November 25, 2019
* Currencies & metals get sold on Friday…
* U.S. Data will be all jammed into Wednesday…
Good Day… And a Marvelous Monday to you! Talk about a shortened week! That’s this one folks! Today and tomorrow are the only days the Pfennig will be written this week, as Wednesday I head to the wound center early, and Thursday is, well, it’s Thanksgiving! What are you thankful for? I’m thankful for so many things, I can’t begin to write them all down! I’m most thankful for the love of God and his gracefulness in keeping me alive when I should have had my last rites given to me years ago… Not to turn this into a religious manifest, just wanted to get that out there! My darling granddaughter, Delaney Grace, was fabulous on Saturday night! Although she was not the leading actress, she was the star of the show in my mind! The Cornelius Brothers & Sister Rose greet me this morning with their song: It’s Too Late To Turn Back Now…
That should be our main topic this morning, it being too late to turn back now, that is… I’m talking about the recession train pulling out of the station and into the economy… Fed Head, Neal Kashkari, doesn’t agree with me… He said, last week that “he didn’t see a recession, although there has been some weakness in some of the data”… I laughed… I said, “Some of the data?” How about all of the data Neal? Oh, I guess not all of the data per se, as Consumer Confidence rose last month… The economy has that going for it. But in reality, the stupid Consumer Confidence report and a quarter won’t buy you a cup of coffee… I’m just saying…
So, on Friday last week, the currencies and metals finally made a move out of the mud they had been stuck in. Unfortunately, they moved downwards VS the dollar on Friday… the moves were huge, but significant enough to notice, which hadn’t been the case all week up to Friday’s trading. The Chinese announced that they would place heavy fines on anyone pirating IP intelligence… And I guess traders took this to signal a Trade Agreement would soon follow… So the dollar rallied, and the currencies and Gold lost ground… Gold has lost a total of $10 since we last talked ($7 on Thursday, $3 on Friday), which is no big deal… I have an article for you on Gold in the FWIW section today, so please stay tuned for that, you won’t want to miss it!
Gold is down another $4 in the early trading today… Well, the shiny metal sure is trying to attract buyers at cheaper levels now isn’t it?
In the overnight markets last night the dollar continued to be bought, and pushed the currencies even lower throughout the night. We used to be able to rely on the European Markets to push the euro higher, and then wait for the U.S. counterparts to mark it back down… but that’s not what happened last night. UGH!
The last 30 days have seen the Russian ruble remain steady Eddie VS the dollar. The price of Oil fluctuates over and under the $57 handle, not really giving any love toward the ruble, as a Petrol Currency… Many years ago now, I was a featured speaker on a panel that had some heavy hitters sitting next to me. We, as a panel, were asked about the Russian ruble’s forecast… I responded with, “the ruble is a petrol currency, and probably the lead Petrol Currency, therefore, the ruble, to me, is an oil play… what’s your forecast for the price of Oil?” Because that’s going to help determine what the ruble does going forward”…
Afterward, James Rickards, came up to me and said that he agreed with me on the ruble… And I thought… “WOW! Even a blind squirrel can find an acorn! “ But that WAS important to me to have my thought on the ruble be agreed to by one of the utmost respected analysts in the world…. This past weekend I ran into a note about whether the ruble will get stronger or not… And this is what I read: “The Russian ruble doesn’t need to recover, according to President Putin’s plan. … It depresses imports and boosts extractive exports, securing a healthy trade balance and filling President Putin’s war chest.”
The first thing that entered my mind when I read that, was that the ruble’s price is manipulated / managed to remain steady Eddie…. And then I thought, that it wasn’t that bad of an idea given the rest of the world’s Central Banks have gone mad! And playing rob thy neighbor… So, I’m just saying, the ruble has a good interest rate, and a steady outlook… What more could you ask for?
The Chinese renminbi had its rally stopped in its tracks in the past week, and has steadily moved weaker each day. A month ago I was surprised at the strength in the renminbi as it dropped below the 7.0 figure briefly… But that appears to be over now… And I think that the direction of the renminbi tells us more about the Trade War Talks/ negotiations, than the media gets half-right… So, if the renminbi is weakening again, as it appears to be doing each day, that would mean the negotiations aren’t going so well… Now, that’s a horse of a different color than what the media has been telling us isn’t it?
In Switzerland, the Swiss National Bank (SNB) continues to amaze me… this past weekend the SNB Gov. said that the Bank is looking to cut rates further… Remember, Swiss rates are already negative, so another rate cut would take them deeper into negative territory… I can’t believe the SNB can have their folks stand there with a straight face and talk more negative rates! I’m going to say this again, as I’ve said it before… If negative rates were so good for an economy, then wouldn’t Japan have the best economy in the world?
And I guess I should stop dissing pound sterling, for Lola (aka Goldman Sachs) says that sterling will be the currency du jour for 2020! It just doesn’t pay to fight city hall, and it’s the same for fighting Lola… for what Lola wants, Lola gets… and why shouldn’t Lola get what Lola wants? They have people all over the Treasury, Fed, White House, you name it, former Goldman guys and gals are everywhere, and representing Lola’s point of view, I’m sure!
