April 12, 2018
* Gold soars yesterday, but gets brought back today
* Russian ruble gets whacked!
Good Day… And A Tub Thumpin’ Thursday to you! The old saying goes… A bad day at the ballpark was better than a good day at work… Well, the outcome of the game yesterday was bad, but it was a great day at the ballpark, warmer weather, a good friend with me, and my old boss, and longtime friend, Frank Trotter, stopped by our seats to say hi, and catch up on a few things. I hadn’t seen Frank in almost a year, so that was fun! The Band Ace greets me this morning with their song: How Long… Paul Carrack was the singer for Ace. He also fronted The Squeeze, and Mike and the Mechanics…
I told you yesterday that Chinese President Xi, had extended an olive branch to the U.S., thus easing the fears of an all out Trade War… at least for one day! I saw where President Trump sent out a message that he liked Xi’s speech.. So, now after all the war drum beating, and bravado, we’re going to get along nicely in the sandbox? Oh, well, that sounds like the foundation is pretty questionable, doesn’t it? Well, I think so, which means I wouldn’t be surprised to see the Trade war drums to begin beating again in a couple of days.
So, with the Trade War fears subsiding right now the dollar fought back yesterday, and all the currencies found that they are not on terra firma… The Chinese renminbi was the exception, as it was allowed to appreciate last night… One currency that doesn’t get a lot of attention due to it being pegged to the U.S. dollar, is the Hong Kong Dollar or honkers as currency traders call them. I don’t know if you’ve been watching it in the currency roundup, but the honker is very weak.
You see, the honker has a trading band and it normally trades right smack in the middle of the band, but in recent days the honker has been trading at the bottom of the range, and Hong Kong citizens, who’ve never seen currency fluctuations, are getting antsy… The Hong Kong Monetary Authority, the folks that maintain the currency band, issued a message yesterday, in their attempt to calm the people that just because the honker hasn’t been this weak since 2005, there’s no reason to worry. Hong Kong has ample currency reserves, so they could correct this situation with intervention at any time… But I did want to make note that I’m watching the honker…
The Russian ruble got whacked again yesterday. UGH! I told you yesterday that ruble investors are fleeing the currency with fears that the ruble could experience a run on the currency like 2014, after the U.S. announced additional economic sanctions on Russia. Weak minds… these sellers must have weak minds, for what has the Central Bank of Russia (CBR) and their rock star Gov. Elvira Nabiullina proven in the past? The proved that they know how to weather a storm, and she maneuvered the Russian economy around the previous sanctions that both the U.S. and Europe had placed on Russia… The country came out of the recession, defeated inflation, and had seen its key interest rate fall in recent times… Oh well… I guess this will test one’s metal, eh?
How about Gold yesterday? The shiny metal had a great day but… and there’s always a but, right? Gold is giving back most of yesterday’s gain in the early trading this morning… Here’s the skinny… Gold rallied with conviction yesterday all the way to $1,369, but the price manipulators flooded the market with short Gold paper trades, pushing the number of contracts traded yesterday to 492,000! OMG! Well, the $1,362 didn’t last long and Gold closed at $1,362 on the day, up $13.69…
But like I said the early morning trading isn’t being kind to Gold, and it’s already down $11 The Syrian ordeal hasn’t reached panic stage like everyone thought when the President tweeted “the bombs are coming”, and so the impatient Gold holders are winning the day so far…
It was brought to my attention yesterday, that yesterday’s letter was very long… Well, I guess I had a lot to say, eh? I had to make up for the fact that there’s only 4 Pfennigs a week now! HA! And in that vein… Let’s think about something that’s been on my mind lately… What if, all this Trade War mongering, and Syrian posturing is just a diversion to keep the sheeple like me from thinking about how the economy is crumbling around us? I mean, stocks, were down yesterday, but they’ve been up and down in an environment where they should be heading downward daily, because the stock jockeys refuse to believe the gig is up… I don’t want to go down the rabbit hole that is a discussion on stocks… But…
I do have something to say, and that’s simply, I was reading one of those emails that are trying to sell you something, and in this case it was stocks, and guy was saying that Corp earnings are great and only going to be getting better, and that bodes well for stocks… If I could I would respond to him and ask him this… If there is a Trade War, wouldn’t that cut into the Corp earnings you’re touting as great, and cause problems for the Corporation’s stock? Ok, gotta move on, I’m no stock jockey, even though that’s where I cut my teeth in the financial sector…
The U.S. Data Cupboard had the stupid CPI report, and a drop in gas prices pulled down consumer prices in March which came in at Econoday’s low estimate for a 0.1 percent decline. But the core rate, which excludes energy, did hit expectations at a modest 0.2 percent monthly gain with the year-on-year rate rising 3 tenths to 2.1 percent which also hits expectations. I can’t believe I reserves this much space in the letter talking about the stupid CPI!
BTW John Williams at Shadow Stats says that CPI is really 6%, when you calculate it like we used to before the “hedonic adjustments” were added to the calculation in the 90’s…
To recap… the olive branch extended to the U.S. by China calmed the markets yesterday, and allowed the dollar to fight back, and fight back it did, gaining on all the currencies except the Chinese renminbi. Chuck points out the honker weakness, the Russian ruble weakness for us today. And asks a question, is this all a diversion?
For What It’s Worth… Well, as Gomer Pyle used to say, “Surprise, surprise, surprise” That’s what I thought of when I saw this article sent to me by MarketWatch… It’s about what was in the Fed’s Meeting Minutes that printed last night… Quite interesting, and you can find it here: https://www.marketwatch.com/story/fed-discussed-need-to-slow-the-us-economy-down-minutes-show-2018-04-11
Or, here’s your snippet: “The Federal Reserve, focused on stimulating the US economy since the financial crisis, has switched to discussing how to cool off the economy, according to minutes of the March meeting of the Federal Open Market Committee.”
Chuck Again… And these mental giants thought that by leaving interest rates near zero for nearly a decade wouldn’t eventually show up in the economy? Oh well, we carry on despite our shortcomings, right?
Currencies today 4/12/18… American Style: A$ .7754, kiwi .7380, C$ .7945, euro 1.2338, sterling 1.4194, Swiss $ 1.0384, … European Style: rand 11.9880, krone 7.7692, SEK 8.4118, forint 252.30, zloty 3.39, koruna 20.5771, RUB 63.33, yen 107.17, sing 1.3110, HKD 7.85, INR 65.17, China 6.2750, peso 18.17, BRL 3.3976, Dollar Index 89.74, Oil $66.64, 10yr 2.78%, Silver $16.64, Platinum $929.14, Palladium $953.17, and Gold… $1,349.10
That’s it for today… I’m headed to the heart doc this morning, they’ll run a magic wand over my pacemaker, and it’ll tell them all they need to know about what my heart has been doing… Cardinals have noodle bats I do believe… The start of spring training they couldn’t hit, and then things got better, but the start of the regular season has seen a return of the noodle bats… UGH! OK, no Pfennig tomorrow… I’m officially down to a 4 day a week Pfennig schedule… Do you recall me telling you about the young man that played water polo for my son, Andrew, who became paralyzed last in a swimming mishap in Mexico, and how he had progressed to the surprise of everyone? Well, I saw him last week at a water polo game, and he’s walking better then me! And he negotiated the steps very well! I teared up watching him move about, so inspirational.. And with that it’s time to do, so the Beatles send us to the finish line today with their song: I Want To Hold Your Hand… I hope you get to get out and make this a Tub Thumpin’ Thursday, and remember to be Good To Yourself! Chuck Butler