January 8, 2020
* Currencies fall back as the dollar rebounds…
* Gold soars with the eagles but gets grounded with the turkeys!
Good day… And a Wonderful Wednesday to you! My travel day yesterday went along OK, until… my stomach began to revolt on me… UGH! But we made it here, to S. Florida, to our 2nd home… And I’ll be here until April… I was a happy camper again once we got outside here, and it was sunny and 75… I love warm weather! Well, Gold soared briefly yesterday, as the Iranian retaliated for the airstrike on them last week. Not that I want to see war escalating, but this is one of the reasons you own Gold! So, more on that today, and talk about what happened to the short-lived currency rally… So, pull up a chair, grab a cup of joe… and let’s go! The local St. Louis band, Mama’s Pride, greets me this morning with their song: Blue Mist…
OK, first things first… The war trigger fingers are getting itchy folks… I do not want to see the U.S. in another war, unless of course, God forbid, we are attacked first. But late yesterday, news came across that the Iranians has retaliated and fired some land to air missiles at a base in Iraq, that housed American Soldiers… As I went to bed last night, I had not heard of any loss of American lives, but one would have to think that to be tenuous… Bottom line to all this saber rattling, is the price of Gold has seen some wild and crazy trading… At one point yesterday, I checked the prices and Gold was $1,604…. But that didn’t last, as I’m sure the JPMorgan’s etal, were there to make sure that they threw up a roadblock, and Gold ended the day up $10, and not the $28 it had briefly touched on.
As I said above, this is one of the reasons why you own Gold… Geopolitical problems… I said on Monday this week that I thought this saber rattling would continue and that it would keep the bid constant and rising for the price of Gold. And Silver was not chopped liver these past few days too and closed yesterday at $18.35 (after venturing higher on the day to $18.55… so, the price manipulators are attempting to stop a runaway train… I have this feeling they’re going to be run over, but then that’s just me…
There was an article Monday about how Gold was “overbought”… And I thought, well that may be, but the figures they were using were based on a belief by them that mom and pops here in the U.S. are all-in on Gold buying, when the actual truth is that many don’t even know that Gold exists as an investment option! The GATA folks think that 95% of the number is incorrect, and I would agree!
And while the precious metals moved down the rally tracks at a steady speed, the currencies gave back their gains from last week. The Plunge Protection Team (PPT) had to choose their battles, and they chose to battle the falling dollar… The euro, which was 1.1205 on Monday morning, has seen its recent mini-rally falter, and when the Big Dog falters the rest of the currencies (the little dogs) can’t get out of their own way!
The price of Oil slipped a little yesterday, which didn’t do the Petrol Currencies any favors as they were waiting for either the euro to gain, or the price of Oil to gain, and since neither happened, the Petrol Currencies that include: Rubles, krone, real, loonies, pesos and others, got sold on the day… UGH!
In the U.S. Data Cupboard on Monday, was the Markit ISM (manufacturing index)… The Markit folks say there’s nothing contracting in manufacturing, but the ISM did say that not only was the manufacturing sector contracting it had contracted more than the previous month! Where’s the disconnect here? I mean do the Markit people now get their numbers from the BLS? HA! Because the BLS sure knows how to massage the numbers each month, so more and more sheeple go to market and buy stocks, don’t they? And now the Markit report on manufacturing says everything is hunky dory, and the real ISM report says, not so fast their Markit boys! So, anyway, the thing is simply that one’s telling the truth, and other is telling the not so truth… And I’ll bet a shiny quarter that you know which one is which in my book!
Yesterday in the Data Cupboard, we saw November Factory Orders, which placed the odds of a good 4th QTR GDP here in the U.S. very low, as Factory Orders were negative -0.7%… Along with the negative print in Durable Good Orders, and the Baltic Dry Index, and Cass Freight indexes both dropping like rocks from a cliff, the picture that’s being painted for 4th QTR GDP is not a pretty one, folks… I’m just saying…
The Data Cupboard today has the ADP Jobs report for December… The ADP report forecast is for only 67,000 jobs to have been created in December. Last month we had a low number on the ADP report, only to see the BLS blow that out of the water two days later… So, I guess I’ll have to wait-n-see what the BLS has up its sleeve on Friday, eh?
