Chuck Butler’s: A Pfennig For Your Thoughts
January 19, 2018
* Dollar to end the week down
* For the 6th consecutive week!
Good Day… And a Happy Friday to one and all! I don’t know what’s going on in your life, but I sure hope to make this a Fantastico Friday, and hope that you can too! Our Blues won last night in Ottawa, setting today up for a good day! Will the U.S. Gov’t shutdown today? I doubt it! I heard yesterday that a plan to extend the deadline and keep the Gov’t running was being worked on. So, expect to hear that good news later today… Paul McCartney and Wings greet me this morning with their song: Band On The Run…
My weekly letter for the Dow Theory Letters (DTL) printed last night, and in it I talk about China… And then this morning, I read some more good stuff on China, and thought, “darn it Chuck, once again you talked about something before you should have!” Yes, that’s usually the case, but better early than late to the party don’t you think? It’s just a pain in the rear end waiting for what I said would happen to actually happen! UGH!
So, since I opened with talk about China, I’ll go through the recent data a little later this morning, but first, we’ve got to talk about the U.S. Gov’t shutdown that’s scheduled for today… Because of this threat to our economy, the dollar is getting sold this morning, and the currencies are looking spiffy, and Gold is looking like something out of Gentlemen’s Quarterly! HA!
The Aussie dollar (A$) finally knocked on the door of 80-cents and the door opened wide for the A$, and the currency stepped through! Running after the A$ is its kissin’ Cousin across the Tasman, kiwi, which also made a strong move past 73-cents in the overnight markets. The Big Dog, euro, is off the porch, chasing the dollar down the street, but it appears that all the little dogs (other currencies) are going to outrun the Big Dog…
One of those little dogs outrunning the euro, is British pound sterling. This currency has really taken off for higher ground in recent weeks. Of course it doesn’t hurt the pound that the dollar has seen 6 consecutive weeks of losses… That’s right 6 consecutive weeks the dollar has ended down on the week, now that’s the makings of a weak dollar trend if I’ve ever seen one, and I’ve been around long enough that not only were rainbows in black and white when I was a boy, but I’ve seen 4 different trends since I began writing the Pfennig!
One currency that has me a bit befuddled is the Swiss franc, which normally moves in opposite directions of the euro, well, when I say “usually” I mean since the Swiss National Bank (SNB) decided to tie the franc to the tracks, I mean the euro about 10 years ago.. But not this time… the SNB has remained on the sidelines, and I haven’t heard a peep out of them as the franc has been pushing the envelope of currency appreciation across the desk.
I believe that this is a tell-tale sign that a weak dollar trend is in place, when currencies that have closets full of skeletons like the franc and pound sterling can keep the closet door shut, and rally like there’s no tomorrow…
Ok, I promised above that I would go through the Chinese data that has printed since I wrote my DTL article that printed last night. So, here you go… For the first time since 2010, Chinese GDP grew in 2017 to 6.9% from 6.7% a year earlier. December Retail Sales were strong with a 9.4% figure attached to them, and December Industrial Production (IP) also printed strong at +6.2%, and finally, China reported that they created 13 Million new jobs in 2017…
No wonder the Global Growth Revival has taken off in the past 6 months! Yesterday I told you about how the Tent Revival for Global Growth that I talked about seeing take place 6 months ago, had really taken off for higher ground, and now I see what has underpinned this Global Growth… A recovery of the Chinese economy…
Now, you make be one of those naysayers that believes that China cooks their books, and none of this growth is really there… But if that’s the case, why then hasn’t the Chinese economy collapsed like so many economists and pundits wrote about the past 5 years? And then there’s the thought that the U.S. also cooks their books, so it all evens out in the wash, eh?
My good friend, Dennis Miller, the Retirementor, and creator and editor of his newsletter that appears on: www.milleronthemoney.com, wrote a very good article for yesterday’s release, on Social Security, here in the U.S. and this is where the cooking of the books really is seen, as the cost of living (COLA) increases haven’t kept pace with inflation or the increased Medicare costs. If you’re retired or nearing retirement, or just plain interested in what he has to say, I strongly suggest you visit the link above and then read away!
But the inflation calculator for Social Security payments certainly is a case of cooking the books, don’t you think? Alrighty then, let’s move on from this before I begin to yell at the walls and wake everyone in the building up!
