U.S. Dollar To Get Its Clues From Renminbi?

September 29, 2017

Dollar Backs off again from its assault!

Gold has another good day!

The Data Cupboard wakes up today!


Good day… And a Happy Friday to one and all! It’s the middle of the night, so I’m not so sure about how the day will go along, but I’m sure going to attempt to make it a Fantastico Friday, and I hope you do too! The Cubs ended the Cardinals pipe dream last night, and so the season comes to an end this weekend, with no playoffs for a team that didn’t miss them very much in the past decade, and this makes the second consecutive year of no playoffs…  Hello? Mr. DeWitt? Yes, please fire the GM and manager, I’ll hang us now so I can listen to your reasons why that won’t happen…     The Temptations greet me this morning with their song: The Way You Do The Things You Do…  I’ve got a story to tell you someday about my first band…   

The dollar stopped swinging its mighty hammer on the currencies on Wednesday, and that continued through yesterday’s trading and through the overnight markets.  The euro has climbed back to the 1.18 handle, and Gold had another day without major selling yesterday, so we’ve got those two things going for us today, eh?  Man, I looked at yesterday’s Pfennig and thought, Chuck, that’s too long of a letter! But I can’t help it, if I’m feeling good, and had a nice night’s sleep, watch out!   I feel Ok right now, but like I said above, it’s the middle of the night, so, so much for the nice night’s sleep!   The Eurozone  saw some data this morning, so let’s go there and see what’s happenin’!    

The Eurozone saw August results in CPI (consumer inflation), which rose to 1.1% from 1% previous, Producer Prices increase 0.4% in August, and Consumer Spending fall -0.3%.    Germany also printed their August Retail Sales, which were unchanged from July at 2.8%…  The Eurozone economic data has all been showing a trend to getting stronger in recent weeks, and that should help the European Central Bank (ECB) in their decision as to when to remove their accommodative Monetary Policy… 

Recall, the Eurozone has negative deposit rates, and those have got to go! And the ECB meeting in Rocktober, is when ECB President, Mario Draghi, told us he would give the details on their unwinding of the ECB’s balance sheet of bonds…  See, Mario? I remembered what you said, in case you were hoping that everyone forgot that the Rocktober meeting is the one you said you would reveal your plans for unwinding the balance sheet! 

I was doing some reading tonight and came across an article on Bloomberg.com that talked about how currencies trades have their eye on the Chinese renminbi fixings, as to their clue of when the dollar might slip back into the underlying weak trend, that it climbed out of last week with the hawkish statements by the Fed, and now the tax reform talk…  The idea here is that the Chinese, which had allowed appreciations nearly every day until a couple of weeks ago,  and that coincided with the dollar climbing out of the weak dollar trend…  Hmmm…   So, if China decides to stop the night mark downs of the renminbi, the dollar will retreat once again… Hmmm, Interesting take, and I’m buying it, for now…  

Well, let’s take trip down the yellow brick road… Yes, we can bring Dorothy along, but not that pesky dog! HA!  Gold, as I said above was able to avoid major selling once again and added $4.30 on the day to close at $1,286.70… The shiny metal has followed that gain yesterday with another gain to bring Gold to $1,291.80 in the early morning trading. 

It’s a Friday, so that means today is the day we get to see the latest COT (commitment of Traders) report on Gold & Silver… I used to work with a guy that thought the COT was the only thing on earth, that was reliable to trade on… And he stuck to his guns through the years, always recording the COT numbers each Friday and charting them…  I’ve never really gotten into the COT, because by the time it comes out, sentiment with traders could have already changed…  

Can you believe that this is the end of the 3rd QTR? Man, this year has gone by fast…  But then I was dealing with a change of jobs, and the transfer of the Pfennig to the Aden Research Group, all the while dealing with chemo infusions every two weeks! So, most of the summer was just a blur to me!  So, with it being the end of the quarter, we could very well see some volatility today as traders square up their books for quarter end reporting….  and that means if an asset has been sold short in recent weeks, then those short positions are closed out…  

This quarter end stuff is tricky, so be careful out there today…  The 4th QTR here in the U.S. is going to be one to remember…  That’s what I’m thinking, and I’ve told you all what I think will go on in the 4th QTR, but add to that the Gold price reset, that James Rickards keeps talking about, and when the 4th QTR is all said and done,  the dollar should be getting sold like funnel cakes at a State Fair, and Gold should be on a moon shot!

