Author: admin

May 10, 2018    

* The dollar’s rally appears to be ending… 

* China’s depreciations hurting emerging markets… 

 

Good Day…  And a Tub Thumpin’ Thursday to you! I think I finally got control of the nasty cold I had, and shook it out of me! I still have an occasional cough, but nothing near what was going on earlier in this week! So Yahoo! By the time you see this in your email box this morning, I’ll be all by myself again for the next 11 days.  No biggie, I’m used to it by now. Hello Pizza Man, Pizza? HA!  There wasn’t much on the telly last night, so I sat down and began reading emails… I think about how we used to get in touch with people and how it’s done now, and I’m not sure it’s a better way, it’s faster, and more precise, but I miss memorizing important phone numbers, and talking to people on the phone…  Oh well… 

And I wonder just how many homes still have a land line for a phone line? I don’t have one, and most millennials don’t have one. I knew that if I kept looking I would find something in common with them! HA!   

The dollar rally that began last week with a short squeeze, and continued this week with panic selling, looks to be petering out and looky here, I’m not the only one that thinks that…    

Jeff Clark is someone I’ve known for quite a few years, as he used to be associated with the Casey Group. We would talk each year in Vancouver, and one year, he even video recorded an interview with me that can be found on line still. In fact, I’ve got a treat for you here’s the link to the interview that took place in 2012… Now, keep in mind that this was during the revealing of Greece’s problems and the rot on the euro’s vine that waa being exposed. For If that information was available at that time, I don’t believe I would have been so bearish on the dollar. Anyway… here’s the link: https://www.youtube.com/watch?v=_KXCiqYt4Cg

One thing I really noticed in watching it, is that my left eye is closed a lot while I talked. As you know I don’t have any sight on the left side, in fact, my eye was taken out in 2010… You may not have noticed anything different, but I did… Oh, and I’m also probably 50 lbs lighter now than I was then…

Alrighty now, getting back to Jeff Clark… he recently wrote on his blog that his charts indicate that the current dollar rally is about to end….. I would show you the chart, but… It won’t copy and paste to this blog… UGH! But i can give you the link to his website, so here it is: https://www.gold-eagle.com/authors/jeff-clark

Longtime readers know that I mainly use fundamentals as my criteria for buying currencies and metals, but there are times that I refer to the “chartists” like Jeff Clark, and my old colleague Sean Hyman…   

Now that’s music to a non-dollar investor’s ears to hear that the dollar rally is nearing an end…  

Well, well, well… what on God’s Green Earth have we here? By golly, it’s the Bank of England (BOE) meeting this morning, and the BOE Gov. Mark Carney, not fulfilling his promise to hike rates this year one more time. About a month ago, sterling was on a daily climb higher VS the dollar, as it was looking as if Carney would finally be able to pull a rabbit out of his hat. And I kept saying then, that there were too many questions with the BREXIT negotiations to be hiking rates, and besides, the economy isn’t THAT strong! And then a couple of weeks ago, the economic data reports began to show cracks in the rate hike foundation, and now, this morning, there’s no hope at all that rates will be hiked today, or next month, or the next month… And sterling has taken the hit on this turnaround…

Now, the BOE might talk a rate hike game today after announcing that they didn’t hike rates, but in reality, they don’t have a leg to stand on righ now… BREXIT is proving to be a real problem, and the economy isn’t on terra firma… And Mark Carney knows this in his heart of hearts, but I’m betting a shiny quarter that he comes out and says a “rate hike is coming” or something like that! And the sterling bulls will take whatever morsel Carney throws their way…    

Gold got back in the rally game yesterday with a $6 gain, but that came after the market closed! And the shiny metal has a $4 gain in the early morning trading today… One of the perks of subscribing to the Dow Theory Letters, is that I receive a weekly letter from Omar Ayales of Gold Charts R Us… Now, I’m going to give you a snippet of his letter, but if you want more, you’ll need to go www.dowtheoryletters.com and subscribe! Here’s Omar on Gold…

“Gold is holding up well in spite of the sharp dollar rise. The B decline is underway, and it’s telling us gold could possibly test the $1278 level, its 23-month MA, and still be in a solid uptrend rise.” Omar Ayales

Chuck again… I really like reading what Omar has to say each week about Gold, and I do believe you would too! He probably wouldn’t say it in so many words, but I will… If Gold moves under $1,300, you need to seriously consider scooping up more for your portfolio, I know I will!    

The Chinese renminbi has been on a downward path recently and that concerns me, for a number of reasons. But the main reason is that what we had last month was dollar down, renminbi stronger, and that’s the scenario the world would like to see more of, for it facilitates trade worldwide.  The Emerging markets are getting hammered with stronger dollar and higher interest rates in the U.S. and this weaker renminbi, for their competitiveness with exports into China aren’t working out for them… 

I think I know why China has been marking down the renminbi each night at the fixing, and that is to offset the tariffs on their exports to the U.S. I sure hope they don’t move the currency 20% lower though! And I doubt they will, they just want to take a chunk out of the tariffs bite… 

The U.S. Data Cupboard today will have the stupid CPI for April…  Yesterday, April’s PPI only showed a 0.1% increase, which was below the estimates of 0.3%… So, wholesale inflation took a hit in April, and now it’s the stupid CPI’s turn to print. Recall that in March CPI turned negative and was down -0.1%, so an uptick for April will offset March’s negative print, and that’s what I’m expecting, but who knows for sure what the BLS has on their minds?   

To recap…  Chuck may have lost a battle or two to the nasty cold, but he believes he’s won the war!  The dollar’s run appears to be ending today, as the currencies attempt to mount a rally VS the green/peachback.  Chuck goes back in time and gives you a link to a video interview he did in 2012…  And Gold seems to have stopped the bleeding today too.  

For What It’s Worth…  To end the week (for me that is) I have a very interesting piece today that Ed Steer highlighted in his letter this morning… This is about tunnels under a prison that were producing diamonds, and the whole set up, and you can find it all here: http://resourceclips.com/2018/05/08/inmates-caught-tunnelling-below-prison-were-miners-not-escapees/   

Or, here’s your snippet: “Illicit diamonds and metals, often from conflict sources, plague the Democratic Republic of Congo’s mineral-rich reputation. But in a new twist on illegal mining, authorities have discovered a covert diamond operation run by prisoners right underneath their prison. And while the country’s notorious conflict operations often use forced labour, this mine was popular enough with its workers to retain some of them after their sentences finished.

The mine was discovered under the Osio Prison in the country’s north, DRC radio Okapi reported. A raid found over 30 people, including a prison guard, working underground or toiling in their cells at mining-related tasks.

Some prisoners had refused to leave the institution after finishing their sentences. Non-prisoners built temporary homes nearby to join the operation.”   

Chuck Again…. This sounds like a plot in a movie doesn’t it? You can’t make this stuff up! I thought this was very interesting and different for you today…   

Currencies today 5/10/18… American Style: A$ .7488, kiwi .6930, C$ .74, euro 1.1885, sterling 1.3570, Swiss $1.0029, … European Style: rand 12.3830, krone 8.0492, SEK 8.6861, forint 264.36, zloty 35678, koruna 21.4630, RUB 63.22, yen 109.67, sing 1.34, HKD 7.8496, INR 67.26, China 6.3657, peso 19.40, BRL 3.5776, Dollar Index 92.91, Oil $71.51, 10yr 2.97%, Silver $16.64, Platinum $919.10, Palladium $982.20, and Gold… $1,317.30

That’s it for today…  I wonder what I’ll do all day today here, all by myself? Well, the first order of business is to go back to sleep, I didn’t sleep well last night, and I have some making up to do… My beloved Cardinals are in San Diego for the next 4 games, of which I’ll only see one on Sunday. Those games out there start way too late for me! The weather is warmer now, finally, and I spent some time outside yesterday soaking up some vitamin D! I traded emails with my former colleague, and friend, Jen, yesterday, man she was full of questions for me!  Jen sat to the right of me on the trading desk for a long time. So, we had some catching up to do! Foghat takes us to the finish line today with their iconic rock song: Slow Ride…  I recall when I was on the trading desk and Mike Meyer was too, and this song would come on, and we would immediately begin to talk about the Hardee’s commercial that featured this song… Ahh memories… OK, you’ve got to go out and make this a Tub Thumpin’ Thursday, and carry that over to a Fantastico Friday tomorrow!    And please remember to Be Good To Yourself!   

Chuck Butler

May 9, 2018     

* David Rosenberg joins our discussion today

* Chuck’s Pfennig gets retweeted!  WOW!

 

Good Day… And a Wonderful Wednesday to you! I bit better again today, but still coughing violently at times. This is one nasty cold, but then with my immune system compromised, it’s probably worse for me… One more day and then I’ll be all by myself, for about 10 days.  Sunday is Mother’s Day… I miss my mom, she was my biggest fan, and supporter. Mother’s Day is a great day to hug your mom and tell her you love her… Of course that should be done often, and not just on Mother’s Day, but one day won’t cause the oceans to divide..  AC/DC greets me this morning with their song: Rock and Roll Ain’t Noise Pollution…    

The currencies traded in tight ranges yesterday, awaiting the outcome of the  President’s announcement regarding the Iran Nuclear Deal. But once it was confirmed that the U.S. was pulling out of the Iran Nuclear Deal (IND) nothing happened, there was no movement in either direction, and the tight ranges remained in place in throughout the overnight markets. 

I’ll take tight ranges at this point given the dollar’s recent rally, that was originally fueled by a short squeeze. This could very well be the turning point that I talked about last week, that will come and turn around before we can get the keys in the ignition to start up the truck we are going to use to back up and buy euros. The question is: Was this enough for the PPT? Was this enough of a rally that the Plunge Protection Team will be satisfied, and sit on their collective hands again?  

I was doing some reading yesterday, and came across some quotes on data from David Rosenberg, one of my face economists… Let’s listen in to hear what Mr. Rosenberg had to say… But first let me tell you that The job openings and labor turnover survey (JOLTS) is a survey done by the United States Bureau of Labor Statistics to help measure job vacancies… Ok, here’s David Rosenberg: “As per the JOLTS survey, if the consumer was really spending the tax cuts would retailers have slashed their hiring 25K in March, on top of a 4K decline in Mar, and by a total of 60K since last Nov.?”   I saw this quote on Twitter… 

I was also delighted yesterday when checking Twitter, that another of my fave economists, Danielle Di Martino Booth, retweeted my Pfennig the other day that was titled: Manipulations Are Everywhere, They’re Everywhere!  That means she thought highly of my humble little letter that day, and I’ll take that any day!     So, maybe, just maybe, because as Joaquin Andujar used to say his favorite word was, “you never know” that important people are beginning to notice the Pfennig and me again…  

Of course, you dear reader has always been there for me, and this is a good time to thank you for being a Pfennig Reader! 

