Author: admin

November 15, 2018

* Currencies rally, thanks to Chuck… HAHAHAHAHA

* The Bloom is off the real’s rose… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m very excited to say that I will be able to join in on any Tub Thumpin’ that comes my way today! YAHOO! Another beautiful day here… I was supposed to be here for November last year too, but the day before we were to leave, I woke up with that nasty infection that had gathered around my prosthesis, that eventually led to surgery to get the infection out, and zip me back up and send me on my way! So, I’m glad that I got to head south this year for November, my least fave month! Van Morrison greets me this morning with his hit song: Moondance Can I just have one more Moondance with you, my love?

Well, I’m going to take credit for the rally in the currencies & metals yesterday… You see, yesterday I was banging on Traders for not selling dollars on the fact that the U.S. Fiscal Budget was in the hole by $100.5 Billion to start its fiscal year! And I’m sure traders read the Pfennig, no wait, I’m positive they read the pfennig, and did the old V-8 head slap and say, by Joe, he’s right! Let’s sell dollars today and show him we do know what we’re doing! HA! As if, right? Oh well, the news from the currencies and metals at the end of the day yesterday, had the euro at 1.1325, and Gold up $8.50!

Yesterday, I asked Alexa to play some smooth jazz for me, and soon I was bopping along in my chair… I love smooth jazz on the Amazon music station. It’s just stuff you don’t hear all the time, and that gets me thinking… I find that my mind goes racing from one topic to the other while listening to this station… And yesterday, my mind kept going back to this phenomenon that we keep seeing with the dollar getting sold, most days, during the U.S. session, and then getting bought in the overnight session… When I first noticed this weeks ago, I thought for sure it was the European Central Bank (ECB) intervening in weaker volume markets that then carries more movement, thus giving them more bang for the buck. I thought that the ECB was doing this to keep the euro in check, but then as it kept happening, I thought it was a case of dolt foreign investors… But then investors can’t be that idiotic can they? Well, whatever it may be, it happened again last night, and that 1.1365 that the euro held going into the overnight session, was reduced to 1.1290, as I turned on the currency screen this morning. 

Gold is still holding its gains yesterday, and is actually adding to them in the early morning trading…  The Boys in the band haven’t arrived at their desks yet, so let’s just take Gold’s gains this morning with just a grain of salt, and hope the shiny metal can hold onto its gains. 

Getting back to the U.S.’s awful kick start to the fiscal year, after we were told the tax reform would be neutral, and it turned out to be NOT neutral in any sense of the imagination, I thought I would see what other analysts are thinking… 

I thought the following question that was asked by publishing guru, Bill Bonner in his letter yesterday was a pretty good one… here’s Bill: “Here’s a question: How come… in a booming economy… the feds are increasing spending more than twice as fast as revenue? Why do they have to borrow at all? And if they can’t balance the budget when times are flush, when can they?

I’m  thinking that that’s enough on the deficit thing, I don’t want to be accused of beating a dead horse! (No animals were hurt here!) But… my final thought on this is… As Gomer Pyle used to say… Shame, shame, shame…

I noticed yesterday after hitting the send button on my letter that I’ve been quite the heavy thinker these past few days, and I vowed to not be that way today… Wait! What? I agreed to do what? No way! No, backing out now, Chuck, you agreed… So, keep it light or else! 

OK… in the U.K. this week, PM May, introduced her Brexit plan… And well, it was met with tons of disappointment, and now the Brexit secretary resigned and this whole process that took two years to finalize, is a flub… And pound sterling is paying the cost for this mess… The pound got whacked and whacked good and it doesn’t look like the selling is over just yet for the pound.  I told you many moons ago, that this currency seemed to be overpriced, given the potential problems of the Brexit negotiations, and looky there, it all played out like I said we should be wary of…  Hmmm… 

Yesterday I made a quick comment in the currency roundup that the Brazilian real had seen the bloom disappear from the rose, as it seems daily now that the real moves downward. I told you to be careful here… And that’s when things were going the real’s way every day… I’ve seen these currency rallies on a political basis through the years, and they have all done the same thing… Rally during the campaign process, and then after the election the currency gets sold, because… well… now the person that got elected has to get all their reforms that they got elected on, implemented, and the realization sets in that all that stuff can’t be done immediately… It will take time… And well, currency traders don’t have time to wait…  So, the proven medicine for Political based rallies holds true here… Aren’t you glad you use dial, don’t you wish everyone did? Wait! Aren’t you glad you listened to me and remained careful here? 

The Aussie and New Zealand dollars, respectively, are back on the rally tracks after being derailed about 10 days ago… China appears to be dealing with the slowdown caused by the Trade War, and that will go a long way toward giving these two currencies room to stretch their legs…  I have a long lost friend, Jay, that’s 6’8″, and whenever I think of stretching legs, I think of him unfolding those tree like legs in a car or on a plane…  Two of my good friends, Rick and Kevin or 6’4′ and 6’3″ respectively, so I’m always looking up to talk to them! 

The Saudis announced that they will seek additional production cuts, and that news halted the daily downward slide in the price of Oil in the last 24 hours…  But how long will that last? The Saudis had better act fast, or the downward pressure to the price of Oil will return. 

As I said above, Gold gained a little more than $8 yesterday, and was up again in the early morning trading today, but my last look, I saw that those early gains had been wiped out… UGH!… I love Ed Steer’s name for the boys in the band selling of paper Gold… he calls it “salami slicing”… Well, let’s hope the salami slicers stick to baloney today! HA!

The U.S. Data Cupboard had the stupid CPI for us yesterday, and by all accounts it remains muted at best… But we all know that’s a bunch of malarkey!  We also had Fed Chairman Powell, speaking, and well, he’s ready to hike rates again in December… Powell said the U.S. economy is strong, while warning that there may be some headwinds next year. With latest data showing that inflation in the economy remains muted, Powell said nothing to change market expectations for another hike in December. So, Powell, was doing his best imitation of: Alfred E. Neuman… I find this to be so strange… But then I’ve talked about the need for speed, I mean the need for higher rates so they can be cut in the next recession, so many times it shouldn’t be so strange… should it? No! you dolt, Chuck! 

Today’s Data Cupboard has Rocktober Retail Sales, and while I don’t believe they’ll be as awful as Septembers negative -0.1%,  the Butler Household Index (BHI) indicates it will be better, but still not the stuff that “strong economies”, such as the one Powell talked about yesterday, should offer…  I’m just saying… 

To recap… The currencies and metals were firmly on the rally tracks yesterday, all day, but then came the overnight markets to wipe those gains out once again… Chuck is still trying to figure out this phenomenon…  Pound sterling is getting whacked after the Brexit plan that PM May introduced was not met with enthusiasm. And the bloom is off the rose with regards to the Brazilian real…  Aren’t you glad you use Dial? HA!

For What It’s Worth…  After all the heaving reading this week, I thought I would have some fun with the FWIW today, and this article does just that, as it describes paying people to move to Tulsa, and it can be found here: https://www.marketwatch.com/story/this-us-city-is-paying-people-more-than-10000-just-to-move-there-2018-11-14

Or, here’s your snippet: “Tulsa, Okla. is offering remote workers $10,000 to move there. The city is joining the ranks of other locations in the U.S. including Vermont and Maine advertising incentives to workers for relocating.

Tulsa claims it is “the ideal city” for remote workers due to its array of museums, low cost of living, and food and drink scene.

“Tulsa is gaining international recognition for the use of modern technology to better serve citizens, and one of the areas where we see great opportunity is as a home for remote workers,” Tulsa Mayor G.T. Bynum said.

One catch: You have to stay in Tulsa for a full year to cash the complete prize. “

Chuck again… Many, many moons ago, when I was a young man in the brokerage back office, I would be sent to the different cities to act as the back office leader when the local person went on vacation. I spent a week in Tulsa once… And while I’m not here to knock anyone’s city, I will say that if things didn’t change over time, I understand why they need to pay people to move there…  HA! 

Currencies today 11/15/18… American Style: A$.7270, kiwi .6815, C$ .7560, euro 1.1313, sterling 1.2801, Swiss $1.0056, European Style: rand 14.2580, krone 8.4990, SEK 9.0785, forint 284.59, zloty 3.7921, koruna 22.9660, RUB 67.54, yen 113.45, sing 1.3773, HKD 7.8316, INR 71.74, China 6.9490, peso 20.38, BRL 3.7945, Dollar Index 97.17, Oil $55.93, 10-year 3.10%, Silver $14.11, Platinum $832.94, Palladium $1,133.05, and Gold…$1,210.68

That’s it for today… And this week!  Man can you believe that next Thursday will be Thanksgiving? Where do the days go?  And that brings me to something I need to talk to you about…  I was going to be able to write to you on Monday only next week… But since it’s just one day, I’m thinking of taking a mini-vacation and be back after the Thanksgiving weekend…  So, don’t be looking for a Pfennig next week…  If something happens that’s worthy, I’ll Tweet it out! I hope that anyone that’s traveling for Thanksgiving will do so safely, and I also hope that everyone has a wonderful and blessed Thanksgiving with their family, friends, whatever the mix, we should all be thankful for what we have…  I’m thankful for my family, my health (whatever it is), my friends, you dear Pfennig Readers, and my beautiful bride…  Make sure you take a minute next week, and list the things you are thankful for…  Steely Dan takes us to the finish line today with their song: Kid Charlemagne…  Is there gas in the car? Yes, there’s gas in the car…  I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and then a truly blessed Thanksgiving next week… And Be Good To Yourself!

Chuck Butler

 

 

 

November 14, 2018

 

Good Day… And a Wonderful Wednesday to you! Yesterday, was simply beautiful here in S. Florida, where a cold front is coming through today, and dropping the daily highs to 78 degrees.. Still much warmer than back home, where they are expecting more snow tomorrow! I had a visit yesterday from one of my fave people in the world… Walt.. Such a great friend! We talked for hours, regarding just about everything under the sun and moon! And then to top off the day, I received an email from another fave person, my old boss, Frank Trotter! I would have to say that it was a good day for me! The Atlanta Rhythm Section greets me this morning with their song: Imaginary Lover…

Yesterday, I really lost my temper writing the Pfennig, talking about debt in this country, and on a lessor note the world. For, when I was a young man, my dad told me that the rest of the world could go to hell in hand basket, but the U.S.A. would still be here… And I believed him.. until the last 10 years when we began to accumulate huge amounts of debt. With no willingness to pay the debts off! 

I came across an old quote from Big Al Greenspan from his essay titled: Gold & Economic Freedom, dated 1966… So, this of course was written while the world, including the U.S., was under the old Gold standard, better known as the Bretton Woods Agreement. As many of you know, Big Al, before he was brainwashed by the dark side and became the Fed Chairman, AKA The Maestro, was a Gold Bug… He learned at the side of the great Ayn Rand… But in 1966, there were calls from dolts (I call them) that wanted to end the Bretton Woods Agreement, and this is Al Greenspan’s response for them…

“This is the shabby secret of the Welfare Statists’ tirades against Gold. Deficit Spending is simply a scheme for the confiscation of wealth… Gold stands in the way of this insidious process. It stands as a protector of property rights. If one can grasp this, one has no difficulty in understanding the statists’ antagonism toward the Gold Standard”… – Alan Greenspan from Gold & Economic Freedom 1966

Well, we all know that Richard Nixon removed the dollar from the Gold Standard in August 1971, and ever since then, the U.S. has gone hog wild in deficit spending, and creating the Welfare state that Greenspan talked about in 1966.

