Author: admin

April 4, 2019 

* Dollar continues to hold down the currencies and metals

* Chuck gives us a glimpse into his old Presentations! 

Good Day… And a Tub Thumpin’ Thursday to you! I heard the weather channel did a bit from Palm Beach Gardens, which is right next to us here in Juno Beach. And they talked about how bad the weather was… I looked outside, and wondered what planet they were on, for here on the beach, the sun was mostly shining and it was 75 degrees… A bit windy, but that’s the beach! This will be my last weekend down here, as I return to St. Louis on Tuesday (no Pfennig that day) next week. I don’t want to go home, I don’t want to go home! But, all good things must come to an end, right? I’ll be back though, probably mid summer… Carlos Santana greets me this morning with his band’s song: Black Magic Woman…

I’m going to start the letter a little differently today, and give you the results of the Data Cupboard, first, because, well, the Data Cupboard revealed quite a lot to us yesterday… First, the ISM, (non-manufacturing index ) for March printed, and it showed a large weakening in the index number to 56.1 VS 59.7 in Feb… That’s a huge drop for that data folks… Did any cable news casts talk about this? I doubt it… There was also the ADP Employment report, which is a precursor to the BLS Jobs Jamboree on Friday, showed that only 129,000 jobs were created in March… The so-called experts are forecasting an increase of 179,000, so we’ll see which one we get, eh?

But once again, currency traders didn’t give any notice to the data… As there was little to no movement in the currencies yesterday, with a slight move down being the only thing happening… And Gold lost a few bucks in trading on the day… Thanks to those of you who sent along a note thanking me for saying what I said yesterday regarding Gold pricing… I know of a former colleague and friend, that was shaking his head no, to all that I said… But that’s OK… I know where he stands on it, and he knows where I stand on it… I’m not here to attempt to get someone to change their position… Just present the facts, as I know them, mixed with some speculation!

OK… So, when will the weak data finally get recognized that it’s not something good for the dollar? A weak economy, means smaller interest rates… And OMG! I totally missed something in Fed Chariman Powell’s recent talk… He said that instead of allowing Treasuries that the Fed holds, to mature, that they were going to reinvest them… This, folks, is what I’ve been talking about… that the Fed would be reversing their tightening… And it’s also what I’ve told you is going to happen with regards to QE… Yes, it’s not going to be called QE… But you can put lipstick on a pig, and it’s still a pig… I’m just saying!

This morning in Germany, the Eurozone’s largest economy, the economic print was not so good… In fact it was miserable!  Factory Orders for February fell -4.2%, and year on year the were -0.4%…  A few weeks ago, we saw data from Germany that painted a different picture for the economy, but this new picture is not a good one, and the euro got sold on the news…  Hmmm… Bad data is noticed by euro traders, but not the dollar…  Double hmmm…   

That fact alone tells me that the dollar is still hanging onto its strong trend, for when a currency is in a strong trend, the old saying that “the trend is your friend” couldn’t be more correct!  Bad things are ignored, while bad things for the currency not in a strong trend get magnified… 

But what I’ve been talking about for some time now, is that all this bad data that’s piling up on the dollar will be too much weight for the dollar to bear, and it will bring about a shift in trends… This current strong dollar trend has been around since 2011, when the debts of Greece were exposed…  A look at trends history would be a good thing here, Chuck, just like you used to go through it in your Presentations!   Are you ready for this?  If you never attended a conference that I spoke at, this is what it would have sounded like… 

It all began in of August of 1971, when then President, Nixon, closed the Gold Window and removed the backing of Gold from the dollar. Within a couple of years, after some failed attempts to restore a Gold backed currency system, the rest of the world succumbed to this new “fiat currency” era.

You see the debts of President Johnson’s, “ great society”, and Vietnam disaster, had grown so much that countries holding dollars were skeptical that the U.S. would be able to pay off their debts with Gold… So, as the story goes, France called the U.S.’s bluff, and that’s when Nixon closed the Gold Window.

And the first currency trend was born… It was a weak dollar trend, that began in 1971, and ended in 1978… Do you recall this time period? Remember WIN buttons? WIN stood for Whip Inflation Now… But before that we had the first Oil embargoes and stagflation, a Presidential resignation, from a scandal, and it wasn’t all bad, we did get to celebrate our Bicentennial, and Chuck and Kathy were married!

During this weak dollar trend, the Swiss franc gained 186% going from 4.30 to 1.50, and if a currency diversification investor like yourself (hopefully) were to own a simple combination of DMarks, francs and yen, they would have had a 131% gain VS the dollar or a 17% annual return… Not too shabby for a defensive move in your investment portfolio, eh?

But by 1979, interest rates in the U.S. were beginning to go sky high, and fundamentals being a HUGE part of currency valuations in those days (before the financial meltdown) the weak dollar trend ended, and a new strong dollar trend began and lasted for 6 years, from 1979 to 1985… Do you recall what happened in 1985, that would have turned the dollar’s fortunes around? It was a meeting of the finance ministers around the world, who came to the Plaza Hotel in NYC, to discuss the dollar’s strength, and their fear that the U.S. Current Account Deficit had reached 2.5% of GDP… It was decided then that the dollar would back off from its strong trend. But during its strong trend it gained back 47% of its losses to the Swiss franc going from 1.50 to 2.85, and our combo of DM, Sfr, and yen, gave back 39%, or a -6% annual return.

So, now we’re into the 3rd trend, and it’s another weak dollar trend, that began in 1985, and lasted ten years to 1995. By 1995, interest rates in the U.S. were above 6%, and the U.S. stock market was experiencing, in the words of Al Greenspan, “irrational exuberance” And the weak dollar trend ended, but during its run of 10 years, the Swiss franc gained back 138% of the ground going from 2.85 to 1.20, and our combo of three currencies gained 171%, or another 17% annual return.

The years 1995 to 2002, 7 years, saw good times and bad times, and through it all the dollar gained back 30% of the ground it had lost VS the Swiss franc, with the franc going from 1.20 to 1.72, and our combo of currencies lost 36% or a -5% annual return. By 2002, with the Dot-Com bust, corporate scandals left and right, and people around the world feeling squeamish, about owning dollars they took a flyer on a relatively new currency, the euro, and the next weak dollar trend was born.

2002, though 2010, 8 years… this weak dollar trend was different than the others before it due to stops and starts… from 2002 through 2004, and in those 3 years, the Swiss franc gained 40% VS the dollar. In 2005, the dollar rebounded on a tax rebate for Corporate earnings, and once that ended in 12/31/2005, the dollar went right back to its underlying weak trend. So, the total, including a down year in 2005, gain for the franc 2002-2010 was 52%… And our combo, which now was euro, francs and yen, gained, are you ready for this? 155%!

But just when it looked like the dollar might not ever rebound, along came the discovery of the debts of the Club Med (Greece, Italy, Spain, Portugal) countries of the Eurozone, and the euro, which had quickly become the offset currency to the dollar in a very short time period, was sold like funnel cakes at a State Fair! And so it began the last full trend that we’ve seen, a strong dollar trend, that lasted 7 years, from 2010 to 2016, and during that time the dollar gained back 8% VS the Swiss franc, and our 3 currency combo also lost a total of 48% during those years. Since 2016, we’ve witnessed a couple of false dawns, when it appeared that the strong dollar trend had ended, only to be fooled once again… UGH!  But now that fundamentals are no longer the king of the hill in valuing currencies, it’s been quite difficult to read trader’s minds, for the sentiment of traders is what moves markets these days, along with a dash of fundamentals… 

So to add it all up… The dollar has lost a total, net of strong dollar years, 291% to the Swiss franc, and our 3 currency combo was up 334% to the dollar…

So, as you can see, during weak dollar trends, the dollar loses far more than it ever recovers during strong dollar years. Now there one thing I want to make perfectly clear, and that is that during a trend, there can be volatility, which means a trend is not a ONE-WAY Street!   But from this little exercise we know for sure that a “trend is YOUR friend”! 

OK, that was fun…  In 2006, the year before I was diagnosed with Stage 4 cancer, I spoke 35 times…  That’s right 35 times… I was everywhere!  And in demand from anyone holding a conference. I was interviewed for the Wall Street Journal on two different occasions by two different writers, with one of those writers carving out one chapter in his book, about me! It was very much like the Frank Sinatra song…  I was flying high in 2006, shot down in 2007…  

But during my time as a conference speaker, I nearly always told the story of the dollar trends…  I once had an audience of 750 in Vancouver, singing along with me the Lemon Tree song…   Now that’s something that had never been done at a financial conference!  

Ok, sorry, I got going down that memory road, and just couldn’t turn around!  

The U.S. Data Cupboard is pretty much empty today, and is preparing itself for the grand entry of the Jobs Jamboree tomorrow…  What happens to the dollar, if we get another disastrous jobs report tomorrow that’s much like February’s 20,000 number?  I would think that this could be the straw that breaks the camel’s back, but then I’ve been wrong before, and I’m not afraid of being wrong…  Like I said earlier in the week, I’m sure that the folks at the BLS (Bureau of Labor Statistics) got the “memo” reminding them that they have a shelf full of hedonic adjustments to use to keep a disastrous jobs report from happening again…

Before I head to the Big Finish…  I wanted to mention this… In my old office we had a bank of windows on the east side of the building, and during the winter, Mike Meyer and myself would note the position of the sun each day, as it moved north in the sky, and would always give us a feeling of hope that spring wasn’t far away…  I mention this because I noticed this morning that the sun is moving north across the sky, as my view to the east no longer has the sunrise in it…  

You know, my dad always told me that “just when you think you’ve got something, somebody has something greater”…  I was on a boat recently and the captain pointed out a house that he explained had a rotating living room, so that the owner could watch the sunrise, and the sunset without leaving his couch!  WOW!  I guess I just need more windows down here!

To Recap…  Another day of dollar strength, albeit soft dollar strength, but strength nonetheless was what Wednesday was all about, and the overnight markets didn’t give an inch either. Germany received some bad economic data today with factory orders for Feb. falling -4.2%! The euro took a bit of a hit on the news…   And Chuck gives us a glimpse of his old presentations! 

For What It’s Worth…  Ok, longtime reader Bob, sent me this and while reading it, I thought it to be FWIW worthy… It’s about a Financial Tax that’s being talked about by lawmakers… and it can be found here: https://www.globalresearch.ca/why-us-needs-financial-transaction-tax/5673391

Or, here’s your snippet: ” The financial transaction tax is an issue that never goes away from the public agenda completely. It keeps coming back to the policy and political discussions in different forms across the world. Currently, the idea of a financial transaction tax (FTT) is gaining in popularity within the Democratic Party of the United States as a policy tool to curb excessive speculation and high-frequency trading that destabilizes markets; and to generate a significant amount of revenue to finance social programs such as free college tuition.

