September 10, 2019
* It took a day, but rubles finally get bought!
* Currencies trade in tight range yesterday, but slip overnight
Good Day… And a Tom Terrific Tuesday to you… No baseball for me last night, and I really don’t get excited any longer about watching an NFL football game… So, I turned the volume on whatever was on down low, and began to read… I really shouldn’t do that, because what it does is it gets me all riled up and yelling at the wall, and then I try to go to sleep… Doesn’t work! But anyway… It just keeps getting more difficult every day, to wake up… I have no idea what’s going on, I have always been a morning person, able to get up whenever, and be ready to take on the world… But not any longer… Is it age? Or years of accumulation of Chemo? Or do I know in the back of my mind that, in reality, I no longer HAVE to get up so early? Probably a bit of all three, don’t you think? Oh, well… I carry on despite my short comings! A St. Louis band, Mama’s Pride, greets me this morning with their song: Blue Mist…
Well, the price we pay for making sure our kids have everything they desire, because… You don’t want to upset them! Oh, the humanity if we did! That price I’m talking about is the run up of Consumer Debt… It’s crazy folks… But remember when the July Retail Sales were so strong, and I said that it was inflated with back-to-school sales, and wondered what the credit card bills would show when they arrived in the mail? Well, the report card is out, and here are the numbers, read ‘em and weep! For the month of July, consumer credit increased at a seasonally adjusted annual rate of 6.75%. Revolving credit, which are credit cards increased at an annual rate of 11.25% while non-revolving credit increased at an annual rate of 5.25%.
That’s over 11% increase in July from June in credit card debt…. What on earth are these people thinking about? Do they think they’ll come a day when all is forgiven, and the Gov’t will step up and take all their debts away? What was the old TV commercial? Calgon… take my troubles away… or something like that! I’m telling you now, so please make sure you listen to me later, but not too much later… That a situation like I just thought of, would be devastating to you and me… People that pay their taxes, save, and trying to invest… (I have a doozy for you on investing in 2020 in the FWIW section today) Because, who’s going to pay for all this debt forgiveness? Ahem… are you looking in a mirror?
Oh, and for those of you keeping score at home…. Longtime readers will recall me saying several times though the years, that debt levels like we have in the U.S. are hurting our economy’s ability to grow… And then I came across this yesterday, and thought… Hmmm, I wonder where they got this idea… Hmmm… “Debt owed by governments, businesses and households around the globe is up nearly 50% since before the financial crisis to $246.6 trillion at the beginning of March, according to the Institute of International Finance, an association of global financial firms. And the high debt levels are weighing heavily on economies….”
So, hopefully we don’t ever come to that… What we might be coming to however, is negative rates… and I read this past weekend that Big Al Greenspan said that negative rates were no big deal… Wait! What? Oh, brother, have we gone, no wait Chuck, don’t say it, for it wouldn’t be nice, and your mother always told you to hold your tongue if you didn’t have anything nice to say about someone…
Well, just as a sidebar… The University of Bath, did some research and found that negative interest rates aren’t doing what they were supposed to be doing… Look, at Japan… Their economy is still in the dumpster, and now Europe’s economy just headed into a recession… So, while I believe that’s where we will eventually be with negative rates, I certainly hope we don’t ever get there!
OK, I’ve started this morning off full of you know what and vinegar! The currencies on the other hand had little to no upward movement yesterday VS the dollar… Gold on the other hand was not able to hold to the early morning gains, and ended up in the red once again, falling almost $8 on the day, and closing below $1,500… I somewhat expected this to happen, as I explained a couple of weeks ago, I viewed the $1,500 level as the new $1,300 level… Recall how we would bump up higher over $1,300 and then get sold back below it again, and we played that game for over a year!
So, like I said yesterday, I would look to buy Gold on the dips… And anytime it falls under $1,500 would seem like a “dip” to me… I’m just saying…
In the overnight markets, the currencies have slipped a little (except the Russian ruble), and Gold is down another $6 in early trading. The real BIG mover to the positive side yesterday was the price of Oil, which bumped up to trade with a $58 handle, and that got traders and investor excited about buying the leading Petrol Currency, the Russian ruble… The ruble saw a strong rally on the day, and in my opinion, it’s about time! I saw a blurb on the Bloomberg this morning that traders are questioning the size of the Oil reserves in Saudi Arabia… Uh-Oh… this has the potential to be a very damaging piece of news, should it turn to be the truth…
Sure, as I’ve been saying, the ruble was trading very steady Eddie for a long time, but after the news I brought to you yesterday, about how Russia’s economy was still growing, even after 5 years of economic sanctions, finally impressed someone, or group of someones… You can still get an interest rate above 4.75% in Rubles, folks… I’m just pointing these things out, it’s up to you to do something! HA!