It’s important to remember this part of what he said though… “Deficit spending is simply a scheme for the confiscation of wealth”…  And then remember that Gold, is a store of wealth… I’m just saying… 

 

 

And to that tune… My old boss, and good friend of many years, Frank Trotter, sent me a note last night that he pulled from Bloomberg… Ready? OK, get a load of this… “The United States reported a $100.5 billion budget deficit in October, the start of the U.S. fiscal year, representing a hike of about 60 percent from the year-earlier period, as spending grew about twice as fast as revenue. Receipts hit $252.7 billion in October, a 7 percent rise from October 2017, while outlays jumped 18 percent to $353.2 billion.” – Bloomberg

OK… a point I want to make here is that when the Tax Reform was passed, I told you that it was not for you and me, but more for Corporations, which in theory would be good if Corporations would use the tax savings to improve their plants, buy new equipment, Capital expenditures… But unfortunately, I pointed out that in my humple opinion, Corporations would use the tax savings to buy back more of their respective company’s stock…

And so I was right… The Deficit spending is far outweighing any gains by the tax reform act, and this $100.5 Billion deficit in Rocktober is the first month of the new fiscal year! Annualized we would be looking at $1.2 Trillion in deficit spending… But that’s the good news, if there is such a thing here, because I believe each month will be worse, and therefore the annual deficit will be more than $1.2 Trillion… UGH!

The dollar bugs retreated on the news of this large first month of the fiscal year, deficit. The euro climbed back above 1.13, and Gold gained about $4 on the day. That was far better results than what we had seen since Friday… But in my opinion, it should have been a massaquer on the dollar…  But those rallies were short-lived, as once again, we saw the currencies and metals get taken down in the overnight markets… Somebody out there, folks, wants the dollar to be stronger right now than it should be… 

This deficit spending has gotten out of control once again, and as I was telling my good friend, Walt, yesterday, the next recession in my opinion will make 2008 look like chump change, because of the amount of debt that has been taken on by not only Governments, but the states, Corporations, and Consumers, The Too Big To Fail Banks growing even larger, the amount of derivatives being more in number and size than in 2008, the amount of leveraged Corp loans, and the fact that years of zero interest rates, and easy credit being reined in will be too much for the economy to take, and well… this is where you have to put away the sharp objects to read further…

OK, everything safe now? I believe the economy will collapse in the next recession, which will then be called a Great Depression… The Fed has kicked the recession can down the road, and down the road, and down the road, until… it won’t be able to kick it anymore… And that’s when the chickens come home to roost, the cheese binds, and we find out the true value of physical Gold…

My mother used to have a saying… “You made your bed, now lay in it”… We allowed the Gov’t to go on this deficit spending spree years ago, and well, now we’ll have to lay in it!

I still think that this could be averted somewhat by a complete repricing of Gold… If you repriced Gold to, say, $10,000 an ounce, and maintain that price going forward, the deficits would be forgotten about, and physical Gold holders could pay down debts with their newly repriced Gold… But is that going to happen? I doubt it very much… But it is a way to keep things from collapsing… And I’m not saying that just because I own physical Gold… So, think about that, and then send your representative a note and tell them this is your idea to deal with debts… And then get set to laugh your know what off when you receive a response… The boys and girls in Washington D.C. have no idea how to deal with this debt, so they just continue to add to it, and hope it doesn’t collapse under their watch! 

In the Eurozone this morning, Industrial production for September printed, and was not good, falling -0.3%, VS the 1.0% gain in August. The Year-on-year IP was still positive at -.9%, but I think we have to really pay attention to this one month downward move, and think about the Trade War’s affects on the world of Industrial Production.  The Eurozone also printed their first run at 3rd QTR GDP, which was 1.7%, matching the 2nd QTR’s output of 1.7%… So, no slippage here, but… the majority of the Quarter took place before the Trade Wars began… 

The U.S. Data Cupboard doesn’t have much for us today other than the stupid CPI (consumer inflation) for Rocktober…  In the previous two months to Rocktober, this data had shown some slippage, which it was due to experience because of the Fed Rate hikes… I’ll say this again, just to drive home the point… You don’t hike rates to induce inflation into your economy! You hike rates to eliminate inflation from your economy!  The Fed have been hiking rates all while telling us they wanted inflation to grow…  I shake my head in disbelief that these guys really thought they could pull the wool over our eyes…  

For we all know good and well, why the Fed has been hiking rates… They need higher rates going into the next recession, so they can cut them in an attempt to cut the recession short… We went through the math of this yesterday, so in case you missed class that day, go to www.dailypfennig.com and read it there! 

Will the last trader to leave the Oil trade turn out the lights? There’s been a mass exodus from the Oil trade since last Friday… President Trump called out the Saudis and slam, bammed the production cuts, and that started all this Oil price debacle…  This morning the Price of Oil is trading with a $55 handle…  That’s $20 from its recent peak… 

And Gold eked out a small gain yesterday, but has given it all back already in the early morning trading this morning…  I’m at a loss for words, to describe my feelings toward this recent price action of Gold…  Ed Steer calls the short Gold paper trades as “Salami Slicing”, and that’s a good description of what’s going on… 

To Recap…  The currencies and metals rally on the news that the U.S. kick-started its fiscal year, with a $100.5 Billion deficit… But those rallies were short-lived and the traders in the overnight markets took profits. Chuck believes there’s somebody out there that feels the need to have a stronger dollar right now…  Chuck tells us about a something that Big Al Greenspan said in 1966, and the price of Oil continues to slide downward… 

For What It’s Worth…  Remember Rolling Stone’s Matt Taibbi? He of the famous quote calling Goldman Sachs, the “vampire squid”?  Well, according to this article the folks in Malaysia are probably thinking the same thing. So here you go, this article can be found here: https://www.zerohedge.com/news/2018-11-13/malaysian-prime-minister-obviously-we-have-been-cheated-goldman-sachs

Or, here’s your snippet: “Goldman Sachs famously avoided liability after the Libyan Investment Authority accused the bank of squandering more than $1.5 billion belonging to the country’s sovereign wealth fund after the bank plied employees of the fund with “hookers and five-star hotels” before losing all of their money in complex derivatives trades. But as the DOJ ramps up an investigation into the bank’s role in the sprawling 1MDB scandal (the federal government believes Goldman helped now-jailed former Malaysian Prime Minister Najib Razak siphon $4.5 billion from the fund), it’s looking like the bank (and possibly its ex-CEO Lloyd Blankfein, whose involvement in the scandal was recently revealed by Bloomberg) may not escape culpability this time.

Yesterday, Goldman shares cemented their largest two-day drop since 2010, crashing to a two-year low after Malaysian Finance Minister Lim Guan Eng demanded a “full refund” of the $600 million in fees that Goldman charged Malaysia for the three 1MDB bond offerings underwritten by the bank. Eng also demanded that Goldman repay the “interest-rate differential” that Malaysia paid, which was 100 basis points over the benchmark rate. Goldman has argued that it demanded such high fees because it took many of the unrated bonds on to its balance sheet, increasing its exposure, because Malaysia said it wanted the money “right away” for “development projects”. Of course, Goldman had sold the local currency bonds long before 1MDB defaulted in April 2016.

And on Tuesday, Malaysia turned up the heat when the country’s 93-year-old Prime Minister Mahathir Mohamad accused Goldman bankers during an interview with CNBC of “cheating” Malaysia (though he also said the country wanted to “see the results” of the DOJ’s investigation).

“There is evidence that Goldman Sachs has done things that are wrong,” Mahathir said.”

Chuck Again…  Yes, it’s always someone else’s fault, right? But when the blame finger keeps pointing at the same entity, there’s something to that, right? I’m just saying… 

Currencies today 11/1418…American Style: A$.7193, kiwi .6775, C$ .7550, euro 1.1265, sterling 1.2904, Swiss $1.0099, European Style: rand 14.4015, krone 8.5305, SEK 9.1205, forint 286.59, zloty 3.8135, koruna 23.0680, RUB 67.81, yen 113.90, sing 1.3817, HKD 7.8327, INR 72.11, China 6.9546, peso 20.50, BRL 3.7812 (it sure appears that the bloom is off the rose here with the real, eh?) Dollar Index 97.36, Oil $55.76, 10-year 3.13%, Silver $13.76, Platinum $833.65, Palladium $1,107.29, and Gold… $1,199.95

That’s it for today…  Well, I guess today’s Pfennig was more than you bargained for, eh? I love the fact that I can express my opinions, without having to be stopped at the border… Did I make you think this morning? I sure hope so… If not… Maybe you should go back and reread it? HA!  Well, this is my weekly plead to my beloved Cardinals to sign Bryce Harper… Please?  Triumph takes us to the finish line today with their song: Fight The Good Fight.  That’s what I’ve always done in the Pfennig… I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

 

 

November 13, 2018

* Currencies & metals continue to get sold

* Oil’s rally is short-lived! 

Good Day… And a Tom Terrific Tuesday to you! I was remiss yesterday in not mentioning that our Blues had gotten their hats handed to them by the Wild on Sunday… I was not following that game, so it took a dear reader to bring that to my attention… Tomorrow night they play the Blackhawks, a HUGE rival, so they have an opportunity to get back on their skates! Go Blues! Things were moving along nicely here, but then ground to a complete stop… Come on guys! I need to get this project completed! The creator of Spider Man, Stan Lee, died yesterday, my he rest in peace. And The great Otis Redding greets me this morning with his song: I’ve Been Loving You… This was a live recording from the famous Whiskey A G0-Go… I met up with a bond trader from New Zealand at the Whiskey A Go-Go years ago, and while I waited for him to show, I kept thinking of Otis Redding singing his songs there…

OK… Yesterday, I told you that the political fears from the Eurozone and the U.K. had put the currencies on a spiral spin downward since Friday. And yesterday, the spiral didn’t stop, and the currencies moved further downward. Like I mentioned yesterday, I find this interesting that the traders are being myopic with these fears, and not looking at the U.S. political situation and not see the potential for nothing but gridlock for the next two years. I remember in 2007, the best marketing person I had ever seen, David Galland, wrote that “if you thought the previous administration were spend thrifts, you haven’t seen anything yet when the new group gets into office”… Boy was he correct… but then most of you longtime readers know how much debt was added the next 8 years, because, I told you!

I bring this up because the world is drowning in debt, and not just countries, but the people that make up those countries are too in debt up to their eyeballs. Last week, I talked about how a year ago we were talking about a Tent Revival for Global growth, and now that has faded, quickly… Here’s David Rosenberg’s take on this crashing of Global Growth from his Twitter page…

“OECD leading indicator fell in September for the 10th straight month. The YoY rate started the year at +0.45%; now stands at -0.82%.”

In case you’ve forgotten… The OECD stands for the Organization for Economic Cooperation & Development. They work Globally with countries to promote growth, and they issue this Leading Indicator of Global Growth, that’s discussed above.

I received an email from a dear reader who asked me, “why are the Fed insisting that interest rates need to go higher, when, as you’ve pointed out the slow down of the economy has already begun?”