On March 5, Democrats in both houses of Congress introduced bills to introduce a financial transaction tax in the US. Senator Brian Schatz of Hawaii introduced a bill titled, “The Wall Street Tax Act of 2019”[1] in the Senate while Representative Peter DeFazio of Oregon introduced a companion bill in the House of Representatives. The bill proposes a 0.1 percent tax (i.e., 10 cents on every $100 financial transaction) on stocks, bonds, foreign exchange, derivatives and other financial assets traded in the US markets. While initial public offerings (IPOs) and short-term debt of fewer than 100 days would be exempted from the proposed FTT. Further, the proposed tax would apply to the actual payment for the derivatives contracts between the seller and the buyer, rather than to the notional value of derivatives contracts.”

Chuck Again…  Well, I’m no fan of taxes, folks… And this tax would be a real problem for investors… I’m just saying… 

Currencies today 4/4/19 American Style: A$.7115, kiwi .6780, C$ .7487, euro 1.1230, sterling 1.3156, Swiss $1.0018, European Style: rand 14.1660, krone 8.5829, SEK 9.2732, forint 284.63, zloty 3.8206,  koruna 22.868, RUB 65.23, yen 111.40, sing 1.3533, HKD 7.8492, INR 69.12, China 6.7101, peso 19.24, BRL 3.8547, Dollar Index 97.15, Oil $62.46, 10-year 2.50%, Silver $15.08, Platinum $886.71, Palladium $1,412.52, and Gold… $1,291.65

That’s it for today, tomorrow and the week!  This letter was a bit long today, but since I don’t write on Fridays any longer, I like to extend the Thursday letter a bit…  Like I said above, no Pfennig next Tuesday, as I’ll be traveling early in the morning.  Well, today was supposed to opening day for my beloved Cardinals in St. Louis… But they’ve already called off the game and the opening day ceremonies, because of rain that scheduled to hit there today… So, Opening Day in St. Louis, which is like no other city when it comes to Opening Day, will be tomorrow… I used to be lucky enough to gain a ticket or two for Opening Day, from my good friend, Sandra, but… times change… And now I’m not even “in town” for Opening Day! The Moody Blues take us to the finish line today with their song: I Know You’re Out There…   I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and will Be Good To Yourself!

Chuck Butler

 

 

 

April 3, 2019 

* Dollar holds its gains during the day yesterday… 

* But the currencies fight back in the overnight markets! 

Good Day… And a Wonderful Wednesday to you… Well, as I predicted yesterday, the first part of the day here was beautiful, and then later a heavy downpour came, but went quickly, and soon the sun was shining again! I think I’m beginning to believe that I can predict the weather down here better than the meteorologists! HA! Isn’t that the way it always is: Someone believes he can do a better job than the person holding the job? Give them the keys, and let them drive, we’ll soon see just how good they are! No baseball for hockey for me last night… The Rolling Stones greet me this morning with their song: Wild Horses…

Well, we start today the same as we have for the past week… The dollar bugs continue to have their way with the currencies and metals… I have to say this right here, right now… I truly believe and always have that the U.S. Gov’t is behind the price manipulation of both the dollar and the metals… Sure, it’s the likes of the JPMorgans that do the dirty deed, but the way I see it, is they get the wink and nod from the government, and the government keeps the regulators off their backs… It goes back to those WikiLeaks papers I presented to you years ago… Where, oh, Chuck forget about it, either the readers are believers or non-believers… And I can’t change their minds…

OK, I had to get that off my chest, because things are becoming more and more frustrating to me on a daily basis… So much so, that I can easily get myself all riled up reading articles, but have been able to, so far that is, stop and do something else when I feel my blood pressure rising…

Gold was able to gain $4.80 on the day, but in my eye, this is small potatoes compared with what should be happening.. We have a Trade War going on… We have the U.K. failing miserably at leaving the EU… We have debt everywhere… We have tons and I mean tons of negative yielding bonds in the world… And wars going on that never seem to end, and Gold can’t find a bid on a daily basis?  I shake my head in disbelief, and disgust, but that’s doesn’t change anything, Chuck… So, chin up, Wilbur! 

The overnight markets have been much kinder to the currencies than they received during the day yesterday…  The euro has pushed to a 1/2-cent gain, and the Aussie dollar (S$) is back above 71-cents this morning. All-in-all, things look a little better this morning than they did all day yesterday!  Maybe someone with an ounce of gray matter looked at the U.S.’s data cupboard and decided holding dollars just didn’t seem like the thing to do…  maybe?

On the Data Cupboard front yesterday, we had the Durable and CAPEX Orders for February… let me see if economist guru, David Rosenberg had something to say about the negative CAPEX orders… This from his Twitter feed: “Core capex orders dipped 0.1% in February and have declined now in three of the past four months. Over that time, they have contracted at a 3.5% annual rate. Nothing I see tells me Q1 weakness was transitory.” – David Rosenberg on Twitter 4/2/19

For those of you new to class… CAPEX stands for Capital Expenditures… And this is where I find that most of my thinking about a coming recession comes from… You see, I learned in Economics 101 that Businesses should take their profits and invest in equipment, work places, people to insure economic growth for not only themselves but the economy as a whole. Without CAPEX, you have an economy that’s not growing, and one that’s not growing is soon to be contracting… Now, I’m not sure what you learned in Economics 101… But I learned from some of the greatest economic minds of our time… I’m just saying.

And now… we’re in that position of being able to say that CAPEX has been negative 3 of the last 4 months… And that doesn’t look good for the economy going forward… Recall the tax reform last year, and how it was supposed to get Corporations to invest in their respective companies, making CAPEX purchases, but I told you when the tax reform was announced that it wouldn’t be used for CAPEX, but instead these mental giants that run Corporate-America would be using the tax gains to buy-back their respective company’s stock…  And so, that ends today discussion on CAPEX… aren’t you glad you sat through that?  HA!

I was doing my daily reading yesterday, and came across an article on Reuters that sums up what’s been going on so far this year, quite nicely… They talked about how Currency Traders fret as sleepy markets slow to calmest in years…    Yes, I would imagine that currency desks around the world are spending a lot of time cruising the internet at work these days… 

Today’s Data Cupboard here in the U.S. has the ADP Employment Report for March, and is the precursor to the Jobs Jamboree which will take place on Friday this week…   I wonder what the BLS has in store for us this week? Recall that last month they surprised everyone and their brothers with a very small 20,000 jobs created in February report…   I would suspect that whomever released that report got called on the carpet, and told that the BLS does not deal in truths, and to go back and revise their numbers, for this month’s report… 

And in BREXIT news… The articles on the subject seem to be more positive this morning, as U.K. PM May requests an extension… Anytime things look better on the BREXIT front, pound sterling gets to rally, and vice versa when things go sour… 

To recap…  Yesterday saw the dollar gain VS the currencies most of the day, but in the overnight markets things seemed to have shifted, and the euro fought back… Gold was able to gain $4.80 on the day, but Chuck is convinced that these kind of daily gains are small potatoes VS what he believes they should be.  The U.S. Data Cupboard yesterday had some negative numbers for Durable and CAPEX Orders reports, and Chuck talks about how CAPEX orders are the root of the economy… 

For What It’s Worth…  In yesterday’s reading I came across an article on Reuters regarding Gold Sales at the Perth Mint, and thought it would be a good FWIW article, and when I went back this morning to find it… It was nowhere to be found (was I really on Reuters?) But Ed Steer saved the day, and he posted it in his daily letter: www.edsteergoldandsilver.com and you can find the article here: https://finance.yahoo.com/news/perth-mints-gold-sales-jump-09320

Or, here’s your snippet: “The Perth Mint said on Monday its gold products sales in March surged about 68 percent from the previous month, touching the highest level since November last year.

Sales of gold coins and minted bars in March rose to 32,757 ounces from 19,524 ounces in February, the mint said in a blog post.

Silver sales last month jumped 60.2 percent from the previous month and touched their highest since October last year at 935,819 ounces.

In March, benchmark spot gold prices posted their second straight monthly decline, falling about 1.6 percent, hurt by a strong dollar.

The Perth Mint refines more than 90 percent of newly mined gold in Australia, the world’s second-largest gold producer behind China.”

Chuck again…  OK, so demand for physical Gold remains strong… where are the daily gains of Gold? 

Currencies today 4/3/19 American Style: A$.7120, kiwi .6796, C$ .7516, euro 1.1247, sterling 1.3178, Swiss $1.0035, European Style: rand 14.1275, krone 8.5508, SEK 9.2636, forint 284.15, zloty 3.8157, koruna 22.8393, RUB 65.33, yen 111.50, sing 1.3525, HKD 7.8494, INR 68.94, China 6.7197, peso 19.13, BRL 3.8541, Dollar Index 96.99, Oil $62.76, 10-year 2.52%, Silver $15.14, Platinum $858.74, Palladium $1,426.21, and Gold… $1,291.81

That’s it for today…  no sunrise to be seen this morning, as it’s very cloudy out right now… But the sun will be out later, I’m sure of that! So, how’s the start of the season going for your baseball team?  My team is pretty shaky right now, but I think once they get their sea legs, they’ll be fine…  Speaking of Teams… My pick for the NCAA Basketball Champion is Michigan St. (I had to pick them two weeks ago) And they’ll play in one of the two Semi-finals on Saturday… The Final Four day is a pretty exciting day for basketball fans…    Weezer takes us to the finish line today with their song: Island In The Sun…   catchy tune…  I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

 

 

 

April 2, 2019

* Another day of dollar buying, on mixed data prints… 

* Petrol Currencies gain on bump up in Oil to $62… 

Good Day… And a Tom Terrific Tuesday to you!  A good day here yesterday, turned to an even better day, when my beloved Cardinals found a way to win a game, and our Blues kept the pedal to the metal with a shootout win last night. I still say a shootout is the dumbest way to settle a match, that is unless the match involves shooting guns! I think the Cardinals’ front office is beginning to have some buyers’ remorse feelings about their purchase of an aging pitcher, of whom I won’t mention… I hope he can ‘find the magic” he once possessed…  Little Feat greets me this morning with their song: Fat Man In The Bathtub…  I think that only Little Feat fans would know that song… 

Another day, another day of dollar buying…  And to answer Ed Steer’s question about “has the bottom been reached” in Gold, I would say no…  The data prints yesterday, here in the U.S. were mixed and in no-way reflect the kind of buying that took place with the dollar. Something is fishy about this dollar buying folks…  Stocks aren’t getting bought, bonds have backed off their buying, currencies aren’t getting bought, and neither is Gold / Silver. 

