Rocktober 16, 2017
* U.S. Data Fails To Meet Expectations!
* Platinum soars!
* Slow Data Week…
Good Day… And a Marvelous Monday to you… Talk about a roller coaster ride on the weather this past weekend! Saturday was sunny and very warm, and yesterday the trap door was sprung on the warmth! But pretty days, and nothing to complain about! My stomach has been performing calisthenics most of the night, so I wasn’t sure I would answer the bell this morning, but look at me here, bright eyed and bushy tailed! HA! As If! But I’m here so, let’s get to work! Big Head Todd, and the Monsters greet me this morning with their song: Bittersweet
Well, all the premarket hub-bub on Friday was about just how strong Retail Sales would be… And strong they were, but not as strong as forecast, and soon after the print, the markets’ collective focus switched to the stupid CPI (consumer inflation), which had missed expectations for 4 of the last 5 months, and September’s print made it 5 of the last 6 months…
The dollar wasn’t able to run to higher ground with abandon like I was suspecting it would given all the pre-print talk about how strong Retail Sales would be. The currencies held their ground, with little slippage as the day went along on Friday. However, in the overnight markets last night the dollar as been bought VS the euro, as the main currency pair in the trading pit… I read one headline on Bloomberg this morning , that cracked me up, here goes: “Dollar recovers as Mexican peso loses ground”… As if the dollar was recovering because the peso was losing ground!
Yes, the peso was losing ground, having lost the 18 handle and is now trading with a shiny 19 handle, but what I’m trying to express here is that the dollar’s moves are not dictated by what the peso does! I checked the currencies last night, and saw the euro slip, sliding away through the 1.18 handle, and I said to myself at that time, it looks like the euro is going to lose the 1.18 figure again… And sure as the sun is warm in the summer here, the euro did fall below 1.18 as I turned on the currency screen this morning. The mess in Catalonia, Spain, continues to heat up, with negotiations not seeming to be going anywhere. And as long as this continues it will weigh heavily on the euro.
The Petrol Currencies all seem to be on board the rally train this morning, with some getting the good seats! The Russian ruble, Norwegian krone, and Brazilian real go the good seats, while the Canadian dollar/ loonie had to settle back in coach. There was no news from the talks between China and Saudi Arabia that I’m aware of at this point. And I really didn’t think that they would come out of the meeting rooms with their arms around each other, waving to the crowd with their free arms, and announce that they had reached an agreement to swap currencies for Oil. Because that would send the currency market into a tizzy… No, rather I think they might begin doing with stealth-like, and just start trading Oil using their own currencies and not dollars, and let the markets gradually catch on.
Have you been keeping tabs on Palladium’s rise in price? First it closed in on Platinum and then it overtook it, leaving Platinum in its wake. The Palladium closed in on $1,000 oz. and on Friday, it overtook the $1,000 handle! Palladium’s rise this year has been something for the ages… And now I have to add Palladium to my worry list about metals that get attention from “the boys in the band”
I’ve told you this before, so… I’ll tell you again! Ed Steer’s Saturday letter (www.edsteergoldandsilver.com) contains a graph of the number of days of production it would take to match the short positions on each metal… For instance Silver has a number of 195 days of production it would take to match the short positions in the metal. And believe it or don’t, but both Platinum and Palladium have larger numbers than Gold! Platinum’s number is 100, Palladium’s is 95 and Gold’s is 90… I don’t know about you, but knowing these numbers gives me a strong idea of how much the metals have to fight to gain ground, which makes Palladium’s run this year even that more impressive!
So, what was the deal with Retail Sales last Friday? Well, like I said above, it was strong, even if you took out the Auto Sales that were boosted by the new car sales from people that had their cars flooded. But it wasn’t quite as strong as the expectations, and with economic data, it’s all about the expectations, folks… So, for those of you keeping score at home, Sept. Retail Sales were up 1.8% (1.9% expected), 0.5% minus auto-sales (0.6% expected)… But like I told you last week regarding GM’s announced plant shutdowns, this good Retail Sales print could be a one and done…
Nothing is ever going to convince me that this is a sign of a strong and robust economy… And I think traders pretty much for the most part, were saying the same thing on Friday, as there was no conviction, after the print, to take the dollar higher… And the stupid CPI print pretty much made traders think that there is a chance that the Fed might pass on a rate hike in December. Of course if they just read the Pfennig, they would know that I don’t believe there is any chance of a rate hike in December!