Instead of just answering him directly, I thought it best that everyone know this… The Fed has been hell bent and whiskey bound to hike rates, so that they have enough rate to cut when the recession begins… In the past, the Fed has cut interest rates on average around 4% during recessions… And the average rate going into a recession was 6.5%… The Fed is currently at 2.25%, they are going to have to aggressively step up the pace of their rate hikes, or they’ll meet up with the next recession, and won’t have 4% of rate to cut… Which means… They’ll have to implement another round of QE… Or even worse, introduce negative deposit rates here in the U.S.

So, that’s why the Fed hasn’t paid attention to the rot on housings vine, the increase of debt by consumers, the stock market bubble, or the weaker by the print of data reports, and instead continue to hike rates…

I’m not trying to deflect the problems for the currencies and metals folks, I’m just pointing out that it’s not a sunshine, lollipops and rainbows for the U.S. economy and the Fed… And so, I continue to wonder why none of this is entering into traders collective minds right now…  And here’s another thing that traders should be looking at as potential problems for the dollar… 

We have the different payment systems around the world that are dealing the dollar a blow, as the use of the dollar by foreign banks dwindles… The different payment systems, there’s one in Europe, (SEPA), one in China (CIPS) and one in Russia (MIR) have all been created to eliminate 1. The dollar, as a reserve currency and 2. The power of the U.S. to administer sanctions through SWIFT.

Speaking of SWIFT… In December 2015, the U.S. controlled 43.89% of transactions through SWIFT, and the Eurozone had 29.39%… Just two years later, in December 2017, the euro had cut into the dollar’s control of SWIFT… The U.S. was at 39.85%, and the Eurozone was at 35.66%…

Here’s a clip from the Financial Times… “One consequence of the America First policies of US President Donald Trump will be to create a bipolar financial world, with China at one end and the US at the other. That will mean smaller financial flows between the two, and a much more robust effort from Beijing to eventually challenge the dollar’s status as the world’s reserve currency. That, in turn, potentially has implications for everything from the status of US Treasury securities as the safest assets in the world to how oil is priced.

“The Trump administration’s “America First” policy will encourage a long-term move away from the US dollar,” according to Christopher Wood of CLSA, the arm of Beijing-based Citic Securities, pointing to “the growing American practice of using the dollar as a weapon via the implementation of sanctions and the like.”

Chuck again… These things scare me folks… about 8 years ago, the Chinese issued a statement saying that they no longer had the need to accumulate dollars in reserve… And they’ve been true to their word, with their lower and lower amounts of Treasury holdings… They haven’t gone “all-in” like Russia did with their Treasury holdings, and I don’t expect China to even undertake thinking about doing that, but choose instead to do it stealth-like, and hope that it goes unnoticed… But, I see it, and when I see things I write about them, and hopefully you read them and think about what this all means for the dollar, as the reserve currency of the world.

So, as you can see, there are plenty of problems out there that traders could be very worried about with regards to the dollar, but… Right now, they choose not to worry about that right now… Reminds me of Alfred E. Neuman… “What me worry?”  Ok, youngsters, you’ll have no idea who I’m talking about here, so Google his name or Mad Magazine… 

OK, so the currencies got whacked again yesterday, what about Gold? Well, it didn’t fare much better, losing $9.50 on the day, and falling below $1,200… I’m shaking my head in disbelief right now as my fat fingers fly across the keyboard… Physical demand for Gold is strong, but the shiny metal’s price direction is controlled by the short Gold paper trades…  UGH!

Well, Sears announced more store closings last week… It’s not been a good year for brick and mortar stores here in the U.S., but just when you thing we’ve got it bad… Someone else has it worse! Thanks to Dear Reader Bob, for sending this to me, but the U.K. has seen far worse numbers from their Retail Sector… A net 1,123 stores disappeared from Britain’s top 500 high streets in the first six months of the year, according to the accountancy firm PwC.

That’s an average of 14 stores a day… OMG!

And where has all that rhetoric from Bank of England (BOE) Gov. Mark Carney, about hiking rates gone? Long time passing… where have all the flowers gone, so long ago?

Russia continues to dedollarize… They are taking strides to eliminate the use of dollars… And I don’t know if you’ve noticed this or not… But after decades of mistrust between China and Russia, they sure seem to be snugging up these days, don’t they? Look… we as a country have ticked off both those major players in the world, with sanctions and tariffs, so it makes sense to me that they buddy-up. China has long said that the “dollar standard should end”… They began this dedollarization years ago, with their FX Swap Agreements with countries they did trade with, that essentially removed the dollar from the terms of transaction when they traded with each other.

The amount of dollars held in reserve around the world has fallen and has been falling for the last couple of years, but I would think that the tallies at the end of this year will show a HUGE drop… And that’s just the beginning folks… just the beginning…

The Price of Oil saw a brief rally yesterday after the Saudis announced production cuts, but that didn’t last too long, and President Trump, was once again pushing the Saudis for cheaper gas, and well, that’s what we have this morning, as the price of Oil is trading with a $58 handle! 

The U.S. Data Cupboard is pretty light on data prints the first part of this week, but tomorrow we begin with the Data Cupboard yielding a plethora of data, starting with Retail Sales for Rocktober… We’ll talk more about these reports tomorrow, just know that for today, there’s not much other than the Federal Budget Deficit that will print…

There will be 3 different Fed Heads speaking today, so we’ll see more singing from different song sheets by the Fed Heads… There was a time when this, going in different directions, would cause great pain for the dollar… But that’s when fundamentals ruled…

To Recap…  The dollar bugs continue to buy dollars, and sell currencies and metals, and traders say its because of the political problems in the Eurozone and U.K.  I say hogwash, those problems don’t amount to a hill of beans compared to the stuff that’s hanging over the dollar like the Sword of Damocles!  And I spend the rest of the morning pointing out these problems for the dollar! 

For What It’s Worth…  I mentioned the economic sanctions on Russia above and this was in Ed Steer’s letter today, so I thought, what the hey, why not use it for my FWIW… it’s about Germany calling an end to those sanctions and can be found here: http://theduran.com/german-bundestag-mp-petr-bystron-calls-for-an-end-to-sanctions-against-russia/?

Or, here’s your snippet: “Dear Mr. Bystron, recently we have met at the International Conference on the Development of Parliamentarism in Moscow recently. In front of representatives of Parliaments from all around the world, international experts and journalists you held a well-received speech, calling for an end to sanctions against Russia. Why?

I demanded an end to sanctions because they have not achieved anything except harming German business. There’s no point to maintaining these useless sanctions any longer.

The Russian-German relations are very complex. On the political agenda, they are burdened with the sanctions which the E.U. countries imposed to Russia, but on the other hand, Germany and Russia cooperate on a strategic project such as North Stream 2. How do you see the prospect of developing further relations between your country and Russia, and also how the United States relations towards the possibility of greater convergence between Germany and Russia?

North Stream 2 is just one example of this.
But it’s no secret there is a lot of pressure from the United States to stop this project. There was a bipartisan initiative in the U.S. Senate in March supported by 39 Senators, urging the government to do everything it can it stop the pipeline.

Chuck Again…  I’ve long said that these sanctions have gone on long enough, and the idea that Europe may drop them will go a long way toward more trade between the Eurozone and Russia… 

Currencies today 11/13/18.. American Style: A$.7198, kiwi .6747, C$ .7555, euro 1.1250, sterling 1.2923, Swiss $1.010, European Style: rand 14.43345, krone 8.4939, SEK 9.0906, forint 286.71, zloty 3.8215, koruna 23.0623, RUB 67.66, yen 114.00, sing 1.3817, HKD 7.8292, INR 72.48, China 6.9595, peso 20.39, BRL 3.7429, Dollar Index 97.44, Oil $58.70, 10-year 3.17%, Silver $14.02, Platinum $844.48, Palladium $1,106.30, and Gold… $1,198.17

That’s it for today… I heard about more cold weather back home yesterday…  I’m just so glad I’m not there! Things here are pretty quiet, as the “yankees” haven’t begun to move back to the south for the winter just yet…  I’ve gotten past that bad stomach I had late last week, and have been feeling pretty good the past couple of days. Consuming rice and toast for a couple of days, usually does the trick for me, and this time was no different. Customer service in this country sinks… That’s all I’m going to say about that! My mom used to say that something “stinks to high heaven”…  That’s what customer service has come to being, folks…  Pink Floyd takes us to the finish line today with their song: Us And Them… I hope you have a Tom Terrific Tuesday, and continue to Be Good To Yourself! 

Chuck Butler

November 12, 2018

* Overseas Political Problems Weigh On Currencies

* Chuck thanks a Veteran… 

Good Day… And a Marvelous Monday to you! This is going to be very short today. The reason? Well, Yesterday was Veterans Day, and that makes today a holiday. If I was still at the bank, I would be sleeping right now for the bank would be on holiday. But, with yesterday being Veterans Day. I thought a tribute to them would be more fitting for today’s Pfennig. These are men and woman that have fought battles for our country. I feel bad this year, in that, normally on Veterans Day, I visit my dad’s grave to place a new flag on it. He was a WWII veteran. But I’m not at home, so I guess that will have to wait until I return… I saw a TV commercial the other day, that featured the song that greets me this morning… Faces, doing their song Ooh, La, la…  I wish that I knew what I know now… When I was younger… 

Well, do a quick drive by on the currencies, and then head to the tribute… On Friday, the support the currencies were using was pulled out from under them. Suddenly, the markets believe there is too many problems with politics of the Eurozone (Italy the main problem) and the U.K. (Brexit negotiations), and the hammer brought down on the euro first, then the pound, and all the other currencies, was a heavy blow… The euro is down nearly 2-cents, and the strong moves last week by the Aussie and kiwi dollars is a distant sight in the rear view mirror… 

I find this interesting in that the political problems that will arise from last week’s U.S. election, hasn’t even registered with traders, they’re quite myopic these days…  Gold got whacked $14 on Friday, and is down a couple of bucks in the early trading today… The only anti-dollar asset rallying is the price of Oil, as the Saudis signaled that the OPEC members had agreed on production cuts, as we discussed last week. 

OK… here goes…  

When you see someone in a uniform,
Someone who serves us all,
Doing military duty,
Answering their country’s call,
Take a moment to thank them
For protecting what you hold dear;
Tell them you are proud of them;
Make it very clear.
Just tap them on the shoulder,
Give a smile, and say,
“Thanks for what you’re doing
To keep us safe in the USA!”
~By Joanna Fuchs

There are many tributes to veterans that can be given, and all should be read or heard…  

Currencies today 11/12/18… American Style: A$ .7207, kiwi .6736, C$ .7576, euro 1.1268, sterling 1.2876, Swiss $1.0091, European Style: rand 14.3772, krone 8.4588, SEK 9.1220, forint 285.56, zloty 3.8128, koruna 23.0265, RUB 67.61, yen 113.90, sing 1.3815, HKD 7.8320, INR 72.78, China 6.9552, peso 20.26, BRL 3.7350, Dollar Index 97.41, Oil $60.53, 10-year 3.18%, Silver $14.13, Platinum $853.24, Palladium $1,107.55, and Gold… $1,207.60

that’s it for today… A good weekend for my teams… Our Blues won Friday night, and my beloved Missouri Tigers won on Saturday! I heard that back home in St. Louis, they received an inch or two of snow this past weekend, and that the temps had dropped into the 20’s… Man, am I a happy camper to be here and not there! I’m not alone down here now, as that person I’m not supposed to talk about joined me on Saturday night. I hope you celebrated Veterans Day…  Yesterday was also the birthday of the Marines! Semper Fi! to all you Marines!  Jackson Browne takes us to the finish line today with his song: These Days…  I hope you have a Marvelous Monday, and remember to Be Good To Yourself!