The one asset I do see gaining is the price of Oil… Oil is trading with a $62 handle this morning, and the Petrol Currencies are the only currencies with a some form of gain VS the dollar…  The ruble, real, and loonie are the best examples of that.  I read something the other day that scared the bejeebers out of me, regarding Oil…   The Mexican peso has long been considered a Petrol Currency, but recently their Oil production has fallen from the sky! A major fall in production in 2018, has Oil traders wondering if the well is running dry in Mexico…   I’ll have to do more research on that subject folks, so stay tuned… 

Oil trading pales in comparison to Bonds, currencies and even stocks with regards to size, but still this move higher is something to behold, and comes to us by way of a deep plunge in Oil production by the Saudis…  Just in time for the summer driving season… I’m just saying… 

Another thing I read recently is something that I’ve talked about previously on many occasion, and that is the dumping of U.S. Treasuries by Russia and China (and Japan to a lesser degree)…  Yesterday, I told you that Russia had announced that the value of their reserves, including Gold, were greater than their external debt. ( A very BIG DEAL in Chuck’s book!) But failed to give you the skinny on Russia’s Gold accumulation…  And for that we have… Data from the Russian central bank cited by Bloomberg show that its gold reserves have nearly quadrupled over the past ten years, and that 2018 marked the most “ambitious year yet” for Russia gold-buying, which coincided with the Central Bank of Russia’s mass-dumping of its Treasury holdings.

Remember when I told you that Russia’s central bank had liquidated $81 Billion in Treasuries, nearly its entire holdings. And how that sales had dropped Russia out of the top 30 countries with Treasury holdings?  Well, It appears now that Russia didn’t just buy Gold with their Treasury sale funds…  The Chinese renminbi got bought up by the truck load, and has led to a mess of Central Banks buying renminbi…  

All these external things going on around the world have really caused the Chinese architects of getting the renminbi greater distribution in the world, to take their eye off the ball, in recent months…  But news like this has to be like manna from heaven to the Chinese leaders… 

This relationship between China and Russia has gotten a little strange… Two countries that were historically at odds all the time, have gotten together to trade Oil for Gold, to develop a new transfer payments system to use if they get kick out of using SWIFT again.  And now their buying each other’s currency as reserves…   I don’t like these goings on folks… I’m just saying, but it’s more than that, I’m afraid…  

The U.S. Data Cupboard, as previously stated, was a mixed bag-o-nuts yesterday, with February Retail Sales printing a Big Fat negative number to match the January red numbers… Feb. Retail Sales were negative -0.2%… And when they take out Auto Sales the number gets even more red at negative -0.4%…  I’m said this before folks, but spending is a Big Deal here in the U.S. and when spending isn’t taking place, the economy grinds to a halt…  

The positive side of the Data Cupboard yesterday was the increase of the ISM Index (manufacturing) in March… I told you yesterday that  the recent index direction has been to weaken each month, but March’s result was a positive gain from 54.2 to 55.3…    I don’t know that happened, given the other data prints, like the Chicago PMI that printed last week, so I’ll put that down to smoke and mirrors… That’s what the deal is as far as I’m concerned…  

Negative yielding bonds are making a comeback… As the rest of the world deals with low to zero interest rates, their bond issuance reflects this, and to highlight this, Germany’s recent bond auction saw a huge cover and interest in their negative yielding bonds…  Wait! What?  Yes, investors are lining up to say, “yes sir, may I have another?” to negative yielding bonds…  So for the next 5, 10 or whatever maturity length they buy, they’re saying that this is the best we can get, and we realize that at maturity, I will have taken a loss…  

I don’t know, maybe you have to be a little strange in your thinking to sign up for something like that, eh?  I don’t see it, as something that I would hear me telling my financial advisor to look into buying for my investment portfolio…  So, let’s hope it never happens here in the U.S.  But one never knows, right? 

This dollar trend has really been hanging around much longer than I would have suspected it to hand around, but then even a blind squirrel can find an acorn, right?  But if you’re diversified with currencies and metals, you’ve reduced the overall risk of your investment portfolio, and when things turn around, and they will, no trend grows to the moon, you’ll be set to see those asset classes perform nicely…   

Well, a new and improved BREXIT deal is being worked on as I write…  And all the while the U.K. economy suffers, and pound sterling does too…  Hey Bank of England Gov. Mark Carney, Hello… Is that really you on the phone? OK, Great! I’m humbled that you would take my call, but I have a question for you… How’s that call that you made about how interest rates would be going higher?   Oh, I seem to have lost you, the line went dead… I’ll call back to get my answer… 

Today’s Data Cupboard here in the U.S. will have February Durable Goods and CAPEX Orders… I suspect them to be negative once again… I’ve played the record of me talking about how important CAPEX orders are to an economy, that I’ve worn a groove in the vinyl, and now it’s stuck, and keeps playing the same thing over and over!   

And remember when I was talking about Retail Armageddon?  Well, longtime reader, Bob, sent me a link to something that is pretty scary to me… Walmart has been closing stores…  Wait! What? Walmart? not Walmart?  Yes, it’s true… And on a much smaller scale, I saw yesterday that Steak-n-Shake restaurants are being closed here and there…  I Googled the nearest Steak-n-Shake to me, down here, and it’s 34 miles away… Just reading that made me crave a double steak burger with cheese!  HA! 

To recap…  Another day, and another day of dollar buying yesterday, with the only exceptions the Petrol Currencies, who saw their values increase along with the Price of Oil that is trading with a $62 handle this morning. The U.S. Data yesterday, was mixed with Retail Sales printing negative, but the manufacturing index increasing this month…  Gold can’t find a bid, and keeps dropping, and has Chuck scratching his balding head once again… 

For What It’s Worth…  I was doing my usual research yesterday, and checking out what the Reuters people were writing about, and came across this article about the White House calling out the Fed rate hikes, and thought it to be FWIW worthy… So here’s the link to the article: https://www.reuters.com/article/us-usa-fed-trump/white-house-calls-for-fed-to-reverse-u-s-rate-hikes-idUSKCN1RA2MB

Or, here’s your snippet: “U.S. President Donald Trump said on Friday that the Federal Reserve made a mistake by raising interest rates and blamed the central bank for hurting the U.S. economy and stock market.

“Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0 percent GDP, and Stock Market, would have both been much higher & World Markets would be in a better place!,” Trump tweeted.

The remarks were part of a new attack the White House has launched against the independent central bank in their unusual public split. The Fed’s Board of Governors did not immediately comment.

No fewer than five Fed officials this week have touted the underlying strength of the American economy and argued a recent spate of weak data on business activity is more likely to prove fleeting than lasting. None said they currently back a rate cut.

Prior administrations have taken care not to comment on Fed policy, but Trump has railed repeatedly against the U.S. central bank’s rate hikes. Friday’s comments were uniquely specific about the course of action now favored by the president.”

Chuck Again… You know, love him or hate him, the guy doesn’t have a problem speaking his mind on things, and for that I applaud him…  And that’s all I’ll say about that!

Currencies today 4/2/2019 American Style: A$.7078, kiwi .6770, C$ .7506, euro 1.1205, sterling 1.3052, Swiss $1.0003, European Style: rand 14.1787, krone 8.6087, SEK 9.3181, forint 287.23, zloty 3.8373,  koruna 22.9835, RUB 65.35, yen 111.38, sing 1.3555, HKD 7.8496, INR 69.16, China 6.7092, peso 19.16, BRL 3.8913, Dollar Index 97.37, Oil $62.04, 10-year 2.47%, Silver $15.02, Platinum $850.00, Palladium $1,404.52, and Gold… $1,288.50

That’s it for today…  It was a real foggy day outside this morning down here… Fog is something I’m used to see back home in my little river town, but now down here!  A nice sun-filled, warm day, today is supposed to turn nasty this afternoon, so I had better get out and enjoy the sun while it’s still shining this morning!  Played email catchup with a former colleague yesterday… it was great to hear from Lauren again… Day one, alone was OK… Onto Day two… And most of the “renters” here in this building have gone home, so there aren’t many people here… So, there’s no one to bug me! HA!  The Reverend Al Green takes us to the finish line today with his song: Love And Happiness…   I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler

April 1, 2019 

* Gold gets a $22 hickey on Thursday… 

* Russia’s reserves cover their external debt! 

Good Day… And a Marvelous Monday to you! And welcome to April! It’s also April Fools Day, but I have no hijinks to play on you today… Well, how did you do with your NCAA Basketball bracket? Crazy games this past weekend, for sure! I’m here by myself, once again, as my wife went home on Saturday. I refused to go home that “early”, and so I’m here, by myself… I have doctor appts. And scans that are due the middle of April, so I guess I have to go home by then! UGH! It was Opening Weekend for baseball, and my beloved Cardinals didn’t get started on the right foot, but there are 158 more games to… So I’ll calm down now… Lynyrd Skynyrd greets me this morning with their bluesy song: The Legend of Curtis Lowe…

Well… what comes next in the U.K.? PM May’s latest version of a BREXIT plan was voted down by the Parliament once again… This divorce is getting quite ugly… sort of like that divorce movie from years ago, Kramer VS Kramer… I guess the people in the U.K. that got the masses all lathered up about leaving the European Union, should have looked at the pre-nuptial agreement’s terms of divorce before making their stance…

It’s the same thing in Greece, Italy, and whatever Club Med country that is up to its respective ears with debt, and think that they can simply leave the euro, and go back to their legacy currency and then devalue the hell out of it, to pay back the debts with devalued currency… It won’t happen!  A few years ago my longtime friend, and former Big Boss, Frank Trotter, handed me a two -inch thick document that outlined the fire hoops a country would have to jump through to leave the euro… And given Greece or Italy, or any other Club Med country’s lack of “get it done” attitude, and would rather things are given to them… I doubt anyone is going anywhere anytime soon!

Now, that was quite the way to start the Pfennig today, wasn’t it? On Thursday last week, I was treated to a phone call from Robert Vrijhof from Weber Hartman of Switzerland! Yes, my phone lit up and it was a call from Switzerland! I had mentioned his interview with good friend, Dennis Miller for www.milleronthemoney.com a couple of weeks ago, and seeing that I was still writing he contacted me! It was nice to know that someone else with years and years of experience in these markets is as frustrated with the way currencies and metals are valued these days… He told me that going forward, when I needed to talk to someone to contact him! And you can bet your bottom dollar I will!

So, that was my lead-in to telling you that the dollar bugs had their way with the currencies on Friday… Gold was able to eke out a $2.60 gain, but that was after a $22 hickey it had to suffer through on Thursday… Ed Steer of www.edsteergoldandsilver.com asked, “Is the bottom now in?” The price manipulators like to have a day where they really whack the you know what out of Gold, and then go in a buy at cheaper prices… The Bank for International Settlements (BIS) was really active in the selling on Thursday… Why? Because they didn’t have anything else to do that day, I guess… UGH!