And if all that doesn’t take place, then I’ll be like Puff the Magic Dragon, and you’ll hear my mighty roar no more!   Hmmm…  do you really think that you’ll stop spreading your opinion, Chuck?  Nah… I doubt it seriously… But then in the words of the great Joaquin Adujar, You never know! 

The U.S. Data Cupboard yesterday, had a couple of interesting data prints, and so we’ll talk about them, briefly that is…  The Advance Trade Balance saw the figure narrow in August from $65 Billion to $63 Billion…  I’ve explained this data before, but for all of you new to class, here goes again…  The Advance Trade Balance is printed at first to show the trade that went on in the month, but in about a week, the figure will be brought down to the total Trade Deficit…  The data in the advance goods report are accounted for on a census basis and can differ slightly from subsequent data in the international trade report where goods data are accounted for on a balance of payment basis to adjust for changes in ownership that can occur without goods passing into or out of the US. 

But the reason I brought this up is that the total amount fell, which means the U.S. either didn’t export as much, or we didn’t spend as much on imports…  So, you can usually point to the dollar’s performance as to the reason the Trade Deficit narrows or widens…  I know clear as mud, right? Oh, well, I tried…     

Today’s Data Cupboard has two of my fave pieces of data, with August Personal Income and Spending data to print…   We’ll also see the color of the latest Consumer Sentiment…  Which I don’t really care about, because they never call me for my opinion! HA!   

To recap….  Another day of the dollar backing off its assault on the currencies & metals  yesterday, and through the overnight markets too! The dollar has hung its hat on the hawkish statement by the Fed last week, and the president’s tax reform… Seems to me that those will become quite stale by next week… hint, hint… wink, wink… 

For What It’s Worth…  I got sent this note from the folks at MarketWatch yesterday, and I thought it to be FWIW worthy, given all the talk about the Tax Reform…  So, here it is, and it can be found here: http://www.marketwatch.com/story/why-trumps-tax-plan-could-be-a-big-win-for-retirement-savers-2017-09-28?link=MW_popular

Or, here’s your snippet: “Whatever you might think of our current president, you can’t say he doesn’t think big.

The Trump-GOP tax plan just announced has the potential to affect retirement savers in fundamental, long-term ways that could be positive for many Americans. The plan is a long way from reality and is likely to see some changes before becoming law. 

Now, about taxes. Some will grumble that the corporate rate is low enough, or that the effective taxes paid by companies is low already.
Read: Trump’s tax plan: It’s not great, but it could have been worse
But consider what a corporate tax cut means for retirement savers with investments in the stock market. Sure, lower taxes might mean more jobs. But one thing it means without a doubt is higher corporate income — money that goes to the owners of U.S. corporations.” 

Chuck Again… Well all that’s fine and dandy, but what happens when the stock market has a correction and those “savers” that are in stocks get their hats handed to them?  And besides, I’ll come out and say right here, right now that I’m no fan of larger deficits, and that’s what this plan will result in…    UGH!   

Currencies today 9/29/17… American Style: A$ .7850, kiwi .7220, C$ .8050, euro 1.1802, sterling 1.3412, Swiss $ .9705, … European Style: rand 13.48, krone 7.9418, SEK 8.1078, forint 263.27, zloty 3.65, koruna 22.0457, RUB 58.07, yen 112.14, sing 1.3560, HKD 7.8104, INR 65.42, China 6.6622, peso 18.14, BRL 3.1817, Dollar Index 93.05, Oil $51.54, 10yr 2.31%, Silver $16.90, Platinum $925.31, Palladium $938.60 and Gold… $1,291.80    

That’s it for today and this week!  I’ll have to drown my sorrow over my beloved Cardinals tonight at my fave watering hole! I have a joke for you today… What’s the difference between Tire American and the Fed Reserve? Tire America understands disinflation!   HAHAHAHAHAHA!  I tell ya, I’ve got a million of them! HA!  My Mizzou Tigers are on bye this week, which is good because after that last game, bye was about the only team they could compete with!  My Sundays are now free! Baseball is coming to an end, and I really don’t have a dog to hunt in the NFL, so I don’t care to watch two teams play that I don’t have a dog in the  hunt… The performance of my Fantasy Football Team will keep me up to date with who’s good and not…  Journey takes us to the finish line today with their song: Girl Can’t Help It…  And with that… You know.. it’s a Good day, to have a Good Day!  I hope you have a Fantastico Friday, and Be Good To Yourself!