Chuck Butler

 

 

November 8, 2018 

* Currencies see profit taking on the day… 

* RBNZ leaves their OCR unchanged, and Chuck is disappointed… 

Good day… And a Tub Thumpin’ Thursday to you! My stomach took a turn for the worse yesterday, so I doubt I’ll be doing any Tub Thumpin’ today, but please don’t let my problems keep you from Tub Thumpin’! The dust is still settling on the elections here in the U.S., I really went a bit too far with my statement yesterday, as I have made it a tradition in the Pfennig to not discuss politics at all… And while I just made a statement about the outcome, I probably shouldn’t have gone there… It doesn’t look like my beloved Cardinals are going to attempt to sign Bryce Harper, as his price tag is going to be north of $325 Million… And that’s going to keep the smaller market teams like my Cardinals from participating in the Bryce Harper sweepstakes… The late great Joe Cocker greets me this morning with his song from the movie soundtrack of 9 ½ Weeks… You Can Leave Your Hat On…

Well, there was some profit taking yesterday in the currencies, at least that’s what it looked like to me, as there were no stories on the wires about the king dollar, yadda, yadda, yadda… Instead, I keep finding stuff that the Fed Heads are saying that just leaves me baffled! They are wearing the rose colored glasses, for sure, as they keep giving us rosy forecasts about the economy and inflation… I think they’re full of baloney, but don’t just take my word on that… Here’s economist Danielle Di Martino Booth on her twitter page yesterday, “Goldilocks herself would blush at the near perfect jobs and inflation scenario forecasted by the central bank”

I wrote about their track record yesterday, and that will play nicely in the sandbox with their rosy outlook…

Speaking of the Fed… Their FOMC will meet this afternoon, and discuss rates… If the economy is so strong and robust and will continue that way for as long as the Fed thinks it will, why wouldn’t they hike rates today? Come on, Jerome, back up your words with a rate hike, I dare you… No, wait! I double dog dare you!  While, there’s a slim chance that the Fed could hike rates today, most observers believe they will wait until December… But, as I said, if the economy is as the Fed say it is, then it certainly warrants a rate hike this monrht, and then in December! 

But by doing that, the Fed would be sending out smoke signals that the markets would be taking as the Fed is panicking, and inflation is spiraling upward…  Oklahoma and Oklahoma State football teams play a game each year that’s called “Chaos”…  Well, that’s exactly what we would have if the Fed stepped up their rate hike game… 

In China yesterday, they reported their Tade Balance for Rocktober… And guess what happened to their blance with the U.S. given the Trade War going on? China’s Trade Surplus with the U.S. grew in Rocktober to $34.01 Billion from $31.70 Billion in September… How is that happening? I can hear the leaders in Washington D.C. asking… Well, for one… China has chopped a good chunk of fat from the renminbi’s value, so that the exports to the U.S. won’t be more expensive… The U.S. has put 20% tariffs on Chinese exports to the U.S. and the Chinese have depreciated the renminbi about 16%… So, basically, the exports to the U.S. are a wash… to the U.S. consumer that as… And that brings me to the other thing in play here… the U.S. Consumer… Their cash may be depleated, but not their credit card availability!

And in other news… The GATA folks sent me a note yesterday telling me that Iran and S. Korea agreed to a currency swap agreement, to exchange each other’s currencies in the terms of trade, and leave out dollars… This may be a baby step in regards to the size of dollars not being used going forward between these countries, but… We all know tha baby steps turn to big steps… And that would be the end of the dollar as the reserve currency… So, we’re here… and we’re going there… The difference between humor and trajedy is time… That’s also what’s in play here… Time… how much? I don’t know, but I don’t want to be the last one to turn out the lights on the dollar!

The price of Oil continues to slide downward and this morning its trading with a $61 handle… Our friends at OPEC (NOT!) have decided enough is enough, and the have called for a meeting this coming weekend to discuss production cutbacks… You may recall that last year, the OPEC countries cut production and the price of Oil rallied nicely, and eventually got to the $70 price the OPECKERS were looking for… So, they’ll go for round 2, most likely, this weekend… 

The Reserve Bank of New Zealand (RBNZ) left their OCR (official Cash Rate) unchanged at their meeting yesterday…  And left no indication, in their statement, that rates will be hiked any time soon…  I’m so disappointed in the RBNZ, they gave all kinds of indications last year about this time that they were ready to begin a new rate hike cycle, and then crickets…  

Well, it was good while it lasted…  I’m talking about the rally in the Brazilian real… But from the looks of the trading the last 3 days, I would have to think that the rally is over…  It was a nice rally, as the real rallied from a low of 4.17 on 9/15, to the 3.69 level last week… And if my new math works that’s about an 11% move…  But you will be able to see in the currency roundup that 3.69 is no longer…   Oh, and the real is a European Priced Currency, which means as the price goes down, it takes less of the currency to make a dollar, and therefore represents a rally… 

The Aussie and New Zealand dollars respectively, are back on the rally tracks… A couple of weeks ago, I told you to keep that news quiet, but someone cracked and the two had their rallies stopped at the border. But they’re back at it, and I find no reason to keep quiet about it, for there are just too many voices in the field of currencies these days… 

In 2004, Craig Karmin, of the Wall Street Journal came to St. Louis to interview me for an article in the WSJ. He called me a pioneer, for at that time I was the lone voice shouting about how the dollar was losing value and investors should be diversifying into currencies and metals. I was among the few, that talked about currencies… And today? Well, there’s more currency analysts out there than you can shake a stick at! 

Gold lost a whopping 40-cents yesterday, and the volume picked back up with 242,000 contracts traded. I’m waiting… and I’ll keep waiting… and waiting… for U.S. investors to realize that buying commodities will help to offset the damage that the rising inflation that the Fed is talking about  will do to their investment portfolios… 

The U.S. Data Cupboard is all about the FOMC meeting this afternoon…  Yesterday, the Cupboard has Consumer Credit (read debt) for September, and it was far less than expected, which was $20 Billion, and it only amounted to $11 Billion… That’s so strange, in my book, folks… And now I’m going to be fixated on how that data is comprised to see if “adjustments” are made… Because $11 Billion just doesn’t seem to be right in my estimation… 

For What It’s Worth… I told you last week that I truly enjoy reading anything I can get my hands on from James Grant. So, with that in mind, this is an article with James Grant talking about U.S. Debt that was on a free site! And it can be found here: https://www.weeklystandard.com/james-grant/congress-is-plenty-bipartisan-when-it-comes-to-ignoring-the-national-debt

Or, here’s your snippet: “America’s deteriorating public credit is the cold-button issue of the 2018 midterms. With rare bipartisanship, Democrats and Republicans compete to pretend that the country isn’t going broke. In 1992, the third-party presidential candidate Ross Perot likened the widening gap between federal receipts and federal spending to “the crazy aunt tucked away in the room upstairs nobody talks about.” The old gal’s dottier than ever.

It took the United States 193 years to accumulate its first trillion dollars of federal debt—the gross debt, as it’s called. We will add that much in the current fiscal year alone. All told, the government owes $21.5 trillion, give or take a few careless tens of billions—that works out to $65,885 for each American. It’s the ease of borrowing that drives the growth in federal IOUs.

The remote political cause of this predicament is the ideology of statism. In Washington, this takes the form of tax and tax, spend and spend, elect and elect; on Wall Street, it’s found in too-big-to-fail, a virtually socialized mortgage market, and an overreaching,
manipulative central bank.

The remote monetary cause of our troubles is the closing of the gold-standard era in 1971, or what little remained of it by then. It was the breakdown of the fixed monetary order that opened the floodgates. From Alexander Hamilton to Richard Nixon, the dollar was an IOU, a promise to pay gold or silver at a fixed rate. It subsequently became a thing unto itself, an IOU nothing. In consequence, for the past several decades, federal liabilities have grown faster than the national income with which to service them. Ultra-low interest rates have cheapened the cost of this profligacy and hidden the looming dangers.”

Chuck again… Now, James Grant is as concerned about the National Debt, as I am, and that says something, folks… Too bad the media, or the markets, don’t see it that way…

BTW… The U.S. spent $548 Billion in Rocktober to service its debt… (pay interest on bonds outstanding) That number is only going to go up because 1. Interest rates are rising, and 2. Debt issuance is exploding higher and higher… 

Currencies today 11/8/18… American Style: A$.7283, kiwi .6775, C$ .7632, euro 1.1415, sterling 1.3093, Swiss $1.0027, European Style: rand 13.9896, krone 8.3388, SEK 8.9832, forint 281.67, zloty 3.7605, koruna 22.6735, RUB 66.03, yen 113.75, sing 1.3715, HKD 7.8272, INR 72.13, China 6.9197, peso 19.89, BRL 3.7556, Dollar Index 96.26, Oil $61.76, 10-year 3.22%, Silver $14.47, Platinum $870.94, Palladium $1,124.46, and Gold… $1,222.73

That’s it for today… I had a good phone conversation with good friend Dennis Miller yesterday. He told me that he had just read that the U.S. is going to change the way they compute FICO scores… I immediately thought of all the other hedonic changes that the Gov’t has made through the years, when things just wouldn’t work the way the wanted them to… It’s a sad, sad, thing, folks…  Well, our Blues are back to .500, and at home for the next few games, so they need to put the pedal to the metal now! Let’s Go Blues! This makes two days in a row, but the band Yes takes us to the finish line today with their song: Long Distance Runaround…  I hope you can get out and do some Tub Thumpin’ on this Thursday, and remember to Be Good To Yourself!

Chuck Butler

November 7, 2018

* Currencies rebound and climb throughout the night!

* What’s the Fed up to? 

Good Day… And a Wonderful Wednesday to you! Not as early today with the letter, as I allowed discretion be the better part of valor this morning, and turned off the alarm when it went off! Well, the mid-term Elections are in the books. I purposely watched something on TV last night that wouldn’t be interrupted by election returns… I can honestly say that I’m of the opinion these days, that it doesn’t matter what dolt you elect to represent your state, they aren’t going to do that once they get to Washington D.C. Kind of cynical, eh? Well, it’s just how I see it… And we can thank Woodrow Wilson for that! What? you don’t know? I’ll explain this later…  Oh, and Bill Bonner says it best when he wrote: The Bad thing about elections is that somebody wins!  The Allman Brothers greet me this morning with my fave Allman Brothers song: Melissa… 

The turnaround that the dollar was performing yesterday morning, faded as the day went on, and by the end of the day, the currencies were kicking sand in the dollar bugs’ collective faces. The currencies led by the Big Dog Euro, steadily climbed throughout the day, and then continued that climb in the overnight markets, where this morning the euro is firmly in the 1.14 handle, and the Aussie dollar is knocking on the door to 73-cents!  The Asian currencies has joined in, and even the Swedish krona is getting in on the kicking sand in the dollar’s face… 

Gold wasn’t allowed to participate in the kicking of sand yesterday, losing $4.10 on just 173,000 contracts traded, But… the shiny metal has recovered that loss yesterday already in the early morning trading today!  If Gold can at least maintain the early morning gain these two days would be a wash. Hopefully Gold can add to the early morning gains, eh? 