The U.S. Data Cupboard last week, wasn’t anything to write home about for the dollar bugs, but they continued to rule the roost… Personal Spending for January recovered a bit. You may recall that December’s consumer spending was a negative -0.6%… January’s recovery was nascent at best with a 0.1% increase. So, to me, this data is telling us that consumer are maxed out… And since consumers are a big part of the country’s GDP… Well, I think you know where this goes… Another piece of data last week that was eye-opening, was a piece that normally doesn’t get any spotlights shined on it, and that is the Chicago PMI (manufacturing index)… The March print was 58.7, which on paper sounds good, right? Well, not when you look at it VS February’s print which was 64.7…

But like I said, the dollar bugs just won’t step down from their position as king of the hill… But eventually, all this weak data has to pile up an weigh heavily on the dollar, right? Well, I would think so, but then I look at things logically… I have an article from Reuters in the FWIW section today that has them scratching their collective heads too, as to why the dollar is buoyed when the data keeps printing weaker and weaker…

In Russia today, the reports are indicating that Russia’s gross international reserves, including gold, has reached $487.1 billion as of March 22 — enough to cover Russia’s external debt dollar for dollar in cash.   Did you hear that correctly, folks?  Russia’s reserves can cover their debt!   And what does Russia rubles get for this announcement, that should send it soaring to the moon?  It gets sold…  UGH!

I’m in the middle of another interview with Dennis Miller, and in I talk about currencies that I like…  I talk about the Russian ruble and that was before I read that their reserves were large enough to cover the debt! Here’s the thing that I especially like that’s going on in Russia with regards to finances…  The Central Bank of Russia (CBR)  has worked their magic and gotten inflation down to 5%…  The internal rate (like our Fed Funds rate) is 7.25%…  So, in Russia, their key rate is higher than inflation!  There aren’t many countries in the world that can claim that! But in today’s world, the ruble gets sold…  Oh, well, it does give investors an opportunity to buy at cheaper prices, now doesn’t it? 

In great challenges lies great opportunities… 

According to Bloomberg this morning, it appears that the Trade talks between the U.S. and China are getting somewhere… Bloomberg reports that China has announced that they are willing to give some concessions… Of course Bloomberg didn’t say what those “concessions” were… And if they’re not in the neighborhood of “intellectual property”, then they might as well go back and star all over again!    Because when you boil this issue down you find that “intellectual property” has been the cheese that binds all the time, not tariffs on Big Screen TV’s!  

The U.S. Data Cupboard stars this week with a BANG! We’ll see February Retail Sales, and the March ISM today…  That’s some heavy lifting for the Data Cupboard!  February Retail Sales should print and be just ok…  The BHI (Butler Household Index) indicates that February’s report could be better than the average bear, but… we were under different circumstances in February, than the average bear…  So, I’m going with just OK!

The March ISM (manufacturing index) is what I’m really looking forward to seeing print. Recent months have shown the index number dropping in small moves… If this trend continues it would be a very good indicator that a recession is just around the corner. 

To recap…  The dollar bugs continue to hammer away at the currencies. Gold received a $22 hickey on Thursday, tried to come back on Friday, but was held in check, and is down a buck or two in the early trading today…  The BREXIT debacle carries on… Trade Talks with China and the U.S. seem to be moving along, and Russia announced that their reserves are now large enough to cover their external debt…  Good new like that for a country usually sees the currency rewarded…  But not this time… UGH!

For What It’s Worth… Well, I already told you what today’s FWIW is about, so with no further ado… Here’s the link to the article on Reuters website: https://www.reuters.com/article/us-global-forex/dovish-central-banks-buoy-dollar-even-as-growth-slows-idUSKCN1R903G

Or, here’s your snippet: “With many currencies on the defensive, the dollar has brushed aside a decline in benchmark U.S. Treasury debt yields to 15-month lows. The dollar index, which measures the greenback against a basket of six currencies, gained 0.46 percent to 97.219, at two-week highs in its third day of gains.

The rally continued even after the Commerce Department announced it had cut its measure of U.S. gross domestic product growth in the fourth quarter, when corporate profits fell by the most in a year. The third reading estimated growth at 2.2 percent, down from the initial estimate of 2.6 percent.

The euro weakened 0.2 percent to $1.122 as speculation grew that the European Central Bank will introduce a tiered deposit rate, a sign that policymakers plan to keep interest rates low for longer. The euro remains above 21-month lows of $1.117 touched a few weeks ago. “

Chuck again… Yadda, yadda, yadda, they keep talking about how other Central Banks are just as dovish as the Fed… But we’re the U.S. aren’t we supposed to be better?

Currencies today 4/1/19 American Style: A$.7118, kiwi .6826, C$ .7485, euro 1.1236, sterling 1.3091, Swiss$1.0058, European Style: rand 14.2640, krone 8.5867, SEK 9.2566, forint 285.55, zloty 3.8267, koruna 22.9410, RUB I65.63, yen 111.02, sing 1.3545, HKD 7.8496, INR 69.32, China 6.7111, peso 19.30, BRL 3.9219, Dollar Index 97.09, Oil $60.63, 10-year 2.44%, Silver $15.08, Platinum $848.96, Palladium $,378.63, and Gold… $1,290.78

That’s it for today…  It’s April! If April showers bring May flowers, what do May flowers bring?  Pilgrims! HA!  This is my friend and IRA guru April’s month! I call her April Showers… And she just smiles…  Well, the cellulitis is back in my leg… I know, I know, with me, it’s always something, right? When the NCAA Tournament began, Kathy asked me, “who will be the Cinderella team this year?”  Well, I guess there are two of them… Auburn and Texas Tech… They join Michigan St. and Virginia in the Final Four! It’s supposed to a normal day here, (sunny and 80), so I’ll take the book I’m reading and sit outside to soak up some vitamin D…  Mitch Ryder and the Detroit Wheels take us to the finish line today with their song: Devil With the Blue Dress…  I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

March 28, 2019

* Dollar continues its march to higher ground… 

* The other side of a narrowing Trade Deficit… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m hoping to do some Tub Thumpin’ of my own tonight as I hoping to go to my fave place for live music tonight… It’s a Glorious Day, because…. IT’S OPENING DAY! And today should be a national holiday, to celebrate Opening Day for the national pastime! My beloved Cardinals begin the year on the road in Milwaukee today, and I will be glued to the tv for sure! I just finished watching them play 15 games in 30 days, and you would think I’ve seen enough! But nooooooooo! I only saw the starting lineup together for 1 inning all spring! I’m so excited… I can’t wait for first pitch at 2pm today! Call me crazy, because I am… crazy in love with baseball, and my Cardinals! The Doobie Brothers greet me this morning with their song: Listen To The Music… I like the Doobie Brothers before and after Michael McDonald… He was good, but it wasn’t the same… in my opinion, that is!

So, what’s up with the news media, have they all become Pfennig Readers? Yesterday, I told you that I was thinking that U.K. PM May might have to fall on a sword to get her BREXIT plan passed, and then all day long I’m reading article after article about how May has offered to resign if her plan is passed! I find that to be a very eerie co-inkee-dink!

The euro gave back more ground to the dollar yesterday, not much, but more… I guess having the Trade Deficit shrink to a mere $57.7 Billion was cause to celebrate for the dollar bugs… And while that looks nice, here’s the other side of that coin for you… The U.S. is a nation of consumers, we spend until we can’t and then we spend some more just for good measure… Well, when our imports from China plummet, it should cause some questions to be asked… No one? Ok, then I’ll ask them! If imports from China plummeted then visa-vie our spending has to also plummet, right? Well, I would think so… and that my friends is the other side of a narrowing of the Trade Deficit by the size it narrowed… (59.8 VS 57.7)

I guess I am a glass half full kind of guy… But then there’s no reason to be excited about having half of our glass emptied, unless you did the drinking!

That was all the data to be had yesterday, as we’re still getting delayed signs hung on data release dates… But getting back to something I made a big stink about yesterday, it was the stupid Consumer Confidence Index plunge… I thought it to be significant, and judging from one of my fave economists, David Rosenberg, he thought it was too… Here’s David Rosenberg on his Twitter feed yesterday… “Declines in the Conference Board “jobs gap” index of 5.7 points or more don’t happen every day. In fact, this development was saved for the past five recessions; they don’t happen in expansions.”

David has seen the same writing on the wall that I have, and I feel quite cocky about that, given his stature in the financial arena, and my lack of stature in the financial arena! Dare I say though, that I saw it first? Ooops, I just did say it! Oh, but didn’t say it out loud did I? Ahem, yes you did Chuck… so go on, slap yourself on the back and move along!

I just don’t get what’s going on with currency traders, investors, hedge funds, etc. these days… Jackson Browne sang it best when he sang… These days I sit on cornerstones and count the time in quarter tones to ten… my friend… Don’t confront me with my failures, I had not forgotten them… Currency traders continue to reward the dollar with every weak data print, every sign pointing to a recession, and I just don’t get it!

Back in my day, when I was a currency trader, fundamentals meant something… Now, they’re treated  like the crazy old uncle that you still invite to family gathering because he’s “family”, but then wish you hadn’t when he decided to swimming in the Koi pond!

Isn’t that what old-timers always would say… “Back in my day!” Well, I guess that’s what I’m becoming… They showed me the door, and told me not to come back, and all I have left are memories of “back in my day”…

OK.. enough of that! I have no idea how that all began, but I know how it ended, and I’m better than that!

I had a few dear readers question me about my statement yesterday regarding the dollar being devalued back in the 30’s by FDR… Yes, I’m sure that’s what happened… He didn’t come and say “I’m devaluing the dollar”, but he did decree that the Gold that he had just confiscated from citizens, was going to be repriced higher, thus devaluing the dollar…. Just for fun, I asked Google if the dollar had ever been devalued before and this is the answer I received…

“The more a currency is devalued, the less you can buy with it because the purchasing power decreases. The graph below shows the purchasing power of the US dollar since 1913. … In fact, the dollar has lost over 96% of its value. That means today’s dollar would be worth less than 4 cents back in 1913.”

Ahhh, 1913… I know, I can hear some of you saying, “Oh, no! here he goes again with 1913”… Yes, every chance I get to talk about repealing 1913, I make the most of… 1913 is infamous for 3 reasons….. 1. Woodrow Wilson crammed the Fed Reserve down our throats… 2. Woodrow Wilson ushered in the IRS… and 3. He changed the way State Senators were sent to Washing D.C. before this change, Senators were assigned by each state’s Governor to represent the state’s affairs in Washington D.C. This way, if the senator wasn’t doing his job, he could be recalled very easily, and replaced immediately… Now, doesn’t that sound like a far better idea than what we have now?

OK… enough on 1913… But curtesy of the Federal Reserve which began in 1913, the dollar has lost 96% of its purchasing power…. I’m just saying…

Back to the euro… Well, yesterday one think tank said something that pushed the euro weaker, and now we have the think tank IFO with a different point of view, of which euro traders didn’t seem to be fazed by… So… let’s check out what Germany’s IFO Institute said in its business climate index… It rose to 99.6, beating a consensus forecast of 98.5 and ending six consecutive months of decline. But as I said, euro traders weren’t fazed one iota by this… so we move along…

Boy did the precious metals get their you know whats handed to them yesterday by the boys in the band… Palladium lost over $90 in one day! Gold was sent packing to the tune of $6, and the others fell in line… I wonder if what I was talking about the other day regarding how in the initial days of the financial meltdown that’s coming Gold would get sold to pay for gas, groceries and giggles, but when the dust settled it was time to back up the truck…  I wonder if this is coming to fruition..  