Well, there’s an article on the Bloomberg today from a trader in the South Pacific telling his readers that they need to sell their New Zealand dollars / kiwi and buy Aussie dollars (A$). He believes that with the prices of raw materials, including the main raw material in Australia, Iron ore, on the rise that the Aussie economy will grow faster than the economy of New Zealand, and thus the RBA will beat the RBNZ to the punch with a rate hike before New Zealand comes around to hiking rates.   

I’m not so sure that’s a great idea…  I do like buying A$’s  but don’t like the idea of selling kiwi, in fact I was prepared to talk today about how the recent plunge in the price of kiwi, has opened up Pandora’s Box of opportunities to buy kiwi at cheaper prices… But then I’m just a country bumpkin in a little river town Southwest of St. Louis, Mo. and not someone that gets articles posted on Bloomberg!    

Man, I need shave…  With me hunkering down these past 3 days to deal with this nasty cold, I didn’t feel like shaving, and when I just reached up to rub my face, I realized that I needed a shave badly! 

OK, sorry for going off line there…  Remember Money Supply? I recall that every week the bond dept would come to screeching halt and shiny quarter bets were made as to what the Money Supply number would be that week. But then the Gov’t took the punch bowl away, and we would no longer have Money Supply to bet on each week.   

I tell you this because long time reader, Bob, sent me a link to a lewrockwell.com  article about Money Supply, which caught my eye. In the article Money Supply is discussed and a True Money Supply Index (TMS) was created, and then the article went further to say the following: ” if the Fed adheres to its recently stated commitment to raise interest rates two more times and shrink its balance sheet by nearly one-half trillion dollars in 2018, it will further throttle back the growth rate of TMS, possibly turning it negative. This portends a spike in market interest rates, a collapse of the housing bubble, and a deep dive in equity prices. The ensuing financial crisis and recession will be made worse by the fact that large financial institutions and are still in a weakened state. While these events cannot be precisely timed and quantified, Austrian business cycle theory teaches us that they are the inevitable outcome of the Fed’s 10-year manipulation of money and interest rates.”   

Without the TMS isn’t this the same stuff I’ve been telling you about the Fed’s rate hikes and their shrinking of their balance sheet? Nice to see the outcome that I’ve sketched out, is being added to…  Too bad we have to talk about the Fed’s misgivings and dealings…  

Well, Gold gyrated yesterday, as nearly 400,000 contracts traded in the shiny metal, that saw a miniscule 60-cent gain at the close of the day, after all of those contracts were traded…  Gold is down about 3 bucks in the early morning trading today, but what on earth is going on here with nearly 400,000 contracts traded in one day? The “boys in the band” must have been busy, eh?    

I read that China’s demand for physical Gold continues to be strong….  And Russia certainly isn’t topping off their Gold demand, but yet, Gold can’t find a bid… Don’t tell me that something isn’t strange here!   

The price of Oil recovered its earlier losses yesterday, after the U.S. announced it was pulling out of the Iran Nuclear Deal, and is trading well above the $70 handle this morning.  I was surprised at how the upward move in the price of Oil was watered down at first. The original thinking here is that Iran’s Oil production isn’t going to be significantly hurt by this U.S. decision.  But as the night went on, the price of Oil slowly ratcheted upward…  

The U.S. Data Cupboard this week so far, that is, has been a real waste of time to deal with, and going forward today and the rest of the week won’t be much better. At least today we’ll see April PPI (wholesale inflation) but don’t expect any fireworks to come of it, so let’s just move along here for these aren’t the droids we’re looking for!   

To recap…  The U.S announced that they are pulling out of the Iran Nuclear Deal, and the markets still don’t know what to make of it all… Chuck highlights a quote from David Rosenberg, and highlights his pfennig of a couple of days ago, that Danielle Di Martino Booth retweeted!  Gold adds 60-cents on a day when nearly 400,000 contracts were traded.. What’s going on with that?   

For What It’s Worth… I told you yesterday that the U.S. and China would face off at the WTO meeting in Geneva, and brother they didn’t disappoint… It was like the Thrilla in Manila all over again but instead of Ali and Frazier, it was the U.S. and China..   I found this accounting of the meeting here: https://www.zerohedge.com/news/2018-05-08/us-slams-alice-wonderland-china-trade-talks-china-claims-wto-taken-hostage

Or, here’s your snippet… “

Despite all the happy-talk of “constructive conversations” from last week’s meeting of the minds between Washington and Beijing, reports from today’s World Trade Organization meeting suggest things are not going so well.

As Bloomberg reports, Chinese and U.S. ambassadors to the WTO clashed at the regulatory body’s general council meeting in Geneva, where Beijing lashed out at President Donald Trump’s proposed tariffs on $150 billion of Chinese goods. Washington defended its measures and criticized China’s vows of retaliation.

Today’s meeting “was extraordinary in its intensity,” WTO Spokesman Keith Rockwell said. “We had the two most powerful members of the WTO weighing in on their views of each others’ policy in a way I have not seen in my many years here.”

Reuters reports that the new U.S. ambassador to the World Trade Organization, Dennis Shea, said something had gone “terribly wrong” with judges at the world body and that China’s arguments showed Beijing was living in a fantasy.

…there was a “steadily worsening rupture of trust” by the Appellate Body

“Something has gone terribly wrong in this system when those charged with adjudicating the rules are so consistently disregarding those very rules,”Beijing’s exhortations against protectionism have “entered the realm of Alice in Wonderland.”  

Chuck Again… I doubt anything good will come of these accusations by each country, but it’s good theater, eh?  

Currencies today 5/9/18… American Style: A$ .7450, kiwi .6982, C$ .7372, euro 1.1875, sterling 1.3565, Swiss $1.0012, … European Style: rand 12.5092, krone 8.10, SEK 8.7375, forint 265, zloty 3.5915, koruna 21.5114, RUB 63.15, yen 109.66, sing 1.3403, HKD 7.8497, INR 67.29, China 6.3658, peso 19.60, BRL 3.5589, Dollar Index 93.05, Oil $70.79, 10-year 3.00%, Silver $16.45, Platinum $911.22, Palladium $972.80, and Gold… $1,308.20

That’s it for today… Boy my beloved Cardinals ran into a buzz saw of pitching from the Twins, and the Cardinals left town with a sour taste in their mouths… They had better find some consistency with their offense soon, or this will be a long summer! I was thinking about their lack of hitting yesterday, and remembered my days a baseball coach, and during the days when the boys began throwing curve balls, I would tell my hitters to look for the curve, and if it wasn’t the curve, take the ball to right field. We won a lot of games and always hit the ball. I wonder if something that simple would help my Cardinals! HA!  Three Dog Night takes us to the finish line today with their song from the live at the Forum album: Easy to Be Hard…  This album was one of the first albums I ever bought, and it always takes me back to those days in my room playing this on a small record player, and turning the volume up as loud as it would go…  Ahhh, memories of youth…  And with that, I had better get this out the door, I hope you have a Wonderful Wednesday, and Be Good To Yourself! 

Chuck Butler

 

May 8, 2018  

* Today, Trump will announce his position on the Iran Nuclear Deal   

* WTO meeting today featuring U.S. VS China… 

 

Good Day… And a Tom Terrific Tuesday to you! Well, my cold isn’t much better today, and all I’ve really done the last two days is sleep. When I’m awake I’m coughing, which is “special”….  So, I’ll get through this again today and then climb back into either the bed or my recliner. The selling of the currencies is really becoming a rout, and now I’m worried that this engineered rally by the dollar is going to last much longer than originally thought… So, I’ll talk about that, and some other things today this 8th day of May, where Cat Stevens greets me with his song: Wild World…  

So, once you knock an asset to the ground, you begin to dig in and find other things that were there, but didn’t seem important, become important, and that’s what’s going on with the euro and sterling and other currencies as we start our day today.  

The dollar trading has really become a rout on the euro, and now that it’s down and out, the warts are showing…  In this case it’s the elections in Italy that are coming up. We talked about these elections maybe weighing on the euro about 9 months ago, but when the euro went into rally mode, everyone forgot about the elections. But now that the euro is getting sold like funnel cakes at a State Fair, the Italian elections get shoved into the faces of euro bulls.. 

Sterling is in the same boat…  Pound sterling was going along nicely, and I kept saying I didn’t get it, because of the problems with the BREXIT negotiations, but as long as sterling was on the rally tracks, those problems were pushed to the side… That is until sterling begins to get sold and then everyone and their brother is talking about PM May’s problems with the BREXIT negotiations…  Go figure…  

So, that’s what we have going on today… Another rout in the currencies. And there are no signs that it’s going to stop in the next day or two. Today, there’s just all these unknowns about what’s going to happen, after President Trump pulls the U.S. out of the Iran Nuclear Deal. And longtime readers know that I’ve always said that markets don’t like “unknowns” and when they occur, there’s always a flight to safety… 

And that usually means dollars, Treasuries, euros, yen, francs and Gold… But when the currencies are getting sold, the safe haven list get whittled down to dollars and Treasuries…    The 10-year Treasury’s yield has held steady Eddie at 2.95% for two consecutive days, and we all know what the dollar is doing.   

The “unknowns” of the pulling out of the U.S. from the Iran Nuclear Deal, even carried over to the price of Oil, which slipped back below $70 in the past 24 hours.  Nothing fundamental in the trading of these assets, just “unknowns” pulling them down.  

Also going on today we have an WTO meeting, which in this day of Tariffs should be interesting… The World Trade Organization holds a general council meeting in Geneva, Switzerland today, I have to think that there will be a clash between the delegations of the world’s two largest economic powers. Chinese Ambassador Zhang Xiangchen will criticize the Trump administration’s proposed tariffs, while his U.S. counterpart will find fault with China’s retaliation. 

Treasury Sec. Mnuchin just left China  with little to no progress on Trade Talks, so this WTO meeting could have some fireworks. But the thing I keep coming back to here is that I believe that President Trump wants a trade war with China to prove his point that China’s Trade Surplus is too much… And the markets aren’t on board with that thought, (they never are on board with my thoughts until it’s too late!) and that’s why the markets are trading the way they are right now.   

I sent off my Dow Theory Letters piece for this week last night, this week I talk about the price of Oil, and how all these goings on remind of the 70’s, and the return of Stagflation… I got some real response to my inclusion of a May 1997, Pfennig in last week’s DTL piece, and that was fun! So, to join us in our fun each week, simply go to www.dowtheoryletters.com and sign up. It does cost, but doesn’t everything these days? And you get a different person’s perspective on the markets 5 days a week!   