Gold saw a choppy day of trading, with a very large 280,000 contracts traded, but it ended the day down just 20-cents… Every up-tick was met with a paper short trade, and it went on like that all day. But as my mom used to tell me all the time… “Chuck there’s a silver lining in everything”, so where is the silver lining in Gold you may be asking? Well, the early morning trading sees Gold up $8 this morning! This possibility of a Gov’t shutdown today, has Gold moving higher as it should when something like this exists in the economy.
The U.S. Data Cupboard just has the stupid Consumer Confidence index today, and it’s expected to have risen again this time from 95 to 98, and why not since MarketWatch is reporting that more than half of S&P 500 stocks are up 20% or more since Trump took office. And the stupid Consumer Confidence Index is nothing more than a check of the pulse of stocks… Don’t these people realize that the U.S. Gov’t could be shutdown today? Shouldn’t Consumer Confidence fall because of this threat?
Well, it should, but it won’t… And that’s why I call it the “stupid Consumer Confidence Index” My grandkids would be all over me like white on rice if they heard me say that, or knew that I wrote that! But, I tell them all the time, I’m old, and when you’re Old you’re allowed to say things that little kids are not allowed to say! And when they’re old they will be able to say stupid again too!
It‘s all about not wanting to hurt someone’s feelings… But when I was a kid, if you got your feelings hurt, it encouraged you to do something about it, to better yourself.. Our moms loved us, but they sure didn’t think we were God’s gift to the world, and, wait a minute Chuck, that’s a Butler Patio discussion, not a Pfennig discussion.. Whew! saved by my conscience!
To recap… The U.S. Gov’t shutdown looms today, will it happen? Chuck doesn’t think so, as another extension is in the works already! But if it does, watch the dollar get taken to the woodshed! The dollar has had 6 consecutive weeks of losing ground on a weekly basis. This morning, the currencies have the conn, and Gold is up $8 in the early morning trading…
For What It’s Worth… Here’s another case of a BIG BANK getting fined for breaking the law but no one goes to jail… This article was found on Reuters and you can find it here: https://www.reuters.com/article/us-hsbc-settlement/hsbc-to-pay-100-mln-to-settle-u-s-probe-into-currency-rigging-idUSKBN1F739N
Or, here’s your snippet: “HSBC Holdings today agreed to pay $101.5 million to settle a U.S. criminal probe into the rigging of currency transactions.
The payment includes a $63.1 million fine plus $38.4 million in restitution to a corporate client, according to a deferred prosecution agreement filed today with the U.S. District Court in Brooklyn, New York.
In the settlement with the U.S. Department of Justice, HSBC also agreed to bolster its internal controls, and admitted and accepted responsibility for wrongdoing underlying two criminal wire fraud charges filed today against the bank, according to the agreement.
Deferred prosecution agreements let companies avoid criminal charges so long as they comply with the terms.”
Chuck Again… And nobody goes to jail… That should be the title of a country-western song… it could go like this: I worked at a bank that taught me how to trade, and I done a client wrong, it was what I was taught to do, but now I’m without a job, but at least Nobody goes to jail!
Currencies today 1/19/18… American Style: A$ .8020, kiwi .7302, C$ .8057, euro 1.2274, sterling 1.3908, Swiss $ 1.0461, … European Style: rand 12.15, krone 7.8394, SEK 8.01, forint 251.88, zloty 3.40, koruna 20.7115, RUB 56.62, yen 110.64, sing 1.3196, HKD 7.8180, INR 63.69, China 6.4241, peso 18.60, BRL 3.2154, Dollar Index 90.31, Oil $63.66, 10-year 2.63%, Silver $17.09, Platinum $1,012.75, Palladium $1,112.87, and Gold… $1,338.20
That’s it for today… Sorry for that rant I started to go on near the end today… I need to keep this on the tracks! Happy Birthday tomorrow to my good friend and former neighbor, Kevin Yanker aka Webbie… How about our Blues? They’ve won last night, making it 2 consecutive games won on the road… I sure hope they can keep this edge through the playoffs this year… It’s now less than one month before pitchers and catchers report for Spring Training! YAHOO! Spring Training games start earlier than usual this year, which means the games will end earlier than usual, and I’ll have to go back home earlier than usual! UGH! Easter is the first Sunday in April this year, and that’s the reason for my earlier trip home than usual! Oh well, it is what it is! Hey! today looks like a good day, to have a good day! right? Now, let’s go out and do everything we can to make this a Fantastico Friday, and Be Good To Yourself!
Chuck Butler