I do keep talking about how I believe the recession hits the U.S. economy in this year, while most economists think it will hit next year…  I’m just saying…

The U.S. Data Cupboard has a 4th QTR GDP revision for us today… Look for a significant drop in the GDP number…  I wonder if that gets the currency traders to notice?  Other than that, we have a few Fed Heads hitting the speaking circuit today, including St. Louis Fed President, James Bullard, who has been a very outspoken dove… Maybe he can make the currency traders notice?  

Oh, and one more thing… It’s being reported that U.S. shale exports are being turned away by Asian importers because the oil is infected…  that can’t be good, folks…  So, I have an article in the FWIW section that explains this today… 

To recap… The dollar moved onward in its march to higher ground yesterday, but the move was small in nature. The dollar bugs must have been giddy over the narrowing of the Trade Deficit, of which Chuck shows us the other side of that narrowing…   Precious metals got whacked yesterday with Palladium leading the way, seeing a fall of over $90 on the day… And finally, a 4th QTR GDP revision will print today, we should see a significant downward revision. 

For What It’s Worth…. OK, I teased you above about the infected shale Oil getting turned away by Asian importers, and here’s where the article I reviewed can be found: https://www.deccanchronicle.com/business/in-other-news/280319/infected-us-shale-oil-faces-rejection-in-asia.html

Or, here’s your snippet: “Two refiners in South Korea—the top buyer of US seaborne supply— have rejected cargoes in recent months due to contamination that makes processing difficult. Growing North American output from dozens of fields pushes everything from highly-volatile oil to sticky residue through shared tributaries and trunk pipes. Smaller carriers then take cargoes from shallow-water ports to giant super tankers in the Gulf of Mexico for hauling to far-away buyers.

Throughout its transit from pipes to tanks and onto vessels, foreign compounds from other fuel or chemicals for cleaning tanks or stabilizing material can leach into the supply and foul up refining equipment. While crude passes through a similar chain in the Middle East too, the risk of impurities is lower because each oil variety typically has its own designated infrastructure.

In the case of American condensates, a type of ultra-light oil pumped in shale fields, cargoes can get pollutants such as “oxygenates, metals and cleaning agents,” said Sebastien Bariller, Senior Vice President at South Korea’s Hanwha Total Petrochemical Co. That’s causing uncertainty around US oil quality, unlike purchases from the Middle East, where quality is stable, he said.”

Chuck again… This is the kind of thing that can spread, and cause major ripples in the Oil Shale exports… 

Currencies today 3/28/19 American Style: A$ .7093, kiwi .6810, C$ .7450, euro 1.1250, sterling 1.3145, Swiss $1.0046, European Style: rand 14.6540, krone 8.6450, SEK 9.2615, forint 284.53, zloty 3.8195, koruna 22.9282, RUB 64.65, yen 110.30, sing 1.3556, HKD 7.8498, INR 69.05, China 6.7198, peso 19.38, BRL 3.9133, Dollar Index 96.96, Oil $59.25, 10-year 2.38%, Silver $15.24, Platinum $851.78, Palladium $1,425.90, and Gold… $1,307.76

That’s it for today, tomorrow and this week! It was an ugly night out, as I was awoken a couple of times with the rain coming down so violently. The ocean is angry this morning, and the wind is howling… Not a good day here for sure, but it’s days like this that make the pretty ones every prettier!  I already have a problem with Cardinals’ Manager’s lineup… Baseball tradition says your best hitter hits 3rd…  We just made Paul Goldschmidt the highest paid Cardinal of all time, which in my mind makes him the best hitter on the team, so why’s he hitting 2nd?  UGH! Albert Pujols in his prime, always hit 3rd… I’m just saying…   That’s one of the great things about baseball… the discussions that can take place about something like that, and go on for hours at a time!  Baseball is back! YAHOO! The Kinks takes us to the finish line today with their song: Sunny Afternoon…  which looks like won’t happen here today!  I hope you have a Tub Thumpin’ Thursday, a Fantastico Friday tomorrow, and a Wonderful Weekend… Monday is April Fool’s Day!  Be Good To Yourself! 

Chuck Butler

 

March 27, 2019 

* Currencies finally move, but go downward… 

* It appears that the bloom is off Palladium’s rose… 

Good Day… And a Wonderful Wednesday to you! I watched the movie Hidden Figures last night, and it sure was a good one! I love it when history is told the way it actually happened… It went late last night, so… I’m dragging the line today… I’m currently reading Tom Woods’ book the Politically Incorrect history of the U.S. It make me feel like I’m back in history while these things happened! I’m being rocked out this morning, as Humble Pie greets me with their rock legend song: I Don’t Need No Doctor…

We finally saw some movement in the currencies yesterday, but unfortunately, they went the opposite way of what I’m thinking they should be going, given the Fed’s about face, Treasury Bond yields continuing to decline, and the mounting evidence of an economic problem here in the U.S. sooner than later… Oh, and let’s not forget the stupid Consumer Confidence Index which actually showed a drop from 131.4 to 124.1… That’s the largest one-month drop since 2008… Traders just aren’t seeing the writing on the wall, that the bond guys are putting up there as warning signs…

And my fave topic (not!) The Federal Budget Deficit just set a record and now the it appears the border wall is going to go through, so more deficit spending on the way… Way back in the 90’s when I began writing a daily letter, I wrote about debt accumulation and how we weren’t paying any of it back, and probably wouldn’t be… I talked yesterday about how the cost of such deficit accumulation was increasing… This is something that everyone should be wary of, folks… Even if the currency traders aren’t making themselves aware of it… You should!

Last night, the Reserve Bank of New Zealand (RBNZ) met, and left their OCR (official Cash Rate) unchanged… The RBNZ acknowledged that employment was strong, and in fact, they said, “Employment is near its maximum sustainable level”… But wage inflation isn’t gearing up and their core “key” inflation rate of 2% isn’t being challenged… So, the OCR remained the same… UGH! And just like I said yesterday when I talked about how kiwi had popped above a significant level but I worried that it wouldn’t be able to hold it… And it wasn’t able… and lost almost 1 full cent… UGH!

In the U.K., PM May admitted yesterday that she doesn’t think she has the votes to get her BREXIT Deal passed… Sterling took it on the chin after hearing this news… I read this morning that in the dark smoke filled rooms that if she wants to get this BREXIT plan passed, she might have to fall on a sword…   And that would take us back to our old thought that currency traders don’t like “unknowns”…  

The euro took some heat yesterday, when the think tank IFO issued their consumer confidence report and it showed a big decline… I would have thought that by now fundamentals would be back in charge of currency direction but nooooooooo! Currency direction is still ruled by trader sentiment… And right now Traders are turning a blind eye on the U.S.’s warts… and only concentrating on those around the world… 

The old thought of the dollar being the cleanest shirt in the dirty laundry basket, just doesn’t hold water with me…. for there are currencies out there with cleaner shirts, than the one dollar is sporting…  Currencies like the Russian ruble, Swiss franc, and so on… 

Well… Gold started the day yesterday down nearly $8, and ended the day down $6…  But today, in the early morning trading, Gold is back to being bought, and is up a couple shekels…   China has come back to the Gold window in a BIG way, Russia has been a constant there the past 5 years, and other foreign Central Banks are getting in on the Gold accumulation, instead of dollars…  This fact alone should be worth a couple hundred dollars of gains in my humble opinion… But for now, the price manipulators are still flexing their muscles… For how much longer, is the $64 question… 

The other day I pointed out that maybe the correction in Palladium was beginning and since then its been 3 down days for the metal, and just like when it was gaping higher, the drops are large… 

The U.S. Data Cupboard yesterday had the Case/Shiller Home Price Index (HPI) for January, and yesterday, I told you that it would be interesting to see if the recent trend of falling home prices continued… And it did, with the HPI falling to 4.3% from 4.6%…  That represents a 6.5-year low folks, so we’re going backward with home prices… Actually, that could be a good thing if it doesn’t get out of hand, as home prices had gotten ridiculously high, and didn’t represent value… The problem with these prices swings though is that the pendulum always goes too far the other direction when correcting, thus causing problems…  

Today’s Data Cupboard has the January Trade Deficit, which should be interesting, given the tariffs and such going on… And we’ll also see the 4th QTR Current Account Deficit…   In the 3rd QTR the data showed it at 2.4% of GDP…  2.5% is the line in the sane folks…  Back in 2001, when I wrote the white paper, Decline of the dollar, I explained that the U.S. Current Account Deficit has exceeded 2.5%, and historically speaking, any country that reached that level of indebtedness experiences a currency crisis…  

And sure as the sun rises in the East, that’s what the dollar began to experience in 2002, and lasted until 2011…   So, watch for this data to see if we are on the brink of a dollar crisis…  

On a sidebar…  I have a very interesting FWIW this morning, that talks about what the U.S. should do to alleviate their debt load…  I think you’ll not want to miss this one!

To Recap… The movement in currencies finally took place yesterday, but they went in a different direction that Chuck was thinking was in their future, as currency traders continue to turn a blind eye toward the warts the U.S. is showing…  Yesterday, it was Consumer Confidence falling with the largest one-month drop since 2008… Remember 2008?  It was not a good year, financially… I’m just saying…   Gold lost $6 yesterday, as the price manipulators continue to keep Gold under wraps… for now that is… And UK PM May, may have a BREXIT plan that gets passed, but will she have to fall on a sword to get passed? 

For What It’s Worth…  I wonder how many people recall or read about how FDR devalued the dollar back when things were getting pretty ugly here in the U.S?  First FDR confiscated Gold from the people at $25 an ounce and then once he had it all, he repriced Gold to $35 an ounce, thus devaluing the dollar…  Well, that old thought is behind this article that the GATA folks sent me and can be found here: https://www.foxbusiness.com/economy/the-federal-government-should-default-on-its-debt

Or, here’s your snippet: “Dramatically hiking taxes, or drastically cutting Social Security and Medicare benefits in the late 2020s or early 2030s when entitlement trust funds run dry, would send the economy into a depression. Ignoring the debt and indefinitely printing more money, as proponents of “modern monetary theory” effectively advocate, would lead to uncontrolled hyperinflation.

Our leaders have dug us into a hole. And the best way out is a “soft” default on the national debt.

A hard default, where the government simply refuses to pay its debts, would cause a global economic meltdown. Dollar-denominated Treasuries and federal reserve notes are the lifeblood of the global financial system. But a soft default — a one-time devaluation of the dollar which enables the government to pay back its debts in full, albeit at a lower intrinsic value — needn’t be catastrophic.

Here’s how a soft default would work.

