Author: admin

May 8, 2019

* the dollar begins to feel the pinch of failed Trade Talks… 

* Chuck talks about how Gold is a Store of Wealth… 

Good Day.. And a Wonderful Wednesday to you! Blues win, Blues Win… Blues Win! Ok, in case you didn’t catch that, our Blues won Game 7 of their series with Dallas, and now move onto the Western Conference Finals… It took 2 overtimes to get the win, but there it was, and we took it! And a St. Louis born player scored the winning goal! It wasn’t such a happy night for my beloved Cardinals or the Lindbergh High School Flyers Water Polo team, who lost in triple overtime to a private school… My son Andrew has built a program at a public school that rivals those of private schools and everyone associated with the team is very proud of him… I know I am! Little Feat greet me this morning with their song: Fat Man In the Bathtub…

Well, with little data to go on yesterday, other than Consumer Credit, which I’ll talk about later, the currencies were allowed to gain a bit on the dollar yesterday. The dollar bugs are feeling the pinch from the Trade Talks between China and the U.S. In case you’ve been living under a rock, these talks aren’t going to peachy… And that has pushed President Trump to announce that he will raise the tariffs on Chinese goods, because no deal has taken place.

The stock jockeys were feeling that pinch too… But Gold & Silver sure didn’t… As Gold was able to sneak past the manipulators and gain more than $6 on the day!  And is up more than $4 in the early trading today… The price of Gold is still below $1,300, and well below the maginot line of $1,350 that some Gold analysts said that it would be be flying past soon… Well, I’m waiting… and so are tons of Gold holders… Not that they want to sell, but they want their Gold holdings to have a more representative price!

This is an important discussion right here, right now so your complete attention is required, please…   Gold (& Silver) are stores of wealth, they’ve never been worthless, and are a hedge VS a falling dollar and inflation… Once you own Gold, you put it away, and forget about it… You’ve stored your wealth…  In the East they get it… And that’s how they treat their Gold holdings… Here in the U.S. for the most part, we treat Gold as a commodity to buy and sell on a whim…  I would love for the West to take on more of an Asian attitude with regards to Gold…  

So… these Trade Talks seem to be a real bugaboo for the dollar… And it should be! I’m telling you now, so you can listen to me later… These trade tariffs are going to bring the Global economies to their knees… It matters not if a country is a part of the China/ U.S. talks, they will be effected negatively… You can bank on that! And the consumer gets caught with their guard down, and when they look up, the cost of just about everything they buy, is more expensive, because of tariffs…

The reporting of inflation in this country is a joke… it really is folks… later this week the stupid CPI will print and it will show that consumer inflation is well below the Fed’s 2.00% target rate… But that’s not reality, folks… Inflation is all around us and we just don’t take the time to figure these things out… For instance, the other night I went to the Panera Bread Co. (We call it Bread co) and bought some broccoli cheddar soup and and sandwich… When I got it home, and took out the container that held my soup, I noticed right away how much smaller it was compared to a few years ago… But the cost was even more… But where’s the inflation there? Not much, unless you could put a measurement on the size of contatiners… It’s like that all over the grocery store folks… And that’s inflation, because, you may spend the same, but you’re buying less in quantity, and you’ll have to go back to the story more often thean you did before… Got Gold?

And then you come across the piece of information that I shared with you on Monday… That 73% of Americans die with debt of more than $60,000… And you start to shiver… And think is that someone I know? It has to be, because we don’t insulate ourselves completely from Debt… I’ve said this before, and I don’t take this lightly, but I read a book many years ago, that has the title: Debt is Slavery…

Of course not all debt is bad, but that’s old school… For in days past, if a consumer bought something on credit, it was always paid off… But then we began to realize that lenders would lend us much more money for just about anything, and we went to town on spending with money we don’t have, with no ability or will to ever pay it all back…  Shame, shame…

To recap…  No data, and nothing but Trade Talk failures to trade on, has the dollar feeling the pinch… Not the hurting kind of pinch that the stock jockeys felt yesterday, and in fact the currencies are trading in the same clothes as yesterday today…  This is shorter than usual today, as Chuck was up all night with a stomach problem… 

For What It’s Worth…  Well, since I was so adamant about debt today, this article came at me from the MarketWatch people and is about how lenders are going to be able to apply pressure to debt holders and it can be found here: https://www.marketwatch.com/story/debt-collectors-could-be-allowed-to-call-text-and-email-you-every-day-2019-05-08

Or, here’s your snippet: “Debt collectors could soon be making a comeback.

Delinquent consumers could get phone calls up to seven times a week, and an unlimited number of texts and emails from debt collectors under the rule proposed by the Consumer Financial Protection Bureau released this week, making it the first major update in more than 40 years.

The new proposal states that once a debt collector speaks to a consumer, however, they’re not allowed to call again for a week. There is no limit to how many emails or text messages they can send under the proposed rule. Consumers will have to opt out or unsubscribe to texts and emails. 

This rule opens the door to increased contact by debt collectors to new channels or existing channels that they haven’t utilized to date like emails and text messages. That’s very dangerous to consumers,” Joanna Darcus, a debt attorney at the National Consumer Law Center in Boston.”

Chuck again…  Well, the article goes further to explain that consumers will be able to push back, but how many will?  

Currencies today 5/8/19 American Style: A$.7006, kiwi .6591, C$.7428, euro 1.1202, sterling 1.3013, Swiss $.9825, European Style: rand 14.3550, krone 8.7716, SEK 9.5941, forint 289.32, zloty 3.8295, koruna 22.9585, RUB 65.25, yen 110.08, sing 1.3620, HKD 7.8486, INR 69.75, China 6.7710, peso 19.08, BRL 3.9721, Dollar Index 97.52, Oil $61.40, 10-year 2.43%, Silver $14.92, Platinum $867.32, Palladium $1,320.11, and Gold… $1,289.10

That’s it for today…  Sorry the letter is shorter than usual, I was up all night with a stomach problem… The first one I’ve had in a long time, so I’m not complaining, but… I was supposed to be going to the day game at Busch stadium to see my beloved Cardinals today, and this stomach problem is not going to allow me to do that… UGH!  In fact, as soon as I hit “send” I’m going back to sleep, to recover the sleep I lost last night!  My darling granddaughter, Delaney Grace, is in Alabama at Space Camp… Pretty cool for her…  Rod Stewart takes us to the finish line today with his rock classic song: Maggie May…   And I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

May 7, 2019  

* The dollar continues to be bought after the jobs report last week… 

* It’s Game 7 tonight! 

Good day… And a Tom Terrific Tuesday to you… Well, as Rod Stewart sang first… Tonight’s the night… and hopeful for our Blues, everything is gonna be alright… And here’s my take on the lyrics, Cause we love you Blues, and there ain’t no stopping us now… In Sports… There’s nothing like a Game 7… Stress, anxiety, and all those things will be weighing on me and all Blues fans tonight! My beloved Cardinals sure like home cooking! They erupted offensively last night and beat the Phillies, with Bryce Harper! Well, the National College Football Champion, Clemson, had their coach Dabo Sweeney visit the ball park last night and take batting practice… This is his second visit to St. Louis… I hope he’s not stealing any recruits from Mizzou! HA! Jimmy Buffett greets me this morning with his song: The Weather Is Here, Wish You Were Beautiful… I’ve seen Jimmy Buffett two different times in concert, and thoroughly enjoyed myself at both concerts!

Well, economists that know the score, have been taking to Twitter and their blogs to blast the BLS’s Jobs Jamboree for April… So, I’m no longer the lone wolf, pointing out the BLS for what they are… But, I sure wish I could keep my thought from months ago that I didn’t care about the BLS any longer… I don’t care what they print, for it’s all rubbish… But you know me well enough to know that I’m going to point out dolts any chance I get!

I have one example of what I’m talking about, and although she doesn’t call out the BLS, it’s the same as doing so when you point out problems with the report… Here’s Danielle Di Martino Booth from here Twitter page:

“While the unemployment rate hit a 50-year low in April, the labor force has contracted for four straight months while household employment has fallen in three out of the last four months driving the labor participation rate down to a seven-month low…” -Danielle Di Martino Booth from Twitter… 

The Currencies were slipping a little more to the dollar yesterday, but last night when I turned on the screen, the euro had recovered as was back to 1.12… This morning, the euro  has slipped back below 1.12..  There seems to be this magic spell cast on currency traders at the moment that prevents them from selling dollars… Yeah! That’s the Ticket!

The pound sterling is still in rally mode, albeit small rally mode, but rally mode nonetheless, as it appears that their BREXIT talks are going much better than the China/U.S. talks… So, why isn’t the dollar getting taken to the woodshed as long as their talks go on unproductive, and cause more tariffs to be implemented? Beats me, folks… I guess the “powers that be” aren’t ready for the dollar to begin a long trend move downward…

Remember when Chinese officials said that they would not allow the renminbi to weaken to offset the tariffs, and I said, hogwash?  Well, don’t look now but the renminbi is sitting at a 2 1/2 month low this morning after a night when the Peoples Bank of China (PBOC) allowed the renminbi to weaken to this new level of weakness.  I believe the Chinese official that said that had his fingers crossed behind his back…  yeah, that’s it, that’s the ticket!  HA!  

Speaking of China… They posted their April currency reserves this morning, and there wasn’t much movement from March’s number of 3.099 Trillion, with April coming in at 3.095 Trillion…  And they didn’t have any positive currency revaluations propping up the numbers either, so this was a good thing for China, in that they haven’t dipped into their reserves, as of yet, to help out the floundering economy. 

The Trade Talks with China / U.S. have not gone swimmingly… in fact they’ve swam like I do… Like a rock!  This morning there’s news that a Chinese negotiator is coming to the U.S.  Well, the markets are all lathered up about this development, but in my mind, this is just another stall junket for someone in China that was next on the list of people that were rewarded a trip to the U.S.  This is NOT an indication that the talks are nearing an end, and I wish the markets would see this for what it is, and not what they want it to be!

I read an article this morning on Ed Steer’s letter (www.edsteergoldandsilver.com)  That the U.S. mint has halted minting of Silver Eagle coins, as they have sold out of supply…  And yet, the price of Silver can’t find a bid anywhere?  Robin Trower is singing his song, Bridge of Sighs, as I write this, and I think its very apropos, given that I just keep the sighs of exasperation coming…  Robin Trower was the guitar player for Procol Harum and this is his solo effort…

Gold was able to eke out a $2.80 gain yesterday, but is down a buck or so in early trading today…   I have an interesting article for you in the FWIW section today, and then I list some of the things that should be weighing on the dollar right now, and yet none of them are doing anything, but how long will that last?  Got Gold?

One Currency that seems to be able to hold onto its level is the Canadian dollar/ loonie… It’s been 74-cents and change for sometime now… There aren’t a whole lot of good economic things to say about Canada right now, but they will print their April PMI (manufacturing index) today, so this will give us something to work with… Getting economic reports from Canada is like pulling teeth with no Novocain! I have a few friends, and Pfennig Readers, north of the border who send me notes from time to time giving me the update, of which I’m very appreciative of!  