Gold lost a whopping $1.40 yesterday and is down a buck or two this morning in the early trading. Gold should be front and center leading the way for the save havens with all that’s going on right now, but it’s not, and that causes me to scratch my balding head, and wonder why…   

The U.S. Data Cupboard  today is basically empty with only a couple of 3rd tier data reports. Yesterday’s Cupboard had the Consumer Credit (read Debt) for March and it was $12 Billion, down from Feb’s $14 Billion…  has the U.S. consumer gotten to the point of no more loans for them! Like the Soup Nazi on Steinfeld, The consumer goes to the bank to get another home equity loan and the banker says, “so loan for you”!  Maybe I shouldn’t make a joke of it, but it sure could be what’s happening with consumers, don’t you think?   

To recap…   The rout on the currencies is on, and now the warts are being exposed!  Today is the day that President Trump will announce that he’s pulling the U.S. out of the Iran Nuclear Deal, and unknowns are seeping into the minds of Traders in all assets. The WTO also meets today, and the main event will feature the U.S. VS China…   

For What It’s Worth…  this piece today is out there, but that’s what this section is all about… So, it’s about how 4 corporations own everything…  and it can be found here: https://www.blacklistednews.com/article/65659/the-four-companies-that-control-the-147-companies-that-own.html   

Or, here’s your snippet: “According to the 2011 annual factbook from the Investment Company Institute, there is $24.7 trillion in all the mutual funds in the world (a little less than half from the US). Based on data from the ICI, $1.24 trillion of this is directly invested in index funds, plus another $992 billion in assets beyond that $24.7 trillion in Exchange Traded Funds, which aren’t mutual funds but are index funds. That means the bulk of that money is in “active” managed funds or fund of funds.
But then consider this: the chief of hedge funds at a very large asset manager told me last week (alas, I cannot identify either) that an internal study his firm recently performed found that the vast majority of mutual funds defined as actively managed see 95% of the assets they hold determined by an index. That means just 5% of actively managed funds really are driven by the active manager’s judgment.

This less-than-active management is for two reasons: one is to maintain the fund in a style box (i.e. large value stock, medium value stocks) and comply with the reality all mutual funds are required to have a benchmark index they compare their relative performance to. The other reason is to adhere to risk metrics to which most of the fund industry is beholden. This second point is partly due to Modern Portfolio Theory (a complex topic we won’t debate here) and to the human nature that active managers tend to build portfolios close to the indexes they benchmark against to avoid really awful downward relative performance years that ends up costing them their jobs.

So of the $25.69 trillion in worldwide assets we’ve identified, $2.23 trillion are directly in indexes (ETFs and index mutual funds) with another $22.3 trillion indirectly beholden to indexes (that 95% of actively managed fund holdings said to be determined by an index).

You can see where I’m headed here. That means the real power to control the world lies with four companies: McGraw-Hill, which owns Standard & Poor’s, Northwestern Mutual, which owns Russell Investments, the index arm of which runs the benchmark Russell 1,000 and Russell 3,000, CME Group which owns 90% of Dow Jones Indexes, and Barclay’s, which took over Lehman Brothers and its Lehman Aggregate Bond Index, the dominant world bond fund index. Together, these four firms dominate the world of indexing. And in turn, that means they hold real sway over the world’s money.”  

Chuck Again…  And that brings the writer of that article to 4 big names that control 147 corporations..  Pretty interesting read in my opinion…  

Currencies today 5/8/17… American Style: A$ .7460, kiwi .6978, C$ .7744, euro 1.1871, sterling 1.3510, Swiss $.9978, … European Style: rand 12.5374, krone 8.1088, SEK 8.8212, forint 265.23, zloty 3.6065, koruna 21,4943, RUB 62.75, yen 109, sing 1.3376, HKD 7.8495, INR 67.05, China 6.3610, peso 19.54, BRL 3.5372, Dollar Index 93.11, Oil $69.89, 10-year 2.95%, Silver $16.49, Platinum $912.43, Palladium $974.60, and Gold… $1,310.40  

That’s it for today…  My beloved Cardinals 6-game winning streak came to abrupt halt last night, oh well, ,time to start a new win streak! Day baseball at Busch today, but I won’t be attending due to the death cold I have…  My little Delaney Grace or little d as I call her, is going to be in the Muny production of Annie this summer. She’s a real natural on stage, so this will be a big deal for her… I got to see all my neighborhood friends on Saturday night at a wedding reception. We all look older and move a lot slower than we did when we moved in almost 30 years ago…   Really? our “new house” is almost 30 years old? Where o where did the time go? When I moved in here, I was working at Mark Twain Bank!  Oh well, time goes on and waits for no one…  The Eagles take us to the finish line today with their iconic rock song: Hotel California…   Now, go out and make this a Tom Terrific Tuesday and Be Good To Yourself!   

Chuck Butler

May 7, 2018  

* Dollar continues to received the love 

* Chuck is a has been?

Good Day…  And a Marvelous Monday to you!  It’s not so much of a good day for me, as I’ve come down with a very nasty cold. My wife had it last week, and I guess she wasn’t satisfied keeping it to herself! I actually slept all day yesterday, and this morning I didn’t set an alarm because I figured when I woke up I would write…  So, here I am, starting the letter at least 4 hours later than usual… UGH! So, if I can stop coughing long enough to put some thoughts together this morning, that’ll be a real accomplishment! Blood Sweat & Tears greet me this morning with their song: Spinning Wheel… 

Well, it’s been a week now and the dollar is still feeling like people love it again, when in reality it’s just a short squeeze that caused this avalanche of dollar buying. Something will change soon enough.. At least that’s how I see it.  The euro has dropped below 1.20 and the rest of the currencies fall in line behind the euro on the ride downward VS the dollar.  Gold was able to punch out a gain on Friday, nothing much to speak of, but a gain nonetheless…  

And don’t look now, but the price of Oil has climbed to $70! 

The Jobs Jamboree on Friday was a disappointment for those looking for a rebound to March’s awful print, but were disappointed once again, when the BLS unveiled their hedonically adjusted total of jobs created in April, and they only totaled  164,000 (184,000 expected) and the AVG. Hourly Earnings only gained 0.1%…   And while the major media outlets don’t seem to ever care about the jobs created out of thin air by the BLS , I do, and last month’s total was 260,000…  So, do the math, right? We had a negative month of jobs creation, but the markets didn’t care, and kept the pressure on the currencies. 

The manipulations going on in the markets these days are something, and I sat down the other day an put this thought together… 

A few years ago, far away friend, Ed Steer, put me on the approved list of people to received the GATA emails. GATA stands for Gold Antitrust Action committee… And on Friday, their Secretary/ Treasurer, Chris Powell, had this to say about manipulated markets… “ No, mainstream financial news organizations are too scared to inquire or too instructed not to inquire about market rigging by central banks, though these days that rigging is the only “market” activity that matters and its documentation is lying around in the open in various places, freely available to anyone who has an interest in looking and thereby democratizing the world financial system.” – Chris Powell

Chuck again.. The days of wine and roses for fundamentally driven markets are over, folks… And old fundamentals followers like me, are being pushed to the side of the road, to make room for Central Bank manipulated markets… I’m an old has been now… When I was a youngster playing High School football, that’s what we called the guys who had graduated and weren’t good enough to play in college (back then hardly any of the kids at my school could go to college to begin with!) , and we would say, that guy was a “has been”… Well, I became a “has been” but only on my own accord… I could have played college football, but I was in love with music, and chose to travel the country in a VW Microbus, with bandmates, playing my guitar… But now, here I am again… I’m a “has been” again… And I don’t like it one iota! But what am I to do about it?
I can only write about it and hope that one day, someone with an ounce of gray matter will stand up and make it a point to change things… No more intervention, no more manipulation, no more PPT, and whomever else is responsible for this mess of markets that we are now facing…

OK, I’ll get down off my soapbox now… What a way to start a Monday morning, eh?

You know…  the U.S. data has been hit and miss a lot lately, which doesn’t bode well for an economy that is looking down the double barrel of more rate hikes…  I came across this data the other day, and thought this really tells a story…  the New York Fed’s six-month business activity outlook plunged from 44.1 last month… to a dismal 18.8.

According to Danielle DiMartino Booth, former adviser to the president of the Dallas Fed: “The 26-point move lower is worse than anything seen during the 2008–09 financial crisis and on par only with the one that followed Sept. 11.”

And  one more thing I noticed last week consumer spending slowed to its weakest pace in nearly five years last quarter.  More of that thought that I’ve expressed several times previously, that the U.S. consumer is Tapped Out…   

Nothing much but Consumer Credit (read Debt) in the U.S. Data Cupboard today…  I’ll be watching that data print though to see how much we’ve gone into debt this past month!    

To recap… the dollar still has the love of the markets and continues to take liberties with the currencies. Gold however, did find a way to gain on Friday, so that was a good thing!  I spend a lot of time talking about market manipulations today, so if you missed it, you’ll need to go back and read that again…  

For What It’s Worth…  this is a long-ish piece today to make up for my shortcomings… It’s Charles Hugh Smith talking about the economy and it can be found here: https://www.zerohedge.com/news/2018-05-04/taking-pulse-weakening-economy    

Or, here’s your snippet: “Corporate buybacks provide the key analogy for the economy as a whole.

Central banks have been running a grand experiment for 9 years, and now we’re about to find out if it succeeds or fails. For 9 unprecedented years, central banks have pushed the pedal of monetary stimulus to the metal: near-zero interest rates, monumental purchases of bonds, mortgage-backed securities, stocks and corporate bonds, injecting trillions of dollars, yuan, yen and euros into the global financial system, all in the name of promoting a “synchronized global recovery” that in many nations remains the weakest post-World War II recovery on record.

The two goals of this unprecedented stimulus were 1) bringing consumption forward and 2) generating a “wealth effect” as the owners of assets rising in value would translate their perception of feeling wealthier into more borrowing and consumption that would then feed a self-sustaining virtuous cycle of expansion.

The Federal Reserve has finally begun reducing its stimulus programs of near-zero interest rates and bond purchases, the idea being that the “recovery” is now robust enough to continue without the extraordinary monetary stimulus of the past 9 years since the Global Financial Meltdown of 2008-09.

Will the “synchronized global recovery” continue as interest rates rise and central bank assets purchases decline? Policy makers and economists evince confidence as they collectively hold their breath–is the recovery now self-sustaining?

The vaunted “wealth effect” was extremely asymmetric: only those in the top 5% who owned enough assets to experience a meaningful increase in wealth–those who bought assets years before the current bubble expanded, and the relative few households who own roughly 70% of all financial assets–and the few workers and entrepreneurs who benefited from an increasingly “winner take most” expansion.”  

