February 5, 2020
* currencies, bonds, & Gold all get sold on Tuesday…
* A Vaccine for the Coronavirus is in the works…
Good Day… And Wonderful Wednesday to you! I have to apologize to one and all for my whining yesterday about how I felt… I shouldn’t have gone into detail, and should have said instead, that “it was a tough night for yours truly” OK… now that’s out of the way, and in case you’re wondering I got the wink an nod to go off the chemo for a week… So, by about the time I start to feel human again, it’ll be time to go back on… I’m still of the belief though that this chemo medicine has run its course with me… I’ve been taking chemo for nearly 13 years and this is the 5 different chemo drug that’s I’ve taken… And I’ve been on this one for 2 years… This is when I contact MD Anderson for their advice as to what is the newest renal cell carcinoma drug available… I think that this morning’s song is telling me something… It’s the great, godfather of soul, James Brown and his song: Get On The Goodfoot…
Oh, and this is the last letter this week folks… I have to be at the wound center very early tomorrow… So no Pfennig tomorrow… sorry…
Well, the currencies can’t stand prosperity… every time in recent months that they appear to be ready to roll VS the dollar, that probes to be a false dawn… They may still build on their gains last week, but it will have to come after giving back some gained ground, like they did yesterday… I say the “currencies” as a general statement, there was a currency or two that gained yesterday. The Aussie dollar (A$) is one of them, and the other is the Russian ruble.
A longtime reader asked me last week what was the # currency VS the dollar last year, and I responded that I believed the Malaysian ringgit was the number one, but it was a very illiquid currency that was difficult to own… And then yesterday, I learned that the Russian ruble was the number one currency of the top 20 currencies in the world, for 2019… The ruble’s return, currency only, was 12.46%… If you owned it the entire year you can add another 4.5% for interest… So, it’s total return was over 17%!!!!
And it should be the best perfoming currency for years to come, until they get back to the level it traded VS the dollar, (35) before the conflict with Ukraine a few years ago, when the currency plummeted…
You know the more I read the more I learn that more and more countries are weaning themselves from their dependency on the U.S. dollar… Russia and China are the leaders of this move, but until the U.S. experiences a failed auction of Treasuries… This movement will take years to come around, but the trend is in, folks… And can you blame these other countries? By having the reserve currency of the world, the U.S. is supposed to be above all others at shepherding their economies and balance sheet to keep the currency strong…
The report card on the U.S.’s efforts to shepherd their economy and blance sheet to keep the reserve currency strong, is not a good one, folks… The U.S. current debt stands at more than $23 Trillion, and the Unfunded Liabilities are $127 Trillion… Add those together… that’s how well the U.S. has done folks… If I were the teacher they would get a hard F! But that’s not all the debt we have in this country… Corporate debt is $15.5 Trillion, or 74% of GDP…. State and local debt is $1.6 Trillion, and Consumer debt is $13.86 Trillion… This is really bad folks… so go ahead and think the dollar is going to remain strong forever… One of these days, all this debt is going to come back and bite the dollar in the rear…
The early morning selling of Gold yesterday, carried through to the rest of the day, with the shiny metal losing $23 on the day, to close at $1,553…. OUCH! Now that’s going to leave a mark! But… as I always say, these brief sell offs in Gold give the procrastinators or the Johnny come lately to investing, the opportunity to buy at much cheaper prices than was we saw late last week!
For if you believe that Gold will remain at these levels forever, you’ll end up being wrong… Remember a few years ago, when Gold dropped to $1,100 and change, and a very well know investment analyst, said that Gold would go to $700? Well, instead of dropping further at that time, it began to rebound, and then late last year it took a big step to the $1,500 level… You know, I wonder where that , well known investment analyst, has gone? I haven’t heard from him in a few years now….
OK… enough of that! Did you hear that a cruise ship off the coast of Japan, has been ordered to remain there and not dock, because there have been some confirmed cases of the Coronavirus on the ship? Talk about the virus beginning to spead? Basically every person on that ship could have been exposed to the virus… I would thing that news like that would boost the price of Gold, euros, francs, yen, and bonds… But in this day of opposites, Gold, euros, francs, yen and bonds all suffered from selling… Go figure, eh?