The Treasury would peg the dollar to gold, oil Opens a New Window.
, natural gas or silver — or perhaps a basket of those commodities. By choosing a weak valuation, for instance, $10,000 per ounce of gold, compared to the current market price of roughly $1,290 per ounce, much of the debt could be paid down thanks to a much weaker dollar.”

Chuck Again… Well, it’s not that too far fetched, as I explained above, it’s happened before… And it could very well happen again…  

Currencies today 3/27/19 American Style: A$.7098, kiwi .6810, C$ .7463, euro 1.1285, sterling 1.3210, Swiss $1.0080, European Style: rand 14.5370, krone 8.5763, SEK 9.2417, forint 283.75, zloty 3.8085, koruna 22.8380, RUB 64.21, yen 110.35, sing 1.3538, HKD 7.8491, INR 68.94, China 6.7111, peso 19.22, BRL 3.8604, Dollar Index 96.73, Oil $59.49, 10-year 2.37%, Silver $15.46, Platinum $862.67, Palladium $1,517.28, and Gold… $1,318.57

That’s it for today…  The ocean looks so calm this morning… But apparently that won’t last too much longer given the cold front that’s supposed to move through here this afternoon, and bring a very windy day…   Another day passed by, where I questioned where it had gone at the end of the day, yesterday… UGH!  Tomorrow is Opening Day for baseball… I contend that it should be a national holiday, and one day I hope to see that happen!  Good luck to my beloved Cardinals…  OK. the Cure takes us to the finish line today with their song: Close To Me…  I hope you have a Wonderful Wednesday, and continue to Be Good To Yourself! 

Chuck Butler

 

 

 

 

 

 

March 26, 2019 

* Currencies remain stuck in the mud… 

* Gold gains yesterday and gives back its gains today… UGH! 

Good Day.. And a Tom Terrific Tuesday to you! Well, day one back in the saddle was OK, but getting up this morning was another story! I might as well, have rolled over and gone back to sleep, for there isn’t, once again, much movement in the currencies or metals… UGH! It was a quiet day here now that two of my grandkids have gone home… I honestly don’t know where the day went, and I questioned myself when I went around to turn off the lights last night! But… It happens! I did get to speak to my good friend, the Retirementor, Dennis Miller, yesterday. We were putting our heads together for another interview… Should be a good one! Neil Young greets me this morning with his song: Southern Man…

So… How’s your NCAA Basketball Bracket? I’m OK, so far, hanging tough, but sure wish I hadn’t taken our St. Louis University Billikens in the first round! Loyalty will get you nowhere! HA! I’m the only one in our family bracket contest that picked Michigan St. to win it all… So… Go Spartans!

OK, so like I mentioned above, yesterday was a non-trading event day once again… You know how a bull paws at the ground, and stands in one place while it is thinking about its charge? That’s how I view the currencies and metals right now… What will be the cause of the change of sentiment among traders? Well, if the Fed changing horses in the middle of the stream didn’t change their sentiment toward the dollar, I’m not sure I know what will! But there will be a plethora of candidates that will attempt to unseat the dollar’s hold on trader sentiment… And one of them just might be bad data from the U.S….. Sure we’ve seen our share of weaker data around the world, but that doesn’t matter, given the dollar’s use around the world… it’s all about the U.S. folks… And that’s where I think the dollar will find a dark alley soon…   

Gold found a way to add $8 to its price yesterday, but in the early trading this morning nearly all of that $8 gains has been given back! UGH! Up one day, wiped out the next… reminds me of a Frank Sinatra song… Riding high in April, shot down in May…   I think of this prolonged time of sitting here waiting for an upward move, as opportunity…  For those out there that have procrastinated and put off buying Gold… 

Well, can we all just get along now? The Mueller Report has been filed, and it only costs taxpayers $25 Million! Hey that sounds cheap, doesn’t it? What a waste of money, time, effort, etc. now could we just all get along now? And that’s all I have to say about that, for this is not a discussion on politics!

While the U.S. media has been all tied up in knots waiting for the Mueller Report, China has been making moves that are very reminiscent of a time a about a decade ago, when China was going around signing nation after nation to a currency swap agreement… first it was reported that China had gotten Italy to join in the one Belt plan… But then this was also reported to have been done by the Chinese in the past few days… Reuters reports that “France signed 15 business contracts with China worth billions of euros on Monday, including a 300-plane order with Airbus and a 1 billion euro contract for EDF to build an offshore wind farm in China.”

• The Airbus order “was the most lucrative of the deals unveiled in Paris, with a French presidency official saying it was worth about 30 billion euros ($33.94 billion).”

• “France’s Fives and China National Building Materials Group signed a 1 billion euro ($1.13 billion) deal to cooperate on energy savings in developing countries, [and] shipping line CMA CGM and China State Shipbuilding Corporation signed a 1.2 billion euro ($1.36 billion) deal to build 10 container ships.”

• French poultry exports are welcome in China again: An embargo imposed that followed bird flu outbreaks in France was lifted.

Chuck Again… China isn’t wasting any time finding new trade partners to help smooth out the bumps in the road caused by the U.S. and their Trade Wars… Speaking of such, the Trade War Talks have gone nowhere… They have until the end of March to agree to something or the next round of tariffs begin… I doubt that there will be any Midnight agreements here… So, we can expect more Trade problems going forward… In my humble opinion that is…

Ok… the euro is trading in the same clothes as yesterday morning, but still above 1.13… Most of the currencies can’t find a bid with both hands… The Aussie dollar (A$) and kiwi have moved higher and into levels that they’ve reached before, but have been slapped back…  As I explained yesterday, I doubt this continues much longer… But a wise man on a bond trading desk told me years ago… The markets can remain irrational longer than you can stay solvent… Meaning that Mr. Market will decide when to pull the rug from under the dollar, and not me, or anyone else!

So, I mention above that I spoke to Dennis Miller yesterday. He had sent me an article to read, and highlighted a paragraph from the Credit Bulletin that he thought I would take interest in, since they mention my economics hero, Hy Minsky… Let’s listen in to what the writer of the Credit Bulletin had to say…

“March 17 – Financial Times (Rana Foroohar): “Hyman Minsky would have had a field day with last week’s US inflation numbers. One of the key points in the late, great economist’s Financial Instability Hypothesis was that there are two kinds of prices — prices for goods and services, and asset prices. Inflation in the two areas should, as a result, differ. And indeed they have, quite markedly. The latest Consumer Price Index figures show that almost all core inflation, which was weaker than expected, was in rent or the owner’s equivalent of rent (up 0.3%). Core goods inflation, meanwhile, was down 0.2%. Very simply, this means that the housing market is once again completely out of sync with the rest of the economy. A decade on from the subprime bubble, housing… is the only major component of the CPI with a national inflation rate that is consistently above the overall number.” – Credit Bulletin… 

The U.S. Data Cupboard comes back on board today with some housing data, including the Case/Shiller Home Price Index for January… This data has shown home prices sliding in recent prints, so it will be interesting to see if that trend continues… In addition, we’ll also see the stupid Consumer Confidence Index…  Lemmings being led to a cliff, if you ask me… 

Before I head to the Big Finish today, this came to me last night and says a lot, folks… says a lot…   All around the world…. Bonds will be bonds… It’s the same ol’, same old situation… Ah, nothing like changing some lyrics to make the song work with what you’re going to talk about, eh? I thankthe members of Motley Crue… OK… I was minding my own business when I received an email from Twitter telling me there was something I needed to see… And sure shootin’ there was! This was taken from Eric Pomboy’s twitter feed… “Market Value of Global Negative Yielding Bonds rises $421bln today to $10.07 trillion. TEN TRILLION.

To recap…  Another day of little to no movements in currencies. Gold found a way to gain $8 but has given it right back early this morning. Day by day, bond markets all over the world are telling investors the same thing… That things are going to get rough for economies all over the world, but most importantly, here in the U.S.  The A$ and kiwi found a way to move higher, but for how long?  Questions all around… 

For What It’s Worth…  Well, FWIW articles are slow these days too! But today I have something that’s worth reading… It’s an article about how the Germany is defying demands made by the U.S. and it can be found here: https://sputniknews.com/columnists/201903211073433025-nato-us-germany-rift/?

Or, here’s your snippet: “This is going to get very ugly. Germany is openly defying U.S. President Trump’s demands to spend more on its NATO budget. Already the American ambassador to the country, Richard Grenell, is crying foul, prompting German calls for his expulsion.

Of all the countries in the European Union, it is Germany that’s been mostly on the receiving end of Trump’s wrath since he entered the White House. In two years, the bilateral relation between Washington and Berlin has plummeted under the weight of Trump’s withering verbal attacks.

The American president has assailed Germany for unfair trading practices over its lucrative auto exports; and he has virtually accused Berlin of treason in its dealings with Russia for natural gas supply, threatening to slap economic sanctions on German firms over the Nord Stream 2 pipeline project under the Baltic Sea.

Grenell’s condemnations this week regarding Germany’s military budget have again sparked furor among the country’s politicians and media, eliciting further public calls for the envoy to be expelled owing to his alleged gross interference in Berlin’s internal affairs. “An ambassador is not supposed to act like the spokesman of an occupying power,” said Wolfgang Kubicki, the deputy leader of the Free Democrat Party.

The New York Times this week reported “the timing couldn’t be worse” for U.S.-German relations. Next month marks the 70th anniversary of the founding of the NATO alliance. A major celebration is due to take place in Washington D.C. for the occasion. The atmosphere will be severely chilled by Germany’s truculent defiance of Trump to boost its commitment to NATO.”

Chuck Again… when did not obeying what the U.S. demands become vogue? Interesting article I must say… 

Currencies today 3/26/19 American Style: A$.7130, kiwi .6903, C$ .7467, euro 1.1320, sterling 1.3230, Swiss $1.0068, European Style: rand 14.3744, krone 8.5190, SEK 9.2233, forint 278.80, zloty 3.7920, koruna 22.7585, RUB 64.30, yen 110.37, sing 1.3502, HKD 7.8494, INR 68.90, China 6.7096, peso 19.00, BRL 3.8866, Dollar Index 96.49, Oil $59.58, 10-year 2.44%, Silver $15.46, Platinum 852.23, Palladium $1.566.64, and Gold… $1,314.61

That’s it for today… The sunrise was beautiful this morning, and it should be a good warm day here, before the next cold front comes through tonight… I laugh at the weather people down here, they make it sound like the temps are going to go to zero, “as a cold front moves through, and we get chillier temperatures”…  Yeah, instead of 82 it’ll be 76…   funny, eh? Our Blues won their 4th game in a row last night… this past Saturday night they beat the Tampa Bay Lightening (the best team in hockey) There aren’t many games left in the regular season, before the playoffs start… This team has gone from being really bad early in the season to a well oiled machine now… fingers crossed! Go Blues!   A Flock of Seagulls takes us to the finish line today with their song: Space Age Love Song…  I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler

 

March 25, 2019 

* Currencies & Metals continue to be stuck in the mud… 

* Federal Budget hits a record deficit! 