I took this from Ed Steer’s letter this morning which you can find at www.edsteergoldsilver.com and I thought it played well with the Gold move overnight… “European Gold demand was 51.1 tonnes during the third quarter of this year, up 10% year-on-year, according to the World Gold Council.

Germany, which accounts for more than half of the region’s bar and coin investment – was up 10% to 28.4 tonnes. In late September the euro-denominated gold price fell to a two-and-a-half year low of €32,638/kg.

Unlike the European-ETF market, concerns around Italian debt and its potential to spark a broader financial crisis, prompted safe-haven buying among retail investors.”

OK, back to the currencies, which is actually an incorrect statement, as I already was talking about the currencies with my discussion of Gold… I’m just saying…  But for reasons beyond my control, the markets continue to consider Gold a “precious metal”…  

I told you yesterday that the Eurozone would print September Retail Sales this morning, and they did, with Retail Sales climbing 0.8%, which beat the expectations of 0.7% growth. If you can beat expectations, you’re a leg up on the competition!  I also talked briefly yesterday about China’s Treasure Chest of reserves. Well, they printed their total reserves’ value at the end of Rocktober this morning, and it was $3.053 Trillion, which was down from the September print of $3.087 Trillion. The difference appears to me, to be nothing but currency fluctuations.  

It appears to me that the U.S. voters have voted in gridlock… And the advancements that have been made will fade away… I’m not talking politics here, just a general feeling that we’ll experience nothing but gridlock going forward, and that won’t be good for the economy, or the dollar… I’m just saying… 

More rot on housing’s vine got exposed yesterday, when the report on Mortgage applications for last week, printed.  Mortgage Applications fell 2.5% in the week, and reached the lowest level of applications that goes back to December 2014…  The Mortgage industry talking heads are blaming higher mortgage rates… No duh!  That and the fact that houses got too darn expensive once again, and first time buyers have been hit with higher mortgage rates and very expensive homes… That a recipe for disaster if you ask me! 

The U.S. Data Cupboard is still pretty barren, but it will have one print for us today, and that is September Consumer Credit (read debt)…  With other pieces of data that reflect spending, up, one has to believe that credit card use, and home refis, have to be soaring, and if so, it will be reflected in this data…  

A $20 Billion number or anything close to it is going to tell me that debt accumulation is strong among consumers again, and that’s not going to turn out to be seashells and balloons…  

My good friend, and the Retirementor, Dennis Miller, wrote an excellent piece for his readers last week and in it he asks the question. “Is The Fed Engineering A Market Crash?”  Hey lays out the facts and then  says, “Is the Fed trying to engineer a crash before the next election? I hope it is not true. If the deep state is willing to do that to maintain their power, God help us all.” – Dennis Miller

He also quote me in this letter, let’s see what I had to say… So, let’s look at the Fed’s track record, shall we? Did you know that in 105 years, the Fed has never accurately forecast a recession?
…. Or that the current running total is nine straight annual economic forecasts that they’ve had monumentally incorrect! -Chuck Butler in Dennis Miller’s letter: www.Milleronthemoney.com

I know I’ve said this before a couple of times, but I never grow tired of saying it… If you’re retired, or even thinking about retiring, you need to subscribe to Dennis’s letter. I know that a quite a few Pfennig Readers already have signed up, but I would like to see our readers lists mirror each other! Simply go to www.milleronthemoney.com  It’s free, just like the Pfennig! 

To recap… The currencies turned around the dollar’s rally yesterday, and have climbed higher throughout the overnight markets, led by the Big Dog Euro! Shoot Rudy! Even the Asian currencies are joining in on the kicking of sand in the dollar’s face. Gold was allowed to participate yesterday, but is playing catch up in the early morning trading, and Chuck thinks the elections have brought gridlock to the U.S. we shall see if he’s right, eh? 

For What It’s Worth… This is BIG NEWS folks, even if the media doesn’t choose to report on it… The GATA folks sent this to me of course, and it’s about a trader pleading guilty to currency manipulation, and it can be found here: https://www.justice.gov/opa/pr/former-precious-metals-trader-pleads-guilty-commodities-fraud-and-spoofing-conspiracy

Or, here’s your snippet… “An ex-J.P. Morgan Chase trader has admitted to manipulating the U.S. markets of an array of precious metals for about seven years — and he has implicated his supervisors at the bank.
John Edmonds, 36, pleaded guilty to one count of commodities fraud and one count each of conspiracy to commit wire fraud, price manipulation, and spoofing, according to a release today from the U.S. Department of Justice.

Edmonds spent 13 years at New York-based J.P. Morgan until leaving last year, according to his LinkedIn account.

As part of his plea, Edmonds said that from 2009 through 2015 he conspired with other J.P. Morgan traders to manipulate the prices of gold, silver, platinum, and palladium futures contracts on exchanges run by the CME Group. He and others routinely placed orders that were quickly canceled before the trades were executed, a price-distorting practice known as spoofing.

“For years John Edmonds engaged in a sophisticated scheme to manipulate the market for precious metals futures contracts for his own gain by placing orders that were never intended to be executed,” Assistant Attorney General Brian Benczkowski said in the release.”

Chuck again… The question I would have on this is HOW IN THE WORLD DID THE CFTC MISS THIS IN THEIR EXAMINATION ON MANIPULATION WHERE THEY SAID THEY COULDN’T FIND ANYTHING? 

Currencies today 11/7/18… American Style: A$ .7288, kiwi .6777, C$ .7646, euro 1.1478, sterling 1.3155, Swiss $1.0029, European Style: rand 13.9318, krone 8.2995, SEK 8.9892, forint 280.17, zloty 3.7380, koruna 22.6217, RUB 65.97, yen 113.18, sing 1.3693, HKD 7.8293, INR 72.29, China 6.9160, peso 19.67, BRL 3.7353, Dollar Index 95.80, Oil $62.90, 10-year 3.20%, Silver $14.67, Platinum $876.20, Palladium $1,124.51, and Gold… $1,231.89

That’s it for today…  Did you like the use of the term: discretion over the better part of valor? When I was a young man playing football, my teammates used to use that phrase a lot… College basketball is back! They’re getting started too soon in my opinion… College Football has everyone’s attention now, they should wait to start their basketball season until Thanksgiving… But nobody asked me…  Our Blues won last night at home to boot! Go Blues! A slow start by the Blues is getting turned around, slowly but surely… By the way, who’s Shirley? HAHAHA!  The band Yes, takes us to the finish line today with their song: Starship Trooper   I hope you have a Wonderful Wednesday, and keep Being Good To Yourself! 

Chuck Butler

 

 

November 6, 2018

* Currencies battle back and forth with the dollar

* RBA meets tonight, no surprises expected… 

Good Day… And a Tom Terrific Tuesday to you! Another day in the warm sun, I’m a happy camper, trust me on that one! I despise November, St. louis, weather. I’ve said this before but the days are so depressing, so I’m glad I’m not there this year! I went out for dinner last night. I got used to eating out by myself when I was traveling to speak at different places, but now, it’s a little weird, for sure! Today is Day 2 of Rachel Butler’s Birthday month! HA! It’s Election Day… When I was a young man, the Banks and bars were closed on Election Day, so that those wishing to buy a vote or two, couldn’t get money out of the bank or buy a prospective voter a beer… That’s all changed these days, votes can be bought easily and “voters” have been known to vote early and often! HA! We have a hotly contested race for Missouri Senator, it’ll be a close vote I’m sure… America greets me this morning with their song: Sandman… I used to enjoy playing that song on my guitar…

The reversal that the dollar had put in VS the currencies yesterday morning, got lost in the woods, and the dollar got sold the rest of the day, with the Big Dog euro, rising through the 1.14 handle, and the Aussie dollar climbing past 72-cents! Gold didn’t fare so well, on the day losing a few bucks… The price of Oil climbed back to 63-cents, only to lose that figure later in the day. The War of Words, were being spoken again yesterday by the leaders of the U.S. and China, with the U.S. saying they will add more tariffs to Chinese exports to the U.S. and China saying they too will add more tariffs on U.S. exports to China.

In the overnight markets, the dollar saw a turnaround, but mostly against the euro, which left the single unit back below 1.14. The last two trading days saw the euro gain VS the dollar, only to be sold in the overnight markets, which has my spider sense tingling… Quacks like a intervention, waddles like intervention, and smells like intervention, so it must be intervention…  Well, at least that’s what my spider sense is tingling about…  A couple of months ago, we went through this trading pattern for a few weeks, and I said at that time that I thought the European Central Bank (ECB) was selling euros to keep them from getting too strong, and push down their rising inflation they claim they need. I think the same thing is happening now… 

The news from the Eurozone is that there are good negotiations between the Eurozone commissioners and Italian leaders with regards to the Italian budget, that was just going to work for the ECB. In other words, “that dog ain’t gonna hunt”… 

There’s not much in the way of data being printed around the world, we will see September PPI in the Eurozone later this morning, but beyond that there’s little to look at. But that changes tomorrow, with a Eurozone Retail Sales report for September, and boat load of data prints from Japan. 

The Reserve Bank of Australia (RBA) will meet tonight for us, tomorrow morning for them, and I really don’t expect to see the RBA surprise the markets with a rate hike, the RBA has gone silent lately, and that tells me that they battened down the hatches, and are in a wait-n-see period, with China… 

Speaking of China…  The Chinese continue to mark down the renminbi almost nightly…  We did see two days of appreciation Friday and Sunday night, but back to mark downs last night.  Before the two days of appreciation recently, I was beginning to work up my talk about how China was going to allow the renminbi to depreciate to 7.0 to help offset the tariffs.  I still think we’re going there with the renminbi, folks… But the Chinese will do it with brief appreciations, so that it doesn’t look so obvious what they’re doing…  But I’ve got a memo for the Chinese… Everyone knows what you’re doing, so just go ahead and do it! 

And I read a report in the RT last night that Russia’s alternative payments system to SWIFT, has already gained quite a few users… When trading partners of Russia, and eventually China too, as they will use this alternative payments system, will use this system and bypass SWIFT, which means they’ll have no need for dollars to settle the terms of the trade.  These are the baby steps to that outcome folks… It’s happening right before your eyes… Do you see it?  

And now this… The good news for the U.S. just keeps rolling in! I’ve told you all about how Central Banks around the world have been backing away from their usual allotment of Treasuries sold at the Auction… Well, yesterday, we had the 2nd worst bid to cover in 9 years at the Auction of short term Treasuries… Wait! What?  Yes, the Auction didn’t go off so smoothly…

So… we’ve seen yields rise, right? I mean we’re at 11 yr highs in short rates, and the stock market is teetering, and all that isn’t enough to attract more buyers at the auction? Uh-Oh! Apparently, yields are going to have to rise much more, and we all know what that does to the bond servicing costs! This is scary to me folks… And should be to you, and I’m NOT the boy who cried wolf, this is actually happening!