Last month I was talking about how the price of Oil just kept ratcheting upward, and this month the price of Oil has just been ratcheting back down… like the Frank Sinatra song>>> Flying high in April, shot down in May…  I can’t believe that the report that officials pulled out from up their Bullwinkle sleeves a couple of weeks ago, showing that supplies were larger than previously reported, is still keeping the price of Oil down…

Don’t get me wrong, I don’t want to see the price of Oil higher, but… I also don’t want to see manipulations going on…

Not too many notes in the Pfennig Replies box yesterday that disagreed with me on my take of the Fed…  I took that as a sign that the major majority agreed with me…  Or, should I take that as a sign, that people are tiered of telling me differently?  I know I’m a hard headed Irishman, but come on… I can take a different point of view, without throwing rocks at someone! HA! Yeah, and I have some land to sell you in the desert, and my first wife was a young Elizabeth Taylor, yeah, that’s the ticket!

There isn’t much in the U.S. data Cupboard this week… Today we’ll see Consumer Credit (read debt) which will be huge… Thursday we’ll see PPI (wholesale inflation) for April, and then on Friday we’ll see the stupid CPI (consumer inflation)… In between there will be several Fed Head talks, that won’t move markets unless they say some rouge comment…

I’m expected that the Consumer Debt skyrocketed in March, given all the hoopla of the other data from March…  

For What It’s Worth… A dear Pfennig Reader sent me this link and all the time I was reading the article that it took me too, I was thinking, Oh no, not again! It’s about the HELOC loans and what problems they possess for the economy and can be found here: https://www.msn.com/en-us/money/markets/easy-equity-loans-threaten-homeowners-and-the-economy/ar-AAAY6Ge

Or, here’s your snippet: “According to Equifax, between 2013 and the third quarter of 2018, close to 12 million new home equity loans were originated in the U.S. with a total of nearly $1 trillion in new installment loans or HELOC credit limits. Roughly two-thirds of these loans were HELOCs.
Three or four years ago, the standard HELOC had a combined loan-to-value (CLTV) limit of 80%. This meant that together, your first and second mortgages could not exceed 80% of the current value of the property. The restriction gave the lender a 20% equity cushion against another price downturn. A few lenders would go as high as 90% only if you had an extremely high credit score.

Standards have loosened up a lot since then. If you go online, you will see dozens of ads offering tantalizing deals for a new HELOC. In doing a quick search, I found at least 10 lenders that offer a 100% CLTV HELOC if you have a high FICO score and clean credit history. They must be highly confident that home prices will not go down again. Sounds much like 2005 and 2006.

Why are HELOCs and home equity installment loans a cause for concern? That is a reasonable question. After all, haven’t the worst of them been washed out of the system through foreclosures and refinancing?

One big problem is that we don’t even know how many of these second liens are still outstanding. Despite the Equifax report showing 12 million new HELOCs and home equity installment loans, they asserted that there were 3.2 million fewer home equity loans outstanding at the end of this period than at the beginning.”

Chuck Again… As I said above… Oh no… not again! Gov’t Debt… Student Loan Debt… Corporate Debt… States Debt… underfunded pensions… and bubble-mania in stocks…  This will all work out just peachy, right?  

Currencies today 5/7/19 American Style: A$.7017, kiwi .6598, C$ .7425, euro 1.1180, sterling 1.3062, Swiss $.9796, European Style: rand 14.4101, krone 8.7261, SEK 9.5776, forint 290.03, zloty 3.8340, koruna 23.0105, RUB 65.25, yen 110.60, sing 1.3626, HKD 7.8477, INR 69.46, China 6.7542, peso 19.01, BRL 3.9489, Dollar Index 97.57, Oil $61.72, 10-year 2.47%, Silver $14.82, Platinum $872.76, Palladium $1,336.32, and Gold… $1,280.36

That’s it for today… Let’s Go Blues!  I joked with my buddies the other day, when one of them said, “we need to get together to watch Game 7” and I said, “no, we all need to be exactly where we were when we watched them win Game 6” HA!  Superstitions… I have them I know…  And I know they are malarkey, but I have them nonetheless…  We’ve had 2 1/2 days of sunshine, and now the rain returns today, and will be around for the next few days… UGH!  Aren’t all these rainy days supposed to have come in April?  Living in a little river town, we don’t like to see all this rain… I’m just saying…   OK… got your Blues jersey on? It’s Game 7!  The Blues have had nothing but disappointments in their history, so, I’m hoping that this year will change all that!   R.E.M. takes us to the finish line today with their song: Losing My Religion… Which is what I’ll be doing tonight! HA! I hope you have a Tom Terrific Tuesday, and continue to Be Good To Yourself!

Chuck Butler

 

May 6, 2019

* Jobs Jamboree sends dollar higher on Friday… 

* Gold gains and bond boys aren’t buying the jobs report… 

Good Day… And a Marvelous Monday to you! The rain finally stopped on Saturday afternoon, and on Sunday it was just beautiful outside… Good for me, because I need to be outside! Did you have a great Cinco de Mayo yesterday? I write about this every year, on this day, because it’s funny… Years ago, I was writing about how I had stopped to sing in a sidewalk setting while in Cancun, and a Pfennig reader sent me a note and called me a MAK… (you can figure it out) We laughed about that on the trade desk for years! My Cardinals ran into a buzz saw in Chicago this past weekend…. And the Blues… Well, they survived game 6 to play a Game 7, otherwise they would had to get the golf clubs out. So, Let’s Go Blues! The Outlaws greet me this morning with their 10 minute song, with tons of great guitar playing: Green Grass And High Tides…

Well… I’m going to start the day, talking about the Fed, because they’ve been on my mind since they left rates unchanged last Wednesday, and reversed their previous statement that the economy was weakening to “It’s solid”… Lots of people like me, were writing about this last week, and so I’ll give you my version of what I’m seeing from the Fed right now… They’ve backed themselves into a corner… Yes, there they are with the paint bucket, and paint brush all dripping with wet paint, and they’ve painted themselves into a corner… What to do? Oh my, the humanity! These bunch of knuckleheads have done this to themselves… They try and try to micro-manage the economy, and it never works!

They have no idea what’s going to happen, and so they stumble, fumble, rumble along with all their “talk”… In their March meeting they talked about how the economy was showing strains and that no further rate hikes would happen… Of course that came after stocks appeared to be ready to drive off a cliff, Thelma and Louise style. So, stocks rallied… But in the meantime, we’ve had two consecutive months of strong jobs gains (I guess I won’t argue with that any longer, right here for this discussion anyway, as it does me no good to get all lathered up over it) and now it appears the Fed is going to have to hike rates to calm any potential wage inflation from this strong jobs growth… And you can bet your bottom dollar that stocks won’t like that at all… Then what will the Fed do, or say?

They did this to themselves, folks… if they had just shut up, stayed in the Eccles Building and not tried to be the Knight in Shining Armor, and save the stock market, and just let the economy do what economies are supposed to do, we wouldn’t have all these gyrations going on back and forth, will they, or won’t they? Etc. etc.

OK, that felt good to get off my chest!  Well, the currencies didn’t fare too well, with the Fed back on the rate hike path… But the slippage hasn’t been the all-out of the water kind of slippage, the euro is trading around 1.12, and pound sterling is near to 1.31… The Aussie dollar (A$) has really lost some ground, as just last month it was trading around 72-cents, and now it has fallen to a 69-cent handle…  Global Growth, or lack of I should say, is the cause of the A$’s problems, as China is in some deep dookie… 

Speaking of China, the Trade Talks have gone on and one, and while last week there was hope that they would end soon, (recall I said, they’ll have to show me?) they aren’t ending any time in the near future, and President Trump has called for additional tariffs on Chinese goods because his patience with the Talks has grown thin… 

Tariffs are NOT what the Chinese need right now, and their retaliation will NOT be what the U.S. needs right now either…  I totally dislike tariffs folks…  And when all is said and done, everyone will come to totally dislike them for they will be the  snowflake that caused the avalanche on the financial system… mark my words… I’m dead serious here… 

Well, you knew I wouldn’t pass on the opportunity to throw some shade on the BLS and their Jobs number right? For all you not in touch with today’s lingo, throwing shade on someone is like criticizing them… OK… So, the BLS said 283,000 jobs were created in April, beating the estimate of 213,000 by a very wide margin… Guess what the BLS added to the Jobs total after they received the surveys… go ahead, make a guess… If you guessed 281,000 then you would be correct… Wait! What? 281,000 of the 284,000 were added by the BLS after the surveys? Yes, Virgina,  there is a Santa Clause and he works at the BLS! The BLS  were, so how about that for organizing a “manufactured report”? I have to hand it the BLS they don’t care what others think, they’re going to push that envelope of manufactured reports as far out there as they can before someone, other than me, calls them on the carpet and demands an explanation… And that my friends is NOT going to happen! So… we live with the BLS and just say to ourselves each month… It’s only a made up report, it’s only a made up report, it’s only a made up report…

Too bad the markets don’t think like me, eh? Because stocks were flying high on the report… along with the dollar… Gold was able to gain some ground because well, if the labor gains are what they are reported to be, then wage inflation won’t be far behind… But the bond guys didn’t care what the BLS had up their sleeve… The yield on the 10-year only moved 1 Basis Point on the day… And in the overnight markets the 10-year’s yield has dropped to 2.48%…

But just don’t take my word for this jobs report being a debacle that isn’t being reported as such… Famous economist, David Rosenberg, had this to say on his Twitter feed yesterday…. “The main feature of the payroll data was aggregate hours worked, which declined 0.1% in April. When you factor in the workweek falloff, it’s akin to a 110k employment slide!”

Chuck again… I love this guy! He points out things that everyone seems to pass up, but not David Rosenberg!

The U.S. Data Cupboard, last week, had some interesting data prints and on Thursday they printed 1st QTR Productivity… Now long time readers know I usually call this report stupid, because it measures how productive or how hard people work… But get this… 1st QTR Productivity was up 3.6%, which would be good, except…. Unit Labor Costs for the 1st QTR also printed and it was negative -0.9%…  What that tells me folks, is that workers aren’t getting paid for their productivity gains… Work harder, make less…  That’s not a good combination for the worker, but more importantly, it’s not good for the economy…   

In addition, last week, March Factory Orders rebounded and rose 1.9%… Recall I had told you that given the other data prints from March, that I expected the Factory Orders to rise… And that’s just what they did… But the 2nd QTR has started out very differently than what apparently was going on in March, so let’s put a mark on this data and make sure we check the April number when it prints… 

Well, rising debt is everywhere folks… Gov’t’s, States, Corporations, and individuals…  I read a piece of information this past weekend that made me stop and say, Whoa, there partner!  Let me spell it out for you and see if you have the same reaction…  Apparently 73% of Americans die with debt of more than $60,000…   Let me repeat that… 73% of American die with debt of more than $60,000…   See? crazy, eh?  Debt is everywhere… 

To recap… The Jobs Jamboree was a trumped up report of 283,000 new jobs in April… (281,000 were added after the surveys were received) and the dollar got renewed strength VS the currencies, but it’s not an all-out of the water kind of strength VS the currencies… And Gold gained $8.50 because IF jobs are that strong, wage inflation not far behind… The Bond guys aren’t buying any of this, and the 10-year’s yield fell to 2.48% (from 2.52% last week) And Chuck has a lot to get off his chest today regarding the Fed, so don’t miss any of today’s Pfennig!