 

Good Day… And a Marvelous Monday to you! Front and center this morning, I want to say thank you to all who sent along birthday wishes to me last week… I had a grand day, and ate like a king that night, along with some of my family. I paid for it, when I stepped on the scale the next day! HA! Well, all the March guests have gone now, and it’s just the two of us here, where we seem to bump into each other all the time… UGH! We saw some beautiful moon rises last week, as the last Super Moon of 2019, appeared in the sky… When you’re on the ocean like I am, the moon seems to come up out of the ocean, it’s all pretty cool… Chicago greets me this morning with their song: In The Country… Some of my fave guitarist, Terry Kath’s, greatest work…

Well, I left you last week with the euro trading around 1.1350, and this morning it’s trading around 1.1322… So, not much to talk about still (regarding currency movement) … But there have been some things going on in the world that do need to be addressed, so I’m here, reporting for duty!

First and foremost was the Fed’s FOMC meeting that concluded last Wednesday afternoon, with the Fed backing off their outrageous previous comments about the economy being strong and robust, and decided to take the dovish road…  The Fed has basically changed horses in the middle of a stream!  (I was always told that that was a  very bad idea!) They basically jettisoned their plans for more rate hikes this year, and yet the dollar didn’t budge… Wait! What? That’s right, the dollar stood in place like a Buckingham Palace Guard… So, let me get this straight… The dollar began its rally because the Fed was hiking rates, while most of the world was stuck in the mud with rates near zero, and now that the Fed has stopped hiking them, and is basically looking at cutting them should the economy warrant it (and it does, but no one but me seems to think that right now), the dollar doesn’t get sold? I guess it just shows me that the dollar is the king, and no amount of chinks in the armor can hurt it…

Well, we’ll see about that… I’m just saying, because, bad things are coming, folks… The Treasury Yield Curve inverted last week… That means that long term rates fell below the shorter term rates… And this, historically, has been a keen indicator that a recession is on its way… I don’t make this stuff up folks… It’s all there in the history books on recessions… And this recession could very well be the end of the line for the Credit guys… It won’t be pretty… We have never had this much debt, we have never had this much Corporate Debt leveraged, we have never had this many derivatives that no one knows what happens when they collapse, and we have never had a Central Banks that is bumbling, fumbling, stumbling along and making all the wrong moves…

I must warn you that when the curtain falls on the economy, that at first, Gold will get caught up in the selling because, just like in 2007, when the dark clouds began to appear, investors sold whatever they had that had a profit to offset their margin calls, or just keep the debt collectors at the door… But when all the dust settles, you’ll want to back up the truck to the Gold window… I’m just saying.

Did you hear that the Federal Budget Deficit hit a record? The Treasury Department said Friday in its monthly report that the deficit hit an all-time high for February of $234 Billion. That surpasses the old February deficit record of $232 Billion set in 2012, the last year the deficit for the year topped $1 Trillion!

It’s time that everyone gives up and realizes that I was correct when I told you last year that the Tax Cuts wouldn’t do anything but raise the deficit, for Corporations wouldn’t use the tax cuts to invest in their businesses, but use them for stock buybacks instead… And that’s exactly what has happened, and now we don’t have the Corporations with good futures, and a Treasury Dept, that is lacking tax receipts!

And then add to that… The cost to finance that debt… Interest rates being higher as they are, are adding to the Deficit spending in a Big Way folks… I read last week that the amount we spent in 2018 was greater than in any other previous year… I’ve got a great piece on this from the Peterson Foundation in the FWIW section today, so I’ll leave this here…

Before you head to the currency roundup today, let me tell you that the yield on the 10-year Treasury is correct… I say that because I know some of you would be questioning it, as it has tumbled down to 2.47%…  Bond guys get it… The Fed’s dovish stance that is… The get it, and that’s why bonds have rallied like a banshee…   I guess that’s where I get my attitude here, as I was a bond buy, many year ago…  But back then, I was a foreign bond trader, so I had to understand and know the economies of dozens of countries at the same time…  Boy, I guess I used to be smart, eh?  HA!

But seriously here, we need to take this drop in the 10-year’s yield seriously, and begin to prepare for some read rotten eggs coming from the economy, soon…  And that’s all I’ll say about that! 

Around the world last week, we had the BREXIT talks get an extension, but I think this is like a stay of execution… To leave the EU is like Hotel California… You can check out but you can never leave… And UK PM May is going to take a beating from voters who voted to leave, but never was explained to back then what it would take to leave the EU… Maybe if it were explained back then, the vote would have been different? Anyhow, pound sterling continues to be the whipping boy for these talks…

The U.S. / China Trade Talks are still going nowhere… But I did see that President Trump decided to drop some of the sanctions against N. Korea in hopes to get what he wants from them… (Denuclearization)… Negotiations are far better than sanctions, and wars…

In New Zealand last week, the last quarter’s GDP got a bump when consumers went on a spending spree… I don’t want to think that this was like a star that’s getting ready to burn out, but I have to because what’s good for the goose is good for the gander, right? Anyway… the Reserve Bank of New Zealand (RBNZ) meets this week, and I’m still angry with them for their misleading last year, and they won’t do anything to correct it this week either, so look for kiwi’s recent rise to take a bit of hit when the RBNZ sounds all Eeyore when they meet…

Oh! And one more thing about the Fed that needs to be said…  The Fed has adopted  a very dovish tone, the central bank’s new “dot plot” showed no increases in interest rates this year and only one in 2020, down from a total of four rate hikes in the Fed’s last forecast in December.

So, from December to March, 3 months, if you will, the Fed Heads have gone from “strong and robust” to their current stance of dovish tones… That’s how fast the worm can turn on you when you’re not paying attention to the weeds in the garden…  And they haven’t been paying attention to the weeds in the garden… I have.. David Rosenberg has… Bill Bonner has… and others, but none of us have any pull with the Fed Heads…  I’m just saying… 

The U.S. Data Cupboard is emptied out today, but will be back tomorrow with goodies to eat up…  Late last week, we saw the Markit Manufacturing Index (PMI) here in the U.S. fall to the lowest level it’s been in a month of Sundays… (52.5)  The index number is still above 50, which is good, but the direction of the number is falling, and that’s bad…  

Did you hear that President Trump nominated a new person to the Fed’s Board of Governors?  And it’s “one his guys”…   At least he is now… But there’s something in the water at the Eccles Building, because horses change color when they go there to work… Greenspan, for example was a Gold Bug before, and after, but not during his time as Fed Chairman…  And I’m certain that current Fed Chairman Jerome Powell, was what Trump thought was “his guy” when he was given the top job at the Fed…   

Well, all this talk and no mention of Gold… Hmmm…  I wonder what’s up wit that, eh?   HA!  Well, Gold hasn’t had its breakout upward move yet, so what’s there to talk about?  I did have a dear reader ask me last week if I thought Platinum would soon replace Palladium in cars, just as Palladium once replaced Platinum?  Cost of the metal being the main reason for the changes… Well, maybe… and today could be the start of that, as Platinum is up $8, while Palladium is down $13 this morning… Hmmm…  Good question! 

To recap…  Nothing much has changed since last Wednesday, when Chuck threw in the towel on the week for none movements in currencies and metals, Trade Talks and BREXIT Deals…  Well, he’s baaaaaaacccckkk, but still there’s not much movement going on, and it surprises Chuck, given the Fed’s changing their dot chart, and their position on the economy… 

For What It’s Worth… Well this is the piece that I teased you with earlier… it explains in black and white, how the spending on financing the deficit is going to begin to hurt the economy, and it can be found here: https://www.pgpf.org/blog/2018/11/we-will-soon-be-spending-more-on-national-debt-interest-than-on-these-vital-programs

Or, here’s your snippet: “Programs that millions of Americans depend on and care about may be feeling a squeeze from interest costs on our high and rising national debt.

In fiscal year 2018, the federal government already spent more on interest than it did on budget areas such as veterans’ benefits, transportation, and administration of justice.

But over the next few years, spending on interest will exceed spending on a number of additional major categories:
• In fiscal year 2019, interest will be greater than the amount spent on income security — a category that includes programs such as the Supplemental Nutrition Assistance Program, Supplemental Security Income, and unemployment compensation.

• In fiscal year 2020, interest payments will exceed the amount that the federal government spends on children, according to projections from the Urban Institute.

• In fiscal year 2021, interest will surpass the combined amount spent on Medicaid, the Children’s Health Insurance Program, and subsidies for the purchase of health insurance under the Affordable Care Act.”

Chuck again… The article goes further with more explanation, so if you do have time I think it would be prudent to visit the article in its entirety… 

Currencies today 3/25/19 American Style: A$.7096, kiwi .6883, C$ .7458, euro 1.1320, sterling 1.3172, Swiss $1.0064, European Style: rand 14.4097, krone 8.5234, SEK 9.2162,  forint 279.75, zloty 3.7955,  koruna 22.7311, RUB 64.63, yen 110.22, sing 1.3509, HKD 7.8479, INR 68.95, China 6.7163, peso 19.07, BRL 3.9041, Dollar Index 96.51, Oil $59.01, 10-year 2.47%, Silver $15.51, Platinum $853.46, Palladium $1,539.52, and Gold… $1,318.29

That’s it for today… Good to be back in saddle, but I do have to say that when I don’t write, I lose track of the days…  Well, my beloved Cardinals ended Spring Training with a win in the 9th inning yesterday. Opening Day is this Thursday… A day that should be a National Holiday, in my opinion!  I get a bit sad at the end of Spring Training each year, for I know that I’ve seen 15 games in 30 days, and probably won’t see, in person that is, many more this year…  I love Roger Dean Stadium as it’s easy for me to get in, sit down, and easy to get out…  At my age, and my abilities, ease of use is a major deal to me!  OK, so I celebrated another birthday last week… Another notch in the belt since 2007, is all that’s on my mind when my birthday comes around…   Fleetwood Mac takes us to the finish line today with their song: Say You Love Me…   I hope you have a Marvelous Monday, and continue to Be Good To Yourself! 

Chuck Butler

 

March 20, 2019 

* Currencies and metals didn’t move much on Tuesday… 

* What does currencies should we be looking to buy? 