Chuck Again… Thanks to Ed Steer for helping out with the FWIW piece today… 

Currencies today 5/7/18… American Style: A$ .7505, kiwi .7013, C$ .7772, euro 1.1923, sterling 1.3553, Swiss. $.9965, … European Style: rand 12.5547, krone 8.0558, SEK 8.8115, forint 263.63, zloty 3.5683, koruna 21.3945, RUB 62.56, yen 109.26, sing 1.3367,  HKD 7.8495, INR 67.21, China 6.3696, peso 19.37, BRL 3.5270, Dollar Index 92.88, Oil $70.25, 10-year 2.95%, Silver $16.47, Platinum $915.04, Palladium $980.10, and Gold… $1,312.70

That’s it for today…  sorry again for the tardiness, but when you need to rest you need to rest! I want to give a GREAT BIG SHOUTOUT to my darling granddaughter, Delaney  Grace, as she was picked to be in the Muni production of Annie this summer… The Muni is a BIG DEAL for us here in St. Louis!   Cards sweep the Cubs! That was some weekend of baseball!  After I slept all day yesterday, I was ready to watch the game last night (have I ever told you how much I dislike Sunday Night Baseball games?) but not prepared to go to the 14th inning, and so I didn’t see the walk off home run at 1 am this morning. Mike and the Mechanics take us to the finish line today with their song: Silent Running, with Paul Carack singing…  I have to go cough my fool head off now, so please go out and make this a Marvelous Monday, and Be Good To Yourself! 

Chuck Butler

 

May 3, 2018  

* Trade War talks heat up again… 

* Gold finds its way through the gauntlet!

  

Good Day… And a Tub Thumpin’ Thursday to you! I woke up this morning, and thought it was Friday, so…  I went back to sleep! UGH! then I woke up in a panic that I had overslept, as it was actually Thursday! Double UGH! I got to see a very well played game yesterday, with the Cardinals pitcher, Carlos Martinez, impersonating Bob Gibson, as he threw 7 shoutout innings and hit a home run! It was sunny, warm, and under a blue umbrella sky, I sat there watching day baseball, with friends… As the old commercial used to say: It doesn’t get any better than that! David Bowie greets me this morning with his song: Waiting For The Man… I watched a documentary the other day about David Bowie… He was quite the showman, so creative, and a very good songwriter…  

The Dollar continues to have its way with the currencies, the euro lost the 1.20 figure yesterday, the Aussie dollar (A$) gained back about 1/4-cent and the rest were either traded in very tight ranges, or slipped even more. There does seem to be a tourniquet wrapped around the currencies at this moment, as Trade Talks come back into focus…

The fears of an unscheduled rate hike at yesterday’s FOMC meeting,  were put to rest when the Fed decided to keep rates unchanged, but set the table for a rate hike in June…  I’m really surprised by the fact that the Fed is able to keep hiking rates, i thought by now, this whole rate hike cycle would have run its course, and the Fed would be contemplating a reversal  of previous rate hikes…

The U.S. economy continues to show signs of wanting to circle the bowl, but then somehow doesn’t find the bowl. I’m really shocked that this charade continues… But then, when have I not been so ahead of the curve on things? HA!  Seriously though, this doesn’t bode well for the currencies and metals… But I’m not changing my view, just the timing of it… I’m still convinced that the U.S. economy has run its course for this growth cycle, as muted as the growth was, it has run its course, and if the Fed Heads can’t see that, with their 1,000’s of economists, and they want to keep hiking rates, then those are just rate hikes that will have to be reversed when Humpty Dumpty finally falls off the wall…

I do have to point out something that was said by Fed Chairman Powell yesterday…  The Fed statement added the word “symmetric” as a qualifier to its inflation target. Fed officials have said this means inflation can move above or below target from time to time. Are you thinking what I’m thinking, if so, I feel sorry for you, but what I’m thinking is that Jerome Powell was reading his Reader’s Digest and the word of the month was Symmetric, and he thought, “how can I incorporate that word into my Fed Statement”?   HAHAHAHAHA!  

Gold found its way through the gauntlet of more than 350,000 contracts yesterday, to gain $1.00…  That’s right I said one dollar…  Everyday, Ed Steer prints a graph of the dollar movements from the previous days, and every day I look at and I can pinpoint when the short dollar paper trades hit the market by bundles, for the drop is so pronounced and at one time. The price manipulators are so brazen now that they don’t need to spread out their short paper trades, just throw them all at the market at the same time and watch the drop…   

And the dollar trading in the Dollar Index pretty much goes the same way, with the dollar buying happening in bunches, as the Plunge Protection Team (PPT) continues to hold the key to dollar strength or weakness… 

Now, i f the currencies were seeing their respective economies growing like weeds, and their respective Central Banks were hike rates, like the Fed, then they could muster enough strength that they could drive the PPT out of the markets, and it would be all about fundamentals again, and the respective currencies would be getting bought on those fundamentals… 

But, the currencies’s economies don’t have their back…  It looked like the Eurozone economy was coming out of the dark ages, but the European Central Bank (ECB) continues to drag out the stimulus and negative interest rates, and until that changes, the euro will struggle, especially with the dollar getting bought. 

Well, this certainly is the “volatility” within a trend that I’ve talked about, but in reality it was “engineered volatility” or “managed volatility” courtesy of the PPT, so it’s not an organic bout of volatility, which means that I’m having a problem figuring out when this volatility within the weak dollar trend is going to end. But it will… eventually, and when it does, we need to be ready to strike!   

Well, I mentioned above that the Fed’s FOMC Meeting ended with no rate hike, but some table setting for a June hike. In their statement the Fed Heads acknowledged that inflation was rising, and that it had hit their target rate of 2%. The Fed Heads also made a point of telling the markets that they will not panic should inflation continue to rise. Wait, What? If inflation was growing like a week, wouldn’t that be the time TO PANIC?

I shake my head in disbelief of the things that these people that should know better, say…  So, now we have more than a month of reading and listening to pundits talk about the rate hike in June… Blah, blah, blah… It’s going to be so much fun… NOT!    

The U.S. Data Cupboard yesterday had the ADP Employment Report for April, and it showed that 204,000 jobs were added in April, which is much better than the paltry 103,000 in March, but let me remind you that last month’s ADP report showed 241,000 jobs created in February, and the BLS said only 103,000, so unless this data begins to align with the BLS Jobs Jamboree, then I’m not going to pay attention to it any longer! 

The Data Cupboard today has some goodies for us… First up is a real economic piece of data, Factory Orders for March, expect this data to be basically unchanged and remain at 1.2%… Then we’ll see the data print that has been lagging, Productivity for the first QTR…  Productivity is supposed to measure the growth of labor efficiency in producing the economy’s goods and services. But in layman’s terms… it’s how much work you’ll do for the same wage…  The jobs increases have brought down the productivity levels here in the U.S.  

To recap…  The dollar continues to push the currencies around, but Gold was able to eke out a $1 gain (Big Deal, rigtht?)  The Trade War talks are heating up again, and this could lead the currencies right back to pushing the dollar around. The Fed kept rates unchanged but set the table for a June rate hike… Chuck does a mea culpa regarding this thought that the Fed would be contemplating reversing the rate hikes by now…  

For What it’s Worth….   I mentioned today that the Trade War talks were heating up, and it appears that China is the one turning up the heat. This article talks about how China is reacting to the tariffs, and it can be found here: https://www.zerohedge.com/news/2018-05-02/china-warns-trump-we-will-outlast-you-us-significantly-escalates-trade-war   

Or, here’s your snippet: “Beijing sent the first messaging salvo ahead of the Steven Mnuchin-led delegation to China (which will engage in trade talks over May 3-4) overnight when the PBOC fixed the yuan sharply lower than many expected. The signal was clear: push us hard enough, and we may just launch another devaluation. Or worse.

A little while later, Beijing did its best attempt at managing expectations, when it said that it’s “unrealistic” to expect to solve all issues between the U.S. and China at a single meeting, given the economic sizes of the two countries and their complex economic and trade relationship, foreign ministry spokeswoman Hua Chunying says at daily briefing.

While Hua tried his best to pay the diplomatic “good cop”, saying it was in the mutual interest of both countries to solve trade issues through consultation, just a few hours later, China’s foreign minister Wang Yi was the bad cop, who warned that whereas China would welcome a successful outcome from upcoming trade talks with the United States, it is “fully prepared for all outcomes and will not negotiate on core interests.”

Then the “worst cop” emerged in the form of yet another, unnamed official who according to Reuters said that talks must be held as equals and be mutually beneficial, echoing E.U. president Jean-Claude Juncker, saying that Beijing would not yield to any trade threats from Washington or accept any preconditions for talks.

He then uttered the most explicit warning yet: “In the event of a trade war, we have a much greater ability to endure (the consequences) than the U.S.,” the official said.”   

Chuck Again…  I want to thank Ed Steer for pointing me to this article. Ed does such a great job of putting together news articles that affect the metals…  I think that the last time I mentioned Ed Steer, and put his website in the Pfennig, I gave you the wrong web address, so in my attempt to rectify that here it is again: www.edsteergoldsilver.com/   

Currencies today 5/3/18… American Style: A$ .7530, kiwi .7033, C$ .7790, euro 1.2975, sterling 1.3585, Swiss  $ .9986, … European Style: rand 12.6132, krone 8.0543, SEK 8.8548, forint 262.30, zloty 3.5614, koruna 21.3524, RUB 63.69, yen 109.43, sing 1.3318, HKD 7.8495, INR 66.60, China 6.3616, peso 19, BRL 3.5274, Dollar Index 92.53, Oil $67.83, 10-yr 2.95%, Silver $16.50, Platinum $902.21, Palladium $973.10, and Gold… $1,312.50  

That’s it for today and this week… Saturday is Cinco de Mayo, and Kentucky Derby Day!  For years I’ve told readers the story of me in Cancun many years ago, and watching a street performer play his guitar, and me grabbing the microphone an begin singing along with his guitar playing, and Cinco de Mayo always reminded me of that time… Once a performer, always a performer…  That was a great day yesterday at the ballpark. And now the Cubbies come to town… And Saturday is also the wedding day for our good friend’s daughter.. So, the neighbors will all be there, and a good time will be had by all, I do believe! So, I’ll be busy this weekend… Hope you are too!  The Hooters take us to the finish line today with their song: All You Zombies…  one of the better 80’s music songs…   I hope you can make this a Tub Thumpin’ Thursday, and remember to BE Good To Yourself!  