For What It’s Worth…  Well, since I went off on the Fed this morning, I thought that this piece on zerohedge.com played nicely in the sandbox with my thoughts, and it can be found here: https://www.zerohedge.com/news/2019-05-03/fed-has-lost-control-rates-technical-tweak-fails

Or, here’s your snippet: “

While the rest of the world is distracted by the plummeting unemployment rates and trade deal hype, a funny (well not so funny) thing happened in the short-term funding markets in the world’s reserve currency.

As we noted previously, something unexpected has been going on in overnight funding markets: ever since March 20, the Effective Fed Funds rate has been trading above the IOER. This is not supposed to happen.

This week, The Fed tried to do something about it by cutting the IOER. It has failed!
In other words, as one veteran funding market trader exclaimed, “it’s getting worse!”
Simply put, this is front and center a dollar liquidity shortage signal that The Fed is unable to solve… for now.

As Barclays’ Joseph Abate recently ominously concluded:

The large move also suggests that the banking sector is “nearing the steeply sloping part of the reserve demand curve” which means that “bank reserves are now significantly closer to what individual banks consider their ‘least comfortable level of reserves’ and thus banks are more willing to pay higher rates to retain these balances.”

In other words, some $1.5 trillion in excess liquidity created by the Fed is no longer enough for banks which are starting to scramble to obtain additional liquidity, which needless to say, is very troubling for a banking system which is supposedly “fortress” and “much more stable” than it was before the financial crisis. If anything, this means that even a modest liquidity draining crisis at any point in the future could have vastly more dire consequences than even the pessimists.”

Chuck again…  Well, this is not good folks… and the only way out of this is to cut rates aggressively, or have a coordinated effort to weaken the dollar…  I’m just saying…

Currencies today 5/6/19 American Style: A$.6989, kiwi .6613, C$ .7423, euro 1.1200, sterling 1.3097, Swiss $.9818, European Style: rand 14.5095, krone 8.7448, SEK 9.5804, forint 288.73, zloty 3.8240, koruna 22.9595, RUB 65.05, yen 110.83, sing 1.3631, HKD 7.8461, INR 69.42, China 6.7336, peso 19.06, BRL 3.9375, Dollar Index 97.53, Oil $61.94, 10-year 2.48%, Silver $14.92, Platinum $870.00, Palladium $1,353.00 and Gold… $1,281.30

That’s it for today…  Well, that was something at the Kentucky Derby on Saturday… I put my money on the winning horse, but then he was disqualified in a historic decision… UGH! I said then to anyone that would listen to me at the Watch Party I attended, that this is a bad precedence for horse racing because now every race is going to have a challenge… Why not? who knows what these knuckleheads will do, and a 65-1 odds horse may win?   OK… Cubs sweep the Cardinals, which is bad…  Our Blues come home for Game 7, and will play it on home ice, which has not been kind to them this year in the playoffs, they’ve been a better road team… Let’s hope the hockey gods are kind to them this time! Let’s Go Blues!  I get my scans results today, so fingers crossed… other than that I’m out of things to say! HA!  The Moody Blues take us to the finish line today with their song from the Seventh Sojourn album (one of my top 10 fave albums): When You’re A Free Man…   I hope you have a Marvelous Monday, and will be Good To Yourself!

Chuck Butler

 

 

May 2, 2019 

* The Fed says the U.S. economy is “solid”… Really? 

* Chuck talks economics, and brings Hy Minsky into the conversation today! 

Good Day and a Tub Thumpin’ Thursday to you! I had a nice evening as son, Andrew stopped by to return something to me, and asked if I wanted to go get a bite to eat… We proceeded to run into some neighborhood friends, and there was lively chatter… My beloved Cardinals found a way to get to Max Scherzer last night, and won again… They just finished April with a franchise best record for April… That’s all good, but the season is 6 months long… But as I always say… “Games you win in April, are games you don’t HAVE to win in September”… In other words, they’re just as important to win! Faces greets me this morning with their song: Ooh La Laa… I wish I knew what I know now, when I was younger…

Well, the BIG Hoopla yesterday was the FOMC’s press conference following their two days of playing board games… The Fed surprised the markets, not by keeping rates unchanged, but by talking about how inflation had fallen below their target rate, but… The central bank’s statement walked back its March view that the economy had “slowed” from the end of last 2018, noting that recent developments show that economic activity “rose at a solid rate.”

See what massaging a GDP report will do for you? Just when you thought the Fed would give the markets the wink and nod that a rate cut was coming this year, that rogue GDP revision changes things… Not to worry though… The Fed Heads will rue the day they didn’t jump at the chance to breath life into the economy that they believe is “solid”… They’ll be proven wrong once again… But no one will hold their feet to the fire… President Trump tried to put some pressure on the Fed Heads by saying they needed to cut rates by 1 full percentage point, and begin bond buying again…

Love him or hate him, it matters not to me, but… at least he’s seeing the economy for what it’s becoming, and sure doesn’t want to see a full blown economic recession while he’s campaigning for 2020…

So, the currencies lost ground they had gained earlier this week after the Fed’s statement… Gold didn’t move and everyone was quite shocked by the Fed’s announcement that the economy is “solid”… I am surprised though that the selling of the euro and other currencies didn’t got as deep as usual, and to me, it appears the Currency Traders are hemming and hawing about what direction they want to take the dollar now, and from what I can see in the markets this morning, it’s downward… 

The Bank of England (BOE) met this morning already, and left rates unchanged and cited BREXIT problems to the economy as their reason for keeping rates unchanged. The pound got sold on this news, but then it’s all kind of mixed up as the reason for the weakness, was it the BOE news, or was it the Fed news? 

Well, yesterday, I told you how China’s Manufacturing index was hovering just over the line in the sand that marks whether a manufacturing sector is contracting (below 50) or expanding (50 and above)… And told you that the both the Markit version of U.S. manufacturing and the Gov’t’s version of it, called ISM, would print on Wednesday… And they did, and guess what? They are slip, sliding away, slip sliding away… The Markit print was 52.6, and the ISM was 52.8, but that was down from 55.3 in March… I told you all that the trade war would hurt both economies, and then eventually hurt all economies, didn’t I!

In addition, the U.S. Data Cupboard yesterday had April Construction spending, which went negative by -0.9%, and in March it was a positive 0.9%… So that’s a 2 point negative move in a month folks… No wonder the Atlanta Fed is forecasting a very weak, 2nd QTR GDP… Yes, the Atlanta Fed’s GDP Now system has 2nd QTR GDP at 1.2%… Of course that’s before all the massaging  by the BLS gets done!

And let’s not forget that I’m still buzzing mad about the revision to QTR1 GDP… But economist Paul Rosenberg tried to explain some of it by showing that Business Inventories and Gov’t spending made up a huge portion of it… So… let’s dive further into those things… Business Inventories according to Kudlow was autos… But he told us not to worry, because consumers would be opening up their wallets soon…. And the Gov’t spending was mostly on highways and bridges… Hmmm, you can’t build a bridge or highway twice can you (unless you screwed it up the first time!)? Well, no, so, that’s why we’re in a world of hurt, folks… But the window dressing isn’t saying that, and that’s too bad, because stocks keep going higher, and people keep getting sucked in…

OK… Longtime readers know all about what I’m about to say about me, and my background and who formed the foundation of my economic theories, but there are new readers, and so I thought today would be a good day to go through some of this…   Have you ever heard of Hyman Minsky?  Well if you are a longtime reader of this letter, his name has come up a few times though the years, right?  Well, the late great, Hy Minsky, was the catalyst behind my wanting to learn about economics…  He was well known in his time, as someone that new how the markets worked…  So, today, let’s highlight Hy Minsky… 

First of all let me set the table here… Minsky spent his life, as an economist, on the margins of economics, but after the 2007-2008 financial meltdown, to many, it seemed to offer one of the best explanations as to why it had happened… And Minsky died in 1996!

His book, Stabilizing an Unstable Economy was in high demand after 2008… Imagine that! So, here is Hyman Minsky’s idea about the three stages of debt… 

 There Are 3 Stages of Debt… Minsky believed in a theory called: “financial instability hypothesis” which says that lending goes through three distinct stages. He called them: The Hedge, The Speculative, and the Ponzi stages. You won’t believe how similar this is to now… for the first stage, after the crisis, banks and borrowers are cautious. Loans are made in modest amounts and amounts that the borrower is known to be able to repay both the principal and interest.

As confidence grows, banks begin to make loans in which the borrower can only afford to pay the interest. And the collateral on the loan is usually an asset that’s rising in value. And then when the memory of the past crisis is faded, and forgotten…

The Ponzi stage begins. At this point banks make loans to firms and households that can afford to pay neither the interest nor the principal. And this is done under the idea that the asset that’s used as collateral will continue to rise in value. But when the asset held as collateral doesn’t continue to rise… The loan is called, and begins a very bad circle of foreclosures, failures, and bailouts.

This begins the Ponzi stage… And that’s where I believe we are now… Can you believe that Minsky’s thoughts on debt, were written many years ago? Shoot Rudy, he’s been gone since 1996!  And once again I’ll say that if you don’t know about history, or learn about history, it’s going to come back and bite you in the you know what!  And all those young energetic traders on Wall Street have now idea who Hy Minsky was… And they are about to learn, the hard way! 

OK… enough of that today…  I dedicated an entire article on the Minsky Moment when I was writing weekly articles for the Dow Theory Letters, on January 24, 2018…  I was a good article, I hope you had the opportunity to read it, for you would have a better understanding of where I come from with my thoughts…  Of course there are others that have helped shape my economics background…  Frank Trotter is a key, so is Ed Bonawitz, and Roy Fischer, along with guys like Bill Bonner, Doug Casey, David Rosenberg, etc. It takes a village to teach a country bumpkin like me! HA!