And speaking of the Coronavirus, a British scientist believes he has developed a vaccine to combat the coronavirus. By the time it gets through all the hoops and goes to manufacturing, it will be too late to help with the outbreak this time, but… At least the next time, there will be an answer, apparently, that is…
I don’t think the news of a vaccine to combat the Coronavirus, had anything to due with the boys in the band taking down Gold yesterday, but I’m sure there’s an excuse list out there that the boys in the band are reciting from that has the vaccine as one of the reasons they took Gold down, I mean they really whacked Gold…
The U.S. Data Cupboard yesterday had December Factory Orders, and I said yesterday that given the recovery in the ISM data, that I would expect that Factory Orders also recovered from their negative print in November… And recover it did, apparently that is, for I’m unaware of fidgeting in this number, but given that all other numbers have some fidgeting, one would think that this one did too… The December print was 1.8%, that wasn’t enough to bring Factory Orders out of the red y-t-d for 2019… So, the poor readings will continue, with the December print a brief escape… That’s how I see it anyway!
Today’s Data Cupboard has the ADP Employment Report for January, and the precursor to Friday’s Jobs Jamboree, is expected to show 175,000, which is in line with December’s print… I would think that the January temp help for December was all gone, and that the January jobs number will be lower…
To recap… The currencies, for the most part, suffered through a day of dollar buying on our Tom Terrific Tuesday. Gold got whacked, royally, and that whacking is going to leave a mark! The A$ and rubles were the only rallying currencies… All the real data for December, ISM, Durables, Factory Orders, etc. all showed improvement, but couldn’t bring the annual numbers out of the doldrums…
For What It’s Worth… Well the improvement in the data for December wasn’t enough to pull each respective data print out of the doldrums, and… it wasn’t enough to keep Macy’s from cutting jobs and shuttering stores… The article about this was found on zerohedge.com and can be found here: https://www.zerohedge.com/markets/macys-cut-2000-jobs-and-shutter-125-stores-amid-significant-structural-change
Or, here’s your snippet: “Macy’s announced Tuesday that it had adopted a three-year plan designed to stabilize profits and continue company growth. The new plan calls for a radical $1.5 billion cost-cutting program that will axe upwards of 2,000 jobs and shutter 125 stores across the US.
The retailer, which operates 680 stores under the Macy’s and Bloomingdale’s brands, said the closure represents an 18% reduction in its brick and mortar footprint. The layoffs of about 2,000 corporate jobs will account for 9% of its workforce. There’s also a plan to close several offices.
Macy’s said the cost savings would generate about $600 million in 2020 and $1.5 billion annually by 2022.
“We are taking the organization through significant structural change to lower costs, bring teams closer together, and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends. The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile, and better fit to compete in today’s retail environment,” Macy’s CEO Jeff Gennette said in a statement.
Gennette said the company’s “least productive” stores would be cut first. There are already 30 stores in the process of closing, he added.
Under the consolidation program, Macy’s NYC will become the company’s sole corporate headquarters. Offices in San Francisco, Cincinnati, and Lorain, Ohio, will be closed within the next three years.”
Chuck again… Just another of the brick and mortar companies that are seeing less and less of foot traffic in their stores… But it’s not just the stores folks… We’ve seen Oil companies file for bankruptcy, and on and on…
Currencies today 2/5/20 American Style: A$ .6759, kiwi .6485, C$ .7529, euro 1.1025, sterling 1.3054, Swiss $1.0295, European Style: rand 14.7168, krone 9.1920, SEK 9.5767, forint 304.65, zloty 3.8583, koruna 22.7357, RUB 63.26, yen 109.58, sing 1.3800, HKD 7.7629, INR 71.09, China 6.9981, peso 18.61, BRL 4.2452, Dollar Index 98.05, Oil $50.74, 10-year 1.63%, Silver $17.61, Platinum $977.06, Palladium $2,488.80 (this metal is up $56 this morning!) and Gold… $1,553.71
That’s it for today… A Big Snow storm and cold front was moving through St. Louis later this morning. So Kathy changed her flight that was supposed to leave around 4pm to one that left at 5.50am and got out of Dodge before the deluge! (no telling her I talked about her!) I traded emails with Ty Keough last night, he sounded upbeat… And doing better! The power of prayer reveals itself once again! The Cardinals are moving their equipment south which means sprint training is nearing… we are now just 8 days away from pitchers and catchers reporting… YAHOO! The KC Chiefs will hold their parade today… It will be bitter cold in KC, but I doubt those long suffering fans will feel it! The Kinks take us to the finish line today with their song: Sunny Afternoon… I love this line: Now I’m sitting here, sipping on my ice cold beer, lazing on a Sunny Afternoon! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!
Chuck Butler