Chuck Butler

May 2, 2018

* Trump’s tariffs are getting watered down… 

* The Fed’s two-day meeting ends today…. 

  Good Day… And a Wonderful Wednesday to you, along with a putting out the welcome mat to May… Sorry I wasn’t here yesterday, but it was a travel day, which brought me back home, and now here I am at my writing desk! I got back and the temps here are warm! YAHOO! Much better than my earlier return and it was nothing but chills and rain. A nice walk-off win for the Cardinals last night in the 9th inning. The Cardinals had been stymied until the 9th, so better late than never, eh?  The Beatles greet me this morning with their song: Get Back…

Well, we’re still dealing with dollar buying… Yesterday, Gold got whacked again, as the “boys in the band” were busy. The euro is hanging onto 1.20 by the skin of its teeth this morning, and the “old reliable” Chinese renminbi has seen a week of losses.  The U.S. President, Trump, decided to soften up his tariffs for the U.S.’s allies, proving once again that it’s nice to have friends in high places! 

It does appear to me that all the Trade War talk was built to a crescendo, only to see them dissipate…  It was more talk than walk, as my dad used to say… And as far as I’m concerned, that’s a good thing for the U.S. economy, and bad thing for the currencies, as the dollar, which got sold during the Trade War Talks, is getting bought on the war drums beating fading away…

I told you last week that the short squeeze that was happening, and breathing new life into the dollar, could go on for some time, and it appears to be doing just that. You know… All the reasons the dollar was sold prior to the short squeeze are all still in place, which leads me to believe that once we get through all this short dollar buying, that new shorts will be placed and the dollar will once again be on the chopping blocks…    

I arrived home last night, and quickly set up my laptop to view what happened during the day.

It was, of course, May Day, which is also workers day… Hmmm… I talked to a friend the other day about when we were youngsters and the nightly news on May 1st, would show us the military parade in Russia… Remember that? Well we don’t have that going any longer, but… what we have these days is the workers in Paris, France, setting the town on fire… That kind of stuff always boggles my mind… You’re upset with something, so go burn down the city… Makes so much sense to me… NOT! The city is flooding, let’s go loot the local TV store! NOT! And so on… I just don’t get that mentality, so I guess, I have officially crossed over to “Old crabby guy, that yells at his kids to “get off my lawn””…     

I mentioned the Aussie Bank scandal on Monday, but totally forgot to explain what the scandal was all about. Thank Goodness for Bloomberg who gave a quick snippet on the subject… “he most startling revelations relate to financial planning and wealth management. Banks have provided poor and inappropriate investment advice, charged fees without providing any additional services, siphoned fees from the estates of deceased clients, impersonated clients or forged their signatures on documents, and generally failed to act on legitimate client grievances.”

THE WRITER WROTE ABOUT HOW THIS TYPE OF SCANDALOUS STUFF IS GOING ON ALL OVER THE WORLD RIGHT NOW, AND THAT INCLUDES THE U.S…..     

Scary stuff, eh? And even more reason for the “boys in the band” to be busy, propping up the dollar VS Gold, because when I read stuff like that, I immediately think, “Do I have enough Gold?”  Oh, well, Gold lost $11 yesterday, with 268,000 contracts traded… Crazy, eh?    

Well… I would love to say that this story made my day yesterday… But then I would probably receive a letter of cease and desist! HAHAHAHA.. But, I’m Chuck Butler, and I don’t care, because the more that Lola gets noticed that their practices earn the name that Matt Taibbi of Rolling Stone magazine bestowed upon them several years ago… the Great Vampire Squid… The more I feel better… But, as usual NO ONE WENT to JAIL! So with no further ado, here’s what I’m talking about…

Goldman Sachs Group Inc. has agreed to pay about $110 million to resolve allegations that its foreign exchange traders improperly shared information about client orders on an electronic chat room, putting clients at a disadvantage.

The firm will pay roughly $55 million each to New York’s Department of Financial Services and the Federal Reserve Board. As part of its settlement, Goldman Sachs Bank USA, the state-chartered unit overseen by the New York agency, will provide its regulators with a plan to improve its internal controls and compliance program.  

But again… nobody went to jail! And that’s all I’m going to say about that! 

The U.S. Data Cupboard today will have the ADP Employment report, which is the appetizer for Friday’s Jobs Jamboree…  On Monday, we saw Personal Income and Spending, and the PCE report for March… Personal Income is on the rise in the U.S. which is a good thing as long it’s a steady and even rise. And don’t get all caught up in the comparisons to last year’s data, because that data was so darn weak, that it makes this year’s print look even stronger than it is.  

But Personal Spending continues to lag Income…  I would have to say that given the Vehicle Sales of more than 17 million, that consumers must be concentrating on autos…     The ISM also printed earlier this week, and it slipped from 59 to 57… A sign of things to come? That’s difficult to say for sure until we see next month’s print…    And the Fed’s preferred inflation calculator the Personal Consumption Expenditures report showed that inflation has finally reached the Fed’s 2.0% target, on a year on year basis…  Once again the data a year ago was so weak that the increases to last year are a little skewered, but nonetheless, the target has been reached… What will the Fed Heads do now?

I saw this article on the Bloomberg, and them MarketWatch also sent it to me and it’s about a Billionaire investor that has over half of his total investments in Gold…  I bet he yells at the walls, and sets off a string of curse words directed at the price action in Gold, every time the “boys in the band” begin playing….   But that’s quite an investment in Gold, eh? 

Now, I would never suggest to any investor that they have over half of their net worth in any particular investment asset class.  Diversification is the key, and it should be conservative and spread across several asset classes that have little to no correlation with other investments in your portfolio.

That would include currencies and metals… Longtime readers have heard this preaching by me so many times, they probably grow tired of hearing it! But this won’t be the last time I get up on my soap box and preach about diversification!    

Oh, and I almost forgot!  Today the Fed will tell us what their two days of playing board games got them thinking about…  the two-day FOMC meeting will end this afternoon, and the wisdom for all (NOT!) will be passed on to the markets… Recall that on Monday this week, I told you that there were some rumors going around that someone’s underground, no wait! the rumor was all about the Fed hiking rates at this meeting… I don’t see that happening, but then again nothing surprises me coming from the Fed any longer… 

To recap…  The dollar buying continues, and Gold has gotten caught up in the dollar buying. The euro his hanging onto 1.20 by the skin of its teeth, and Gold lost $11 yesterday. Trump’s tariffs are getting watered down, and the Trade War drum beating has faded The Data Cupboard has been good and bad with PCE reaching 2.0%, the ISM sliding backwards, and the Personal Income and Spending reports mixed…   

For What It’s Worth… This article is from zerohedge.com and is about how the U.S. booked debt in the first quarter that we haven’t seen the likes of since the Financial meltdown..  And it can be found here: https://www.zerohedge.com/news/2018-04-30/us-just-borrowed-488-billion-one-quarter-most-financial-crisis  

Or, here’s your snippet: “For months, analysts have been warning that the U.S. is set to borrow an unprecedented — for a non-recessionary period — amount of money…and on Monday afternoon this was confirmed, when the U.S. Treasury announced that in the quarter ended March 31 (the fiscal year’s second quarter), the U.S. borrowed $47BN more than its had anticipated three months ago, or $488BN to be precise.

This was the single biggest quarterly amount of debt sold by the U.S. Treasury since the record $569BN in debt borrowed in Q4 2008 when the financial system nearly collapsed, and Treasury had no choice but to raise a gargantuan amount of money during the biggest financial crisis in modern U.S. history.

What is scary is how fast the U.S. is raking up the debt: as a reminder, just a few weeks ago we reported that in the first six months of the fiscal year, the U.S. budget deficit rose to $600 billion as spending increased at three times the pace of revenue growth in the October-to-March period. At that run-rate, the U.S. deficit will soar to $1.2 trillion for fiscal 2018, far above the $804BN projected budget gap and resulting in an even greater amount of debt borrowed.”   

Chuck Again… Can you believe this? But not to worry folks, the Tax bill is going to cure all that ails the U.S. according to the Treasury Dept…  Somebody please check the foreheads of the Treasury Dept folks, as they must be running a temperature!    

Currencies today 5/2/18… American Style: A$ .7511, kiwi .7022, C$ .78, euro 1.2003, sterling 1.3657, Swiss $.9963, … European Style: rand 12.62, krone 8.0728, SEK 8.8590, forint 261.54, zloty 3.5518, koruna 21.3235, RUB 63.25, yen 108.83, sing 1.3347, HKD 7.8495, INR 66.64, China 6.3392, peso 18.98, BRL 3.5042, Dollar Index 92.35, Oil $67.51, 10-year 2.99%, Silver $16.39, Platinum $898.95, Palladium $960.40, and Gold… $1,311.70  

That’s it for today… Well, there’s a day game at Busch Stadium today, so that means I’m going to the game! Good Friend, Duane took care of getting the tickets, and it’s supposed to be 86 degrees today, perfect for a baseball game! The flights home yesterday were non-events, no hassles, no problems, and Alex picked us up at the airport right on time… Which meant I needed to buy Alex’s dinner! But we had a good time together, and the brisket sandwiches we had were yummy!  And with that, The Blues Image takes us to the finish line today with their song: Ride Captain Ride… I hope you have a Wonderful Wednesday and remember to Be Good To Yourself!  

Chuck Butler

April 30, 2018

* N & S Korea agree to denuclearize!

* The dollar continues to be bought… 

   Good Day…  And  a Marvelous Monday to you. Not so much for me this morning, as I’m having some stomach problems to start the day. Hopefully they will dissipate and I can join you in this Marvelous Monday! What a bad trip to Pittsburgh for my beloved Cardinals last weekend UGH! I  hear that my oldest son, Andrew, has some handicapped tickets to the game Friday night for me. YAHOO! You know me, I prefer day games, but an invitation to a game can’t be dissed! There’s a lot of stuff going on, I doubt I can get to all of it… Oh! And no Pfennig tomorrow, it’s a travel day for me…  the Allman Brothers greet me this morning with their song: Blue Sky…    

Well, here we go! We’ve got a Fed monetary meeting this week, the Jobs Jamboree on Friday for April, we had North & South Korean leaders shaking hands this past weekend, we’re still waiting for a definitive decision from the U.S. President on the Iran nuclear deal, and there’s some money missing in Philadelphia. These and maybe some more thoughts from me today, and maybe I won’t even be able to get to these!  So, let’s get started and when my battery runs out, well, we’ll cross that bridge when if we get there!  