Gold lost nearly $7 bucks yesterday, and all of the loss came after the Fed announcement, as someone (you can guess who) showed up at the COMEX with an armful of short Gold contracts…  How in the world can the Fed Heads be fooled by the head fake upward revised GDP report?  That’s all it was in my opinion was a head fake… And the Fed Heads went for it and came up with air, as the economy runs past them to the other end zone that is for team recession… 

Today’s Data Cupboard here in the U.S. will have some conflicting data prints… One of those will be Factory Orders for March… I say conflicting because, apparently March was a blip on the radar screen for stronger growth… So the negative Factory orders for Jan and Feb will be forgotten by the markets when today’s positive number prints… In addition, today we’ll see 1st QTR reports for Productivity and Unit Labor Costs… Should be interesting… 

To recap… The Fed left rates unchanged and talked about how inflation was no longer their concern, but… then they changed horses in the middle of the stream, and talked about how the economy was “solid”….  The currencies and Gold got sold on the news, for it wasn’t what the markets were expecting to hear… Recall, they, in the least, wanted a wink and nod that rates will be going lower soon, and they didn’t get that at all!  Chuck talks economics and even brings Hy Minsky into the conversation today… 

For What It’s Worth…  Well, I spent a good portion of today’s letter talking about debt… And guess what the lawmakers in D.C. did yesterday? The Senate passed a Huge Deficit / spending bill, and sent it to the House… I found this in my email box this morning and it can be found here: https://www.washingtonpost.com/powerpost/house-leaders-scramble-to-win-support-for-budget-deal-ahead-of-midnight-deadline/2018/02/08/4812e996-0cd9-11e8-8b0d-891602206fb7_story.html?utm_term=.49c7b81a5a2d&wpisrc=al_news__alert-politics–alert-national&wpmk=1

Or, here’s your snippet: “The Senate passed a sweeping bipartisan spending bill Friday morning, but not before the federal government shut down when Sen. Rand Paul (R-Ky.) delayed the vote past midnight to complain about the budget deficit. It was the second government shutdown in less than three weeks.

The spending legislation passed 71-28, with wide bipartisan support. The bill would reopen the government while showering hundreds of billions of dollars on defense and domestic priorities, speeding disaster aid to hurricane-hit regions, and lifting the federal borrowing limit for a year. But first it must pass the House, where opposition from the left and the right made the outcome uncertain.

House votes were expected later Friday morning.

The shutdown was so unanticipated that the Office of Management and Budget didn’t tell federal agencies to prepare for it until Thursday evening.”

Chuck again… wait! What? The OMB didn’t tell anyone that the Gov’t could shutdown until last night, and that it could happen starting today? What the heck is going on in D.C.?  But more importantly, more debt folks… When will it stop?

Currencies today 5/2/19 American Style: A$.7020, kiwi .6626, C$ .7440, euro 1.1205, sterling 1.3047, Swiss $.9814, European Style: rand 14.4570, krone 8.6896, SEK 9.5297, forint 289.12, zloty 3.8185, koruna 22.8770, RUB 64.63, yen 111.50, sing 1.3610, HKD 7.8444, INR 69.43, China 6.7339, peso 18.95, BRL 3.9187, Dollar Index 97.62, Oil $62.76, 10-year 2.52%, Silver $14.67, Platinum $860.98, Palladium $1,357.42, and Gold… $1,271.14

That’s it for today… I’m late, I’m late, to a very important date! I guess that’s what I get for attempting to stay up to watch our Blues last night… Our Blues were attempting to go undefeated on the road this year, but ran into a buzz saw last night, and lost… The series is tied 2-2…   Back to St. Louis for Friday night… Let’s Go Blues!   Well, I have more doctor things to do tomorrow and Saturday morning… Hopefully I’ll be finished on Saturday morning in time to go to the water polo game at the high school to watch my son’s team in the state playoffs…  OK… the great Johnny Rivers takes us to the finish line today with his song: Secret Agent Man… Now there’s an oldie!  I hope you have a Tub Thumpin’ Thursday, and well Be Good To Yourself!   

Chuck Butler

 

 

 

 

 

May 1, 2019 

* Euro and Sterling are only real movers yesterday… 

* Big Data Day with the FOMC announcement to finish it off… 

Good Day… And a Wonderful Wednesday to you!  And Welcome to May! it’s May Day! Where’s the Maypole? What was in the water yesterday that caused a few of my longtime acquaintances to contact me? First it was my longest time known friend, Robin who I met in kindergarten! Then it was longtime colleague Chris, and followed up by Christine, and then former Mark Twain Bank colleague, Neil… I had just heard the previous day while driving around making stops, because that’s what I do when I’m by myself! And I heard the oldie by Bobby Vinton, Mr. Lonely… And while he was singing it from a soldier’s point of view, I related to the line… Letters, never a letter, I get no letters in the mail… And then the next day, POP! Van Morrison greets me this morning with his song: Brown Eyed Girl… Whenever I hear that song, I think of my friend, Jennifer, who used to say it was her song, as he was singing to her!

Well… I told you yesterday morning that the Eurozone had just printed a better than expected GDP report, which dispelled some of the thoughts that the Eurozone was heading to a recession, and that it was helping the euro push higher… And that was the thought of the day for Currency Traders who got caught short the euro, on the recession bet…

Pound sterling was also on the move higher VS the dollar yesterday, as there were positive signs coming from the BREXIT talks… Again, like I said with the China / U.S. Trade Talks… I’m from Missouri, I’ll have to be shown… But for now, traders are happy to think that it will all right on the night for sterling with the BREXIT talks nearing an end…

The rest of the currencies didn’t really see much movement yesterday… My spider sense was tingling last week, and I’ve been waiting to see what happened afterward to talk about it… I’m talking about the price of Oil, which was on daily move higher 10 days ago, and then right when analysts were talking about it going to $70… it got the rug pulled from under the rally, as if from up the sleeve of Bullwinkle, the U.S. produced a report showing that Oil supplies were greater than previously thought… Boy my spider sence was tingling and working over time, with all kinds of thought about how reports are manipulated to make us feel good, and this one falls right there, right? Don’t get me wrong here I don’t want to have to pay $4 for a gallon of gas, but why can’t the manipulators just let markets be markets, and see what happens?

And my main concern here is the Petrol Currencies… They aren’t allowed to get off the porch with the Big Dog euro, and chase the dollar down the street, when the price of Oil is floundering like it has since the supplies report was pulled from Bullwinkle’s sleeve last week…

Speaking of manipulations… Recall yesterday morning I told you that Gold had lost $6.50 the previous day, but was up the same amount in the early morning trading? Well, that early morning gain got wiped out during the day… and in a day or two, I’ll read about how “X” number of contracts to sell all hit the market at the same time… No manipulation here folks, just move along for these are not the droids we’re looking for…. NOT! NOT! NOT! Last week I printed a piece in the FWIW section about how a trader talked of how when trade desk has a large position to sell, they do it in drabs and bits, to keep the price pretty steady while they sell… Not got all-in with arms full of short contracts to throw at the market at once…

I get so worked up over this stuff, that it takes me a minute or two to calm down before I can write more….

OK…  Yesterday, Canada printed their Q1 GDP and it was not pretty…  What the heck is going on in Canada?  The Bank of Canada (BOC) last year hiked rates, but it sure looks as though they are going to have to reverse that hike… Recall that the hike was made to water down the hot housing markets of Toronto and Vancouver…  Well, what are you going to do now?

In other data… China printed a very scary PMI for April…  The CAIXEN PMI, which is a private company that tracks manufacturing strength with a manufacturing index called the PMI, it’s NOT the official Gov’t report on manufacturing but it’s widely respected, so the markets react to it… And yesterday the CAIXEN PMI for April fell to 50.2 from 50.8 in March… 50.2 is within spittin’ distance of going into contraction folks…  Remember, I told you that the Trade War would hurt both countries? Well, it’s doing a number on China right now…

And here in the U.S. we had one of the regional PMI prints yesterday from Chicago, and in it’s latest check on the pulse of manufacturing for the region showed a HUGE drop in the index price from 58.7 in March to 52.6 in April, the lowest level for this data since January 2017…    So, it appears the Trade War is doing a number on the U.S. right now too…  

And remember the Chinese saying that the wouldn’t allow the renminbi to weaken to offset the effects of the Trade War? Well, don’t look now but the renminbi has been on a one-way move downward recently… 

It’s Labor Day Holiday in several countries around the world but mostly centered in Europe. China also observes this day as their Labor Day…  

The U.S. Data Cupboard had some interesting, but certainly not real pieces of economic data, prints yesterday, so let’s go through them with some thoughts on each… First the Case/Shiller Home Price Index for Feb, printed and showed once again that home prices continue to fall…  Then we saw Consumer Confidence’s index drop from 129 to 126… Still too high if you asked me, but they don’t ask me, so it is what it is! 

Today’s Cupboard has the monthly ADP Employment Report, the precursor to Friday’s BLS Jobs Jamboree…  We’ll also see prints from both outfits that measure manufacturing here in the U.S.  The Markit PMI Index, and the National ISM Index…  Don’t look for major drops like we say in the Chicago region yesterday from these two, because for some reason the regional prints never really factor into the National prints… Hmmm…  But don’t worry about it, there’s nothing fishy going on here…  fingers crossed! 

And the biggest thing today is the conclusion of the two-day FOMC meeting by our Fed Heads…  Like I said yesterday, I don’t expect any rate changes today, but IF and that’s a BIG IF, Fed Chairman Powell, gives us the wink and nod of a rate cut coming soon to a theater near you, then to the markets that will be as good an actual rate cut now…  So, watch for that because usually when the U.S. signals rate cuts, Gold reacts favorably… 

Yes, the Fed Heads have to put away all the board games they had to finish all the board games they had out and get them put away before rolling their sleeves back down, putting their jackets back on and checking themselves in the mirror before making their announcement this afternoon… So, finish your game of Battleship! By, Joe you’ve sunk my battleship! HA!

To recap…   A better than the average bear GPD report in the Eurozone yesterday put to bed, for now at least, the thoughts of a recession in the region, and the euro has responded favorably to the report. Pound sterling is rallying on news that the BREXIT Talks are going smoothly… And the Trade Talks between China and the U.S. are sending signals that they may be completed soon… Chuck says, he’s from Missouri, they’ll have to show him!  The rest of the currencies didn’t get much movement yesterday, and Gold struggled throughout the day, but that could all change if Fed Chairman Powell gives the wink and nod for a future rate cut this afternoon… 

For What It’s Worth… Well, I’ve been talking about a liquidity crisis for a few years now,,, And every now and then there are alarms going off about how it’s becoming a problem, only for them to be proven to be false dawns… But this time… This is JPMorgan talking about a liquidity problem, and since they are so big, and into just about every market there is, maybe we should at least listen to them and see if what they’re talking about makes sense, eh? You can find the article here: https://www.zerohedge.com/news/2019-04-27/jpmorgan-we-are-approaching-point-again-where-us-banks-run-out-liquidity

Or, here’s your snippet: “Now it’s the turn of everyone’s JPMorgan contrarian, Nick Panigirtzoglou – the author of the popular “Flows and Liquidity” report, and a lone skeptical voice amid an otherwise permabullish landscape dominated by Marko Kolanovic – to warn that despite some $1.4 trillion in excess reserves sloshing around, “the liquidity conditions in the US banking system are perhaps close to decade lows” which in turn is manifesting itself in the breakout of the effective Fed Funds rate above the IOER, which as Morgan Stanley suggested last week, the Fed may have no choice but to cut by another 5 bps at the next Fed meeting just to “normalize” the fed funds rate and restore some temporary control to the most important interest rate in the world.