Well, Gold did climb back to $1,300 on Friday, and has added a few shekels to its value in the early morning trading today… On Friday, Gold rallied to the tune of a $10.20 gain on the day to close at $1,303.30. This morning, as I write, Gold is trading at $1,307.40… 287,000 contracts were traded in Gold on Friday…
The BREXIT negotiations aren’t getting anywhere, and pound sterling is being held back because of these going nowhere negotiations… Any strength the pound has found has been from the talk about a rate hike coming soon from the Bank of England (BOE) and its Gov. Mark Carney… Pound traders, in my opinion, are wise to not take Carney seriously, about a rate hike, as they were fooled once before by talk of a rate hike that never materialized!
Data-wise around the world today… China saw stronger than expected Consumer and Wholesale inflation data for September. The Eurozone Trade Deficit rose to $21.6 Billion in August from a previous $18.6 deficit in July, and late this afternoon, we’ll see the color of the latest CPI from New Zealand. And that’s about it for our data viewing from around the world today, please remain in your seats until we’ve come to complete stop..
The U.S. Data Cupboard won’t have much for us this week, except tomorrow when Industrial Production and Capacity Utilization for Sept. print… I expect Industrial Production to be negative again this month. Other than these two real pieces of economic data, there’s not much to see in the Data Cupboard this week… I wonder what will move the currencies and metals this week, more saber rattling? I guess we’ll have to wake up each day to find out! Sounds like a Plan!
To recap… Retail Sales and CPI didn’t meet expectations on Friday, and even though both saw nice gains, the dollar couldn’t go hog wild. But in the overnight markets last night, the dollar has been bought, bringing the euro back below 1.18 this morning. Gold added $10.20 on Friday to close back above $1,300, and Palladium has traded above $1,000 overnight!
Before I go to the Big Finish I wanted to point out that “real U.S. wages” fell 0.2% last month, marking the second consecutive month of losses in wages… I don’t see how we get ahead at this rate…
For What it’s Worth… I saw this article on zerohedge.com and thought it to be very FWIW worthy… it’s about how British Banks are calling for the biggest consumer collapse in 10 years, and can be found here: http://www.zerohedge.com/news/2017-10-13/british-banks-forecast-biggest-consumer-credit-collapse-10-years
Or, here’s your snippet: “
As if Theresa May did not face enough challenges, the latest survey from The Bank of England (BoE) suggests the British consumer is about to face the biggest credit crunch since the great financial crisis.
After repeated warnings from BoE about the surging pace of lending to households, British lenders are planning the biggest cutback in consumer loans in nearly 10 year.
Earlier this year the BoE warned lenders may be dicing with a “spiral of complacency”, with car loans a particular area of worry, and now, as The New York Times reports, this latest survey signals the steepest contraction since the fourth quarter of 2008, when the economy was in the depths of its worst post-war recession.
Thursday’s survey figures showed Britain’s consumer economy is running out of steam, said Joanna Davies, economist at Fathom Consulting, the only forecaster in recent Reuters polls to predict a recession.
“We’re quite concerned about the consumer squeeze,” Davies said, citing falling wages in inflation adjusted terms and historically low household savings.
“If you add tightening credit conditions onto that, it doesn’t bode well.”
Pouring more cold water on Britain’s recovery hopes, after seven years of persisting with a forecast of rebounding productivity, the Office for Budget Responsibility (OBR) has [also] thrown in the towel.”
Chuck again… And Carney wants us to believe that he’s going to hike rates in the U.K.? He’s like the boy who cried wolf, but only he’s crying rate hikes…
Currencies today 10/16/17… American Style: A$ .7872, kiwi .7188, C$ .80, euro 1.1793, sterling 1.3295, Swiss $ .9762, … European Style: rand 13.3370, krone 7.8995, SEK 8.13, forint 261.09, zloty 3.5995, koruna 21.8698, RUB 57.14, yen 111.82, sing 1.3520, HKD 7.8088, INR 64.79, China 6.5793, peso 19.01, BRL 3.1443, Dollar Index 93.22, 10year 2.29%, Silver $17.45, Platinum $944.83, Palladium $1,005.86, and Gold… $1,307.40…
That’s it for today… Well, it’s a “short-week” Pfennig-wise, since Thursday is an infusion day… Had a great day yesterday as we took a short road trip to Waterloo, Ill. to eat fried Chicken with friends, Gary, Barb, Toni and Duane. Maybe that’s what caused my stomach to dance a jig all night, as I probably ate more than I should have yesterday! What an exciting ninth inning of the NLCS last night with a walk off home run! Yesterday made my 5th consecutive week without the NFL.. My fantasy football team’s QB, broke his collarbone and is out for the year. So I guess I just made a donation again this year! UGH! I think this song came up a month or so ago, but here it is again… The Stylistics take us to the finish line today with their song: Betcha By Golly Wow… And with that, I hope you have a Marvelous Monday! And BE GOOD TO YOURSELF!