First, the Fed meeting On Wednesday, i read some research this past weekend that talked about how the Fed just might hike rates at this meeting, given the sudden spike in PCE (Personal Consumption Expenditures) The Fed’s preferred inflation calculator.  There’s been little talk from the Fed Head speakers about a rate hike in May, instead most talk about a rate hike in June. So, moving like this unexpectedly, could prove to be damaging for the psyche of the markets, in my humble opinion that is…   I see a rate hike in two days to be the Fed signaling that they are behind the 8-ball with regards to rising inflation…  Now, that’s a calming thought isn’t it?  

  The currencies continue to get sold VS the dollar this morning. This really burns me up… A couple of weeks ago, the dollar was ready to go on a very long trip on the Slippery Slope, but then the “gentle hands” stopped the dollar selling, a short squeeze started, and now after all that, the panic sets in among investors in the currencies that this dollar buying isn’t going to end…  Whoa, there partner! I’ve always told you that a trend is not a ONE-WAY Street, that there can be volatility within the trend haven’t I?  Why, yes, Chuck, you have probably said that 100 times through the years… 

Of course this doesn’t make the dollar buying go away… And now Lola, aka Goldman Sachs is saying the Aussie dollar is going to fall to 72-cents! You see there’s a banking scandal in Australia that’s being played out on TV in OZ…  It’s a nasty banking scandal, that might stretch its tentacles to other countries before it’s all said and done…  I’m watching it unfold, and thinking… I would bet the same thing is going on all over the world, including the U.S.!   Well, we all know that what Lola wants, Lola gets, so hold onto your hats,  and get ready for a storm in the Aussie dollar (A$)… 

The dollar buying is so strong right now that even the second consecutive  month of the price of Oil rising isn’t enough to offset the dollar strength, and the petrol currencies are thrown in with the rest of the currencies seeing weakness. The Norwegian krone, which when the euro was rising along with the price of Oil, was looking very good, but now that the euro has hit a speed bump, the krone has seen enough selling to bring it back to an 8 handle… UGH!  

Speaking of the price of Oil…  It’s not as perky in price as it was last week, but it still has booked another monthly gain, marking two consecutive months of gains for the bubbling crude, black Gold, Texas Tea… A lot of the thing that’s helping the price of Oil to get bid upward, is this Iran Nuclear Deal…  Apparently, May 12, is the cutoff, and there are Oil buyers that won’t book deals after that day, not knowing what the end process is going to be for the U.S. in the deal.   

Did you see the leaders of N. and S. Korea shaking hands and acting like longtime buddies? Well, they supposedly, signed a deal to denuclearize the peninsula of Korea, which is a good thing in my book, but can we really trust the leader from N. Korea? I tend to doubt that we can… But I guess this is a wait-n-see, eh?  

Gold continues to get hammered almost daily these days. The shiny metal did gain $6.30 on Friday, as the price manipulators must have taken the day off, as only 232,000 contracts traded. Unfortunately, Gold is back on the chopping blocks in the early morning trading today, and is down $8…

I had a dear reader send me a note last week, with his opinion that the main culprits in the Gold price suppression game is China and Russia, for they continue to back up the truck and buy large amounts of physical Gold each month, and they love it that the price of Gold remains stuck in the mud and unable to trade past $1,350…    I told him that while I’ve thought of this before scenario before, I just can’t get my arms around it, for there has been no “claims to this scenario by anyone other bloggers” And I’ve got the proof of U.S. involvement from the WikiLeaks memos I’ve printed before and given readers the links to.     

The U.S. Data Cupboard is chock-full-o-data this week, culminating in a Jobs Jamboree on Friday. Tomorrow we’ll see two of my fave prints, when Personal Income and Spending for March prints.  Last Friday, the first reading of GDP for the 1st QTR printed, and I was laughing so violently when I saw the headlines that I about fell out of my chair…  Apparently, somewhere along the way, we are being led to believe that 2.3% annual growth is to be considered as “strong”, for that’s what the report called this print!  You’ve got to be kidding me, I said out loud! And let’s not forget that the first print of GDP usually gets brought down with the revisions that will come in the coming weeks.  

It’s the trophy for everyone scenario, the dumbing of America, the let’s settle, that’s taking hold of this country, folks… 2.3% is strong?  I have to tell you that it isn’t, and shouldn’t ever be considered strong again! But it will, because we’ve grown to be accepting to this babble… I shake my head in disgust…   

I received a treat on Friday last week, from my good friend, and longtime boss, Frank Trotter… Back in the 90’s websites were just beginning to become something that every company needed to have, and the old Mark Twain Bank was no different. So, Frank built the website for the bank, and decided that the website needed content that changed daily to keep brining people back to the site. And that’s wen he decided that my Daily Pfennig letter would be perfect!  Before that, the Pfennig was being sent to readers via fax machines… Pretty archaic, eh?   Any way, Frank sent me a link to the old Mark Twain Bank archives, and in it were  a month of Daily Pfennigs!  You should see them! They were short and to the point, and included a picture of me, which shows me with hair! HAHAHAHA! 

I highlight one of those Pfennigs from May 1997, in this week’s Dow Theory Letters that will print this coming Thursday.  That picture of me from 1997 is worth the price of admission folks! And I hear that the Aden Research people are still offering an introductory price of $69 for 3 months, hint, hint… check it out at www.dowtheoryletters.com  

That Frank was always full of surprises!  When I talked to Frank a couple of weeks ago, he sure looked relaxed and enjoying his retirement!  Good for him!   

To recap…  The dollar is still being bought as we start the week, and the currencies are getting sold along with Gold. The price of Oil will book a 2nd consecutive month of gains this month, but even this rise in the price of Oil can’t help the Petrol Currencies. Lola says that the A$ is headed south, and what Lola wants, Lola gets, right? N and S Korea agree to end nuclear development, who here thinks that the N. Korea leader had his fingers crossed behind his back?   

For What it’s Worth… I talked last week about the scenario where sanctions to Russian aluminum could be removed, and the folks at zerohedge.com ran this story last week, thus removing the barrier that was holding up the removal of sanctions on Russian aluminum…  And it can be found here: https://www.zerohedge.com/news/2018-04-27/deripaska-agrees-resign-rusal-will-sell-controlling-stake   

Or, here’s your snippet: “Just 24 hours ago, Bloomberg reported that “Oleg Deripaska Plans on Keeping Control of Rusal”, a move which suggested that the Russian oligarch would remain defiant in face of U.S. demands that he sell his stake and/or step down as head of United Co. Rusal – the world’s biggest aluminum producer outside of China – even as the Russian aluminum giant battles for survival having lost capital markets access following the sanctions.

Or maybe not: overnight we got a first indication that Bloomberg’s report was incorrect when Rusal published a Facebook post denying the Bloomberg claim that Deripaska was intent on keeping control over Rusal, and threatened to take “legal action”

And then, moments ago, we got definitive confirmation when EN+, which holds a controlling stake in Rusia, announced that Deripaska had in fact agreed “in principle” to cut his stake in EN+ to below 50%, and that the sanctioned Russian billionaire had agreed with the proposal that he will resign from board.

As EN+ also adds, the company is seeking an urgent response to the formal request submitted to OFAC, and notes that without an extension of “authorization period for General License No. 13″, the ability of the company to maintain GDR listing on LSE will be materially impacted.”

Chuck Again… Maybe this news will help the ruble to wrap a tourniquet around the currency to stop the bleeding?    

Currencies today 4/30/18… American Style: A$ .7540, kiwi .7040, C$ .7768, euro 1.2078, sterling 1.3724, Swiss $.9912, European Style: rand 12.4426, krone 8.00, SEK 8.6962, forint 259.45, zloty 3.4972, koruna 21.1432, RUB 62.15, yen 109.37, sing 1.3258, HKD 7.8482, INR 66.44, China 6.3333, peso 18.73, BRL 3.4567, Dollar Index 91.84, Oil $67.39, 10-year 2.96%, Silver $16.39, Platinum $905.48, Palladium $969.97, and Gold… $1,314.70  

That’s it for today, and I’ll talk to you again on Wednesday…  We didn’t get everything we came down here to do accomplished but it wasn’t any of our lack of trying… Red tape, and dolts is all I’ll say about that… I might be spending the month of June down here, we’ll have to wait-n-see how everything progresses at this point. Where have the bats gone? Someone please find them and return them to the Cardinals!   The White Sox come to town for a quick two-game series this week, and interleague play begins for the Cardinals. Bad Company takes us to the finish line today with their song: Can’t Get Enough…  I hope you have a Marvelous Monday, and please Be Good To Yourself…

Chuck Butler

April 26, 2018    

* Riksbank leaves rates unchanged, and ECB meets…

* Oil rises on Iran deal talk… 

 

Good Day… And a Tub Thumpin’ Thursday to you! I bagged the alarm again this morning, UHG! Good thing I’m no longer working for a wage, eh?  Of course back when I was working for a wage I would go to bed at night and sleep through the night, so getting up before the rooster crows wasn’t a BIG Deal. My beloved Cardinals’ bats came alive last night. This team just can’t find any consistency in the early part of the season so far…  I hope they figure it out soon, otherwise it’ll be a long summer…  Lynyrd Sknynyrd  greets me this morning with their song; The Ballad of Curtis Lowe…    

Well, the short squeeze, that has turned the dollar into a world beater once again continued yesterday and in the overnight markets. The euro has given up the 1.22 handle, and the rest of the currencies fall in behind the Big Dog euro. I do want to say that I’m getting the sense that this short squeeze is nearing an end, in my opinion, because the downward moves in the currencies were small yesterday, which indicates to me that the depth of the trade is thinning out.  That’s how I see it, so let’s see how it unfolds, eh?   

If I’m correct, then we need to be finding the keys to our truck that we’re going to back up to buy the currencies and metals once the short squeeze is over. We’re going to want to be ready to move when the time comes, right?  I hope I’m not doing a Will Farrell in his movie when he’s streaking down the middle of the street, and thinks there’s a whole mass of people streaking behind him, only to find out he was by himself…   

Alrighty then… The Big News overnight is that France’s President Macron, told reporters yesterday that he believes the U.S. is going to pull out of the Iran Nuclear  Deal, which got the Iranians irritated and they responded that if the U.S. pulls out, they will too… Well, that got the juices flowing with Oil traders and investors, and they began to buy Oil and drive the price up over the $68 handle on the day.  

I had a longtime reader send me note the other day, and wondered why I stopped adding the link to the Debt Clock each week?  I sat back and said to myself… “I don’t have an idea why I that happened!”  So, in honor the former longtime tradition on Fridays to list the Debt Clock link, I’ll try my best to recall to do it every Thursday now… So, here you go!http://www.usdebtclock.org/        Did you know that the Debt Clock is also an app for your smart phone?  I have it, and whenever I’m out and someone begins to spout off about the debt or whatever, I pull out m iPhone and click on the app and soon am able to right his wrong with proof!    