In his latest weekly note, JPM’s flows strategist recaps what we said previously, noting that “the liquidity effects from the Fed’s balance sheet resurfaced over the past week following a spike in overnight interbank rates. While a previous spike in both the median and 75th volume-weighted percentiles of the Fed funds rate to 3bp above the Interest rate on Excess Reserves (IOER) around quarter-end was quickly unwound, these rates spiked again over the past week to 4bp and 5bp above IOER creating a more persistent and concerning up move.”

Chuck again… I feel somewhat vindicated that someone besides me is talking about a liquidity problem here in the U.S. I guess we’ll all have to wait-n-see, but in the meantime… Got Gold?

Currencies today 5/1/19 American Style: A$.7058, kiwi .6665, C$ .7468, euro 1.1238, sterling 1.3070, Swiss $.9849, European Style: rand 14.2918, krone 8.6260, SEK 9.4957, forint 288.52, zloty 3.8067, koruna 22.7767, RUB 64.52, yen 111.30, sing 1.3586, HKD 7.8447, INR 69.55, China 6.7346, peso 18.92, BRL 3.9359, Dollar Index 97.36, Oil $63.50, 10-year 2.51%, Silver $14.89, Platinum $886.00, Palladium $1,372.00, and Gold… $1,282.80

That’s it for today… I remember when I was younger, that May Day meant that the communist countries would get their respective military all dressed up and have a parade, with tanks and other stuff… Quite the spectacle…  Ok, sad stuff from the University of North Carolina yesterday, as there was a shooting and some deaths… UGH! Please be safe out there folks!  My beloved Cardinals won again last night, but now they have to face two of the best pitchers in the game the next two days… This will be interesting… And our Blues will be back on the ice tonight, with yet another very late start time! UGH!  But, so be it… Let’s Go Blues!  Gerry Rafferty takes us to the finish line today with his song: Get It Right Next Time…  I hope you have a Wonderful Wednesday, May Day to boot! And will continue to Be Good To Yourself!

Chuck Butler

 

April 30, 2019 

* Currencies continue to inch higher VS the dollar…

* Are the Big Boy new outlets seeing things Chuck’s way? 

Good Day… And a Tom Terrific Tuesday to you! What a night for me, as both St. Louis teams were playing on the road… The Cardinals in Washington, D.C. and the Blues in Dallas… I had both on, trying to pay attention to one or the other at various times… And both teams won! WOW! Oh, What a night… I saw yesterday, that Wall Street broke a record… See? What I mean about putting out trumped up economic reports? Investors swallow them hook, line and sinker and buy, buy, buy… And when the following month’s downward revision comes through, it’ll be done under the darkness of night, and no one will make a Big Deal out of it, except me! OK, more on that later… Right now… Jimmy Cliff greets me this morning with a very apropos song… Hello Sunshine… With all the rain we’ve been getting we need some sunshine.

The currencies continue to move higher in small moves though, but higher nonetheless… Yesterday I told you how the Dollar Index had dropped in price from 98.30 to 98.02… Well this morning the Dollar Index is trading at 97.58… I know, I know I’ve told you through the years that the Dollar Index isn’t the best way to follow the currencies, but for this time, it’s been a good indicator to me, that is, that the currencies, led by the Big Dog euro, have been inching higher VS the dollar. 

Speaking of the euro… In the Eurozone this morning we had a check on Eurozone 1st QTR GDP, which beat the expectations of 1.1%, the same as the 4th QTR 2018, and printed at 1.2% instead… That’s not a great report card, but… it’s far better than the reports that the Eurozone was going into a recession…  Of course, 1.2% isn’t that much of a cushion… 

Gold had a bad day yesterday, but not as bad as Palladium! Gold lost $6.50 yesterday, but has gained that amount right back in the early morning trading today…  But poor Palladium, it lost $95 yesterday! That’s right, I said $95… OUCH! Now that’s going to leave a mark! 

Getting back to my tirade yesterday… The Fed will meet today and tomorrow (time to get the board games out again!), and while I believe they will keep rates on hold for now… I do believe that when Fed Chairman Powell gives his press conference on Wednesday afternoon, he’ll probably casually mention that the Fed Heads are teeing up a rate cut for later this year… Of course later could technically mean at their next meeting, but I digress…

So, while I was just sitting here thinking about the hold the Fed has on the economy these days, I came across a thought that all Central Banks around the world have an equal footing on the way their respective economies run, too… And that got me thinking ( you know the thigh bone is connected to the knee bone, etc. ) that what we have in the world today is not what we used to have, which was free markets… We now have managed economies by each country’s Central Bank… Oh, heaven help us, for we do not know of the things that we have allowed to happen…

I say that because… These Fed Heads are not out in the real world, they have no idea what’s going on from day to day in the economy. Sure they get their regional reports, but those are written by underlings to the Fed Heads, what do you expect them to say… That the whole economy is crashing around us?… it’s a Mad, Mad, World out there, and you had better be street wise and savvy to be a Fed head in my opinion… Take this reversal of their previous thoughts that they would be hiking rates all this year and some more next year… That certainly has been throw to the curb, now hasn’t it? The problem here is that what happens if they “went too far” with consecutive rate hikes? And then when they panic and begin to cut rates again, do they go “too far” that way too?

The thing is, that we have to live with these moves… We have to adjust things, our spending habits, our savings, our investments, etc. Because the Fed managed the economy too much? That’s crazy folks… And I’m going to stop there because… Well, because…

Well, it’s almost all out of my system, except I keep seeing more and more looks under the hood of that dangblasted  U.S. GDP revision last week… This one is from David Rosenberg, once again, who looks under hoods as much as I do, or even more! This is from his Twitter feed… “The weak surprise in Q1 GDP was the consumer – a 5.3% annualized plunge in big-ticket spending! The bulls were telling everyone to expect a consumer boom based on surging tax refunds. But guess what? The average refund was 2% lower this year than it was last!”- David Rosenberg on Twitter.. 

On Bloomberg this morning that have three charts that they say are very good indicators that the economy is headed downward… They talk about the lack of Industrial production, Capital spending, and that gasoline prices are within 10-cents of last year’s peak, and are up 30% since the start of the year…  There was nothing new here to regular Pfennig readers, as I’ve talked about all these things, including how gas prices were going up now, as we near the start of the summer driving season… 

The reason I brought these things up from Bloomberg this morning is that the major media outlets are beginning to “see the light”… And come around to Chuck’s way of seeing things for what they are, and not pulling any punches! 

I just saw a news flash that in Venezuela this morning, the opposition is attempting to overthrow the Maduro Gov’t with a military uprising…  This will be something to watch today… 

Well, I haven’t talked about the Trade talks lately… And I’m here to correct that! HA!  The U.S. negotiators are in China and there’s word that a trade deal might be close to being done.  Well, I’m from Missouri… You’ll have to show me… I’ll believe it when I see it! 

To Recap…  The Currencies continue to inch higher VS the dollar with the euro leading the charge. Eurozone GDP beat expectations but those expectations were watered down, so the beating of them wasn’t exactly a moon shot… But the euro rallied nonetheless.  Hey! Bloomberg is coming around to Chuck’s way of seeing the economy for what it is and not what the Fed Heads and Gov’t think it is…  That’s a big step for Bloomberg, folks…  Because most outlets don’t want to be associated with the likes of Chuck! HA!

For What It’s Worth… Well this article plays well in the sandbox with my thought earlier this morning regarding the Fed overacting with rate cuts/ hikes. And this article talks about a new program that the Fed is thinking about and can be found here: https://www.cnbc.com/2019/04/29/fed-looking-at-a-program-that-could-be-version-of-quantitative-easing.html

Or, here’s your snippet: “Federal Reserve officials are considering a new program that would allow banks to exchange Treasuries for reserves, a move aimed at ensuring liquidity during difficult times that also would help the central bank decrease the size of its nearly $4 trillion balance sheet.

The so-called standing repo facility is in its early discussion phases. Respected St. Louis Fed economists David Andolfatto and Jane Ihrig have authored two papers on the plan, which they say would ease the regulatory burden for banks that feel pressured into holding ultra-safe assets.

In some quarters, the idea is viewed as a natural extension of current Fed policy. Others, though, think it in essence could be a repackaged form of quantitative easing and thus yet another iteration of the Fed’s decade-long tinkering in financial markets.

The idea comes as central bank policymakers look for ways to cut the bond holdings on its balance sheet without being disruptive to markets.”

Chuck again…  There they go trying to improve things that were bad to begin with… I mean wouldn’t it be a good idea to see if the markets could function without intervention/ manipulation? I’m just saying…

Currencies today 4/30/19 American Style: A$.7057, kiwi .6677, C$ .7440, euro 1.1212, sterling 1.3009, Swiss $.9808, European Style: rand 14.3143, krone 8.6210,  SEK 9.4825, forint 287.97, zloty 3.8216, koruna 22.8817, RUB 64.57, yen 111.25, sing 1.3603, HKD 7.8450, INR 69.64, China 6.7312, peso 18.90, BRL 3.9324, Dollar Index 97.58, Oil $63.30, 10-year 2.53%, Silver $15.07, Platinum $903.00, Palladium $1,377.00, and Gold… $1,286.60

That’s it for today… A late night for me, but I couldn’t turn the hockey game off, the Stars kept scoring to tie the game and the Blues would storm back and move ahead, until the horn sounded and the Blues had won!  My beloved Cardinals are on a roll, but the gauntlet of good pitchers is lining up to face them the next 3 games… Their work will be cut out for them for sure! My darling daughter, Dawn, called me last night to see if I was OK… She always checks on me when I’m all by myself… And I truly appreciate that!  Son, Andrew tells me that the State playoffs begin this Saturday, and I think I’ll attempt to get to the game. His team is the 3rd seeded team in the state, Good luck to the Flyers!  Good luck to the Cardinals, and Let’s Go Blues! Stevie Nicks (old heart throb!) and Fleetwood Mac take us to the finish line today with their song: Landslide…  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

 

April 29, 2019 

* 1st QTR GDP is revised upward and Chuck takes exception to its print! 

* Currencies and metal Traders don’t buy the GDP report! 

Good Day… And a Marvelous Monday to you! Man have I got a bone to pick with the Gov’t bean counters this morning… They actually put a damper on my weekend, and so, I’m going to take them to the woodshed this morning! Our Blues got the 2nd round of the playoff started on the right foot with a win on home ice Thursday night, but lost the second game on Saturday, and Now the series moves to Dallas, where I saw on TV that they are prohibiting sales of tickets to Missouri residents… So, Blues fans, if you want to go to see your Blues play in Big D, then you’ll have to buy them 2nd hand… No biggie, people are used to using Stub Hub to buy tickets these days… Paul Young greets me this morning with his 80’s song: Every Time You Go Away… Very apropos for me today, since I’m alone again now… Whenever this song plays I think of a former Mark Twain Bank colleague, Janet Young, who loved this song… I wonder where Janet, now Rogers, is these days?

