ruble can’t weaken… Sure it could… But as long as there are more and more people move their funds in to rubles to pick up yield, it’s not going to weaken… So, for now, the ruble seems to be the currency that depositors around the world are looking to… But keep it liquid folks… For we never know when the Russians might invade another country, now do we?

It certainly doesn’t hurt the ruble or any of the other Petrol Currencies that the price of Oil has rebounded to $55…  

I just thought of something that I used to bang on the Fed about… Remember when the Fed began their rate hike cycle over 3 years ago, and the Fed Heads talked about wanting to get inflation to rise to 2%?   I would so eloquently explain how that’s not how you invite inflation to rise… You cut rates to accomplish that feat. So the Fed was fighting themselves with regards to getting inflation to rise as long as they were hiking rates…  Now, the Fed says, “inflation is under control” so we’re going to cut rates… Well, it won’t be under control too much longer! 

Well, as I look across the desk at the currencies this morning, I see that nearly every one of them is on the rally tracks VS the dollar…  the one that sticks out like a sore thumb, and isn’t on the rally tracks is the Swiss franc…  A couple of days ago, the franc was touching parity with the dollar, and fast forward to today, and the franc has slide to .9860…   I bet you’re wondering why?  Well, I could say that the need for safe haven currencies has dissipated… but that wouldn’t explain why the Japanese yen is still strong…   So, it has to be something else, and I’m sure it has something to do with the Swiss National Bank (SNB)… Those guys, led by Gov. Jordan, are a suspicious bunch for sure…  I’m just saying… 

The U.S. Data cupboard has some 2nd and 3rd Tier data reports today… The Weekly Jobless Numbers have been moved to the 2nd team, and rarely gets a chance to play…  But there’s one piece of data today that’s forward looking, and it’s Leading Indicators, and we’ll see the color of that data for May this morning… Leading Indicators aren’t market moving, but they can make for some interesting headlines… 

And one more thing before we head to the Big Finish today…  I was going to write about this yesterday, and forgot…  But not today… Gold, which for trading purposes is priced in dollars (except on the Chinese Shanghai Gold platform) But when you look at Gold in other currencies… It was really shining…  It recently hit an all-time high VS the Aussie dollar (A$), and kiwi…  And that was one of the reasons I kept thinking that Gold was going to take off VS the dollar soon…  

To recap…  The Fed’s FOMC Meeting ended with no rate move, but… Shoot Rudy, let’s make that a BIG BUT… Fed Chairman Powell, gave the wink and nod to the markets that a rate cut is coming, and all hell broke loose in the currencies and metals… The euro shot through the 1.12 handle on its way higher, and Gold soared through the Maginot Line! Nearly all the currencies are on the rally tracks today VS the dollar, and Gold continues to march higher in the early trading… 

For What It’s Worth…  OK… Debt here in the U.S. continues to pile up, thus necessitating the need for more Treasuries to be issued to finance the debt, and I’ve been telling you that countries like Russia and China are dumping Treasuries… This article talks about Russia’s latest dump of Treasuries and can be found here: https://sputniknews.com/business/201906181075934481-russia-chips-away-at-us-debt-holdings-dumping-another-16-bln-in-treasuries/

Or, here’s your snippet: “The targeted selloff brings Russian holdings of U.S. Treasuries to a 12-year-low; total holdings have fallen by over $150 billion over the last decade.

The Russian Central Bank dumped $1.58 billion in U.S. Treasuries in April, freshly released data from the US Treasury indicate.

According to the figures, Russia’s Treasury holdings dropped from $13.716 billion in March to $12.136 billion in April. The sell-off brought Russia’s US debt holdings to their lowest level since mid-2007.

Russia, once one of the most dependable investors in T-bills, has gradually shaved its holdings amid a worsening in relations with the U.S., dropping out of the top 33 holders last year in a sell-off worth tens of billions of dollars. Less than two years ago, in late 2017, Russian Treasuries holdings stood at over $92 billion. In 2010, when bilateral relations were better, Russia owned over $170 billion in U.S. Treasuries.

The April data also showed that China and Japan dropped some of their (much more sizable) Treasury holdings. China dropped its investment by some $8 billion, from$1.121 trillion in March to $1.113 trillion in April, with the figure Beijing’s lowest in nearly two years.

Japan, the second-largest holder of U.S. debt after China, similarly reduced its T-bill holdings, from $1.078 trillion in February to $1.064 in April, indicating a drop of $13 billion.”