 

Good Day… and a Wonderful Wednesday to you! Well, I told you yesterday that if things didn’t change in the “not much has happened or going on” scenario, that I would pack up and take a mini-vacation, in hopes that this all changes while I’m gone… Well, here I am, and things really didn’t change much yesterday… I’ll run through it, very quickly, and then head out for the week! The Outlaws greet me this morning with their song: There Goes Another Love Song…

Well, the deluge of rain came as advertised yesterday, and last night… It just didn’t stop! I hear it’s supposed to stop this morning, which would be fine with me, for I have tickets to the Cardinals & Marlins game today at 1:05… And tomorrow, is the day that most of the Cardinals fans that attend these spring trainging games have been waiting for… The Yankees come to Roger Dean… I sure hope they bring their A Team…

So, here we go again… There wasn’t much movement in the currencies yesterday… for those of you keeping score at home, the Dollar Index was 96.39 yesterday morning and when I checked it last night it was 96.45… The price of Oil slipped below $59 and Gold couldn’t find a bid all day… My good friend, the Retirementor, Dennis Miller, is sending out his letter tomorrow, to his subscribers, an interview with a man that I know, by the name of Rob Vrijhof, managing partner of Weber Hartmann Vrijhof & Partners Ltd., Swiss international asset managers. And while I don’t want to steal Dennis’ thunder tomorrow when his letter goes out, I will steal something that Rob had to say about currencies that I agree with wholeheartedly…

He talks about currencies that his firm is investing in and tracking… I won’t give away the store here, so you need to go to www.milleronthemoney.com and sign up to see what Rob had to say… I’ll give you one as a tease… He likes the Russian ruble… Man, where have I heard that before? HA! 

Well, Gold couldn’t get out of its own way yesterday but did manage to close up $2 bucks and change, but has given that right back and more in the early trading today…  The Big mover yesterday was Palladium, again, as it hit a new high of $1,571… And in the early trading today it’s up another $7… and at one point overnight it hit $1,600, according to Bloomberg…  Crazy pricing in Palladium folks, and as I’ve told you, they say it’s all due to a shortage of the metal…   

The U.S. Data Cupboard had January Factory Orders on a delayed basis print yesterday, and it was just like 99% of the other pieces of data that we’ve tracked… It fell way short of expectations, coming in at only 0.1%, instead of 0.4%… All in all it’s just another brick in the wall…

Just a friendly neighborhood spiderman reminder, that the Fed’s FOMC meets this afternoon… I don’t think they’ll do anything rash, but they could say things that get the markets moving…

And in place of a FWIW article today I have a quote from famous economist, David Rosenberg, from his Twitter account… Take it away Rosey!

“The bulls like to use Dec. 24 as the starting point on how right they’ve been without realizing that since the first peak above 2,800 in Jan. ’18, the SPX has generated a total return of 1%; the return on the 10-year note is 4%. In the land of low returns, bonds are still king!”

Currencies today 3/20/19… American Style: A$.7091, kiwi .6844, C$ .7560, euro 1.1351, sterling 1.3230, Swiss $1.0008, European Style: rand 14.5168, krone 8.5376, SEL 9.1885, forint 275.45, zloty 3.7760, koruna 22.5898, RUB 64.35, yen 111.55, sing 1.3507, HKD 7.8498, INR 68.80, China 6.7107, peso 19.02, BRL 3.7853, Dollar Index 96.44, Oil $58.83, 10-year 2.60%, Silver $15.30, Platinum $861.83, Palladium $1,600.71, and Gold… $1,303.03

That’s it for today, tomorrow and this week…  And I’m not going to apologize for the stoppage this week, as there’s just not enough going on that 1. I haven’t already covered like a cheap suit, and 2. You don’t want to read the same thing every day…  I’m waiting for the sunrise this morning, in hopes that it’s not too cloudy out to see it… (it’s way too dark now to tell) Well, Friday this week is my birthday… I used to not get all excited as a school girl about my birthday… but since I was diagnosed with Stage 4 metastatic cancer in 2007, I get somewhat happy on my Birthday, for it’s another year I’ve beaten this awful disease…  So, Happy Birthday to me on Friday…  And with that, Triumph takes us to the finish line today with their song: Fight The Good Fight…   Which is exactly what I’ve done for 12 years! I hope you have a Wonderful Wednesday, and rest of the week, and please Be Good To Yourself!

Chuck Butler

March 19, 2019

* currencies fail to add to gains from Friday

* I guess now, All Central Banks are turning dovish?

 

Good Day… And a Tom Terrific Tuesday to you! The Cyrkle sang it best all those years ago, when they sang… It’s a turn down day… For those of you who’ve never heard of the Cyrkle, they were the warm up band for the Beatles! My Beloved Cardinals finally found their bats yesterday VS the Phillies, but it still wasn’t an awesome offensive display! But a 4-1 win is a win… The long awaited deluge of rain has finally arrived in S. Florida, and I’m glad there isn’t a game today for me to go sit in the rain and then have it called off! Delaney Grace surprised everyone yesterday, when we heard the rain in the forecast, Daughter Dawn asked what we did when the day is washed out by rain, and I replied, “well, your mom goes shopping”… And Delaney spoke up and said quizzically: “Shopping?” The Fabulous Temptations greet me this morning with their song: Papa Was A Rolling Stone…

Well, our turn down day, applied to the currencies, on Monday, as they failed to add to their gains from Friday and in the overnight markets, and lost a little ground… Not much to talk about but a little ground nonetheless… These aren’t the days of wild moves in the currencies… Instead these are days when if a currency moves more than a quarter, the confetti begins to fall, and ticker tape parade is had! In fact, I’m really getting tired of saying that there wasn’t much movement in the currencies and metals yesterday… I was thinking that I would go on a mini-vacation to get away from the markets and so I wouldn’t have to say, “The currencies and metals didn’t have much movement yesterday, anymore this week!

I’ll play it by ear, but if I sit down at my computer tomorrow night to check on things and they’re still stuck in the mud, then I’m calling it quits for this week! Nobody wants to hear the same thing over and over and over again from me…

Hey! And we can all rest easily now, Goldman, aka Lola, tells their clients that there’s no risk of a recession this year… Thanks for calling me out on that Lola… As I’ve said that most economists believe the recession will come next year, but I have said over and over again, that I believe it will begin this year, and I have until 12/31/19, for that to come true!

We won’t be putting / adding any bricks in the wall today, as the Data Cupboard here in the U.S. is basically emplty, with only Housing starts to print today… I have seen quite a few articles in the past few days that are talking about how all Central Banks, including the Fed, have turned dovish…  Well, now isn’t that just special, as the church lady used to say, back when SNL was funny…  

Our friends at OPEC, NOT! had a special meeting that concluded yesterday, in which the members made public comments about how they were holding true to the production cuts, and that news pushed the Price of Oil to the $59 handle in the past 24 hours!  Next stop is $60… And then the vicious cycle for the price of Oil kicks in again… Or does it?  One has to wonder how long this cycle for the price of Oil can continue?  Well, as long as it takes for the shale oil to dry up, which I’ve read many an article about it doing so, recently…  Hmmm….

When the recession hits the U.S. that would most likely be a bad time for the Oil drillers… As demand for gas in the U.S. would stumble… So, think about that for a minute…  But for now, the price of Oil is on the rally tracks, and that’s a good thing for currencies like the Russian ruble, the Brazilian real, the Canadian dollar / loonie, and others that qualify under the heading of Petrol Currencies… 

Last week, after I had signed off for the week, the U.S. had a very interesting data print, that most people glossed over.. The  NY Fed manufacturing  index slipped to a two-year low in March. Factory output -0.4% in Feb after a 0.5% slide in January.  All three bricks in the wall, but I bet you didn’t see that data reported on your evening or cable news, did you?  

Gold was able to eke out a $1 gain yesterday… That’s it… $1…  not a fiver or a sawbuck, but a $1 gain…  In the early morning trading today, Gold is up $3… not “Palladium type moves” but gains, nonetheless, of which we are grateful for! 

The move that Palladium has been making for months now is something to be awed about… They say that the soaring price is a result of a shortage VS the demand… Now, I’m not doubting that, but what I will say  is that there’s been a shortage in Silver for a couple of years now, and we haven’t seen price moves like Palladium has pulled off!  I’m just saying… 

To recap… I know this is shorter than usual, but there’s just not much to talk about these days… It’s the same old song and dance every morning, of which I’m growing tired of talking about, as you are reading about! The Fed’s FOMC meeting is tomorrow afternoon, so we might not have much to talk about tomorrow either!  UGH! the price of Oil continues to gain and it’s all about the production cuts. And Gold eked out a $1 gain yesterday… 

For What It’s Worth…  Well, I get so focused on the debt here in the U.S. that, at times, I forget what’s going on elsewhere with debt…  This article is about the debt in Japan and it can be found here: https://www.asiatimes.com/2019/03/article/japans-debt-passes-250-of-gdp/

Or, here’s your snippet:Santa Claus territory.” That is how Charles Gave of Gavekal Research views renewed debate about how a concept known as “Modern Monetary Theory” can save capitalism.

There’s nothing modern, of course, about the idea that a government can borrow with abandon in its own currency, unconstrained by deficits. It’s not just that its origins can be traced back 100 years – some argue 1,000. It’s that Japan has been toying with MMT for two decades now.

In 1999, the Bank of Japan became the first major authority in modern history to drive interest rates down to zero. A couple of years later, it pioneered the quantitative-easing that peers from Washington to Frankfurt would eventually adopt.

What’s truly astounding is the docility of bond yields. Try as they may, punters haven’t been able to set Japanese government bond prices in nearly 20 years. That’s because the central bank dominated the bond market.

Japan proves that so long as a government borrows at home, and does so skillfully, the laws of financial gravity lose relevance. Yet it also stands as a cautionary tale for other developed economies scurrying down the MMT rabbit hole.”

Chuck again… Well, I’ve explained this before, but I’ll do it again… The major difference between the debt in Japan and the debt in the U.S. is that most of the debt in the U.S. is financed with the kindness of strangers, while most of Japan’s debt is self financed by the people of Japan… Not that by doing it that way it doesn’t mean debt of 250% of GDP is a good thing, because it’s not! 

Currencies today 3/19/19 American Style: A$.7098, kiwi .6860, C$ .7536, euro 1.1352, sterling 1.3270, Swiss $1.0002, European Style: rand 14.3725, krone 8.5436, SEK 9.2270, forint 276.25, zloty 3.7812, koruna 22.5520, RUB 64.50, yen 111.30, sing 1.3567, HKD 7.8497, INR 68.89, China 6.7103, peso 19.04, BRL 3.8073, Dollar Index 96.39, Oil $59.22, 10-year 2.60%, Silver $15.38, Platinum $841.32, Palladium $1,593.27, and Gold… $1,306.40

That’s it for today…  We all were tired last night from the game yesterday, and it was a turn down night to go along with our turn down day…  I heard the rain in the middle of the night, so it’s finally here… Now, let’s get it over with so the sun can come back out! I’m hobbling along these days with plantar fasciitis that will be taken care of starting today…  Jerry and I were walking yesterday from the ballpark, and he asked me if I was OK, and I said, sure, I’m in pain, but I’ve dealt with pain every day of my adult life, so carry one… And on that fine note…  Cat Stevens takes us to the finish line today with his song: If You Want To Sing Out…   I hope you have a Tom Terrific Day, and remember to Be Good To Yourself!

Chuck Butler