On a side bar, this is what gets my goat about one of the 3 nasty things that President Woodrow Wilson did during his term… 1. Fed Reserve, 2. IRS, 3. Changed the way Senators went to D.C. … I’m talking here about the way Senators used to be assigned by the Gov. of the respective state, and would go to Washington to represent their state’s wishes… And if they didn’t do that the Gov. would just call them home and assign someone else! This my friends, is where the Gov’t began to take over state’s rights… I’m just saying… Wilson changed that, and made a Senator an elected official… Well, now, who do these Senators represent, other than their own personal agenda?
OK… back to regular programming…
In other things that went on this past weekend, the U.S. sent a bill to S. Korea for their military costs in providing defense for the country… S. Korea balked, and then went out to sign a defense agreement with China… Wait! What? Does this mean we can bring our soldiers home from S. Korea? Wouldn’t that be wonderful? But that’s not going to happen overnight folks… The U.S., / Korea/ and China will have to work out everything… Otherwise, will S. Korea pay their bill? Only the shadow knows!
The U.S. Data Cupboard also has a shortened week, and most of the good stuff will be in the Wednesday offering. Durable and Capital Good Orders, which have been negative for a couple months running, will print, along with the Rocktober numbers for Consumer Income and Spending… But by the time the Beige book prints (Fed regional reports) there won’t be anyone around to see the ink dry on the report… In fact, I’m sure that by noon, trading desks in the Big Apple will be ghost towns…
Which brings us to the Friday after Thanksgiving, aka Black Friday… the markets will be thinned out, and this is my annual warning of the potential of wild swings in those thinned out markets… Don’t get caught up in any of it… Sit on the sidelines and watch the goings on, would be my suggestion…
To recap… The drifting of the currencies and metals last week, turned to outright selling of these two asset classes, that has continued on throughout the overnight markets last night. Lola says that pound sterling will be the currency du jour for 2020… And we know that what Lola wants, Lola gets, right? I found out early in life that you don’t fight city hall, and you don’t go against Lola… I’m just saying…
For What It’s Worth… I know what’s on every Gold holder’s minds these days… “Why hasn’t Gold continued to rally?” I mean, for crying out loud, Gold has every reason to be making great strides toward $1,600… But it seems to be stuck in the mud around $1,475… This article was on Kitco.com, which used to post my Pfennigs every day… I wonder what happened there? Oh well, this article tried to explain why Gold hasn’t moved higher and it can be found here: https://www.kitco.com/news/2019-11-22/Gold-price-has-every-reason-in-the-world-to-rally-why-isn-t-it.html
Or, here’s your snippet: “ The yellow metal was unable to sustainably break the $1,475 an ounce this week, signaling a new resistance line before the $1,500 mark.
“Gold is not looking great. It’s got every reason to rally in the world and it can’t right now. That’s a problem,” RJO Futures senior market strategist Phillip Streible told Kitco News on Friday. “The Federal Reserve cut rates three times this year. It is a race to the bottom globally with central banks. The Fed is embarking on somewhat of a QE with this repo rate. You have protests going on everywhere. In Iran, they burnt down the central bank; in Lebanon, there is a run on the banks; and Hong Kong protests are escalating.”
The new resistance level for gold is $1,475 and the inability to break it next week could send the precious metal to $1,425, said Streible.
“Gold even can’t hold on to $1,500 anymore. It seems like $1,475 is the new resistance point,” he noted. “We are below the 100-day moving average, that’s resistance. Support is the 200-day moving average at $1,410. A 50% retracement from $1,300 when it started this massive move up back in June to $1,550, would be $1,425, which is probably where we are going.”
This is a tough break for gold in the short-term, considering there are still multiple factors support the yellow metal. But, it is important to remember the seasonality of gold, added Streible.
“Gold seasonally goes down around this time. From November 25 to December 20, gold has gone down 12 out of 15 years,” he pointed out.”
Chuck Again… Well, they go on in the article to talk about the conflicting news we received daily about the China / U.S. Trade negotiations… And that DOES have a lot to do with how traders deal with Gold… The other thing that’s on my mind this morning is that there was yet another JP Morgan metals trader with charges brought against him last week… I mention this because, in my humble opinion, the price manipulation is the main reason Gold is stuck in the mud right now…
Currencies today 11/25/19 American Style: A$ .6790, kiwi .6411, C$ .7518, euro 1.1012, sterling 1.2870, Swiss $1.0017, European Style: rand 14.7241, krone 9.1862, SEK 9.6376, forint 304.16, zloty 3.9010, koruna 23.1380, RUB 63.81, yen 108.87, sing 1.3652, HKD 7.8272, INR 71.50, China 7.0382, peso 19.36, BRL 4.1943, Dollar Index 98.30, Oil $57.59, 10-year 1.79%, Silver $16.89, Platinum $891.98, Palladium $1,789.24, and Gold… $1,457.79
That’s it for today… I sure had a great time Thursday evening, as my former colleagues came out to my little river town to have an adult beverage with me! I’ve seen some of the people recently, and some of them I hadn’t seen since I left the bank… And even Mike Meyer, who no longer works there, came by! A good time was had by all! Mike used to be the first guy after me of course, in to start the day, and we would listen to my iPod play everything from Frank Sinatra to AC/DC… We had our fave TV people, and we would watch the earth rotate from Winter to Summer… Oh well, life goes on…. November is almost over! Thank Goodness! The Christmas decorations are getting brought out, and then it’ll be my fave time of year! The Allman Brothers take us to the finish line with my fave song by them: Melissa… I hope you have a Marvelous Monday, and please Be Good to Yourself!
Chuck butler