Gold gained a whopping $1.60 yesterday on a very reduced amount of volume, as only about 150,000 contracts were traded… The shiny metal is up another $3.50 in the early morning trading today, these cheaper prices of Gold just seem to be calling out to investors… Look at me! Look at me! I’m cheap (comparatively to where I’ve been and where I’m going!) 

The GATA folks sent me an email yesterday that highlighted an article in the Alchemist and featured some quotes by a former French Central Banker… The Alchemist is a publication of the London Bullion Market Association (LBMA)… And at the end of the article I found this quote about what the LBMA is up to, check this out: “While the London Bullion Market Association’s magazine is named The Alchemist, its alchemy is of a different sort, the sort of alchemy undertaken by modern central banking itself: not to turn lead into gold, as the alchemists of old sought to do, but to turn gold into mere paper.”

I of the belief that won’t happen folks, not as long as Physical Gold is being bought by the boat load in Russia, and China…  

The U.S. Data Cupboard today is a non-event with The Election Day dominating the news and the markets today… Tomorrow’s cupboard will have the September Consumer Credit (read debt) which has really ballooned in recent months, and this report should be no different, so we’ll see tomorrow. 

To recap…  The dollar got sold yesterday, but in the overnight markets the euro got sold.. Chuck thinks its intervention by the ECB…  It’s Election Day, make sure you get out there and vote!  The RBA will meet tonight, no rate move is expected. The Chinese continue to mark down the renminbi in an effort to offset the tariffs on their goods going to the U.S. And Gold gained a whopping $1.60 yesterday on little volume… 

For What It’s Worth… Since it’s Election Day, I found this article to be on time! It’s about how Congress no longer carries out their jobs as the founding fathers intended them to, and can be found here: https://www.washingtonpost.com/graphics/2018/politics/laws-and-disorder/?noredirect=on&utm_term=.cc6518c40b72&wpisrc=al_trending_now__alert-politics–alert-national&wpmk=1

Or, here’s yoursnippet:“For more than 200 years,Congress operated largely as the country’s founders envisioned — forging compromises on the biggest issues of the day while asserting its authority to declare war, spend taxpayer money and keep the presidency in check.

Today, on the eve of a closely fought election that will determine who runs Capitol Hill, that model is effectively dead.

It has been replaced by a weakened legislative branch in which debate is strictly curtailed, party leaders dictate the agenda, most elected representatives rarely get a say, and government shutdowns are a regular threat because of chronic failures to agree on budgets, according to a new analysis of congressional data and documents by The Washington Post and ProPublica.

The study found that the transformation has occurred relatively quickly — sparked by the hyperpolarized climate that has enveloped politics since the 2008 election of President Barack Obama and the subsequent dawn of the tea party movement on the right.”

Chuck Again… I could show you evidence of this with emails I sent to our Senator a year or so ago, and her responses to me… It’s a real shame, and that’s all I have to say about that!

Currencies today 11/6/18.. American Style: A$.7228, kiwi .6671, C$ .7671, euro 1.1395, sterling 1.3036, Swiss $1.0048,.. European Style: rand 14.2357, krone 8.3705, SEK 9.0733, forint 282.43, zloty 3.7811,   koruna 22.6717, RUB 66.12, yen 113.17, sing 1.3750, HKD 7.8308, INR 72.74, China 6.9144, peso 19.94, BRL 3.7013, Dollar Index 96.41, Oil $62.97, 10-year 3.19%, Silver $14.68, Platinum $875.10, Palladium $1,135.10, and Gold… $1,235.00

That’s it for today…  I was in an office yesterday, and an older man said to me, “The northerners will be coming soon” I guess he thought I was from the South! My friend, Dennis Miller, used to tell me that they called the change in colors for fall the different license plates that converged on Florida… HA! Well, I’m told that work begins today on my project I have going on down here… I’ll have pop a bottle of Champagne to celebrate, as this has taken a month of Sundays to get started!  Steely Dan takes us to the finish line today with their song from the album of the same name: Aja… (a great song and album!)  I hope you can get out to vote today, and have a Tom Terrific Tuesday… Please remember to Be Good To Yourself!

Chuck Butler

 

On a sidebar… I’m finished with SNL… It’s been years since I religiously watched it each Saturday Night, but I’ve found the show to be a bore the past couple of years, and now they’ve crossed the line… They poked a jab at a guy who lost an eye in combat! Having lost an eye, I’m very sensitive to this… I’m just saying…

November 5, 2018

* Currencies rally on Friday, but get turned around overnight

* Everybody has current debt, but the U.S. has current and future debt! 

Good Day… And a Marvelous Monday to you! I had an uneventful trip here to my winter home yesterday, other than leaving at zero-dark thirty, in the morning! The good thing about flying that early in the morning is that you still get to enjoy the day when you arrive! The mid-term elections are tomorrow, I tried on numerous occasions to absentee vote last week, but each time I was met with lines of people that were trying to do the same thing.  I have this “thing” about long lines… And that’s all I’ll say about that!  I don’t know if all the early voting places were as busy as the one I went to, but if they are… There should be good voter turnout for this election… I’m here, all by myself… but I have plenty to do! I did sit outside a bit yesterday soaking up some Vitamin D, it was nice to be able to be outside without layers and a coat! The late great Jimi Hendrix greets me this morning with Bob Dylan’s song: All Along The Watchtower…

Well, Friday was interesting… The Jobs Jamboree surprised the experts & markets with a better than expected print of 280,000 jobs created in Rocktober… Ahem… 246,000 of those jobs were added by the BLS after the surveys, because, well, the “economy is doing so well”… Really? 246,000 jobs were created out of thin air, by the BLS because, well… They thought it would be prudent? I shake my head in disgust that the BLS is allowed to play these games, with people’s money… But then it’s what they call… “other people’s money” or OPM… I had better go on, from here… before I get all worked up!

And with the stupendous Jobs created report on Friday, one would have thought the dollar would have crushed the mini-rally that the currencies had going on when we last looked at them on Thursday. But I didn’t… I can say that the dollar actually lost ground on Friday… Not much… but the loss is significant because it should have been rallying like a banshee! Now, I’m not complaining, just a little confused as to what’s driving the currencies these days? Was it more tariff talk that pushed the dollar down? Seems reasonable, but then that’s been the talk of the town for some time now, it’s not like this is a new thing for the markets to digest…

But the overnight markets reversed the currency rally and the euro, which had  touched 1.14 in the mini rally, has given back about 1/3 of its move on Friday… UGH!  And Gold is flat in the earling morning trading, with a trading range of a shekel or two…

The world’s economies are slowing down… Last year, we talked about the Tent Revival movement going on with the economies of the world, all syncing up and growing… But that was before there were 3 more Fed Rate hikes, and a Trade War… My friend, Dennis Miller of www.milleronthemoney.com sent me a graph yesterday that shows by year a list of countries and their GDP growth… It’s pretty interesting to watch China’s GDP Grow like a weed, while those in other countries just petered in and out over time.

Remember when Japan was making yen rain on everyone, back in the 80’s… The Vapors sang a song, I’m turning Japanese…  that I’ve used for years to point to the fact that the U.S. economy was following in Japan’s path… Japan bought just about everything it could get its hands on, like Pebble Beach… and so on… But debt slowed the Japanese down, and has kept them under the thumb of Debt, ever since the mid-90’s… China has a boat load of debt too… But they also have a Treasure Chest of reserves of around $3 Trillion… The U.K. has more debt than they should, and their economy is slugging along… The Eurozone has huge debts, that the member countries have accumulated, and they’re hoping like hell that Germany’s economy can pull them out of this debt mess… And then that brings us to the good old U.S. of A. Now we have gone about accumulating debt, on a current basis, and on an unfunded liabilities basis…

I’ve always thought, well since I’ve been in the currency markets, that debt was like currencies’ kryptonite. The dollar, has an exhorbinate privilege, because of the fact that it is the Reserve Currency of the World… And that’s the only reason, that the dollar is still hanging on… I’m still of the opinion, that a lot of the dollar standard as we know it, will come to an end with the next recession here in the U.S. that looks like It’s now on track for 2020… I just don’t see how when the mess of a new recession, with all this debt, and derivatives, and leveraged corporate loans, works out well for us, and the dollar, not to mention the stock market… Call me negative Nellie, no wait.. negative Nate, but it’s how I see it all unfolding, and I have only one question for you…. Got Gold?

Getting back to the Jobs report last week, we did see good earnings growth, which is probably keeping the December rate hike still on the table… But there’s more to Jobs created… The BLS thought that Professional & Business Service was the hot spot in hiring as they allocated 91,000 jobs to this sector… So, there are always things that people pick out of the Jobs report that are very interesting… One such person is the great economist, David Rosenberg, who said on his Twitter account…

“The dirty little secret in the ADP report…in the past four months, job gains in the small-business service sector (leading indicator) has slowed from +48k, to +32k, to 29k, to +20k…lowest number since Sept. 2017. Very close to the figure printed in Nov. 2007…”

OK… they say small business is the key to the U.S. economy, and if that’s the case, it sure looks like small business is in trouble…

Over in the Eurozone to start the week there, we had ECB members out talking the talk, and walking the walk, of a Union that has an economy that will, in their opinion, still become a full fledged growing economy… And made sure that everyone heard them when they said that the withdrawal of Monetary Stimulus is on track to take place… they also pointed out that a recent easing of price growth was likely to be temporary…  

We’ve talked about the use of the word Temporary before, right? Sometimes it just doesn’t work out… Remember that the removal of the dollar from the Bretton Woods Agreement, (Gold standard) was supposedly, “temporary”…   Well, 47 years later, people have forgotten that the removal of the dollar from the Gold standard was supposed to be only “temporary”…

 Things are still looking up for the Brazilian real, as it gets marked up nearly every day… Something doesn’t feel right about this to me folks… And that’s where I’ll leave that… Just be careful here! 

Sometimes I wish I still went to conferences so that I could talk to the great mind of Steve Sjuggerud…  I would ask him now how he feels about commodities. The reason, is simple, commodities have been down for so long, and they are hated, to speak of, by most investors… This is when Steve normally picks up the baton and runs with it… he loves buying asset classes that other people don’t want… 

IF he said that it was time to buy commodities, it would confirm my belief that with all this spooling up of inflation around the world, that commodities would return to their glory years… I’m just saying… 

The U.S. Data Cupboard doesn’t have much for us this week, with the Election Day tomorrow, and then a Fed FOMC meeting on Wednesday, which will yield no rate move, but could give us some indication of whether or not the Fed is watching the rot on Housing’s vine get exposed… 

To Recap… The Jobs jamboree was better than expected last Friday, with the help of 246,000 jobs added to the surveys by the BLS…  the surveys only added 34,000 jobs in Rocktober…  The dollar didn’t rally on the data print though, and the currencies ended the week with a mini-rally. That Mini-rally has given back some of the gains won on Friday, in the overnight markets today. Gold is flat, and Chuck spends time talking about debt… 

For What It’s Worth…  the picking were slim this morning for a FWIW article folks… But I found this on Reuters that is Jack Ma of Alibaba talking about the Trade War, and thought it to be FWIW worthy, and it can be found here: https://www.reuters.com/article/us-china-trade-usa-jackma/alibabas-ma-calls-u-s-china-trade-war-most-stupid-thing-in-this-world-idUSKCN1NA0V6

Or, here’s your snippet: “The U.S.-China trade war is the “most stupid thing in this world,” Jack Ma, the chief of Asia’s most valuable public company, Alibaba Group Holding Ltd (BABA.N), said on Monday.