Chuck Again…  this is not going to be a pretty picture to look at as we go forward folks… I’m just saying… 

Currencies today 6/20/19 American Style: A$.6925, kiwi .6589, C$ .7583, euro 1.1306, sterling 1.2700, Swiss $.9860, European Style: rand 14.2374, krone 8.5577, SEK 9.4123, forint 286.55, zloty 3.7628, koruna 22.6643, RUB 63.90, yen 107.77, sing 1.3563, HKD 7.8163, INR 69.45, China 6.9026, peso 18.91, BRL 3.8581, Dollar Index 96.65, Oil $55.54, 10-year 2.01%, Silver $15.35, Platinum $817.74, Palladium $1,518.77, and Gold… $1,380.91

That’s it for today…  Well it took 11 innings but my beloved Cardinals finally pulled out a winner, but only had 6 hits in the game… It’s a reoccurring problem for them…  Well, my oncologist asked me yesterday if I had watched the Blues last week… And I had the same reaction I had last week, when they won the Stanley Cup, I teared up and chills went down my spine…  Day 2, alone was fine once again… I was upset a bit at the doctor’s office yesterday, because I had gained back a lot of the weight I had recently lost… UGH!  A vicious cycle with me, for sure!   The Moody Blues take us to the finish line today and this week, with their song from the Seventh Sojourn album (one of my faves!): Isn’t Life Strange?   I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and will Be Good To Yourself!

Chuck Butler

 

 

June 19, 2019

* Currencies fight back on Tuesday… 

* Trump & Xi will meet at G-20, when did meeting ever accomplish anything? 

Good Day… And a Wonderful Wednesday to you! I was watching my beloved Cardinals get shut out again last night, and I heard the two knucklehead announcers say that they didn’t see this coming, all these shut outs… I sat there and said… I guess they don’t read the Pfennig, nor do they listen to me during spring training games, when I kept saying out loud… This team can’t hit! Well, they can sometimes, but most nights it’s just not their night to hit… Unfortunately, those nights are becoming more and more often… UGH! Well, day one, alone,  was no biggie… I actually slept for most of the afternoon, since I was up at 3 am to take my wife to the airport… I ate Chinese food for dinner last night and my fortune cookie’s message to me was; “Your personality is fueled by the fascination you feel for life” I thought, by gosh, by golly it’s right! Rod Stewart greets me this morning with his rock classic song: Maggie May…

Well, the constant buying of dollars by the dollar bugs tailed off yesterday, and the currencies, led by the euro, were able to gain back some of their lost ground… Not all, but some… Well, longtime reader Bob, sent me a note last night, that scared the bejeebers out of me first thing this morning… So, since it hit me like a ton of bricks, I thought why not you too? Here it is: The amount of negative yielding global sovereign bonds has never been higher, now $12 trillion worth. So bad is the global economy, so nervous is big money, that it is prepared to PAY for the privilege of owning government issued debt.

And yesterday, European Central Bank (ECB) President Mario Draghi, threw the euro under the bus again, when he talked about how the Eurozone had not reached its inflation target, of 2%, and therefore he had plenty of arrows in his quiver to combat that, including deeper negative rates, and bond buying…   

This talk should have shook the euro to its foundation… But it didn’t… I thinking that traders have seen and heard enough of Draghi, by now, and just don’t pay attention to him…  But deeper negative rates?  

Oh, me oh my… And I can’t help but think that before we know it happened, U.S Treasuries will see a part of its curve in negative territory… Yes, I’m saying negative yielding Treasuries are in our future… Just like negative deposit rates are too… I know, I know, I sound like Dr. Doom, and quite frankly, I think Dr. Doom is too Polly Anna for what’s in store for us in the next recession!

But I’m really a very positive person! When positivity is called for that is… Other than that I’m just a guy that calls them the way he sees them… So, now that we’ve laid that groundwork… I have a very interesting FWIW article today, it’ll have you scratching your head and wondering What the Hell! (WTH)

The Fed’s FOMC Meeting will end this afternoon, but not before we find out who sunk Bullard’s battleship! HA! I really threw a grenade from left field yesterday, when I told you I expected to see a rate cut in July and 2 more before year-end, didn’t I?  But that’s not today, and today we’re going to hear the Fed heads talk about how things have changed since their April meeting, and that they see the need for a rate cut should they continue to deteriorate.  That should do the trick, for the dollar folks, but then we never know, right? 

Gold found its way to gain $7 on the day yesterday, but is down $4 in the early trading today.  Can’t have Gold getting to close to the Maginot line of $1,350 now can we?  Well, like I said yesterday, there will be a break through in the Maginot Line for Gold, and I do believe it’s coming soon… 

But for now, you’re still able to pick up some physical Gold before the break through $1,350 comes…  Because after the break comes and it is followed through, it won’t be too late, but shall we say, tardy? 