OK… let me first say that even though the Government accountants tried to pull a fast one on us last week, the currencies and certainly not Gold traders didn’t fall for it, and neither should you… The currencies are trading a bit stronger this morning as evidenced by the Dollar Index, that is trading at 98.02 this morning and it was 98.30 last Thursday morning… No big moves, but a general direction that’s promising for non dollar holders… 

Gold finally got unleashed, and gained over $9 on Friday…  And Palladium kept going with its renewed interest gaining appeal.  Well, the COMEX issued a report last Friday, like they do every Friday, called the Commitment of Traders, or COT report… These COT reports are what technical traders use to see if their charts align with what the COT report is telling them… In this case, is the bottom in for Gold & Silver? Well, The GATA folks sent me a note yesterday explaining why they believe the COT is telling them the bottom is in for Gold & Silver… Let’s listen to a short piece from the GATA folks… “These positions are reported weekly in the CoT (Commitment of Traders) report issued by COMEX. Followers of this report have seen instances of the Managed Money long positions turning to or near short (or at least ‘bottoming’) and the Commercials short positions nearing nil or even long (or at least ‘bottoming’) preceding substantial market rallies.”

You don’t have to be a Technical guru, or someone who is very aware of the COT reports, all you have to do is to stop and listen to people that see these things for what they are, and that is a rally in Gold & Silver is coming… Is the bottom in? That’s difficult to say, but I would think that given this info, that the bottom if not in, is near an end… I’m just saying!

OK… I can’t hold my breath any longer, I’ve got to let it out… What a bunch of BS! 1st QTR GDP was revised upward, yes, I said upward, to 3.2% from a previous reading of 2.3%… What a bunch of hogwash! Yes, the March numbers are coming in a little better than previously thought, but that’s just one month of the quarter, the first two months were horrendous with data!… And a little better than previously thought March, brings the 2.3% print to 3.2%? I’m not buying it, and you shouldn’t either folks… I’ve come to the realization that whenever we see a negative or weak print one month, that the boys in the back room that count the beans get called on the carpet and told to not let that happen again… And thus, we see immaculate turnarounds in data from month to month… I know there’s nothing I can do about it, so I’m not going to let this get me all ticked off and such… I’ll just say my piece and move along… 

Oh, and let us not forget that the U.S. Gov’t was shutdown for a period of time during the 1st QTR… Are the bean counters telling us that it had no effect what-so-ever on economic growth? Or did they forget, that we have long memories and would remember the shutdown? I’m betting that it was the latter of the two! These guys that put together the economic reports have become so brazen, with their reporting, that someone, somewhere with a strong identity, should stand up and be heard that it’s all a bunch of hogwash! Pig slop, road pizza, whatever it’s all getting on my nerves, and it should be getting on yours too!

And don’t just take my word that the GDP print was hogwash… Let’s listen to what one of my fave economists, David Rosenberg, had to say about it… “This was a low-quality GDP report. All one-offs – lower imports, higher inventories & Pentagon spending. Real final private sales a puny 1.3%. Removing more lipstick from this pig shows cyclically-adjusted GDP contracting at a 2% annual rate; deepest decline in nearly a decade .” – David Rosenberg from his Twitter feed.

And did you hear this one? Global Growth has dipped negative in the first quarter of the year on a year on year basis, this is the first time that’s happened in over a decade! And we’re supposed to believe that a negative Global Growth in the first quarter, led to an upward revised GDP of 3.2% here in the U.S.? Come on, what do you guys take us for a bunch of dolts? 

I guess using the fact that they printed the number and didn’t look back, that they do undoubtedly take us for a bunch of dolts!  Well, I’m mad as hell and I’m not going to take it any longer!  Or something like that… 

But as Neil Young sang… Don’t let it get you down, it’s only castles burning…  

I’ve been so keyed up about writing this morning regarding the upward revised 1st GDP report, that I’ve spent the whole letter, just about on just that!  But you can see from my talking about it so much that it means something to me, that these things happen for a reason, and the reason is… to keep everyone happy, and from grabbing their shovels and pitchforks and rakes and marching on their respective state house… Oh? What’s that you say? People don’t do that any longer because they’ve become so about themselves, that they wouldn’t report a crime if it happened in their front lawn?  Oh, I don’t believe that for one minute! But it sure seems that we, as a people, are heading in that direction, to ignore these types of things, instead of proactively writing or calling one’s representatives and giving them a piece of their minds…  I’m just saying…

The U.S. Data Cupboard gets this week started with a bang this morning as it will yield the Personal Income and Spending reports from March, along with core inflation…  The spending for March was probably better than the average bear, given the lead up to Easter, and spring and St. Patty’s Day, and so on…   And we’ll end the week with the April Jobs Jamboree, which at this point is being forecast to have added  190,000 jobs…  The BLS is another of those brazen bean counters that just gets my dander up! 

To recap… The 2nd QTR GDP was revised up from 2.3% to 3.2% last Thursday, and they threw a ticker tape parade down Wall Street for happy days were here again!  Not so fast there bucko…  Chuck has his bone to pick with the guys and girls that put together the reports…  But the currency and metals traders didn’t buy the report, and they have seen rallied since the report was printed…  And the COMEX printed a very favorable COT on Friday that the GATA folks believe is an indication that the bottom for Gold and Silver is in… 

For What It’s Worth….  Well, since I talked about the question of whether the bottom was in or not for Gold in today’s letter, I thought that this article that talks about demand for physical Gold at the Perth Mint had surged in March was apropos… And it can be found here: https://www.coinnews.net/2019/04/26/perth-mint-gold-and-silver-bullion-sales-surg

Or, here’s your snippet: “Australian gold and silver bullion sales advanced sharply in March from February but they declined in the first quarter 2019 compared to the same period in 2018, according to figures from The Perth Mint of Australia.

The Mint’s gold sales in March was the highest in four months after logging an eight-month low in February and demand for its silver coins and bars climbed to a five-month high after sliding to a six-month low.
March increases happened against a backdrop of plunging precious metals with LBMA prices registering losses of 1.8% for gold and 4.5% for silver.
Bullion Sales in March 2019

March sales of the Mint’s gold coins and gold bars reached 32,757 ounces, posting gains of 67.8% from February and 9.6% from March 2018.”

Chuck Again… Well that’s two signs that Gold is preparing for a upward run… That’s good enough for me! 

Currencies today 4/29/19 American Style: A$.7050, kiwi .6666, C$ .7423, euro 1.1150, sterling 1.2924, Swiss $.9801, European Style: rand 14.3119, krone 8.6829, SEK 9.5068, forint 289.20, zloty 3.8490, koruna 22.0250, RUB 64.75, yen 111.77, sing 1.3621, HKD 7.8435, INR 69.91, China 6.7283, peso 18.94, BRL 3.9240, Dollar Index 98.02, Oil $63.19, 10-year 2.51%, Silver $15.05, Platinum $899.00, Palladium $1,460.00, and Gold… $1,281.30

That’s it for today…  And nice homestand was completed by my beloved Cardinals yesterday, with a win… They seem to have righted the ship with hitting, but now injuries are mounting for pitching… Uh-oh…   Our Blues are back on the ice, tonight, they need to win one of the two that will be played in Big D…   I did some cooking on Friday and Saturday for the Lindbergh H.S. Water Polo Tournament. I was told that what I cooked was a hit!  Well, even a blind squirrel can find an acorn! HA!  This took me much longer to write today because I kept going back and deleting some things I said… Better not said, here but on the Butler Patio, would be just fine!  I read a thing this weekend that we as writers use the ! too much… Well to that I say, I don’t care!!!!!!!   The great Elvis Presley takes us to the finish line today with his song: One Night…  ( I love this song version of the song!) I hope you have a Marvelous Monday and will Be Good To Yourself!

Chuck Butler

 

April 25, 2019 

* No more Black Fridays here any longer? 

* Halleluiah! Gold finally found a bid yesterday! 

Good Day… And a Tub Thumpin’ Thursday to you! I’ve been pretty tired lately throughout the day, needing a good long nap to get through the rest of the day… I know it’s the chemo wearing on me, as it accumulates in my system… I’m lucky that I’m now retired and the kids are out of the house, for I have quiet time whenever I need it. So, having said all that, I’m going to try to do some Tub Thumpin’ tonight, but then one never knows! Son, Andrew stopped by last night, to drop off tons of meat he wants me to cook for him for Saturday, as Saturday is the main day of the water polo tournament that he hosts each year at this time… So, I’ll be busy tomorrow and Saturday morning for sure! Steely Dan greets me this morning with their song: Black Friday… When black Friday comes I stand down by the door And catch the grey men when they Dive from the fourteenth floor… Long before the term came to denote the shopping frenzy on the day after Thanksgiving, Steely Dan released this song about the original “Black Friday,” when on Friday, September 24, 1869 a failed ploy left many wealthy investors broke. The investors tried to corner the market on gold, buying as much of it as they could and driving up the price, but when the government found out, it released $4 million worth of gold into the market, driving down the price and clobbering the investors.

Strange how things come and go, eh? We still have investors (mainly the bullion banks) that are trying to manipulate the price of Gold. But only this time they want to bring down the price of Gold… Only this time, if my thought prove to be correct, the Gov’t already knows about and condones it!

Whew! What a way to start the day, eh?

Well, it was better than having to tell you that the euro lost another ½-cent yesterday, bringing its total loss so far this week to 2 cents… HEY! Currency Traders! Enough is enough! Since the euro is the offset currency to the dollar, when the euro gets sold, the dollar rallies… and it has moved quite high this week, as evidenced by the move in the Dollar Index, which on 4/17 it stood at 97.02, and this morning it is trading around 98.30… That’s over 100 index points in less than 2 weeks, with a couple of days missing because of the Easter holiday…

I had a very nice long conversation with my good friend Dennis Miller, the Retirementor, who can be found at: www.milleronthemoney.com And we were discussing an idea about updating an article I wrote for the Dow Theory Letters back in June of 2016! I won’t spoil the soup here… But those of you who were kind enough to follow me to the DTL will be able to find the letter and see what it was I was talking about back then…

I was reminded about this conversation when I clicked on the Bloomberg site and saw an article titled: “What If The Bull Market In Stocks, Never Ends?” well, with all things manipulated these days, I don’t see how, even a recession can knock the stuffing out of the stock market right now… Historically speaking, recessions have always been a dark cloud over stocks… But what I’m saying now is that given the manipulation, and Central Bank buying (yes, Central banks buy stocks, like the Swiss National Bank) I’m wondering the same thing that the Bloomberg writer was wondering and writing about.

OK, letting discretion be the better part of valor, I was typing a spiel about the deep state, when something hit me and said, “Chuck, don’t go there”.. And so I erased it, and went on… Aren’t you proud of my new sense of right things to talk about and wrong things not to talk about? HA!