The two countries have set tariffs on hundreds of billions of dollars of each other’s goods and U.S. President Donald Trump has threatened to slap tariffs on the remainder of China’s $500 billion-plus exports to the United States if the trade dispute cannot be resolved.

Ma made the comments at the China International Import Expo (CIIE) held in the Chinese commercial hub of Shanghai.” 

Chuck Again… You tell ’em Jack!  Because nobody listens to me! 

Currencies today 11/5/18..American Style: A$.7193, kiwi .6655, C$ .7690, euro 1.1368, sterling 1.3005, Swiss $1.0063, European Style: rand 14.3750, krone 8.3752, SEK 9.0905, forint 283.59, zloty 3.7938, koruna 22.7244, RUB 66.10, yen 113.28, sing 1.3768, HKD 7.8311, INR 73.83, China 6.8910, peso 20.12, BRL 3.6954, Dollar Index 96.55, Oil $62.76, 10-year 3.20%, Silver $14.73, Platinum $870.46, Palladium $1,130.50, and Gold… $1,232.00

That’s it for today… Well, I do believe that today is Rachel Butler’s birthday! What a lovely person Rachel is, and has become a 2nd daughter to me… Happy Birthday! Rachel is someone that celebrates her birthday, MONTH!  Christmas decorations are already out in the stores, and we received a letter from the family that runs the Tree Farm we go to each year, so we’re headed to Christmas whether you want to or not! And one of my fave songs to sing along with takes us to the finish line today… Charlie Daniels song: Long Haired Country Boy… I hope you have a Marvelous Monday, and Rachel has a Happy Birthday, and we all remember to Be Good To Yourself! 

Chuck Butler

November 1, 2018

*Currencies finally break the dollar’s spell over them!

* Gold reverses yesterday’s selloff… 

Good Day… And a Tub Thumpin’ Thursday to you!  Welcome to November… I despise this month, so we’ll start out like that today! This was the day, when I was a young lad that I used to wish I went to the private Catholic School, instead of the public school, because today was a Catholic holiday! And still being somewhat sugar high hungover from the night before, I would trudge into school… I almost called this in today, saying that I was Catholic and it was a holiday for me! Funny thing, I was raised Catholic, went to church each Sunday, bought pretzels from the guy outside the church, and so on… But that’s as far as it went with me… I was actually baptized in a Baptist Church… go figure on that one! So, I hope your Halloween was great, and that you heard lots of good jokes! Elvin Bishop greets me this morning with his song: Traveling Shoes…

Another day, another day of the dollar pushing the currencies and metals downward… I’m almost resigned to think about how badly the currencies look, each day instead of thinking about how much they may have gained in the overnight markets… The overnight markets have been non-existent recently, And then last night… Boom! They mattered again! Before last night’s move, I was thinking that  I would write most of the letter the night before, then wake up later, and add in any extras and send it out… But I know what would happen if I actually did that… Over time I would not even get up in the morning to write anything, I would just spool it up the night before and be done with it! And… at this point, I have no idea why we’re even talking about that!

So… I didn’t get much feedback from my attack on the Fed yesterday from dear readers, I guess they all agree with me! HA! But good friend, and the Retirementor, Dennis Miller of www.milleronthemoney.com sent me some quotes from an article on Rand Paul, and his desire to audit the Fed… here are a couple of quotes from that article… “Probably one of the more startling things is the Fed will say that they are already audited, and that is kind of disingenuous, is the best way you can put it. The GAO auditor was before a House committee a few years ago, and they say, “Well, you’re the auditor and you perform the audit,” and she said yes, and they said, “Well, what does the Fed own? They have $4.5 trillion of assets — what are these assets?” and they said, “Oh, we don’t audit that.” It is like, what do you audit, how much coffee they purchased, what their salaries are, their expenses? It is kind of ridiculous and really unfair to say they are audited, when an audit would be what are your activities, what do you buy and sell, and what are they really worth?

Because I think for the confidence of the nation, we would want to know what their assets are worth, are they marked-to-market, who did they buy them from, what did they pay for them.” – Rand Paul

I just shake my head and wonder how in the hell we got here? This Fed was supposed to be the end all that ails the U.S. economy, but have they even come close to realizing that goal? Since they’ve been around (1913) we’ve seen dozens of recessions, a Great Depression, and a Great Recession, along with a financial meltdown… Boy, they’ve sure done their jobs there, eh? I’m just saying… 

Well, I hear that not only is today November 1st, the beginning of my least fave month, and also my former colleague, Our Little Christine’s, least fave month too… But today is also National Toothbrushing Day… When I was a young man, I didn’t take good care of my teeth, shoot I even played football without a mouth guard! But as a young adult, I met a dentist who got me straightened out, and I’ve been admant about tooth health ever since! And now I’m so lucky to have the wonderful dentist, Holly Ellis, as my dentist… How lucky is that?

But today is the beginning of month that has historically been the worst month every year of my life… Need I remind everyone that last November, I was stricken with an awful infection, that put me having to use a walker, and eventually have to have surgery, to clean out the infection… I was in tremendous pain for a long time, and it lasted the whole month of November… Besides that there are numerous other bad things that have happened in November, not to mention the cold, raw, steel gray days that just jab at you… Well, this year, I’m heading to S. Florida for most of November… Hopefully, when I return spirits will have changed to Christmas cheer…

The Dollar Index bumped up over the 97 figure on Tuesday, but in the past 24 hours it has retreated to 96.65… One of the currencies that is NOT a part of the Dollar Index, the Aussie dollar (A$) finally climbed above 71-cents on the night. The A$ has attempted to move higher for a few weeks now, but always seemed to be “not worthy”… 

And one currency that IS a part of the dollar index, The Swedish krona, had some news so let’s go there… Well, how about that reversal, about face, and whatever other term you want to use to describe what Sweden has done regarding their previous move to remove cash…  Here’s what’s going on… The Swedish government and its central bank, Riksbank, have been pushing for a “cashless society” for years, and many of Sweden’s bank branches have stopped handling cash altogether. However, Sweden’s central bankers now want to reverse their policy and have proposed making it mandatory for all banks and financial institutions to offer cash services so that it does not disappear as a form of payment. Financial companies and businesses that have converted out of cash may also be obligated to trade in cash.

I’m so glad to have read this… I was really beginning to believe that Sweden was going to not only be the poster child for negative interest rates, but also a cashless society… And that would have stricken them from my list of fave countries for sure! They’re teetering on getting bounced from the list with their negative interest rate Policy (NIRP) (remember ZIRP? Zero interest rate policy) . But I read this past weekend that there are whispers that the NIRP hasn’t worked the way the Swiss leaders thought it would, and they are looking to drop NIRP soon… Hmmm… Now, wouldn’t that be a different barrel of fish?

The Price of Oil slipped downward again in the past 24 hours, and trades with a $64 handle this morning…  Gold got whacked by nearly $9 yesterday, but is up nearly $9 in the early morning trading today, so that’s a wash… I read so much regarding Gold that I get confused over if I’ve talked about it or not… So, to keep me from being confused today, let’s just move along to the U.S. Data Cupboard… 

The U.S. Data Cupboard is gearing up for tomorrow’s BIG Jobs Jamboree, and yesterday’s attempt to prime the markets for a big number, was the ADP Employment Report, which showed 227,000 jobs created in Rocktober, with the Employment Cost Index (ECI) moving higher, as expected, and the Chicago region manufacturing pulse slipping… 

Today’s Data Cupboard has more data to sift through, with the likes of the stupid Productivity level, U.S. Vehicle Sales, and the ISM manufacturing index… So, all middle tier data prints, that unless there’s a rogue print in there, the markets will move along not noticing them… I say that, knowing all too well, that sometimes, the markets get a wild hair, and decide something WAS important… 

For What it’s Worth… Yesterday, I went on a rant about the Fed… And today, well, it’s Ron Paul’s turn! I found this at: https://www.lewrockwell.com/2018/10/ron-paul/trump-is-right-the-fed-is-crazy/

And he thinks the Fed is crazy… Hmmm… he said it, not me!

Or, here’s your snippet: “The very act of creating money and manipulating interest rates distorts the market. Therefore, the Federal Reserve System cannot be fixed with a “rules-based” monetary policy or even with “tying” the Fed-created money supply to the price of gold. It is amazing how many economists who oppose price controls on all other goods support allowing a secretive central bank to control the price of money.
Trusting the Federal Reserve to produce permanent prosperity instead of a boom-and-bust cycle is a textbook example of a popular definition of insanity being repeating the same action in hope of getting different results. The Federal Reserve System is as unworkable and doomed to failure as every other form of central planning.

It is likely that the next Fed-created recession will come sooner rather than later. This could be the major catastrophe that leads to the end of fiat currency. The only way to avoid crisis is to force Congress to end our monetary madness. The first steps are passing the Audit the Fed bill, allowing people to use alternative currencies, and exempting all transactions in precious metals and cryptocurrencies from capital gains taxes and other taxes.”

Chuck again… Another point I would like to make regarding the Fed, is that I’m a firm believer that we as a country and our economy would be better off without them! I say, let the bond markets set interest rates, and count the beans the way they were supposed to be counted for inflation… 

Currencies today 11/1/18.. American Style: A$.7155, kiwi .6610, C$ .7627, euro 1.1380, sterling 1.2880, Swiss $1.0031, European Style: rand 14.5475, krone 8.3662, SEK 9.0530, forint 284.12, zloty 3.8017, koruna 22.7370, RUB 65.69, yen 112.95, sing 1.3805, HKD 7.8377, INR 73.23, China 6.9694, peso 20.16, peso 3.7056, Dollar Index 96.65, Oil $64.85, 10-year 3.16%, Silver $14.41, Platinum $848.70, Palladium $1,078.90, and Gold… $1,223.54

That’s it for today… And this week… My next correspondence with you will be transmitted from my winter home… Just a 3 week trip this time, to make sure work is getting completed on time! I didn’t hear any good jokes last night, and I only had about 25-30 kids show up to Trick-or-Treat. I told Kathy, “see I told you we had enough candy for me to sneak some early”…  Dawn brought  Delaney Grace and brother Everett, in their Halloween costumes by early yesterday… My little d, is growing up, I’m not sure I’m ready for that!  Sorry for all the directions in the Pfennig today, I’m still dealing with a sugar hangover! HA!  OK, this is my weekly plead to the Cardinals to sign Bryce Harper…   Surely someone in the Cardinals office reads the Pfennig, and can let the GM know that I want them to sign Bryce Harper! HAHAHAHA!  And with that, Journey takes us to the finish line today with their song: Girl Can’t Help It… (one of my fave Journey songs)… I hope you can go out and make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler

 

 

Rocktober 31, 2018

* Currencies and metals take on more water… 

* Chuck explains his dislike of the Fed… 

Good Day… Boo! And a Wonderful Wednesday to you! And a Happy Halloween to one and all! I recall going to New Orleans on Halloween for a conference years ago… They sure do get into Halloween in New Orleans! No baseball, no football, no hockey to watch, what’s a guy to do? HA! Our Blues don’t play again until tomorrow night… I sure liked the strike-shortened season of a few years ago, when they crammed as many games as they could into a short time, it seemed like there was a game every other day! I don’t live each night on sports watching alone, if that’s what you think, but it does help the night go by, and keep me from sitting at my writing desk, reading and researching for the next day’s Pfennig… I do so much of that already, I don’t need to be doing it at night too! The late, great, Tom Petty, greets me this morning with his song: You Got Lucky…

And don’t you feel you got lucky so many years ago, when you found this letter? HA! I’m feeling better today, as my one-week trip on steroids ended yesterday morning… So, if there’s a dolt out there, I’ll find them for sure! Whoa, there Partner, what on earth do you mean, If there’s a dolt out there, You know darn good and well that there are plenty of dolts out there!