Before I head to the Big Finish today, I want to talk a bit about the Russian economy… I read last week that they had a bumper crop in 2019 (their year-end is in July) and that they are fully expecting a repeat if not a better than 2019 for 2020… The economic sanctions continue to hold a grip on the Russian economy, folks, but so far they are doing everything possible to ignore them and move ahead.
I know, and realize that I spend a lot of time and words talking about Russia, and ruble… But longtime readers know that there are times when countries go front and center and need to be talked about… In the early 2000’s it was the euro… then the Aussie and kiwi dollars, and then the dollar, and now it’s rubles… The ruble is so weak, compared to where it was before the conflict with Ukraine began… And that’s another reason I think it needs to be looked at, for shouldn’t it return to its previous level? I believe so… And so…
To recap… I know, shorter than usual today, just getting my bearings adjusted that’s all… OK… well all the euphoria in the currencies and metals have been brought back to earth, as the saber rattling notched higher yesterday and then faded… The Markit and ISM reports on Manufacturing seem to have a disconnect, are the Markit folks getting their numbers from the BLS? HA! Gold soared with the eagles for a while yesterday, but ended the day grounded with the turkeys… UGH! Oh, well, can’t move too fast upward or there will be a correction!
For What It’s Worth… I always love to find stuff in my local paper that I can use… The St. Louis Post Dispatch, doesn’t really have too many original story writers left, so most of the time they are simply reprinting stories found on the newswires… But every now and then, economy writer, David Niclaus writes a real good one, and I have to make sure I find a way to use it! So, this article is about the tariffs and how they’re destroying manufacturing, and the so on, and can be found here: https://www.stltoday.com/business/columns/david-nicklaus/tariffs-were-supposed-to-save-american-manufacturing-they-re-destroying/article_0ff11533-3744-5411-8741-bdda614a9d6e.html#tracking-source=home-top-story-1
Or, here’s your snippet: “resident Donald Trump’s tariffs were supposed to make American factories great again.
Instead, a new Federal Reserve study says, they’ve harmed American manufacturing, destroyed jobs and raised prices for consumers.
Moreover, the damage won’t be undone by the president’s phase one trade deal with China. The 25% tariffs he imposed in 2018 on a wide range of components and other manufacturing inputs will remain in place.
Aaron Flaaen and Justin Pierce say their study provides the first comprehensive look at how the tariffs affect U.S. manufacturers. That’s important because tariff advocates sometimes argue that any pain caused to consumers, financial markets or even the economy as a whole is necessary to maintain a robust manufacturing sector.
Trouble is, the tariffs clearly are hurting the sector they were supposed to help.”
Chuck again… Well, here’s one that I’ll slap myself on the back for… You see when the tariffs were first talked about, I told you, dear reader, that the economy would suffer… I’m just saying… I can hear you now… “Yeah, Chuck, even a blind squirrel can find an acorn!” HA!
Currencies today 1/8/20 American Style: A$ .6870, kiwi .6647, C$ .7686, euro 1.1130, sterling 1.3107, Swiss $1.0290, European Style: rand 14.2060, krone 8.8540, SEK 9.4407, forint 297.45, zloty 3.8115, koruna 22.6841, RUB 61.86, yen 108.71, sing 1.3503, HKD 7.7772, INR 71.66, China 6.9473, peso 18.84, BRL 4.0657, Dollar Index 97.11, Oil $62.90, 10-year 1.81%, Silver $18.36, Platinum $969.72, Palladium $2,099.60, and Gold… $1,578.43
That’s it for today, and this week… Next week we get back to a regular schedule, I think! Tomorrow I will drive north 30 mile to Port St. Lucie to a wound center there, and see what they think of my leg… And then weekly I’ll head back there, but don’t know the schedule they’ll keep for me, so for now, we’re back to regularly scheduled programming next week… I heading south this morning for a breakfast meeting with my good friend Rick, who’s down here for a conference. The last time I met someone for breakfast while down here was a couple of years ago, when I met my former marketing person Suzanne for breakfast… Back then I was having problems with the tumor in my mouth, and during breakfast I began to bleed, and so I rushed off to the bathroom where I stayed for the next 1/2 hour attempting to get it stopped… Poor Suzanne… well, that was a bad memory! But no more… Robert Plant takes us to the finish line today with his song: Big Log… I hope you have a Wonderful Wednesday, and will continue to Be Good To Yourself!
Chuck butler