The Peoples Bank of China (PBOC) allowed another increase in the value of their currency, the renminbi, VS the dollar last night… That marks 3 days of allowing gains… What’s up with that? Not that I’m complaining about this move in the renminbi, it’s just that it doesn’t make any sense… I guess the fact that there are still negotiations going on with regards to the Trade War with the U.S., there’s no reason to keep marking the renminbi down…
Remember when I asked the question, and said that I was sure that some propeller heads in China probably had already figured out at what level the renminbi needed to fall in order to make up the losses from the Tariffs… Well, I guess they figured it out! HA!
Well, the mess in politics in the U.K. continues… PM Boris Johnson failed once again to get his call for elections passed. BREXIT looks like its dead in the water, and the deadline is looming… I believe it’s Rocktober 31st, which is also Halloween, will it be the bewitching hour for BREXIT? The U.K.? Boris Johnson? I know it sounds far off, 10/31 that is, but it’ll be here before we know it, as time waits for no one and it won’t wait for the U.K. to come up with a BREXIT deal… I’m just saying…
I told you yesterday that the U.S. Data Cupboard was going to be a disappointment this week until we get to Friday, and Retail Sales prints… And so that means yesterday, we had the Consumer Credit data that we already talked about, and today we get the Median Household Income number… No biggie, but it will be interesting to see if we continue to lose ground with regards to wages…
To recap… The currencies played in the mud yesterday, and are a little weaker in the overnight markets. Except the Russian ruble, and the Chinese renminbi, these two have rallied once again. There are rumors going around that the Oil reserves aren’t what they were thought to be in Saudi Arabia… Hmmm…. Gold lost $8 yesterday, and is down another $6 in the early trading today… As I’ve already explained but repeated once again today, $1,500 is the new $1,300… Got it? Get it!
For What It’s Worth… I saw this article last night on MarketWatch, and thought, this is going to be a humdinger of an article… It’s about investing in 2020, and I’m sure you’ll want to take a look at it and if so, it can be found here: https://www.marketwatch.com/story/why-investors-risk-major-damage-ahead-of-the-most-volatile-year-in-history-2019-09-09?mod=MW_section_top_stories
Or, here’s your snippet: “Think 2019 has been hectic? You ain’t seen nothing yet.
According to our call of the day from John Mauldin of Mauldin Economics, 2020 “will be the most volatile year in history” for investors
“The last few weeks marked a turning point in the global economy. It’s more than the trade war. A sense of vulnerability is replacing the previous confidence — and with good reason,” he wrote in his latest market update. “We are vulnerable, and we’ll be lucky to get through the 2020s without major damage.”
Mauldin pointed to supply shocks, the trade war, interest rates, unproductive debt and Europe’s mess as some of the factors set to create the perfect storm, but it’s one volatility bomb, in particular, that could blow up best-laid plans.
“Remember when experts said to keep politics out of your investment strategy?” he asked. “We no longer have that choice. Political decisions and election results around the globe now have direct, immediate market consequences.”
Of course, the most consequential of all: The 2020 U.S. election. And Mauldin doesn’t sound too hopeful about any of the scenarios.
“None of the possible outcomes are particularly good. I think the best we can hope for is continued gridlock,” he said. “But between now and November 2020, none of us will know the outcome. Instead, a never-ending stream of poll results will show one side or the other has the upper hand.”
Markets will be a mess, bouncing up and down with each headline, Mauldin warned, and that will inspire politicians and central bankers to react. To “do something.” That something, he said, will probably be the wrong thing.”
Chuck Again… Yes… and it brings to my brain the question I keep asking…. Got Gold?
Currencies today 9/10/19 American Style: A$.6868, kiwi .6423, C$ .7587, euro 1.1037, sterling 1.2348, Swiss $.9916, European Style: rand 14.6770, krone 8.9784, SEK 9.7357, forint 300.32, zloty 3.9260, koruna 23.4322, RUB 65.53, yen 107.45, sing 1.3798, HKD 7.8406, INR 71.88, China 7.1217, peso 19.55, BRL 4.0737, Dollar Index 98.44, Oil $58.25, 10-year 1.64%, Silver $17.92, Platinum $940.50, Palladium $1,554.56, and Gold… $1,493.36
That’s it for today… I just caught myself looking at one of the pictures I have on my wall at my writing desk, and while doing that I inadvertenly held down a key, and I had a whole page of that one key on my screen! What a dolt! OK, I got rid of all that… the picture I was looking at, is a picture of me and my oldest sister, Brenda. She was battling cancer at that time and had wig on, but smile on her face, which is how I’ll always remember her… My beloved Cardinals head out west for 3 games starting tonight, which will start later, because, well… they’re out west! So, when I get up at 4 in the morning to take my chemo, I’ll be checking on the final scores…. Journey takes us to the finish line today with their song: Who’s Crying Now? I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!
Chuck Butler