Well… The currencies didn’t fare much better in the overnight markets either, so we begin the day with all the currencies, including the ruble, on the downside of their values VS the dollar. It appears that the boys in the band have gotten what they wanted from shorting Gold, as the shiny metal was able to eke out a $3.80 gain yesterday, and is up a buck in the early morning trading today… Halleluiah, halleluiah, halleluiah, I was beginning to believe that we might not see a day of Gold being bid higher every again!

Palladium is still being bought though, as its price is back above $1,400 this morning… This is a strange one to me… Because auto sales are slowing, and in fact they just posted the slowest beginning of the 2nd QTR in years, and Palladium is tied to auto sales… Hmmm….  Something is fishy here… Do you smell it? It’s yesterday’s fish! Something is awry here I can feel it in my bones!

The U.S. Data Cupboard has the previously mentioned Durable and Capital Goods Orders for March this morning… Reminder, I say they’ll be negative!  Tomorrow’s Cupboard will have the next revision of Q1 GDP, if you recall this original number was around 3%, and I told you then that it was hogwash, and to look for downward revisions, which have come and the last print was 2.3%…  Given that Q4 2018, ended up at 2.2%, I would think that Q1, 2019 will be even lower, but even if it’s not…  Our over 10 year run in the economy, has generated just 2.3% of GDP growth in that time…  

To Recap…  The currencies sunk further to the dollar yesterday, and in the overnight markets… This is getting ugly folks… Time to pull down the hatches and lock them tight! Halleluiah, Gold finally found a bid yesterday, and gained $3.80… About time, eh? Now, let’s hope it wasn’t just a one and done!  It’s all about manipulation and price supports these days folks, and a Bloomberg writer wants to know if the Bull market in stocks is ever going to end?  

For What It’s Worth…  Well, I had this sent to me by a dear Pfennig reader, and thought it to be quite FWIW worthy, in that it covers a topic I had in the FWIW last week, regarding the Retail Apocalypse… And it can be found here: https://wolfstreet.com/2019/04/19/retails-existential-threat-is-private-equity/

Or, here’s your snippet: “Since I first wrote about private equity’s looting and ultimate devastation of Mervyn’s (“On Private Equity and Real Estate” September 2012, behind paywall), retailer after retailer has been similarly gutted. Payless Shoes, Toys ‘R’ Us, Gymboree, Sears Holding, Mattress Firm and Radio Shack — all companies at one point owned or controlled by private equity firms — have since filed Chapter 11.

In fact, Debtwire, a financial news service, calculates that about forty percent of all US retail bankruptcies in the last three years were private equity backed.

How do the private equiteers do it? Simple, the leveraged buyout. The LBO is the financial world’s pick and roll, that is, a highly effective play that is difficult to counter, especially if the PE firm takes the prudent first step of bribing its intended victim’s CEO into going along with their acquisition.

In short, the PE firm pays top dollar for a given retailer, often even overpaying, but using as little equity and as much debt as it possibly can. It then improves the company’s profitability by cost-cutting beyond prudence and, as with Debenhams, says, “What a good boy am I,” rewarding itself with a major dividend, often recovering not only its entire initial investment, but a substantial profit to boot.”

Chuck again… this snippet is just the tip of the iceberg in this article, and if you’re tired of hearing that the internet is causing brick and mortar businesses to close, then this explains it as just one of many reasons for the Retail Apocalypse…  

Currencies today 4/25/19 American Style: A$.6996, kiwi .6588, C$ .7405, euro 1.1125, sterling 1.2866, Swiss $.9781, European Style: rand 14.5217, krone 8.6838, SEK 9.5497, forint 289.71, zloty 3.8590, koruna 22.1290, RUB 64.07, yen 111.90, sing 1.3652, HKD 7.8432, INR 70.36, China 6.7200, peso 19.14, BRL 3.9469, Dollar Index 98.30, Oil $66.21, 10-year 2.52%, Silver $14.87, Platinum $880.35, Palladium $1,419.29, and Gold… $1,276.63

That’s it for today, and tomorrow of course! I’m going to rest up today, to be ready for being busy tomorrow and Saturday… What an ugly day here yesterday, but they got the game in downtown, which the Cardinals won, completing their sweep of the Brewers, so it wasn’t all bad…  Our Blues begin the 2nd round of the playoffs tonight… The game doesn’t start here until 8:30 which is ridiculous, I’ll probably barely get through 1 period before feeling the calling of sleep! On Saturday, I’ll be all by myself here once again for about 10 days…  Matthew Sweet takes us to the finish line today with his song: Girlfriend…  I saw Matthew Sweet in concert probably 20 years ago now… Many where does the time go?   I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday and will Be Good To Yourself!

Chuck Butler 

 

 

April 24, 2019

* The dollar gains VS almost all currencies and metals yesterday…

* Russian ruble is lone wolf currency gaining VS the dollar yesterday… 

Good Day… And a Wonderful Wednesday to you! From 13 runs one night to barely able to sneak across a run or two last night, was the roller coaster ride for Cardinals fans… That’s baseball! Today is a day game, and I thought I was going, but a death in the family of a friend, put those best laid plans of mice and men to rest… It’s supposed to be a day with periods of rain, so, I guess it’s better this way. I had a great lunch yesterday with longtime friend Frank, who told me all about his recent journey through the mountains and wilderness in Argentina, on foot! WOW! Led Zeppelin greets me this morning with their song: All Of My Love…

Well, stuck in the mud no more was the scene for the currencies yesterday, as they lost more ground throughout the day… Not HUGE moves but still downward moves and that’s not what I would expect given the rotten data that has been shooting out of the pipeline here in the U.S. I really don’t get it, but then all my magical powers of yesteryear have seen to have drifted away from me… And when I see something that appears evident, it turns out to be that it’s not imminent!

Here’s the explanation of the dollar strength yesterday from Reuters… “The dollar hovered near a 22-month high against its peers on Wednesday, after strong U.S. housing data further eased concerns of a slowdown in the world’s biggest economy.”

Really? Strong data? Currency traders are pinning their colors to the mast of “housing data”? Well, bust my buttons (which is what I’ve been doing latey, as I gain more weight once again! UGH), I would have never thought that Currency traders would be so thin skinned… and dumb! But I digress, here… Let’s talk about something else!

In something that should count as a reason for a currency to rally, much more than a split decision on Housing Data (recall yesterday I told you that Existing Home Sales dropped big time) and that is the German sentiment index as measured by the think tank IFO, was up for this month VS March… Shouldn’t that be a more of a reason to buy euros, than the split decision in housing data was to buy dollars? Well, yes… I’ll answer my own question, because you know what I was getting at!

Yesterday, I mentioned the Swiss franc and how it was losing ground because of the euro’s inability to find a bid… But there’s more to the story than that, and it came across my desk yesterday, in the form of an email… That stated that the Swiss National Bank (SNB) was seriously thinking about taking their current negative rates even further into negative territory! What on earth, are these dolts at the SNB thinking? I guess they want to see the franc get Smack, crack, bushwhacked Tie another one to your racks, baby…. (thanks REM!)

The price of Oil continues to ratchet higher each day, and this morning its trading with a $66 handle…  I haven’t had to fill my gas tank since I’ve been back (I just don’t drive much any longer) So, I not aware of the price gouging in refined gas, but I’m sure it’s there!  Higher gas prices as we draw nearer to the summer driving season, is a sure way to put a crimper on consumer spending for other things… I’m just saying… 

Hey! I’ve got a great piece on metals manipulation in the FWIW section for you today, but before we get there I have this… Did you know that…. There was a recent interview in which former CFTC Commissioner Bart Chilton confirmed that JPMorgan took over Bear Stearns’ short positions and dominated and controlled the short side of COMEX silver despite CFTC demands that it cease is a case in point. Did I make myself celar there, the CFTC demanded that JPMorgan cease their short paper trading in Silver, and JPMorgan chose to ignore this demand from the commodities regulator?

What On earth is going on here? OK… here’s my take on this, if you don’t want to hear this I suggest you skip ahead, for I’m going to go down a very dark rabbit hole on manipulation… OK, everyone that wants to hear this with me now? OK, opening up the hatch on the rabbit hole, and here I go! I’ve long told you all that I believed the U.S. was behind the manipulation, for the reason that is so evident right now, they can’t have people/ countries/ central banks leaving the dollar… Ok, got that?
Now skip to this new revelation that the CFTC did see a problem with the shorting of Silver, but having demanded that JPMorgan stopped, they did nothing, tells me that I was correct for years now that JPMorgan etal, may be the executor of the short trades, but they are given the wink and nod from the U.S. Government, all the while knowing that (JPMorgan) wouldn’t be penalized by the CFTC, because the Government had their back!

OK, I know that’s a lot to take in so early in the morning, and believe me, if I were still employed by a bank (any bank not just my former bank) they wouldn’t have allowed me to say all that… Remember when Bart Chilton of the CFTC would go on TV and tell the world that the CFTC couldn’t find any sign of price manipulation? I would say that that time that he was lying between his teeth! And now, there’s proof!

The U.S. Data Cupboard gets past its dates with housing,  and gets to take a breather today, with no data prints on the docket…   But… tomorrow the Data Cupboard gets to some real economic data this morning with the March print of Durable and Capital Goods Orders… Recall this data for both was negative last month, and as I told you two days ago, I suspect the March data will also be negative… That will print very soon, so we don’t have to wait long for that! 

Gold and the other precious metals still can’t find a bid anywhere, and when one does surface, it gets snuffed out by the short Gold paper trades… Dirty rotten scoundrels! 

To recap…  The currencies finally moved out of the mud but went downward VS the dollar, to Chuck’s amazement, given all the rotten / weak economic data that’s been shooting out of the Data Cupboard lately…  He even goes as far as to compare how the markets treated the German IFO VS the split decision in Housing here in the U.S. …  Strange days indeed, so peculiar momma… 

For What It’s Worth… Thanks to the GATA folks who sent this to me yesterday… It’s Dave Krantzler taking on the writer at KITCO for saying something very stupid about the Gold selloff Monday, that I told you yesterday was manipulators… And it can be found here:

Or, here’s your snippet: “At 8:39 a.m. EST 523,200 ozs of paper gold were unloaded onto the Comex in the space of less one minute:

Anyone who’s traded big positions on a trading desk knows that the best way to unload a position that is larger than the immediate liquidity of the market in which the security trades (yes, Comex contracts are “securities,” not actual physical gold) is to feed it out over time.

In that chart above, why wouldn’t the seller try to sell its position in a way that would enable it to get a price for the entire position that was in the vicinity of the market price at the time the sell-order was executed? After all, the market has clearly rebounded to the price level at the time massive sell-order bombed the trading systems, suggesting that the seller could have achieved much larger sell proceeds with a little bit of patience in its selling

This is all rhetorical, of course, because the all-too familiar “fishing line” 1-minute chart is the blatant footprint of market manipulation. Of course, Kitco’s “reporter” on the scene chose to attribute the sudden price plunge to a market “hamstrung by not much risk aversion in the world marketplace” Kitco.com.