One guy who’s not a dolt, and is a very well respected and admired economist, David Rosenberg, likes to use Twitter, which is pretty cool for me, because I get to see his quotes for free! Yesterday, he posted the following to his Twitter Account: “Best economy of all time generated the first decline in real per capita disposable personal income last month since June 2017!” – David Rosenberg

He does have a way of using a pointed stick, doesn’t he?

OK… Well, the dollar’s spell over the currencies remains, and the euro took on more water yesterday. The Trading Ranges so far this week have been quite muted/ small… But the overall depreciation of the currencies remains in place… The euro, is still above the 1.09 level it was 18 months ago, but it’s also far below the 1.25 it reached last spring. And there’s just not that much going on overseas to talk about… In Australia today, they will print their latest CPI (consumer inflation) for the 3rd QTR… The experts are forecasting an unchanged level from the 2nd QTR of 0.4% growth.. That won’t get annual CPI above 2%, so you can see why the Reserve Bank of Australia (RBA) has disappointed the markets so far this year with no rate hike.

Gold never could recover from its early morning selling yesterday, and closed the day down $7… UGH! No forward momentum can be found with Gold, folks… it’s up one day, down the next two, up two days, down the next one, and so on, and so on… Just bumping along, picking up passengers … That’s right, buyers at these reduced levels seem to be ganging up, but right now, they’re just not making any difference… But they will…

Have you ever held a one-ounce Gold coin in your hand? The Maple Leaf is the shiniest, and the Gold Eagle is pretty shiny too… Once you hold a Gold coin in your hand, you get this feeling of being wealthy… Well, you may not be wealthy, but you’ve provided yourself a store of wealth, with the Gold coin… I’m just saying…

There was more evidence overnight that the Trade War with China is hurting both countries, but this time it’s China’s manufacturing… China’s official manufacturing Purchasing Managers’ Index (PMI) was 50.2 — lower than the 50.6 analysts expected in a Reuters poll and down from 50.8 in September. Gloom, despair, and agony on both economies in this Trade War… If it weren’t for bad luck, I’d have no luck at all… Gloom, despair, and agony on me..  

I made a big deal out of the increase in debt to our country yesterday, and one of the things I was all set to talk about that was related to that, escaped my mind at the time of writing… About an hour later, I realized that I had completely forgotten to talk about what was related to the spending! UGH! (A Senior moment?) Anyway… let’s look at this from another angle… Military spending is soaring, folks… And when you get down to the cheese that binds… Gov’t. spending is making up most of the gist of GDP these days… yes, if it weren’t for the Gov’t spending like there’s no tomorrow, GPD would be much lower… So, there! I finally said it! Aren’t you glad I remembered? HA! 

One of my “go-to’s” with economics questions through the years, Lisa, used to tell me, that it’s the role of government to fill in the gaps of consumer consumption…  I used to argue, why? We rarely saw eye-to-eye with things, but she made me think, and I adored her for that! 

OK… I told you yesterday that was going to talk about my dislike of the Fed today… Many of you will recall when I used to make a big deal out of a saying that I coined… Repeal 1913!  For it was 1913 that Woodrow Wilson crammed the idea of a Central Bank down the throats of Americans, and we ended up with the Federal Reserve, which by name alone is a bunk of malarkey, for there’s nothing Federal about it! 

I was asked a question the other day, that I had to really think about the answer, not that I didn’t know what to say, but more how to say it so that there were no follow-up questions… So, the question was… “Chuck, you’re always being negative of the Fed, why is that, is there some risk that they’ve added that we, the public don’t’ know about?”

Then I saw this quote and thought this says it all!  “The greatest threat to the central bank’s existence is the tendency of Fed governors and economists to pursue abstract economic theories that make no sense in real world terms and often do more harm than good. “I have written at length about how the radical policies followed by the FOMC, first under Bernanke and then Yellen, have distorted asset allocations, and the term structure of interest rates and credit spreads.

I went on to say, “think about what easy money the past 10 years has done to asset allocations and valuations? Think about about what easy money has done to the yield curve of Treasuries bonds? And think about what easy money has done to the retired people’s savings… Was all that necessary? The answer is an emphatic NO! Operation Twist, doesn’t get its due, but when the dust settles on this coming financial mess, people will look back and examine the damage that Operation Twist did to the yield curve… And ask the question… “What on earth was the Fed thinking?”

Yes, there’s risk that no one talks about… That’s why I’m 100% behind an “audit the Fed” bill… Sort of like the health care act, we won’t know what’s in there until we pass it…  

So, there it is in a nutshell, folks… My take on the Fed, and what they’ve done to our economy and our future… I really got a kick out of a recent article I read that quoted former Fed Chairman, Paul Volcker, with him really calling out Bernanke and Yellen over their complete lack of knowledge regarding deflation, and the stupid 2% inflation target…

The U.S. Data Cupboard saw the Case/Shiller Home Price Index for August fall to 5.8% from 6% in July… I told you yesterday that the big move in home prices probably hadn’t occurred yet for the August report, but that we could still see some weakness, and that’s exactly what we saw… I sure hope the Fed Heads are watching all this rot being exposed on Housing’s vine… If not, what are they watching? I heard it’s reruns of WKRP In Cincinnati… HAHAHAHAHAHA! Just kidding… Baby, if you’ve ever wondered, wondered whatever became of me… I’m living on the air in Cincinnati, Cincinnati WKRP…

In addition to the HPI… This piece of data falls under the heading of… Believe It or Don’t! Consumer Confidence for this month… Let me make that clear, this month… increased from an index number of 135 last month to 137.9 this month! And they say that most of the Consumer Confidence Index is derived from stock market performance? Well, that can’t be the case any longer, because the stock market has really pushed the exit button this month, and Confidence rose? Go figure that one!

If Consumer Confidence is so darn strong I have to ask the question, Why then are the mid-term elections next week so “up in the air?” I’m just saying, and that’s as far as I’ll go with politics…  Ask a question and then retreat… Throw a grenade, and retreat…

Today’s Data Cupboard will have the ADP Employment Change report… Which signals to me that this Friday will be a Jobs Jamboree Friday! We’ll also see the Employment Cost Index (ECI), which I bet is increasing… Unless the ADP report falls out of bed, I doubt that either of these will cause too much disturbance in the currencies’ atmosphere…

To Recap… The dollar’s spell cast over the currencies and metals remains in place this morning, with bot asset classes taking on more water this morning. Chuck is concerned with debt, as usual, but looks at it from a different angle today, which should be interesting! The Trade War with China is having negative effects to their manufacturing, as evidenced by the latest PMI print from China.  And the rot on housing’s vine is being exposed more and more with every housing report… Are you watching, Fed? 

For What It’s Worth…  Ok, I haven’t talked much about Gold price manipulation lately, so when I saw this article highlighted on Ed Steer’s letter this morning, I just had to use it for my FWIW today… So, that’s what it’s about and it can be found here: https://hedgenordic.com/2018/10/precious-times-times-ahead/

Or, here’s your snippet: “Behind the scenes, the dynamics steering the gold price are undergoing some fundamental changes that could lead to this breakout, Eric Strand of Swedish Pacific Fonder suggests. One indication, he believes, came when the CFTC (Commodity Futures Trading Commission) reported in early September 2018, that for the first time in 17 years, commercial participants in gold futures flipped their COMEX positioning from short, to being net long. Retail, and technical funds, however, now have big short positions, “which could lead to a big short squeeze”, Strand adds.

“The price of gold has been suppressed artificially for too long, Strand believes, and now may be the time for a change”.

Strand refers to Silver expert Ted Butler who has monitored the market every single day for over 30 years and describes it as follows: “Every time we’ve had a rally in the last 10 years, ever since J.P. Morgan took over the investment bank Bear Stearns, J.P. Morgan has added aggressively to its paper short division on the COMEX as retail speculators and technical funds come in to chase rallies higher. J.P. Morgan has always been the seller of last resort, and they sell whatever is required to satisfy all buying. And, ultimately, after that buying is satisfied, the prices roll over and come back down. J.P. Morgan adding short positions has stopped every rally in silver – and gold, for that matter – over the last 10 years.

J.P. Morgan never sells on the way down. They only sell and add short positions on the way up. And, when J.P. Morgan adds short positions, once they’re done selling and the buyers are done buying, the price stops going up and people turn to sell. That’s when J.P. Morgan rings the cash register and buys back all the shorts that they’ve added at lower prices than where they sold, meaning they always make a profit.”

Chuck Again…  I think this plays well in the sandbox with what I talked about earlier this morning, with regards to Gold… So there you go!

Currencies today 10/31/18.. American Style: A$.7095, kiwi .6540, C$ .7614, euro 1.1338, sterling 1.2740, Swiss $1.0060, European Style: rand 14.7025, krone 8.4295, SEK 9.1780, forint 286.36, zloty 3.8190, koruna 22.8448, RUB 65.66, yen 113.14, sing 1.3858, HKD 7.8450, INR 73.79, China 6.9629, peso 20.01, BRL 3.7104, Dollar Index 97.03, Oil $66.41, 10-year 3.14%, Silver $14.35, Platinum $836.12, Palladium $1,073.15, and Gold… $1,217.78

That’s it for today…  Except… I hear that talks with China regarding Trade/ tariffs are going on, and if they don’t come up with something, the U.S. is ready to add more tariffs to China’s bill… I shake my head , and wonder when this will all go away…  It’s raining cats and dogs outside right now, I sure hope it ends before the Trick or Treaters go out tonight!  I’ve become a candy lover, and having all this candy here waiting for tonight, is driving me crazy! I got caught stealing some Starburst yesterday…  I said, Oh, come on, we’ve got more candy here than there are kids in the neighborhood, can’t I have a piece?  OK, enough of that… I can’t wait to see the little ones tonight, as each year, I sit on the front porch, and give out candy to the Trick-or-Treaters…  Why did the mushroom get invited to the party?  Because he was a fungi! HAHAHAHA! Happy Halloween! The late great Alvin Lee and his band Ten Years After take us to the finish line today with their song: I’d Love To Change The World…  Now, it’s your responsibility to go out and make this a Wonder Wednesday, a Happy Halloween, and remember to Be Good To Yourself!

Chuck Butler