Go ahead and click on the link… Now  scroll down and you’ll see the two things that scare the bejeebers out of me… The Unfunded Liabilities which are $112.9 Trillion and the Unfunded Liabilities per Tax payer… $930,348!  WOW! and that’s not a good WOW! And Professor Lawrence Kodlikoff believes that the real Unfunded Liabilities is more than $200 Trillion!  And as I’ve explained many times before, but will do so again because well, I want to…  The Unfunded Liabilities represent the so-called Entitlements, and with 10,000 Baby Boomers retiring every day for the next 10 years, thee strain on the Unfunded Liabilities is going to be tremendous… 

Now, doesn’t that scare the bejeebers out of you too? Or are you one of those people that believe the U.S. could just print enough money to cover the debt and start over?  Well, the U.S. could do that, but what would that do to the value of the dollar? Yes, that would ruin the dollar’s value and bring it to its intrinsic value… Ok, you say, that wouldn’t be the end of the world, now would it? Well, let me ask you this… All your investments, your home, etc. are denominated in dollars, so if you don’t mind that your net worth gets bashed and bruised, and your purchasing power has gone to hell in a hand basket, then you’re good to go!    

Alrighty then, enough of that!  The Riksbank (Sweden’s Central Bank) surprised observers this morning by leaving their interest rates unchanged. It was thought that the Riksbank was going to hike rates at this meeting, and thus get out of the negative interest rates game… But that didn’t happen and the krona is paying for it…   

The European Central Bank (ECB) is meeting while I write this morning, but there’s nothing here to mention… The ECB is stuck in the mud, for the euphoria they had a couple of months ago with the economy, has faded, and with that fade, is the possibility of the ECB also getting out of the negative interest rates game… No wonder the euro can’t seem to find a bid these days… 

So, if anything, look for the ECB President, Mario Draghi to be a real Eeyore this morning and not give the euro any ability to rebound…  

Gold wasn’t able to put tow days of gains together yesterday and lost $7.20 on the day, closing at $1,322.60… There weren’t as many contracts traded yesterday in Gold, with a good amount still of 258,000.. Up one day, down the next, no trend to speak of here, and that really surprises me in that with all the geopolitical stuff going on Gold should be racking up gains on a daily basis… I’m just saying… 

The U.S. Data Cupboard was empty yesterday, but gets restocked today with the real economic data prints of Durable Goods and Capital Goods Orders for March.. .I expect these two pieces of data to fall from February’s print of 3.0% and 1.4% respectively.  There are some other minor pieces of data to print today, but these two are definitely the cat’s meow of data prints today.. . 

To Recap… The Riksbank left rates unchanged, surprising observers who thought they would hike them. the ECB is meeting as Chuck writes this morning, and the dollar continues to swing its mighty hammer as the short squeeze nears an end, in Chuck’s opinion…  The U.S. and Iran seem to be headed in the wrong direction, and that has the price of Oil rising again this morning…   

For What It’s Worth…  I saw this in Ed Steer’s letter today, and when he said it was Ambrose Evans-Pritchard writing it I knew I would want it for the FWIW section today…  This is about the price of Oil rising to $100, and can be found here: http://business.financialpost.com/commodities/energy/oil-shock

Or, here’s your snippet: “The world risks a full-blown oil shock within months as three geostrategic crises come to the boil and Saudi Arabia hints at US$100 crude, setting off a speculative scramble by commodity hedge funds.

Brent crude has surged this week to a 40-month high of almost US$75 a barrel even though the global economy is losing momentum. This price spike is different from earlier China-driven episodes over the past 15 years. It reflects a constriction of supply and a rising “political premium.” Such a context makes it more threatening.

It is now highly likely that Donald Trump will reinstate oil sanctions against Iran on May 12, this time adding extra curbs on distillates. Japan and South Korea will almost certainly join the Americans. Most European firms will fall into line whatever the policy of their own governments since it is dangerous to defy the U.S. Treasury. Most insurers and shippers will steer clear of Iranian cargoes.

“We are pretty confident that oil will be in triple digits by next year,” said Jean-Louis Le Mee from Westbeck Capital. By then the oil market will be feeling the delayed effects of a 40 per cent slump in investment from late 2014 to early 2017, storing up a structural shortfall of 8 million barrels a day (b/d).”    

Chuck Again…  And what was the driving force of last month’s rise in auto sales? SUV’s and Trucks.. in other words, gas guzzlers, just in time for the price of gas to go through the roof again… How many of those purchases will be abandoned on the side of the road in the future?   I’m just saying….

  Currencies today 4/25/18.. American Style: A$ .7576, kiwi .7075, C$ .7788, euro 1.2182, sterling 1.3960, Swiss $1.0166, … European Style: rand 12.3711, krone 7.9453, SEK 8.5760, forint 256.76, zloty 3.4744, koruna 20.8975, RUB 61.98, yen 109.22, sing 1.3260, HKD 7.8473, INR 66.74, China 6.3166, peso 18.82, BRL 3.4830, Dollar Index 91.17, Oil $68.32, 10-year 3.0%, Silver $16.60, Platinum $912.16, Palladium $975.96, and Gold… $1,324.60  

That’s it for today…  My new chair was delivered yesterday… I had long wanted a recliner down here in my winter home, and last week I finally bit the bullet and bought one… Man is it comfortable! I may not get out of it all day now! HA!  Day game at Busch today, wish I were there to go to the game, but I’m not, so I’ll have to miss it… I saw it was raining while the game was going on last night… UGH!  Should be a good day for a day baseball game today… I know it will be nice an warm here!  And with that thought, it’s time to get this out the door! Steely Dan takes us to the finish line today with their song: Black Friday…  I hope you will go our and make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler

April 25, 2018    

* The Indian rupee is worst performer.. 

* Gold finally sees some love and gains $5.60 on the day… 

 

Good Day… And a Wonderful Wednesday to you!  OOPS I did it again. UGH! I was up walking the floor after midnight, in the moonlight last night And once again I failed to obey the alarm clock. I think that this change in my MO is concerning to me, as I’ve never been one to just “let it be”…  But maybe this semi-retirement I’m in, has caused this change in me… Oh well, The Strawbs greet me this morning with their Rock Classic song: Autumn…  

Right out of the starters blocks this morning, I’ll tell you that the dollar continues to take no prisoners…. I read that it’s a short squeeze, that everyone an their brother was short dollars, and this short squeeze could end up being rock star status… That wouldn’t be good for the currencies, so we’ll have to wait-n-see just how far this short squeeze goes, eh? It won’t be over until it is, is the saying I used to tell the folks on the trading desk at m old place of business… 

One of the worst performing currencies in recent weeks has been the Indian rupee… I mentioned the other day that a banking scam/ scandal was scaring investors here, and that remains, but there’s also this fear that the calm that fell over the Indian economy when Oil prices dropped, is going to reverse, now that Oil prices are moving higher again.  So, if you own rupees I suggest you batten down the hatches, and wait for a sunny day to buy some more at cheaper prices, and if you don’t own any, you don’t care about any of this! HA!  

A couple of years ago, when I was still sitting on the trading desk, I was talking with one of our dealer friends at Morgan Stanley, and I told her the next BIG problem for the U.S. was going to be a Lack of Liquidity, and she was very doubtful that a Liquidity problem was going to come upon us. But I pointed out that with the Fed in the markets every day, buying bonds (at that time) that there would come a day when the Fed stopped buying, and liquidity would begin to dry up… 

I tell you this because there’s an article on Zerohedge.com  this morning that talks about a liquidity problem showing signs of becoming  the real deal…  Let’s listen in… “As The Wall Street Journal recently noted, worsening liquidity comes as banks have reduced inventory of riskier assets and investors more closely track bond indexes, making it harder and harder to buy or sell when they want (let alone when they need)…

The liquidity problem has been worsening for years. Investors say it began nearly a decade ago, when post-financial-crisis regulation prevented banks from trading for themselves, and forced them to hold larger amounts of capital – thereby shrinking their inventory of riskier assets.

This, in turn, reduced banks’ ability to serve as intermediaries between buyers and sellers.”    Chuck again… Crazy, eh? People as me all the time how I see these things happening long before they come to fruition… I tell them, I have no idea, for I use logic to form my thoughts, and logic told me years ago that if you have an entity buying large sums of bonds, and then stops buying, that you’ll have a liquidity problem…  That, my friends is what you get when you read the thoughts of someone that has been around the markets for 45 years… 

I know you’re saying, but he doesn’t look that old, right? HA!  The price of Oil slipped downward to the $67 handle from the lofty $69 handle in the past 24 hours… I would imagine that there was plenty of profit taking going on here.. 

Gold finally saw some love yesterday, and was able to carve out a $5.60 gain on the day, to close at $1,329.80, after the dust settled on the 268,000 contract traded in the shiny metal. It’s a shame, the way the price manipulators keep playing this game of allowing Gold to run up to $1,350 and the whack it back down, and then rinse and repeat over and over again…  One of these days, Alice! To the Moon!  Ralph Kramden would know what to do with the “boys in the band”… 

That’s an oldie but goodie, eh? The euro continues to get battered as the offset currency to the dollar when the dollar is rallying like this. But when things turn around…  I’m just saying, which begs the question, should we be looking to buy some euros at these cheaper prices?  I think we should probably wait and see where this short squeeze for the dollar goes, but when it ends, THAT would be the time to back up the truck, so to speak… 

Beep, Beep, Beep…   No, put it in park, we’re not ready to be backing up yet!

The  U.S. Data Cupboard is empty today, but yesterday’s cupboard had the stupid Consumer Confidence report for April, and it showed a HUGE jump in the index number from 125.9 in March to 128.17 in April…  Weren’t we talking about a possible Trade War this month? How could these people be so darn confident? I just don’t get it…  

We also saw  The Case/Shiller Home Price Index for Feb, and it grew 6.3%, and then the New Home Sales data printed for March, and showed that it beat the expectations by a large margin, showing that 694,000 new Homes were sold in the month, VS 630,000 expected…  I thought that a month ago, there was all this talk that home prices were getting too high and driving away buyers.. Hmmm… I wonder what happened to change that?

Oh well, I’m not going to lose any sleep over the change, go ahead and go deep into debt with that house that cost a bazillion dollars and see how that works out for you when the next financial crisis comes along..  I’m just saying…  

To Recap…  The dollar continues to rally and now it has been revealed that there is a short squeeze going on, and how long it will continue to go on is the $64 question this morning. Higher Oil prices aren’t helping the Indian economy any, and the rupee is getting sold as a result. Gold finally saw some light and was able to gain $5.60 on the day yesterday, but the euro and the price of Oil slid downward.   