It’s hard to believe an educated person wrote that commentary (“Gold Prices Sink To 4-Month Low On Scant Risk Aversion” by Jim Wycoff). Honestly, that headline makes me chuckle. Well then, Jim, the Dow is now up 153 points as I write this 5 hours later, which by your logic would imply there’s even less risk aversion than the “scant” risk aversion at 8:39 a.m. How come, Jim, the price of gold rebounded to the level where it was trading when fear of “scant” risk aversion triggered someone to unload 16 tons of paper gold in less than 60 seconds if indeed fear of scant risk aversion was the catalyst for sell order?”

Chuck Again… Way to point that out Dave! But still we have naysayers to price manipulation, like the CFTC (the commodities regulator) and others who by now have to believe somewhat that Gold (&Silver etal) are getting sold to manipulate the price downward… It’s a sad, sad world we live in that allows stuff like this to happen folks… sad, sad, world, indeed…

Currencies today 4/24/19 American Style: A$.7030, kiwi $.6620, C$.7430, euro 1.1208, sterling 1.2942, Swiss $.9820, European Style: rand 14.3564, krone 8.5720, SEK 9.3679, forint 286.40, zloty 3.8260, koruna 22.9475, RUB 63.74 (the lone wolf currency that gained a bit vs the dollar yesterday)yen 111.86, sing 1.3591, HKD 7.8416, INR 69.97, China 6.7186, peso 18.95, BRL 3.9329, Dollar Index 97.69, Oil $66.07, 10-year 2.54%, Silver $14.86, Platinum $891.88, Palladium $1,392.04, and Gold… $1,273.36

That’s it for today… A lot to say today for sure! Cardinals pull out a back and forth game late for a win last night… Day game today, but like I said above, I’m grounded! HA! Our Blues will be playing the Dallas Stars in the 2nd round, which will begin tomorrow night here in St. Louis! Let’s Go Blues! It’s a late game which makes no sense given it’s in the Central Time Zone… But TV dictates the start times… UGH!  On Sunday, grandson Everett was very proud of his dollars he found in the egg hunt. I pulled out my Mogambo Guru one oz. Silver Coin and asked him which would he rather have, and he chose the coin… smart kid, either that or he just like bright shiny things! HA!   Chris Issac takes us to the finish line today with his haunting song: Wicked Game…  Which is apropos today given my explanation of the manipulation scheme going on… that I think is going on, I should say!  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

April 23, 2019

* Easter Monday saw trading volume thin yesterday… 

* Existing home sales sees a HUGE drop in March… 

Good Day… and a Tom Terrific Tuesday to you! Man! I completely forgot to mention that yesterday was Earth Day! I hope everyone did something good for the Earth! I recall when I was a young lad, that the album rock stations, and their listeners, were the only people that celebrated Earth Day… I’m just saying… Another sunny, blue umbrella sky day here yesterday, but I spent most of the day watching episode after episode of the new Season 5 of Bosch… Styx greets me this morning with their song: Too Much Time On My Hands… Fits me perfectly, these days for sure!

Well, no real data, except housing data, and I’m not sure that qualifies as real data as it could very easily be manipulated each month, for the markets to go on, and so the currencies were stuck in the mud with only some marginal winners on the day… The price of Gold was up in the early trading, but then gave that back and then some as the day closed with Gold down $4 on the day… I guess the salami slicers aren’t finished yet…

The price of Oil hit a 6-month high yesterday at $65.70,  and has continued to climb in price overnight… but the Petrol Currencies weren’t able to generate enough enthusiasm about their values and ended the day stuck in the mud with the rest of the currencies. Oil’s move is all tied to the story I told you about yesterday, regarding the U.S. dropping the Iranian Oil waivers, come May 2nd. If you’re a not-so-big country, and you are importing Oil from Iran, you’re going to be getting economic sanctions put on you by the U.S. come May 2nd… So, either they shut off the Iranian Oil imports, and the price of Oil goes higher because there’ll be less supply available, or… they continue as is, and the Global Growth Slowdown gets another member…

One of the reasons that the currencies didn’t move much yesterday is the fact that it was Easter Monday around the world, which means the Christian countries all had a holiday… We didn’t here in the U.S… and that’s all I’m going to say about that!

Circling back to the housing data yesterday, Existing Home Sales for March were down big at 5.21 Million VS 5.48 Million in Feg, and 5.31 Million expected… I read where the smaller more affordable houses didn’t see a major slowdown, but the big, swanky, McMansions did… Hmmm, that’s go to tell me something about this market, doesn’t it?

Today, we’ll see the New Home Sales for March, and again the expectation for this data is that it will come in weaker than the Feb number of 667,000…

Well… there I was thoroughly enjoying watching my beloved Cardinals turn up the heat on the Brew Crew last night, when I saw an email come through from longtime reader Bob… These are always good, so I read them when I can… This one was a report about the recent report by the Social Security Board of Trustees, who consist of: United States Secretary of the Treasury, Secretary of Labor, Secretary of Health and Human Services, etc. (certainly not Chuck Butler and his conspiracy theorists here!)

And this is an excerpt of what they had to say… “The Board of Trustees itself calculates Social Security’s long-term shortfall at a mind boggling $43+ TRILLION.

Simply put, the trust funds don’t have enough money to keep the programs going, at least under the current promises.

They admit right at the beginning of their report that, starting 2020, Social Security’s cost will exceed the money it earns in from interest and taxes. “
OK, is anyone else alarmed at this report? 2020, is not “years away”, it’s next year! If you would like to read the gory details of this report you can find it here: https://www.ssa.gov/oact/TR/2019/tr2019.pdf

Like I said yesterday… Oh brother can you spare a dime?

Manipulations, coercion, price rigging, flying by the seat of one’s pants, and other descriptions that I use to explain the price actions these days, are beginning to really get on my nerves… I can’t do anything about them, and that’s killing me!  I write about them, in hopes that a lawmaker or two reads my thoughts and does something about all this, but I know that’s not going to happen, because, upsetting the applecart is not in the bloodlines of our lawmakers… 

I’ve been doing some reading regarding the proposed additions to the Fed Reserve… There’s been two vacancies there for quite a few years now, and now the President has some people in mind to nominate, and already they are being casts as “no goes” by the media and lawmakers… I just don’t get it… These vacancies need to be filled… Let’s get it done, OK?  

Sorry about that trip down a side road…  Let’s get back to what’s up… 

The British Parliament returns to work today, and soon they will go to work with PM May on a new BREXIT deal…  Yesterday, the pound had fallen below 1.30, but today with the renewed hope of a new deal , the pound has pushed back above 1.30…  

The Swiss franc sure has seen better days, as it lost the parity handle to the dollar last week, and has been slowly, inch by inch, crept lower as the week as gone on…  I believe this is all tied to the fact that the euro just can’t find a bid these days… It’s not that the franc is tied to the euro any longer, that cross was broken years ago now, but it still trades like there is a relationship, which it should given that most of their trade is with the Eurozone… 

Speaking of the Eurozone… in Germany, I’m waiting to see the results of the latest sentiment index from the think tank IFO that was scheduled for release this morning.  Germany is the Eurozone’s largest economy, and therefore it’s all about Germany… 

The Aussie dollar (A$) is slipping again, after touching 72-cents last week, it has slowly moved downward again…  I have an interesting piece on Australia’s 28-year run without a recession in the FWIW section today, so I won’t spoil the soup here, and leave you with the thought that the A$, as I’ve said for years, is the proxy for Global Growth… And I’ve been talking about a Global Growth Slowdown for months now…  I’m just saying…

The U.S. Data Cupboard has the aforementioned New Home Sales data today, and that’s it! Tomorrow, we get dialed up for more data that will be real economic data, so make sure you come back for that! HA!  

To recap… The currencies are stuck in the mud again, and while a couple of currencies found some solace in the rising price of Oil, their moves are muted at best…  Gold still can’t find a bid, and can’t hold onto any gains it generates… The Social Security Board of Trustees give a sobering report on the condition of Soc. Sec., and we only have data from New Home Sales today… 

For What It’s Worth… Good friend, Dennis Miller, sent me this last week, and it took me a couple of days to read through it, with interruptions, holidays and what have you… But it’s an article about Australia’s lengthy growth period without a recession… And it can be found here: https://www.smh.com.au/business/the-economy/what-australia-s-economic-miracle-is-teaching-the-rest-of-the-world-20190408-p51bu4.html

Or, here’s your snippet: “I had flown 25,000 kilometers not to study economic malaise, but its opposite: the remarkable resilience of the Australian economy, which has gone nearly 28 years without a recession.

The government, with elections to take place next month, recently announced an expected surplus in the next budget year.
Surely this grand economic success story would hold lessons for the United States and the rest of the world, right?

Yet instead of giddy enthusiasm, what I found in Sydney was a pervasive sense of caution and wariness — and not just involving real estate, though housing does loom large in discussions about the economy. In conversations with Australian businesspeople and college students, economists and government officials, I detected no sense of triumphalism.

An entire generation of young adults has grown up without experiencing a protracted downturn. But in Australia, as I came to learn, nobody really acts as if they’re the stars of an unprecedented three-decade success story. They’re aware that the good times could end. The mood is more practicality than pessimism.”

Chuck Again… Well, why don’t we try some of that practicality, and not so much sunshine, lollipops, and rainbows all the time here in the U.S. ?

Currencies today 4/23/19 American Style: A$.7112, kiwi .6660, C$.7478, euro 1.1250, sterling 1.3007, Swiss $.9807, European Style: rand 14.1894, krone 8.5175, SEK 9.3340, forint 285.24, zloty 3.8105,  koruna 22.8734, RUB 63.82, yen 111.90, sing 1.3570, HKD 7.8438, INR 69.76, China 6.7088, peso 18.87, BRL 3.9263, Dollar Index 97.35, Oil $65.92, 10-year 2.58%, Silver $15.03, Platinum $889.00, Palladium $1,388.00, and Gold… $1,272.60

That’s it for today…  What a awesome display of power put on by my beloved Cardinals last night as they broke the 13-run pool…  Did you ever have a group of people that organized a 13-run pool? Fun stuff, for sure! That Brewers lineup is scary though…  And it was just one game… gotta come back tonight with more of the same!  Hey! I’m so excited about my lunch date today! I’m going to meet up with longtime friend, and the birthday boy this past weekend, Frank!  YAHOO!  So, I have that going for me today…  I forgot to mention yesterday just how darling my little Delaney Grace looked on Sunday… The two grandsons looked sharp too! All dressed up for Easter… The school year is almost over, and next year, little Delaney Grace will be in middle school! Oh No! That can’t happen, can it? I’m afraid so… I sure hope she doesn’t fall into that “middle schooler funk”…  The Blue Jays take us to the finish line today with their song: I Dreamed Last Night…  (one of my all-time fave songs!)  The Blue Jays consist of Justin Hayward and John Lodge of the Moody Blues… And their music sounds just like the Moody Blues!  I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!

Chuck Butler