The U.S. Data Cupboard only has the FOMC Meeting on its agenda today… Yesterday, the housing data proved me to be correct, when I said it lags and that houses can still be being built well into a recession…  There isn’t much in the Data Cupboard for the rest of the week after today, so the way I see this going is that the Fed hints and greases the tracks for a rate cut in July, which causes whiplash to the markets, and then it will linger through the weekend because there’s nothing else to deal with, data-wise. 

OK, the meeting is on!  It was announced yesterday that Trump and Xi WILL meet at the upcoming G-20 meeting.  The markets breathed a deep sigh of relief hearing this, but I have to ask them why?  When in all their years of dealing with meetings have they ever been a part of a meeting that actually accomplished anything?  Come on….  I shake my head in disbelief that they fell for the “meeting”….  

Before I head to the Big Finish today, I wanted to mention that all the saber rattling going on between President Trump and Fed Chairman Powell, is getting old…  But I have a suggestion for the President, should he find that he needs to add a Fed Head…  I would love for him to consider economist, Danielle Di Martino Booth…  She’s been in the belly of the beast (the Fed) before, and has a better viewpoint as to what the Fed needs to do… 

To recap… The currencies fought back yesterday, and through the overnight markets to start today, looking a bit healthier than yesterday morning.  Draghi tries to throw the euro under a bus again, but this time traders aren’t hearing him… But Draghi did mention deeper negative rates, and that has Chuck talking about how he see those coming to the U.S. 

For What It’s Worth… Another article sent to me from dear reader Bob last night, and this one just makes me madder than hell! This article is about what the Banks did with all the Billions of cash the Fed gave them after the last financial meltdown and it can be found here: https://www.cbsnews.com/news/whered-the-bailout-cash-go-its-a-secret/

Or, here’s your snippet: “After receiving billions in aid from U.S. taxpayers, the nation’s largest banks say they can’t track exactly how they’re spending it. Some won’t even talk about it. “We’re choosing not to disclose that,” said Kevin Heine, spokesman for Bank of New York Mellon, which received about $3 billion. The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what’s the plan for the rest? None of the banks provided specific answers. Some banks said they simply didn’t know where the money was going.

There has been no accounting of how banks spend that money. The answers highlight the secrecy surrounding the Troubled Asset Relief Program, which earmarked $700 billion … to help rescue the financial industry. Lawmakers summoned bank executives to Capitol Hill last month and implored them … not to hoard it or spend it on corporate bonuses, junkets or to buy other banks.

But there is no process in place to make sure that’s happening and there are no consequences for banks that don’t comply. Meanwhile, banks that are getting taxpayer bailouts awarded their top executives nearly $1.6 billion in salaries, bonuses, and other benefits last year. Congress attached nearly no strings to the $700 billion bailout in October. And the Treasury Department, which doles out the money, never asked banks how it would be spent. No bank provided even the most basic accounting for the federal money. Most banks wouldn’t say why they were keeping the details secret.”

Chuck Again… Well, I can tell you that some banks didn’t want to take any cash but were made to take it anyway… But aside from that, the Gov’t doesn’t want to know what the banks did with the money… And since there apparently isn’t any accounting of the money… Now you tell me how in the hell that happens when there are bank auditors? I’m shaking my head in total disgust this morning and had better calm down because I’ll be having my blood pressure taken shortly! UGH!

Currencies today 6/19/19 American Style: A$.6872, kiwi .6525, C$ .7475, euro 1.1208, sterling 1.2587, Swiss $.9970, European Style: rand 14.5397, krone 8.7325, SEK 9.5380, forint 288.92, zloty 3.8056, koruna 22.8705, RUB 64.15, yen 108.40, sing 1.3673, HKD 7.8245, INR 69.73, China 6.9159, peso 19.15, BRL 3.8729, Dollar Index 97.55, Oil $53.83, 10-year 2.08%, Silver $14.94, Platinum $799.45, Palladium $1,496.97, and Gold… $1,342.83

That’s it for today…  And this week… Sorry, but I’m needed somewhere tomorrow morning… I know, I know I’ll miss talking about the FOMC, but I’m sure the media outlets will cover it… Not the way I do, but at least you’ll know what the main story is. My good friend, Dennis Miller, is hanging in there, and is almost finished with his treatments.  He still needs your prayers though, so don’t forget! I get to see my oncologist today… She’s great! I don’t think I continued to drop any weight, so she’ll be good with where I am now… I think I need a different antibiotic to combat the cellulitis in my leg… It just keeps hurting and doesn’t heal…  Oh well… life goes on…    The Strawbs takes us to the finish line today with their song: Autumn….   Hold on to me, I’ll hold on to you, the winter long I will be with you….   I love that line…  if you hold me, I’ll hold you… You can bet your sweet bippie I will! I hope you have a Wonderful Wednesday, and Tub Thumpin’ Thursday, and Fantastico Friday!  And I hope you continue to Be Good To Yourself!

Chuck Butler