For What It’s Worth..  When the Shanghai Gold Exchange began trading Gold in 2014, I said then that it would eventually change the way Gold was traded and priced… Well, this article catches that spirit, and can be found here: https://www.chinadailyhk.com/articles/20/163/245/1524473885382.html   

Or, here’s your snippet: “Led by China, the global gold market has moved from the West to the East, the CEO of the World Gold Council, Aram Shishmanian, told an industry forum on April 19.

And building on that position, China is assuming leadership in the world of gold, he said at the Global Gold Market Summit 2018 in Xiamen, East China’s Fujian province. “Your leadership, I have no doubt, will determine or help determine the structure and form of the evolving international gold market.”

The summit, the third of its kind, was organized by the Shanghai Gold Exchange (SGE) and the Xiamen Municipal People’s Government and gathered about 700 industry heavyweights and professionals from across the world.

Shishmanian noted that China was small in the gold industry 20 years ago but has gone through “spectacular transformation” – the result of a “very careful and deliberate strategy” supported by the People’s Bank of China (PBOC), the central bank.”  

Chuck Again… Whoever didn’t see that China would take this all over eventually once they put their collective minds to it is blind as a bat!  Well, maybe not that blind, as there are investors out there that continue to believe that China’s Communist spirit will overtake this capitalist movement…  I guess we can always have a little fear of that happening in the back of our minds, but not allow it to come forward!    

Currencies today 4/25/18… American Style: A$ .7575, kiwi .7087, C$ .7767, euro 1.22, sterling 1.3945, Swiss $1.0177, … European Style: rand 12.46, krone 7.9470, SEK 8.5444, forint 256.67, zloty 3.4560, koruna 20.8574, RUB 61.60, yen 109.10, sing 1.3277, HKD 7.8479, INR 66.91, China 6.3074, peso 18.99, BRL 3.4581, Dollar Index 91.03, Oil $67.92, 10-year 3.01%, Silver $16.61, Platinum $921.66, Palladium $967.38, and Gold… $1,325.40

That’s it for today…  I don’t know why I did that, but I stayed awake to watch the whole baseball game last night, and to eventually see the Mets win in extra innings.  UGH! For the first time this year, the Cardinals young ptiching stud, didn’t pitch out of jam…   I have some calling to the insurance company to do today, UGH! They are a bunch of knuckleheads and getting my point across to them has to be a lot like Hell would be..  Oh well, if life were easy we’d all be living to 100!  The O’Jays take us to the finish line today with their song: The Backstabbers…   What they do!  I told longtime readers a few years ago when this song played that it always reminded me on someone… And that’s all I have to say about that!  I hope you have a Wonderful Wednesday! And Be Good To Yourself!  

Chuck Butler

April 24,2018   

* The dollar continues to swing its mighty hammer

* The price of Oil closes in on $70… 

 

Good Day… And a Tom Terrific Tuesday to you! Well, it finally happened… I  told you yesterday that the waking up several times each night had returned, as one of the evil side effects of the chemo drug I take settles in. Well, last night, I was awake for a lot of it, and then about 4 this morning, I fell asleep and when the alarm went off an hour later, I turned it off and made an executive decision, to go back to sleep…  I really didn’t think I would ever do that, but I did it this morning, and thus, the tardiness of the letter…  Journey greets me this morning with their song: Only the Young… 

I think that subconsciously I just didn’t want to face the music of what the news overnight was telling us… The dollar is still swinging its might hammer, and even with the price of Oil closing in on $70, the currencies can’t muster any kind of rebound. The currencies look sick, and the dollar looks like it could do this all day, every day…  It won’t, but you get the idea… 

The Big News overnight is that the U.S. has thrown a life-line to Russia’s Aluminum sector. Here’s the skinny on the whole thing, which to me sounds as if the U.S. is targeting an individual and not a company.. I’ll let the folks at Zerohedge.com to take it from here for this description of what’s going on here…  

“That didn’t take long: just one day after we reported that “in a surprise twist”, most of Europe was pushing the Trump administration to ease Russian sanctions due to growing concerns of stagflation and outright recession should supply chains remain crippled, on Monday morning the U.S. appears to have caved, and in a notice the Treasury announced it would provide sanctions relief to the world’s largest aluminum maker outside of China, United Co. Rusal, if Oleg Deripaska relinquishes control and sells his controlling stake, while extended the deadline for companies to wind down dealings with Russian aluminum producer.

In the notice, the Treasury said that for Rusal, “the path for the United States to provide sanctions relief is through divestment and relinquishment of control of Rusal by Oleg Deripaska.” – www.zerohedge.com    

So, the price of  aluminum, which the president was attempting to prop up with his tariffs, dropped like a rock as the supply of Aluminum would get large given the sanctions being dropped…  

Gold lost another round to the price manipulators yesterday, and after 277,000 contracts traded, the shiny metal posted an $11 loss for the day, closing at $1,324.00.   What in the world is going on here? I would like to say that I’m not losing any sleep over it, but maybe I am! UGH!   

So, guess what’s in the news from the Eurozone this morning?  If you guessed that yet another round of debt problems have shown up at the European Central Bank’s (ECB) door, you get a Gold Star! It seems that the banking sector in the Eurozone has more bad loans than you can shake a stick at, and while the ECB was planning on bringing a requirement for the Banks to add to their loan loss reserves, the Italians, you knew it would be the Italians, right?, balked, and now the ECB is going to shelve this requirement, and instead attempt to have Bank Supervisors work on brining the bad loans up to date…    

I laughed at that decision because if it were as easy as a bank supervisor calling the owner of a bad loan on the telephone and asking them to deposit a large amount of money, then they wouldn’t have the bad loan problem to begin with!  But silly people do silly things, right?   or as Forrest Gump said, Stupid is and Stupid does…      

Anyway… the euro continues to slide VS the dollar, and this news of bad loans that total more than $1 Trillion, hasn’t helped the single unit one iota…    

So, I mentioned above that the price of Oil was closing in on $70, as it trades with a $69 handle this morning. This rise hasn’t helped the Petrol Currencies any, as the leader of the Petrol Currencies, the Russian ruble, can’t muster a rally on a day when Oil rises, and they’ve been given a path to remove Aluminum sanctions…   

That pretty much, right there, indicates the strength the long dollar trades are…  And when the dollar is trading like this, the pimples on the currencies become large zits! Take the Indian rupee for example, the last couple of weeks, the rupee has been slip sliding away, and it’s all been about the banking scams that have been going on there… But, with the rupee slip sliding away, it was confined to small moves, that is until the dollar started swinging its mighty hammer again, and then suddenly, the rupees problems get a floodlight shined on them and they become a real problem!    

The Russian ruble isn’t the only Petrol Currency getting sold in the face of a rising Oil price this morning…  The Norwegian krone, Canadian dollar/ loonie, and Brazilian real are all seeing their values go down this morning. UGH!  

The U.S. Data Cupboard saw the Markit ISM (manufacturing index) rise in March to 56 from 55…  Yesterday we saw the Eurozone manufacturing index also rise, so this seems to be a global thing right now, and not just a U.S. thing.  Today’s cupboard brings us the stupid Consumer Confidence for this month, and the Case/Shiller Home Price Index for Feb, which I’m not sure matters to anyone what home prices were doing in February, which seems like a year ago to me!    

To recap… Chuck slept in, and the Pfennig is later today… Shame, shame, shame!  The dollar continues to swing its might hammer, and all the currencies are getting sold this morning. Gold lost $11 yesterday but is up $3 in the early morning trading today. And the price of Oil is closing in on $70… but it’s not help to the Petrol Currencies, yet…   

For What It’s Worth… I thank longtime reader, Bob, for sending this link my way… It’s James Kuntsler  and his view of the U.S. economy, which I have to say is bang on in my opinion, and it can be found here: https://www.zerohedge.com/news/2018-04-23/kunstler-america-has-become-alzheimer-nation   

Or, here’s your snippet: “We really have reached limits for an industrial economy based on cheap, potent energy supplies. *The energy, oil especially, isn’t cheap anymore. The fantasy that we can easily replace it with wind turbines, solar panels, and as-yet-unseen science projects is going to leave a lot of people not just disappointed but bereft, floundering, and probably dead, unless we make some pretty severe readjustments in daily life.

We’ve been papering this problem over by borrowing so much money from the future to cover costs today that eventually it will lose its meaning as money – that is, faith that it is worth anything. That’s what happens when money is just a representation of debt that can’t be paid back.

This habit of heedless borrowing has enabled the country to pretend that it is functioning effectively. Lately, this game of pretend has sent the financial corps into a rapture of jubilation. The market speed bumps of February are behind us and the road ahead looks like the highway to Vegas at dawn on a summer’s day.

Tesla is the perfect metaphor for where the US economy is at: a company stuffed with debt plus government subsidies, unable to deliver the wished-for miracle product — affordable electric cars — whirling around the drain into bankruptcy. Tesla has been feeding one of the chief fantasies of the day: that we can banish climate problems caused by excessive CO2, while giving a new lease on life to the (actually) futureless suburban living arrangement that we foolishly invested so much of our earlier capital building. In other words, pounding sand down a rat hole.” 

Chuck Again… And in the whole article he really goes off on stuff, but you get the drift… This House of Cards built on deficit spending is really becoming a problem folks… Whew! I’m tired!  

Currencies today 4/24/18… American Style: A$ .7611, kiwi .7124, C$ .7792, euro 1.2216, sterling 1.3955, Swiss $1.0227, …. European Style: rand 12.32, krone 7.8861, SEK 8.4998, forint 256, zloty 3.4380, koruna 20.8225, RUB 61.67, yen 108.81, sing 1.3220, HKD 7.8467, INR 66.42, China 6.3069, peso 18.84, BRL 3.4267, Dollar Index 90.90, Oil $69.06, 10-year 2.97%, Silver $16.68, Platinum $917.28, Palladium $972.18, and Gold… $1,327.40  

That’s it for today…  I apologize for the tardiness of the Pfennig, but I’ll go with the old saying today of: Better late than never, eh?    Cardinals and Metropolitans for a three games series starting tonight… It’ll be interesting to see if the Cardinals can beat a team other than the Reds… I got dragged all over God’s creation yesterday looking at things, and my hip pain flared up on me last night, it’s still feeling a bit iffy this morning, so I had better nip that in a bud!  And with that, Neil Young and Crazy Horse take us to the finish line today with their live version of: Cowgirl In The Sand, recorded at the old Filmore East…  It’s 17 minutes long… I hope you have a Tom Terrific Tuesday and Be Good To Yourself…  

Chuck Butler